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Trading statements

Crest Nicholson trading in line with expectations

16 May 2017 07:54

Crest Nicholson said trading continued to be in line with expectations and it remained on track to deliver growth in unit sales and 10% in revenues for the full year to 31 October 2017.

Average selling prices (ASPs) rose as the group delivered on its strategy of investing in high quality locations.

Open market completion ASPs in the first six months, excluding PRS, were 12% higher at £418k (2016: £372k).

The change in product and location mix towards higher ASPs also resulted in the business naturally operating at a lower sales rate per outlet.

Sales per outlet week, excluding PRS, averaged 0.81 (2016: 0.87) which was in line with the average sales rate achieved through the whole of 2016.

As expected, unit completions for the first half of the 2017 financial year at 1,064 (2016: 1,206) were lower than the comparative period in 2016, primarily due to a reduced first half weighting from the timing of PRS completions. Unit completions excluding the impact of PRS were 1,021 (2016: 1,033), broadly in line with last year.

At the end of April, forward sales for the 2017 year including year to date completions were 5% ahead of the same period last year.

Forward sales were supported by an increase in outlet numbers which averaged 49 for the first half of 2017 (2016: 44) an increase of 11%. The second half of 2017 would see the new division in the Midlands established and additional outlets opened across the existing Divisions.

The group continued its disciplined approach to land acquisitions, in what is a benign market. In the first half of 2017, the business had more than replaced housing revenues purchasing 1,092 plots across 11 sites with a gross development value of £418m, maintaining a broad land pipeline for the future.

A further 1,196 plots across two sites were converted from the strategic land pipeline in the period, after relevant resolutions to grant planning consent were secured. The strategic pipeline was replenished with an additional 1,101 plots.

LEASEHOLD SALES

There was some public comment on leasehold sales in recent months. Crest Nicholson said its general approach was to sell houses on a freehold basis and, as a result, very few leasehold houses were sold. The company reported it continually reviewsterms of ground rents for sale of all leasehold properties and it did not believe they constitute a material exposure for the group.

OUTLOOK

The housing market continued to be robust across the group's principal operating areas. The market was underpinned by strong demand with good mortgage access and support from the Help to Buy Scheme.

Moderate sales inflation should help to maintain affordability in the near term and combined with moderate build cost inflation should help underpin margins.

Addressing production capacity, clearance of planning conditions and shortage of skilled labour continued to be key areas of focus for the sector in terms of securing volume delivery and growth.

Against this market backdrop the board remained confident the business is well positioned to continue to deliver a strong operational and financial performance in the medium term.

Story provided by StockMarketWire.com

Related Company: CRST

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