Crest Nicholson reinstates dividends for shareholders

Crest Nicholson has reinstated its dividend for shareholders after swinging to a half-year profit amid strong demand from buyers looking to move to homes with more space.

The Chertsey-based housebuilder has upped its annual profit forecast and said demand from buyers for completions taking place after the 30 September stamp duty holiday deadline remained strong. 

The FTSE 250-listed company reported a pre-tax profit of £36.3million for the six months to 30 April, against a loss of £51.2million at the same point a year ago. 

On the up: Crest Nicholson has reinstated its dividend for shareholders after swinging to a half-year profit

The group, which builds houses and flats largely focused on the southern half of England, now expects an adjusted pre-tax profit of at last £100million for this year.

Revenue rose to £324.5million over the period, up from £240million a year ago and the number of completions increased from 775 to 1,017. 

Over the period, the group saw sales of 2,771 units and a gross development value of £691.8million as of 18 June, compared with 2,715 units the year before, and £575.1million in GDV. 

The housebuilder declared an interim dividend of 4.1p a share, ‘in line with dividend policy and reflecting confidence in outlook’, it said.

Shares in the group rose this morning and are currently up 3.25 per cent or 14p to 444.40p. A year ago the firm’s share price was 205.20p. 

The group revealed it had upped the expected cost of replacing defective cladding on its properties to £23million. 

The firm said that it had reassessed existing provisions for the costs and timing of works, resulting in an increase of £10.3million in its provision. 

Crest Nicholson spent £1.9million during the six months to April across a number of buildings requiring further investigative costs, including balcony and cladding related works.

It also expects to fork out £15.5million of the remaining provision within one year, and the balance within two to five years.

Since the property market reopened after the height of lockdown, many housebuilders like Crest Nicholson have benefited from government incentives such as a tax-break extension and a mortgage guarantee scheme, along with increasing customer preferences for spacious properties. 

Peter Truscott, chief executive of Crest Nicholson, said: ‘I am very pleased with the strong trading performance the Group has delivered in the first half. 

‘This has been achieved against the backdrop of the ongoing pandemic and I would like to thank all Crest Nicholson employees and our partners for their dedication and commitment during this time.

‘We are making good progress in all five of our strategic priorities. Our balance sheet has been transformed and positions us strongly to grow in the future. 

‘Having completed the first part of our turnaround strategy, and implemented our operational efficiency programme, our focus now moves to rebuilding operating margins and delivering sustainable growth. 

‘We are evaluating options to enter new geographical markets and look forward to outlining these future growth plans and our long-term financial targets later this year.’   

Boost: Demand from buyers has been strong in the last six months, Crest Nicholson said

Asking prices homes between mid-May and early-June rose by 0.8 per cent, compared with a month before, marking the biggest rise for the time of year since 2015.

Anthony Codling, chief executive of property platform Twindig, said: ‘Crest had a tougher 2020 than most of its peers, but it has now had the jab and the vaccine is working.

‘In the half-year, its home sales are up 31 per cent and profit after tax up 700 per cent and the outlook for the full year looks just as healthy. Crest has used the lockdowns to its advantage focusing on internal issues and as lockdown eases it has emerged all the better for it.’

On Wednesday, developer Berkeley Group revealed it pocketed a pre-tax profit of just over £518million, as its average home sale price climbed almost £100,000.

The housebuilder, which calls itself a ‘place-maker’, sold 2,825 homes in London and the South East of England last year and said that it had the capacity to build 63,000 on its current land holdings.

Despite the property market narrative of an escape to the country driving house prices, suburban and city-focussed Berkeley’s average selling price of £770,000 was £93,000 more than the £677,000 average the year before.

This post first appeared on Dailymail.co.uk