Crest Nicholson HY25: Profit doubles as strategy delivers early gains

Crest Nicholson Holdings plc (LON:CRST) has announced its interim results for the six months ended 30 April 2025.

Martyn Clark, CEO commented:

“I am pleased to report that Crest Nicholson has delivered trading in line with expectations in the first half and is on track to meet its FY25 guidance.

We have made good early progress against each of the four key strategic priorities set out at our Capital Markets Day. Our focus on building exceptional quality homes efficiently has been recognised with our build teams receiving four nominations for the annual Premier Guarantee Excellence Awards, more than any other national developer. Our reinvigorated approach to putting the customer at the heart of all we do and delivering an outstanding customer experience is reflected in our regaining the HBF’s 5-star customer service rating and we are on-track to maintain the rating for the current assessment year. Our commitment to operational and commercial excellence has underpinned the better sales rates we have delivered, with a notable increase in sales rates since January, which are now more in line with industry standards. It is also visible in the improvement we are starting to see in achieved prices as our sales transformation becomes embedded. We have delivered improved gross profit and margin with a notable reduction in completed sites charges and NRV provisions. We have taken swift action to reduce administrative expenses with the merger of the Midlands and Yorkshire divisions, amongst other initiatives delivering a 6% adjusted administrative expenses reduction year on year. Our ongoing focus on working capital management and inventory reduction is reflected in our net debt position being better than expected, and we continue to be highly active in exploring ways to optimise the value of our land portfolio.

“The housing market continues to show signs of stabilisation with an incrementally easing planning system, improving affordability and strong support from lenders. Customer appetite for the mid premium segment of the market, which is characterised by high-quality, well-designed homes in sought-after locations, and which is our focus segment remains robust. This places Crest Nicholson in a strong position to navigate the market with confidence and clarity of purpose, as we progress towards the delivery of our FY29 targets and with it, attractive and sustained value creation.”

HY25 results summary

1.     Adjusted basis represents the HY25 and HY24 statutory figures adjusted for exceptional items as disclosed in note 5. Adjusted performance metrics and net debt are non-statutory alternative performance measures (APMs) used by the Directors to manage the business which they believe should be shared for a greater understanding of the performance of the Group. The definitions of these APMs and the reconciliation to the statutory basis are included below

2.     Includes joint venture units at full unit count

3.     Net debt is defined as cash and cash equivalents less interest-bearing loans and borrowings

4.     Represented – see note 17 for an explanation of the prior year representation                       

Financial highlights

·      Home completions were as follows:

·      Volume reduction was driven by the Group’s new strategy to increase profitability by focusing on open market homes in the mid premium segment. Volume totalling a further 112 units from existing PRS contracts will be fully delivered by the end of FY26

·      HY25 open market sales per outlet week at 0.53 (HY24: 0.47) with significant improvement in sales rate since mid January (0.61) as the early benefits of improved sales execution are realised

·      Average outlets in the half at 40 (HY24: 45)

·      Adjusted operating profit increased 92% to £11.9m (HY24: £6.2m) as a result of lower completed site costs, lower NRV charges and lower administrative expenses

·      £11.8m combustibles recovery recognised in exceptional items following settlements with third parties in respect of three buildings. Modest net increase in provision of £2.4m from latest forecast remediation estimates

·      Early benefits (£29.9m), from the Group’s inventory reduction programme helped to deliver better than expected net debt at £71.5m (FY24: £8.5m)

·      Significant reduction in HY25 land creditors to £77.8m (FY24: £131.6m)

Strategic and operational highlights

Strong initial progress against each of our four strategic priorities:

·      Our build teams have been recognised with four nominations for the annual Premier Guarantee Excellence Awards, more than any other national developer

·      The Group regained its 5-star customer service rating from the HBF and is on track to maintain the rating for the current assessment year

·      Good early progress in delivering initiatives to re-position the group in the mid premium segment:

o  Training and upskilling of sales and build teams

o  Launch of online sales extras portal “Arteva” to drive value and customer satisfaction

o  Midlands and Yorkshire regions merged

o  Commencement of administrative expenses reduction programme with early benefits delivered in the half

o  Rolling out mid premium positioning to all colleagues

o  Ongoing improvement in management information to drive better decision making

·      Over 50% of our strategic land is now either allocated or in draft allocation status

·      Active exploration for value realisation of non-core sites

·      Crest Nicholson continues to make good progress completing its assessment programme within the scope of the Developer Remediation Contract. At the end of May 2025, the Group has completed 279 external wall assessments and 270 internal assessments on the 293 buildings in scope and remains on track to meet all its commitments in the Joint Plan to accelerate developer-led remediation

Current trading and outlook

Trading in the first half of the financial year was in line with expectations with a stronger than anticipated balance sheet position at the period end. Sales have continued to progress in line with expectations in the first few weeks of the second half of the financial year. Forward orders for FY25 as at the end of May 2025 total 763 units. We expect to deliver further improvements in performance in the second half as the actions undertaken in the early phases of the transformation plan are embedded across the business. We remain mindful of volatility in the macroeconomic backdrop, which continues to impact consumers through concerns around affordability and job security. However, the market is now starting to benefit from increased lender support and better mortgage affordability as the interest rate environment starts to ease. Overall, we are not experiencing any meaningful build cost inflationary pressures, either on the labour or material side and we continue to reinforce operational disciplines to reduce abortive costs. Planning reforms continue to move slowly but positively. As such, we anticipate further stabilisation in the trading environment in the second half of the year.

Guidance

Guidance for the year remains unchanged: