28th Jan 2014 11:26
LONDON (Alliance News) - Housebuilder Crest Nicholson Holdings PLC Tuesday reported an increase in profit and revenue for its last financial year, citing the UK government's flagship, but contentious, mortgage-financing scheme as a catalyst for renewed interest in new builds.
The firm saw pretax profit jump 40% to GBP80.9 million for the 12 months ended October 31, 2013, from GBP62.1 million a year earlier, despite exceptional costs of GBP5.9 million connected with its initial public offering in February 2013.
It said sales rates across the year have averaged 0.90 sales per outlet per week, from 0.67 a year earlier, a 34% improvement.
This gain was particularly marked in the second half of the year, following the introduction of the government's Help to Buy scheme, which has driven some of the increase in volumes for 2013.
The first phase of the Help to Buy scheme in England started in April 2013, making buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit. The second phase, which started in the Autumn, guarantees a portion of a buyer's mortgage.
"The stimulus from government schemes has served to reduce mortgage pricing and increase loan availability, creating the consumer confidence which has then supported the delivery of more new homes to meet pent-up housing demand," the firm said.
However, the scheme, which came as a "surprise to the industry when it was announced in the budget last year", created some problems for companies, Finance Director Patrick Berign said in a telephone interview with Alliance News.
"The housing market was already showing signs of recovery when we launched our IPO, particularly in the areas where we operate in the South East. The Help to Buy Scheme really helped push demand and initially created a few issues for everybody, including the supply chain, which had to step up to demand," he said.
"The challenges in the second half of the year was to get the supply chain to gear itself up to meet the incremental 15% of additional demand on top of the growth we were already seeing," Berign added.
Overall, private home completions were up 35% over the year and the firm took almost 600 reservations under the Help to Buy scheme.
As the firm ramped up construction, revenue increased 29% to GBP525.7 million compared with GBP408.0 million in 2012.
Housing revenues rose 32% to GBP491.2 million, from GBP372.2 million a year earlier, whilst unit completions increased 15% to 2,172 from 1,882.
Higher average selling prices contributed significantly to revenue growth, reflecting a change in product and location mix, including the first unit contributions from its new London-centric division.
Open-market average selling prices were up 9% at GBP250,000, from GBP230,000 in 2012, reflecting the mix of product being sold as well as increases in sales prices.
However, revenues from commercial and land sales combined amounted to GBP34.5 million, down from GBP35.9 million.
Overall, the company said its land bank made strides, with 30,713 units under contract last year, up from 29,582 in 2012.
Despite a growing land bank, Berign said housebuilders were still constrained by an "overburdensome" planning process exacerbated by government cuts to local authorities and increased applications.
He urged government to "resource up certain departments" to meet increased demand.
Looking ahead, Berign said the company hoped to return to delivering over 3,000 units a year.
"Crest historically delivered over 3,000 units and we can see ourselves initially seeking to grow to around 2,500 units as a first target," he said. "We guided the City having initially thought we could meet that in 2015 or 2016 but we think we may hit the target this year."
Bergin said the company planned to open another operating division in the South East to push it back towards the historic 3,000 units a year.
Financially, the group had net cash of GBP42.5 million at the end of October, compared with a net debt of GBP30.3 million in 2012.
The board said it was pleased to mark its return as a listed company by proposing a final dividend of 6.5 pence per share.
The stock was trading at 359.90 pence Tuesday morning, up 7.70 pence, or 2.2%.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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