Crest Nicholson H1 2025 Earnings Report

Crest Nicholson EPS Results

• Actual EPS: GBX 2.20
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Crest Nicholson Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Crest Nicholson Announcement Details

• Quarter: H1 2025
• Date: 6/12/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, June 12, 2025
• Conference Call Time: 4:00AM ET

Crest Nicholson (LON:CRST) engages in building residential homes in the United Kingdom. It develops and sells apartments, houses, and commercial properties. The company was founded in 1963 and is headquartered in Addlestone, the United Kingdom.

Crest Nicholson H1 2025 Earnings Call Transcript

Key Takeaways

• Strong H1 financial performance: Adjusted operating profit rose 92% to £11.9m, adjusted PBT more than tripled to £7.9m, EPS increased to 2.2p, interim dividend was raised to 1.3p, and net debt improved to £71.5m.
• Project Elevate gains momentum: Early transformation initiatives drove the open market sales rate up from 0.47 to 0.53 units per outlet, reduced build defects, and secured a return to a five-star HBF customer service rating.
• Fire remediation on track: The combustible materials provision increased by £2.4m (<1%), recoveries totaled £11.8m in H1 (over £32m to date), with over 90% of surveys complete and remediation works aligned with the July deadline.
• Land bank optimization: Two non-core land parcels were sold (with £2.2m deferred payments), and over 50% of strategic land is now in allocated or draft allocation status at an average 19% discount, boosting future margin potential.
• Guidance and market context: Despite headwinds from inflation, interest rates and planning delays, consumer sentiment is improving and FY25 guidance remains at 1,700–1,900 completions and £28–38m adjusted PBT.

Presentation

[Operator]

Thank you for joining the Crest Nicholson plc Interim Results for six months ended thirty April twenty twenty five. My name is Marie, and I will be coordinating your call today. I will now hand over to your host, Martin Clark, Chief Executive Officer, to begin. Please go ahead.

[Martyn Clark, CEO at Crest Nicholson]

Thank you, Marie. Good morning, everyone, and thank you for joining us today at the Crest Nicholson's interim results presentation for the six months ending 04/30/2025. I'm Martin Clark, the CEO, and I'm joined today by Bill Floyd, our CFO. It's good to see you all again. We're looking forward to updating you on our financial and operational performance in this financial period as well as an update on the good progress we are making against the four strategic pillars, which I outlined at the Capital Markets Day in March.

[Martyn Clark, CEO at Crest Nicholson]

As a reminder, the pack contains a note on forward looking statements, which I'll take as read. The agenda for this morning is as follows. There are principally three matters we wish to run through today, the half year financial results, the progress we have made against the strategy set out at our Capital Markets Day in March, and an update on fire remediation. This will then be followed by an opportunity for Q and A. The challenges faced in the external macro backdrop have been well publicized, and the trading environment remains challenging.

[Martyn Clark, CEO at Crest Nicholson]

Despite that, I am pleased to report that Crest Nicholson's trading performance for the period is in line with expectations. We've talked previously about the launch of our transformation strategy referred to going forward as Project Elevate, which is based on four strategic pillars. I'm encouraged by the progress that we have made in the past few months on that critical work. We've started to see some improvements across the number of our key metrics due to the changes that we have made as a business. I've always said that it's going to take two or three years to fully execute the transformation, but the improvements we have seen to date shows that we are on the right path.

[Martyn Clark, CEO at Crest Nicholson]

In terms of fire safety provisions, we obviously updated everyone on those provisions back in February. Following that update and in line with our robust review processes, our provision has been slightly adjusted upwards by just less than 1%, but offset by some notable recoveries from parties, which we will expand on shortly. Finally, looking into the half of the year, we remain on track to achieve the FY 2025 guidance and medium term objectives set out previously. With that, I'll hand over to Bill, who will go through the numbers in a little more detail.

[Bill Floydd, CFO at Crest Nicholson]

Thank you, Martin, and good morning, everyone. Today, I'll take you through a financial summary of the half, and I'm pleased to say that this set of results is more in line with expectations than the others that I have presented in my time here. So on the financial summary, here you can see the financial headlines for the half. Revenue was £249,500,000 down by 3% on the first half of last year. Revenue from housing was 2 and £33,200,000 which was up by 3%, and the reduction was driven by a £14,500,000 fall in land sales. I'll have more sales metrics for you on the next slide.

[Bill Floydd, CFO at Crest Nicholson]

Gross margin improved to 14.2% from 12%, with the biggest factors being substantially and also lower NRV charges. Overheads were £1,500,000 lower than the first half of last year, with some early restructuring benefits and tighter management focus being the key contributions. As a result of these gross margin and overhead improvements, adjusted operating profit was up by 92% to £11,900,000 and adjusted PBT more than tripled to £7,900,000 Exceptional items were in profits compared to last year's £33,500,000 loss as a result of the £11,800,000 recovery from parties, and I'll give you further explanation of the exceptionals on a later slide. Adjusted basic earnings per share was 2.2p, more than 3x the 0.7p in FY 2024. The Board has proposed an increase in the interim dividend to 1.3p per share.

[Bill Floydd, CFO at Crest Nicholson]

Net debt was better than we expected at £71,500,000 with the key contribution being lower inventory. On the sales metrics, adjusted outlook was 40, in line with our guidance and down from 45 last year as a small number of sites completed their last properties. The open market sales rate for the half year was 0.53 compared to last year's 0.47. We're pleased with the progression we've made in the sales rate since the January to 0.61, and we're confident that the uplift is largely as a result of our own self improvement initiatives rather than a broader market up uplift. Martin will take you through the sales improvement components later on.

[Bill Floydd, CFO at Crest Nicholson]

On completions, we delivered seven thirty nine, of which 64 were at the joint venture sites. Open market volume was in line with last year and affordable growth was 21 units. Most notable is the reduction in bulk units. As we outlined at the Capital Markets Day, this is no longer an area of focus for us because of the discount level and commercial terms required by investors. Going forward, there are only a further 112 units contracted, and these will all be delivered by the end of FY twenty twenty six.

[Bill Floydd, CFO at Crest Nicholson]

Accordingly, this will be a headwind to our total volume until FY twenty twenty seven. The details of the exceptional items are as follows. On the combustible materials, we recovered £11,800,000 from parties, bringing our total recoveries to more than £30,000,000 We've appointed an internal litigator to bring more focus and purpose to this activity. We're carrying out a thorough qualification of all potential claims, and we're prioritizing our efforts to achieve the best overall economic outcome that we can. As a reminder, we do not recognize any recoveries until the settlement is virtually certain to be received.

[Bill Floydd, CFO at Crest Nicholson]

We continue to progress the building surveys and have completed the vast majority, with a few outstanding on track for completion by the July deadline. Our latest estimate of the total cost has increased by a modest £2,400,000 less than 1% of the overall estimated total cost of remediation. In the back of your packs, you'll find a page that has the high level key facts on the combustible survey progress and the latest financials. We've incurred £2,000,000 of restructuring costs, and I expect that to be around £5,000,000 for the full year. The net finance expense is the accounting for imputed interest on the combustibles provision.

[Bill Floydd, CFO at Crest Nicholson]

And overall exceptional items totaled 1,100,000 income compared to last year's first half charge of £25,100,000 On the balance sheet, we've made some early progress on the overall inventory balance with a reduction of close to £30,000,000 since the end of the year and nearly 75,000,000 compared with a year ago, with good progress on land, completed buildings and part exchange, offset by an increase in the WIP, reflecting some infrastructure on new sites and seasonality. We've paid down a significant proportion of the outstanding land creditor balance and anticipate a further £60,000,000 to be paid in the half. As a reminder, the group's committed debt facilities are an RCF of £250,000,000 which matures in October 27 and £85,000,000 of private placements, with the next repayment being £20,000,000 in August. On the cash flow, the key balances of note are the improvements in operating profits and the improvement realized from starting to get the inventory under better control. The outflow from other working capital is substantially as a result of paying down land creditors and utilization of the combustible materials provision, on which the spend in the half was £34,000,000 We've drawn down £70,000,000 on the RCF, and the other movements comprises the net inflow from joint venture funding, interest tax and dividends.

[Bill Floydd, CFO at Crest Nicholson]

Finally, a reminder of the guidance for the full year, which is unchanged, with volume expected to be between seventeen hundred and nineteen hundred units, outlets between forty and forty two and an open market sales rate of 0.5 to 0.6. We're not experiencing any meaningful build cost inflation and continue to reinforce operational disciplines to reduce supportive costs. You'll recall that we guided to 30% of EBIT being delivered in H1, and we remain comfortable with that split. Adjusted PBT is expected to be in the range of 28,000,000 to £38,000,000 Overall, whilst the net debt is better than we anticipated at this point in the year, we're maintaining the guidance for the full year as there are a good number of 10,000,000 to £20,000,000 swing items that can move the overall balance quite significantly. Overall, that's where we are. And I will now hand you back to Martin.

[Martyn Clark, CEO at Crest Nicholson]

Thank you, Bill. I'll start by providing some context on the market environment, that we're currently operating in. In previous presentations, I have spoken about the well publicized challenges that the industry has faced over the past few years. From a macroeconomic perspective, these challenges have largely been a product of the high inflation, high interest rate environment that has dampened consumer sentiment and affordability. From a regulatory perspective, challenges within the planning system have constrained our ability to bring sites through the pipeline to the point at which development can start.

[Martyn Clark, CEO at Crest Nicholson]

Based on our experience, although there are some positives to be taken from ongoing reductions in interest rates, with rates currently at their lowest level since q four twenty twenty two, consumer sentiment remains low. As the chart on the bottom left shows, consumer sentiment is gently improving, albeit from very depressed levels. This is important to note given the need for consumers to have confidence in their own financial returns, sorry, futures to be able to commit to significant new purchases such as a new home. I think it is fair to say that the government is trying in many ways, if not all the ways we'd ideally wish for, to support the housing industry and make it easier for people to buy homes. Though there remain challenges in the planning system, and it is unlikely that these are going to resolve themselves in the short term.

[Martyn Clark, CEO at Crest Nicholson]

Having said that, we are achieving good results despite this mixed picture. This gives me confidence that our strategic shift and ongoing transformation is positioning us well both for the market today and hopefully more favorable market of the future. So within that market context, a quick reminder of the four key strategic pillars presented at our Capital Markets Day just three months ago that underpin Project Elevate and show how we will transform Crest to capitalize upon the long term opportunities we see in The UK housing market. It starts with the product. We need to build exceptional homes that people want to live in and that reflect the mid premium Crest brand.

[Martyn Clark, CEO at Crest Nicholson]

Buying a home is We need to ensure that we look after the customer throughout that journey. To deliver both of these critical tasks while delivering sustainable returns for shareholders, we need to be better commercially and operationally. And finally, alongside that side of things, we have identified opportunities to optimize value in our land bank, which will improve our working capital position without jeopardizing our future growth plans. We've talked about Project Elevate, and I will now discuss the shape and objectives of this transformation project.

[Martyn Clark, CEO at Crest Nicholson]

I wanted to put the following two slides into the pack because I think it helps you all visualize the structure we are using to successfully execute this project. It is clear that the impact will be felt across the business and that we are leaving no stone unturned in the pursuit to ensure we maximize the potential. The plan is well defined, and everyone in Crest, through a clear communication strategy, will have absolute clarity on what they are doing and what their contribution will be. Everything is focused on the objective of making Crest the best operator it can be, focused on mid premium housing segment, which I think is the best path towards delivering sustainable shareholder returns. We have taken a comprehensive approach that covers every stage of the value chain from the land bank itself through the design and planning phase for the plots to make sure we have the right commercial and operational practices and culture in place to build exceptional homes.

[Martyn Clark, CEO at Crest Nicholson]

And then finally, of course, making sure the customer journey is as seamless and customer focused as it should be. Running through those four different stages of the value chain, we think hard about making sure the overheads and costs are appropriate. That doesn't mean simply doing everything as cheaply as possible. Are we being efficient with capital considering our size as a housebuilder? Are we able to meet or surpass the regulatory commitments we need to honor?

[Martyn Clark, CEO at Crest Nicholson]

And have we got the right systems to ensure long term consistent performance? This is a multiyear plan. And whilst there will be some early gains in our operational performance, other work streams will take longer to fully realize benefits, such as a new house type range being designed, planned, and then ultimately needing to be built. Importantly, we've put robust governance in place. We have 24 separate projects with each having a named sponsor responsible for delivery, and we are tracking progress closely through set of metrics and KPIs.

[Martyn Clark, CEO at Crest Nicholson]

There is obviously a lot to do, and so we are prioritizing our resources and efforts on particular areas that we believe will have the most immediate impact, whilst also ensuring that work starts in areas that have had that will have longer lead in times. For example, in sales and marketing, where we have already carried out a lot of work and have seen an improvement in our sales rates and achieved values. Alongside this, we are running a coordinated program of internal communications to ensure we build the momentum and cultural change needed to embed these initiatives right across the business. This is not just a set of ideas. It's a detailed, actionable program with enabling foundations, governance and accountability built in.

[Martyn Clark, CEO at Crest Nicholson]

We are confident this structure gives us the clarity and discipline to deliver on our objectives and position Chris Nicholson for sustainable growth and enhanced value creation over the medium term. I will now take you through some examples of progress across each of our four strategic pillars. Every time I've seen you, I've spent some time talking about the importance of build quality and customer service. I wanted to give an update on these two important areas, starting with build quality The top left bar shows on a monthly basis the number of reportable items found by one of our warranty warranty providers, the NHBC. You will see that in the past few months, the number of reportable items, RIs, has dropped substantially and now compares well with the overall market average.

[Martyn Clark, CEO at Crest Nicholson]

There are a number of drivers behind the improvement in performance. We've been embedding a right time culture across our sites, ensuring we deliver homes with fewer defects, leading to reduced costs and higher customer satisfaction. We now directly incentivize our build teams on quality metrics, which are clearly working. There's always more to do, but I think the past few months and these data points show that we are moving in the right direction. Providing excellent customer service is paramount to

[Martyn Clark, CEO at Crest Nicholson]

I'm very pleased to confirm we have regained the five star HBF customer service rating, and we remain firmly on track to maintain this in the new assessment year. The bottom left bar shows that we sorry, bar chart shows that we have the highest HBF customer rating in recent history. To lead the next phase of our customer service transformation, we've appointed a group customer service director who is already driving important changes across the business to drive not only greater customer satisfaction, but with a remit to reduce the significant costs we have been incurring. Aligned to that, I'm encouraged by the progress we have made in rolling out the specific items within the new Crest specification introduced to enhance customer satisfaction and which now reflect the Crest brand. This slide provides some color on the initiatives and progress that we are making regarding the customer experience we provide.

[Martyn Clark, CEO at Crest Nicholson]

All of these initiatives contributed to the five star HBF customer service rating and show what we need to do to maintain our five star rating going forward. The starting point was completing the extensive customer research program. I have some views and thoughts on what needs to be done, but it was important to make sure we were making the changes and improvements that would drive real results. The research has enabled us to enhance our systems and processes and will assist with the Crest Nicholson standard house type range that will be introduced in the future. Subsequently, we've upgraded the specifications of our house range to meet the expectations of mid premium.

[Martyn Clark, CEO at Crest Nicholson]

And we've enhanced the customer journey through redesigned sales suites, targeted staff training and the launch of Arteva, our new online portal that enables customers to browse choices and upgrades easily and efficiently. Some of you may remember the demonstration, at the start of our digital offering, when we visited Windsor earlier in the year. I think these enhancements will make a great, difference to our consumers. Picking up on the topic of sales, we have a couple of interesting charts on this slide. The chart shows the positive trend we are seeing regarding the net achieved reservation price versus our book value.

[Martyn Clark, CEO at Crest Nicholson]

The chart shows the recent positive trend in the half with our sales rate particularly compared to last year. On the previous slide, I talked about some of the initiatives and investments that contributed towards those improving standards. The other point I think worth flagging is the extensive training that we have provided for everyone, ensuring that they now both have the tools to sell houses and know how to use those tools properly and effectively. The other theme I'd like to touch upon with this slide is the progress we have made with regard to our operational and commercial efficiency. There is, of course, much more to do in this area.

[Martyn Clark, CEO at Crest Nicholson]

We have now merged the Midlands and Yorkshire divisions, which has contributed to the 6% year on year reduction in our overheads without in any way impacting our capabilities as a housebuilder. More generally, across the company, as a result of tighter operational focus, we are seeing a notable reduction in both completed site costs and NRV charges. Previously, we talked about the opportunity within our land bank. This is a key pillar in our strategy and a big opportunity for us. By way of reminder, we currently hold a long, high quality land bank with around seven years of short term land supply, which while valuable is not necessarily the most efficient use of capital for a company of our size.

[Martyn Clark, CEO at Crest Nicholson]

We have good plots that are either in the wrong part of the country, too far away from our divisional offices or that are too large for a housebuilder of our size. For these sites, we are selectively exploring options to maximize value, whether through disposal as a whole or in part and other strategies that unlock capital and improve returns. In the period, we completed on the sale of two parcels of land from sites with multiphases, reflecting our strategy going forward. The figure quoted on this slide includes a deferred payment of $2,200,000 payable once our servicing obligations are completed. We're encouraged by the initial opportunities here and we'll update you as appropriate going forward.

[Martyn Clark, CEO at Crest Nicholson]

On the other hand, our strategic land portfolio remains a real strength and a critical pipeline for future growth. With over 50% of our strategic land now allocated or in draft allocation status and with an embedded average discount of around 19% on these sites, we are positioned to deliver much higher gross margins when this land is developed. This balance between optimizing our short term land holdings and securing strong high margin strategic land opportunities will play a key role in driving our strategic priorities, improve capital efficiency and support long term value creation. Alongside our approach to optimizing the current land bank, there are opportunities to improve the processes through which we buy the land. I'd like to now to provide an update on the significant progress we've made in our fire remediation program, which remains a key operational and regulatory priority for the group.

[Martyn Clark, CEO at Crest Nicholson]

I have to say that I'm pleased with the progress in this area, which has been driven largely through the creation of a dedicated special projects team. We've made tremendous progress on our assessments of the two ninety three buildings in scope under the joint plan to accelerate. We have completed two seventy nine external assessments and two seventy covering both internal and external aspects. We remain firmly on track to meet the agreed deadline of July. In terms of the on ground delivery, remediation works are progressing in line with plan.

[Martyn Clark, CEO at Crest Nicholson]

In our FY twenty twenty four results, we announced that total fire remediation costs of $298,400,000 which covered all buildings under scope of the fire remediation program. This provision amount increased by $2,400,000 less than 1% of the total in the of the year following our ongoing reviews. Our provision, as we have said before, does not make any allowance for recoveries from parties. We have successfully recovered £11,800,000 in the first half, bringing the total recovered to more than £32,000,000 We will actively pursue all parties that are found to be at fault for remediation works being necessary. Overall, this reflects a centralized, disciplined and proactive approach to managing our remediation obligations, giving us confidence in both the cost position and the delivery trajectory of this critical program.

[Martyn Clark, CEO at Crest Nicholson]

As we wrap up today's presentation, I want to take a moment to reflect on the progress we've made since our Capital Markets Day in March. We've achieved a lot in a relatively short period. And again, I think this is a reflection of the support and open mindedness that my colleagues have shown in embracing a lot of change. I've always been open and honest about the scale of the challenge and that this transformation is going to take at least two to three years to bed in and fundamentally change the business. That said, the early signs from Project Elevate are promising.

[Martyn Clark, CEO at Crest Nicholson]

We've already seen meaningful improvements across sales, customer service and build quality. We're also seeing early benefits from tighter work in progress and cost optimization controls, which have resulted in a better than expected net debt position. Greater discipline is being applied across the business and the benefits of that are now beginning to emerge. Looking ahead, the early phases of the transformation plan are now being rolled out and embedded across the business, and we will continue to focus on driving operational performance improvements. Importantly, we believe that the stabilization we are starting to see in the market will provide additional support, enabling us to deliver growth as we move forward.

[Martyn Clark, CEO at Crest Nicholson]

We are reaffirming our FY 2025 guidance, and we remain confident in our ability to deliver against it. In summary, Crest Nicholson is on a clear and disciplined path. And whilst there is much more to do, we are confident we are building the right foundations to drive long term success. And with that, I'd like to hand over to the floor for questions. Get my voice back.

[Aynsley Lammin, Equity Analyst at Investec]

Michael, morning. Ainsley Lemmon from Investec. I think I've got three, please. Just maybe a bit more color on kind of recent trade in. Obviously, sales rate's up at point six.

[Aynsley Lammin, Equity Analyst at Investec]

What's the kind of pattern been over recent weeks? And any comment on are you seeing any house price inflation? What you're doing to sales incentives would be quite interesting. Secondly, just on recoveries, the 11,800,000.0. Is that something that's changed kind of I I think Barrow had some ruling.

[Aynsley Lammin, Equity Analyst at Investec]

Has it become just a bit easier to recover, or is it just a one off kind of project where that was more possible? And thirdly, just on planning, it seems to be quite positive on that beginning to free up. Just interested to hear a bit more color on what you're seeing. Does that mean that that half of the strategic land bank is quite confident to get through?

[Martyn Clark, CEO at Crest Nicholson]

Yeah. Thanks, Ase. I mean, with regard to recent trading, most of May was pretty in line, was was pretty consistent. I think it's been slightly quieter, but nothing nothing unusual for the last half term was was going on. House price inflation, I mean, our focus really is on ensuring that we are getting better at what we're doing and achieving more than our book value, and we are doing that.

[Martyn Clark, CEO at Crest Nicholson]

So it's difficult to know whether that's through our own efforts or general inflation, but I'm actually quite pleased with what with what we're doing. I think it's more of what we're doing rather than the market at the moment. The 11,800,000.0 recover recovery, I mean, I don't think that's it isn't. I don't think it's nothing to do with the Barrett case. That was only fairly recently.

[Martyn Clark, CEO at Crest Nicholson]

That will help us in the future. It will enable us to perhaps get after parties that have caused our issues with a bit more success. We'll just see how that pans out. I mean, we've got an awful lot of buildings, 293 buildings. Will we be able to get after everybody in every single site?

[Martyn Clark, CEO at Crest Nicholson]

No. And we won't have the balance sheet to be able to get after. Others don't exist. And we need to look at everyone that we've got and see where the appropriate time and investment go in the short term to get the early returns. But on that in this half, we're pleased with what we've done.

[Martyn Clark, CEO at Crest Nicholson]

And then planning yeah. I mean, the the media is account of the government. They want to try and help us get planning, and that we are certainly seeing that. We have a great strategic land bank. Nothing in planning happens overnight.

[Martyn Clark, CEO at Crest Nicholson]

It will take time to to start seeing delivery. But, certainly, with our strategic land bank, we're seeing an awful lot more progress than perhaps we have over the last few years. And we're confident that that land bank will, you know, start to materialize future. Okay. Thank you.

[Harry Goad, Equity Analyst at Berenberg]

Harry Goad, Berenberg. I've got two, please, both on the medium term guidance. So firstly, it had 20% gross margin. Can you talk about that in the context of land acquisitions that you're looking at at the moment in terms of where that's at? And then the one in terms of, I think, it's 2,300 units you talked about is that midterm target.

[Harry Goad, Equity Analyst at Berenberg]

Can you talk about the capacity within the business, what that means on a sort of units per business unit or region sort of field just to get a feel for what the scope is to grow and what costs might be needed? Thank you very So

[Bill Floydd, CFO at Crest Nicholson]

on the 20%, Harry, you know, in terms of what land we're bidding on at the moment, yeah, we're targeting that and above. It's a competitive market out there at the moment, so we'll probably see 10 to 15 competitors on on each individual process. So it is a balance if, you know, if you kind of hold out for 25% margin, you're not going to win many. So it so it is a balance of getting that for sure. Yeah.

[Bill Floydd, CFO at Crest Nicholson]

And and on the, you know, the ambition to be a 2,300 odd units, we need to get the overall number of outlets up, you know, kind of pushing towards 50 level. And if we can add a couple a year over the timeframe, then that should get us in roughly the right place.

[Will Jones, Equity Analyst - Construction & Building Materials at Redburn Atlantic]

Thanks. Will Jones from Redburn Atlantic. Just a few, if I can. The around the gross margin, I think about 14% in the half. Can you help us with how much of that was influenced by the legacy side issue and what your expectations are for the gross margin as you look into the half?

[Will Jones, Equity Analyst - Construction & Building Materials at Redburn Atlantic]

The is maybe just coming back to outlets. I think you talked about that 40,000,000 number remaining stable in the half. Just wondering what your expectation might be at the stage for any improvement on that into FY 'twenty six. And then lastly, if you can just maybe update us with your thoughts on the government announcements yesterday, particularly the affordable housing side. And I think you talked about trying to get up to 30% affordable over time.

[Will Jones, Equity Analyst - Construction & Building Materials at Redburn Atlantic]

Was that just gonna be through section one zero six, or are you hoping to do additional beyond the one zero six?

[Martyn Clark, CEO at Crest Nicholson]

Yes. So our strategy in March, we said we'll just try and focus on doing what we have to do through the section one zero sixes. I think the government announcement yesterday was less than or just over twenty four hours ago or less than twenty four hours ago. I think, you know, the the devil will be in the detail. We need to see what comes out of it.

[Martyn Clark, CEO at Crest Nicholson]

I think anything that will help RPs have the confidence to bid for section one zero six sites or even additionality will help us. There's certainly been some issues recently with offers that the housing industry has been receiving from our fees, section one zero six and beyond. So yeah. I mean, it's all all positive news. At least we're seeing some positive news.

[Martyn Clark, CEO at Crest Nicholson]

Our outlets, yeah, 14. I mean, we want more outlets. I want guidance for FY '26, perhaps, could be towards the end of the year. But, you know, we're working hard internally to to drive as many changes we can forward. And the gross margin profile?

[Bill Floydd, CFO at Crest Nicholson]

Yes. I'm not going to give you a number on gross margin, but look, we continue I'm pleased with what we did in the half. It's largely been around avoiding mistakes from the past. The other thing just to think about in there is the weighting of zero margin sites. And we're kind of unwinding that at the pace I expected to.

[Bill Floydd, CFO at Crest Nicholson]

So there's a bit left for next year. And then kind of after '26 is the zero margin stuff has kind of broadly disappeared. So those kind of underlying factors of, you know, stop making mistakes and get rid of the bad stuff that build all true.

[Will Jones, Equity Analyst - Construction & Building Materials at Redburn Atlantic]

Does the share of legacy sites dip a little bit half versus Thank

[Glynis Johnson, Analyst at Jefferies]

you. Glenys Johnson, Jefferies. Three very quick ones, actually. One, the relaxation in some of the mortgage stress testing, is it making a difference? Are you seeing anything on-site?

[Glynis Johnson, Analyst at Jefferies]

Number two, the 10 to 20,000,000 number of items that might influence the net debt. What are we talking about? Are we talking about land deals? Are we talking about recoveries coming in? Just any kind of color.

[Glynis Johnson, Analyst at Jefferies]

And then the anticipated land sales. We've seen a few others of your peers struggle with land sales to get them over the line. If there's any kind of color you can give us in terms of land sales, the appetite that you're seeing, you know, the kind of you know, maybe it's about the size of the sites, you know, whatever you can give us in terms of reassurance that those are progressing.

[Martyn Clark, CEO at Crest Nicholson]

Yeah. Mortgage mortgage stress testing. I mean, anything that helps the market is great. I think our size is difficult to gain any sort of meaningful statistics with any 40 outlets. But, yeah, I mean, it's it's all positive news.

[Martyn Clark, CEO at Crest Nicholson]

It will enable people to get, you know, to the lateral or get a large margin by a bigger property. It's all positive news. Okay.

[Bill Floydd, CFO at Crest Nicholson]

So a few examples of 10 to 20,000,000 swing items. Yeah. We could get more recoveries in the half. We the pace at which we receive BASF invoices on the fire remediation can swing it pretty significantly. If we had if we got to a quick resolution on the legal claim, that could be in or out.

[Bill Floydd, CFO at Crest Nicholson]

If we do more land acquisition that is not in the blank creditors at present. So it's those kinds of things, Glennis. In terms of land sales, we said at the Capital Markets Day, we're not in a hurry to do any of the bigger, more strategic positioning disposals. We are in market with a couple of them. We're not going to give any color on what's going on there for commercial reasons.

[Bill Floydd, CFO at Crest Nicholson]

We'll do it when we've got the right economic deal on the table. We're not going to be influenced by year end boundaries and accounting and all that kind of stuff. It's we get the right value for shareholders rather than try to ramp it into a financial year to get a better outcome. And then in terms of interest, yes, good interest on those. Similarly what we're doing smaller parcels, there's good interest on those as well.

[Martyn Clark, CEO at Crest Nicholson]

Thanks. Sam Cullen from Beyond. I've only got

[Sam Cullen, Equity Research Analyst at Peel Hunt]

one really. I think, Martin, you mentioned new house type ranges because what's wrong with the current range? And secondly, if the land bank correctly set up for the new range, or do you need to also refresh the land bank to to fit the new range?

[Martyn Clark, CEO at Crest Nicholson]

Our current house type portfolio has got some softening gaps in my opinion in it. I think we could plot our lay outs better, reflective of the mid premium market that we're trying to attract, and it needs a complete refresh. I see on sites the same house type with three different variations, for example. Things have just morphed in divisions. I need some standardization across the group. Standardization across the group. And I'm taking the opportunity to listen to the feedback that we've had from the research that we've had undertaken and make sure we've got a range that actually will get the value. And actually building the smallest compliant box that you can sometimes doesn't actually get best value. So we need to do a complete refresh of the whole thing. Our group design director started on Monday, and he's got his role fairly clearly defined in these targets to get it back to me by.

[Martyn Clark, CEO at Crest Nicholson]

So, yeah, this it's that's gonna be quite exciting. In terms of the land bank, I mean, this we've obviously got planning consent on a lot of the sites we're building. We can do some amendments to those house types to make put a certain size house type, and we're doing doing it three different ways. We can get it done one different way across the group. We can do some internal wall movements to make things better, some feedback from sales and from our customers.

[Martyn Clark, CEO at Crest Nicholson]

But ultimately, if we can have a range of house types that we can either do plus substitutions fairly easily, great. That'll filter through quickly. But then on the larger digit size that we've only got an outline consent at the moment, current house type range doesn't affect that. Yeah. Brand new house type range on there, the design. Morning.

[Chris Millington, Equity Analyst at Deutsche Numis]

Chris Mullins in Numis. I won't put it so close next time. Yeah. A few. Can I have you thought any more about where you wanna get the ASP to on this mid premium strategy?

[Chris Millington, Equity Analyst at Deutsche Numis]

You know, your $4.03 5, it stayed pretty flat in the year. I mean, it's gonna be quite an important component of the revenue as we look forward. Next one, nine month HPF score. Has that made similar progress to the eight week one? And then I think one for Bill.

[Chris Millington, Equity Analyst at Deutsche Numis]

Average debt in the half and line credits in the half. It's a big move in the half relative where you were. Do think that's gonna shift back up?

[Martyn Clark, CEO at Crest Nicholson]

Yep. Okay. I'll do the nine month HPF score. Yes. We have made significant gains on that, and it's even more important now because going forward from last October, the five star rating isn't based on just a single question from the eight week survey.

[Martyn Clark, CEO at Crest Nicholson]

It's based on a number of questions from both the eight week and the nine month as combined score. So using that combined score, we are still currently trading in the five star range. So yes. So the efforts that we're putting into the nine month score will certainly pay off. Average sale price, it's always a balance between how much I'd like to get a property and how many properties we can sell.

[Martyn Clark, CEO at Crest Nicholson]

But, yeah, I mean, I I don't really want to see it going less than $4.03 5. That doesn't mean I'm gonna be building 2,000 homes a year, that are gonna be £600,000 a year. We need to make sure that we're premium priced right for the mid premium sector in any individual town that we're building. Does that sound like? No. I don't think so.

[Bill Floydd, CFO at Crest Nicholson]

No. I I think the other thing on just the ASP, the thing that moves it more than anything is just the mix of what goes through in any individual year. If you have fewer apartments, more houses, it's just going to go up. And so I think that top level ASP number, kind of a bit, it is what it is. On the average net debt for the half, I don't have a number in front of me, but my guess is about a 100.

[Bill Floydd, CFO at Crest Nicholson]

And land credits in the half, then we've got a lot due to go out in the rest of the year. I would kind of expect it to. We'll probably top it. I expect us to do a few land deals in the half and so we'll top it up a little bit. Net net it should come down.

[Bill Floydd, CFO at Crest Nicholson]

It well, it's also a function of how many land deals we actually do. You know, we're in we're in you know, we've got a lot of land. We don't need to do we don't need to do loads of deals. So that once we are doing they're kind of infill relatively smaller sites kind of in the 75 to 125 type territory. So they're not and obviously, yes, we'll obviously pay for it as late as we possibly can. It's not going to be a huge move up.

[Martyn Clark, CEO at Crest Nicholson]

So the payment profile on larger sites, big difference to payment profile on the other side.

[Charlie Campbell, Managing Director, Equity Research at Stifel Financial Corp]

Morning. It's Charlie Campbell at Stifel. Two questions, please. one is just on overheads. Obviously, kind of some reductions from merging divisions.

[Charlie Campbell, Managing Director, Equity Research at Stifel Financial Corp]

Should we just sort of model that out as following sales from here? And question on Graybelt. Is that something that features in your strategic land plans going forward? Or is it just sort of too early and it takes too long and that it's not something yet?

[Martyn Clark, CEO at Crest Nicholson]

If I do the gray belt question. It's quite difficult to determine the actual definition of is is. We do have some sites that will fall into that category within our strategic land bank, so it will help us. But it's not the panacea to everything. Are we is our see

[Bill Floydd, CFO at Crest Nicholson]

impact think the overall reduction for the is similar to what it would for full year.

[Martyn Clark, CEO at Crest Nicholson]

Okay. Thank you. Marie, do we have any questions Okay. Thank you, Murray.

[Operator]

We currently have no questions. So I will hand back to Martin Clark for closing remarks.

[Martyn Clark, CEO at Crest Nicholson]

Okay. Well, thank you very much everybody for coming out to see us this morning. We hope this has provided you some color on what our objectives are. It is going to be a two or three year transformation. We are working really hard to get there, but thank you for your time.

[Operator]

This concludes today's call. Thank you all for joining. You may now disconnect your line.

Participants

Executives

• Martyn Clark, CEO
• Bill Floydd, CFO

Analysts

• Aynsley Lammin, Equity Analyst at Investec
• Harry Goad, Equity Analyst at Berenberg
• Will Jones, Equity Analyst - Construction & Building Materials at Redburn Atlantic
• Glynis Johnson, Analyst at Jefferies
• Sam Cullen, Equity Research Analyst at Peel Hunt
• Chris Millington, Equity Analyst at Deutsche Numis
• Charlie Campbell, Managing Director, Equity Research at Stifel Financial Corp