Crest Nicholson LON: CRST said it made progress on its transformation program in the first half of fiscal 2026, but management pointed to a weaker sales environment, continued pressure in the land market and a focus on liquidity as the U.K. housebuilder works through covenant discussions with its lenders.
Martyn, who led the presentation, said Project Elevate, the company’s program to reposition the business toward the “mid-premium” housing segment, remains “firmly on track.” He cited progress in product design, customer proposition, customer experience and operational improvements, while also noting that sales rates have softened since April to around 0.5.
“While the near-term trading environment continues to be challenging, we are confident in the actions we have taken and are taking,” Martyn said. “Crest Nicholson is controlling the factors within its control and building a stronger, more resilient, and better positioned business for the future.”
First-half results show operating loss
Bill, who reviewed the financials, described the first-half outcome as “clearly a disappointing” one. Crest Nicholson reported first-half revenue of GBP 197.6 million, including GBP 184.9 million from housing and GBP 12.7 million from land.
Adjusted gross profit fell by GBP 21.5 million, with GBP 13 million attributed to lower housing volumes and mix and GBP 3.5 million to lower profit on land. Bill said the company also took higher net realizable value provisions related to reducing sales prices on unsold plots at legacy apartment schemes and adopted a more cautious view on cost inflation at some completed sites.
The company reported an adjusted operating loss of GBP 11.9 million for the half. Adjusted net finance expenses were GBP 6.3 million, while exceptional items before tax totaled GBP 17.9 million. Basic loss per share was GBP 0.051.
Given the first-half loss and the outlook for the year, Bill said the board will not propose a dividend for fiscal 2026.
Sales rates soften after stronger start to spring
Crest Nicholson’s average outlets were 41 in the first half, in line with expectations. The open-market sales rate for the half was 0.48, reflecting a weak consumer environment in November and December. Sales improved to 0.64 from mid-January through the end of March before slowing modestly in April. Since then, Bill said sales have been running at about 0.5.
On a regional basis, Bill said the Eastern and Southwest divisions were seeing good activity and sales prices, while the Midlands was more inconsistent. Trading was slowest in the south. The company said it was not seeing a meaningful change in cancellation rates.
First-half completions totaled 584, including 76 at joint venture sites. Open-market units declined 5% to 414, bulk units fell to 63 as the company shifts away from that channel, and affordable deliveries were 107. For the full year, Crest Nicholson expects 1,400 to 1,500 completions, with open-market units of around 970 to 1,000. Bill said the variation in the completion range depends largely on the number of bulk transactions on completed apartment schemes.
The company expects EBIT for fiscal 2026 to be in the lower half of its previously guided GBP 5 million to GBP 15 million range. It is not providing fiscal 2027 guidance because of broader macroeconomic uncertainty.
Lender talks continue as cash management remains central
Crest Nicholson said discussions with its lending group are ongoing and “well progressed.” The company has been operating under a temporary waiver of its interest cover covenant and has agreed further temporary covenant waivers through the end of September to allow time to document and complete an agreement.
Bill said he could not provide further details while discussions continue, but expects the process to be concluded by Sept. 30.
Management emphasized liquidity and cash flow management, with land sales and work-in-progress controls identified as key areas. Bill said the land disposal program is taking longer in the current macroeconomic environment, but the company completed one material land disposal in the first half and expects two or three further completions during the remainder of the year.
The company expects total land sale revenue of about GBP 40 million for the year, in line with April guidance. From a cash flow perspective, Crest Nicholson has received GBP 10 million to date, expects GBP 50 million from deferred receipts on prior-year land disposals and anticipates up to GBP 20 million from new land sales, for total cash receipts of GBP 70 million to GBP 80 million.
On inventory, Bill said the company has slowed build activity across the portfolio to align with lower expected sales rates and expects to reduce work in progress by a further GBP 20 million to GBP 30 million by year-end.
Fire remediation and exceptional items
The company said its fire remediation program continues to progress in line with plans. Bill said all surveys are now complete and external wall work has been completed on 60 buildings. The estimate of remaining costs increased by around 2%, which management described as broadly stable.
Crest Nicholson did not record recoveries in the first half, but Bill said it has recovered GBP 3.8 million so far in the second half, taking total recoveries to GBP 35 million. He noted that the company does not include assumed recoveries in its provision and only recognizes them when cash is received.
Exceptional items included a net GBP 3.6 million combustible materials charge, GBP 5.1 million of completed site costs tied to legacy customer warranty matters, restructuring costs mainly related to redundancies and a divisional office closure, and GBP 3.6 million of net finance expense related to imputed interest on the combustible materials charge.
Project Elevate targets product, customer experience and costs
Martyn said Crest Nicholson has completed the design of its new house type range, which is intended to better match its target customer and mid-premium positioning. The homes are expected to begin launching on selected sites during fiscal 2027, with planning submissions already progressing. Construction has started on the first development using the new “Timeless” range in Heybridge, Essex.
He said the new range should improve site efficiency, provide more varied street scenes and reflect future standards, while also delivering higher incremental margins than the company’s current product.
Customer service remains a central part of Project Elevate. Crest Nicholson maintained its five-star HBF customer satisfaction rating. Martyn said warranty issues have fallen 30% over the last four months, and the cost to remediate customer service issues has declined 30% over a 12-month period. He also pointed to digital investments, including Digisuite and HubSpot, which he said are helping improve customer insights and engagement.
Build quality metrics also improved, according to management. Martyn said the NHBC reportable item metric fell to 0.23, a 57% improvement over two and a half years, while the Premier Guarantee site inspection rating improved to 4.56 from 4.15 at the end of fiscal 2023.
Looking ahead, management said it expects no material improvement in either the housing market or the land market for the balance of the financial year. However, Martyn said the long-term fundamentals remain supportive, citing underlying housing need, employment levels and the availability of mortgage finance.
About Crest Nicholson LON: CRST
Crest Nicholson Holdings plc 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.
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