Crest Nicholson shares slump as lender talks drag on
Crest Nicholson shares dropped after the housebuilder posted a £35m loss and told investors it is still locked in talks with its lenders.
The London-listed firm had delayed the publication of its results in the hopes of seeking emergency permission from its creditors to loosen the terms of its debt, but said on Thursday that it has still not reached an agreement.
The housebuilder had sought to cushion the blow of lower profits caused by the high interest rates, rising costs and deteriorating consumer confidence caused by the Iran war.
But the firm told investors on Thursday that it had so far failed to secure new terms, adding that it remains locked in “constructive” talks.
“These discussions are well-progressed but remain ongoing and we have agreed further temporary waivers to allow us time to document and complete a covenant amendment,” it said.
Shares drop 10 per cent
The group said it now has until the end of September to agree new terms with its lenders.
The housebuilder fell to a £35m pre-tax loss in the six months to the end of April, compared to a £9m profit the year before, as its gross margin slimmed from 14 to seven per cent.
The firm’s shares dropped by nearly 10 per cent on Thursday morning, to 66p. The stock has shed more than half of its value so far this year.
Crest Nicholson said it is focussing on generating cash by cutting back land purchases, slowing the starts of some developments and putting “non-core” land up for sale.
The company said it expects to complete between 1,400 and 1,500 homes this year, down from 1,691 last year.
The firm guided towards the bottom end of its earnings forecast, which is pitched between £5m and £15m.
Burnham urged to boost housebuilding
Crest Nicholson hit out at industry conditions, saying that the “challenging” period of pre-Budget tax speculation at the end of last year was followed by weakening consumer confidence at the start of this year as conflict began in the Middle East.
“Since April, pricing has generally remained resilient, but customer enquiries, visitor levels and land market sentiment have softened,” it said.
But the housebuilder said that the “fundamentals of the UK housing market remain supportive,” pointing towards an “undersupply” of homes and government planning reforms.
A number of leading housebuilders have called on incoming Prime Minister Andy Burnham to go further to get spades in the ground across the country.
FTSE 100 Barratt Redrow has called on the former mayor of Greater Manchester to abolish stamp duty for first-time buyers.
Berkeley, which is listed on the FTSE 250, urged Burnham to offer “strong political leadership” on housebuilding, just months after it halted all landbuying to insulate itself from rising costs.