Crest Nicholson hikes dividend by 40% as annual profit surges on growing demand

Crest Nicholson has hiked its dividend by 40% on the back of a sharp increase in pre-tax profits, while annual revenue grew by a quarter, despite a slight wobble following Britain's vote in favour of leaving the European Union.

In the year to 31 October 2016, the residential developer reported a 24% year-on-year increase in revenue to £997m ($1.24bn, €1.16bn) as the volumes of houses sold and their average selling price rose by 5% and 18% respectively.

The company said the higher selling prices reflected the higher-priced locations available in its portfolio. It has forecast that a sustained increase in unit volumes would be the main driver behind future revenue growth.

Crest Nicholson added that most locations achieved "elements of pricing growth" in the financial year, although prices of prime properties in Central London have declined due to a combination of weaker demand and the introduction of the stamp duty.

Meanwhile, the FTSE 250-listed group lifted its total dividend by 40% year-on-year to 27.6p on the back of a 27% increase in pre-tax profit to £195m.

Looking ahead, the company added that forward sales halfway through January 2017 were 4% higher than a year ago at £533.5m, saying that it was on track to hit its target of £1.4bn in sales and the building of 4,000 homes a year by 2019.

However, it warned that the weaker pound would have an impact on the cost of raw imported materials.

Data released earlier this month by Markit/CIPS UK showed that Britain's construction sector fared better than expected in December 2016, expanding at the fastest pace in nine months as new orders grew at the quickest rate in almost a year, but input costs registered the steepest increase on record since April 2011.

Crest Nicholson said the outlook for the housing market remained promising, as both reservations and consumer confidence have stabilised following the "temporary" impact of the Brexit vote.

However, the group admitted that long-term implications of the vote were "still unknown" and that uncertainty surrounding EU workers was a potential risk to the market, as EU workers in the the UK's construction industry have been "essential in delivering much-needed homes".