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FTSE 250 movers: Crest Nicholson tanks on build defects; Close Bros surges

16:04, 19th March 2024

FTSE 250 (MCX) 19,397.84 -0.46%
Crest Nicholson said on Tuesday that it has become aware of build defects on four sites that were completed prior to 2019 that could cost it up to £15m to fix.

In an update on trading for the period from 1 November 2023 to 15 March 2024, the housebuilder said remediation on the four sites will take place over the next three years.

"As a result, the board has decided to appoint third party consultants to provide greater assurance on the adequacy of current provisions around these and other sites completed prior to 2019," it said. "A further update will be provided at the group's interim results in June."

As far as trading is concerned, Crest said it has achieved reservations in line with expectations and delivered a year-to-date open market sales per outlet per week (SPOW) rate of 0.44, based on 46 outlets, with reduced activity before Christmas and a stronger performance from mid-January.

The SPOW rate for the last eight weeks to 15 March improved to 0.52, it said, while sale prices have been in line with expectations and cancellations remained at normalised levels.

Crest Nicholson said build activity in the sector continued to operate at a lower level, which is now resulting in lower labour costs in some areas. Overall build cost inflation has largely stabilised and at a level lower than prior year.

The housebuilder said the planning system continues to be "challenging". "Our strong land portfolio with several quality sites acquired last year places us in a favourable position to mitigate planning delays and support future outlet growth," it said.

It added that construction at the Farnham development and other legacy sites which are still being completed is progressing "largely as planned".

"The group continues to focus on optimising value and expects FY24 completions to be in the range of 1,800 to 2,000 homes, with completions weighted approximately 35/65% in favour of the second half of the year, reflecting the opening order book and the low level of reservations in the first two months of the financial year," it said.

"Sales prices are expected to remain stable in FY24."

Merchant banking group Close Brothers saw shares surge on Tuesday after it announced a raft of measures - including the suspension of dividends - to strengthen its capital position as it prepares for the conclusion of a regulatory probe into motor finance.

The Financial Conduct Authority's ongoing investigation has not yet financially impacted the company, and so no provisions were recognised in the first six months of its financial year, the company confirmed.

The probe centres around so-called discretionary commission arrangements or DCAs, through which lenders allowed motor dealers to use their discretion to land on interest rates within a certain range, leading to claims that consumers had been over-charged for car loans between 2007 and 2021.

"Significant uncertainty" still exits, Close Brothers said, and the "timing, scope and quantum of any potential financial impact on the group cannot be reliably estimated at present".

Along with the temporary suspension of its dividend for 2024, first announced in February, the company has taken other actions - from retaining earnings and cost management initiatives to significant risk transfer of assets and selective loan book growth to optimise risk weighted assets - in order to beef up its CET1 capital ratio by up to £400m by the end of 2025.

"The board is confident that these decisive actions will position the group well to withstand a range of scenarios and potential outcomes," the company said.

In other news, Close Brothers announced a "resilient" operating performance in the first half ended 31 January, with income down 1% at £470.8m but pre-tax operating profits up 702% at £93.8m.

The loan book increased by 4% to £9.9bn, while total client assets were up 7% at £18.5bn.

Essential components manufacturer Essentra said it had delivered a "resilient" performance in 2023, with the group progressing towards its medium-term targets.

Essentra said adjusted operating profits were up 85.3% at £43.2m, while adjusted operating margins rose 630 basis points to 13.7% and adjusted basic earnings per share surged from 1.9p to 10.6p. However, revenues dropped from £33.7m to £316.3m - a 4.4% year-on-year decline at constant currency and a 6.4% contraction at actual FX rates.

The FTSE 250-listed company noted that its 2024 performance to date was in line with expectations, with the group remaining focussed on "enhancing its hassle-free customer proposition", delivering strong profit margins and cash conversion, and investing in growth initiatives, whilst delivering on its sustainability goals.

"The business is well positioned for when volume growth returns to normalised levels. Management anticipates 2024 performance will be weighted towards a recovery in the second half," said Essentra. "The group remains confident of making further progress towards its medium-term targets in 2024."

Essentra also revealed that chief financial officer Jack Clarke will retire from the group. He will stay with the company until a successor can be put in place in order to ensure a smooth transfer of responsibilities. Essentra expects him to leave no later than 31 March 2025.

 

Market Movers

FTSE 250 - Risers

PureTech Health (PRTC) 222.00p 8.82%
Close Brothers Group (CBG) 359.00p 7.42%
W.A.G Payment Solutions (WPS) 73.80p 2.50%
Bytes Technology Group (BYIT) 537.50p 2.48%
TP Icap Group (TCAP) 222.00p 2.30%
Abrdn Private Equity Opportunities Trust (APEO) 544.00p 1.87%
Wood Group (John) (WG.) 150.20p 1.83%
FirstGroup (FGP) 178.40p 1.65%
Target Healthcare Reit Ltd (THRL) 80.60p 1.64%
Wizz Air Holdings (WIZZ) 2,106.00p 1.59%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 198.60p -11.34%
Essentra (ESNT) 165.40p -4.72%
Octopus Renewables Infrastructure Trust (ORIT) 75.00p -4.09%
Ferrexpo (FXPO) 47.50p -4.00%
Diversified Energy Company (DEC) 892.50p -3.36%
Watches of Switzerland Group (WOSG) 366.00p -3.17%
Carnival (CCL) 1,132.50p -2.66%
Bellway (BWY) 2,662.00p -2.42%
Ibstock (IBST) 145.50p -2.41%
Foresight Solar Fund Limited (FSFL) 87.20p -2.24%

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