Housebuilder Crest Nicholson back to profit and FTSE

LONDON Mon Jan 21, 2013 10:35am GMT

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LONDON (Reuters) - British housebuilder Crest Nicholson CRTNC.UL announced a return to pre-tax profit and the UK stock market on Monday, positioning itself for a sector recovery five years after being taken over during the country's housing crash.

The 50-year-old company posted annual pre-tax profit of 62.1 million pounds, compared to a 27 million-pound loss in 2011, and said it would sell new and existing shares on the London stock exchange to raise about 50 million pounds ($79 million) and pay down debt.

"Our announcement today is just a sign that the housing market recovery is starting to move forward. There's a lot of interest in the sector and a lot of interest from government in increasing housing volumes in this country," Chief Executive Stephen Stone told Reuters.

The company said it expected a minimum of 35 percent of its shares to be free float following the offer.

Crest Nicholson, one of Britain's biggest housebuilders, was hit hard by the slump in the UK housing market after years of easy credit inflated prices.

It and rivals like Taylor Wimpey (TW.L) and Barratt Developments (PSN.L) have since focused their building efforts in the south of England and London, where house prices stayed strong in comparison to the north of the country. Taylor Wimpey and Barrett said last week that they expect to post significant profit rises for the full year.

The sector has also been helped by government schemes to boost buyer demand and loosen mortgage lending. The Royal Institution of Chartered Surveyors showed British house prices held steady in December and are tipped to pick up in coming months.

Crest said on Monday revenue for the full year rose 27.9 percent to 408 million pounds.

The company has a short term land bank of which over 95 percent is in the south of England, with 16,959 plots on 72 sites and an estimated gross development value of 3.9 billion pounds.

Crest hopes to use cash raised from the listing to buy more land.

IPO

A source told Reuters in September that Crest was actively exploring a flotation on the London stock market and described a 500 million pound valuation at the lower end of the possible range.

"Being a listed company does give you greater flexibility and credibility," Stone said on Thursday.

Crest was taken private by Scottish entrepreneur Tom Hunter and mortgage lender HBOS in May 2007 and is now majority owned by U.S. distressed investment fund Varde Partners, after a series of deals last year.

The company said its offer to list would also incorporate a sale of existing shares by some institutional shareholders, including Varde Partners and Deutsche Bank AG (DBKGn.DE) worth between 200-250 million pounds, Group Finance Director, Patrick Bergin, said.

Stone said he hoped institutional investors such as Fidelity and Standard Life (SL.L), which were shareholders in Crest Nicholson before it was taken private, would participate in the initial public offering.

"All of our major institutions when we were listed did very well - we sold out just a few months before Northern Rock (collapsed)," he said. "We hope that the major institutions that were involved then might be interested in once again becoming part of our company."

The company expects the offer to complete in February and to become eligible for inclusion in the FTSE UK indices at the quarterly review at either March 2013 or June 2013.

($1 = 0.6304 British pounds)

(editing by Sophie Walker)

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