Crest Nicholson Holdings plc Annual Results Announcement for the year ended 31st October 2019

Crest Nicholson Holdings plc (Crest Nicholson) today announces its Preliminary Results for the year ended 31 October 2019 and an updated strategy.

Highlights¹

• Sales, including the Group’s share from joint ventures, at £1,094.9m (2018: £1,122.0m) 
• Home completions down 4% at 2,912 (2018: 3,048) units
• Net cash at year end increase to £37.2m (2018: £14.1m)
• Adjusted operating profit margin² at 12.2% (2018: 16.2%)
• Adjusted profit before tax² down to £121.1m (2018: £168.7m) in line with previous guidance
• Exceptional charge in respect of fire-risk of £18.4m
• Statutory profit before tax of £102.7m (2018: £168.7m)
• Forward sales at mid-January of £503.5m (2018: £648.3m)
• Significant improvements in customer service
• Total full year dividend maintained at 33.0p per share (2018: 33.0p per share)

Updated Strategy

• Five strategic priorities
• Building on our reputation and strengths in placemaking and build quality
• Realising the value from our flexible and long-term land portfolio
• A greater focus on operational efficiency
• Simplified ways of working and organisational restructure
• Introduction of new enhanced house type range and a consistent group wide specification review
• Reduction in sales-related costs and overheads already underway
• An ambition to be consistently rated Five-Star for customer service
• Growing our partnerships business and multi-channel, multi-tenure capability

• Four foundations
• Safety, Health and Environment – our number one priority
• Sustainability and Social Value – our responsibilities to our stakeholders
• People – we will continue to invest in our people
• Financial Targets – we will rebuild trust in our performance

_{(1) Financial comparatives for 2018 have been restated to reflect the adoption IFRS15 with effect from 1 November 2018
(2) 2019 figures, adjusted for the £18.4m exceptional item relating to the combustible materials charge, net of £3.5m tax credit where appropriate}

New forward financial guidance

As part of our updated strategy we have set ourselves new three-year financial targets to FY2022

• Home completions to increase to 3,500 units (2019: 2,912)
• Outlets to grow to a minimum of 70 (2019: 59)
• Adjusted operating profit margin to improve by a minimum of 250bps (from 2019: 12.2%)
• Administrative expenses to be 5% of sales (2019: 6.0%)
• Return on capital employed to increase to a minimum of 20% (2019: 15.9%)
• Strong cash generation and disciplined capital allocation
• Dividend per share of 33.0p in FY2020, 33.0p + RPI from FY2021 (2019: 33.0p per share)
• Anticipated sales contribution – Private: 60%, Affordable: 20-25%, Bulk: 15-20%

Chief Executive, Peter Truscott commented:

“Today I am pleased to announce the details of our updated strategy and new financial targets. We have already taken decisive action in reducing our sales-related costs and overheads, launched an enhanced house type range including a full specification review, and have made organisational changes to realise our ambitions in our partnerships division. 

We have assembled an experienced new leadership team with the necessary skills and capabilities to take Crest Nicholson forward. In 2020 we will continue to work quickly in implementing further changes to improve performance and to create value for shareholders. I look forward to updating you on progress in future communications. Crest Nicholson is a resilient business with a bright future. I am confident that our updated strategy will restore Crest Nicholson to being one of the UK’s leading house builders.”

Current trading and outlook

We believe the decisive political outcome should provide support for the sector in the near term. While it is too early to form a view on the impact for FY2020 trading we are seeing some encouraging signs. Footfall and visitor numbers on our developments have increased and traffic on our website is up. We remain confident in our ability to deliver on our previous guidance and re-iterate our expectations for FY2020 Adjusted profit before tax at £110m-£120m.

Key financials

Corporate Advisers

The Company confirms that with immediate effect its joint corporate brokers and financial advisers are now Barclays Bank PLC and HSBC Bank plc.

Financial Calendar

A full calendar of financial announcements for the forthcoming period is available via the Company’s Investor Relations website at www.crestnicholson.com/investor-relations/financial-calendar

Analyst webcast

There will be an analysts and investor meeting at 8.30am today at 1 Moorgate Place, London, EC2R 6EA. The presentation will be broadcast live from 8:30am today. An audio playback facility will be available shortly after the presentation has finished via link:
www.investis-live.com/crest-nicholson/5df79ae452202e0d003e4d1d/afbl

A conference call facility is available:
Dial in: 020 3936 2999
Access code: 870942

An audio playback facility will be available at www.crestnicholson.com/investor-relations/reports-results-and-presentations following the presentation

For further information, please contact:

Forward-looking statements
This release may include statements that are, or may be deemed to be, "forward-looking statements". These forward-looking statements can be identified by the use of forward-looking terminology, including the terms "believes", "estimates", "plans", "projects", "anticipates", "expects", "intends", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology, or by discussions of strategy, plans, objectives, goals, future events or intentions. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this release and include, but are not limited to, statements regarding the Group's intentions, beliefs or current expectations concerning, among other things, the Group's results of operations, financial position, liquidity, prospects, growth, strategies and expectations of the industry. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the development of the markets and the industry in which the Group operates may differ materially from those described in, or suggested by, any forward-looking statements contained in this release. In addition, even if the development of the markets and the industry in which the Group operates are consistent with the forward-looking statements contained in this release, those developments may not be indicative of developments in subsequent periods. A number of factors could cause developments to differ materially from those expressed or implied by the forward-looking statements including, without limitation, general economic and business conditions, industry trends, competition, commodity prices, changes in law or regulation, changes in its business strategy, political and economic uncertainty. Save as required by the Listing and Disclosure Guidance and Transparency Rules, the Company is under no obligation to update the information contained in this release. Past performance cannot be relied on as a guide to future performance