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

Financial highlights

  • Revenue at £677.9m (FY19: £1,086.4m), impacted by COVID-19 disruption in FY20
  • Adjusted profit before tax1 at £45.9m, (FY19: £121.1m), ahead of £35m-£45m guidance range
  • Exceptional charge net of tax of £48.1m (FY19: £14.9m), including £43.2m non-cash inventory impairment charge 
  • Loss after tax at £10.7m (FY19: £82.5m profit after tax)
  • Good trading performance since the spring lockdown and reservation levels in line with expectations during January 2021. Year to date sales per outlet week (SPOW) of 0.60
  • Forward sales as at 15 January 2021 of 2,435 units and £564.5m Gross Development Value (GDV) c.55% of FY21 covered (17 January 2020: 2,346 units and £503.5m GDV) 
  • FY20 SPOW of 0.59 (FY19: 0.76)
  • Average outlets at 63, up from 59 in FY19, in line with our strategic priority to grow outlets
  • Excellent progress strengthening balance sheet through better WIP management and control
    • Net cash2 at £142.2m (FY19: £37.2m), ahead of November trading statement guidance
    • Land creditors at £205.7m (£216.5m)
  • £2.5m Government Job Retention Scheme funding repaid in full on 14 December 2020
  • Reinstatement of dividend at two and a half times cover, effective from HY21
(1) Adjusted items represent the FY20 and FY19 statutory figures adjusted for exceptional items as disclosed in note 4 to the consolidated financial statements. These alternative (non statutory) performance measures have been disclosed as the Directors believe this assists in better understanding the performance of the Group.
(2) Net cash is defined as cash and cash equivalents less bank loans, senior loan notes and other loans. See note 23 to the consolidated financial statements for a reconciliation.

Sustainability targets

  • Ambitious new sustainability targets set to achieve by 2025, versus FY19 comparatives:
    • Reduce scope 1 and 2 carbon emissions intensity by 25%
    • Reduce waste intensity by 15%
    • Purchase 100% renewable electricity

Strategic highlights

Despite the impact of COVID-19 on trading performance during the year, the Group has made strong progress against all of its strategic priorities and is well placed heading into 2021:

  • Internal reorganisation completed, delivering annualised overhead savings in excess of £15m (c. 23%) compared to FY19. Strong, new leadership team now established and aligned behind strategy
  • >£30m of specification savings now embedded in our short-term land portfolio, strengthening supplier relationships and enhancing quality in a number of areas
  • Approximately £40m of gross margin improvements identified and being delivered through better design of existing and future schemes utilising our new house type range and benefitting from our plotting efficiency programme
  • Over 5,500 future units in our short-term land portfolio have now been replanned with the new house type range. We expect 80% of our houses will be delivered using this range in 2022
  • Awarded five-star rating for customer satisfaction in FY20 with scores continuing to improve 
  • 1,812 plots approved for purchase at an average gross margin of 28.7%
  • Growing multi channel business with strong pipeline of potential opportunities 

Key financial metrics

£m (unless otherwise stated) FY20 FY19 % Change 
     

Home completions (units)

2,247

2,912  (22.8)

Revenue

667.9 1,086.4 (37.6)
Adjusted gross profit3 107.7 201.9 (46.7)
Adjusted gross profit margin3 15.9% 18.6% (270bps)
Adjusted administrative expenses3 (50.3) (65.5) 23.2
Adjusted net impairment losses on financial assets3 (0.3)     (3.4)            91.2

Adjusted operating profit3

57.1 133.0 (57.1)
Adjusted operating profit margin %3 8.4% 12.2% (380bps)  
Adjusted net finance expense3 (10.7) (11.0)  2.7
Share of joint venture results  (0.5) (0.9) 44.4
Adjusted profit before tax3 45.9 121.1 (62.1)

Adjusted income tax3

(8.5) (23.7) 64.1
Adjusted profit after tax3 37.4 97.4 (61.6)  
Exceptional items net of income tax (48.1) (14.9) (222.8)  

Operating (loss) / profit (1.8) 114.6 (101.6)
(Loss) / profit before tax (13.5)  102.7 (113.1)  
(Loss) / profit after tax (10.7) 82.5 (113.0)
         
Adjusted basic earning per share (p)3 14.6 38.0 (61.6)  
Basic (loss) / earnings per share (p)  (4.2) 32.1 (113.1)  
Dividend per share (p)4  - 11.2    
(3) Adjusted items represent the FY20 and FY19 statutory figures adjusted for exceptional items as disclosed in note 4 to the consolidated financial statements. These alternative (non statutory) performance measures have been disclosed as the Directors believe this assists in better understanding the performance of the Group.
(4) FY19 interim dividend paid. FY19 final dividend of 21.8p per share cancelled due to the impact of COVID-19.

Current trading

We have entered the new year with a strong forward order book and enhanced balance sheet. The organisational improvements we made across the business in 2020 have created a more efficient and effective operating platform, now overseen by a highly experienced new management team.  We are confident that Crest Nicholson is well positioned to navigate the current uncertainty caused by COVID-19.  Despite the current lockdown restrictions, we are continuing to trade in line with our expectations and will provide further financial guidance when these restrictions ease and the economic outlook is clearer.

Outlook

Looking forward, through 2021 and 2022, the next phase of Crest Nicholson’s recovery will be improving operating margins to be in line with industry peers.  Gross profit margins in 2021 will continue to be impacted by some of our more complex legacy sites and we will also need to invest the necessary capital to complete these.  However, the Group still expects to deliver strong profit growth and cash flow generation.  This backdrop supports the reinstatement of the dividend and provides flexibility to invest for growth.

From FY22 we will begin to see the full effects of our updated strategy driving growth, as the new sites acquired at a higher hurdle rate, developed with our new standardised house type range from a significantly lower cost base, also start to contribute to stronger operating margins. Accordingly, the Board remain positive about the long-term prospects of Crest Nicholson.

Peter Truscott, Chief Executive, commented:

The impact of COVID-19 has clearly had a defining impact on this year’s financial performance. It has challenged all of us in ways we could not have predicted, and I would like to recognise at the outset, the incredible job the team at Crest Nicholson have done in keeping our operations running safely and securely during the pandemic.

We had to make some difficult decisions during this year but because we acted swiftly we have ensured the Group enters 2021 in strong shape and will remain resilient to whatever challenges this year brings. We have made strong progress on all elements of our strategy, delivered profit ahead of our revised guidance and strengthened the balance sheet as we promised.

Analyst and investor conference call and webcast

There will be an analyst and investor presentation via webcast, hosted by Peter Truscott, Chief Executive and Duncan Cooper, Group Finance Director, at 9.00 a.m. today. To join the presentation, go to the Crest Nicholson website, www.crestnicholson.com/investor-relations.

There is also a facility to join the presentation and Q&A session via a conference call. Participants should dial +44 203 936 2999 and use confirmation code 501172. A playback facility will be available shortly after the presentation has finished. For further information, please contact:

For further information, please contact:


Crest Nicholson

+44 (0) 7552 842720

Jenny Matthews, Head of Investor Relations

   

Tulchan Communications

+44 (0) 20 7353 4200

James Macey White

 

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