Crest Nicholson Holdings plc ('Crest Nicholson' or 'Group') today announces its Preliminary Results for the year ended 31 October 2021.
- Revenue at £786.6m (FY20: £677.9m), reflecting strategic progress and underlying strength of the housing market
- Strong sales momentum with sales per outlet week1 (SPOW) of 0.80 (FY20: 0.59) with average outlets at 59 (FY20: 63)
- Forward sales1 as at 14 January 2022 of 2,702 units and £719.0m Gross Development Value (GDV) (15 January 2021: 2,435 units and £564.5m GDV) with c.63% of FY22 revenue covered
- 2,407 (FY20: 2,247) home completions1, comprising open market completions (including bulk deals) of 1,924 (FY20: 1,741) and affordable completions of 483 (FY20: 506)
- Adjusted profit before tax2 at £107.2m (FY20: £45.9m) including £16.0m contribution from the sale of Longcross Film Studio.
- Adjusted operating margin2 at 14.6% (FY20: 8.4%)
- Exceptional inventory impairment provision credit of £8.0m (FY20: £43.2m exceptional charge)
- Net exceptional charge for combustible materials of £28.8m (FY20: £0.6m), with £42.6m (FY20: £14.8m) remaining provision
- Profit after tax increased to £70.9m (FY20: £10.7m loss after tax)
- Increased participation in the land market in the year with 4,332 plots approved for purchase at a forecast gross margin of 26.7% (after sales and marketing costs)
- Transformed balance sheet with resources to support future growth ambitions
- Net cash3 at £252.8m (FY20: £142.2m) and average net cash of £78.4m (FY20: £99.6m average net debt)
- Return on capital employed increased to 17.2% (FY20: 7.6%)
- Medium-term financial guidance reinstated to accompany growth strategy
- Proposed final dividend of 9.5 pence per share. Total dividend for the year of 13.6 pence per share, in line with dividend policy and reflecting confidence in outlook
(1) FY21 includes joint venture units at full unit count (FY20: Crests share of joint venture units), and FY21 is on an equivalent unit basis which allocates a proportion of the unit count for a deal to the land sale element where the deal contains a land sale (FY20: no equivalent unit allocation to land sale element). This approach reflects the Group’s actual production output and also removes the distortive impact on ASPs of land sales.
(2) Adjusted items represent the FY21 and FY20 statutory figures adjusted for exceptional items as disclosed in note 4 to the consolidated financial statements Adjusted performance metrics are disclosed on pages 72 to 73. These alternative (non-statutory) performance measures, which are not necessarily better than statutory measures, have been disclosed as the Directors believe this assists in better understanding the performance of the Group, which is how the Directors internally manage the business.
(3) Net cash is defined as cash and cash equivalents less bank loans, senior loan notes and other loans. See note 20 to the consolidated financial statements for a reconciliation.
The Group has delivered a successful turnaround of its financial and operational performance. It has an efficient operating platform, a well-resourced balance sheet and an experienced leadership team to execute its future growth plans:
- Successful roll out of new house types with over 6,800 units now plotted in the short-term land portfolio (FY20: 5,500). We expect 80% of our private open market houses will be delivered using this range in FY22
- Over 1,500 plots added to the short-term land portfolio in FY22 YTD
- Achieved another year of five-star customer satisfaction in HBF survey
- Crest Nicholson Partnerships and Strategic Land (CNPSL) established new relationships and delivered a strong pipeline of bulk deals, including for several low margin legacy sites
- Ambitious growth strategy outlined at Capital Markets Day on 20 October 2021:
- Plan to open divisions in East Anglia, Yorkshire and one other region by FY24
- New divisional leader for Yorkshire joined Group in January 2022
- Medium-term financial guidance reinstated to accompany growth strategy:
- Phase one: gross margin rate accretion and volume growth from existing divisions (FY22-FY24)
- Phase two: volume growth from the three new divisions (FY24-FY26)
- Expect FY22 gross margin rate to be similar or slightly ahead of FY21
|Medium term targets||FY24||FY26|
|Home completions (units)||In excess of 3,000||In excess of 4,200|
|Operating profit margins||18-20%|
|Return on capital employed||22-25%|
|Land creditors (% of net assets)||Less than 30%|
|Dividend policy (cover)||2.5x|
In FY20 the Group set new sustainability targets and has made strong progress against these in the year:
|Measure||Sustainability target by 2025||Achieved in FY21 v FY19 equivalent|
Carbon emission intensity reduction (scope 1 and 2)
Waste intensity reduction
|% Renewable electricity (absolute basis)||100%||62%|
In FY21 the Group also pledged to reduce its scope 3 emissions and joined the United Nations-backed Race to Zero, committing to net zero emissions by 2050 at the very latest. This will see the Group develop science-based targets, validated by the Science Based Targets initiative (SBTi), which will be announced in FY22. Finally, the Group is also committed to improving biodiversity on its developments in line with the requirements set out in the Environment Act 2021.
On 10 January 2022, the Secretary of State communicated the Government’s latest policy position with respect to building safety concerns arising from cladding and combustible materials. The Board is carefully considering the impact of this update and is representing its views in response through the Home Builders Federation (HBF), who have sought to establish a dialogue with the Government in this area. The Group recognises the distress caused to homeowners from living in a property that they rightfully expect is safe and has been built to a standard that is compliant with all the necessary building regulations.
The Board and Executive Leadership Team of Crest Nicholson take their responsibilities in this area very seriously. Following the Grenfell Tower tragedy, the Group has actively worked to identify buildings where it has an obligation as legal owner, to remedy defects or meet the requirements of newly published Government guidance. In addition, it has considered situations where it is no longer the owner of the building but there are design or workmanship defects because of the Group, its subcontractors, product suppliers or designers falling short of their obligations at the time of construction. In these instances, the Group is taking action to ensure these issues are remedied as quickly as possible.
In conducting this assessment, and in estimating the provisions made to date, the Group has not discriminated between buildings based on their height and has instead considered all buildings where a risk may exist. The Group is working with a wide range of stakeholders to implement any identified and agreed remediation works as swiftly as possible and will shortly be paying the cladding levy announced in the last Budget.
Key financial metrics
|£m (unless otherwise stated)||FY21||FY20||% Change|
Home completions (units)1
|Adjusted gross profit2||166.7||107.7||54.8|
|Adjusted gross profit margin2||21.2%||15.9%||530bps|
|Net impairment losses on financial assets2||(1.0)||(0.3)||233.3|
Adjusted operating profit2
|Adjusted operating profit margin2||14.6%||8.4%||620bps|
|Adjusted net finance expense2||(9.1)||(10.7)||(15.0)|
|Share of joint venture results||1.7||(0.5)||(440.0)|
|Adjusted profit before tax2||107.2||45.9||133.6|
Adjusted income tax2
|Adjusted profit after tax2||87.3||37.4||133.4|
|Exceptional items net of income tax||(16.4)||(48.1)||(65.9)|
|Gross profit margin||18.5%||9.4%||910bps|
|Net impairment losses on financial assets||(1.0)||(7.9)||(87.3)|
|Operating profit/(loss) margin||11.9%||(0.3)%||1,220bps|
|Profit/(loss) before tax||86.9||(13.5)||(743.7)|
|Profit/(loss) after tax||70.9||(10.7)||(762.6)|
|Adjusted basic earning per share (p)2||34.0||14.6||132.9|
|Basic earnings/(loss) per share (p)||27.6||(4.2)||(757.1)|
|Dividend per share (p)||13.6||-||-|
(1) FY21 includes joint venture units at full unit count (FY20: Crests share of joint venture units), and, FY21 is on an equivalent unit basis which allocates a proportion of the unit count for a deal to the land sale element where the deal contains a land sale (FY20: no equivalent unit allocation to land sale element). This approach reflects the Group’s actual production output and also removes the distortive impact on ASPs of land sales.
(2) Adjusted items represent the FY21 and FY20 statutory figures adjusted for exceptional items as disclosed in note 4 to the consolidated financial statements. Adjusted performance metrics are disclosed on page 72 to 73. These alternative (non- statutory) performance measures have been disclosed as the Directors believe this assists in better understanding the performance of the Group.
Peter Truscott, Chief Executive, commented:
‘It was a clear objective of the new leadership team to restore Crest Nicholson to being one of the UK’s leading housebuilders. That challenge was undoubtedly heightened by the arrival of the pandemic. However, we can say with confidence that we have delivered the turnaround that we wanted. Our operating platform is now efficient and scalable, our balance sheet is transformed and equips us with the resources to grow the Group’s footprint in the UK and we have assembled an experienced leadership team to drive the Group forward.
A strong improvement in financial performance has followed which also reflects the ongoing underlying strength of the market. We were delighted to increase profit expectations twice in the year and we have started 2022 with a strong forward order book and everyone in Crest Nicholson is excited about our plans for expansion. I would like to thank all colleagues for their dedication and hard work this year in delivering these results.
It is right that we remain aware of the broader macroeconomic uncertainty, but the fundamentals of our sector remain strong. I am confident that our strategy is the right one to navigate this environment and ensure we deliver maximum value for all of our stakeholders.’
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/investors/results-centre.
There is also a facility to join the presentation and Q&A session via a conference call. Participants should dial +44 203 936 3000 and use confirmation code 017802. A playback facility will be available shortly after the presentation has finished. For further information, please contact:
For further information, please contact:
+44 (0) 7552 842720
Jenny Matthews, Head of Investor Relations
+44 (0) 20 7353 4200
James Macey White/Giles Kernick/Martin Pengelley