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Crest Nicholson Holdings plc

UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2021

 

STRONG HY21 TRADING PERFORMANCE

STRATEGY ON TRACK TO ACCELERATE GROWTH

FY21 EARNINGS GUIDANCE UPGRADED

 

Crest Nicholson Holdings plc (‘Crest Nicholson’, the ‘Company’ or the ‘Group’) today announces its unaudited interim results for the six months ended 30 April 2021:

Financial highlights

  • Revenue in the period increased to £324.5m (HY20: £240.0m), with home completions increasing to 1,0171 (HY20: 775)
  • Strong HY21 trading performance with sales per outlet week (SPOW) rate at 0.69 (HY20: 0.46)
  • Forward sales of 2,771 units and Gross Development Value (GDV) of £691.8m as at 18 June 2021 (19 June 2020: 2,715 units and £575.1m GDV):
    • Robust forward order book with approximately 93% of FY21 revenue covered
  • Adjusted profit before tax2 (APBT) for HY21 of £36.1m (HY20: £4.5m)
  • Profit before tax for HY21 of £36.3m (HY20: £51.2m loss before tax)
  • Exceptional inventory impairment provision release of £7.6m (HY20: £43.2m exceptional charge), reflecting confidence in market conditions
  • Net exceptional charge for combustible materials provision of £7.9m (HY20: £nil) with HY21 provision now at £23.2m (HY20: £12.5m)
  • Transformational progress in strengthening the balance sheet:
    • Net cash3 at £130.4m (HY20: net debt £93.3m) – operated with net cash position throughout HY21. FY21 closing net cash expected to be around £170.0m
    • Land creditors at £178.5m (HY20: £223.9m)
  • Interim dividend declared of 4.1 pence per share, in line with dividend policy and reflecting confidence in outlook
  • FY21 APBT now expected to be at least £100.0m, including the Longcross Film Studio profit contribution

1 HY21 includes joint venture units at full unit count (HY20: Group’s share of joint venture units). HY21 is also 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 (HY20: no equivalent unit allocation to land sale element). This approach reflects the Group’s actual production output and also removes the distortive impact on average selling prices (ASP) of land sales.

2 Adjusted items represent the HY21 and HY20 statutory figures adjusted for exceptional items as disclosed in note 5 to the condensed consolidated financial statements. Adjusted performance metrics are as disclosed in note 20. These alternative (non-statutory) performance measures have been disclosed as the Directors believe this assists in better understanding the performance of the Group. 3 Net cash is defined as cash and cash equivalents less bank loans, senior loan notes and other loans. See note 16 to the condensed consolidated financial statements for a reconciliation.

 

Strategic highlights

The Group continued to make good progress against all its strategic priorities in the half:

  • Retained Home Builders Federation (HBF) five-star rating for customer satisfaction for a further year 
  • Investment in land for growth with 2,682 plots approved for purchase at an average gross margin of 26.5%, after sales and marketing costs
  • New house type range rollout on track, with over 6,700 future units in our short-term land portfolio now replanned with the new range:
    • 425 new house type completions expected in FY21
    • 80% of our private open market houses will be delivered using this range in 2022
  • Several PRS deals exchanged or completed in HY21:
    • Growing PRS interest in single family homes
  • New initiatives implemented to support delivery of sustainability targets:
    • Enhanced suite of reporting to monitor site processes and activities
    • Biodiesel trial underway

Further, the sale in May 2021 of 50% equitable interest in Longcross Film Studio is expected to deliver £45.0m cash consideration in the second half of FY21 and the profit contribution is expected to be in excess of £10.0m.

 

Key financial metrics

£m (unless otherwise stated)

 

HY21

HY20

% Change

Home completions1

 

1,017

775

31.2

         

Revenue

 

324.5

240.0

35.2

Adjusted gross profit2

 

63.3

35.9

76.3

Adjusted gross profit margin2

 

19.5%

15.0%

450bps

Adjusted administrative expenses2

 

(23.1)

(24.8)

(6.9)

Net impairment losses on financial assets

 

(0.2)

-

 

Adjusted operating profit2

 

40.0

11.1

260.4

Adjusted operating profit margin2

 

12.3%

4.6%

770bps

Adjusted net finance expense2

 

(4.8)

(5.5)

(12.7)

Share of joint venture results

 

0.9

(1.1)

(181.8)

Adjusted profit before tax2

 

36.1

4.5

702.2

Adjusted income tax2

 

(7.3)

(0.9)

711.1

Adjusted profit after tax2

 

28.8

3.6

700.0

Exceptional items net of income tax

 

0.2

(44.1)

(100.5)

         

Gross profit/(loss)

 

63.0

(7.3)

(963.0)

Gross profit/(loss) margin

 

19.4%

(3.0)%

2240bps

Operating profit/(loss)

 

39.7

(44.0)

(190.2)

Operating profit/(loss) margin

 

12.2%

(18.3)%

3050bps

Profit/(loss) before tax

 

36.3

(51.2)

(170.9)

Profit/(loss) after tax

 

29.0

(40.5)

(171.6)

         

Adjusted basic earnings per share (p)2

 

11.2

1.4

700.0

Basic earnings/(loss) per share (p)

 

11.2

(15.8)

(170.9)

Dividend per share (p)

 

4.1

-

 

1 HY21 includes joint venture units at full unit count (HY20: Group’s share of joint venture units). HY21 is also 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 (HY20: 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 HY21 and HY20 statutory figures adjusted for exceptional items as disclosed in note 5 to the condensed consolidated financial statements. Adjusted performance metrics are as disclosed in note 20. These alternative (non-statutory) performance measures have been disclosed as the Directors believe this assists in better understanding the performance of the Group.

 

Current trading and outlook

Our trading performance in the first half has been strong, reflected in our HY21 SPOW rate of 0.69 and our forward order book being approximately 93% covered as at 18 June 2021. Based on demand for homes which will complete after the 30 September 2021 stamp duty deadline, we are confident that the housing market will remain robust, and this transition can be managed smoothly. We are also continuing to make good progress in all five of our strategic priorities and are increasingly confident about our future growth prospects.

Given our strong trading performance and confidence in outlook, including the Longcross Film Studio contribution, we now expect FY21 APBT to be at least £100.0m.

The Group intends to hold a Capital Markets Day in October 2021 to outline its future growth plans and long-term financial targets.

 

Peter Truscott, Chief Executive, said:

“I am very pleased with the strong trading performance the Group has delivered in the first half. This has been achieved against the backdrop of the ongoing pandemic and I would like to thank all Crest Nicholson employees and our partners for their dedication and commitment during this time.

We are making good progress in all five of our strategic priorities. Our balance sheet has been transformed and positions us strongly to grow in the future. Having completed the first part of our turnaround strategy, and implemented our operational efficiency programme, our focus now moves to rebuilding operating margins and delivering sustainable growth. We are evaluating options to enter new geographical markets and look forward to outlining these future growth plans and our long-term financial targets later this year.”

 

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, please use the following link:

https://www.investis-live.com/crest-nicholson/60af6ae98b32171000bc8d75/fghj

There is also a facility to join the presentation and Q&A session via a conference call. Participants should dial +44 (0) 20 3936 2999 and use confirmation code 408563. A playback facility will be available shortly after the presentation has finished. For further information, please contact:

Crest Nicholson

Jenny Matthews, Head of Investor Relations                                    +44 (0) 7557 842720

Tulchan Communications                                                  

James Macey White / Giles Kernick                                                  +44 (0) 20 7353 4200

 

The person responsible for arranging the release of this announcement on behalf of the Company is Kevin Maguire, General Counsel and Company Secretary.

 

Cautionary statement regarding 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.

 

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