TIDMCRST
RNS Number : 7219O
Crest Nicholson Holdings PLC
14 June 2022
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No. 596/2014 as it
forms part of domestic law by virtue of the European Union
(Withdrawal) Act 2018.
CREST NICHOLSON HOLDINGS PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 APRIL 2022
FY22 EARNINGS GUIDANCE UPGRADED
CONTINUED STRONG TRADING AND PROFIT MARGIN GROWTH
NEW SCIENCE-BASED SUSTAINABILITY TARGETS ANNOUNCED
Crest Nicholson Holdings plc ('Crest Nicholson', the 'Company'
or the 'Group') today announces its unaudited interim results for
the six months ended 30 April 2022:
HY22 Financial Highlights
-- Revenue increased 12.3% to GBP364.3m (HY21: GBP324.5m), reflecting
strong operating performance and underlying strength of the housing
market
-- Home completions increased 7.8% to 1,096 (HY21: 1,017), comprising
open market completions (including bulk deals) of 912 (HY21: 819)
and affordable completions of 184 (HY21: 198). Sales per outlet
week (SPOW) of 0.72 (HY21: 0.69) with average outlets at 58 (HY21:
57)
-- Forward sales as at 10 June 2022 of 2,891 units and GBP814.9m
Gross Development Value (GDV) (18 June 2021: 2,771 units and GBP691.8m
GDV) with over 96% of FY22 revenue covered
-- Adjusted operating profit margin(1) increased by 270bps to 15.0%
(HY21: 12.3%), demonstrating good progress in our profit margin
recovery
-- Adjusted profit before tax (1) at GBP52.5m (HY21: GBP36.1m)
-- Loss before tax at GBP52.5m (HY21: GBP36.3m profit before tax).
Loss after tax at GBP42.2m (HY21: profit after tax GBP29.0m),
after an exceptional charge before tax of GBP105.0m which includes
our obligations in respect of the Government's Building Safety
Pledge
-- Strong cash generation with net cash(2) at GBP173.3m (HY21: GBP130.4m)
o Average net cash of GBP98.6m during the first half (HY21: GBP80.5m)
o Land creditors at GBP179.9m (HY21: GBP178.5m)
-- Return on capital employed(3) at 18.3% (HY21: 10.5%)
-- Interim dividend declared of 5.5 pence per share, in line with
dividend policy at 2.5x cover
-- FY22 adjusted profit before tax (1) expected to be in the range
of GBP135 - 140m
(1) Adjusted items represent the HY22 and HY21 statutory figures
adjusted for exceptional items as disclosed in note 5 to the condensed
consolidated half year financial statements. Adjusted performance
metrics are disclosed below. These alternatives (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.
(2) (Net cash is defined as cash and cash equivalents less interest-bearing
loans and borrowings. See note 14 to the condensed consolidated
half year financial statements.)
(3) Return on capital employed equals rolling 12 month adjusted
operating profit before joint ventures divided by the average
of opening and closing capital employed over the same 12 months
(capital employed = equity shareholders' funds plus net borrowing
or less net cash). Adjusted performance metrics are disclosed
below.
CREST NICHOLSON HOLDINGS PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 APRIL 2022
HY22 Strategic Highlights
Strong progress on all elements of our strategy:
-- Retained Home Builders Federation (HBF) five-star rating for customer
satisfaction
-- Successful roll out of new house types with over 7,400 units now
plotted in the short-term land portfolio (HY21: 6,700). We expect
75% of our private open market houses will be delivered using
this range in FY22
-- Continued investment for growth in a competitive land market:
o 1,543 plots approved for purchase at a forecast gross margin
of 26.8% after sales and marketing costs
o 2,204 plots added to short-term portfolio in the first half
-- The Group has continued to optimise its land portfolio by disposing
of its 50% share in the joint venture containing the London Chest
Hospital site in East London in May 2022. The transaction will
realise GBP16.0m of consideration and has resulted in a GBP2.3m
net impairment charge in the first half. The scheme was forecast
to be unprofitable for the Group and would have accrued significant
work-in-progress during its construction phase
-- Expansion plans are progressing well:
o Yorkshire office now open in Leeds with several key team appointments
in place and two sites approved for purchase
o East Anglia division is set to be established in second half
with two sites now acquired
Sustainability
In 2020 we set out challenging targets to reduce greenhouse gas
(GHG) emissions intensity by 25%, waste intensity by 15% and
increase renewable electricity procurement to 100%, all by 2025. We
continue to make good progress against these targets.
New science-based sustainability targets
We are stepping up our ambitions to reduce the Group's carbon
footprint and are setting out new science-based targets. These are
designed to achieve net-zero by 2045 and have been submitted to the
Science Based Targets initiative for validation. Our new targets
are:
o Reduce absolute scope 1 and 2 GHG emissions 60% by 2030 from
a 2019 base year
o Reduce scope 3 GHG emissions intensity by 55% by 2030 from
a 2019 base year
o Reach net-zero GHG emissions across the value chain (scopes
1, 2 and 3) by 2045
Key financial metrics
GBPm (unless otherwise stated) HY22 HY21 % Change
Key financial results
Home completions 1,096 1,017 7.8
Revenue 364.3 324.5 12.3
Adjusted gross profit(1) 77.5 63.3 22.4
Adjusted gross profit margin(1) 21.3% 19.5% +180bps
Adjusted operating profit(1) 54.5 40.0 36.3
Adjusted operating profit margin(1) 15.0% 12.3% +270bps
Adjusted profit before tax(1) 52.5 36.1 45.4
Adjusted profit after tax(1) 40.4 28.8 40.3
Exceptional items net of income
tax (82.6) 0.2
Net cash(2) 173.3 130.4 32.9
-------------------------------------- -------- ------ ---------
Gross (loss)/profit (27.5) 63.0 (143.7)
Gross (loss)/profit margin (7.5)% 19.4% -2690bps
Operating (loss)/profit (50.5) 39.7 (227.2)
Operating (loss)/profit margin (13.9)% 12.2% -2610bps
(Loss)/profit before tax (52.5) 36.3 (244.6)
(Loss)/profit after tax (42.2) 29.0 (245.5)
-------------------------------------- -------- ------ ---------
Adjusted basic earnings per
share (p)(1) 15.7 11.2 40.2
Basic (loss)/earnings per share
(p) (16.5) 11.3 (246.0)
Dividend per share (p) 5.5 4.1 34.1
1 Adjusted items represent the HY22 and HY21 statutory figures
adjusted for exceptional items as disclosed in note 5 to the
condensed consolidated half year financial statements. Adjusted
performance metrics are disclosed below. These alternatives
(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.
(2 Net cash is defined as cash and cash equivalents less
interest-bearing loans and borrowings. See note 14 to the condensed
consolidated half year financial statements.)
Peter Truscott, Chief Executive, commented:
We are delighted to have delivered a strong first half
performance, making further strategic and operational progress.
Given this underlying momentum and the resilient housing market we
are upgrading our full-year adjusted profit before tax expectations
to a range of GBP135-140m.
We are pleased to have reached a resolution with the Government
by signing the Building Safety Pledge. We hope this now provides
comfort and assurance to affected residents and stakeholders. It
also allows the Group to move forward in remediating the affected
buildings directly or through another party as soon as
possible.
Despite the unpredictable global, economic and political
outlook, we remain optimistic about the fundamentals of the UK
housing market and are confident in the skill and determination of
Crest Nicholson colleagues to manage and adapt to these challenges.
We are firmly focused on delivering our ambitious growth strategy
and ensuring as many customers as possible can benefit from living
in a new Crest Nicholson home.
Analyst and investor conference call and webcast
There will be an analyst presentation in person and 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_interim results
2022
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 074927. 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.
CREST NICHOLSON HOLDINGS PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHSED 30 APRIL 2022
Chief Executive Statement
Business Overview - strong first half results
We are pleased to report an excellent operational and financial
performance in the first half. We set out our plans to turnaround
the Group in January 2020 and we have subsequently established an
efficient operating platform, supported by a strong balance sheet.
Our geographical expansion in Yorkshire and East Anglia is on track
and our year-to-date forward order book positions us well to
deliver a strong full year financial performance.
Reassuringly, there is now greater clarity around the
Government's requirements of us and the wider sector concerning
historic building safety issues, and the costs related to remediate
these. In April 2022 we signed the Government's Building Safety
Pledge (the Pledge), which we believe is in the best interests of
the Group, taking further steps to support those living in affected
buildings. The Pledge sets out our commitment to address life --
critical fire -- safety issues on all buildings of 11 metres and
above in England developed by the Group in the 30 years prior to 5
April 2022. In addition, the Group agreed that the Government's
Building Safety Fund will not be used to remediate those buildings
and to reimburse any amounts already paid by the Building Safety
Fund.
Sustainability is one of the foundations of our business
strategy and we continue to embed responsible practices throughout
our operations. We have made good progress in reducing our scope 1
and 2 greenhouse gas (GHG) emissions and I am pleased to announce
that we have submitted new, challenging GHG reduction targets to
the Science Based Targets initiative for validation.
Trading
The Group has performed well in the first half, in line with our
expectations. Customer demand for our homes is strong across all
regions reflecting the continued strength of the UK housing market.
Our developments are often located in areas which benefit from the
structural change that has occurred between the balance of office
and home working since COVID-19. We continue to see this rationale
being cited by customers in their reasons for moving home. Our SPOW
rate remains strong at 0.72 (HY21: 0.69) and completions are up by
7.8% at 1,096 units (HY21: 1,017). No one in the construction
sector is immune from the current impacts of input cost inflation.
However, we are managing to successfully offset this with sales
price inflation in a market with strong demand and relatively poor
levels of supply. Finally, the tapering off of Help to Buy, which
is due to end in April 2023, has had no measurable impact on our
sales rate to date.
As of 10 June 2022 our order book is over 96% covered for FY22
revenue providing good visibility and confidence in meeting our
revenue targets for the current financial year.
Operational efficiency
We continue to make good progress in delivering efficiency
across all aspects of our operations. Despite some of the ongoing
challenges in materials and labour availability, we have managed to
maintain our build rate in line with expectations in the first
half. The new house type range roll out is on track and we expect
75% of our private open market houses will be delivered using this
range in 2022. Moving to these standardised house types has been
strongly vindicated in an environment of labour and material
shortages.
We continue to seek opportunities to replan our sites. Plotting
efficiency is an ongoing process to maintain flexibility in our
product offerings and to optimise the value of the developments.
Replans and replotting will continue to bring positive benefits in
coverage while also enhancing the returns from these
investments.
We remain highly disciplined in managing our build costs,
overheads and work-in-progress. Our overheads remain appropriately
sized for the Group's operations today. As we open our new
divisions, we will need to make further investments both locally
and centrally as the size of our overall operations increases. On 6
May 2022 we sold our 50% share in our joint venture with Clarion
Housing Group containing the London Chest Hospital development in
East London. While we have realised a small impairment loss on our
investment in this asset, we will productively recycle the
consideration into the types of investments and housing types that
fit with our strategy.
Maintaining an efficient operating platform will remain a key
focus, underpinning our margin recovery plan as the impact of older
sites diminish and the benefit of new land purchases at a higher
margin takes effect.
Build cost and supply chain
The UK construction environment is experiencing disruption to
materials availability and inflationary pressures on pricing. There
are several factors contributing to this; the rapid reopening of
construction activity after COVID-19 lockdown restrictions were
lifted, coupled with more recent lockdown restrictions still being
in place in some countries; the volume of large construction and
infrastructure projects creating demand such as HS2 rail; the
disruption to raw material supply from Ukraine and the boycotting
of products from Russia; rapidly rising energy costs and the
transition costs as suppliers seek to move to more sustainable
methods of production.
Some materials such as steel have increased in price in direct
correlation to the rise in energy prices. Other materials, such as
bricks, have been more insulated where alternatives such as
concrete (rather than clay) can be sourced and used instead. All
these material increases have been accompanied by a moderation in
the rising cost of labour. Our site teams do an outstanding job of
managing this disruption on a day-to-day basis and to ensure our
build rate remains on track. At a Group level we continue to
develop strong economic and strategic partnerships with key
suppliers that create value for both parties.
Land investment
We have been active in the land market in our existing divisions
in the first half and continued to see good opportunities for land
in our new and existing divisions. The short-term land market
remains very competitive, however our operational efficiency
programme and new house type range enables us to bid with
confidence and to acquire land within our appraisal criteria. We
also have a large strategic land portfolio which we utilise
whenever possible to draw land into our short-term land portfolio.
In the first half we have approved for purchase 1,543 plots of land
(HY21: 2,682) at a forecast gross margin of 26.8% (HY21:
26.5%).
Building safety
Since the Grenfell Tragedy in 2017, and the subsequent review of
building design and the construction methods and materials used,
the Group has acted swiftly to identify and remediate any legacy
buildings where it has a constructive or legal obligation to do so.
The Group recognises the significant distress caused to residents
and as such has always sought to engage constructively with
residents, building owners, Government and other affected
stakeholders. The Pledge sets out our commitment to address life --
critical fire -- safety issues on all buildings of 11 metres and
above in England developed by the Group in the 30 years prior to 5
April 2022. In addition, the Group agreed that the Government's
Building Safety Fund will not be used to remediate those buildings
and to reimburse any amounts already paid by the Building Safety
Fund.
Accordingly, as at 31 October 2021 the Group had cumulatively
recorded GBP47.8m a net charge in respect of these obligations
since the year ended 31 October 2019. In addition, it is
contributing to the Residential Property Developer Tax (RPDT),
effective from 1 April 2022, to support the remediation programme
of all affected buildings taller than 18 metres in the United
Kingdom.
Since January 2022 the Group has been in active dialogue with
the Department for Levelling Up, Housing and Communities (DLUHC) on
remediation of all buildings 11 metres and over and in April 2022
the Group announced that it has signed The Pledge, taking further
steps to support those living in affected buildings. The Group
hopes this now provides comfort and assurance to affected residents
and stakeholders. It also allows the Group to move forward in
remediating the affected buildings directly or through another
party.
There continues to be speculation that the Government will go
further in its actions to obtain economic redress for 'orphaned'
buildings that need fixing. The Group has taken full financial
responsibility for the buildings with which it had involvement and
would not expect to contribute to the remediation of buildings for
which it has never had any responsibility or involvement in
constructing.
As a consequence of signing The Pledge, the Group has recorded a
further GBP105.0m exceptional charge in the half. More detail on
this is provided in the Financial Review.
Sustainability
Our sustainability priorities are three-fold, protect the
environment, make a positive impact on communities and operate our
business responsibly. We continue to make good progress against our
existing targets to reduce greenhouse gas (GHG) emissions, waste
and increase our use of renewable electricity.
We have taken positive action to reduce our scope 1 and 2 GHG
emissions and we are on track to achieve our 25% intensity
reduction target. We are also taking steps to reduce our scope 3
emissions through our home designs, preparation for the Future
Homes Standard and engagement with our supply chain.
We have now set new science-based targets, which we have
submitted to the Science Based Targets initiative for validation.
The targets are:
o Reduce absolute scope 1 and 2 GHG emissions 60% by 2030 from a
2019 base year
o Reduce scope 3 GHG emissions intensity by 55% by 2030 from a
2019 base year
o Reach net-zero GHG emissions across the value chain (scopes 1,
2 and 3) by 2045
Reaching net-zero across the value chain will be a significant
challenge and we look forward to continued collaboration with our
stakeholders as we transition toward a low carbon economy.
Geographical expansion
At our Capital Markets Day in October 2021 we set out our
ambitious future growth plans. Our plan will be delivered in two
phases with targets aligned to both phases. We are making excellent
progress in the first phase as we target achieving a minimum
operating margin of 18.0% by FY24, returning Crest Nicholson to
normalised industry returns. Thereafter, we expect operating margin
to reach 20.0% by FY26 and deliver over 4,200 home completions.
In the early years the operating margin growth will come from
our existing divisions, depleting legacy sites with weaker margins
and delivering an increasing contribution from new land
acquisitions, plotted with the new house type. By FY24 we will have
opened three new divisions with the first two being in Yorkshire
and East Anglia and the third to be announced in FY23. These new
divisions, coupled with increasing capacity expansion in our
existing divisions, will deliver the volume growth required to meet
our plan aspirations.
We have made good progress in respect of these plans in the
first half. Our adjusted operating margin has increased to 15.0%
(HY21: 12.3%) demonstrating we are on track with this element of
our plan.
We are making good progress with our expansion plans. In
Yorkshire we have opened our divisional office in Thorpe Park,
Leeds. The leadership team is taking shape following several key
appointments with all team members based in the Yorkshire region
and having knowledge of the area. We are busy assessing new land
opportunities and have recently approved the purchase of two sites
in South Yorkshire and East Riding. We will be looking to open our
East Anglia division in the second half, where we have already
secured two sites in Norwich and Ipswich. We look forward to
providing more details on progress in both new divisions at our
preliminary results in January 2023.
Outlook
The Board remains convinced that, despite the current global
economic and geopolitical volatility, the long-term fundamentals of
the UK housing market remain strong. The Group's efficient
operating model and highly experienced leadership team position it
well in times such as this. In addition, the balance sheet is
robust and adequately capitalised to fuel this growth agenda and
provide resilience if trading conditions become tougher.
As evidenced by the ongoing improvements to financial
performance this year, the Group is pleased to announce that it now
expects FY22 adjusted profit before tax to be around GBP135-140m.
The Board remains confident that Crest Nicholson has a unique
opportunity to deliver superior returns, by way of strong earnings
growth accompanied by an attractive dividend and is committed to
giving more customers the opportunity to own a Crest Nicholson
home.
Financial Review
Completions and revenue
During the first half open market (private) completions were 754
(HY21: 701), affordable completions were 184 (HY21: 198) and bulk
completions were 158 (HY21: 118). Total home completions were
therefore 1,096 (HY21: 1,017), up 7.8%, reflecting the continuing
recovery in volumes post the COVID-19 pandemic and the ongoing
strength of the housing market.
Open market (private) average selling price (ASP) increased
slightly to GBP409k (HY21: GBP398k), up 2.8%. The strong selling
market has supported house price inflation during the year which
has been offset by the changing mix of what the Group sells. The
new house types are increasing in composition as the remaining
legacy house types, often sold at higher price points, start to
reduce.
Affordable ASP was up 1.7% to GBP179k (HY21: GBP176k) and bulk
ASP was up 25.4% to GBP281k (HY21: GBP224k) as deals for both Old
Vinyl, Hayes and Brightwells Yard, Farnham, given their respective
locations and price points, drove the increase on prior year. Group
revenue, excluding joint venture revenue of GBP21.1m (HY21:
GBP13.1m), increased 12.3% to GBP364.3m (HY21: GBP324.5m) in the
first half.
Sales
Sales rates as measured by SPOW, were 0.72 for the first half
compared to 0.69 in the prior year. Despite the resumption of Stamp
Duty, following its suspension during COVID-19, demand for housing
has remained strong in the first half. A lack of supply, plentiful
mortgage availability and issuance and ongoing changes to the
balance of home and office working patterns have all supported this
backdrop.
Sales outlets were 58 (HY21: 57) in the first half. The speed at
which planning applications are considered and approved remains
subdued. Stakeholders have had to work through a backlog of
COVID-19 delayed applications. In addition, new environmental
challenges related to the levels of nitrates in local water have
also emerged in recent months.
Forward sales as at 10 June 2022 of 2,891 units and GBP814.9m
Gross Development Value (GDV) (18 June 2021: 2,771 units and
GBP691.8m GDV) with over 96% of FY22 revenue covered.
Operating profit and margin
Adjusted operating profit rose to GBP54.5m (HY21: GBP40.0m),
with adjusted operating profit margin also increasing to 15.0%
(HY21: 12.3%). This improvement is in line with the operating
profit margin recovery trajectory and targets the Group
communicated at its Capital Markets Day in October 2021. Several
unprofitable legacy schemes are subject to net realisable value
(NRV) provisions and during the first half the Group fully
recognised the sale of Old Vinyl, Hayes by way of a bulk deal and
similarly in the second half expects to recognise the sale of
Sherborne Wharf, Birmingham. This will leave approximately a third
of the remaining NRV provision to be used in FY23 and FY24 and
predominantly relates to the Group's development at Brightwell's
Yard, Farnham.
Operating loss after exceptional items for the first half was
GBP50.5m (HY21: GBP39.7m operating profit) reflecting the GBP105.0m
exception combustible materials charge in the period.
Another challenging legacy scheme held in the Group's portfolio
is the London Chest Hospital in East London. This site is held in a
joint venture with a third party and is financed by way of
intercompany loans from both members. This site has been the
subject of planning objections and delays and is a complex build
programme with significant levels of peak capital investment. On 6
May 2022 the Group disposed of its 50% share in the joint venture
to its joint venture partner for a total consideration of GBP16.0m,
half of which will be received in the second half of this financial
year and the other half in FY23. Although this transaction was
completed after 30 April 2022 the carrying value of the
intercompany loan was impaired in the first half to reflect this
latest market valuation of the scheme. Accordingly, the Group
recorded a GBP2.3m net impairment loss on financial assets for the
first half (HY21: GBP0.2m).
The continued unwinding of these poorer legacy schemes, replaced
by new land purchases, plotted with the new house types, drives the
Group's forecast margin improvement targets.
Operational efficiency is one of the Group's five strategic
priorities and as part of this focus overheads have been
sustainably lowered since FY19. During the first half
administrative expenses were GBP20.7m (HY21: GBP23.1m), with the
prior year comparative containing the GBP2.5m repayment of the
Government's Job Retention scheme grant, received in FY20 and in
respect of financial support during the COVID-19 pandemic.
Exceptional items
Since the Grenfell Tower tragedy in 2017, the Government and
construction sector have been carefully considering what lessons
must be learned, and how buildings that are exposed to potentially
life-critical fire risk can be identified and swiftly
remediated.
Since the emergence of new Government guidance in this area the
Group has worked with all impacted stakeholders to identify where
it has a legal or constructive obligation to remediate legacy
buildings. The first exceptional charge taken in this respect was
in FY19 for GBP18.4m and by the end of FY21 the Group had
cumulatively recorded GBP47.8m of net exceptional charges and had
an unutilised balance sheet provision of GBP42.6m.
In January 2022 the Secretary of State for the Department for
Levelling Up, Housing and Communities (DLUHC) announced the
Government's intention to change the regulatory and legislative
framework for fire remediation. These changes culminated in a
request to housebuilders to sign the Government's Building Safety
Pledge which the Group did on 19 April 2022.
As a consequence of signing the Building Safety Pledge the Group
informed the capital markets on 5 April 2022 that it considered a
further exceptional charge of GBP80-120m represented its best
estimate of the range of these incremental costs. The Group has
subsequently been able to refine this estimate and has recorded an
exceptional charge of GBP105.0m in the first half.
Tax credit on exceptional items is GBP22.4m (HY21: GBPnil).
Further detail on exceptional items can be found in note 5 and
note 12 of the condensed consolidated financial statements.
Financing and liquidity
At 30 April 2022 the Group had net cash of GBP173.3m (HY21:
GBP130.4m). Net debt including land creditors were GBP6.6m (HY21:
GBP48.1m). Average net cash during the period was GBP98.6m (HY21:
GBP80.5m).
Since the Group announced its updated strategy in January 2020,
the balance sheet has progressively strengthened through a clear
focus on capital expenditure, overheads and work-in-progress
management. The Group also benefits from a GBP250.0m Revolving
Credit Facility which remained undrawn throughout the first
half.
Return on capital employed (ROCE) for the first half was 18.3%
(HY21: 10.5%) reflecting the higher earnings delivery on prior year
and the continued strength of the balance sheet. This improvement
reflects continued progress towards the Group's five-year target
for ROCE of 22-25%.
This financial position equips the Group to meet its capital
allocation priorities while maintaining adequate resilience to
changing market conditions, in a sector that has historically been
cyclical in nature.
Pension
The Group operates a defined benefit pension scheme. At 30 April
2022 the retirement benefit surplus under IAS 19 was GBP35.4m
(HY21: GBP8.6m). In February 2022 the Group finalised the latest
triennial valuation with the Trustees and agreed that the monthly
cash contributions from the Group into the scheme would reduce from
GBP0.75m to GBP0.13m, effective from the February 2022 payment.
Taxation
The effective tax rate applied to adjusted profit for the period
was 19.6% (HY21: 20.1%). This reflects the best estimate of the
weighted average annual effective tax rate which is expected to
apply to the Group for the year ending 31 October 2022. Over the
next three years the Group's effective tax rate will increase in
line with the statutory rate increases and as the Group becomes
subject to a full year effect of the Residential Property Developer
Tax (RPDT) of 4.0%, effective from 1 April 2022.
Earnings per share
Adjusted basic earnings per share was 15.7 pence (HY21: 11.2
pence), reflecting the increase in the Group's earnings on prior
year. Basic loss per share was 16.5 pence (HY21: earnings per share
11.3 pence), principally reflecting the impact of the exceptional
item for combustible materials.
Dividend
The Board has declared an interim dividend of 5.5 pence per
share, payable on 13 October 2022 to shareholders on the register
on 23 September 2022. The dividend represents approximately one
third of the dividend expected to be paid in respect of the
financial year ending 31 October 2022.
Land and planning
During the first half the Group approved 1,543 plots for
purchase at a forecast gross margin of 26.8% after sales and
marketing costs.
At 30 April 2022 the short-term land portfolio includes 15,510
(FY21: 14,677) plots. 2,204 plots were added in the half with
additions across all regions. The Group's strategic land portfolio
ended the half with 22,303 (FY21: 22,308) plots meaning the total
land portfolio at 30 April 2022 was 37,813 plots (FY21: 36,985).
The total GDV of the portfolio is GBP12.3bn (FY21: GBP11.8bn).
The land market remains very competitive. In addition, approvals
are being delayed due to environmental issues such as nitrate
levels and water neutrality. The Group has a proven capability and
strong track record at being able to realise value from its
strategic land portfolio. Where the Group has been able to be
active in the short-term land market it now benefits from increased
competitiveness with the new house types and its strong balance
sheet supports ongoing disciplined investment for growth.
Principal Risks and Uncertainties
The Group's financial and operational performance and reputation
is subject to a number of potential risks and uncertainties. These
risks could, either separately or in combination, have a material
impact on the Group's performance and shareholder returns.
Our divisional boards consider their divisional risk registers
on a half-yearly basis. The divisional risk reviews, alongside the
Group's principal and emerging risks are carefully considered by
the Executive Leadership Team. Both the Audit and Risk Committee
and the Board have oversight of the Group's emerging and principal
risks.
We face a number of emerging risks including increased inflation
and higher energy prices, which we work closely with our supply
chains to mitigate any potential impact. This is set against the
backdrop of recent rising costs of living in the UK and the
geopolitical situation in Ukraine.
Changes to the planning systems have also been proposed by the
Government and may impact our future land acquisitions and new home
delivery. These risks have the potential to further impact existing
principal risks.
Our principal risks are unchanged from those set out on pages 64
to 68 of the Group's Annual Integrated Report for the year ended 31
October 2021.
Statement of Directors' Responsibilities
The Directors confirm that these condensed consolidated half
year financial statements have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the United Kingdom and that the interim
management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
-- material related-party transactions in the first six months
and any material changes in the related party transactions
described in the last Annual Integrated Report.
The current Directors of Crest Nicholson Holdings plc are listed
in the Annual Integrated Report for the year ended 31 October 2021
with the exception that Tom Nicholson stepped down from the Board
on 27 May 2022.
By order of the Board
Peter Truscott
Chief Executive
14 June 2022
CREST NICHOLSON HOLDINGS PLC
HALF YEAR RESULTS FOR THE SIX MONTHSED 30 APRIL 2022
CONDENSED CONSOLIDATED INCOME STATEMENT
Half Half Half Half Half Half Full Full Full
Note year year ended year year year ended year year year ended year
ended ended ended ended ended ended
30 April 30 April 30 30 April 30 April 30 31 October 31 October 31
April April October
2022 2022 2022 2021 2021 2021 2021 2021 2021
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Exceptional Exceptional Pre-exceptional Exceptional
items items item item (note
Pre-exceptional (note Pre-exceptional (note 5)
items 5) Total items 5) Total Total
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
Revenue 4 364.3 - 364.3 324.5 - 324.5 786.6 - 786.6
Cost of sales (286.8) (105.0) (391.8) (261.2) (0.3) (261.5) (619.9) (20.8) (640.7)
---------------- ------------ ---------- ---------------- ------------ ---------- ---------------- ------------ --------
Gross
profit/(loss) 77.5 (105.0) (27.5) 63.3 (0.3) 63.0 166.7 (20.8) 145.9
Administrative
expenses (20.7) - (20.7) (23.1) - (23.1) (51.1) - (51.1)
Net impairment
losses on
financial
assets (2.3) - (2.3) (0.2) - (0.2) (1.0) - (1.0)
---------------- ------------ ---------- ---------------- ------------ ---------- ---------------- ------------ --------
Operating
profit/(loss) 6 54.5 (105.0) (50.5) 40.0 (0.3) 39.7 114.6 (20.8) 93.8
Finance income 1.3 - 1.3 1.5 - 1.5 3.4 - 3.4
Finance expense (5.2) - (5.2) (6.3) 0.5 (5.8) (12.5) 0.5 (12.0)
---------------- ------------ ---------- ---------------- ------------ ---------- ---------------- ------------ --------
Net finance
(expense)/income (3.9) - (3.9) (4.8) 0.5 (4.3) (9.1) 0.5 (8.6)
Share of
post-tax
result of
joint ventures
using the
equity method 1.9 - 1.9 0.9 - 0.9 1.7 - 1.7
---------------- ------------ ---------- ---------------- ------------ ---------- ---------------- ------------ --------
Profit/(loss)
before tax 52.5 (105.0) (52.5) 36.1 0.2 36.3 107.2 (20.3) 86.9
Income tax
(expense)/credit 7 (12.1) 22.4 10.3 (7.3) - (7.3) (19.9) 3.9 (16.0)
Profit/(loss)
for the period
attributable
to equity
shareholders 40.4 (82.6) (42.2) 28.8 0.2 29.0 87.3 (16.4) 70.9
---------------- ------------ ---------- ---------------- ------------ ---------- ---------------- ------------ --------
Earnings/(loss)
per ordinary
share
Basic 8 15.7p (16.5)p 11.2p 11.3p 34.0p 27.6p
Diluted 8 15.7p (16.5)p 11.2p 11.3p 33.9p 27.5p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year Half year Full
ended ended year ended
30 April 30 April 31 October
2022 Unaudited 2021 Unaudited 2021
Audited
GBPm GBPm GBPm
(Loss)/profit for the period attributable
to equity shareholders (42.2) 29.0 70.9
Other comprehensive income/(expense):
Items that will not be reclassified
to the consolidated income statement:
Actuarial gains of defined benefit schemes 16.4 17.2 20.2
Change in deferred tax on actuarial
gains of defined benefit schemes (5.6) (3.3) (4.8)
--------------- --------------- ------------
Other comprehensive income for the period
net of income tax 10.8 13.9 15.4
--------------- --------------- ------------
Total comprehensive (expense)/income
for the period attributable to equity
shareholders (31.4) 42.9 86.3
--------------- --------------- ------------
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Retained Total
capital premium earnings
account
GBPm GBPm GBPm GBPm
Half year ended 30 April 2022 (Unaudited)
Balance at 1 November 2021 12.8 74.2 814.6 901.6
Loss for the period attributable
to equity shareholders - - (42.2) (42.2)
Actuarial gains of defined benefit
schemes - - 16.4 16.4
Change in deferred tax on actuarial
gains of defined benefit schemes - - (5.6) (5.6)
--------- --------- ---------- -------
Total comprehensive expense for
the period - - (31.4) (31.4)
Transactions with shareholders:
Equity-settled share-based payments - - 1.2 1.2
Deferred tax on equity-settled share-based
payments - - (0.3) (0.3)
Purchase of own shares - - (0.4) (0.4)
Dividends paid - - (24.4) (24.4)
--------- --------- ---------- -------
Balance at 30 April 2022 12.8 74.2 759.3 846.3
--------- --------- ---------- -------
Share Share Retained Total
capital premium earnings
account
GBPm GBPm GBPm GBPm
Half year ended 30 April 2021 (Unaudited)
Balance at 1 November 2020 12.8 74.2 738.3 825.3
Profit for the period attributable
to equity shareholders - - 29.0 29.0
Actuarial gains of defined benefit
schemes - - 17.2 17.2
Change in deferred tax on actuarial
gains of defined benefit schemes - - (3.3) (3.3)
--------- --------- ---------- ------
Total comprehensive income for the
period - - 42.9 42.9
Transactions with shareholders:
Equity-settled share-based payments - - 0.7 0.7
Deferred tax on equity-settled share-based
payments - - 0.2 0.2
--------- --------- ---------- ------
Balance at 30 April 2021 12.8 74.2 782.1 869.1
--------- --------- ---------- ------
Share Share Retained Total
capital premium earnings
account
GBPm GBPm GBPm GBPm
Year ended 31 October 2021 (Audited)
Balance at 1 November 2020 12.8 74.2 738.3 825.3
Profit for the year attributable
to equity shareholders - - 70.9 70.9
Actuarial gains of defined benefit
schemes - - 20.2 20.2
Change in deferred tax on actuarial
gains of defined benefit schemes - - (4.8) (4.8)
--------- --------- ---------- -------
Total comprehensive income for the
year - - 86.3 86.3
Transactions with shareholders:
Equity-settled share-based payments - - 1.8 1.8
Deferred tax on equity-settled share-based
payments - - 0.1 0.1
Purchase of own shares - - (1.6) (1.6)
Transfers in respect of share options - - 0.2 0.2
Dividends paid - - (10.5) (10.5)
--------- --------- ---------- -------
Balance at 31 October 2021 12.8 74.2 814.6 901.6
--------- --------- ---------- -------
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note As at As at As at
30 April 30 April 31 October
2022 2021 2021
Unaudited Unaudited Audited
ASSETS GBPm GBPm GBPm
Non-current assets
Intangible assets 29.0 29.0 29.0
Property, plant and equipment 1.0 1.7 1.2
Right-of-use assets 2.8 4.7 3.7
Investments in joint ventures 8.0 5.3 6.8
Financial assets at fair value
through profit and loss 2.7 3.5 4.2
Deferred tax assets 5.1 7.0 4.8
Retirement benefit surplus 35.4 8.6 16.7
Trade and other receivables 32.7 59.6 44.5
---------- ---------- -----------
116.7 119.4 110.9
---------- ---------- -----------
Current assets
Inventories 10 1,129.6 1,038.1 1,037.5
Financial assets at fair value
through profit and loss 2.1 1.7 1.1
Trade and other receivables 102.6 78.7 102.4
Current income tax receivable 17.4 4.9 5.8
Cash and cash equivalents 11 271.6 228.0 350.7
---------- ---------- -----------
1,523.3 1,351.4 1,497.5
---------- ---------- -----------
Total assets 1,640.0 1,470.8 1,608.4
---------- ---------- -----------
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 11 (98.3) (97.6) (97.9)
Trade and other payables (50.6) (126.0) (107.6)
Lease liabilities (2.0) (3.6) (2.7)
Deferred tax liabilities (10.2) (1.6) (4.1)
Provisions 12 (82.1) (8.1) (28.4)
---------- ---------- -----------
(243.2) (236.9) (240.7)
---------- ---------- -----------
Current liabilities
Trade and other payables (484.5) (347.2) (449.5)
Lease liabilities (1.7) (2.1) (1.9)
Provisions 12 (64.3) (15.5) (14.7)
---------- ---------- -----------
(550.5) (364.8) (466.1)
---------- ---------- -----------
Total liabilities (793.7) (601.7) (706.8)
---------- ---------- -----------
Net assets 846.3 869.1 901.6
---------- ---------- -----------
EQUITY
Share capital 15 12.8 12.8 12.8
Share premium account 15 74.2 74.2 74.2
Retained earnings 759.3 782.1 814.6
---------- ---------- -----------
Total equity 846.3 869.1 901.6
---------- ---------- -----------
Crest Nicholson Holdings plc Registered number 6800600. These
condensed consolidated half year financial statements were approved
by the Board of Directors on 14 June 2022.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Half year Half year Full year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
Unaudited Unaudited Audited
GBPm GBPm GBPm
Cash flows from operating activities
(Loss)/profit for the period attributable
to equity shareholders (42.2) 29.0 70.9
Adjustments for:
Depreciation on property, plant and equipment 0.3 0.6 1.0
Depreciation on right-of-use assets 0.7 1.2 2.4
Net finance expense 3.9 4.3 8.6
Share-based payment expense 1.2 0.7 1.8
Share of post-tax result of joint ventures
using the equity method (1.9) (0.9) (1.7)
Movement of inventories impairment (8.5) (12.4) (16.4)
Net impairment of financial assets 2.3 0.2 1.0
Income tax (credit)/expense (10.3) 7.3 16.0
--------- --------- ----------
Operating (loss)/profit before changes in
working capital, provisions and contribution
to retirement benefit obligations (54.5) 30.0 83.6
Decrease in trade and other receivables 6.7 14.2 4.8
Increase in inventories (83.6) (8.0) (3.4)
Increase/(decrease) in trade and other
payables, and provisions 79.9 (28.6) 73.5
Contribution to retirement benefit obligations (2.6) (5.6) (11.2)
--------- --------- ----------
Cash (used by)/generated from operations (54.1) 2.0 147.3
Finance expense paid (3.2) (3.5) (6.9)
Income tax paid (1.4) (7.4) (13.9)
Net cash (outflow)/inflow from operating
activities (58.7) (8.9) 126.5
--------- --------- ----------
Cash flows from investing activities
Purchases of property, plant and equipment (0.1) (0.3) (0.2)
Disposal of financial assets at fair value
through profit and loss 0.3 0.6 1.0
Dividends received 0.9 - -
Funding to joint ventures (3.4) (7.5) (13.0)
Repayment of funding from joint ventures 7.5 5.9 11.5
Finance income received - 0.1 0.1
--------- --------- ----------
Net cash inflow/(outflow) from investing
activities 5.2 (1.2) (0.6)
--------- --------- ----------
Cash flows from financing activities
Principal elements of lease payments (0.8) (1.3) (2.7)
Dividends paid (24.4) - (10.5)
Purchase of own shares (0.4) - (1.6)
Transfer in respect of share options - - 0.2
--------- --------- ----------
Net cash outflow from financing activities (25.6) (1.3) (14.6)
--------- --------- ----------
Net (decrease)/increase in cash and cash
equivalents (79.1) (11.4) 111.3
Cash and cash equivalents at the beginning
of the period 350.7 239.4 239.4
Cash and cash equivalents at end of the
period 271.6 228.0 350.7
========= ========= ==========
CREST NICHOLSON HOLDINGS PLC
HALF YEAR RESULTS FOR THE SIX MONTHSED 30 APRIL 2022
NOTES TO THE CONDENSED CONSOLIDATED HALF YEAR FINANCIAL
STATEMENTS (unaudited)
1 BASIS OF PREPARATION
Crest Nicholson Holdings plc (the Company) is a public limited
company incorporated, listed and domiciled in the UK. The address
of the registered office is Crest House, Pyrcroft Road, Chertsey,
Surrey KT16 9GN. The condensed consolidated half year financial
statements consolidate the results of the Company and its
subsidiaries (together referred to as the Group) and include the
Group's interest in jointly controlled entities.
These condensed consolidated half year financial statements for
the six months ended 30 April 2022 have been prepared in accordance
with the Disclosure Guidance and Transparency Rules of the UK
Financial Conduct Authority and with UK-adopted International
Accounting Standard 34 'Interim financial reporting'. These
condensed consolidated half year financial statements do not
include all of the information required for full annual
consolidated financial statements and should be read in conjunction
with the Group's Annual Integrated Report for the year ended 31
October 2021, which has been prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006, and international financial
reporting standards (IFRS) adopted pursuant to Regulation (EC) No
1606/2002 as it applies in the European Union.
These condensed consolidated half year financial statements do
not constitute statutory financial statements within the meaning of
Section 434 of the Companies Act 2006. Statutory financial
statements for the year ended 31 October 2021 were approved by the
Board of Directors on 19 January 2022 and delivered to the
Registrar of Companies. The report of the auditor on those accounts
was (i) unqualified, (ii) did not include a reference to any
matters to which the auditor drew attention by way of emphasis
without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act
2006.
These condensed consolidated half year financial statements are
unaudited but have been reviewed by PricewaterhouseCoopers LLP, the
Company's auditors in accordance with International Standard on
Review Engagements (UK and Ireland) 2410 'Review of Interim
Financial Information performed by the Independent Auditor of the
Entity', issued by the Auditing Practices Board. The auditor's
review report for the period to 30 April 2022 is set out at the end
of this document.
Going Concern
The Directors have considered the impact of the Group's current
principal risks and uncertainties to confirm the appropriateness of
the going concern assumption in these condensed consolidated half
year financial statements. The Directors do not consider that any
material or significant changes have occurred to the risks
identified and outlined in the Group's Annual Integrated Report for
the year ended 31 October 2021, and as discussed in the Financial
Review.
The Group benefits from a GBP250.0m revolving credit facility,
which expires June 2024, and GBP100.0m of senior loan notes, which
mature between 2024 and 2029. Both of these arrangements are
subject to three financial covenant tests. The Group was compliant
with all three tests throughout the six month period ended 30 April
2022.
At 30 April 2022 the Group had net cash of GBP173.3m. Given this
strong liquidity position the Directors consider the impact of
breaching one of its covenants as being the first indication that
the Group could be in distress and should be the basis of assessing
its going concern basis. The Directors have then considered three
scenarios that stress test whether the Group would remain compliant
with its covenants as a result of some principal risks starting to
crystallise:
Base case
This is the Group's latest forecast which reflects current
market experience and is reviewed by the Directors
periodically.
Severe but plausible downside case
The following assumptions were applied both individually and in
combination to the base case:
-- An immediate 15.0% reduction in forecast home completions
-- An immediate 7.5% fall in forecast average selling prices
-- An immediate 5.0% increase in build costs, this is an
addition to the build cost inflation already factored into the base
case
Test to failure
The above assumptions were then applied, individually and in
combination, above a level considered plausible to help inform the
Directors as to what level of stress would be needed to realise a
breach in any of the covenants.
In all 3 scenarios above, the Group remained compliant with all
covenants without the need to rely on any potential mitigations
which include but are not limited to:
-- A reduction in Group overheads
-- Renegotiation of supplier arrangements in a deteriorating market
-- Mothballing of unprofitable or capital-intensive schemes
-- Repaying interest-bearing products to reduce the net interest charge
Conclusion on going concern
In reviewing the assessment outlined above the Directors are
confident that the Group has the necessary resources and
mitigations available to continue trading for at least 12 months
from the date of approval of the condensed consolidated half year
financial statements. Accordingly, the condensed consolidated half
year financial statements continue to be prepared on a going
concern basis.
Critical accounting estimates and judgements
The preparation of the condensed consolidated half year
financial statements under IFRS requires the Directors to make
estimates and assumptions that affect the application of policies
and reported amounts of assets and liabilities, income and expenses
and related disclosures. In applying the Group's accounting
policies, the key judgements that have a significant impact on the
financial statements, including those involving estimates, are as
follows; the judgement to present certain items as exceptional (see
note 5), certain revenue policies relating to part exchange sales,
the identification of performance obligations where a revenue
transaction involves the sale of both land and residential units
with revenue on the units subsequently recognised over time and the
recognition of the defined benefit pension scheme surplus.
Estimates and associated assumptions affecting the financial
statements are based on historical experience and various other
factors that are believed to be reasonable under the circumstances.
The estimates and underlying assumptions are reviewed on an ongoing
basis. Changes in accounting estimates may be necessary if there
are changes in the circumstances on which the estimate was based or
as a result of new information.
Revisions to accounting estimates are recognised in the period
in which the estimate is revised if the revision affects only that
period, or in the period of revision and future period if the
revision affects both current and future periods.
The Directors have made estimates and assumptions in reviewing
the going concern assumption as detailed above. The Directors
consider the key sources of estimation uncertainty that have a risk
of causing a material adjustment to the carrying value of assets
and liabilities are the carrying value of inventories, estimation
of development profitability, valuation of the pension scheme
assets and liabilities and the combustible materials provision.
These are detailed within the Group's consolidated financial
statements for the year ended 31 October 2021. In addition,
combustible materials is presented below following an increase in
the provision in the period.
Combustible materials
The combustible materials provision requires several key
estimates and judgements in its calculation of value and
probability. In line with IAS 37, a provision is recognised if it
is probable that an outflow of cash or other economic resources
will be required to settle the provision and the provision can be
reliably measured. A contingent liability is a possible obligation
depending on whether some uncertain future event occurs, or a
present obligation but payment is not probable or the amount cannot
be measured reliably. The key judgements include, but are not
limited to, identification of the properties impacted over the
required period of construction considered and which properties
should then be included. The key estimates applied to the
identified properties include the potential investigation costs,
rectification costs of works and materials, disruption to
customers, along with considering the future timing of the
expenditure.
If forecast remediation costs on identified buildings currently
provided for are 5% higher than is now estimated, the exceptional
items charge in the condensed consolidated income statement would
be GBP7.3m higher. If further buildings are identified this could
result in an increase to the current provision, but the potential
value of this change cannot be reliably measured without further
claims or investigative work. See notes 5 and 12 for additional
details.
Accounting policies
The principal accounting policies adopted in the condensed
consolidated half year financial statements are consistent with
those applied by the Group in its consolidated financial statements
for the year ended 31 October 2021 except in respect of taxation
which is based on the expected effective tax rate that would be
applicable to expected annual earnings, and the revenue policy
relating to recognised over time housing units as detailed
below.
The Group reviewed the application of its revenue policy
relating to recognised over time housing units. From 1 November
2021 revenue is now recognised on over time units by reference to
the stage of completion, via surveys of work performed on contract
activity. The Group considers this policy more closely aligns with
the benefits transferred to the customer. Previously revenue was
recognised on housing units as the build of the related units
progressed, using the input method based on costs incurred. This is
considered a change in accounting estimate and so has been
implemented prospectively.
Adoption of new and revised standards
There are no new standards, amendments to standards and
interpretations that are applicable to the Group and are mandatory
for the first time for the financial year beginning 1 November 2021
which have a material impact on the Group.
Alternative performance measures
The Group has adopted various Alternative Performance Measures
(APM), as presented below. These measures are not defined by IFRS
and therefore may not be directly comparable with other companies'
APM, and should be considered in addition to, and are not intended
to be a substitute for, or superior to, IFRS measurements.
2 SEGMENTAL REPORTING
The Executive Leadership Team (ELT), as disclosed in the Group's
consolidated financial statements for the year ended 31 October
2021 on page 76, with the exception that Tom Nicholson stepped down
from the Board on 27 May 2022, is accountable to the Board and has
been identified as the chief operating decision-maker for the
purposes of determining the Group's operating segments. The ELT
approves investment decisions, allocates group resources and
performs divisional performance reviews. The Group operating
segments are considered to be its divisions, each of which has its
own management board. All divisions are engaged in residential-led,
mixed use developments in the United Kingdom and therefore, with
consideration of relevant economic indicators such as the nature of
the products sold and customer base, and, having regard to the
aggregation criteria in IFRS 8, the Group identifies that it has
one reportable operating segment.
3 SEASONALITY
In common with the rest of the UK housebuilding industry,
activity occurs throughout the year, with peaks in sale completions
in spring and autumn. This creates seasonality in the Group's
trading results and working capital.
4 REVENUE
Half year Half year Full year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
Revenue type GBPm GBPm GBPm
Open market housing including specification
upgrades 328.3 287.4 654.7
Affordable housing 19.6 31.3 78.7
--------- --------- ----------
Total housing 347.9 318.7 733.4
Land and commercial sales 15.5 3.4 49.2
Freehold reversions 0.9 2.4 4.0
--------- --------- ----------
Total revenue 364.3 324.5 786.6
--------- --------- ----------
Half year Half year Full year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
Timing of revenue recognition GBPm GBPm GBPm
Revenue recognised at a point in time 342.5 284.9 687.7
Revenue recognised over time 21.8 39.6 98.9
--------- --------- ----------
Total revenue 364.3 324.5 786.6
--------- --------- ----------
Proceeds received on the disposal of part exchange properties, which
is not included in revenue, were GBP20.1m (30 April 2021: GBP23.6m,
31 October 2021: GBP48.6m). These have been included within cost
of sales.
5 EXCEPTIONAL ITEMS
Exceptional items are those which, in the opinion of the
Directors, are material by size and/or non-recurring in nature and
therefore require separate disclosure within the condensed
consolidated income statement in order to assist the users of the
financial statements in understanding what the Directors consider
to be the underlying business performance of the Group. Where
appropriate any material reversal of these amounts will be
reflected through exceptional items.
Exceptional items for half year ended 30 April 2022 relate to
the same category of items booked in previous financial
periods.
Half year Half year Full year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
Cost of sales GBPm GBPm GBPm
Combustible materials charge 105.0 10.3 31.2
Combustible materials credit - (2.4) (2.4)
--------- --------- ----------
Net combustible materials charge 105.0 7.9 28.8
Inventory impairment credit - (7.6) (8.0)
--------- --------- ----------
Total cost of sales exceptional charge 105.0 0.3 20.8
Net finance expense
Finance expense credit - (0.5) (0.5)
Total exceptional charge/(credit) 105.0 (0.2) 20.3
Tax credit on exceptional charge/(credit) (22.4) - (3.9)
--------- --------- ----------
Total exceptional charge/(credit) after
tax credit 82.6 (0.2) 16.4
--------- --------- ----------
Net combustible materials charge
Following the fire at Grenfell Tower in 2017, and the subsequent
review of building design, construction methods and materials used,
the Group has acted swiftly to identify and remediate any legacy
buildings where it has a constructive or legal obligation to do so.
The Group recognises the significant distress caused to residents
and as such has always sought to engage constructively with
residents, building owners, Government and other affected
stakeholders.
Accordingly, the Group has cumulatively recorded GBP47.8m of net
charges in respect of these obligations between the year ended 31
October 2019 to 31 October 2021.
On 19 April 2022 the Group signed the Government's Building
Safety Pledge, which has a wider perimeter of potential buildings
impacted and has thus contributed to a further GBP105.0m
combustible materials charge for the half year ended 30 April 2022.
Due to the material nature of the charge, it has been recognised as
an exceptional item. See note 12 for additional information.
Inventory impairment credit
In the half year ended 30 April 2021 and the year ended 31
October 2021 the Group released unused inventory impairment which
was previously recognised as exceptional, resulting in a credit in
those periods. For further details see note 4 within the Group's
consolidated financial statements for the year ended 31 October
2021.
Taxation
An exceptional income tax credit of GBP22.4m (30 April 2021:
GBPnil, 31 October 2021: GBP3.9m) has been recognised in relation
to the above exceptional items using the actual tax rate applicable
to these items.
6 OPERATING (LOSS)/PROFIT
Operating loss of GBP50.5m (30 April 2021: operating profit of
GBP39.7m, 31 October 2021: operating profit of GBP93.8m) from
continuing activities is stated after (crediting)/charging:
Half year Half year Full year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
GBPm GBPm GBPm
Joint venture project management fees
received (note 16) (1.0) (0.7) (1.5)
Government grants repaid - 2.5 2.5
Government grants
In the half year ended 30 April 2021 and year ended 31 October
2021 the Group recognised a GBP2.5m charge within administrative
expenses relating to the voluntarily repayment of the Government
JRS grant received in the year ended 31 October 2020.
7 TAXATION
The rate of taxation on (loss)/profit for the half year ended 30
April 2022 is 19.6% (30 April 2021: 20.1%, 31 October 2021: 18.4%)
and reflects the best estimate of the weighted average annual
effective tax rate which is expected to apply to the Group for the
year ending 31 October 2022. This calculation uses rates
substantively enacted by 30 April 2022 as required by IAS 34
'Interim Financial Reporting'.
The Residential Property Developer Tax (RPDT) tax rate of 4.0%
from 1 April 2022 has been substantially enacted during the period
and its impact on current and deferred tax is reflected within
these condensed consolidated financial statements.
8 (LOSS)/EARNINGS PER ORDINARY SHARE
Basic (loss)/earnings per share is calculated by dividing
(loss)/profit attributable to equity shareholders by the weighted
average number of ordinary shares in issue during the period. For
diluted earnings per share, the weighted average number of shares
is increased by the average number of potential ordinary shares
held under option during the period. This reflects the number of
ordinary shares which would be purchased using the difference in
value between the market value of shares and the share option
exercise price. The market value of shares has been calculated
using the average ordinary share price during the period. Only
share options which have met their cumulative performance criteria
have been included in the dilution calculation. The earnings and
weighted average number of shares used in the calculations are set
out below.
(Loss)/ Weighted Per
earnings average share
number
of amount
shares
Half year ended 30 April 2022 - Total GBPm millions pence
Basic loss per share (42.2) 256.5 (16.5)
Effect of share options - - -
-------- -------- ------
Diluted loss per share (42.2) 256.5 (16.5)
-------- -------- ------
Half year ended 30 April 2022 - Pre-exceptional
items
Basic earnings per share 40.4 256.5 15.7
Effect of share options - 0.9 -
------
Adjusted diluted earnings per share 40.4 257.4 15.7
-------- -------- ------
Half year ended 30 April 2021 - Total
Basic earnings per share 29.0 256.8 11.3
Effect of share options - 0.7 -
------
Diluted earnings per share 29.0 257.5 11.3
-------- -------- ------
Half year ended 30 April 2021 - Pre-exceptional
items
Basic earnings per share 28.8 256.8 11.2
Effect of share options - 0.7 -
------
Adjusted diluted earnings per share 28.8 257.5 11.2
-------- -------- ------
Full year ended 31 October 2021 - Total
Basic earnings per share 70.9 256.8 27.6
Dilutive effect of share options - 1.0 (0.1)
------
Diluted earning per share 70.9 257.8 27.5
-------- -------- ------
Full year ended 31 October 2021 - Pre-exceptional
items
Basic earnings per share 87.3 256.8 34.0
Dilutive effect of share options - 1.0 (0.1)
------
Adjusted diluted earnings per share 87.3 257.8 33.9
-------- -------- ------
9 DIVIDS
Half Half Full year
year ended year ended ended
30 April 30 April 31 October
2022 2021 2021
GBPm GBPm GBPm
Dividends recognised as distributions to
equity shareholders in the period:
Final dividend for the year ended 31 October
2021 of 9.5 pence per share (2020: GBPnil
pence per share) 24.4 - -
Interim dividend for the year ended 31 October
2021: 4.1
pence per share (2020: GBPnil pence per share) - - 10.5
----------- ----------- ----------
24.4 - 10.5
The Board approved an interim dividend of 5.5 pence per share on
14 June 2022. The interim dividend will be paid on 13 October 2022
to ordinary shareholders on the Register of Members on 23 September
2022. In accordance with IAS 10 'Events After the Reporting Period'
the proposed dividend has not been included as a liability in this
condensed consolidated half year financial information.
10 INVENTORIES
As at As at As at
30 April 30 April 31 October
2022 2021 2021
GBPm GBPm GBPm
Work-in-progress 1,056.5 934.1 965.7
Completed buildings including show homes 58.6 85.6 57.7
Part exchange inventories 14.5 18.4 14.1
--------- --------- -----------
1,129.6 1,038.1 1,037.5
--------- --------- -----------
In the prior period the remaining unutilised residential 7.5%
sales price provision was released creating an exceptional
inventory impairment credit of GBP7.6m (31 October 2021:
GBP8.0m).
Total inventories are stated net of a net realisable value
provision of GBP12.2m (30 April 2021: GBP24.7m, 31 October 2021:
GBP20.7m), mainly relating to the impairments as disclosed in the
Group's consolidated financial statements for the year ended 31
October 2020.
Of the GBP12.2m remaining NRV provision at 30 April 2022 it is
currently forecast that over half will be used in the second half
of the 2022 financial year as some sites subject to NRV are
forecast to be legally completed.
Movements in the NRV provision As at As at As at
30 April 30 April 31 October
2022 2021 2021
GBPm GBPm GBPm
At beginning of the period 20.7 37.1 37.1
Pre-exceptional NRV charged/(credited)
in the period 1.8 (0.7) 0.8
Pre-exceptional NRV used in the period (3.2) (3.7) (5.2)
Exceptional NRV credited in the period
(note 5) - (7.6) (8.0)
Exceptional NRV used in the period (7.1) (0.4) (4.0)
--------- --------- -----------
Total movement in NRV in the period (8.5) (12.4) (16.4)
--------- --------- -----------
At end of the period 12.2 24.7 20.7
--------- --------- -----------
11 CASH AND CASH EQUIVALENTS, INTEREST-BEARING LOANS AND BORROWINGS
As at As at As at
30 April 30 April 31 October
2022 2021 2021
GBPm GBPm GBPm
Cash and cash equivalents 271.6 228.0 350.7
--------- --------- -----------
Non-current interest-bearing loans and
borrowings
Senior loan notes - maturing 2024 to
2029 (100.0) (100.0) (100.0)
Revolving credit facility and senior
loan notes issue costs 1.7 2.4 2.1
(98.3) (97.6) (97.9)
--------- --------- -----------
At 30 April 2022, the Group had undrawn revolving credit
facilities of GBP250.0m (30 April 2021: GBP250.0m, 31 October 2021:
GBP250.0m).
12 PROVISIONS
As at As at As As at As at As As at As at As at
at at
30 April 30 April 30 30 April 30 April 30 31 October 31 October 31
April April October
2022 2022 2022 2021 2021 2021 2021 2021 2021
Combustible Other Total Combustible Other Total Combustible Other Total
materials provisions materials provisions materials provisions
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
At beginning
of the
period 42.6 0.5 43.1 14.8 0.4 15.2 14.8 0.4 15.2
Provided
in the
period 105.0 - 105.0 10.3 - 10.3 31.2 0.1 31.3
Utilised
in the
period (1.5) (0.2) (1.7) (1.9) - (1.9) (3.4) - (3.4)
At end
of the
period 146.1 0.3 146.4 23.2 0.4 23.6 42.6 0.5 43.1
------------ ----------- ------ ------------ ----------- ------ ------------ ----------- --------
Of which:
Non-current 82.1 - 82.1 8.1 - 8.1 28.4 - 28.4
Current 64.0 0.3 64.3 15.1 0.4 15.5 14.2 0.5 14.7
------------ ----------- ------ ------------ ----------- ------ ------------ ----------- --------
146.1 0.3 146.4 23.2 0.4 23.6 42.6 0.5 43.1
------------ ----------- ------ ------------ ----------- ------ ------------ ----------- --------
Combustible materials
Following the fire at Grenfell Tower in 2017, the Government
announced a public inquiry surrounding the circumstances leading up
to and surrounding the fire, including a review of fire-related
building regulations, notably those relating to external walls, and
issued a new regulatory framework for building owners.
On joining the Group in 2019, the new ELT quickly established a
dedicated internal team, headed by a Special Projects Director, to
oversee and govern the Group's response to this changing regulatory
backdrop. The interpretation of this guidance often varies between
professional advisors who are engaged to oversee the identification
and implementation of any remediation required.
To consider the ongoing changes in regulations, the ELT meets
regularly, chaired by the Chief Executive with attendance from the
Group Finance Director, Group Production Director and Special
Projects Director responsible for this area. In 2019 the team
conducted a full review into all legacy buildings it believed may
be at risk based on guidance at that time, any relevant regulations
and considered any notification of claims. Accordingly, the Group
recognised a combustible materials provision. With ongoing
regulatory changes, this provision was subsequently increased in
financial years 2020 and 2021 to reflect the Group's interpretation
of their legacy portfolio following those changes to the Government
regulatory framework, along with any new notifications received if
it was considered that they represented an expected liability.
In addition, as time has passed the Group has also been able to
apply the benefit of experience to develop a more accurate
assessment and forecast of its potential liability. As such the
Group now has a detailed risk register of all legacy buildings in
scope, which it regularly reviews. The team considers the
application of the latest guidelines against each affected
building, advice from its technical or legal advisors along with
relevant updates or notifications from a variety of stakeholders.
Such sources can include residents, management companies,
freeholders, subcontractors, architects, mortgage lenders, building
control bodies and independent fire engineers.
The risk register considers the progress of any identified
remediation works and adjusts the provision to reflect the Group's
best estimate of any future remediation works. As such the
condensed consolidated half year financial statements are prepared
on the Group's current best estimate of these future costs and this
may evolve in the future based on the result of ongoing
inspections, further advice, the progress and cost to complete of
in-progress remediation works and whether Government legislation
and regulation becomes more or less stringent in this area. See
note 17 for disclosures relating to further potential liabilities
and recoveries relating to the combustible materials provision.
In January 2022, the Secretary of State for the Department for
Levelling Up, Housing and Communities (DLUHC) announced the
Government's intention to widen and lengthen the definition of
legal obligation on developers to fund the remediation of affected
buildings between 11 and 18 metres high and extending the review
period to buildings constructed within the past 30 years. On 19
April 2022 the Group signed the Government's Building Safety Pledge
which commits the Group to remediate a larger number of legacy
buildings.
Accordingly, the Group recorded a further net combustible
materials charge of GBP105.0m in the period. This charge comprises
GBP70.3m specifically for buildings where Building Safety Fund
(BSF) funding had been applied for, which the Group have now agreed
to cover under the Building Safety Pledge, and GBP34.7m for
movements in previous cost estimates and extending the liability
period to 30 years. The further charge is in addition to the
GBP18.4m charged in 2019, GBP0.6m charged in 2020 and GBP28.8m
charged in 2021.
The Group spent GBP1.5m in the period across several buildings
requiring further investigative costs, including balcony and
cladding related works.
The provision of GBP146.1m represents the Group's best estimate
of costs at 30 April 2022. The provision is stated after a related
discount of GBP2.6m, which unwinds to the consolidated income
statement as finance costs over the life of the cash expenditure.
The Group will continue to assess the magnitude and utilisation of
this provision in future reporting periods. The Group recognises
that required remediation works could be subject to further
inflationary pressures and cash outflows on currently unprovided
sites may also become probable in the future.
The Group expects to have completed any required remediation
within a five-year period, using GBP64.0m of the remaining
provision within one year, and the balance within one to five
years.
The Group is continuing to review the recoverability of costs
incurred from third parties where it has a contractual right of
recourse. In the prior half year GBP2.4m was recovered from third
parties, which was recorded as an exceptional credit in the
condensed consolidated income statement. See note 5 for income
statement disclosure.
13 FINANCIAL ASSETS AND LIABILITIES
As at As at As at
30 April 30 April 31 October
2022 2021 2021
Financial assets GBPm GBPm GBPm
Sterling cash deposits 271.6 228.0 350.7
Trade receivables 43.8 28.7 27.2
Amounts due from joint ventures 51.0 56.6 56.0
Other receivables 5.5 4.0 6.0
--------- --------- -----------
Total financial assets at amortised
cost 371.9 317.3 439.9
Financial assets at fair value through
profit and loss 4.8 5.2 5.3
--------- --------- -----------
Total financial assets 376.7 322.5 445.2
--------- --------- -----------
Financial assets at fair value through profit and loss are held
at fair value and categorised as level three within the
hierarchical classification of IFRS 13 'Fair Value Measurement'.
The carrying value of cash and cash equivalents, trade and other
receivables and amounts due from joint ventures is a reasonable
approximation of fair value which would be measured under a level 3
hierarchy.
As at As at As at
30 April 30 April 31 October
2022 2021 2021
Financial liabilities GBPm GBPm GBPm
Senior loan notes 100.0 100.0 100.0
Land payables on contractual terms carrying
interest 57.3 65.0 65.0
Land payables on contractual terms carrying
no interest 122.6 113.5 157.9
Amounts due to joint ventures 0.2 0.1 0.1
Lease liabilities 3.7 5.7 4.6
Other trade payables 40.2 35.7 32.0
Other payables 5.7 9.2 11.2
Accruals 275.5 214.5 264.1
--------- --------- -----------
Total financial liabilities at amortised
cost 605.2 543.7 634.9
--------- --------- -----------
The carrying amounts of the Group's financial liabilities is
deemed a reasonable approximation to their fair value.
14 (NET DEBT)/NET CASH INCLUDING LAND CREDITORS
As at As at As at
30 April 30 April 31 October
2022 2021 2021
GBPm GBPm GBPm
Cash and cash equivalents 271.6 228.0 350.7
Non-current interest-bearing loans and
borrowings (98.3) (97.6) (97.9)
--------- --------- -----------
Net cash 173.3 130.4 252.8
Land payables on contractual terms carrying
interest (57.3) (65.0) (65.0)
Land payables on contractual terms carrying
no interest (122.6) (113.5) (157.9)
--------- --------- -----------
(Net debt)/net cash including land
creditors (6.6) (48.1) 29.9
--------- --------- -----------
15 SHARE CAPITAL
Shares Nominal Share Share
issued value capital premium
account
number pence GBPm GBPm
As at 30 April 2022, 30 April 2021
and 31 October 2021 256,920,539 5 12.8 74.2
------------ -------- --------
16 RELATED PARTY TRANSACTIONS
Related parties are consistent with those disclosed in the
Group's consolidated financial statements for the year ended 31
October 2021. On the 6 May 2022 the Group disposed of its 50% share
in Bonner Road LLP to its joint venture partner.
The Group had the following transactions with its joint ventures
in the period:
Half year Half year Full year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
GBPm GBPm GBPm
Interest income on joint venture funding 1.4 1.4 2.8
Project management fees received 1.0 0.7 1.5
Amounts due from joint ventures, net
of expected credit losses 51.0 56.6 56.0
Amounts due to joint ventures 0.2 0.1 0.1
Funding to joint ventures (3.4) (7.5) (13.0)
Repayment of funding from joint ventures 7.5 5.9 11.5
17 CONTINGENT LIABILITIES
There are performance bonds and other engagements, including
those in respect of joint venture partners, undertaken in the
ordinary course of business. It is impractical to quantify the
financial effect of performance bonds and other arrangements. The
Directors consider the possibility of a cash outflow in settlement
of performance bonds and other arrangements to be remote and
therefore this does not represent a contingent liability for the
Group.
In the ordinary course of business, the Group enters into
certain land purchase contracts with vendors on a conditional
exchange basis. The conditions must be satisfied for the Group to
recognise the land asset and corresponding provisions within the
condensed consolidated statement of financial position. No land
payable in respect of conditional land acquisitions has been
recognised.
The Group provides for all known material legal actions, where
having taken appropriate legal advice as to the likelihood of
success of the actions, it is considered probable that an outflow
of economic resource will be required, and the amount can be
reliably measured. No material contingent liability in respect of
such claims has been recognised since there are no known claims of
this nature.
In 2019, the Group created a combustible materials provision,
which was subsequently increased in financial years 2020 and 2021.
This provision is subject to the Directors' estimates on costs and
timing, and the identification of legacy developments where the
Group may have an obligation to remediate or upgrade to meet new
Government guidance where it is responsible to do so. This
provision has been difficult to reliably estimate due to the
changing nature of Government regulation in this area, and where
the Group is no longer the freehold owner and has no visibility
over remediation requirements. As such the Group has historically
not disclosed a range of expected future costs. As a consequence of
signing the Government's Building Safety Pledge on 19 April 2022,
the Group has now become responsible for the remediation of a
larger number of buildings, constructed over a longer historic time
period. Accordingly, whilst the Group believes that most
significant liabilities will have been identified through the
process of building owners assessing buildings and applying for BSF
funding, there is a risk of contingent liabilities arising if
additional buildings are subsequently identified requiring
remediation. Due to the enduring challenges of developing a
reliable estimate of these possible costs, the Group continues to
not disclose an expected range.
The Group is reviewing the recoverability of costs incurred from
third parties where it has a contractual right of recourse. As
reflected in the prior year financial statements the Group has a
track record of successfully obtaining such recoveries, however no
contingent assets have been recognised in these condensed
consolidated financial statements for such items.
CREST NICHOLSON HOLDINGS PLC
HALF YEAR RESULTS FOR THE SIX MONTHSED 30 APRIL 2022
ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
The Group uses a number of alternative performance measures
(APM) which are not defined within IFRS. The Directors use the APM,
along with IFRS measures, to assess the operational performance of
the Group as detailed in the Strategic Report on pages 1 to 69 of
the Group's Annual Integrated Report for the year ended 31 October
2021, and above. Definitions and reconciliations of the financial
APM used compared to IFRS measures, are included below:
Adjusted performance metrics
Adjusted performance metrics as shown below comprise statutory
metrics adjusted for the exceptional items as presented in note 5
of the condensed consolidated financial statements. These measures
are not defined by IFRS and therefore may not be directly
comparable with other company's APM, including those in the Group's
industry. APM should be considered in addition to, and are not
intended to be a substitute for, or superior to, IFRS measurements.
The exceptional items have a material impact to reported
performance and arise from recent, unforeseen events. As such, the
Directors consider these adjusted performance metrics reflect a
more accurate view of its core operations and underlying business
performance.
Exceptional
Half year ended 30 April 2022 Statutory items Adjusted
Gross (loss)/profit GBPm (27.5) 105.0 77.5
Gross (loss)/profit margin % (7.5) 28.8 21.3
Administrative expenses GBPm (20.7) - (20.7)
Administrative expenses/overhead
efficiency % 5.7 - 5.7
Operating (loss)/profit GBPm (50.5) 105.0 54.5
Operating (loss)/profit margin % (13.9) 28.8 15.0
(Loss)/profit before tax GBPm (52.5) 105.0 52.5
Income tax credit/(expense) GBPm 10.3 (22.4) (12.1)
(Loss)/profit after tax GBPm (42.2) 82.6 40.4
Basic (loss)/earnings per share Pence (16.5) 32.2 15.7
Diluted (loss)/earnings per share Pence (16.5) 32.2 15.7
Exceptional
Half year ended 30 April 2021 Statutory items Adjusted
Gross profit GBPm 63.0 0.3 63.3
Gross profit margin % 19.4 0.1 19.5
Administrative expenses GBPm (23.1) - (23.1)
Administrative expenses/overhead
efficiency % 7.1 - 7.1
Operating profit GBPm 39.7 0.3 40.0
Operating profit margin % 12.2 0.1 12.3
Net finance expense GBPm (4.3) (0.5) (4.8)
Profit/(loss) before tax GBPm 36.3 (0.2) 36.1
Income tax (expense)/credit GBPm (7.3) - (7.3)
Profit/(loss) after tax GBPm 29.0 (0.2) 28.8
Basic earnings/(loss) per share Pence 11.3 (0.1) 11.2
Diluted earnings/(loss) per share Pence 11.3 (0.1) 11.2
Exceptional
Full year ended 31 October 2021 Statutory items Adjusted
Gross profit GBPm 145.9 20.8 166.7
Gross profit margin % 18.5 2.7 21.2
Administrative expenses GBPm (51.1) - (51.1)
Administrative expenses/overhead
efficiency % 6.5 - 6.5
Operating profit GBPm 93.8 20.8 114.6
Operating profit margin % 11.9 2.7 14.6
Net finance expense GBPm (8.6) (0.5) (9.1)
Profit before tax GBPm 86.9 20.3 107.2
Income tax expense GBPm (16.0) (3.9) (19.9)
Profit after tax GBPm 70.9 16.4 87.3
Basic earnings per share Pence 27.6 6.4 34.0
Diluted earnings per share Pence 27.5 6.4 33.9
Gearing including land creditors
Gearing including land creditors equals (net debt)/net cash
including land creditors divided by equity shareholders' funds add
net debt including land creditors or less net cash including land
creditors.
As at As at As at
30 April 30 April 31 October
2022 2021 2021
(Net debt)/net cash including land
creditors (note 14) GBPm (6.6) (48.1) 29.9
------------------ --------- -----------
Equity shareholders' funds GBPm (846.3) (869.1) (901.6)
(Net debt)/net cash including land
creditors GBPm (6.6) (48.1) 29.9
GBPm (852.9) (917.2) (871.7)
------------------ --------- -----------
Gearing including land creditors % 0.8 5.2 (3.4)
Return on capital employed (ROCE)
Return on capital employed equals rolling 12 month adjusted
operating profit before joint ventures divided by the average of
opening and closing capital employed over the same 12 months
(capital employed = equity shareholders' funds plus net borrowing
or less net cash).
Half Half Full
year year year
ended ended ended
30 April 30 April 31 October
2022 2021 2021
Adjusted operating profit - rolling 12
month GBPm 129.1 86.0 114.6
Average of opening and closing capital
employed over same 12 months GBPm 705.9 817.1 665.9
ROCE % 18.3 10.5 17.2
Half Half Half
year year year Full Full
ended ended ended year ended year ended
30 April 30 April 30 April 31 October 31 October
2022 2021 2020 2021 2020
Adjusted operating profit
For reporting period/year GBPm 54.5 40.0 11.1 114.6 57.1
Second half of the prior
year where applicable GBPm 74.6 46.0 n/a
---------- ---------- ------------
Rolling 12 month GBPm 129.1 86.0 114.6
---------- ---------- ------------
As at As at As at As at As at
30 April 30 April 30 April 31 October 31 October
2022 2021 2020 2021 2020
Capital employed GBPm GBPm GBPm GBPm GBPm GBPm
Equity shareholders' funds GBPm 846.3 869.1 802.1 901.6 825.3
Net (cash)/net debt (note
14) GBPm (173.3) (130.4) 93.3 (252.8) (142.2)
---------- ---------- ---------- ------------ ------------
Closing capital employed GBPm 673.0 738.7 895.4 648.8 683.1
---------- ---------- ---------- ------------ ------------
Average closing capital
employed GBPm 705.9 817.1 665.9
---------- ---------- ---------- ------------ ------------
CREST NICHOLSON HOLDINGS PLC
HALF YEAR RESULTS FOR THE SIX MONTHSED 30 APRIL 2022
Independent review report to Crest Nicholson Holdings plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Crest Nicholson Holdings plc's condensed
consolidated interim financial statements (the "interim financial
statements") in the unaudited interim results of C rest Nicholson
Holdings plc for the 6 month period ended 30 April 2022 (the
"period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
The interim financial statements comprise:
-- the Condensed Consolidated Statement of Financial Position as at 30 April 2022;
-- the Condensed Consolidated Income Statement and the Condensed
Consolidated Statement of Comprehensive Income for the period then
ended;
-- the Condensed Consolidated Cash Flow Statement for the period then ended;
-- the Condensed Consolidated Statement of Changes in Equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the unaudited
interim results of Crest Nicholson Holdings plc have been prepared
in accordance with UK adopted International Accounting Standard 34,
'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the unaudited
interim results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The unaudited interim results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the
unaudited interim results in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the unaudited interim results based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 June 2022
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