Crest Nicholson made a pre-tax loss of £51m for the six months ended 30th April 2020, citing the impact of Covid-19, but profits for the full financial year will now be ahead of previous expectations, the board has revealed.
Crest Nicholson’s adjusted profit before tax for the full year to 31st October 2020 will be at the upper end of the previously guided range of £35m to £45m, the board said, and “significantly ahead of consensus of £37.9m”.
Sales have remained strong and are now slightly ahead of pre-lockdown. Forward sales as at 31 October 2020 were 2,289 units and £480.5m gross development value, compared to 2,013 units and £378.0m GDV this time last year.
The balance sheet shows net cash in excess of £135m, up from £37.2m at the start of the year.
Crest Nicholson has also been focusing on cost-cutting since the arrival of Peter Truscott as chief executive from Galliford Try in September 2019. This programme has found £30m of specification savings through better discipline in procurement and £40m of gross margin improvements on existing and future schemes by re-plotting the layout and the types of units on those schemes. [See previous report here.]
“The release of pent-up demand, whether due to customers putting off moving because of Brexit uncertainty or subsequent Covid-19 disruption, and the benefits of the stamp duty holiday, have supported near-term confidence levels in the housing market,” the company said.
“We are also seeing evidence of changing customer attitudes and requirements as a result of the pandemic. Expectations that Covid-19 has driven a structural change to the balance of office and home working has featured strongly in customers' reasons for considering a Crest Nicholson home. Our land portfolio and developments are concentrated in southern England and the commuter belt to major towns and cities, especially London.
“However, we have not simply benefitted from a better than anticipated market backdrop. We have made strong progress implementing the updated strategy we outlined in January 2020. We have completed our internal reorganisation across our operating divisions and head office... we have now assembled an experienced group of managing directors from across the sector who are focused on restoring the group to being one of the UK's leading housebuilders. In line with best practice in the sector, we have instilled a culture of continually reviewing the profitability of our schemes and making changes where appropriate.”
Shareholder dividends are set to be reinstated from the interim 2021 results, on a two and a half times cover basis.
Peter Truscott said: "The introduction of another national lockdown will undoubtedly bring fresh challenges, but we welcome the government's support to maintain construction activity and for the housing market to remain open for business. We will continue to ensure our colleagues, suppliers and customers' health &safety on site, and in our offices, is our number one priority as we trade through this ongoing situation.
"Although the macro-economic outlook is uncertain our strategy will remain unchanged. We will maintain our strong focus on delivering operational efficiencies and if our trading becomes significantly disrupted we will act decisively again to protect our enhanced balance sheet. However, we expect the housing market to remain resilient to the impacts of Covid-19 and as such we are well positioned to capitalise on that demand, particularly considering our product range and focus in southern England."
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