REG - Crest Nicholson Hdgs - Final Results
04/02/2025 07:15
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RNS Number : 7527V Crest Nicholson Holdings PLC 04 February 2025
Crest Nicholson Holdings plc
FULL YEAR RESULTS IN LINE WITH GUIDANCE
NEW STRATEGIC PRIORITIES TO DELIVER SUSTAINABLE GROWTH, ENHANCED PROFITABILITY
AND CONSISTENT SHAREHOLDER VALUE CREATION
Crest Nicholson Holdings plc ('Crest Nicholson' or 'Group') today announces
its Preliminary Results for the year ended 31 October 2024:
Martyn Clark, CEO commented
'I am pleased to report that we delivered FY24 results in line with guidance
issued at the start of my tenure and finished the year with better than
expected net debt. Nevertheless, this has been a very tough and disappointing
year for the business. Despite this, there must be acknowledgement of the hard
work and dedication of our colleagues at Crest Nicholson, and I extend my
heartfelt thanks to them for their continued commitment to the Group.'
'Since I joined in June, we have worked with renewed vigour to make
significant operational progress, revitalising our sales process, improving
governance, upgrading management information to allow for better decision
making, and enhancing operational rigour and cost control. We have implemented
adjustments that are already delivering positive outcomes, including a strong
focus on customer service which has ensured we are consistently achieving over
90% customer satisfaction rates, positioning us consistently as a 5 star
service provider. We now have greater clarity relating to legacy issues with
necessary provisions in place, notably via our updated fire remediation
provision which includes all buildings known to be in scope. This affords us
the transparency and understanding to define and deliver a clear future
strategy for the business and ensure Crest Nicholson realises its full
potential.'
'I have undertaken a comprehensive review to understand the business, which
has included obtaining both internal and external perspectives. This has
allowed me to identify the market opportunity and craft a strategy that will
allow us to maximise that opportunity and optimise the company for sustainable
growth with an appropriately scaled cost base that will enhance profitability
and consistent shareholder value creation. I look forward to updating you in
March 2025 with the findings, which will help formulate our strategic focus
for the year and beyond and our pathways to achieve our strategic goals.'
'Our priorities are to build homes of exceptional quality efficiently, deliver
outstanding service to customers and thereby optimise value from our
high-quality land portfolio to ensure the delivery of sustainable returns for
stakeholders. While economic and political challenges persist, I am cautiously
optimistic about the year ahead. We see pent-up demand from customers seeking
high-quality, well-designed homes in desirable locations. As a housebuilder
with a strong land bank and brand, Crest Nicholson is well-positioned to meet
this demand. Early indicators, including increased customer interest and
enquiries and sales rates in January, are encouraging, though we remain
mindful of macroeconomic uncertainty and the pace of interest rate reductions
and the impact this may have on 2025 profitability which remains below long
term averages.'
'With our initiatives and the anticipated stabilisation of the macroeconomic
environment, we believe we are well-positioned to navigate this evolving
landscape effectively.'
FY24 results summary
FY24 REPRESENTED % change
£m (unless otherwise stated) FY23(3)
Adjusted basis (1)
Revenue 618.2 657.5 (6.0%)
Operating profit 31.3 50.8 (38.4)
Operating profit margin 5.1% 7.7% (260bps)
Profit before tax 22.4 48.0 (53.3%)
Basic earnings per share (p) 5.6 14.2 (60.6%)
Statutory basis
Revenue 618.2 657.5 (6.0%)
Operating (loss)/profit (128.7) 29.9 (530.4%)
Operating profit margin (20.8%) 4.5%
(Loss)/profit before tax (143.7) 23.1 (722.1%)
Basic (loss)/earnings per share (p) (40.4) 7.0 (677.1%)
Other metrics
Home completions (units) 1,873 2,020 (7.3%)
Net (debt)/cash (1,2) (8.5) 64.9 (113.1%)
Dividend per share (p) 2.2 17.0 (87.1%)
1. Adjusted basis represents the FY24 and FY23 statutory figures adjusted
for exceptional items as disclosed in note 4. Adjusted performance metrics and
net cash are non-statutory alternative performance measures (APMs) used by the
Directors to manage the business which they believe should be shared for a
greater understanding of the performance of the Group. The definitions of
these APMs and the reconciliation to the statutory numbers are below. Refer to
the Alternative Performance Measures (unaudited) below.
2. Net cash is defined as cash and cash equivalents less interest-bearing
loans and borrowings. See note 26 to the consolidated financial statements.
3. See note 29 of the consolidated financial statements for an explanation of
the prior year representation.
· Group completions of 1,873, comprised of 1,047 open market units,
495 units of affordable and 331 bulk completions
· FY24 open market sales rate at 0.48 (FY23: 0.52), average outlets
in the year at 44 (FY23: 47)
· Four land sales of £45.7m relating to future phases of current
sites that the Group would not be able to access for housebuilding for several
years
· Year-end land creditors at £131.6m, (FY23: £205.5m)
· Enhanced focus on improvements in cash management delivered
better than expected year end net debt at £8.5m
· Pretax exceptional charge at £166.1m, including £131.7m related
to additional fire remediation provision which covers all known 291 buildings
within the scope of the Developer Remediation Contract
· Statutory operating loss £(128.7)m, (FY23: operating profit
£29.9m); statutory loss before tax £(143.7)m, (FY23: operating profit before
tax £23.1m).
FY24 operational summary
· Practical build completion was finally achieved at Farnham in
September. This has been a challenging and complex development. We are
disappointed with the additional costs incurred in FY24 but the majority of
residential units are now occupied with less than 13% of remaining apartments
to sell through
· The Group has continued to incur some additional costs on other
remaining legacy sites but continues to progress in trading out of these
schemes
· The Group has made significant progress of its assessment of all
buildings within the scope of the Developer Remediation Contract. We are
therefore now in a position to account for the expected costs for non-surveyed
buildings within its scope. As a result, the total fire remediation provision
at the 2024 year end is £249.3m and compares with £145.2m at the 2024 half
year
· During the year we selectively made land investments in
appropriately scaled sites, acquiring 1,158 plots to ensure a good land
pipeline. The Group has sufficient fully permitted land for the planned build
programme for FY25
· Re-focused the leadership team to enforce the governance and
oversight needed and continued to improve operational controls, checks and
balances throughout the business
· Identified weaknesses in the management information systems and
implemented important enhancements for timely, data-driven decision-making
· The Group has continued to drive higher levels of customer
satisfaction and has consistently achieved over 90% customer satisfaction and
5 star scores throughout 2024
· Commenced more comprehensive training of the sales team with
reformed incentive structures to align with service excellence and
profitability
· Introduced a more robust commercial and build cost control system
in H2 2024 to better manage and control costs and site budgets.
· Identified the actions needed to reduce our Work In Progress
· Made good progress in our sustainability agenda and targets,
continued to align our operations to reduce greenhouse gas emission;
successfully implemented measures to ensure compliance with Biodiversity Net
Gain regulations.
Current trading and outlook
Recent weeks have shown an ongoing incremental improvement in sales
performance, supported by encouraging early indicators such as increased
website visits and follow-up appointments. However, the slower than
anticipated pace of interest rate reductions continues to weigh on the ability
to convert indications of interest and is tempering the housing market
recovery. We remain cautious but anticipate greater stabilisation in the
trading environment during the second half of 2025, underpinned by pent-up
demand for good quality homes. As at the end of January 2025, the forward
order book for FY25 was 1,051 units.
Guidance
The Group provides the following guidance for FY25:
Open market units 1,050 - 1,150
Bulk and affordable units 650 - 750
Outlets 40-42
Sales rate 0.5 - 0.6
Interest £10m - £12m
Profit before tax £28m - £38m
Net debt £40m - £90m
Analyst and investor meeting, conference call and webcast
There will be a meeting for analysts at 9.00 am today at Norton Rose
Fulbright, 3 More London Riverside, London SE1 2AQ hosted by Martyn Clark,
Chief Executive Officer and Bill Floydd, Chief Financial Officer. To join the
presentation, please use the following link: FY24 prelims results webcast
(https://www.investis-live.com/crest-nicholson/67813d0483fc4b000e146206/chet)
There is also a facility to join the presentation and Q&A session via a
conference call. Participants should dial +44 203 936 2999 and use
confirmation code 927132. 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
Teneo
James Macey White / Giles Kernick
+44 (0) 207 260 2700
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
Registered no. 6800600
Chief Executive Officer's statement
It is my pleasure to present my first set of results as Chief Executive
Officer of Crest Nicholson. The unique circumstances of my introduction to the
business coincided with the unhelpful distraction of an unsuccessful,
unsolicited takeover approach for the Group. This allowed me to gain real
insight into, and a comprehensive understanding of, our operations, our
people, our strengths, the areas we need to address and the many opportunities
for us to grow the business profitably and create value for our shareholders
within a more condensed period. I am encouraged by the potential I see within
the Group and am increasingly confident of being able to shape Crest Nicholson
into a best-in-class UK housebuilder.
My initial focus has been on implementing early operational changes at pace,
and ensuring we have a solid foundation for the years ahead. As part of that,
I have reviewed the existing Executive Committee to ensure we have the right
breadth of expertise and capability, in order to enhance decision making,
strengthen internal controls, address operational challenges and drive future
strategic priorities.
I have also made considerable progress in reviewing our strategy and defining
my long-term vision for Crest Nicholson to re-invigorate the business for
growth, focussing on three key strategic priorities:
· building homes of exceptional quality efficiently;
· delivering outstanding service to customers, and optimising value
from the Group's high quality land portfolio;
· growing private sales and emphasising value-led growth to enhance
returns and margins.
I look forward to sharing with the market in March more information on those
strategic priorities and the initiatives I will implement to maximise
sustainable value for all Crest Nicholson shareholders.
2024 has undoubtedly been a challenging year for Crest Nicholson. Previous
failures to identify and implement appropriate internal controls within the
Group, particularly in relation to legacy operational issues on complex
developments and legacy sites have significantly impacted our financial
performance. We have taken steps to address these shortcomings. Furthermore,
the market was affected by the impact of persistently high interest rates and
subdued consumer confidence. Despite these challenges, we have delivered 2024
results in line with guidance updated at the start of my tenure, and through a
rigorous focus on cash management have exited the year with better than
expected net debt. This is a testament to my colleagues' dedication and
commitment during highly uncertain times, and I thank them for their hard
work.
First impressions
Since joining, I have been encouraged by the strengths I see within our
business. We have a valuable portfolio of land assets, which positions us well
to optimise value creation as market conditions evolve. The team is talented
and dedicated. However, my initial assessment has identified certain
operational areas that need attention to improve efficiency and performance.
There is also an opportunity to streamline processes, tighten controls and
enhance our approach to project execution to meet our goals effectively.
Actions Taken During the Year
My initial focus has been on implementing early operational changes and
ensuring we have a solid foundation for the years ahead. As part of that, I
have expanded the existing Executive Committee to ensure we have the right
breadth of expertise and capability in order to enhance decision making,
strengthen internal controls, address operational challenges and drive future
strategic priorities. We have also taken several key actions during the year
to set us on the right path, and support our strategic goals focusing on
actions that can deliver immediate improvements. For example, we are upgrading
our management information systems, which will enable better and more timely
data-driven decision making across the business. I have also noticed a marked
positive cultural change over the past few months, as cross-functional teams
are now working together more effectively, creating a unified focus on our
strategic priorities and promoting a results-driven environment.
Delivering outstanding service to customers
It is essential to recognise that we are, at our core, a business offering
customers one of the most significant emotional and financial purchases of
their lives. We have taken meaningful steps to enhance our customer service,
ensuring a seamless and exceptional experience throughout the entire sales
journey and beyond. Since January 2024, we have consistently achieved a
customer satisfaction rating above the 90% required to achieve 5 star status
from the Home Builders Federation. Our sales team has undergone comprehensive
recurrent training to enhance the skills to better meet our customers' needs.
Initial feedback from both the sales team and customers has been positive and
we will continue to invest in training going forward. Additionally, we have
repositioned our incentive structure to align with our goal of maximising
value while maintaining high service standards.
We are developing a new customer portal, which will not only support customers
during the reservation stage, but also provide them with ongoing access and
visibility of the progression of the sales and build process for their home.
This is due to be rolled out during 2025. Post-sales customer service has also
been significantly improved, with dedicated site teams now in place to address
warranty items promptly and efficiently. The introduction of new systems to
track performance in resolving warranty matters will help us significantly
improve customer response time. These enhancements reflect our unwavering
commitment to delivering quality and ensuring customer satisfaction.
The development of our product offering will be central to our activity in
2025. Several factors will drive these initiatives including changing
regulations (such as the Future Homes Standard), raising quality and, more
importantly, meeting the needs and aspirations of our customers. We have
already enhanced some of the specifications of our homes.
Building homes of exceptional quality, efficiently
Building right first time is essential to deliver an exceptional customer
experience and drive profitable growth. It reduces warranty claims and costs
and hence safeguards our brand value while maintaining the trust of our
customers. In order to optimise resources to maximise returns, we have taken
significant steps in recent months to enhance our build quality, to ensure
operational efficiency and to manage our work in progress effectively. This
means that our build rate needs to be aligned with our expected sales rate and
costs need to be closely monitored for each development. We appointed a new
Group Commercial Director, whose leadership has driven the implementation of
an enhanced system for establishing site budgets and managing cost effectively
in the second half of the year. Additionally, to further improve build
precision, we introduced new software to track build progress and sign off
quality assessments at each build stage, including the capture of photographic
evidence.
We have continued to focus on improving our build quality and are pleased that
independent measures of quality assessed by NHBC and Premier Guarantee show an
improvement on 2023. Furthermore, NHBC has been appointed to carry out
Construction Quality Reviews on all sites. These will serve as an independent
key performance indicator, providing a quantitative assessment of build
quality across construction sites, which we will use to assist us to align
with best practices and maintaining high standards in construction quality.
Health and safety remain a top priority for the Group. We continue to maintain
the highest standard to ensure the wellbeing of our teams and subcontractors,
reinforcing our commitment to a safe working environment.
Optimising value from our high quality portfolio
Our land portfolio is strategically located in highly sought-after areas. We
are focused on leveraging our high quality land assets to maximise their
value, ensuring that every site is optimised for profitability. The portfolio
includes a mix of site sizes. We are conducting a comprehensive review of our
land bank with a focus on managing our cash outlay while increasing the number
of outlets over the medium term.
Fire remediation
In December 2024, the Group signed up to the Joint Plan to accelerate
developer-led remediation and improve resident experience (Joint Plan to
Accelerate), requiring developers to complete all assessments of buildings
under the scope of the Developer Remediation Contract by July 2025 and
commence work on 100% of affected buildings by July 2027. The timing aligns
closely with our revised business plan, with the associated costs integrated
into our budgets and cash flow forecasts.
The Group has made significant progress, supported by our newly centralised
Special Projects division, and is nearing completion of its assessment of all
buildings within the scope of the Developer Remediation Contract. As a
consequence of additional and better information, we are now in a position to
account for the expected costs for known buildings within scope. As a result,
the total fire remediation provision at the 2024 year end is £249.3m and
compares with £145.2m at the 2024 half year.
In determining the quantum of the provision whilst acknowledging that no
approach can eliminate all uncertainty, the Group has applied its experience
to date and the most plausible current risk scenario to ensure it accounts for
its probable liabilities and maintains an appropriate and responsible approach
to fire safety remediation provisions. The provision does not include any
third-party recoveries or contributions that could offset these costs. The
remediation programme is expected to be completed during 2029, exceeding the
obligations of the Joint Plan to Accelerate, and is intended to be funded from
the Group's cash flow and balance sheet. This approach highlights our
commitment to transparency and financial responsibility, and we believe it
should address lingering concerns regarding Crest Nicholson's future legacy
fire-related liabilities, providing greater confidence in our valuation and
business case.
Further details can be found in the Financial Review on pages 30-31 of the
2024 Annual Report and Accounts to be published in February 2025.
Sustainability
We remain committed to our sustainability strategy which focuses on three
priority areas: protecting the environment, making a positive impact on our
communities, and operating the business responsibly. In 2024, we made good
progress against our own targets and continue to work collaboratively with our
suppliers and the wider industry on a range of sustainability initiatives.
More details on our sustainability progress and focus can be found on pages
19-27 of the 2024 Annual Report and Accounts to be published in 2025.
Strategic focus for 2025
In the coming year, our primary goal is to reinvigorate the business for
growth. During the year, I have undertaken a comprehensive review to
understand the business, which has included obtaining both internal and
external perspectives. This has allowed me to identify the market opportunity
and craft a strategy that will allow us to maximise that opportunity and
optimise the Group for sustainable growth, enhanced profitability and
consistent shareholder value creation, based upon the three key strategic
priorities set out above. The changes to the business and the strategic
direction we are heading will not happen overnight but I am confident we will
deliver success.
I look forward to updating you in March 2025 with the findings when I will
also set out our medium-term strategic focuses and goals for ensuring Crest
Nicholson realises its full potential.
Summary and Outlook
2025 will be a year of transition for Crest Nicholson as we implement and
start to deliver on our new strategy for profitable growth. We are
well-positioned with sufficient land with full planning permission to support
our planned outlets and volumes.
The broader economic landscape is showing tentative signs of stabilisation,
even if at a more tempered pace than expected, providing a slightly more
supportive environment for growth in 2025. A more stable and benign interest
rate climate will help to restore confidence among both developers and
homebuyers, reducing financial pressures and enabling greater investment in
housing projects.
Additionally, the government has intensified its efforts to address the
critical shortage of homes in the UK, introducing targeted measures to
streamline and improve the planning process. Such initiatives are not only
vital for addressing the housing crisis but also provide a strong foundation
for the sector to meet the country's pressing demand for homes.
Reflecting on my first months, I am encouraged by the progress we have made
and the potential we have to drive meaningful changes. I am confident that we
can navigate the challenges ahead. I look forward to leading Crest Nicholson
through this transformative period, creating a stronger, more resilient
business and optimising the Group for sustainable growth, enhanced
profitability and consistent shareholder value creation.
Martyn Clark
Chief Executive Officer
Financial Review
Completions and revenue
Open market private completions were 1,047 (2023: 1,222), open market bulk
completions were 331 (2023: 273) and affordable completions were 495 (2023:
525). As a result, total home completions were 1,873 (2023: 2,020), down 7.3%,
reflecting a weak order book at the start of the year as a consequence of low
levels of confidence in the housing market. There was some modest improvement
in market sentiment as the year progressed, largely as a result of the 0.25%
interest rate reduction in August 2024.
The total weighted average selling price for the Group was substantially
unchanged at £344k (2023: £347k). On like-for-like units, we experienced
modest sales price deflation in the first half of the financial year, which
reversed in the second half of the year to leave the average selling prices
largely unchanged, but with some positive momentum being taken into 2025.
The open market private sales rate as measured by sales per outlet week, was
0.48 for the year compared with 0.52 in 2023. The housing market remained
sluggish throughout 2024 compared with much of the previous decade, with
comparatively high mortgage rates, low consumer confidence and an absence of
meaningful government support all contributing to the suppressed levels of
demand. As the year progressed, a commencement of loosening monetary policy
and a new government with more expansive housing aspirations provided some
level of improvement in the overall sales environment.
Average sales outlets were 44 (2023: 47). Planning matters continue to take
much longer to progress sites to operational development and associated
environmental impacts such as water and nutrient neutrality further delay
planning decisions. We therefore expect a minor reduction in our sales outlets
in 2025. As a result of these factors, revenue from housing totalled £572.5m
(2023: £638.0m), a reduction of 10.3%.
We completed £45.7m (2023: £19.5m) of land sales on sites that we would not
have been able to access ourselves for several years.
Total revenue for the year was £618.2m, compared with £657.5m in 2023, a
decline of 6.0%.
Representation of 2023
The current year consolidated income statement presents other operating
income, other operating expenses and administrative expenses separately, with
comparators being represented. Following the in-year review, completed site
accruals are now split into accruals and provisions, also with comparators
being represented. These changes provide greater clarity for users of the
accounts and are marked by footnotes throughout the 2024 Annual Report which
is to be published in February 2025 and explained fully in note 29 of the
consolidated financial statements. The Group's accounting policy for
exceptional items has also been revised to include completed site costs
relating to changes in the estimate of costs associated with completed sites
which are no longer part of the core strategy. The previous year's completed
sites charge has been represented to align with the revised policy.
Gross profit
Adjusted gross profit was £86.8m (2023: £105.6m¹), a reduction of 17.8%.
The reduction in gross profit substantially reflected the continued weak sales
environment. Additionally, we recognised pre-exceptional costs of £7.3m in
respect of completed sites as a result of a one-off review. During the year
£14.2m (2023: £13.4m) additional NRV was charged consisting of £8.5m,
mainly on legacy developments and £5.7m on freehold reversionary interests as
disclosed in note 4.
Gross profit on lands sales was £10.1m (2023: £7.1m). Adjusted gross profit
margin was 14.0% (2023: 16.1%¹). Gross loss was £71.6m (2023: gross profit
£84.7m¹).
Operating profit and margin
Adjusted operating profit of £31.3m (2023: £50.8m¹) was a decline of
£19.5m (38.4%) as a result of the gross profit reduction of £18.8m and an
increase in administrative costs. The operating loss for the year was £128.7m
after an exceptional items charge of £160.0m (2023: £29.9m¹ operating
profit after an exceptional items charge of £20.9m).
Control environment
As noted in my report last year, during 2023 we identified that controls were
not operating effectively in two divisions. The control weaknesses related to
the divisions' management and forecasting of build costs and margin.
At the end of 2023, we completed the rollout of a new ERP system that
strengthened the key financial and commercial controls across the business.
During 2024, further control improvements were implemented. There has been
significant cultural change within the business, led by the new Chief
Executive Officer, Executive Committee and senior management, on the
importance of both governance and transparency in the business. A Chief
Operating Officer was appointed on 1 January 2024 and a Group Commercial
Director joined the business in a newly established role on 3 June 2024.
I changed the reporting line for divisional finance directors from divisional
managing directors to myself, to increase the level of independence and
oversight within divisional management teams. Numerous other governance and
reporting improvements have been implemented during the course of the year to
improve the control environment.
As a result the control environment is operating effectively and we are
continuing to monitor the processes to identify any further improvements that
can be made.
Exceptional items
An exceptional net cost of sales charge of £158.4m was recognised in the
year, comprising combustible materials charge of £131.7m, combustible
materials recovery from third parties of £4.4m, completed site costs of
£25.0m, freehold inventories written off of £5.7m and professional legal
fees of £0.4m.
In the prior year, as a consequence of signing the Developer Remediation
Contract on 13 March 2023, the Group entered into contractual commitments with
the government to identify and remediate those buildings it has developed with
possible life-critical fire safety defects.
The £131.7m combustible materials charge comprises £98.5m relating to the
Group's estimated remedial costs for non-surveyed buildings and £15.2m
remedial costs of buildings surveyed in the year requiring remediation, both
of which were previously disclosed as contingent liabilities, and £18.0m
relating to changes in forecast build cost scope and price over the duration
of remediation for buildings upon which a provision was already recognised.
With additional information, the Group is now able to estimate a charge for
non-surveyed buildings based on its experience of the cost analysis of
surveyed and tendered buildings. The number of surveyed buildings has
increased significantly over the year enabling the Group to compute a reliable
estimate for these buildings.
The Group has also undertaken a comprehensive review, supported by external
consultants, of the Group's remaining cost obligations on completed sites.
Initially, work focused on four sites that were completed prior to 2019 when
the Group closed its Regeneration and London divisions. Subsequently, a review
has been carried out on all sites that the Group has completed but maintains
an obligation to carry out remediation or maintenance on, prior to adoption by
the relevant local authority or management company. The review of completed
site costs is now concluded, resulting in a one-off charge of £32.3m, of
which £25.0m is treated as an exceptional item as it relates to non-standard
developments started prior to the change in strategy in 2019, and the balance
of £7.3m is recorded within adjusted operating profit.
The Group provided £5.7m to write off the value of its remaining freehold
reversionary interests in buildings previously constructed by the Group. The
market for freehold reversionary interests is increasingly uncertain given
proposed legislative changes in this area and the impact of some freehold
buildings requiring fire remediation works.
An exceptional administrative cost of £1.6m is recognised reflecting aborted
transaction costs from the unsolicited approach from Bellway plc.
A further £6.1m (2023: £4.6m) was charged in relation to imputed interest on
the combustible materials charge.
The tax credit on exceptional items is £48.2m (2023: £6.5m¹) based on
actual tax rates.
Further detail on exceptional items can be found in note 4 and note 22 to the
consolidated financial statements.
Financing and liquidity
At 31 October 2024, the Group had net debt of £8.5m (2023: net cash of
£64.9m). Net debt including land creditors was £140.1m (2023: £140.6m).
Average net debt in the year was £49.6m (2023 average net cash: £47.1m).
Return on capital employed (ROCE) for the year was 4.1% (2023: 7.3%¹)
reflecting the lower adjusted operating profit compared with the prior year.
The Group made good progress on improving its cash management during the year,
with increased discipline on part exchange and WIP controls, which continue to
deliver benefits to cash flow.
The Group's debt facilities include a £250m Revolving Credit Facility, the
expiry date of which was extended in the year to October 2027. The Group is
also financed by an £85m private placement. In August 2024, in accordance
with the note purchase agreement, the Group made its first amortisation
payment of £15m. A further amortisation payment of £20m is due to be made in
August 2025.
Going concern
The Directors have assessed the Group's going concern position, analysing a
base case and a range of adverse scenarios that are deemed to be Severe But
Plausible (SBP), including aggregates
of multiple factors.
The base case scenario utilised rolling forecasts up to 30 April 2026 (the
going concern period) that reflect the Group's current financial position and
the prevailing economic landscape, taking into account that the Group has
already secured a proportion of sales for 2025 by way of its forward order
book. The SBP downside conditions incorporate potential macroeconomic
scenarios which could be experienced by the UK, industry-wide dynamics, and
Group-specific risks. The assessment also evaluated the anticipated
effectiveness of proposed mitigating actions that are within the Group's
control. Whilst the Group forecasts to meet all its covenants in the base case
scenario, the cumulative impact of the assumptions and mitigations in the SBP
downside case indicates that the Group would not meet its interest cover
covenant during the going concern period, with the first measurement date in
April 2025. The Group maintains good relationships and a regular dialogue with
all its lenders and is confident that an amendment to its covenants would be
secured if necessary, however, this is not guaranteed and therefore this
represents a material uncertainty related to going concern. In all scenarios,
except where the interest cover covenant is breached and a covenant amendment
is not agreed, the Group forecasts adequate liquidity.
In reviewing the assessment outlined above, and notwithstanding the material
uncertainty related to going concern outlined above, the Directors are
confident that the Group has the necessary resources and mitigations available
to continue operations and discharge its obligations as they fall due for at
least 12 months from the date of approval of the financial statements.
Accordingly, the consolidated financial statements continue to be prepared on
a going concern basis.
Further detail can be found in note 1 to the consolidated financial
statements.
Pension
The Group operates a defined benefit pension scheme. At 31 October 2024, the
retirement benefit surplus under IAS 19 was £19.5m (2023: £10.0m).
Taxation
Effective tax rate applied to the loss before tax (2023: profit before tax)
for the year was 28.0% (2023: 22.5%). The increase in effective tax rate is
due to the impact of changes in the UK corporation tax rate. Full details are
set out in note 8 to the consolidated financial statements.
Earnings per share
Adjusted basic earnings per share was 5.6 pence (2023: 14.2¹ pence),
reflecting the decrease in the Group's earnings on prior year. Basic loss per
share was 40.4 pence (2023: earnings per share 7.0 pence).
Dividend
The Board proposes to pay a final dividend of 1.2 pence per share for the
financial year ended 31 October 2024 which, subject to shareholder approval,
is expected to be paid on 25 April 2025 to shareholders on the Register of
Members on 28 March 2025. This is in addition to the interim dividend of 1.0
pence per share that was paid on 11 October 2024.
Land and planning
At 31 October 2024, the short-term land portfolio comprised 13,935 (2023:
14,922) plots and the Group's strategic land portfolio totalled 17,700 (2023:
18,830) plots, meaning the total land portfolio at 31 October 2024 was 31,635
plots (2023: 33,752). The total gross development value of the portfolio is
£11.5bn (2023: £12.2bn).
During the year, the Group added 1,158 plots to the short-term land portfolio
(2023: 3,197). The Group has sufficient land with planning consents to meet
its requirements for 2025. The Group has a well-developed land bank for 2026
and is working to obtain the relevant planning consents to enable it to meet
its development plans for 2026. The Group is undertaking a thorough review of
its land bank beyond 2026 to determine its overall suitability for the
business' medium-term needs and strategic direction.
Bill Floydd
Chief Financial Officer
1 Represented as per note 29 of the financial
statements.
Principal Risks
http://www.rns-pdf.londonstockexchange.com/rns/7527V_1-2025-2-3.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/7527V_1-2025-2-3.pdf)
The Group's principal risks are contained in the embedded extract from the
2024 Annual Report to be published in February 2025.
Statement of Directors' responsibilities in respect of the financial
statements
The Directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the Group financial
statements in accordance with UK-adopted international accounting standards
and the Company financial statements in accordance with United Kingdom
Generally Accepted Accounting Practice (United Kingdom Accounting Standards,
comprising FRS 101 'Reduced Disclosure Framework', and applicable law).
Under company law, Directors must not approve the financial statements unless
they are satisfied that they give a true and fair view of the state of affairs
of the Group and Company and of the profit or loss of the Group for that
period. In preparing the financial statements, the Directors are required to:
· Select suitable accounting policies and then apply them
consistently
· State whether applicable UK-adopted international accounting
standards have been followed for the Group financial statements and United
Kingdom Accounting Standards, comprising FRS 101, have been followed for the
Company financial statements, subject to any material departures disclosed and
explained in the financial statements
· Make judgements and accounting estimates that are reasonable and
prudent, and
· Prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group and Company will continue
in business.
The Directors are responsible for safeguarding the assets of the Group and
Company and hence for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the Group's and Company's transactions
and disclose with reasonable accuracy at any time the financial position of
the Group and Company and enable them to ensure that the financial statements
and the Directors' Remuneration Report comply with the Companies Act 2006.
The Directors are responsible for the maintenance and integrity of the
Company's website. Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from legislation in other
jurisdictions.
Directors' confirmations
The Directors consider that the Annual Report and financial statements, taken
as a whole, is fair, balanced and understandable and provides the information
necessary for shareholders to assess the Group's and Company's position and
performance, business model and strategy.
Each of the Directors, whose names and functions are listed on pages 54-55 of
the 2024 Annual Report to be published in February 2025 confirm that, to the
best of their knowledge:
· The Group financial statements, which have been prepared in
accordance with UK-adopted international accounting standards, give a true and
fair view of the assets, liabilities, financial position and profit of the
Group
· The Company financial statements, which have been prepared in
accordance with United Kingdom Accounting Standards, comprising FRS 101, give
a true and fair view of the assets, liabilities and financial position of the
Company, and
· The Strategic Report includes a fair review of the development
and performance of the business and the position of the Group and Company,
together with a description of the principal risks and uncertainties that it
faces.
In the case of each Director in office at the date the Directors' Report is
approved:
· So far as the Director is aware, there is no relevant audit
information of which the Group's and Company's auditors are unaware, and
· They have taken all the steps that they ought to have taken as a
Director in order to make themselves aware of any relevant audit information
and to establish that the Group's and Company's auditors are aware of that
information.
On behalf of the Board
Martyn Clark
Chief Executive Officer
3 February 2025
AUDITED FINANCIAL INFORMATION
The consolidated financial statements and notes 1 to 29 for the year ended 31
October 2024 are derived from the Group's annual financial statements which
have been audited by PricewaterhouseCoopers LLP. The unmodified audit report
is available for inspection at the Group's registered office.
CREST NICHOLSON HOLDINGS PLC
Consolidated Income Statement
For the year ended 31 October 2024
Represented(1) Represented(1) Represented(1)
Pre- exceptional items Exceptional items Total Pre- exceptional items Exceptional items Total
(note 4) (note 4)
2024 2024 2024 2023 2023 2023
Note £m £m £m £m £m £m
Revenue 3 618.2 - 618.2 657.5 - 657.5
Cost of sales (531.4) (158.4) (689.8) (551.9) (20.9) (572.8)
Gross profit/(loss) 86.8 (158.4) (71.6) 105.6 (20.9) 84.7
Other operating income 5 75.8 - 75.8 44.7 - 44.7
Other operating expenses 5 (69.9) - (69.9) (40.9) - (40.9)
Administrative expenses (60.8) (1.6) (62.4) (58.0) - (58.0)
Net impairment losses on financial assets 17 (0.6) - (0.6) (0.6) - (0.6)
Operating profit/(loss) 5 31.3 (160.0) (128.7) 50.8 (20.9) 29.9
Finance income 7 4.0 - 4.0 4.1 - 4.1
Finance expense 7 (12.8) (6.1) (18.9) (9.6) (4.6) (14.2)
Net finance expense (8.8) (6.1) (14.9) (5.5) (4.6) (10.1)
Share of post-tax (losses)/profits of joint ventures using the equity method 14 (0.1) - (0.1) 2.7 0.6 3.3
Profit/(loss) before tax 22.4 (166.1) (143.7) 48.0 (24.9) 23.1
Income tax (expense)/credit 8 (8.0) 48.2 40.2 (11.7) 6.5 (5.2)
Profit/(loss) for the year attributable to equity shareholders 14.4 (117.9) (103.5) 36.3 (18.4) 17.9
Earnings/(loss) per ordinary share
Basic 10 5.6p (40.4p) 14.2p 7.0p
Diluted 10 5.6p (40.4p) 14.1p 7.0p
(1) See note 29 for an explanation of the prior year representation.
The notes below form part of these consolidated financial statements.
CREST NICHOLSON HOLDINGS PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 October 2024
2024 2023
Note £m £m
(Loss)/profit for the year attributable to equity shareholders (103.5) 17.9
Other comprehensive income/(expense):
Items that will not be reclassified to the consolidated income statement:
Actuarial gains/(losses) of defined benefit schemes 16 8.5 (2.5)
Change in deferred tax on actuarial gains/(losses) of defined benefit schemes 15 (2.1) 1.1
Other comprehensive income/(expense) for the year net of income tax 6.4 (1.4)
Total comprehensive (expense)/income attributable to equity shareholders (97.1) 16.5
The notes below form part of these consolidated financial statements.
CREST NICHOLSON HOLDINGS PLC
Consolidated Statement of Changes in Equity
For the year ended 31 October 2024
Share capital Share premium account Retained earnings Total equity
Note £m £m £m £m
Balance at 1 November 2022 12.8 74.2 796.1 883.1
Profit for the year attributable to equity shareholders - - 17.9 17.9
Actuarial losses of defined benefit schemes 16 - - (2.5) (2.5)
Change in deferred tax on actuarial losses of defined benefit schemes 15 - - 1.1 1.1
Total comprehensive income for the year - - 16.5 16.5
Transactions with shareholders:
Equity-settled share-based payments 16 - - 1.5 1.5
Deferred tax on equity-settled share-based payments 15 - - (0.2) (0.2)
Purchase of own shares 23 - - (1.9) (1.9)
Transfers in respect of share options - - 0.9 0.9
Dividends paid 9 - - (43.6) (43.6)
Balance at 31 October 2023 12.8 74.2 769.3 856.3
Loss for the year attributable to equity shareholders - - (103.5) (103.5)
Actuarial gains of defined benefit schemes 16 - - 8.5 8.5
Change in deferred tax on actuarial gains of defined benefit schemes 15 - - (2.1) (2.1)
Total comprehensive expense for the year - - (97.1) (97.1)
Transactions with shareholders:
Equity-settled share-based payments 16 - - 1.8 1.8
Deferred tax on equity-settled share-based payments 15 - - 0.1 0.1
Purchase of own shares 23 - - (0.5) (0.5)
Transfers in respect of share options - - 0.4 0.4
Dividends paid 9 - - (32.1) (32.1)
Balance at 31 October 2024 12.8 74.2 641.9 728.9
The notes below form part of these consolidated financial statements.
CREST NICHOLSON HOLDINGS PLC
Consolidated Statement of Financial Position
As at 31 October 2024
Represented(1)2023
2024
ASSETS Note £m £m
Non-current assets
Intangible assets 11 29.0 29.0
Property, plant and equipment 12 3.2 2.2
Right-of-use assets 13 10.9 6.1
Investments in joint ventures 14 8.6 10.7
Financial assets at fair value through profit and loss 2.3 2.6
Deferred tax assets 15 39.7 3.3
Retirement benefit surplus 16 19.5 10.0
Trade and other receivables 17 14.6 6.0
127.8 69.9
Current assets
Inventories 18 1,137.4 1,164.8
Financial assets at fair value through profit and loss 1.0 1.1
Trade and other receivables 17 98.1 120.0
Current income tax receivable 4.1 11.9
Cash and cash equivalents 19 73.8 162.6
1,314.4 1,460.4
Total assets 1,442.2 1,530.3
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 20 (63.2) (83.5)
Trade and other payables 21 (42.3) (69.7)
Lease liabilities 13 (8.8) (4.4)
Deferred tax liabilities 15 (4.9) (2.5)
Provisions 22 (192.5) (75.2)
(311.7) (235.3)
Current liabilities
Interest-bearing loans and borrowings 20 (19.1) (14.2)
Trade and other payables 21 (285.2) (328.6)
Lease liabilities 13 (3.2) (2.0)
Provisions 22 (94.1) (93.9)
(401.6) (438.7)
Total liabilities (713.3) (674.0)
Net assets 728.9 856.3
EQUITY
Share capital 23 12.8 12.8
Share premium account 23 74.2 74.2
Retained earnings 641.9 769.3
Total equity 728.9 856.3
(1) See note 29 for an explanation of the prior year representation.
The notes below form part of these consolidated financial statements.
These consolidated financial statements were approved by the Board of
Directors on 3 February 2025.
On behalf of the Board
Martyn
Clark
Bill Floydd
Director
Director
CREST NICHOLSON HOLDINGS PLC
Consolidated Cash Flow STATEMENT
For the year ended 31 October 2024
2024 2023
Note £m £m
Cash flows from operating activities
(Loss)/profit for the year attributable to equity shareholders (103.5) 17.9
Adjustments for:
Depreciation on property, plant and equipment 12 0.4 0.5
Depreciation on right-of-use assets 13 2.3 2.3
Retirement benefit obligation administrative expenses 16 0.7 0.6
Net finance expense 7 14.9 10.1
Share-based payment expense 16 1.8 1.5
Share of post-tax losses/(profits) of joint ventures using the equity method 14 0.1 (3.3)
Impairment of inventories movement 18 2.1 7.6
Net impairment of financial assets 17 0.6 0.6
Income tax (credit)/expense 8 (40.2) 5.2
Operating cash (outflow)/inflow before changes in working capital, provisions (120.8) 43.0
and contributions to retirement benefit obligations
(Increase)/decrease in trade and other receivables (10.6) 27.0
Decrease/(increase) in inventories 22.2 (182.3)
Increase/(decrease) in trade and other payables and provisions 35.6 (31.9)
Contribution to retirement benefit obligations 16 (1.1) (1.5)
Cash used by operations (74.7) (145.7)
Finance expense paid (5.1) (5.6)
Income tax received/(paid) 12.0 (14.3)
Net cash outflow from operating activities (67.8) (165.6)
Cash flows from investing activities
Purchases of property, plant and equipment 12 (1.4) (1.8)
Disposal of financial assets at fair value through profit and loss 0.2 0.9
Funding to joint ventures (13.1) (13.0)
Repayment of funding from joint ventures 36.4 11.7
Dividends received from joint ventures 2.5 1.5
Finance income received 0.4 2.3
Net cash inflow from investing activities 25.0 1.6
Cash flows from financing activities
Principal elements of lease payments 13 (1.9) (2.4)
Dividends paid 9 (32.1) (43.6)
Net purchase of own shares (0.1) (1.0)
Proceeds from borrowings 112.0 -
Repayments of borrowings (127.0) -
Sale and leaseback proceeds 3.1 -
Net cash outflow from financing activities (46.0) (47.0)
Net decrease in cash and cash equivalents (88.8) (211.0)
Cash and cash equivalents at the beginning of the year 162.6 373.6
Cash and cash equivalents at the end of the year 19 73.8 162.6
The notes below form part of these consolidated financial statements.
CREST NICHOLSON HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
Basis of preparation
Crest Nicholson Holdings plc (Company) is a public limited company
incorporated, listed and domiciled in the UK. The address of the registered
office is 500 Dashwood Lang Road, Bourne Business Park, Addlestone, Surrey,
KT15 2HJ. The Group financial statements consolidate those of the Company and
its subsidiaries (together referred to as the Group) and include the Group's
interest in jointly controlled entities. The parent company financial
statements present information about the Company as a separate entity and not
about its Group.
The financial statements are presented in pounds sterling and amounts are
denominated in millions (£m), unless otherwise stated.
The Group financial statements have been prepared and approved by the
Directors in accordance with UK-adopted international accounting standards,
and with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards and have been prepared on the historical cost
basis except for financial assets at fair value through profit and loss, which
are as otherwise stated. The parent company financial statements are presented
below.
The preparation of financial statements in conformity with UK-adopted
international accounting standards requires the Directors to make assumptions
and judgements that affect the application of policies and reported amounts
within the financial statements. Assumptions and judgements are based on
experience and other factors that the Directors consider reasonable under the
circumstances. Actual results may differ from these estimates.
Judgements made by the Directors, in the application of these accounting
policies that have a significant effect on the financial statements and
estimates with a significant risk of material adjustment in the next year are
discussed below.
Going concern
In determining the appropriateness of the basis of preparation, the Directors
have considered whether the Group can continue to meet its liabilities and
other obligations for the foreseeable future. These include its ability to
meet the financial covenants as required under its sustainability-linked
Revolving Credit Facility (RCF) and senior loan notes as detailed in note 24.
The Directors consider the possibility of breaching one of the three financial
covenants (Gearing, Tangible Net Worth and Interest Cover) as being the first
sign that the Group could be in distress and is the basis of its going concern
assessment in this year's financial statements.
The Directors have assessed the Group's going concern position through to 30
April 2026 (the going concern period), which aligns with its half year
reporting for the 2026 financial year. The going concern model is made up of a
Board approved base case and a Severe But Plausible (SBP) downside. Within the
base case, the Group has already secured a proportion of sales for 2025 by way
of its forward order book. The base case forecast is that the Group maintains
sufficient liquidity headroom throughout the going concern period and will be
compliant from a covenant perspective for all required reporting periods.
The base case has then been used to model a range of adverse scenarios that
are deemed to be plausible downside conditions derived from the scenarios that
are outlined below. These scenarios incorporate potential macroeconomic
scenarios that could be experienced by the UK, industry-wide dynamics, and
Group-specific risks.
The SBP downside scenario aggregates the impacts of multiple risk factors. In
conducting this test, the Directors drew on extensive prior experience in
navigating economic downturns, including the COVID-19 pandemic, and considered
the implications of current market conditions. This assessment also evaluates
the anticipated effectiveness of proposed mitigating actions that are within
the Group's control and can be enacted in good time, ensuring a robust
framework for managing potential disruptions and safeguarding the Group's
financial stability.
Risk factors applied against future forecasts
The following risk factors have been applied in reaching the SBP downside
scenario:
· Scenario 1 - Reduction in sales volumes
Linking to market conditions and solvency and liquidity risk, a potential
decline in macroeconomic conditions in the UK, which negatively impacts the UK
residential property market and reduces the ability for people to buy homes.
The Directors have considered a reduced sales per outlet week (SPOW) of 0.43
in 2025 and 0.47 in 2026 (2024 actual SPOW 0.48), based on a decline
commencing imminently.
· Scenario 2 - Fall in sales price
Also linking to a potential decline in market conditions, a reduction in sales
prices during an economic slowdown and / or lack of available debt finance. A
greater than 2.0% reduction in average selling prices compared to the current
market experience of prices increasing.
· Scenario 3 - Increase in build cost
Linking to supply chain risks, unexpected costs occurring on low margin or NRV
sites cause an immediate reduction in profitability of c. £4m in each six
months of the going concern period.
Mitigation options and considerations
The Directors have considered the mitigations that could be applied in a
deteriorating trading environment to either increase profit or conserve cash
to reduce interest cost. Some of these measures are implicit outcomes of a
downturn (such as reduction in build spend) rather than mitigating actions
which the Group would have to apply.
The Group has experience of applying such mitigations in the past, which
include but are not limited to:
· A reduction in the Group's headcount driving a reduction in
overheads, site and sales and marketing spend to reflect the lower build and
selling activity in a weaker trading environment;
· Potential renegotiation of some supplier arrangements as the amount
of build activity contracts, and materials suppliers and subcontractors are
required to be more competitive, reducing build spend;
· Mothballing unproductive and/or capital-intensive schemes;
· Reduction or elimination of management incentives;
· A reduction in discretionary land acquisitions and therefore land
expenditure as the Group would require less land to replenish the land
portfolio;
· Disposal of land to generate cash; and
· Removal of dividends after April 2025 to conserve cash.
Conclusion on going concern
Whilst the Group forecasts to meet all its covenants in the base case
scenario, the cumulative impact of the assumptions and mitigations in the SBP
downside case indicates that the Group would not meet its interest cover
covenant during the going concern period, with the first measurement date in
April 2025. If this covenant breach were to occur, it would constitute an
event of default under the terms of the Revolving Credit Facility agreement
and senior loan notes. The Gearing and Tangible Net Worth covenants are
forecast to be met in all reporting periods in the SBP downside scenario. The
Group maintains good relationships and a regular dialogue with all its lenders
and is confident that an amendment to its covenants would be secured if
necessary, however, this is not guaranteed and therefore this represents a
material uncertainty related to going concern. In all scenarios, except where
the interest cover covenant is breached and a covenant amendment is not
agreed, the Group forecasts adequate liquidity.
In reviewing the assessment outlined above, the Directors are confident that
the Group has the necessary resources and mitigations available to continue
operations and discharge its obligations as they fall due for at least 12
months from the date of approval of the financial statements. Accordingly, the
consolidated financial statements continue to be prepared on a going concern
basis. However, a material uncertainty exists, in particular with respect to
the ability to achieve the covenant amendments which may be required, which
may cast significant doubt on the Group's ability to continue as a going
concern. The financial statements do not include any adjustments that would
result from the basis of preparation being inappropriate.
Critical accounting estimates and judgements
The preparation of the consolidated financial statements under UK-adopted
international accounting standards 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 described below.
· The judgement to present certain items as exceptional (see note 4)
· 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 and revenue
on the units is then subsequently recognised over time where the land sale
element takes place at the start of the contract (see note 3 for the split of
revenue recognised at a point in time and recognised over time and also the
more detailed revenue accounting policy)
· The recognition of the defined benefit pension scheme net surplus
(see note 16)
· The current and non-current presentation of the combustible materials
provision
· The presentation of completed site liabilities as either accruals or
provisions.
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 year in which the
estimate is revised if the revision affects only that year, or in the year of
revision and future years if the revision affects both current and future
years.
The Directors have made consistent estimates and assumptions in reviewing the
going concern assumption as those 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 as described below.
Carrying value of inventories
Inventories of land, work-in-progress, completed buildings including show
homes and part exchange inventories are stated in the consolidated statement
of financial position at the lower of cost or NRV. On a regular basis
management updates estimates of future revenue and expenditure for each
development. Future revenue and expenditure may differ from estimates which
could lead to an impairment of inventory if there are adverse changes. Where
forecast revenues are lower than forecast total costs an inventory provision
is made. This provision may be reversed in subsequent periods if there is
evidence of sustained improved revenue or reduced expenditure forecast on a
development. If forecast revenue was 10.0% lower on sites within the
short-term portfolio (total land portfolio excluding strategic land) as at 31
October 2024, the impact on loss before tax would have been £13.1m higher
(2023: the impact on profit before tax would have been £15.9m lower).
Estimation of development profitability
Due to the nature of development activity and, in particular, the length of
the development cycle, the Group has to make estimates of the costs to
complete developments, in particular those which are multi-phase and/or may
have significant infrastructure costs. These estimates are reflected in the
margin recognised on developments in relation to sales recognised in the
current and future years. There is a degree of inherent uncertainty in making
such estimates. The Group has established internal controls that are designed
to ensure an effective assessment of estimates is made of the costs to
complete developments. The Group considers estimates of the costs to complete
on longer-term sites, which typically have higher upfront shared
infrastructure costs to have greater estimation uncertainty than sites of
shorter duration with less infrastructure requirements. A change in estimated
margins on sites, for example due to changes in estimates of build cost
inflation or a reduction in house prices, could alter future profitability. If
forecast costs were 10.0% higher on sites which contributed to the year ended
31 October 2024 and which are forecast to still be in production beyond the
year ending 31 October 2026 (2023: beyond the year ending 31 October 2025),
cost of sales in the current year would have been £29.1m (2023: £32.3m)
higher.
The Group has assessed the potential financial impacts of transitional and
physical climate-related risks and opportunities. The primary known
climate-related policy that will affect our product is the Future Homes
Standard, due to be legislated in 2025, which will increase build costs for
individual units. Anticipated additional build costs are incorporated into
project acquisition appraisals. These costs are not expected to have a
material impact on the carrying value of inventories or their associated
project margins or the value of goodwill. Flood risk and broader planning
requirements are also evaluated and accounted for during new project
acquisitions. Longer-term climate-related costs are beyond the time horizon of
the Group's contracted projects and therefore do not impact the carrying value
of inventories or their associated project margins. Additional information on
climate-related risks and opportunities is provided on pages 40-48 of our 2024
Annual Report to be published in February 2025. This area is considered an
area of estimation rather than a critical accounting estimate.
Completed site costs
Completed site costs include completed site accruals which is predominantly
the cost to complete outstanding site infrastructure and amenities within
developments where the last housing unit has been completed, and, completed
site provisions which is the forecast cost to complete remedial works on
buildings where faults have been identified and the Group is responsible to
remedy. Completed site costs can require a number of estimates and assumptions
in their calculation, though provisions also have a level of estimation
uncertainty. The Group has to make estimates of the costs to complete
outstanding site infrastructure and amenities within developments and the cost
of remediation required where faults have been identified post completion. The
Group has internal controls that are designed to ensure an effective
assessment of estimates is made of the costs to finalise completed
developments. If forecast completed site costs are 10.0% higher than provided,
the charge in the consolidated income statement would be £2.2m higher for
completed site accruals and £2.3m higher for completed site provisions.
Valuation of the pension scheme assets and liabilities
In determining the valuation of the pension scheme assets and liabilities, the
Directors utilise the services of an actuary. The actuary uses key assumptions
being inflation rate, life expectancy, discount rate and Guaranteed Minimum
Pensions, which are dependent on factors outside the control of the Group. To
the extent that such assumptions differ to that expected, the pension
liability would change. See note 16 for additional details.
Combustible materials
The combustible materials provision requires a number of key estimates and
assumptions in its calculation. During the year, the combustible materials
provision has been increased to reflect the latest assessment of these costs.
Additionally, the Group has now performed sufficient surveys and has greater
experience of survey outcomes to make an appropriately reliable estimate of
its probable liabilities across non-surveyed buildings.
The key assumptions used to determine the provision include but are not
limited to identification of the properties impacted through the period of
construction considered. The key estimates then applied to these properties
include the potential costs of investigation, replacement materials and works
to complete, along with the timing of forecast expenditure. The Directors have
used Building Safety Fund (BSF) cost information, other external information
and internal assessments as a basis for the estimated remedial costs. The
Group has used estimates and assumptions to evaluate the probable remediation
works required to non-surveyed buildings after applying experience gained from
buildings with surveys and applying risk categories to groups of buildings
with similar characteristics. These estimates are inherently uncertain due to
the highly complex and bespoke nature of the buildings. The actual costs may
differ to the amounts notified by the BSF costed projects, and fire safety
reports in progress may require different levels of remediation and associated
costs than those currently estimated. The number of non-surveyed buildings
requiring remediation may differ from current estimates, which cannot be fully
known until surveys have been completed. Management expects assessments to
have been completed by late summer 2025. If forecast remediation costs on
buildings currently provided for are 10.0% higher/lower than provided, the
pre-tax exceptional items charge in the consolidated income statement would be
£24.9m higher/lower. See notes 4 and 22 for additional details.
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 2023 which have had a material impact on
the Group.
Impact of standards and interpretations in issue but not yet effective
There are a number of standards, amendments and interpretations that have been
published that are not mandatory for the 31 October 2024 reporting period and
have not been adopted early by the Group. The Group does not expect that the
adoption of these standards, amendments and interpretations will have a
material impact on the financial statements of the Group in future years.
Other accounting policies
The accounting policies set out below have, unless otherwise stated, been
applied consistently to all periods presented in these Group financial
statements with the exception of the prior period representation as disclosed
in note 29.
Alternative performance measures (APMs)
The Group has adopted various APMs, as presented below. These measures are not
defined by International Financial Reporting Standards (IFRS) and therefore
may not be directly comparable with other companies' APMs, and should be
considered in addition to, and are not intended to be a substitute for, or
superior to, IFRS measurements.
Consolidation
The consolidated financial statements include the financial statements of
Crest Nicholson Holdings plc, its subsidiary undertakings and the Group's
share of the results of joint ventures and joint operations. Inter-company
transactions, balances and unrealised gains on transactions between group
companies are eliminated on consolidation.
(a) Subsidiaries
Subsidiaries are entities in which the Group has control. The Group controls
an entity when the Group is exposed to, or has rights to, variable returns
through its power over the entity. In assessing control, potential voting
rights that are currently exercisable or convertible are taken into account.
The profits and losses of subsidiaries are included in the consolidated
financial statements from the date that control commences until the date that
control ceases.
The acquisition method of accounting is used by the Group to account for the
acquisition of subsidiaries that are a business under IFRS 3. On acquisition
of a subsidiary, all of the subsidiary's separable, identifiable assets and
liabilities existing at the date of acquisition are recorded at their fair
values reflecting their condition at that date. All changes to those assets
and liabilities and the resulting gains and losses that arise after the Group
has gained control of the subsidiary are charged to the post-acquisition
consolidated income statement or consolidated statement of comprehensive
income. Accounting policies of acquired subsidiaries are changed where
necessary, to ensure consistency with policies adopted by the Group.
Acquisitions of subsidiaries which do not qualify as a business under IFRS 3
are accounted for as an asset acquisition rather than a business combination.
Under such circumstances the fair value of the consideration paid for the
subsidiary is allocated to the assets and liabilities purchased based on their
relative fair value at the date of purchase. No goodwill is recognised on such
transactions.
(b) Joint ventures
A joint venture is a contractual arrangement in which the Group and other
parties undertake an economic activity that is subject to joint control and
these parties have rights to the net assets of the arrangement. The Group
reports its interests in joint ventures using the equity method of accounting.
Under this method, interests in joint ventures are initially recognised at
cost and adjusted thereafter to recognise the Group's share of the
post-acquisition profits or losses and movements in other comprehensive
income. The Group's share of results of the joint venture after tax is
included in a single line in the consolidated income statement. Where the
share of losses exceeds the Group's interest in the entity and there is no
obligation to fund these losses, the carrying amount is reduced to nil and
recognition of further losses is discontinued, unless there is a long-term
receivable due from the joint venture in which case, if appropriate, the loss
is recognised against the receivable. If an obligation to fund losses exists
the further losses and a provision are recognised. Unrealised gains on
transactions between the Group and its joint ventures are eliminated on
consolidation. Accounting policies of joint ventures are changed where
necessary, to ensure consistency with policies adopted by the Group.
(c) Joint operations
A joint operation is a joint arrangement that the Group undertakes with other
parties, in which those parties have rights to the assets and obligations of
the arrangement. The Group accounts for joint operations by recognising its
share of the jointly controlled assets and liabilities and income and
expenditure on a line-by-line basis in the consolidated statement of financial
position and consolidated income statement.
Goodwill
Goodwill arising on consolidation represents the excess of the cost of
acquisition over the Group's interest in the fair value of the identifiable
assets and liabilities of the acquired entity at the date of the acquisition
and is not amortised. Goodwill arising on acquisition of subsidiaries and
businesses is capitalised as an asset. The goodwill balance has been allocated
to the strategic land holdings within the Group. The Group expects to benefit
from the strategic land holdings for a further period of 13 years to 2038. The
period used in the assessment represents the estimated time it will take to
obtain planning and build out on the remaining acquired strategic land
holdings. Goodwill is assessed for impairment at each reporting date. The
sites acquired are considered as a singular cash generating unit and the value
in use is calculated on a discounted cash flow basis with more speculative
strategic sites given a lower probability of reaching development. The
calculated discounted cash flow value is compared to the goodwill balance to
assess if it is impaired. Any impairment loss is recognised immediately in the
consolidated income statement.
Revenue and profit recognition
Revenue comprises the fair value of the consideration received or receivable,
net of value added tax and discounts.
The Group has made a judgement to not recognise revenue on the proceeds
received on the disposal of properties taken in part exchange against a new
property as they are incidental to the main revenue-generating activities of
the Group. As part exchange sales are deemed incidental, the income and
expenses associated with part exchange properties are recognised in other
operating income and other operating expenses in the consolidated income
statement. Income is recognised when legal title is passed to the customer.
Revenue is recognised on house and apartment sales at legal completion. For
affordable and other sales in bulk, revenue recognition is dependent on
freehold legal title being passed to the customer as it is considered that
upon transfer of freehold title that the customer controls the
work-in-progress. Where freehold legal title and control is passed to the
customer, revenue is recognised on any upfront sale of land (where applicable)
and then on the housing units as the build of the related units progresses,
via surveys of work performed on contract activity. Where freehold legal title
is not passed to the customer, revenue is not recognised on any upfront sale
of land and the revenue on the housing units and sale of land is recognised at
handover of completed units to the customer. The transaction price for all
housing units is derived from contractual negotiations and does not include
any material variable consideration.
Revenue is predominantly recognised on land sales when legal title passes to
the customer. If the Group has remaining performance obligations, such as the
provision of services to the land, an element of revenue is allocated to these
performance obligations and recognised as the obligations are performed, which
can be when the works are finished if the work-in-progress is controlled by
the Group or over the performance of the works if they are controlled by the
customer.
Revenue recognition on commercial property sales is dependent on freehold
legal title being passed to the customer, as it is considered that upon
transfer of freehold title that the customer controls the work-in-progress.
Where freehold legal title is passed to the customer, revenue is recognised on
any upfront sale of land (where applicable) and then on the development
revenue over time as the build of the related commercial units progress. Where
freehold legal title is not passed to the customer revenue is not recognised
on any upfront sale of land and the revenue on the commercial property is
recognised at handover of the completed commercial unit to the customer.
Revenue is recognised on freehold reversion sales when the customer is
contractually entitled to the ground rent revenue stream associated with the
units purchased.
Revenue on specification upgrades paid for by the customer or on the cost of
specification upgrades offered to the customer as part of the purchase price
is recognised as revenue when legal title passes to the customer.
Profit is recognised on a plot-by-plot basis, by reference to the margin
forecast across the related development site. Due to the development cycle
often exceeding one financial year, plot margins are forecast, taking into
account the allocation of site-wide development costs such as infrastructure,
and estimates required for the cost to complete such developments.
Other operating income
Other operating income comprises rental income, joint venture and other
management fee income and the income associated with part exchange sales. In
the prior year rental income was included within cost of sales and joint
venture and other management fees was included within administrative expenses.
Part exchange income was previously presented within net administrative
expenses. See note 29 for further information.
Other operating expenses
Other operating expenses represent cost of sales of part exchange properties.
In the prior year this was included within net administrative expenses. See
note 29 for further information.
Exceptional items
Exceptional items are those which, in the opinion of the Directors, are
material by size and/or non-recurring in nature such as significant costs and
settlements associated with combustible materials, significant legal matters,
changes in estimate of costs associated with completed sites which are no
longer part of the core strategy, significant costs associated with corporate
bid approaches and the write down of freehold inventories. Where appropriate,
the Directors consider that items should be considered as categories or
classes of items, such as any credits/costs impacting the consolidated income
statement which relate to combustible materials or certain site costs,
notwithstanding where an item may be individually immaterial. The Directors
believe that these items require separate disclosure within the consolidated
income statement in order to assist the users of the financial statements to
better understand the performance of the Group, which is also how the
Directors and chief operating decision maker internally manage the business.
Additional charges/credits (including reversals) to items classified as
exceptional items in prior years will be classified as exceptional in the
current year, unless immaterial to the financial statements. As these
exceptional items can vary significantly year on year, they may introduce
volatility into the reported earnings. The income tax impacts of exceptional
items are reflected at the actual tax rate related to these items.
Net finance expense
Interest income is recognised on a time-apportioned basis by reference to the
principal outstanding and the effective interest rate. Interest costs are
recognised in the consolidated income statement on an accruals basis in the
period in which they are incurred. Imputed interest expense on deferred land
creditors and combustible materials discounting is recognised over the life of
associated cash flows.
Income and deferred tax
Income tax comprises current tax and deferred tax. Income tax is recognised in
the consolidated income statement except to the extent that it relates to
items recognised in other comprehensive income, in which case it is recognised
in other comprehensive income. Current tax is the expected tax payable on
taxable profit for the year and any adjustment to tax payable in respect of
previous years. Taxable profit is profit before tax per the consolidated
income statement after adjusting for income and expenditure that is not
subject to tax, and for items that are subject to tax in other accounting
periods. The Group's liability for current tax is calculated using tax rates
that have been enacted or substantively enacted by the consolidated statement
of financial position date. Current tax assets are recognised to the extent
that it is probable the asset is recoverable.
Deferred tax is provided in full on temporary differences between the carrying
amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profits.
Deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Deferred tax liabilities are recognised for all
temporary differences. Deferred tax is calculated using tax rates that have
been substantively enacted by the consolidated statement of financial position
date.
Dividends
Final and interim dividend distributions to the Company's shareholders are
recorded in the Group's financial statements in the earlier of the period in
which they are approved by the Company's shareholders, or paid.
Employee benefits
(a) Pensions
The Group operates a defined benefit (DB) scheme (closed to new employees
since October 2001 and to future service accrual since 30 April 2010) and also
makes payments into a defined contribution scheme for employees.
In respect of the DB scheme, the retirement benefit deficit or surplus is
calculated by estimating the amount of future benefit that employees have
earned in return for their service in the current and prior periods, such
benefits measured at discounted present value, less the fair value of the
scheme assets. The rate used to discount the benefits accrued is the yield at
the consolidated statement of financial position date on AA credit rated bonds
that have maturity dates approximating to the terms of the Group's
obligations. The calculation is performed by a qualified actuary using the
projected unit method. The operating and financing costs of such plans are
recognised separately in the consolidated income statement; past service costs
and financing costs are recognised in the periods in which they arise. The
Group recognises expected scheme gains and losses via the consolidated income
statement and actuarial gains and losses are recognised in the period they
occur directly in other comprehensive income, with associated deferred tax.
The retirement benefit deficit or surplus recognised in the consolidated
statement of financial position represents the deficit or surplus of the fair
value of the scheme's assets over the present value of scheme liabilities,
with any net surplus recognised to the extent that the employer can gain
economic benefit as set out in the requirements of International Financial
Reporting Interpretations Committee 14.
Payments to the defined contribution scheme are accounted for on an accruals
basis.
(b) Share-based payments
The fair value of equity-settled, share-based compensation plans is recognised
as an employee expense with a corresponding increase in equity. The fair value
is measured as at the date the options are granted and the charge amended if
vesting does not take place due to non-market conditions (such as service or
performance) not being met. The fair value is spread over the period during
which the employees become unconditionally entitled to the shares and is
adjusted to reflect the actual number of options that vest. At the
consolidated statement of financial position date, if it is expected that
non-market conditions will not be satisfied, the cumulative expense recognised
in relation to the relevant options is reversed. The proceeds received are
credited to share capital (nominal value) and share premium when the options
are exercised if new shares are issued. If treasury shares are used the
proceeds are credited to retained reserves. There are no cash-settled
share-based compensation plans.
Own shares held by Employee Share Ownership Trust (ESOT)
Transactions of the Company-sponsored ESOT are included in both the Group
financial statements and the Company's own financial statements. The purchase
of shares in the Company by the ESOT are charged directly to equity.
Software as a Service (SaaS) arrangements
Implementation costs including costs to configure or customise a cloud
provider's application software are recognised as administrative expenses when
the services are received, and the Group determines that there is no control
over the asset in development.
Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and accumulated impairment losses. Cost includes the original purchase price
of the asset and the costs attributable to bringing the asset to its working
condition. Depreciation is calculated to write off the cost of the assets on a
straight-line basis to their estimated residual value over its expected useful
life at the following rates:
Fixtures and fittings
10%
Computer equipment and non-SaaS
software 20% to 33%
The asset residual values, carrying values and useful lives are reviewed on an
annual basis and adjusted if appropriate at each consolidated statement of
financial position date.
Right-of-use assets and lease liabilities
The Group assesses at lease inception whether a contract is, or contains, a
lease. The Group recognises a right-of-use asset and a lease liability at
lease commencement.
The right-of-use asset is initially recorded at the present value of future
lease payments and subsequently measured net of depreciation, which is charged
to the consolidated income statement as an administrative expense over the
shorter of its useful economic life or its lease term on a straight-line
basis. The right-of-use asset is also reduced for impairment losses.
The Group recognises lease liabilities at the present value of future lease
payments, lease payments being discounted at the rate implicit in the lease or
the Group's incremental borrowing rate as determined with reference to the
most recently issued financial liabilities carrying interest. The discount is
subsequently unwound and recorded in the consolidated income statement over
the lease term as a finance expense. The lease term comprises the
non-cancellable period of the contract, together with periods covered by an
option to extend the lease where the Group is reasonably certain to exercise
that option.
The Group has elected not to recognise right-of-use assets and lease
liabilities for short-term leases that have a lease term of 12 months or less
and leases of low value assets. The Group recognises the lease payments
associated with these leases as an expense on a straight-line basis over the
lease term.
Inventories
Inventories are stated at the lower of cost and NRV.
Land includes land under development, land options purchased and land
exchanged on an unconditional basis with or without planning consent.
Work-in-progress and completed buildings including show homes comprise direct
materials, sub-contract work, labour costs, site overheads, associated
professional fees and other attributable overheads, but excludes interest
costs.
Part exchange inventories are held at the lower of cost and NRV, which
includes an assessment of costs of management and resale.
Land inventories and the associated land payables are recognised in the
consolidated statement of financial position from the date of unconditional
exchange of contracts. Land payables are recognised as part of trade and other
payables.
Options purchased in respect of land are recognised initially as a prepayment
within inventories and written down on a straight-line basis over the life of
the option. If planning permission is granted and the option exercised, the
option is not written down during that year and its carrying value is included
within the cost of land purchased.
Provisions are established to write down inventories where the estimated net
sales proceeds less costs to complete exceed the current carrying value.
Adjustments to the provisions will be required where selling prices or costs
to complete change. NRV for inventories is assessed by estimating selling
prices and costs, taking into account current market conditions.
Financial assets
Financial assets are initially recognised at fair value and subsequently
classified into one of the following measurement categories:
· At amortised cost
· Subsequently at fair value through profit or loss (FVTPL)
· Subsequently at fair value through other comprehensive income (FVOCI)
The classification of financial assets depends on the Group's business model
for managing the asset and the contractual terms of the cash flows. Assets
that are held for the collection of contractual cash flows that represent
solely payments of principal and interest are measured at amortised cost, with
any interest income recognised in the consolidated income statement using the
effective interest rate method.
Financial assets that do not meet the criteria to be measured at amortised
cost are classified by the Group as measured
at FVTPL. Fair value gains and losses on financial assets measured at FVTPL
are recognised in the consolidated income statement and presented within
administrative expenses. The Group currently has no financial assets measured
at FVOCI.
Financial assets at fair value through profit and loss
Financial assets at fair value through profit and loss (which comprise shared
equity receivables) are classified as being held to collect and initially
recognised at fair value. Changes in fair value relating to the expected
recoverable amount are recognised in the consolidated income statement as a
finance income or expense. These assets are held as current or non-current
based on their contractual repayment dates.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost, using the effective interest method,
less provision for impairment. A provision for impairment of trade and other
receivables is established based on an expected credit loss model applying the
simplified approach, which uses a lifetime expected loss allowance for all
trade and other receivables. The amount of the loss is recognised separately
in the consolidated income statement. Current trade and other receivables do
not carry any interest and are stated at their amortised cost, as reduced by
appropriate allowances for estimated irrecoverable amounts. Non-current trade
and other receivables are discounted to present value when the impact of
discounting is deemed to be material, with any discount to nominal value being
recognised in the consolidated income statement as interest income over the
duration of the deferred payment.
Contract assets
Contract assets represent unbilled work-in-progress on affordable and other
sales in bulk on contracts in which revenue is recognised over time. Contract
assets are recognised initially at fair value and subsequently measured at
amortised cost, using the effective interest method, less provision for
impairment. Contract assets do not carry any interest and are stated at their
amortised cost, as reduced by appropriate allowances for estimated
irrecoverable amounts.
Cash and cash equivalents
Cash and cash equivalents are cash balances in hand and in the bank and are
carried in the consolidated statement of financial position at nominal value.
Interest-bearing loans and borrowings
Interest-bearing loans and borrowings are recognised initially at fair value,
net of direct transaction costs, and subsequently measured at amortised cost.
Finance charges are accounted for on an accruals basis in the consolidated
income statement using the effective interest method and are added to the
carrying amount of the instrument to the extent that they are not settled in
the period in which they arise or included within interest accruals.
Financial liabilities
Financial liabilities are initially recognised at fair value and subsequently
classified into one of the following measurement categories:
· At amortised cost
· Subsequently at FVTPL.
Non-derivative financial liabilities are measured at FVTPL when they are
considered held for trading or designated as such on initial recognition. The
Group has no non-derivative financial liabilities measured at FVTPL.
Land payables
Land payables are recognised in the consolidated statement of financial
position from the date of unconditional exchange of contracts. Where land is
purchased on deferred settlement terms then the land and the land payable are
discounted to their fair value using the effective interest method in
accordance with IFRS 9. The difference between the fair value and the nominal
value is amortised over the deferment period, with the financing element being
charged as an interest expense through the consolidated income statement.
Trade and other payables
Trade and other payables are recognised initially at their fair value and
subsequently measured at amortised cost using the effective interest method.
Trade and other payables on deferred terms are initially recorded at their
fair value, with the discount to nominal value being charged to the
consolidated income statement as an interest expense over the duration of the
deferred period. Included within trade and other payables are completed site
accruals.
Contract liabilities
Contract liabilities represent payments on account, received from customers,
in excess of billable work-in-progress on affordable and other sales in bulk
on contracts. Contract liabilities are recognised initially at their fair
value and subsequently measured at amortised cost using the effective interest
method.
Provisions
A provision is recognised in the consolidated statement of financial position
when the Group has a present legal or constructive obligation as a result of a
past event and it is probable that an outflow of economic benefits will be
required to settle the obligation, and the amount can be reliably estimated.
Provisions are discounted to present value on a discounted cash flow basis
using an interest rate appropriate to the class of the provision, where the
effect is material. Included within provisions are completed site provisions.
Seasonality
In common with the rest of the UK housebuilding industry, activity occurs
throughout the year, with peaks in sales completions in spring and autumn.
This creates seasonality in the Group's trading results and working capital.
2 SEGMENTAL REPORTING
The Executive Committee (ExCo) 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. During the year Martyn Clark
(Chief Executive), Bill Floydd (Chief Financial Officer), Joe Lindsay (Group
Commercial Director), Vicky Cullen (Group Sales and Marketing Director), Jenny
Matthews (Head of Investor Relations) and Dean Cooke (Group IT Director)
joined the ExCo and Peter Truscott (former Chief Executive) and Duncan Cooper
(former Group Finance Director) left the ExCo. The ExCo 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 REVENUE
2024 2023
Revenue type £m £m
Open market housing including specification upgrades 493.5 550.0
Affordable housing 79.0 88.0
Total housing 572.5 638.0
Land and commercial sales 45.7 19.5
Total revenue 618.2 657.5
Timing of revenue recognition
Revenue recognised at a point in time 525.0 552.4
Revenue recognised over time 93.2 105.1
Total revenue 618.2 657.5
Assets and liabilities related to contracts with customers
Contract assets (note 17) 7.6 6.9
Contract liabilities (note 21) (6.9) (6.0)
Contract assets have increased to £7.6m from £6.9m in 2024, reflecting more
unbilled work-in-progress on affordable and other sales in bulk at the year
end. This is in line with the trading of the Group and the contractual
arrangements in the Group's contracts. Contract liabilities have increased to
£6.9m from £6.0m in 2024, reflecting a higher amount of payments on account
received from customers in excess of billable work-in-progress on affordable
and other sales in bulk on contracts on which revenue is recognised over time.
Based on historical trends, the Directors expect a significant proportion of
the contract liabilities total to be recognised as revenue in the next
reporting period.
Included in revenue during the year was £2.9m (2023: £16.1m) that was
included in contract liabilities at the beginning of the year.
During the year £nil (2023: £nil) of revenue was recognised from performance
obligations satisfied or partially satisfied in previous years.
As at 31 October 2024 there was £151.9m (2023: £229.1m) of transaction price
allocated to performance obligations that are unsatisfied or partially
unsatisfied on contracts exchanged with customers. Forecasts recognise
£111.3m (2023: £114.3m) of transaction prices allocated to performance
obligations that are unsatisfied on contracts exchanged with customers within
one year, £40.6m (2023: £112.0m) within two to five years, and £nil (2023:
£2.8m) over five years.
4 EXCEPTIONAL ITEMS
Exceptional items are those which, in the opinion of the Directors, are
material by size and/or non-recurring in nature such as significant costs and
settlements associated with combustible materials, significant legal matters,
changes in estimate of costs associated with completed sites which are no
longer part of the core strategy, significant costs associated with corporate
bid approaches and the write down of freehold inventories. Where appropriate,
the Directors consider that items should be considered as categories or
classes of items, such as any credits/costs impacting the consolidated income
statement which relate to combustible materials or certain site costs,
notwithstanding where an item may be individually immaterial. The Directors
believe that these items require separate disclosure within the consolidated
income statement in order to assist the users of the financial statements to
better understand the performance of the Group, which is also how the
Directors and chief operating decision maker internally manage the business.
Additional charges/credits (including reversals) to items classified as
exceptional items in prior years will be classified as exceptional in the
current year, unless immaterial to the financial statements. As these
exceptional items can vary significantly year on year, they may introduce
volatility into the reported earnings. The income tax impacts of exceptional
items are reflected at the actual tax rate related to these items.
2024 Represented(1)
2023
£m £m
Cost of sales
Combustible materials charge (131.7) (11.3)
Combustible materials credit 4.4 10.0
Net combustible materials charge (127.3) (1.3)
Legal provision and professional fees (0.4) (13.0)
Completed site costs (25.0) (6.6)
Freehold inventories write off (5.7) -
Total cost of sales charge (158.4) (20.9)
Administrative expenses
Aborted transaction costs (1.6) -
Net finance expense
Combustible materials imputed interest (6.1) (4.6)
Share of post-tax profits of joint ventures
Combustible materials credit of joint ventures - 0.6
Total exceptional charge (166.1) (24.9)
Tax credit on exceptional charge 48.2 6.5
Total exceptional charge after tax credit (117.9) (18.4)
(1) See note 29 for an explanation of the prior year representation.
Net combustible materials charge
In the prior year, as a consequence of signing the Developer Remediation
Contract on 13 March 2023, the Group entered into contractual commitments with
the UK Government to identify and remediate those buildings it has developed
with possible life-critical fire safety defects. The combustible materials
charge represents forecast changes in build costs, costs of remediating
buildings surveyed in the year, an estimate of costs for non-surveyed
buildings that are forecast to require remediation and changes in the
provision discount. In the year the Group recovered £4.4m from third parties
in respect of defective design and workmanship. See note 22 for further
information.
Legal provision and professional fees
The Group is subject to a legal claim relating to a low-rise bespoke apartment
block built by the Group which was damaged by fire in 2021. The Group has
incurred professional fees in the year in relation to the claim. In the prior
year the Group recognised its estimate of the potential liability, which
remains the Group's best estimate. See note 22 for further information.
Completed site costs
During the first half of the financial year, the Group became aware of certain
build defects initially identified on four sites that were completed prior to
2019 when the Group closed its Regeneration and London divisions. During the
year the Group completed a thorough review of all completed sites in
association with third-party consultants. The review resulted in a one-off
charge of £32.3m, of which £25.0m is treated as an exceptional item as it
relates to complex developments started prior to 2019 which are no longer part
of the core strategy. The balance of £7.3m is recorded as
pre-exceptional. Completed sites exceptional charge of £25.0m is reflected
within completed site accruals of £8.8m (see note 21) and completed site
provisions of £16.2m (see note 22). Prior year comparatives have been
represented to reflect an exceptional completed sites charge for those sites
impacted by this change. See note 29 for further information.
Freehold inventories write off
During the year the Group provided £5.7m to write off the value of its
remaining freehold reversionary interests in buildings previously constructed
by the Group. The remaining value is £nil and therefore this is a
non-recurring item. The market for freehold reversionary interests is
increasingly uncertain given proposed legislative changes in this area and the
impact of some freehold buildings requiring fire remediation works. This cost
has been recognised as exceptional due to its size.
Aborted transaction costs
During the year the Group received an unsolicited bid from Bellway plc. On 13
August 2024 Bellway plc withdrew from the acquisition and the Group has
recognised £1.6m (2023: £nil) of costs associated with this aborted
transaction as exceptional as it is non-recuring in nature.
Net finance expense
The combustible materials imputed interest reflects the unwind of the imputed
interest on the provision to reflect the time value of the liability.
Taxation
An exceptional income tax credit of £48.2m (2023: £6.5m represented see note
29) has been recognised in relation to the above exceptional items using the
actual tax rate applicable to these items.
5 OPERATING (LOSS)/PROFIT
(a) Operating loss of £128.7m (2023: operating profit £29.9m) from
continuing activities is stated after (charging)/crediting:
Note 2024 2023
£m £m
Inventories expensed in the year (497.6) (520.2)
Inventories impairment movement in the year 18 (2.1) (7.6)
Employee costs 6 (63.0) (60.7)
Depreciation on property, plant and equipment 12 (0.4) (0.5)
Depreciation on right-of-use assets 13 (2.3) (2.3)
Joint venture project management fees recognised in other operating income 27 1.9 1.9
(b) Other operating income
2024 2023
£m £m
Proceeds on disposal of part exchange properties 68.8 40.1
Rental income 3.4 1.6
Joint venture and other management fee income 3.6 3.0
75.8 44.7
In the prior year rental income was included within cost of sales and joint
venture and other management fee income was included within administrative
expenses. Part exchange income was previously presented within net
administrative expenses. See note 29 for further information.
(c) Other operating expenses
2024 2023
£m £m
Costs associated with disposal of part exchange properties 69.9 40.9
In the prior year this was included within net administrative expenses. See
note 29 for further information.
(d) Auditors' remuneration
2024 2023
£000 £000
Audit of these consolidated financial statements 191 166
Audit of financial statements of subsidiaries pursuant to legislation 1,529 819
Other non-audit services 130 154
The audit fees payable in 2024 included £220,000 (2023: £nil) in relation to
additional costs for the 2023 audit.
Fees payable to the Group's auditors for non-audit services included £130,000
(2023: £100,000) in respect of an independent review of the half-year results
and £nil (2023: £54,000) for other non-audit assurance services for
sustainability reporting.
In addition to the above, PricewaterhouseCoopers LLP provide audit services to
the Crest Nicholson Group Pension and Life Assurance Scheme and in the prior
year Group joint ventures. The fees associated with the services to the Crest
Nicholson Group Pension and Life Assurance Scheme are £35,505 (2023:
£35,565) and are met by the assets of the scheme, and the fees associated
with services to Group joint ventures are £nil (2023: £20,000).
6 EMPLOYEE NUMBERS AND COSTS
(a) Average monthly number of persons employed by the Group 2024 2023
Number Number
Development 704 778
The Directors consider all employees of the Group to be employed within the
same category of Development.
(b) Employee costs (including Directors and key management) 2024 2023
£m £m
Wages and salaries 52.3 50.4
Social security costs 6.0 5.8
Other pension costs 2.9 3.0
Share-based payments 1.8 1.5
63.0 60.7
(c) Key management remuneration 2024 2023
£m £m
Salaries and short-term employee benefits 4.8 3.5
Share-based payments 0.8 0.6
5.6 4.1
Key management comprises the Executive Committee (which includes the Executive
Directors of the Board) and Non-Executive Directors as they are considered to
have the authority and responsibility for planning, directing and controlling
the activities of the Group. During the year four new members joined the
Executive Committee.
(d) Directors' remuneration 2024 2023
£m £m
Salaries and short-term employee benefits 2.4 1.7
Share-based payments 0.4 0.5
2.8 2.2
Further information relating to Directors' remuneration, incentive plans,
share options, pension entitlement and the highest paid Director, appears in
the Directors' Remuneration Report, which is presented on pages 74-91 of our
2024 Annual Report to be published in February 2025.
7 FINANCE INCOME AND EXPENSE
2024 2023
Finance income £m £m
Interest income 2.7 2.4
Interest on amounts due from joint ventures (note 27) 0.7 1.2
Net interest on defined benefit pension scheme (note 16) 0.6 0.5
4.0 4.1
Finance expense
Interest on bank loans (6.7) (5.7)
Revolving Credit Facility issue costs (0.7) (0.6)
Imputed interest on deferred land payables (5.0) (3.1)
Interest on lease liabilities (note 13) (0.4) (0.2)
Imputed interest on combustible materials provision - exceptional (note 4) (6.1) (4.6)
(18.9) (14.2)
Net finance expense (14.9) (10.1)
8 INCOME TAX CREDIT/(EXPENSE)
2024 2023
£m £m
Current tax
UK corporation tax credit/(expense) on (loss)/profit for the year 3.7 (4.2)
Adjustment in respect of prior periods 0.5 0.7
Total current tax credit/(expense) 4.2 (3.5)
Deferred tax
Origination and reversal of temporary differences in the year 36.0 (1.7)
Total deferred tax credit/(charge) (note 15) 36.0 (1.7)
Total income tax credit/(expense) in consolidated income statement 40.2 (5.2)
Income tax is calculated at 29.0% (2023: 26.5%), based on corporation tax of
25.0% and residential property developer tax (RPDT) of 4.0%. The effective tax
rate for the year is 28.0% (2023: 22.5%), which is lower than (2023: lower
than) the standard rate of UK corporation tax predominantly due to the impact
of expenses not deductible for tax purposes which reduces the tax credit on
the loss. The Group expects the effective tax rate to be more aligned to the
standard rate of corporation tax in future years, however it is likely to
continue to be slightly lower than the standard rate of corporation tax
(including RPDT) due to the RPDT annual allowance.
2024 2023
Reconciliation of tax credit/(expense) in the year £m £m
(Loss)/profit before tax (143.7) 23.1
Tax charge on (loss)/profit at 29.0% (2023: 26.5%) 41.7 (6.1)
Effects of:
Expenses not deductible for tax purposes (1.9) (0.8)
Enhanced tax deductions 0.3 0.3
Adjustment in respect of prior periods 0.5 0.7
Impact of tax rate change on losses carried back (0.4) -
Impact of RPDT annual allowance and adjustments - 0.7
Total income tax credit/(expense) in consolidated income statement 40.2 (5.2)
RPDT is an additional tax on profits generated from residential property
development activity, in excess of an annual threshold and adjusting for
amounts disallowable under RPDT, such as interest expense. There is no impact
from RPDT in 2024, in contrast to the previous year, since the Group has not
generated the minimum level of profit required before RPDT is incurred.
Expenses not deductible for tax purposes include business entertaining,
corporate action professional fees and other permanent disallowable expenses.
Enhanced tax deductions include items for which, under tax law, a corporation
tax deduction is available in excess of the amount shown in the consolidated
income statement. For example, land remediation enhanced allowances.
Adjustment in respect of prior periods reflect the difference between the
estimated consolidated income statement tax charge in the prior year and that
of the actual tax outcome.
In July 2023, the UK Government enacted legislation to introduce a new
Multinational Top-Up Tax and Domestic Top-Up Tax as part of the UK adoption of
the Organisation for Economic Co-operation and Development Pillar Two Rules.
The new rules will apply to the Group from the accounting year ended 31
October 2025.
The new rules intend to ensure that large corporate groups pay a minimum rate
of tax of 15%. The Group's activities are currently entirely UK based. Given
that the Group's tax rate tends to be closer to the statutory tax rate of 29%
(being 25% UK corporation tax plus 4% RPDT) it is not expected that the Group
will be required to pay any additional Domestic Top-Up Tax.
The Group applies the exception, as set out in International Accounting
Standards (IAS) 12: Income Taxes, to the requirements regarding deferred tax
assets and liabilities related to Pillar Two income taxes.
9 DIVIDENDS
2024 2023
Dividends recognised as distributions to equity shareholders in the year: £m £m
Current year interim dividend of 1.0 pence per share (2023: 5.5 pence per 2.6 14.1
share)
Prior year final dividend per share of 11.5 pence per share (2023: 11.5 pence 29.5 29.5
per share)
32.1 43.6
2024 2023
Dividends proposed as distributions to equity shareholders in the year: £m £m
Final dividend for the year ended 31 October 2024 of 1.2 pence per share 3.2 29.5
(2023: 11.5 pence per share)
The proposed final dividend was approved by the Board on 3 February 2025 and,
in accordance with IAS 10: Events after the Reporting Period, has not been
included as a liability in this financial year. The final dividend will be
paid on 25 April 2025 to all ordinary shareholders on the Register of Members
on 28 March 2025.
10 (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 year. 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 year. 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 year. 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 average number of ordinary shares Per share amount
earnings
£m Number Pence
Year ended 31 October 2024
Basic loss per share (103.5) 256,367,618 (40.4)
Dilutive effect of share options - 1,608,047
Diluted loss per share (103.5) 257,975,665 (40.4)
Year ended 31 October 2024 - Pre-exceptional items
Adjusted basic earnings per share 14.4 256,367,618 5.6
Dilutive effect of share options - 1,608,047
Adjusted diluted earnings per share 14.4 257,975,665 5.6
Year ended 31 October 2023
Basic earnings per share 17.9 256,131,621 7.0
Dilutive effect of share options - 594,762
Diluted earnings per share 17.9 256,726,383 7.0
Year ended 31 October 2023 - Pre-exceptional items (Represented(1))
Adjusted basic earnings per share 36.3 256,131,621 14.2
Dilutive effect of share options - 594,762
Adjusted diluted earnings per share 36.3 256,726,383 14.1
(1) See note 29 for an explanation of the prior year representation.
CREST NICHOLSON HOLDINGS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (continued)
11 INTANGIBLE ASSETS
Goodwill 2024 2023
£m £m
Cost at beginning and end of the year 47.7 47.7
Accumulated impairment (18.7) (18.7)
At beginning and end of the year 29.0 29.0
Goodwill arose on the acquisition of CN Finance plc on 24 March 2009. The
goodwill relating to items other than the holding of strategic land was fully
impaired in prior periods. The remaining goodwill was allocated to acquired
strategic land holdings (the cash-generating unit) within the Group and has
not previously been impaired. The goodwill is assessed for impairment
annually. The recoverable amount is equal to the higher of value in use and
fair value less costs of disposal. The Directors have therefore assessed value
in use, being the present value of the forecast cash flows from the expected
development and sale of properties on the strategic land. These cash flows are
the key estimates in the value in use assessment. The forecast looks at the
likelihood and scale of permitted development, forecast build costs and
forecast selling prices, using a pre-tax discount rate of 12.4% (2023: 9.5%),
covering a further period of 13 years to 2038, and based on current market
conditions. The discount rate is based on an externally produced weighted
average cost of capital range estimate. The Future Homes Standard will not
impact the estimated development cash flows as sites in production already
incorporate the forecast extra costs, and for those under option the extra
costs will be adjusted in the land values payable. The period used in this
assessment represents the estimated time it will take to obtain planning and
build out on the remaining acquired strategic land holdings. The recoverable
value of the cash generating unit is substantially in excess of the carrying
value of goodwill. Sensitivity analysis has been undertaken by changing the
discount rates by plus or minus 1.0% and the forecast profit margins
applicable to the site within the cash generating unit. None of the
sensitivities, either individually or in aggregate, resulted in the fair value
of the goodwill being reduced to below its current book value amount. As the
forecast covers the entire life of the cash generating unit no growth rate has
been used to extrapolate the cash flow projection, and as such the rate is not
disclosed.
12 PROPERTY, PLANT AND EQUIPMENT
Fixtures and fittings Computer equipment and software Total
£m £m £m
Cost
At 1 November 2022 1.7 2.9 4.6
Additions 1.8 - 1.8
Disposals - (0.7) (0.7)
At 31 October 2023 3.5 2.2 5.7
Additions 1.4 - 1.4
Disposals (0.8) (0.2) (1.0)
At 31 October 2024 4.1 2.0 6.1
Accumulated depreciation
At 1 November 2022 1.1 2.6 3.7
Charge for the year 0.3 0.2 0.5
Disposals - (0.7) (0.7)
At 31 October 2023 1.4 2.1 3.5
Charge for the year 0.3 0.1 0.4
Disposals (0.8) (0.2) (1.0)
At 31 October 2024 0.9 2.0 2.9
Net book value
At 31 October 2024 3.2 - 3.2
At 31 October 2023 2.1 0.1 2.2
At 31 October 2022 0.6 0.3 0.9
The Group has contractual commitments for the acquisition of property, plant
and equipment of £nil (2023: £nil).
13 RIGHT-OF-USE ASSETS AND LEASE LIABILITIES
Office buildings Other leases Total
£m £m £m
Cost
At 1 November 2022 13.1 4.5 17.6
Additions 2.8 1.9 4.7
Disposals (7.3) (1.6) (8.9)
At 31 October 2023 8.6 4.8 13.4
Additions 2.8 4.3 7.1
Disposals (3.6) (1.4) (5.0)
At 31 October 2024 7.8 7.7 15.5
Accumulated depreciation
At 1 November 2022 11.1 2.8 13.9
Charge for the year 1.3 1.0 2.3
Disposals (7.3) (1.6) (8.9)
At 31 October 2023 5.1 2.2 7.3
Charge for the year 1.2 1.1 2.3
Disposals (3.6) (1.4) (5.0)
At 31 October 2024 2.7 1.9 4.6
Net book value
At 31 October 2024 5.1 5.8 10.9
At 31 October 2023 3.5 2.6 6.1
At 31 October 2022 2.0 1.7 3.7
Other leases comprise motor vehicles and show home leases in 2024 and motor
vehicles in 2023. In 2024 the Group disposed of its show homes (proceeds
received of £14.9m) and entered into a lease back agreement.
Lease liabilities included in the consolidated statement of financial position
2024 2023
£m £m
Non-current 8.8 4.4
Current 3.2 2.0
Total lease liabilities 12.0 6.4
Amounts recognised in the consolidated income statement
2024 2023
£m £m
Depreciation on right-of-use assets 2.3 2.3
Interest on lease liabilities 0.4 0.2
Amounts recognised in the consolidated cash flow statement
2024 2023
£m £m
Principal element of lease payments 1.9 2.4
Maturity of undiscounted contracted lease cash flows
2024 2023
£m £m
Less than one year 3.8 2.2
One to five years 8.2 3.2
More than five years 2.5 1.6
Total 14.5 7.0
14 INVESTMENTS
Investments in joint ventures
Below are the joint ventures that the Directors consider to be material to the
Group:
· Crest A2D (Walton Court) LLP: In January 2016, the Group entered into
a partnership agreement with A2 Dominion Developments Limited to procure and
develop a site in Surrey. The LLP commenced construction in 2019, with sales
completion forecast for 2025. The development will be equally funded by both
parties by way of interest free loans. The Group performs the role of project
manager, for which it receives a project management fee.
· Elmsbrook (Crest A2D) LLP: In July 2017, the Group entered into a
partnership agreement with A2 Dominion Developments Limited to procure and
develop a site in Oxfordshire. The LLP commenced construction in 2018, with
sales completion forecast for 2025. The development will be equally funded by
both parties by way of interest free loans. The Group performs the role of
project manager, for which it receives a project management fee.
· Crest Sovereign (Brooklands) LLP: In April 2019, the Group entered
into a partnership agreement with Sovereign Housing Association Limited to
develop a site in Bristol. The LLP commenced construction in 2019, with sales
completion forecast for 2027. The LLP will be equally funded by both parties,
who will receive interest on loaned sums. The Group performs the role of
project manager, for which it receives a project management fee.
· Crest Peabody (Turweston) LLP: In September 2023, the Group entered
into a partnership agreement with the Peabody Trust to develop a site in
Buckinghamshire. The LLP is expecting to commence construction in 2025, with
sales completion forecast for 2029. The development will be equally funded by
both parties by way of interest free loans. The Group performs the role of
project manager, for which it will receive a project management fee and a
sales and marketing fee.
2024 2023
Total investments in joint ventures £m £m
Crest A2D (Walton Court) LLP 1.3 2.3
Elmsbrook (Crest A2D) LLP 1.2 3.5
Crest Sovereign (Brooklands) LLP 5.9 4.9
Crest Peabody (Turweston) LLP 0.2 -
Other non-material joint ventures - -
Total investments in joint ventures 8.6 10.7
All material joint ventures have their place of business in Great Britain, are
50% owned and are accounted for using the equity method, in line with the
prior year. See note 28 for further details.
Summarised financial information for joint ventures
The tables below provide financial information for joint ventures that are
material to the Group. The information disclosed reflects the amounts
presented in the financial statements of the relevant joint ventures, where
the Group retains an interest, and not the Group's share of those amounts.
2024 Crest A2D (Walton Elmsbrook (Crest A2D) LLP Crest Crest Other non-material joint ventures Total
Court) LLP Sovereign (Brooklands) LLP Peabody (Turweston) LLP
£m £m £m £m £m £m
Summarised statement of financial position
Current assets:
Cash and cash equivalents 0.3 2.4 0.3 0.1 0.5 3.6
Inventories 19.6 0.7 19.5 1.1 - 40.9
Other current assets 8.1 0.2 4.2 5.1 1.6 19.2
Current liabilities:
Financial liabilities (21.8) - (7.4) (5.9) (2.7) (37.8)
Other current liabilities (3.6) (1.0) (4.8) - (1.1) (10.5)
Net assets/(liabilities) 2.6 2.3 11.8 0.4 (1.7) 15.4
Reconciliation to carrying amounts
Opening net assets/(liabilities) at 1 November 2023 4.5 6.9 9.8 - (1.7) 19.5
(Loss)/profit for the year (2.4) 0.4 2.0 (0.2) - (0.2)
Capital contribution reserve 0.5 - - 0.6 - 1.1
Dividends paid - (5.0) - - - (5.0)
Closing net assets/(liabilities) at 31 October 2024 2.6 2.3 11.8 0.4 (1.7) 15.4
Group's share of closing net assets/(liabilities) at 31 October 2024 1.3 1.2 5.9 0.2 (0.9) 7.7
Losses recognised against receivable from joint venture (note 17) - - - - 0.9 0.9
Group's share in joint venture 1.3 1.2 5.9 0.2 - 8.6
Amount due to the Group (note 17) 11.1 - 3.7 6.0 1.8 22.6
Amount due from the Group (note 21) - - - - 0.1 0.1
Summarised income statement for the 12 months ending 31 October 2024
Revenue 56.1 8.2 15.4 - - 79.7
Expenditure (57.5) (7.8) (13.1) - - (78.4)
Operating (loss)/profit before finance expense (1.4) 0.4 2.3 - - 1.3
Finance expense (1.0) - (0.3) (0.2) - (1.5)
Pre-tax and post-tax (loss)/profit for the year (2.4) 0.4 2.0 (0.2) - (0.2)
Group's share in joint venture (loss)/profit for the year (1.2) 0.2 1.0 (0.1) - (0.1)
The Group is committed to provide such funding to joint ventures as may be
required by the joint venture in order to carry out the project if called.
Funding of this nature is currently expected to be £0.9m (2023: £5.9m). The
Group has recognised its share of the accumulated losses of its joint ventures
against the carrying value of investments or loans in the joint venture where
appropriate, in line with IAS 28.
2023 Crest A2D (Walton Elmsbrook (Crest A2D) LLP Crest Crest Other non-material joint ventures Total
Court) LLP Sovereign (Brooklands) LLP Peabody (Turweston) LLP
£m £m £m £m £m £m
Summarised statement of financial position
Current assets:
Cash and cash equivalents 0.2 6.0 0.4 - 0.2 6.8
Inventories 64.8 4.6 16.7 - - 86.1
Other current assets 0.2 1.0 1.9 5.3 2.0 10.4
Current liabilities:
Financial liabilities (52.0) (1.4) (1.1) (0.3) - (54.8)
Other current liabilities (5.7) (3.3) (8.1) (5.0) (3.9) (26.0)
Non-current liabilities
Financial liabilities (3.0) - - - - (3.0)
Net assets/(liabilities) 4.5 6.9 9.8 - (1.7) 19.5
Reconciliation to carrying amounts
Opening net assets/(liabilities) at 1 November 2022 6.7 6.5 4.6 - (2.9) 14.9
(Loss)/profit for the year (3.2) 3.4 5.2 - 1.2 6.6
Capital contribution reserve 1.0 - - - - 1.0
Dividends paid - (3.0) - - - (3.0)
Closing net assets/(liabilities) at 31 October 2023 4.5 6.9 9.8 - (1.7) 19.5
Group's share of closing net assets/(liabilities) at 31 October 2023 2.3 3.5 4.9 - (0.9) 9.8
Fully provided in the Group financial statements (note 22) - - - - 0.9 0.9
Group's share in joint venture 2.3 3.5 4.9 - - 10.7
Amount due to the Group (note 17) 27.4* 1.4 0.4 0.3 - 29.5
Amount due from the Group (note 21) - - - - 0.7 0.7
Summarised income statement for the 12 months ending 31 October 2023
Revenue 0.9 21.1 47.2 - - 69.2
Expenditure (2.6) (17.7) (41.1) - - (61.4)
Expenditure - exceptional item (note 4) - - - - 1.2 1.2
Operating (loss)/profit before finance expense (1.7) 3.4 6.1 - 1.2 9.0
Finance expense (1.5) - (0.9) - - (2.4)
Pre-tax and post-tax (loss)/profit for the year (3.2) 3.4 5.2 - 1.2 6.6
Group's share in joint venture (loss)/profit for the year (1.6) 1.7 2.6 - 0.6 3.3
* £27.4m stated after expected credit loss of £0.1m.
Subsidiary undertakings
The subsidiary undertakings that are significant to the Group and traded
during the year are set out below. The Group's interest is in respect of
ordinary issued share capital that is wholly owned and all the subsidiary
undertakings are incorporated in Great Britain and are included in the
consolidated financial statements.
Subsidiary
Nature of business
CN Finance
plc
Holding company (including group financing)
Crest Nicholson
plc
Holding company
Crest Nicholson Operations
Limited
Residential and commercial property development
A full list of the Group's undertakings including subsidiaries and joint
ventures is set out in note 28.
15 DEFERRED TAX ASSETS AND LIABILITIES
Deferred tax assets Inventories fair value Share-based payments Tax losses Other temporary differences Total
£m £m £m £m £m
At 1 November 2022 1.5 0.5 - 2.8 4.8
Consolidated income statement movements (0.4) (0.1) - (0.8) (1.3)
Equity movements - (0.2) - - (0.2)
At 31 October 2023 1.1 0.2 - 2.0 3.3
Consolidated income statement movements (0.2) - 36.0 0.5 36.3
Equity movements - 0.1 - - 0.1
At 31 October 2024 0.9 0.3 36.0 2.5 39.7
Deferred tax liabilities Pension surplus Total
£m £m
At 1 November 2022 (3.2) (3.2)
Consolidated income statement movements (0.4) (0.4)
Equity movements 1.1 1.1
At 31 October 2023 (2.5) (2.5)
Consolidated income statement movements (0.3) (0.3)
Equity movements (2.1) (2.1)
At 31 October 2024 (4.9) (4.9)
Total deferred tax credited to equity in the year is £2.0m (2023: £0.9m).
Deferred tax assets expected to be recovered in less than 12 months is £9.4m
(2023: £1.0m), and in more than 12 months is £30.3m (2023: £2.3m). Deferred
tax losses have been recognised based on current trading forecasts for the
next three years. Deferred tax liabilities are expected to be settled in more
than 12 months.
At the consolidated statement of financial position date the substantively
enacted future corporation tax rate is 25.0%. RPDT became effective from 1
April 2022 and is an additional tax at 4.0% of profits generated from
residential property development activity, in excess of an annual threshold.
Deferred tax assets and liabilities have been evaluated using the applicable
tax rates when the asset is forecast to be realised and the liability is
forecast to be settled. The Group has no material unrecognised deferred tax
assets.
16 EMPLOYEE BENEFITS
(a) Retirement benefit obligations
Defined contribution scheme
The Group operates a defined contribution scheme for new employees. The assets
of the scheme are held separately from those of the Group in an independently
administered fund. The contributions to this scheme for the year were £2.6m
(2023: £2.8m). At the consolidated statement of financial position date there
were no outstanding or prepaid contributions (2023: £nil).
Defined benefit scheme
The Company sponsors the Crest Nicholson Group Pension and Life Assurance
Scheme (Scheme), a funded defined benefit pension scheme in the UK. The Scheme
is administered within a trust that is legally separate from the Company. A
Trustee company (Trustee) is appointed by the Company and the Company and the
Scheme's members appoint Trustee Directors. The Trustee is appointed to act in
the interest of the Scheme and all relevant stakeholders, including the
members and the Company. The Trustee is also responsible for the investment of
the Scheme's assets.
The Scheme closed to future service accrual from 30 April 2010. Accrued
pensions in relation to deferred members are revalued at statutory revaluation
in the period before retirement. Benefits also increase either at a fixed rate
or in line with inflation while in payment. The Scheme provides pensions to
members on retirement and to their dependants on death.
The Company pays contributions to improve the Scheme's funding position as
determined by regular actuarial valuations. The Trustee is required to use
prudent assumptions to value the liabilities and costs of the Scheme whereas
the accounting assumptions must be best estimates.
Responsibility for meeting any deficit within the Scheme lies with the Company
and this introduces a number of risks for the Company. The major risks are:
interest rate risk, inflation risk, investment risk and longevity risk. The
Company and Trustee are aware of these risks and manage them through
appropriate investment and funding strategies.
The Scheme is subject to regular actuarial valuations, which are usually
carried out every three years. The last actuarial valuation was carried out
with an effective date of 31 January 2021. These actuarial valuations are
carried out in accordance with the requirements of the Pensions Act 2004 and
so include deliberate margins for prudence. This contrasts with these
accounting disclosures, which are determined using best estimate assumptions.
The 31 January 2024 valuation is currently underway and while the final
assumptions have not yet been agreed, the initial results of the actuarial
valuation as at 31 January 2024 have been projected to 31 October 2024 by a
qualified independent actuary and used to derive the present value of scheme
liabilities. The figures in the following disclosure were measured using the
Projected Unit Method.
The investment strategy in place for the Scheme is to invest in a mix of
return seeking, index linked and fixed interest investments. As at 31 October
2024, the allocation of the Scheme's invested assets was 34% in return seeking
investments, 51% in liability-driven investing, 12% in cash and 3% in insured
annuities. Details of the investment strategy can be found in the Scheme's
Statement of Investment Principles, which the Trustee updates as their policy
evolves.
It should also be noted that liabilities relating to insured members of the
Scheme have been included as both an asset and a liability.
Following the High Court judgement in the Lloyds Banking Group Pensions
Trustees Limited v Lloyds Bank plc and others (2018) case, overall pension
benefits now need to be equalised to eliminate inequalities between males and
females in Guaranteed Minimum Pensions (GMP). The Company has allowed for this
in its accounts by adding a 1.0% (2023: 1.3%) reserve reflecting an
approximate estimate of the additional liability.
In June 2023, the High Court judged that amendments made to
the Virgin Media scheme were invalid because the scheme's actuary did not
provide the associated Section 37 certificate. The High Court's decision has
wide ranging implications, affecting other schemes that were contracted-out on
a salary-related basis, and made amendments between April 1997 and April 2016.
The Scheme was contracted out until 29 February 2016 and amendments were made
during the relevant period. As such the ruling could have implications for
the Group. Following the Court of Appeal upholding the 2023 High Court ruling
on 25 July 2024, the Trustee initiated the process of investigating any
potential impact for the Scheme. As part of this process the Trustee is also
considering certain other historical amendments and the manner in which they
were applied.
As the detailed investigation is in progress, the Group considers that the
amount of any potential impact on the defined benefit obligation cannot be
confirmed and/or measured with sufficient reliability at the 2024 year end. We
are therefore disclosing this issue as a potential contingent liability at 31
October 2024 and will review again in 2025 based on the findings of the
detailed investigation.
2024 2023 2022
£m £m £m
The amounts recognised in the consolidated statement of financial position are
as follows:
Fair value of scheme assets 145.1 141.3 160.0
Present value of scheme liabilities (125.6) (131.3) (148.9)
Net surplus amount recognised at year end 19.5 10.0 11.1
Deferred tax liability recognised at year end within non-current liabilities (4.9) (2.5) (3.2)
The retirement benefit surplus recognised in the consolidated statement of
financial position represents the surplus of the fair value of the Scheme's
assets over the present value of the Scheme's liabilities.
The rules of the Scheme provide the Group with an unconditional right to a
refund of surplus assets on the gradual settlement of the Scheme's
liabilities. In the ordinary course of business, the Scheme Trustee has no
unilateral right to wind the Scheme up. Based on these rights and in
accordance with International Financial Reporting Interpretations Committee
14, the Group has made the judgement that the net surplus in the Scheme is
recognised in full.
At the consolidated statement of financial position date, the corporation tax
rate is 25.0%. The deferred tax liability on the retirement benefit surplus
has been evaluated applying this rate. RPDT of 4.0% is applicable to
residential property development trading income only.
Amounts recognised in comprehensive
income:
The current and past service costs, settlements and curtailments, together
with the interest income for the year are included in the consolidated
statement of comprehensive income. Remeasurements of the net defined benefit
asset are included in the consolidated statement of comprehensive income.
2024 2023
£m £m
Service cost
Administrative expenses (0.7) (0.6)
Interest income 0.6 0.5
Recognised in the consolidated income statement (0.1) (0.1)
2024 2023
£m £m
Remeasurements of the net liability
Return on Scheme assets 3.2 (18.5)
(Losses)/gains arising from changes in financial assumptions (4.6) 12.5
Gains arising from changes in demographic assumptions 3.9 6.1
Experience gains/(losses) 6.0 (2.6)
Actuarial gains/(losses) recorded in the consolidated statement of 8.5 (2.5)
comprehensive income
Total defined benefit scheme gains/(losses) 8.4 (2.6)
2024 2023
% %
The principal actuarial assumptions used were:
Liability discount rate 5.3 5.6
Inflation assumption - RPI 3.2 3.3
Inflation assumption - CPI 2.7 2.7
Revaluation of deferred pensions 2.7 2.7
Increases for pensions in payment
Benefits accrued in excess of GMP pre-1997 3.0 3.0
Benefits accrued post-1997 3.0 3.1
Proportion of employees opting for early retirement 0.0 0.0
Proportion of employees commuting pension for cash 100.0 100.0
Mortality assumption - pre-retirement AC00 AC00
Mortality assumption - male and female post-retirement Male/female pensioners: 103%/103% S3PA base tables. S3PA light base tables
Male/female dependants: 103%/100% S3DA base tables. (males and females) projected in line with CMI_2022
Projected in line with CMI_2023 core projections and core parameters (Sk = core model with core parameters (Sk =
7.0, an initial addition of 0.25%, w2020 = w2021 = 0%, and w2022 = w2023 =
15%) and a long-term improvement rate of 1.25% 7.0, an initial addition of 0.25%, w2020
and w2021 set to zero and 2022 set to 25%) and with a long-term rate of
improvement of 1.25% p.a
2024 2023
Years Years
Future expected lifetime of current pensioner at age 65
Male aged 65 at year end 21.4 22.9
Female aged 65 at year end 23.9 24.6
Future expected lifetime of future pensioner at age 65
Male aged 45 at year end 22.7 24.1
Female aged 45 at year end 25.3 25.9
2024 2023
£m £m
Changes in the present value of assets over the year
Fair value of assets at beginning of the year 141.3 160.0
Interest income 7.7 7.5
Return on assets (excluding amount included in net interest income) 3.2 (18.5)
Contributions from the employer 1.1 1.5
Benefits paid (7.5) (8.6)
Administrative expenses (0.7) (0.6)
Fair value of assets at end of the year 145.1 141.3
Actual return on assets over the year 10.9 (10.9)
2024 2023
£m £m
Changes in the present value of liabilities over the year
Liabilities at beginning of the year (131.3) (148.9)
Interest cost (7.1) (7.0)
Remeasurement gains/(losses)
(Losses)/gains arising from changes in financial assumptions (4.6) 12.5
Gains arising from changes in demographic assumptions 3.9 6.1
Experience gains/(losses) 6.0 (2.6)
Benefits paid 7.5 8.6
Liabilities at end of the year (125.6) (131.3)
2024 2023
£m £m
Split of the Scheme's liabilities by category of membership
Deferred pensioners (47.2) (57.8)
Pensions in payment (78.4) (73.5)
(125.6) (131.3)
2024 2023
Years Years
Average duration of the Scheme's liabilities at end of the year 11.0 12.0
This can be subdivided as follows:
Deferred pensioners 15.0 16.0
Pensions in payment 9.0 9.0
2024 2023
£m £m
Major categories of scheme assets
Return seeking
Overseas equities 8.6 2.4
Other (hedge funds, multi asset strategy and absolute return funds) 40.1 23.6
48.7 26.0
Debt instruments
Corporates 35.8 11.8
Liability-driven investing 38.4 44.1
74.2 55.9
Other
Cash (including liquidity fund) 18.3 55.9
Insured annuities 3.9 3.5
22.2 59.4
Total market value of assets 145.1 141.3
The Scheme has a Liability Driven Investment (LDI) strategy designed to
closely align investment returns with movements in the Scheme's liabilities on
a low-risk basis, thereby reducing the volatility of the Scheme's funding
level. The use of LDI brings liquidity risk as the demand for additional
collateral to maintain the Scheme's hedging can change over short periods when
interest rates change.
£nil (2023: £nil) of Scheme assets have a quoted market price in active
markets, £132.1m (2023: £90.9m) of Scheme assets have valuation inputs other
than quoted market prices, including quoted market prices for similar assets
in active markets, £6.2m (2023: £21.4m) of Scheme assets are instruments
that are valued based on quoted prices for similar instruments but for which
significant unobservable adjustments or assumptions are required to reflect
the differences between the instruments, and £6.8m (2023: £29.0m) of Scheme
assets are cash at bank and insured pension annuities.
The Scheme has no investments in the Group or in property occupied by the
Group.
UK legislation requires that pension schemes are funded prudently. The last
funding valuation of the scheme was carried out by a qualified actuary as at
31 January 2021 and showed a deficit of £10.8m. The 31 January 2024 valuation
is underway with ongoing discussions between the Trustees and the Company. The
Company paid contributions of £1.1m during 2024 and stopped paying deficit
contributions in July 2024.
Sensitivity of the liability value to changes in the principal
assumptions
The sensitivities included are consistent with those shown in prior years and
show the change in the consolidated statement of financial position as at 31
October 2024 as a result of a change to the key assumptions.
If the discount rate was 0.25% higher/(lower), the Scheme liabilities would
decrease by £3.3m/(increase by £3.4m) if all the other assumptions remained
unchanged.
If the inflation assumption was 0.25% higher/(lower), the Scheme liabilities
would increase by £1.9m/(decrease by £1.9m) if all the other assumptions
remained unchanged.
If life expectancies were to increase by one year, the scheme liabilities
would increase by £4.9m if all the other assumptions remained unchanged.
(b) Share-based payments
The Group operates a Long-Term Incentive Plan (LTIP), Save As You Earn scheme
(SAYE) and a deferred bonus plan. No awards were made in 2024 under the
deferred bonus plan as under the terms of the Directors' Remuneration Policy
any future awards in respect of the annual bonus scheme will be made in the
form of deferred shares.
Long-Term Incentive Plan
The Group's LTIP is open to the Executive Directors and senior management with
awards being made at the discretion of the Remuneration Committee. Options
granted under the plan are exercisable between three and 10 years after the
date of grant. Awards may be satisfied by shares held in the ESOT, the issue
of new shares (directly or to the ESOT) or the acquisition of shares in the
market.
All awards are subject to a three-year performance period and a two-year post
vesting period for Executive Directors and Executive Committee members.
Awards issued in 2021 and 2022 are assessed against return on capital, profit
performance conditions and relative total shareholder returns (TSR). The
non-market based return on capital and profit performance conditions apply to
60% of the award and value the options using a binomial option valuation
model. The market-based TSR performance conditions apply to 40% of the award
and values the options using the Monte Carlo valuation model. The TSR-based
performance conditions are split one-third FTSE 250 excluding investment funds
and two-thirds sector peer group. Awards issued in 2023 are as above and
include a tCO(2)e target non-market performance condition and 75% of the award
is subject to an additional post-vesting holding period, where shares cannot
be sold for two years after vesting date. 1,487,313 options were awarded in
2024 and are subject to three years' performance with 882,615 options being
subject to an additional two-year post-vesting holding period. 27% of the
awards are assessed against return on capital, 12% against tCO(2)e targets,
39% against relative total shareholder returns and 22% contain no performance
conditions. Non-market based return on capital and tCO(2)e performance
conditions options and the options with no performance conditions are valued
using a binomial option valuation model. Market-based TSR performance
conditions options are valued using the Monte Carlo valuation model.
The 28 January 2022 grant fair value at measurement date of the different
valuation elements of the unrestricted options are £1.68 TSR (FTSE 250),
£1.55 TSR (peer group), and £2.62 for the non-market-based return on capital
and profit performance conditions. The 2023 fair value at measurement date of
the different valuation elements of the restricted options are £1.51 TSR
(FTSE 250), £1.40 TSR (peer group), and £2.36 for the non-market-based
return on capital and profit performance conditions. The correlation of FTSE
250 and peer group calculated for each individual comparator company relative
to the Group is 31% and 68% respectively. The average fair value at
measurement date is £2.10 per option. The average fair value at measurement
date of the 25 August 2023 grant is £1.59 per option.
The 27 January 2023 grant fair value at measurement date of the different
valuation elements of the unrestricted options are £1.84 TSR (FTSE 250),
£1.68 TSR (peer group), and £2.45 for the non-market-based return on capital
and tCO(2)e elements. The 2023 fair value at measurement date of the different
valuation elements of the restricted options are £1.58 TSR (FTSE 250), £1.44
TSR (peer group), and £2.10 for the non-market-based return on capital and
profit performance conditions. The correlation of FTSE 250 and peer group
calculated for each individual comparator company relative to the Group is 33%
and 65% respectively. The average fair value at measurement date is £1.88 per
option.
The 5 February 2024 grant fair value at measurement date of the different
valuation elements of the unrestricted options are £1.48 TSR (FTSE 250),
£1.14 TSR (peer group), and £2.04 for the non-market-based return on
capital, tCO(2)e targets and options with no performance conditions. The fair
value at measurement date of the different valuation elements of the
restricted options are £1.29 TSR (FTSE 250), £0.99 TSR (peer group), and
£1.78 for the non-market-based return on capital, tCO(2)e targets and options
with no performance conditions. The correlation of FTSE 250 and peer group
calculated for each individual comparator company relative to the Group is 32%
and 66% respectively. The average fair value at measurement date is £1.62 per
option.
The 17 June 2024 options granted are in relation to the buy-out arrangement of
Martyn Clark who joined the Group on 3 June 2024 from Persimmon Plc
(Persimmon). 498,628 options have the same conditions as the 5 February 2024
LTIP issue. 224,909 Crest Nicholson Holdings plc options are replacement
unvested Persimmon 2023 LTIP options, subject to satisfaction of original
Persimmon market and non-market performance conditions and vest 2 May 2026.
138,037 Crest Nicholson Holdings plc options are replacement unvested
Persimmon 2022 LTIP options, subject to satisfaction of original Persimmon
market and non-market performance conditions and vest 8 March 2025. 97,544
options are replacement unvested Persimmon 2024 Deferred Bonus Plan Award
options, subject to a service condition and vest on 1 March 2026. The fair
value at measurement date and valuation model applied are within the table
below.
Date of grant 20 Feb 2020 04 Aug 2020 08 Feb 2021 28 Jan 2022 25 Aug 2022 06 Mar 07 Aug 27 Jan 05 Feb 17 Jun 17 Jun 17 Jun 17 Jun
2023 2023 2023 2024 2024 2024 2024 2024
Options granted 1,125,531 7,298 1,328,192 1,341,918 23,955 29,462 508 1,771,417 1,487,313 498,628 224,909 138,037 97,544
Fair value at measurement date £4.28 £1.53 £2.50 £2.10 £1.59 £2.75 £2.46 £1.88 £1.62 £1.92 £1.47 £1.30 £2.48
Share price on date of grant £5.16 £1.85 £3.23 £3.07 £2.33 £2.32 £2.14 £2.45 £2.04 £2.48 £2.48 £2.48 £2.48
Exercise price £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00
Vesting period 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years 3 years May 26 Mar 25 Mar 26
Expected dividend yield 6.40% 6.40% 4.30% 5.30% 5.30% N/A N/A 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Expected volatility 30.00% 30.00% 40.00% 40.00% 40.00% N/A N/A 45.00% 40.00% 40.00% 40.00% 40.00% 40.00%
Risk-free interest rate 0.45% 0.45% 0.03% 0.97% 0.97% N/A N/A 3.23% 4.05% 4.12% 4.12% 4.12% 4.12%
Valuation model Binomial Binomial Binomial/ Monte Carlo Binomial/ Monte Carlo Binomial/ Monte Carlo N/A N/A Binomial/ Monte Carlo Binomial/ Monte Carlo Binomial/ Monte Carlo Binomial/ Monte Carlo Binomial/ Monte Carlo Binomial
Contractual life from 20.02.20 04.08.20 08.02.21 28.01.22 25.08.22 06.03.23 07.08.23 27.01.23 05.02.24 17.06.24 17.06.24 17.06.24 17.06.24
Contractual life to 19.02.30 03.08.30 07.02.31 27.02.32 27.02.32 19.02.30 03.08.30 26.01.33 05.02.34 16.06.34 16.06.34 16.06.34 16.06.34
Number Number Number Number Number Number Number of options Number of options Number of options Number of options Number of options Number Number Total number of options
of options of options of options of options of options of options of options of options
Movements in the year
Outstanding at 1 November 2022 891,970 7,298 1,197,676 1,312,475 23,955 - - - - - - - - 3,433,374
Granted during the year - - - - - 29,462 508 1,771,407 - - - - - 1,801,377
Exercised during the year (417,308) (3,948) - - - (29,462) (508) - - - - - - (451,226)
Lapsed during the year (474,662) (3,350) (167,438) (181,150) - - - (201,028) - - - - - (1,027,628)
Outstanding at 31 October 2023 - - 1,030,238 1,131,325 23,955 - - 1,570,379 - - - - - 3,755,897
Granted during the year - - - - - - - - 1,487,313 498,628 224,909 138,037 97,544 2,446,431
Lapsed during the year - - (1,030,238) (252,040) - - - (455,292) (92,844) - - - - (1,830,414)
Outstanding at 31 October 2024 - - - 879,285 23,955 - - 1,115,087 1,394,469 498,628 224,909 138,037 97,544 4,371,914
Exercisable at 31 October 2024 - - - - - - - - - - - - - -
Exercisable at 31 October 2023 - - - - - - - - - - - - - -
-
£m £m £m £m £m £m £m £m £m £m £m £m £m Total £m
Charge to income for the current year - - - 0.1 - - - 0.4 0.3 0.1 0.1 0.1 - 1.1
Charge to income for the prior year 0.1 - - 0.1 - 0.1 - 0.3 - - - - - 0.6
The weighted average exercise price of LTIP options was £nil (2023: £nil).
Save As You Earn
Executive Directors and eligible employees are invited to make regular monthly
contributions to a Sharesave scheme administered by EQ. On completion of the
three-year savings contract period employees are able to purchase ordinary
shares in the Company based on the market price at the date of invitation less
a 20% discount. There are no performance conditions.
Date of grant 30 Jul 07 Aug 03 Aug 02 Aug 28 Jul 13 Sep
2019 2020 2021 2022 2023 2024
Options granted 935,208 1,624,259 256,132 975,549 1,938,156 663,354
Fair value at measurement date £0.54 £0.36 £1.15 £0.66 £1.51 £0.40
Share price on date of grant £3.68 £1.94 £4.14 £2.67 £2.19 £1.98
Exercise price £2.86 £1.70 £3.42 £1.94 £1.51 £1.71
Vesting period 3 years 3 years 3 years 3 years 3 years 3 years
Expected dividend yield 8.96% 5.20% 1.98% 5.63% 7.78% 8.60%
Expected volatility 35.00% 40.00% 45.30% 42.20% 41.60% 44.10%
Risk-free interest rate 0.38% -0.08% 0.14% 1.62% 4.63% 3.51%
Valuation model Binomial Binomial Binomial Binomial Binomial Binomial
Contractual life from 01.09.19 01.09.20 01.09.21 01.09.22 01.09.23 01.10.24
Contractual life to 01.03.23 01.03.24 01.03.25 01.03.26 01.03.27 01.04.28
Movements in the year Number of options Number of options Number of options Number of options Number of options Number of options Total number of options Weighted average exercise price
Outstanding at 1 November 2022 96,832 907,769 84,131 912,557 - - 2,001,289 £1.94
Granted during the year - - - - 1,938,156 - 1,938,156 £1.51
Exercised during the year - (522,976) - - - - (522,976) £1.70
Lapsed during the year (96,832) (61,983) (41,201) (486,485) (158,774) - (845,275) £2.02
Outstanding at 31 October 2023 - 322,810 42,930 426,072 1,779,382 - 2,571,194 £1.64
Granted during the year - - - - - 663,354 663,354 £1.71
Exercised during the year - (198,624) - (3,581) (4,965) - (207,170) £1.70
Lapsed during the year - (124,186) (9,943) (231,870) (489,591) (27,572) (883,162) £1.68
Outstanding at 31 October 2024 - - 32,987 190,621 1,284,826 635,782 2,144,216 £1.64
Exercisable at 31 October 2024 - - 32,987 - - - 32,987
Exercisable at 31 October 2023 - 322,810 - - - - 322,810
£m £m £m £m £m £m Total £m
Charge to income for the current year - - - 0.1 0.3 - 0.4
Charge to income for the prior year - 0.1 - 0.3 0.1 - 0.5
Deferred bonus plan
Under the terms of certain bonus schemes, some parts of bonus payments must be
deferred into share options. The options carry no performance criteria and
vest over one or three years. Options granted under the plan are exercisable
between one and 10 years after the date of grant. Deferred bonus plan option
numbers are based on the share price on the date of grant.
Date of grant 28 Feb 28 Jan 09 Feb 06 Mar 2023 06 Mar 2023 27 Jan 2023 05 Feb 2024
2020 2022 2022
Options granted 20,956 230,605 58,848 151 2,897 340,125 3,234
Fair value at measurement date £4.52 £2.76 £2.76 £2.75 £2.53 £2.44 £2.02
Share price on date of grant £4.52 £3.06 £3.27 £2.32 £2.32 £2.45 £2.04
Exercise price £0.00 £0.00 £0.00 £0.00 £0.00 £0.00 £0.00
Vesting period 3 years 3 years 1 year N/A N/A 3/1 year N/A
Expected dividend yield and volatility N/A N/A N/A N/A N/A N/A N/A
Risk-free interest rate N/A N/A N/A N/A N/A N/A N/A
Valuation model N/A N/A N/A N/A N/A N/A N/A
Contractual life from 28.02.20 28.01.22 09.02.22 06.03.23 06.03.23 27.01.23 05.02.24
Contractual life to 27.02.30 27.01.32 08.02.32 27.02.30 08.02.32 26.01.33 26.01.34
Movements in the year Number of options Number of options Number of options Number of options Number of options Number Number Total number of options
of of
options options
Outstanding at 1 November 2022 2,260 230,605 58,848 - - - - 291,713
Granted during the year - - - 151 2,897 340,125 - 343,173
Exercised during the year (2,260) - (48,374) (151) (2,897) - - (53,682)
Lapsed during the year - - (10,474) - - (21,108) - (31,582)
Outstanding at 31 October 2023 - 230,605 - - - 319,017 - 549,622
Granted during the year - - - - - - 3,234 3,234
Exercised during the year - - - - - (37,720) (3,234) (40,954)
Lapsed during the year - (41,328) - - - (50,911) - (92,239)
Outstanding at 31 October 2024 - 189,277 - - - 230,386 - 419,663
Exercisable at 31 October 2024 - - - - - - - -
Exercisable at 31 October 2023 - - - - - - - -
£m £m £m £m £m £m £m Total £m
Charge to income for the current year - - - - - 0.2 - 0.2
Charge to income for the prior year - 0.2 - - - 0.2 - 0.4
The weighted average exercise price of deferred bonus plan share options was
£nil (2023: £nil).
Total share incentive schemes 2024 2023
Movements in the year Number of options Number of options
Outstanding at beginning of the year 6,876,713 5,726,376
Granted during the year 3,113,019 4,082,706
Exercised during the year (248,124) (1,027,884)
Lapsed during the year (2,805,815) (1,904,485)
Outstanding at end of the year 6,935,793 6,876,713
Exercisable at end of the year 32,987 322,810
2024 2023
£m £m
Charge to income for share incentive schemes 1.7 1.5
Chief Executive Officer buy-out arrangement(1) 0.1 -
Charge to income for the year 1.8 1.5
(1) As part of his terms of appointment, the Group agreed to buy-out certain
share-based awards from Martyn Clark's previous employment. 21,968 shares
in Crest Nicholson Holdings plc were issued on joining at a cost of £0.1m.
Total buy-out related charge to income for the year was £0.5m (LTIPs charge
£0.4m and £0.1m issued on joining).
The weighted average share price at the date of exercise of share options
exercised during the year was £2.09 (2023: £2.77). The options outstanding
had a range of exercise prices of £nil to £3.42 (2023: £nil to £3.42) and
a weighted average remaining contractual life of 6.7 years (2023: 6.2 years).
The gain on shares exercised during the year was £0.2m (2023: £0.1m).
17 TRADE AND OTHER RECEIVABLES
Trade and other receivables before expected credit loss Expected credit loss Trade and other receivables after expected credit loss Trade and other receivables before expected credit loss Expected credit loss Trade and other receivables after expected credit loss
2024 2024 2024 2023 2023 2023
£m £m £m £m £m £m
Non-current
Trade receivables 12.6 - 12.6 4.6 (0.1) 4.5
Due from joint ventures - - - 1.5 - 1.5
Other receivables 2.0 - 2.0 - - -
14.6 - 14.6 6.1 (0.1) 6.0
Current
Trade receivables 51.0 (1.4) 49.6 57.1 (0.7) 56.4
Contract assets 7.7 (0.1) 7.6 6.9 - 6.9
Due from joint ventures 22.7 (0.1) 22.6 28.1 (0.1) 28.0
Other receivables 15.9 (0.1) 15.8 27.0 (0.2) 26.8
Prepayments and accrued income 2.5 - 2.5 1.9 - 1.9
99.8 (1.7) 98.1 121.0 (1.0) 120.0
Non-current and current 114.4 (1.7) 112.7 127.1 (1.1) 126.0
Trade receivables and contract assets mainly comprise contractual amounts due
from housing associations, bulk sale purchasers and land sales to other
housebuilders. Other receivables mainly comprise two development agreements
where the Group is entitled to recovery of costs incurred under the agreement.
Current trade receivables of £17.7m have been collected as of 1 January 2025
(2023: £20.2m have been collected as of 1 January 2024). The remaining
balance is due according to contractual terms, and no individually material
amounts are past due. At the consolidated statement of financial position date
the difference between the fair value of amounts due from joint ventures and
nominal value is £0.2m (2023: £0.2m).
Amounts due from joint ventures comprises funding provided on four (2023:
four) joint venture developments which are being project managed by the Group
and are repayable according to contractual arrangements. Amounts due from
joint ventures are stated net of losses of £0.9m (2023: £nil). See note 14
for additional details on the Group's interests in joint ventures.
Trade receivables, contract assets and other receivables are stated after a
loss allowance of £1.6m (2023: £1.0m) in respect of expected credit losses,
assessed on an estimate of default rates. £0.7m (2023: £0.7m) provision was
made during the year, £nil (2023: £nil) was utilised and £0.1m (2023:
£0.1m) provision was released during the year.
Movements in total loss allowance for expected credit losses
2024 2023
£m £m
At beginning of the year 1.1 0.5
Charged in the year 0.7 0.7
Released in the year (0.1) (0.1)
At end of the year 1.7 1.1
Maturity of non-current receivables:
2024 2023
£m £m
Due between one and two years 14.6 5.8
Due between two and five years - 0.2
Due after five years - -
14.6 6.0
18 INVENTORIES Represented(1)
2024 2023
£m £m
Land 670.2 679.4
Work-in-progress 334.1 361.3
Completed buildings including show homes 102.9 89.6
Part exchange inventories 30.2 34.5
1,137.4 1,164.8
(1) Work-in-progress has been represented to show land and work-in-progress
separately as land represents a major component of inventories and has
different characteristics to other work-in-progress.
Total inventories of £497.6m (2023: £520.2m) were recognised as cost of
sales in the year.
During the year £14.2m (2023: £13.4m) additional NRV was charged consisting
of £8.5m, mainly on legacy developments and £5.7m on freehold reversionary
interests as disclosed in note 4.
Inventories are stated after an NRV provision of £22.3m (2023: £20.2m),
which it is currently forecast around half will be used in the next financial
year.
Movements in the NRV provision in the current and prior year are shown below:
2024 2023
£m £m
At beginning of the year 20.2 12.6
NRV charged in the year 14.2 13.4
NRV used in the year (12.1) (5.8)
Total movement in NRV in the year 2.1 7.6
At end of the year 22.3 20.2
19 MOVEMENT IN NET (DEBT)/CASH
2024 Movement 2023
£m £m £m
Cash and cash equivalents 73.8 (88.8) 162.6
Bank loans and senior loan notes (82.3) 15.4 (97.7)
Net (debt)/cash (8.5) (73.4) 64.9
20 INTEREST-BEARING LOANS AND BORROWINGS
2024 2023
£m £m
Non-current
Senior loan notes 65.0 85.0
Revolving credit and senior loan notes issue costs (1.8) (1.5)
63.2 83.5
Current
Senior loan notes 20.0 15.0
Revolving credit and senior loan notes issue costs (0.9) (0.8)
19.1 14.2
There were undrawn amounts of £250.0m (2023: £250.0m) under the RCF at the
consolidated statement of financial position date. The Group remained undrawn
until 30 June 2024. From 1 July 2024 to 31 October 2024, the Group had average
drawings of £64.0m (2023: undrawn) under the RCF. See note 24 for additional
disclosures.
21 TRADE AND OTHER PAYABLES
2024 Represented(1)
2023
£m £m
Non-current
Land payables on contractual terms 31.8 64.7
Other payables 1.7 2.0
Contract liabilities - 0.3
Accruals and deferred income 8.8 2.7
42.3 69.7
Current
Land payables on contractual terms 99.8 140.8
Other trade payables 67.8 61.8
Contract liabilities 6.9 5.7
Amounts due to joint ventures 0.1 0.7
Taxes and social security costs 1.7 1.7
Other payables 1.1 1.1
Accruals and deferred income 107.8 116.8
285.2 328.6
(1) See note 29 for an explanation of the prior year representation.
Land payables are recognised from the date of unconditional exchange of
contracts, and represent amounts due to land vendors for development sites
acquired. All land payables are due according to contractual terms. Where land
is purchased on deferred settlement terms then the land and the land payable
are discounted to their fair value using the effective interest method in
accordance with IFRS 9. The difference between the fair value and the nominal
value is amortised over the deferment period, with the financing element being
charged as an interest expense through the consolidated income statement. As
at 31 October 2024 the difference between the fair value and nominal value of
land payables is £3.7m (2023: £6.8m).
Contract liabilities represent payments on account, received from customers,
in excess of billable work-in-progress on affordable and other sales in bulk
on contracts in which revenue is recognised over time. Based on historical
trends, the Directors expect a significant proportion of the contract
liabilities total to be recognised as revenue in the next reporting period.
Amounts due to joint ventures are interest free and repayable on demand. See
note 14 for additional details on the Group's interests in joint ventures.
Other trade payables mainly comprise amounts due to suppliers and
subcontractor retentions. Suppliers are settled according to agreed payment
terms and subcontractor retentions are released once the retention condition
has been satisfied.
Accruals are mainly work-in-progress related where work has been performed but
not yet invoiced and completed site accruals. Completed site accruals are
£21.8m (2023: £14.2m) and relate to the cost to complete outstanding site
infrastructure and amenities on completed developments. Included within the
£21.8m completed site accruals is £8.8m exceptional charge in the year. See
note 4 for additional disclosure.
22 PROVISIONS
Combustible materials Legal provision Completed site provisions Joint ventures Other provisions Total
£m £m £m £m £m £m
At 1 November 2022 140.8 - - 1.2 1.0 143.0
Provided in the year 12.0 13.0 - - 0.4 25.4
Utilised in the year (12.6) - - - (0.6) (13.2)
Released in the year - - - - (0.2) (0.2)
Imputed interest 4.6 - - - - 4.6
Funding commitment change - - - (0.3) - (0.3)
At 31 October 2023 as previously presented 144.8 13.0 - 0.9 0.6 159.3
Represented(1) - - 9.8 - - 9.8
At 31 October 2023 as presented 144.8 13.0 9.8 0.9 0.6 169.1
Provided in the year 131.7 - 21.5 - 0.3 153.5
Utilised in the year (33.3) - (4.0) - - (37.3)
Released in the year - - (3.7) - (0.2) (3.9)
Imputed interest 6.1 - - - - 6.1
Funding commitment change - - - (0.9) - (0.9)
At 31 October 2024 249.3 13.0 23.6 - 0.7 286.6
At 31 October 2024
Non-current 181.5 - 10.7 - 0.3 192.5
Current 67.8 13.0 12.9 - 0.4 94.1
249.3 13.0 23.6 - 0.7 286.6
At 31 October 2023
Non-current (represented(1)) 73.6 - 1.4 - 0.2 75.2
Current (represented(1)) 71.2 13.0 8.4 0.9 0.4 93.9
144.8 13.0 9.8 0.9 0.6 169.1
(1) See note 29 for an explanation of the prior year representation.
Combustible materials
In March 2023 the Group signed the DLUHC Developer Remediation Contract in
England, which converted the principles of the building safety pledge signed
in 2022, in which the Group committed to resolve any historical fire remedial
work on buildings completed since 5 April 1992, into a binding agreement
between the Government and the Group. This provides clarity for future
remediation, particularly with regards to the standards required for internal
and external remedial works on legacy buildings.
The combustible materials provision reflects the estimated costs to complete
the remediation of life-critical fire safety issues on identified buildings.
The Directors have used a combination of BSF costed information, other
external information, and internal assessments as a basis for the provision,
which is a best estimate at this time.
The Group is making good progress with its assessment programme for both
external walls and internal fire safety and is working through the 291
buildings within the scope of the Developer Remediation Contract in a
risk-based sequence. At the beginning of January 2025 the Group has external
wall assessments and internal assessments on 211 and 169 buildings
respectively, each out of the 291 buildings within its scope. The Group has
committed to performing 100% of assessments by July 2025. Due to the quantity
and nature of the projects, the multiple stakeholders involved and the
availability of appropriately qualified and experienced consultants and
contractors, we expect to complete the remedial works within five years.
The Group recorded a further combustible materials charge of £131.7m in the
year of which £98.5m relates to non-surveyed buildings for which the Group is
now able to estimate a charge based on experience gained of remediation costs
for similar surveyed buildings and £15.2m relates to costs for buildings
surveyed in the year requiring remediation, both of which were previously
disclosed as contingent liabilities and thus not provided for previously. The
Group has used its experience gained to date on the cost analysis of surveyed
and tendered buildings, of which the number surveyed has increased
significantly over the year, to compute a reliable estimate for these
buildings. Previously any exposure on these buildings were considered as
contingent liabilities since the Group was not able to reliably estimate any
required costs, or if it was probable that a provision was required based on
the best information available at the time, influenced by the lower level of
buildings previously surveyed. The balance of £18.0m relates to changes in
forecast build cost scope and price over the duration of remediation for
buildings upon which a provision was already recognised. The provision is
stated after a related discount of £21.1m, which unwinds to the consolidated
income statement as finance expense over the expected duration of the
provision.
The provision of £249.3m represents the Group's best estimate of future costs
on 31 October 2024. 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. If forecast remediation costs on
buildings currently provided for are 10.0% higher/lower than provided, the
pre-tax exceptional items charge in the consolidated income statement would be
£24.9m higher/lower.
The Group spent £33.3m in the year across several buildings requiring further
investigative costs and remediation works, including balcony and
cladding-related works. The Group expects to have completed any required
remediation within a five-year period, using £67.8m of the remaining
provision within one year, which includes £22.8m repayable to the BSF, and
the balance within one to five years. The timing of the expenditure is based
on the Directors best estimates of the timing of remediating buildings and
repaying the BSF incurred costs. Actual timing may differ due to delays in
agreeing scope of works, obtaining licences, tendering works contracts and the
BSF payment schedule differing to our forecast.
The Group is continuing to review the recoverability of costs incurred from
third parties where it has a contractual right of recourse. In the year £4.4m
was recovered from third parties by the Group. Recoveries are not recognised
until they are virtually certain to be received. See note 4 for consolidated
income statement disclosure.
Legal provision
The Group is subject to a legal claim relating to a low-rise bespoke apartment
block built by the Group which was damaged by fire in 2021. The fire caused
extensive damage to the property which was subsequently demolished and is
currently being rebuilt by the freeholder. In the prior year the Group
received a letter of claim alleging fire safety defects and claiming
compensation for the rebuild and other associated costs. The provision
recorded represents the Director's best estimate of the Group's potential
exposure taking into account legal and professional advice. The claim and
ultimate route to settlement is ongoing but the Group currently does not have
a set timeline for when the matter will be concluded.
Completed site provisions
During the first half of the financial year, the Group became aware of certain
build defects initially identified on four sites that were completed prior to
2019 when the Group closed its Regeneration and London divisions. During the
year the Group has undertaken a comprehensive review of all completed sites in
association with third-party consultants.
The forecast costs to remedy build defects on these four sites and a limited
number of other sites is £23.6m (2023: £9.8m). Discounting has not been
applied to the balance as the impact would not be material. The prior year
comparative has been represented to reallocate some completed site provisions
previously disclosed within accruals (see note 29). Included within the
£23.6m completed site provisions is £16.2m exceptional charge in the year.
See note 4 for consolidated income statement disclosure.
23 SHARE CAPITAL
Shares Nominal value Share capital Share premium account
issued
Number Pence £ £
Ordinary shares as at 1 November 2022, 31 October 2023 and 31 October 2024 256,920,539 5 12,846,027 74,227,216
Ordinary shares are issued and fully paid.
For details of outstanding share options at 31 October 2024 see note 16.
Own shares held
The Group and Company holds shares within ESOT for participants of certain
share-based payment schemes. These are held within retained earnings. During
the year 250,000 shares were purchased by the ESOT for £0.5m (2023: 840,000
shares were purchased by the ESOT for £1.9m) and the ESOT transferred 248,124
(2023: 1,027,884) shares to employees and Directors to satisfy options as
detailed in note 16 and 21,968 shares as part of Martyn Clark's share-based
awards from previous employment in Crest Nicholson Holdings plc were issued on
joining at a cost of £0.1m. The number of shares held within the ESOT
(Treasury shares), and on which dividends have been waived, at 31 October 2024
was 580,164 (2023: 600,256). These shares are held within the financial
statements in equity at a cost of £1.4m (2023: £1.5m). The market value of
these shares at 31 October 2024 was £1.0m (2023: £1.0m).
24 FINANCIAL RISK MANAGEMENT
The Group's financial instruments comprise cash, trade and other receivables,
financial assets at fair value through profit and loss, bank loans, senior
loan notes, and trade and other payables. The main objective of the Group's
policy towards financial instruments is to maximise returns on the Group's
cash balances, manage the Group's working capital requirements and finance the
Group's ongoing operations.
Capital management
The Group's policies seek to match long-term assets with long-term finance and
ensure that there is sufficient working capital to meet the Group's
commitments as they fall due, comply with the loan covenants and continue to
sustain trading.
The Group's capital comprises shareholders' funds and net debt. A five-year
summary of this can be found in the unaudited historical summary below, in
addition to its return on average capital employed.
The Group seeks to manage its capital through control of expenditure, dividend
payments and through its banking facilities. The Revolving Credit Facility
(RCF) and senior loan notes impose certain minimum capital requirements on the
Group. These requirements are integrated into the Group's internal forecasting
process and are regularly reviewed. The Group has, and is forecasting, to
operate within these capital requirements.
There were undrawn amounts of £250.0m (2023: £250.0m) under the RCF at the
consolidated statement of financial position date.
On 31 October 2024 the Group signed an amendment and extension to the RCF.
This amendment extended the facility to run through to October 2027 and
redefined margin from 1.85% to 2.15%. Therefore, from 1 November 2024 the RCF
carries interest at SONIA plus 2.15% and ends in 2027.
Both the senior loan notes and the RCF are subject to three covenants that are
measured quarterly in January, April, July and October each year. They are
gearing being of a maximum of 70%, interest cover being a minimum of three
times against adjusted earnings before interest and tax (EBIT) and
consolidated tangible net worth being not less than £500m, all based on
measures as defined in the facilities agreements which are adjusted from the
equivalent IFRS amounts. As at the statement of financial position date
gearing was 20.1%, interest cover was 3.5 times and consolidated tangible net
worth was £699.9m.
The RCF facility is Sustainability Linked with the margin applicable varying
by plus or minus 0.05% depending on the Group's progress against four targets.
These targets and 2024 results are presented below:
• Reduction in absolute scope 1 and 2 emissions in line with our
science-based targets. In 2024 this target was met.
• Increasing the number of our suppliers engaging with the Supply
Chain Sustainability School. In 2024 this target was met.
• Reduction in carbon emissions associated with the use of our
homes. In 2024 this target was met.
• Increasing the number of our employees in trainee positions and on
training programmes. In 2024 this target was not met.
As a result of meeting 3 out of 4 of the metrics for 2024 the margin on the
RCF will be amended down by 0.025% (2023: 0.05% based on achieving 4 out of 4
targets) from the date of submission of the compliance documents for the
facility.
Financial risk
As virtually all of the operations of the Group are in sterling, there is no
direct currency risk, and thus the Group's main financial risks are credit
risk, liquidity risk and market interest rate risk. The Board is responsible
for managing these risks and the policies adopted are as set out here.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or other
counterparty to a financial instrument fails to meet its contractual
obligations, and arises principally from the Group's cash deposits, as most
receivables are secured on land and buildings.
The Group has cash deposits of £73.8m (2023: £162.6m) which are held by the
providers of its banking facilities. The Group has bank facilities of £250.0m
expiring in October 2027; as at 31 October 2024 with £250.0m remaining
available for drawdown under such facilities. These are primarily provided by
HSBC Bank Plc, Barclays Bank Plc, Lloyds Bank Plc and NatWest Group Plc, being
four of the UK's leading financial institutions. The security and suitability
of these banks is monitored by the treasury function on a regular basis.
Financial assets at fair value through profit and loss of £3.3m (2023:
£3.7m) are receivables on extended terms granted as part of a sales
transaction and are secured by way of a legal charge on the relevant property
and therefore credit risk is considered low.
The carrying value of trade and other receivables is mainly contractual
amounts due from housing associations, bulk sale purchasers, land sales to
other housebuilders and a development agreement where the Group is entitled to
recovery of costs incurred under the agreement, and equates to the Group's
exposure to credit risk which is set out in note 17. Amounts due from joint
ventures of £22.6m (2023: £29.5m) is funding provided on four (2023: four)
joint venture developments which are being project managed by the Group and
are subject to contractual arrangements. The Group has assessed the expected
credit loss impact on the carrying value of trade and other receivables as set
out in note 17. Within trade receivables the other largest single amount
outstanding at 31 October 2024 is £7.6m (2023: £12.1m) which is within
agreed terms.
The Group considers the credit quality of financial assets that are neither
past due nor impaired as good. In managing risk the Group assesses the credit
risk of its counterparties before entering into a transaction. No credit
limits were exceeded during the reporting year, and the Directors do not
expect any material losses from non-performance of any counterparties,
including in respect of receivables not yet due. No individually material
financial assets are past due, or are considered to be impaired as at the
consolidated statement of financial position date (2023: none).
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due. Cash flow forecasts are produced to
monitor the expected cash flow requirements of the Group against the available
facilities. The principal risks within these cash flows relate to achieving
the level of sales volume and prices in line with current forecasts.
The following are the contractual maturities of the financial liabilities of
the Group at 31 October 2024:
2024 Carrying value Contractual cash flows Within 1 year Within Within More than 3 years
1 to 2 years 2 to 3 years
£m £m £m £m £m £m
Senior loan notes 85.0 94.1 23.1 2.4 52.4 16.2
Financial liabilities carrying no interest 326.7 332.8 280.8 36.1 13.4 2.5
At 31 October 2024 411.7 426.9 303.9 38.5 65.8 18.7
2023 Carrying value Contractual cash flows Within 1 year Within Within More than 3 years
1 to 2 years 2 to 3 years
£m £m £m £m £m £m
Senior loan notes 100.0 112.5 18.5 23.1 2.4 68.5
Financial liabilities carrying no interest - represented(1) 391.6 399.0 325.1 42.7 28.3 2.9
At 31 October 2023 - represented(1) 491.6 511.5 343.6 65.8 30.7 71.4
(1) See note 29 for an explanation of the prior year representation.
Market interest rate risk
Market interest rate risk reflects the Group's exposure to fluctuations to
interest rates in the market. The risk arises because the Group's RCF is
subject to floating interest rates based on SONIA. The Group accepts a degree
of interest rate risk, and monitors rate changes to ensure they are within
acceptable limits and in line with banking covenants. The Group has partially
mitigated this risk by placing £85.0m of senior loan notes which are at fixed
interest rates. For the year ended 31 October 2024 it is estimated that an
increase of 1.0% in interest rates applying for the full year would decrease
the Group's profit before tax and equity by £0.2m (2023: £nil).
The interest rate profile of the financial liabilities of the Group was:
2024 Represented(1)
2023
£m £m
Sterling bank borrowings, loan notes and long-term creditors
Financial liabilities carrying interest 85.0 100.0
Financial liabilities carrying no interest 326.7 391.6
411.7 491.6
(1) See note 29 for an explanation of the prior year representation.
For financial liabilities that have no interest payable but for which imputed
interest is charged, consisting of land payables and lease liabilities, the
weighted average period to maturity is 14 months (2023: 26 months).
2024 Represented(1)
2023
£m £m
The maturity of the financial liabilities is:
Repayable within one year 297.6 335.6
Repayable between one and two years 34.5 60.3
Repayable between two and five years 77.0 78.9
Repayable after five years 2.6 16.8
411.7 491.6
(1) See note 29 for an explanation of the prior year representation.
Fair values
Financial assets
The Group's financial assets are detailed in the table below. The carrying
value of cash and cash equivalents and trade and other receivables is a
reasonable approximation of fair value which would be measured under a level 3
hierarchy. Financial assets at fair value through profit and loss are carried
at fair value and categorised as level 3 (inputs not based on observable
market data) within the hierarchical classification of IFRS 13: Revised.
Financial liabilities
The Group's financial liabilities are detailed in a table below, the carrying
amounts of which are deemed to be a reasonable approximation to their fair
value. The fair values of the RCF, other loans and loan notes are calculated
based on the present value of future principal and interest cash flows,
discounted at the market rate of interest at the consolidated statement of
financial position date.
The fair values of the facilities determined on this basis are:
2024 Nominal interest rate Face Carrying value Maturity
value
£m £m
Current
Senior loan notes 3.32% 20.0 20.0 2025
Non-current
Senior loan notes 3.62%-3.87% 65.0 65.0 2026-2029
Total interest-bearing loans 85.0 85.0
2023 Nominal interest rate Face Carrying value Maturity
value
£m £m
Current
Senior loan notes 3.15% 15.0 15.0 2024
Non-current
Senior loan notes 3.32%-3.87% 85.0 85.0 2025-2029
Total interest-bearing loans 100.0 100.0
Financial assets and liabilities by category
2024 2023
Financial assets £m £m
Sterling cash deposits 73.8 162.6
Trade receivables 62.2 60.9
Amounts due from joint ventures 22.6 29.5
Other receivables 12.5 22.7
Total financial assets at amortised cost 171.1 275.7
Financial assets at fair value through profit and loss 3.3 3.7
Total financial assets 174.4 279.4
Financial liabilities 2024 2023
£m £m
Senior loan notes 85.0 100.0
Land payables on contractual terms carrying no interest 131.6 205.5
Amounts due to joint ventures 0.1 0.7
Lease liabilities 12.0 6.4
Other trade payables 67.8 61.8
Other payables 2.8 3.1
Accruals (represented(1)) 112.4 114.1
Total financial liabilities at amortised cost (represented(1)) 411.7 491.6
(1) See note 29 for an explanation of the prior year representation.
25 CONTINGENCIES AND COMMITMENTS
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 liabilities within the 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.
As discussed in note 16 as a result of the Virgin Media case the Group
considers that the amount of any potential impact on the defined benefit
obligation cannot be confirmed and/or measured with sufficient reliability at
the 2024 year end. We are therefore disclosing this issue as a potential
contingent liability at 31 October 2024 and will review again in 2025 based on
the findings of the detailed investigation.
As a consequence of signing the Developer Remediation Contract on 13 March
2023, the Group has entered into contractual commitments with the UK
Government to identify and remediate those buildings it has developed with
possible life-critical fire safety defects. Accordingly, while the Group
believes that most significant liabilities will have been identified through
the process of building owners assessing buildings and applying for BSF
funding and through the Group commissioning assessments to date, contingent
liabilities exist where additional buildings have not yet been identified
which require remediation. Due to the challenges of developing a reliable
estimate of these possible costs, it is not practicable to disclose an
expected range. As discussed in note 22, in 2024 the Group has now provided
for the estimated cost relating to identified non-surveyed buildings.
The Group is reviewing the recoverability of costs incurred from third parties
where it has a contractual right of recourse. As reflected in these financial
results, the Group has a track record of successfully obtaining such
recoveries, however no contingent assets have been recognised in these
consolidated financial statements for such items.
26 NET (DEBT)/CASH AND LAND CREDITORS
2024 2023
£m £m
Cash and cash equivalents 73.8 162.6
Non-current Interest-bearing loans and borrowings (63.2) (83.5)
Current Interest-bearing loans and borrowings (19.1) (14.2)
Net (debt)/cash (8.5) 64.9
Land payables on contractual terms carrying no interest (131.6) (205.5)
Net debt and land creditors (140.1) (140.6)
27 RELATED PARTY TRANSACTIONS
Transactions between subsidiaries, which are related parties, are eliminated
on consolidation, as well as transactions between the Company and its
subsidiaries during the current and prior year.
Transactions between the Group and key management personnel mainly comprise
remuneration which is given in note 6. Detailed disclosure for Board members
is given within the Directors' Remuneration Report on pages 74-91 of our 2024
Annual Report to be published in February 2025. There were no other
transactions between the Group and key management personnel in the year.
Transactions between the Group and the Crest Nicholson Group Pension and Life
Assurance Scheme is given in note 16.
The Company's Directors have associations other than with the Company. From
time to time the Group may trade with organisations with which a Director has
an association. Where this occurs, it is on normal commercial terms and
without the direct involvement of the Director.
The Group had the following transactions/balances with its joint ventures in
the year/at year end:
2024 2023
£m £m
Interest income on joint venture funding 0.7 1.2
Project management fees recognised 1.9 1.9
Amounts due from joint ventures, net of expected credit losses 22.6 29.5
Amounts due to joint ventures 0.1 0.7
Funding to joint ventures (13.1) (13.0)
Repayment of funding from joint ventures 36.4 11.7
Dividends received from joint ventures 2.5 1.5
28 GROUP UNDERTAKINGS
In accordance with Section 409 Companies Act 2006, the following is a list of
all the Group's undertakings at 31 October 2024.
Subsidiary undertakings
At 31 October 2024 the Group had an interest in the below subsidiary
undertakings, which are included in the consolidated financial statements. All
subsidiaries were incorporated in England and Wales.
Entity name Registered office(1) Active / dormant Year end date Voting rights and shareholding (direct or indirect)
Bath Riverside Estate Management Company Limited 2 Dormant 31 October 100%
Bath Riverside Liberty Management Company Limited 2 Dormant 31 October 100%
Castle Bidco Home Loans Limited 1 Dormant 31 October 100%
Brightwells Residential 1 Company Limited 1 Dormant 31 October 100%
Bristol Parkway North Limited 1 Dormant 31 October 100%
Building 7 Harbourside Management Company Limited 2 Active 31 December 58.33%
Buildings 3A, 3B & 4 Harbourside Management Company Limited 2 Active 31 December 83.33%
Clevedon Developments Limited 1 Dormant 31 October 100%
Clevedon Investment Limited 1 Active 31 October 100%
CN Assets Limited 1 Dormant 31 October 100%
CN Finance plc(2) 1 Active 31 October 100%
CN Nominees Limited 1 Dormant 31 October 100%
CN Properties Limited 1 Dormant 31 October 100%
CN Secretarial Limited 1 Dormant 31 October 100%
CN Shelf 2 LLP 1 Dormant 31 October 100%
CN Shelf 3 LLP 1 Dormant 31 October 100%
Crest (Claybury) Limited 1 Dormant 31 October 100%
Crest Developments Limited 1 Dormant 31 October 100%
Crest Estates Limited 1 Dormant 31 October 100%
Crest Homes (Eastern) Limited 1 Dormant 31 October 100%
Crest Homes (Midlands) Limited 1 Dormant 31 October 100%
Crest Homes (Nominees) Limited 1 Active 31 October 100%
Crest Homes (Nominees No. 2) Limited 1 Active 31 October 100%
Crest Homes (Northern) Limited 1 Dormant 31 October 100%
Crest Homes (South East) Limited 1 Dormant 31 October 100%
Crest Homes (South West) Limited 1 Dormant 31 October 100%
Crest Homes (South) Limited 1 Dormant 31 October 100%
Crest Homes (Wessex) Limited 1 Dormant 31 October 100%
Crest Homes (Westerham) Limited 1 Dormant 31 October 100%
Crest Homes Limited 1 Dormant 31 October 100%
Crest Manhattan Limited 1 Dormant 31 October 100%
Crest Nicholson (Bath) Holdings Limited 1 Active 31 October 100%
Crest Nicholson (Chiltern) Limited 1 Dormant 31 October 100%
Crest Nicholson (Eastern) Limited 1 Dormant 31 October 100%
Crest Nicholson (Epsom) Limited 1 Dormant 31 October 100%
Crest Nicholson (Henley-on-Thames) Limited 1 Active 31 October 100%
Crest Nicholson (Highlands Farm) Limited 1 Dormant 31 October 100%
Crest Nicholson (Londinium) Limited 1 Dormant 31 October 100%
Crest Nicholson (Midlands) Limited 1 Dormant 31 October 100%
Crest Nicholson (Peckham) Limited 1 Active 31 October 100%
Crest Nicholson (South East) Limited 1 Dormant 31 October 100%
Crest Nicholson (South West) Limited 1 Dormant 31 October 100%
Crest Nicholson (South) Limited 1 Dormant 31 October 100%
Crest Nicholson (Stotfold) Limited 1 Active 31 October 100%
(1) 1: 500 Dashwood Lang Road, Bourne Business Park, Addlestone, Surrey KT15
2HJ.
2: Units 1,2, & 3 Beech Court Wokingham Road, Hurst, Reading, England,
RG10 0RU.
(2) CN Finance plc is the only direct holding of Crest Nicholson Holdings plc.
Entity name Registered office(1) Active / dormant Year end date Voting rights and shareholding (direct or indirect)
Crest Nicholson Developments (Chertsey) Limited 1 Active 31 October 100%
Crest Nicholson Operations Limited 1 Active 31 October 100%
Crest Nicholson Pension Trustee Limited 1 Dormant 31 January 100%
Crest Nicholson plc 1 Active 31 October 100%
Crest Nicholson Projects Limited 1 Dormant 31 October 100%
Crest Nicholson Properties Limited 1 Dormant 31 October 100%
Crest Nicholson Regeneration Limited 1 Dormant 31 October 100%
Crest Nicholson Residential (London) Limited 1 Dormant 31 October 100%
Crest Nicholson Residential (Midlands) Limited 1 Dormant 31 October 100%
Crest Nicholson Residential (South East) Limited 1 Dormant 31 October 100%
Crest Nicholson Residential (South) Limited 1 Dormant 31 October 100%
Crest Nicholson Residential Limited 1 Active 31 October 100%
Crest Nicholson (Wheatley) LLP 1 Active 31 October 100%
Crest Partnership Homes Limited 1 Dormant 31 October 100%
Crest Strategic Projects Limited 1 Dormant 31 October 100%
Eastern Perspective Management Company Limited 1 Dormant 31 October 100%
Essex Brewery (Walthamstow) LLP 1 Dormant 31 October 100%
Harbourside Leisure Management Company Limited 1 Active 30 December 71.43%
Landscape Estates Limited 1 Dormant 31 October 100%
Mertonplace Limited 1 Dormant 31 October 100%
Nicholson Estates (Century House) Limited 1 Dormant 31 October 100%
Park Central Management (Central Plaza) Limited 1 Dormant 31 October 100%
Ellis Mews (Park Central) Management Limited 1 Active 31 October 100%
Park Central Management (Zone 11) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 12) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 1A North) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 1A South) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 1B) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 3/1) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 3/2) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 3/3) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 3/4) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 4/41 & 42) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 4/43/44) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 5/53) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 5/54) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 5/55) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 6/61-64) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 7/9) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 8) Limited 1 Dormant 31 October 100%
Park Central Management (Zone 9/91) Limited 1 Dormant 31 January 100%
Park West Management Services Limited 1 Active 29 March 62.00%
(1) 1: 500 Dashwood Lang Road, Bourne Business Park, Addlestone, Surrey KT15
2HJ.
Subsidiary audit exemption
The following subsidiaries have taken advantage of an exemption from audit
under section 479A of the Companies Act 2006. The parent of the subsidiaries,
Crest Nicholson plc, has provided a statutory guarantee for any outstanding
liabilities of these subsidiaries. All subsidiary undertakings have been
included in the consolidated financial statements of Crest Nicholson Holdings
plc as at 31 October 2024.
Clevedon Investment Limited
(00454327)
Crest Homes (Nominees No. 2) Limited (02213319)
Crest Nicholson (Henley-on-Thames) Limited (03828831) Crest
Nicholson (Peckham) Limited (07296143)
Crest Nicholson (Stotfold) Limited
(08774274) Crest
Nicholson (Bath) Holdings Limited (05235961)
Crest Nicholson Developments (Chertsey) Limited (04707982)
Crest Homes (Nominees) Limited (01715768)
Crest Nicholson Residential Limited
(00714425)
Joint venture undertakings
At 31 October 2024 the Group had an interest in the following joint venture
undertakings which are equity accounted within the consolidated financial
statements. The principal activity of all undertakings is that of residential
development. All joint ventures were incorporated in England and Wales.
Entity name Registered office(1) Active / dormant Year end date Voting rights and shareholding (direct or indirect)
Material joint ventures
Crest A2D (Walton Court) LLP 1 Active 31 March 50%
Elmsbrook (Crest A2D) LLP 4 Active 31 March 50%
Crest Sovereign (Brooklands) LLP 3 Active 31 October 50%
Crest Peabody (Turweston) LLP 1 Active 31 March 50%
Other joint ventures not material to the Group
Crest/Vistry (Epsom) LLP 1 Active 31 October 50%
Crest Nicholson Bioregional Quintain LLP 1 Active 31 October 50%
English Land Banking Company Limited 1 Active 31 October 50%
Haydon Development Company Limited 2 Active 30 April 21.36%
North Swindon Development Company Limited 2 Active 31 December 32.64%
(1) 1: 500 Dashwood Lang Road, Bourne Business Park, Addlestone, Surrey KT15
2HJ.
2: 6 Drakes Meadow, Penny Lane, Swindon, Wiltshire SN3 3LL.
3: Sovereign House, Basing View, Basingstoke RG21 4FA.
4: 113 Uxbridge Road, London W5 5TL.
Joint operations
The Group is party to a joint unincorporated arrangement with Linden Homes
Limited, the purpose of which was to acquire, and develop, a site in Hemel
Hempstead, Hertfordshire. The two parties are jointly responsible for the
control and management of the site's development, with each party funding 50%
of the cost of the land acquisition and development of the site, in return for
50% of the returns. As such this arrangement was designated as a joint
operation.
The Group is party to a joint unincorporated arrangement with CGNU Life
Assurance Limited, the purpose of which is to acquire, and develop, a site in
Chertsey, Surrey. The two parties are jointly responsible for the control and
management of the site's development, with each party funding 50% of the cost
of the land acquisition and development of the site, in return for 50% of the
returns. As such this arrangement has been designated as a joint operation.
The Group is party to a joint arrangement with Passion Property Group Limited,
the purpose of which was to develop a site in London. The development was
completed in 2014 and there are no material balances in the Group financial
statements relating to this joint arrangement as at 31 October 2024. The two
parties were jointly responsible for the control and management of the site's
development, with each party having prescribed funding obligations and
returns. As such this arrangement has been designated as a joint operation.
In line with the Group's accounting policies, the Group has recognised its
share of the jointly controlled assets and liabilities, and income and
expenditure, in relation to these joint arrangements on a line-by-line basis
in the consolidated statement of financial position and consolidated income
statement as there is no legal entity in place and the arrangements as
structured such that the Group has a direct interest in the underlying assets
and liabilities of each arrangement.
Crest Nicholson Employee Share Ownership Trust
The Group operates the Crest Nicholson ESOT, which is used to satisfy awards
granted under the Group's share incentive schemes, shares are allotted to the
Trust or the Trust is funded to acquire shares in the open market. The ESOT
falls within the scope of IFRS 10: Consolidated Financial Statements, and is
consolidated within the Group financial statements, as the Group is considered
to have control over the ESOT.
29 PRIOR YEAR REPRESENTATION
The 2023 comparatives have been represented for completed site costs, other
operating income, other operating expenses, administrative expenses and
exceptional items as detailed below. Where relevant to these changes, other
disclosures in the notes to the financial statements have also been
represented.
Completed site costs
In previous years, all costs yet to be incurred on sites where all sales have
been recognised were included within accruals and deferred income. These costs
predominantly relate to the finalisation of infrastructure and amenities
works, which often occur towards the end of the site's life. In certain
instances, accruals have also been made to cover remedial works to remedy
defects and other remediation works identified post completion. This approach
is consistent with industry practice.
The Group reviewed all completed site accruals in the year after the Group
became aware of build defects initially identified on four sites. In relation
to these sites, the Group has a present legal or constructive obligation as a
result of a past event and it is probable that an outflow of economic benefits
will be required to settle the obligation, and the amount can be reliably
estimated. Completed site costs for these sites are now presented as a
provision rather than an accrual.
Accordingly, the 31 October 2023 completed site accruals were reviewed with
£9.8m of balances forecast to cover remedial works (completed site
provisions, which are subject to higher estimation uncertainty) rather than
normal site finalisation costs (completed site accruals). A third balance
sheet, as required under IAS 1, has not been presented given the relative
significance of these changes to the financial statements. If restated,
accruals of £9.8m would be represented as provisions. This change in
presentation resulted in the representation of £8.4m current accruals to
current provisions and £1.4m of non-current accruals to non-current
provisions.
As discussed within note 4 the Group has presented £25.0m of the current year
completed sites charge as exceptional. This is a change in the accounting
policy for exceptional items. The previous year's completed sites charge has
been reviewed on a site by site basis to align with the revised policy, with
£6.6m of that charge now being classified as an exceptional item.
Accordingly, the prior year pre-exceptional cost of sales has been reduced by
£6.6m, with this now disclosed as an exceptional item.
Other operating income, other operating expenses and administrative expenses
In the current year the Group has presented other operating income and other
operating expenses which includes rental income, joint venture and other
management fee income and the income and expenses associated with part
exchange sales. In the current year these balances are material and therefore
the prior year comparatives have been represented to present consistent
information. Previously these balances were not material.
In previous years rental income has been included within cost of sales, being
directly related to current and past residential developments and being
immaterial in value. The Group now includes this income within other operating
income and has represented the comparative by moving £1.6m income from cost
of sales to other operating income.
In previous years joint venture and other management fee income has been
included within administrative expenses, being related to the employee costs
incurred by the Group in project managing its joint venture businesses. The
Group now includes joint venture management fee income within other operating
income and has represented the comparative by moving £3.0m from
administrative expenses to other operating income.
In previous years part exchange income and related expenses have been included
within net administrative expenses and separately presented in the notes to
the accounts as other operating income and other operating expenses
respectively, with the net result on these sales being immaterial. In the
current year due to other income statement representations the Group has
separately disclosed these within the primary statements.
Represented financial information
The below tables disclose the represented prior year financial information.
As previously reported Represented As presented
Consolidated income statement £m £m £m
Pre-exceptional
Cost of sales (556.9) 5.0 (551.9)
Gross profit 100.6 5.0 105.6
Other operating income - 44.7 44.7
Other operating expenses - (40.9) (40.9)
Administrative expenses (55.8) (2.2) (58.0)
Operating profit 44.2 6.6 50.8
Profit before tax 41.4 6.6 48.0
Income tax expense (10.0) (1.7) (11.7)
Profit for the year attributable to equity shareholders 31.4 4.9 36.3
Basic earnings per share (pence) 12.3 1.9 14.2
Diluted earnings per share (pence) 12.2 1.9 14.1
Exceptional items
Cost of sales (14.3) (6.6) (20.9)
Gross loss (14.3) (6.6) (20.9)
Operating loss (14.3) (6.6) (20.9)
Loss before tax (18.3) (6.6) (24.9)
Income tax credit 4.8 1.7 6.5
Loss for the year attributable to equity shareholders (13.5) (4.9) (18.4)
Total
Cost of sales (571.2) (1.6) (572.8)
Gross profit/(loss) 86.3 (1.6) 84.7
Other operating income - 44.7 44.7
Other operating expenses - (40.9) (40.9)
Administrative expenses (55.8) (2.2) (58.0)
Consolidated statement of financial position
2023 current trade and other payables (337.0) 8.4 (328.6)
2023 current provisions (85.5) (8.4) (93.9)
2023 non-current trade and other payables (71.1) 1.4 (69.7)
2023 non-current provisions (73.8) (1.4) (75.2)
2022 current trade and other payables (407.1) 8.2 (398.9)
2022 current provisions (72.2) (8.2) (80.4)
2022 non-current trade and other payables (41.8) 1.6 (40.2)
2022 non-current provisions (70.8) (1.6) (72.4)
Notes to the accounts
Exceptional completed site costs - (6.6) (6.6)
Total exceptional cost of sales charge (14.3) (6.6) (20.9)
Total exceptional charge (18.3) (6.6) (24.9)
Tax credit on exceptional charge 4.8 1.7 6.5
Total exceptional charge after tax credit (13.5) (4.9) (18.4)
Current accruals and deferred income 125.2 (8.4) 116.8
Non-current accruals and deferred income 4.1 (1.4) 2.7
Financial liability accruals 123.9 (9.8) 114.1
Carrying value of financial liabilities carrying no interest 401.4 (9.8) 391.6
Total carrying value of financial liabilities carrying no interest 501.4 (9.8) 491.6
Contractual cashflows of financial liabilities carrying no interest 408.8 (9.8) 399.0
Total contractual cashflows of financial liabilities carrying no interest 521.3 (9.8) 511.5
Financial liabilities carrying no interest due within 1 year 333.5 (8.4) 325.1
Total financial liabilities carrying no interest due within 1 year 352.0 (8.4) 343.6
Financial liabilities carrying no interest - repayable 1-2 years 44.1 (1.4) 42.7
Total financial liabilities carrying no interest - repayable 1-2 years 67.2 (1.4) 65.8
As previously reported Represented As presented
Alternative performance measures (unaudited) £m/% £m/% £m/%
Adjusted operating profit 44.2 6.6 50.8
Return on capital employed 6.3% 1.0% 7.3%
Pre-exceptional
Gross profit 100.6 5.0 105.6
Gross profit margin 15.3% 0.8% 16.1%
Operating profit 44.2 6.6 50.8
Operating profit margin 6.7% 1.0% 7.7%
Profit before tax 41.4 6.6 48.0
Income tax expense (10.0) (1.7) (11.7)
Profit after tax 31.4 4.9 36.3
Basic earnings per share (pence) 12.3 1.9 14.2
Diluted earnings per share (pence) 12.2 1.9 14.1
Exceptional items
Gross loss (14.3) (6.6) (20.9)
Gross loss margin (2.2)% (1.0)% (3.2)%
Operating loss (14.3) (6.6) (20.9)
Operating loss margin (2.2)% (1.0)% (3.2)%
Loss before tax (18.3) (6.6) (24.9)
Income tax credit 4.8 1.7 6.5
Loss after tax (13.5) (4.9) (18.4)
Basic loss per share (pence) (5.3) (1.9) (7.2)
Diluted loss per share (pence) (5.2) (1.9) (7.1)
Total
Gross profit/(loss) 86.3 (1.6) 84.7
Gross profit/(loss) margin 13.1% (0.2)% 12.9%
Historical summary (unaudited)
Gross profit 100.6 5.0 105.6
Gross profit margin 15.3% 0.8% 16.1%
Other operating income - 44.7 44.7
Other operating expenses - (40.9) (40.9)
Administrative expenses (55.8) (2.2) (58.0)
Operating profit before joint ventures 44.2 6.6 50.8
Operating profit before joint ventures margin 6.7% 1.0% 7.7%
Operating profit after joint ventures 46.9 6.6 53.5
Operating profit after joint ventures margin 7.1% 1.0% 8.1%
Profit before taxation 41.4 6.6 48.0
Income tax expense (10.0) (1.7) (11.7)
Profit after taxation attributable to equity shareholders 31.4 4.9 36.3
Basic earnings per share (pence) 12.3 1.9 14.2
Return on average capital employed 6.3% 1.0% 7.3%
Return on average equity 3.6% 0.6% 4.2%
CREST NICHOLSON HOLDINGS PLC
COMPANY STATEMENT OF FINANCIAL POSITION
As at 31 October 2024
Restated(1)
2024 2023
Note £m £m
ASSETS
Non-current assets
Investments 4 33.6 31.9
Current assets
Trade and other receivables 5 162.5 186.4
TOTAL ASSETS 196.1 218.3
NET ASSETS 196.1 218.3
SHAREHOLDERS' EQUITY
Share capital 6 12.8 12.8
Share premium account 6 74.2 74.2
Share-based payments reserve 6 32.1 30.3
Retained earnings:
At 1 November 101.0 138.0
Profit for the year 8.4 8.6
Other changes in retained earnings (32.4) (45.6)
At 31 October 77.0 101.0
TOTAL SHAREHOLDERS' EQUITY 196.1 218.3
1 See note 9 for an explanation of the prior year restatement.
The Company recorded a profit for the financial year of £8.4m (2023: £8.6m).
The notes on above form part of these financial statements.
The financial statements were approved by the Board of Directors on 3 February
2025.
On behalf of the Board
Martyn Clark Bill Floydd
Director
Director
CREST NICHOLSON HOLDINGS PLC
COMPANY STATEMENT OF CHANGES IN EQUITY
For the year ended 31 October 2024
Share capital Share premium account Share- based payments reserve Retained earnings Total equity
Note £m £m £m £m £m
Balance at 1 November 2022 previously reported 12.8 74.2 - 138.0 225.0
Restated(1) - - 28.7 - 28.7
Balance at 1 November 2022 (Restated(1)) 12.8 74.2 28.7 138.0 253.7
Profit for the financial year and total comprehensive income - - - 8.6 8.6
Transactions with shareholders
Dividends paid - - - (43.6) (43.6)
Exercise of share options through employee share ownership trust 4 - - - (2.9) (2.9)
Net proceeds from the issue of shares and exercise of share options - - - 0.9 0.9
Equity-settled share-based payments (Restated(1)) - - 1.6 - 1.6
Balance at 31 October 2023 (Restated(1)) 12.8 74.2 30.3 101.0 218.3
Profit for the financial year and total comprehensive income - - - 8.4 8.4
Transactions with shareholders
Dividends paid - - - (32.1) (32.1)
Exercise of share options through employee share ownership trust 4 - - - (0.7) (0.7)
Net proceeds from the issue of shares and exercise of share options - - - 0.4 0.4
Equity-settled share-based payments - - 1.8 - 1.8
Balance at 31 October 2024 12.8 74.2 32.1 77.0 196.1
1 See note 9 for an explanation of the prior year restatement.
CREST NICHOLSON HOLDINGS PLC
NOTES TO THE COMPANY FINANCIAL STATEMENTS
1 ACCOUNTING POLICIES
Basis of preparation
Crest Nicholson Holdings plc (the Company) is a public company limited by
shares, incorporated, listed and domiciled in England and Wales. The address
of the registered office is 500 Dashwood Lang Road, Bourne Business Park,
Addlestone, Surrey KT15 2HJ. The Company financial statements have been
prepared and approved by the Directors in accordance with Financial Reporting
Standard 101 Reduced Disclosure Framework (FRS 101), in accordance with the
Companies Act 2006 as applicable to companies using FRS 101, and have been
prepared on the historical cost basis. The preparation of financial statements
in conformity with FRS 101 requires the Directors to make assumptions and
judgements that affect the application of policies and reported amounts within
the financial statements. Assumptions and judgements are based on experience
and other factors that the Directors consider reasonable under the
circumstances. Actual results may differ from these estimates.
The financial statements are presented in pounds sterling and amounts stated
are denominated in millions (£m), unless otherwise stated. The accounting
policies have been applied consistently in dealing with items which are
considered material, with the exception of the prior period restatement as
disclosed in note 9.
These financial statements present information about the Company as an
individual undertaking and not about its group. Under Section 408 of the
Companies Act 2006 the Company is exempt from the requirement to present its
own profit and loss account.
As outlined in FRS 101 paragraph 8(a) the Company is exempt from the
requirements of paragraphs 45(b) and 46 to 52 of IFRS 2 Share-based Payments.
This exemption has been taken in the preparation of these financial
statements.
As outlined in FRS 101 paragraph 8(d-e) the Company is exempt from the
requirements of IFRS 7 Financial Instruments: Disclosures, and from the
requirements of paragraphs 91 to 99 of IFRS 13 Fair Value Measurement. These
exemptions have been taken in the preparation of these financial statements.
As outlined in FRS 101 paragraph 8(g) the Company is exempt from the
requirement to disclose a third balance sheet in relation to the matters set
out in Note 9. This exemption has been taken in the preparation of these
financial statements.
As outlined in FRS 101 paragraph 8(h) the Company is exempt from the
requirement to prepare a cash flow statement on the grounds that a parent
undertaking includes the Company in its own published consolidated financial
statements. This exemption has been taken in the preparation of these
financial statements.
As outlined in FRS 101 paragraph 8(i) the Company is exempt from the
requirement to provide information about the impact of IFRSs that have been
issued but are not yet effective. This exemption has been taken in the
preparation of these financial statements.
Under FRS 101 paragraph 8(j) the Company is exempt from the requirement to
disclose related party transactions with its subsidiary undertakings on the
grounds that they are wholly owned subsidiary undertakings of Crest Nicholson
Holdings plc. This exemption has been taken in the preparation of these
financial statements.
Going concern
When determining the appropriateness of the basis of preparation, the
Directors evaluated whether the Company has the ability to meet its
liabilities and obligations as they fall due. This evaluation included a
review of detailed cash flow projections and financial forecasts covering the
period up to 30 April 2026 (the going concern period), aligned with those used
for the Group's going concern assessment. The Company relies on the overall
performance of the Group to fulfil its liabilities and obligations in the
foreseeable future. These obligations include compliance with financial
covenants under the sustainability-linked Revolving Credit Facility (RCF) and
senior loan notes, as outlined in note 24 of the consolidated financial
statements.
Based on these forecasts, the Group is expected to meet its liabilities as
they become due throughout the going concern period. However, in a severe but
plausible downside scenario the Group has identified a material uncertainty
during the going concern period in respect of the compliance with the interest
cover covenant, with the first measurement date in April 2025. Further details
of the Group's going concern assessment are provided in note 1 of the
consolidated financial statements.
In reviewing the assessment outlined above, the Directors are confident that
the Company has the necessary resources and mitigations available to continue
operations and discharge its obligations as they fall due for at least 12
months from the date of approval of the financial statements. Accordingly, the
Company financial statements continue to be prepared on a going concern basis.
However, a material uncertainty exists, in particular with respect to the
ability to achieve the covenant amendments which may be required, which may
cast significant doubt on the Company's ability to continue as a going
concern. The financial statements do not include any adjustments that would
result from the basis of preparation being inappropriate.
Adoption of new and revised standards
There were no new standards, amendments or interpretations that were adopted
by the Company and effective for the first time for the financial year
beginning 1 November 2023 that have had a material impact on the Company.
The principal accounting policies set out below have, unless otherwise stated,
been applied consistently to all years presented in these financial
statements.
Share-based payments
The Company issues equity-settled share-based payments to certain employees of
its subsidiaries. Equity-settled share-based payments are measured at fair
value at the grant date and charged to the subsidiaries income statement on a
straight-line basis over the vesting period, based on the estimate of shares
that will vest. The cost of equity-settled share-based payments granted to
employees of the Group is borne by other subsidiary companies, which are the
employing company of these employees. Since the Company does not receive any
direct employee services in relation to these share-based payments it
recognises this cost as a capital contribution in the Company financial
statements through an addition to investments and the share-based payment
reserve in equity.
Taxation
Income tax comprises current tax and deferred tax. Income tax is recognised in
the Company's income statement except to the extent that it relates to items
recognised in other comprehensive income, in which case it is also recognised
in other comprehensive income.
Current tax is the expected tax payable on taxable profit for the year and any
adjustment to tax payable in respect of previous years. Taxable profit is
profit before tax per the Company's income statement after adjusting for
income and expenditure that is not subject to tax, and for items that are
subject to tax in other accounting periods. The Company's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the statement of financial position date. Where
uncertain tax liabilities exist, the liability recognised is assessed as the
amount that is probable to be payable.
Deferred tax is provided in full on temporary differences between the carrying
amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit.
Dividends
Final and interim dividend distributions to the Company's shareholders are
recorded in the Company's financial statements in the earlier of the period in
which they are approved by the Company's shareholders, or paid.
Investments
Investments relate to Company contributions to the Crest Nicholson ESOT and
the impact of the capital contribution in respect of the cost of
equity-settled share-based payments born by other subsidiary companies. The
ESOT will use the contribution to acquire Company ordinary shares in the
market in order to satisfy share options under the Company's share incentive
schemes. Investments are assessed annually for indicators of impairment.
Financial assets
Financial assets are initially recognised at fair value and subsequently
classified into one of the following measurement categories:
· At amortised cost
· Subsequently at FVTPL
· Subsequently at FVOCI.
The classification of financial assets depends on the Company's business model
for managing the asset and the contractual terms of the cash flows. Assets
that are held for the collection of contractual cash flows that represent
solely payments of principal and interest are measured at amortised cost, with
any interest income recognised in the income statement using the effective
interest rate method. Financial assets that do not meet the criteria to be
measured at amortised cost are classified by the Company as measured at FVTPL.
Fair value gains and losses on financial assets measured at FVTPL are
recognised in the income statement and presented within administrative
expenses. The Company currently has no financial assets measured at FVOCI.
Trade and other receivables
Trade and other receivables are recognised initially at fair value and
subsequently measured at amortised cost, using the effective interest method,
less provision for impairment. A provision for impairment of trade receivables
is established based on an expected credit loss model applying the simplified
approach, which uses a lifetime expected loss allowance for all trade
receivables. The amount of the loss is recognised in the income statement.
Own shares held by ESOT
Transactions of the Company-sponsored ESOT are included in both the Group
financial statements and the Company's own financial statements. The purchase
of shares in the Company by the ESOT are charged directly to equity.
Audit fee
Auditor's remuneration for audit of these financial statements of £32,000
(2023: £30,000) was met by Crest Nicholson plc. No disclosure of other
non-audit services has been made as this is included within note 5 of the
consolidated financial statements.
Critical accounting estimates and judgements
The preparation of the Company financial statements under FRS 101 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 Company's accounting policies, the Directors have made no
individual judgements that have a significant impact on the financial
statements.
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 year in which the estimate is revised if the
revision affects only that year, or in the year of revision and future years
if the revision affects both current and future years. The Directors do not
consider there are any significant sources of estimation uncertainty that have
a risk of causing a material adjustment to the carrying value of assets and
liabilities of the Company.
2 DIRECTORS AND EMPLOYEES
The Company had no employees during either year. Details of Directors'
emoluments, which were paid by another Group company, are set out in the
Directors' Remuneration Report on pages 74-91 of our 2024 Annual Report to be
published in February 2025.
3 DIVIDENDS
Details of the dividends recognised as distributions to equity shareholders in
the year and those proposed after the statement of financial position date are
shown in note 9 of the consolidated financial statements.
4 INVESTMENTS
Investment in own shares Capital contribution Restated(1)
Total
£m £m £m
At 1 November 2022 2.6 28.7 31.3
Additions 1.9 1.6 3.5
Disposals (2.9) - (2.9)
At 31 October 2023 1.6 30.3 31.9
Additions 0.5 1.8 2.3
Disposals (0.6) - (0.6)
At 31 October 2024 1.5 32.1 33.6
1 See note 9 for an explanation of the prior year restatement.
The additions and disposals in the year to investments in own shares relate to
Company contributions/utilisation to/from the Trust. The additions to capital
contributions is the impact of the cost borne by other subsidiary companies
relating to equity-settled share-based payments in the year.
The Directors believe that the carrying value of the investments is supported
by their underlying assets.
5 TRADE AND OTHER RECEIVABLES
2024 2023
£m £m
Amounts due from Group undertakings 162.5 186.4
Amounts due from Group undertakings are unsecured, repayable on demand and
carry an interest rate of 7.0% (2023: 5.0%).
Amounts due from Group undertakings are stated after an allowance of £nil has
been made (2023: £nil) in respect of expected credit losses. £nil (2023:
£nil) provision was made during the year, £nil (2023: £nil) was utilised,
and £nil (2023: £nil) provision was released during the year.
6 SHARE CAPITAL
The Company share capital is disclosed in note 23 of the consolidated
financial statements.
7 CONTINGENCIES AND COMMITMENTS
There are performance bonds and other arrangements, 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 Company.
In addition, the Company is required from time to time to act as guarantor for
the performance by subsidiary undertakings of contracts entered into in the
normal course of their business and typically provide that the Company will
ensure that the obligations of the subsidiary are carried out or met in the
unlikely event that any subsidiary default occurs. The Company considers the
likelihood of an outflow of cash under these arrangements to be remote and
therefore this does not represent a contingent liability for the Company.
8 GROUP UNDERTAKINGS
A list of all the Group's undertakings at 31 October 2024 is given in note 28
of the consolidated financial statements.
9 PRIOR YEAR RESTATEMENT
The Company issues equity instruments to employees of its subsidiaries Crest
Nicholson Operations Limited and Crest Nicholson plc in settlement of the
Group's share incentive schemes. The appropriate share-based payment expense
has been recognised in the financial statements of the subsidiaries. The
prior-year statement of financial position and statement of changes in equity
has been restated to reflect the cumulative capital contribution that should
have been recorded as an investment in subsidiaries given the Company does not
receive any direct employee services.
This restatement has no impact on the Company's retained earnings, or the
consolidated financial statements of the Group.
As previously reported Restated As presented As previously reported Restated As presented
2022 2022 2022 2023 2023 2023
£m £m £m £m £m £m
ASSETS
Non-current assets
Investments 2.6 28.7 31.3 1.6 30.3 31.9
Current assets
Trade and other receivables 222.4 - 222.4 186.4 - 186.4
TOTAL ASSETS 225.0 28.7 253.7 188.0 30.3 218.3
NET ASSETS 225.0 28.7 253.7 188.0 30.3 218.3
SHAREHOLDERS' EQUITY
Share capital 12.8 - 12.8 12.8 - 12.8
Share premium account 74.2 - 74.2 74.2 - 74.2
Share-based payments reserve - 28.7 28.7 - 30.3 30.3
Retained earnings:
At 1 November 166.1 - 166.1 138.0 - 138.0
Profit for the year 10.5 - 10.5 8.6 - 8.6
Other changes in retained earnings (38.6) - (38.6 (45.6) - (45.6)
At 31 October 138.0 - 138.0 101.0 - 101.0
TOTAL SHAREHOLDERS' EQUITY 225.0 28.7 253.7 188.0 30.3 218.3
CREST NICHOLSON HOLDINGS PLC
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 1-50 of our 2024 Annual Report to be published in
February 2025 and above. Definitions and reconciliations of the financial APM
used compared to IFRS measures, are included below:
Sales
The Group uses sales as a core management measure to reflect the full extent
of its business operations and responsibilities. Sales is a combination of
statutory revenue as per the consolidated income statement and the Group's
share of revenue earned by joint ventures, as detailed in the below table:
2024 2023
£m £m
Revenue 618.2 657.5
Group's share of joint venture revenue (note 14) 39.9 34.6
Sales 658.1 692.1
Return on capital employed
The Group uses ROCE as a core management measure to reflect the profitability
and efficiency with which capital is employed. ROCE is calculated as adjusted
operating profit before joint ventures divided by average capital employed
(capital employed = equity plus net debt or less net cash), as presented
below. The Group has long-term performance measures linked to ROCE. ROCE
achieved by the Group in the year reduced to 4.1% (2023 (represented(1)):
reduced to 7.3%).
2024 Represtented(1)2023
Adjusted operating profit £m 31.3 50.8
Average of opening and closing capital employed £m 764.4 699.0
ROCE % 4.1 7.3
Capital employed 2024 2023 2022
Equity shareholders' funds £m 728.9 856.3 883.1
Net (debt)/cash (note 19) £m 8.5 (64.9) (276.5)
Closing capital employed £m 737.4 791.4 606.6
(1) See note 29 for an explanation of the prior year representation.
Land creditors as a percentage of net assets
The Group uses land creditors as a percentage of net assets as a core
management measure to ensure that the Group is maintaining its financial
position when entering into future land commitments. Land creditors as a
percentage of net assets is calculated as land creditors divided by net
assets, as presented below. Land creditors as a percentage of net assets has
reduced in the year to 18.1% (2023: increased to 24.0%).
2024 2023
Land creditors (note 21) £m 131.6 205.5
Net assets £m 728.9 856.3
Land creditors as a percentage of net assets % 18.1 24.0
Net (debt)/cash
Net (debt)/cash is cash and cash equivalents plus non-current and current
interest-bearing loans and borrowings. Net (debt)/cash illustrates the Group's
overall liquidity position and general financial resilience. Net cash has
reduced in the year to £8.5m net debt from £64.9m net cash in 2023.
2024 2023
£m £m
Cash and cash equivalents 73.8 162.6
Interest-bearing loans and borrowings (82.3) (97.7)
Net (debt)/cash (8.5) 64.9
ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
Adjusted performance metrics
Adjusted performance metrics as shown below comprise statutory metrics
adjusted for the exceptional items as presented in note 4 of the consolidated
financial statements. 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 business performance. Adjusted and pre-exceptional are
used interchangeably. EBIT margin for share award performance conditions is
equivalent to operating profit margin.
Year ended 31 October 2024 Statutory Exceptional items Adjusted
Gross (loss)/profit £m (71.6) 158.4 86.8
Gross (loss)/profit margin % (11.6) 25.6 14.0
Operating (loss)/profit £m (128.7) 160.0 31.3
Operating (loss)/profit margin % (20.8) 25.9 5.1
Net finance expense £m (14.9) 6.1 (8.8)
(Loss)/profit before tax £m (143.7) 166.1 22.4
Income tax credit/(expense) £m 40.2 (48.2) (8.0)
(Loss)/profit after tax £m (103.5) 117.9 14.4
Basic (loss)/earnings per share Pence (40.4) 46.0 5.6
Diluted (loss)/earnings per share Pence (40.4) 46.0 5.6
Year ended 31 October 2023 (Represented(1)) ( ) Exceptional items Adjusted
Statutory
Gross profit £m 84.7 20.9 105.6
Gross profit margin % 12.9 3.2 16.1
Operating profit £m 29.9 20.9 50.8
Operating profit margin % 4.5 3.2 7.7
Net finance expense £m (10.1) 4.6 (5.5)
Share of post-tax profit/(loss) of joint ventures using the equity method £m 3.3 (0.6) 2.7
Profit before tax £m 23.1 24.9 48.0
Income tax expense £m (5.2) (6.5) (11.7)
Profit after tax £m 17.9 18.4 36.3
Basic earnings per share Pence 7.0 7.2 14.2
Diluted earnings per share Pence 7.0 7.1 14.1
(1) See note 29 for an explanation of the prior year representation.
HISTORICAL SUMMARY (UNAUDITED)
For the year ended/as at 31 October 2024
Note 2024(1) Represented 2022(2) 2021(3) 2020(4)
2023(1)
Consolidated income statement
Revenue £m 618.2 657.5 913.6 786.6 677.9
Gross profit £m 86.8 105.6 194.3 166.7 107.7
Gross profit margin % 14.0 16.1 21.3 21.2 15.9
Other operating income £m 75.8 44.7 - - -
Other operating expenses £m (69.9) (40.9) - - -
Administrative expenses £m (60.8) (58.0) (51.1) (51.1) (50.3)
Net impairment losses on financial assets £m (0.6) (0.6) (2.3) (1.0) (0.3)
Operating profit before joint ventures £m 31.3 50.8 140.9 114.6 57.1
Operating profit before joint ventures margin % 5.1 7.7 15.4 14.6 8.4
Share of post-tax (loss)/profit of joint ventures £m (0.1) 2.7 4.0 1.7 (0.5)
Operating profit after joint ventures (EBIT) £m 31.2 53.5 144.9 116.3 56.6
Operating profit after joint ventures margin % 5.0 8.1 15.9 14.8 8.3
Net finance expense £m (8.8) (5.5) (7.1) (9.1) (10.7)
Profit before taxation £m 22.4 48.0 137.8 107.2 45.9
Income tax expense £m (8.0) (11.7) (28.8) (19.9) (8.5)
Profit after taxation attributable to equity shareholders £m 14.4 36.3 109.0 87.3 37.4
Basic earnings per share Pence 5.6 14.2 42.5 34.0 14.6
Consolidated statement of financial position
Equity shareholders' funds 1 £m 728.9 856.3 883.1 901.6 825.3
Net debt/(cash) 2 £m 8.5 (64.9) (276.5) (252.8) (142.2)
Capital employed closing £m 737.4 791.4 606.6 648.8 683.1
Gearing 3 % 1.2 (8.2) (45.6) (39.0) (20.8)
Land creditors £m 131.6 205.5 198.7 222.9 205.7
Net debt/(cash) and land creditors 4 £m 140.1 140.6 (77.8) (29.9) 63.5
Return on average capital employed 5 % 4.1 7.3 22.4 17.2 7.6
Return on average equity 6 % 1.8 4.2 12.2 10.1 4.5
Housing
Home completions 7 Units 1,873 2,020 2,734 2,407 2,247
Open market average selling price 8 £000 403 406 388 359 336
Short-term land 9 Units 13,935 14,922 14,250 14,677 14,991
Strategic land 10 Units 17,700 18,830 22,450 22,308 22,724
Total short-term and strategic land Units 31,635 33,752 36,700 36,985 37,715
Land pipeline gross development value 11 £m 11,450 12,163 12,111 11,834 11,360
(1) Consolidated income statement statistics, return on average capital
employed and return on average equity are presented before exceptional items
as presented in note 4 of the 2024 consolidated financial statements. 2023
results have been represented, see note 29 for an explanation.
(2 ) 2022 consolidated income statement statistics, return on average capital
employed and return on average equity are presented before exceptional items
relating to total combustible materials provision charge £105.0m. Not
represented for the items in note 29.
(3) 2021 consolidated income statement statistics, return on average capital
employed and return on average equity are presented before exceptional items
relating to net combustible materials provision charge £28.8m, inventory
impairment credit £8.0m, and finance expense credit £0.5m. Not represented
for the items in note 29.
(4) 2020 consolidated income statement statistics, return on average capital
employed and return on average equity are presented before exceptional items
relating to combustible materials provision £0.6m, inventory impairment
£43.2m, restructuring costs £7.5m and impairment losses on financial assets
£7.6m. 2020 equity shareholders' funds, capital employed closing, gearing and
return on average equity have been represented to reflect the change in
accounting policy on land options. Not represented for the items in note 29.
Note
1 Equity shareholders' funds = Group total equity (share capital plus
share premium plus retained earnings).
2 Net debt/(cash) = Cash and cash equivalents less non-current and
current interest-bearing loans and borrowings.
3 Gearing = Net debt/(cash) divided by capital employed closing.
4 Net debt/(cash) and land creditors = Land creditors less net cash or
add net borrowings.
5 Return on capital employed = Adjusted operating profit before joint
ventures divided by average capital employed (capital employed = equity
shareholders' funds plus net borrowing or less net cash).
6 Return on average equity = Adjusted profit after taxation attributable
to equity shareholders divided by average equity shareholders' funds.
7 Units completed = Open market and housing association homes recognised
in the year. In 2021 to 2024 units completed includes joint ventures units at
full unit count and is stated on an equivalent unit basis. This equivalent
unit basis allocates a proportion of the unit count for a deal to the land
sale element where the deal contains a land sale. 2020 units completed
includes the Group's share of joint venture units and no equivalent unit
allocation to land sale elements.
8 Open market average selling price = Revenue recognised in the year on
open market homes (including the Group's share of revenue recognised in the
year on open market homes by joint ventures), divided by open market home
completions (adjusted to reflect the Group's share of joint venture units).
9 Short-term land = Land controlled by the Group with a minimum
resolution to grant planning permission.
10 Strategic land = Longer-term land controlled by the Group without
planning permission.
11 Land pipeline gross development value = Forecast development revenue of
the land pipeline.
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