REG - Crest Nicholson Hdgs - Half-year Report
14/06/2022 07:00
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RNS Number : 7219O Crest Nicholson Holdings PLC 14 June 2022
This announcement contains inside information for the purposes of Article 7 of
the Market Abuse Regulation (EU) No. 596/2014 as it forms part of domestic law
by virtue of the European Union (Withdrawal) Act 2018.
CREST NICHOLSON HOLDINGS PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2022
FY22 EARNINGS GUIDANCE UPGRADED
CONTINUED STRONG TRADING AND PROFIT MARGIN GROWTH
NEW SCIENCE-BASED SUSTAINABILITY TARGETS ANNOUNCED
Crest Nicholson Holdings plc ('Crest Nicholson', the 'Company' or the 'Group')
today announces its unaudited interim results for the six months ended 30
April 2022:
HY22 Financial Highlights
· Revenue increased 12.3% to £364.3m (HY21: £324.5m), reflecting strong
operating performance and underlying strength of the housing market
· Home completions increased 7.8% to 1,096 (HY21: 1,017), comprising open market
completions (including bulk deals) of 912 (HY21: 819) and affordable
completions of 184 (HY21: 198). Sales per outlet week (SPOW) of 0.72 (HY21:
0.69) with average outlets at 58 (HY21: 57)
· Forward sales as at 10 June 2022 of 2,891 units and £814.9m Gross Development
Value (GDV) (18 June 2021: 2,771 units and £691.8m GDV) with over 96% of FY22
revenue covered
· Adjusted operating profit margin(1) increased by 270bps to 15.0% (HY21:
12.3%), demonstrating good progress in our profit margin recovery
· Adjusted profit before tax(1) at £52.5m (HY21: £36.1m)
· Loss before tax at £52.5m (HY21: £36.3m profit before tax). Loss after tax
at £42.2m (HY21: profit after tax £29.0m), after an exceptional charge
before tax of £105.0m which includes our obligations in respect of the
Government's Building Safety Pledge
· Strong cash generation with net cash(2) at £173.3m (HY21: £130.4m)
o Average net cash of £98.6m during the first half (HY21: £80.5m)
o Land creditors at £179.9m (HY21: £178.5m)
· Return on capital employed(3) at 18.3% (HY21: 10.5%)
· Interim dividend declared of 5.5 pence per share, in line with dividend policy
at 2.5x cover
· FY22 adjusted profit before tax(1) expected to be in the range of £135-140m
(1 ) (Adjusted items represent the HY22 and HY21 statutory figures adjusted
for exceptional items as disclosed in note 5 to the condensed consolidated
half year financial statements. Adjusted performance metrics are disclosed
below. These alternatives (non-statutory) performance measures, which are not
necessarily better than statutory measures, have been disclosed as the
Directors believe this assists in better understanding the performance of the
Group, which is how the Directors internally manage the business.)
(2 ) (Net cash is defined as cash and cash equivalents less
interest-bearing loans and borrowings. See note 14 to the condensed
consolidated half year financial statements.)
(3 ) (Return on capital employed equals rolling 12 month adjusted operating
profit before joint ventures divided by the average of opening and closing
capital employed over the same 12 months (capital employed = equity
shareholders' funds plus net borrowing or less net cash). Adjusted performance
metrics are disclosed below.)
CREST NICHOLSON HOLDINGS PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2022
HY22 Strategic Highlights
Strong progress on all elements of our strategy:
· Retained Home Builders Federation (HBF) five-star rating for customer
satisfaction
· Successful roll out of new house types with over 7,400 units now plotted in
the short-term land portfolio (HY21: 6,700). We expect 75% of our private open
market houses will be delivered using this range in FY22
· Continued investment for growth in a competitive land market:
o 1,543 plots approved for purchase at a forecast gross margin of 26.8% after
sales and marketing costs
o 2,204 plots added to short-term portfolio in the first half
· The Group has continued to optimise its land portfolio by disposing of its 50%
share in the joint venture containing the London Chest Hospital site in East
London in May 2022. The transaction will realise £16.0m of consideration and
has resulted in a £2.3m net impairment charge in the first half. The scheme
was forecast to be unprofitable for the Group and would have accrued
significant work-in-progress during its construction phase
· Expansion plans are progressing well:
o Yorkshire office now open in Leeds with several key team appointments in place
and two sites approved for purchase
o East Anglia division is set to be established in second half with two sites
now acquired
Sustainability
In 2020 we set out challenging targets to reduce greenhouse gas (GHG)
emissions intensity by 25%, waste intensity by 15% and increase renewable
electricity procurement to 100%, all by 2025. We continue to make good
progress against these targets.
New science-based sustainability targets
We are stepping up our ambitions to reduce the Group's carbon footprint and
are setting out new science-based targets. These are designed to achieve
net-zero by 2045 and have been submitted to the Science Based Targets
initiative for validation. Our new targets are:
o Reduce absolute scope 1 and 2 GHG emissions 60% by 2030 from a 2019 base year
o Reduce scope 3 GHG emissions intensity by 55% by 2030 from a 2019 base year
o Reach net-zero GHG emissions across the value chain (scopes 1, 2 and 3) by
2045
Key financial metrics
£m (unless otherwise stated) HY22 HY21 % Change
Key financial results
Home completions 1,096 1,017 7.8
Revenue 364.3 324.5 12.3
Adjusted gross profit(1) 77.5 63.3 22.4
Adjusted gross profit margin(1) 21.3% 19.5% +180bps
Adjusted operating profit(1) 54.5 40.0 36.3
Adjusted operating profit margin(1) 15.0% 12.3% +270bps
Adjusted profit before tax(1) 52.5 36.1 45.4
Adjusted profit after tax(1) 40.4 28.8 40.3
Exceptional items net of income tax (82.6) 0.2
Net cash(2) 173.3 130.4 32.9
Gross (loss)/profit (27.5) 63.0 (143.7)
Gross (loss)/profit margin (7.5)% 19.4% -2690bps
Operating (loss)/profit (50.5) 39.7 (227.2)
Operating (loss)/profit margin (13.9)% 12.2% -2610bps
(Loss)/profit before tax (52.5) 36.3 (244.6)
(Loss)/profit after tax (42.2) 29.0 (245.5)
Adjusted basic earnings per share (p)(1) 15.7 11.2 40.2
Basic (loss)/earnings per share (p) (16.5) 11.3 (246.0)
Dividend per share (p) 5.5 4.1 34.1
(1 Adjusted items represent the HY22 and HY21 statutory figures adjusted
for exceptional items as disclosed in note 5 to the condensed consolidated
half year financial statements. Adjusted performance metrics are disclosed
below. These alternatives (non-statutory) performance measures, which are not
necessarily better than statutory measures, have been disclosed as the
Directors believe this assists in better understanding the performance of the
Group, which is how the Directors internally manage the business.)
(2 Net cash is defined as cash and cash equivalents less interest-bearing
loans and borrowings. See note 14 to the condensed consolidated half year
financial statements.)
Peter Truscott, Chief Executive, commented:
We are delighted to have delivered a strong first half performance, making
further strategic and operational progress. Given this underlying momentum and
the resilient housing market we are upgrading our full-year adjusted profit
before tax expectations to a range of £135-140m.
We are pleased to have reached a resolution with the Government by signing the
Building Safety Pledge. We hope this now provides comfort and assurance to
affected residents and stakeholders. It also allows the Group to move forward
in remediating the affected buildings directly or through another party as
soon as possible.
Despite the unpredictable global, economic and political outlook, we remain
optimistic about the fundamentals of the UK housing market and are confident
in the skill and determination of Crest Nicholson colleagues to manage and
adapt to these challenges. We are firmly focused on delivering our ambitious
growth strategy and ensuring as many customers as possible can benefit from
living in a new Crest Nicholson home.
Analyst and investor conference call and webcast
There will be an analyst presentation in person and via webcast, hosted by
Peter Truscott, Chief Executive and Duncan Cooper, Group Finance Director, at
9.00 a.m. today. To join the presentation, please use the following link:
https://www.investis-live.com/crest-nicholson_interim results 2022
(https://protect-eu.mimecast.com/s/1RUkC4RLPczoYmNCOhown?domain=investis-live.com)
There is also a facility to join the presentation and Q&A session via a
conference call. Participants should dial +44 (0)20 3936 2999 and use
confirmation code 074927. A playback facility will be available shortly after
the presentation has finished. For further information, please contact:
Crest Nicholson
Jenny Matthews, Head of Investor Relations
+44 (0) 7557 842720
Tulchan Communications
James Macey White / Giles Kernick
+44 (0) 20 7353 4200
The person responsible for arranging the release of this announcement on
behalf of the Company is Kevin Maguire, General Counsel and Company Secretary.
Cautionary statement regarding forward-looking statements
This release may include statements that are, or may be deemed to be,
'forward-looking statements'. These forward-looking statements can be
identified by the use of forward-looking terminology, including the terms
'believes', 'estimates', 'plans', 'projects', 'anticipates', 'expects',
'intends', 'may', 'will' or 'should' or, in each case, their negative or other
variations or comparable terminology, or by discussions of strategy, plans,
objectives, goals, future events or intentions. These forward-looking
statements include all matters that are not historical facts. They appear in a
number of places throughout this release and include, but are not limited to,
statements regarding the Group's intentions, beliefs or current expectations
concerning, among other things, the Group's results of operations, financial
position, liquidity, prospects, growth, strategies and expectations of the
industry.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances. Forward-looking
statements are not guarantees of future performance and the development of the
markets and the industry in which the Group operates may differ materially
from those described in, or suggested by, any forward-looking statements
contained in this release. In addition, even if the development of the markets
and the industry in which the Group operates are consistent with the
forward-looking statements contained in this release, those developments may
not be indicative of developments in subsequent periods. A number of factors
could cause developments to differ materially from those expressed or implied
by the forward-looking statements including, without limitation, general
economic and business conditions, industry trends, competition, commodity
prices, changes in law or regulation, changes in its business strategy,
political and economic uncertainty. Save as required by the Listing and
Disclosure Guidance and Transparency Rules, the Company is under no obligation
to update the information contained in this release. Past performance cannot
be relied on as a guide to future performance.
CREST NICHOLSON HOLDINGS PLC
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2022
Chief Executive Statement
Business Overview - strong first half results
We are pleased to report an excellent operational and financial performance in
the first half. We set out our plans to turnaround the Group in January 2020
and we have subsequently established an efficient operating platform,
supported by a strong balance sheet. Our geographical expansion in Yorkshire
and East Anglia is on track and our year-to-date forward order book positions
us well to deliver a strong full year financial performance.
Reassuringly, there is now greater clarity around the Government's
requirements of us and the wider sector concerning historic building safety
issues, and the costs related to remediate these. In April 2022 we signed the
Government's Building Safety Pledge (the Pledge), which we believe is in the
best interests of the Group, taking further steps to support those living in
affected buildings. The Pledge sets out our commitment to address
life‐critical fire‐safety issues on all buildings of 11 metres and above
in England developed by the Group in the 30 years prior to 5 April 2022. In
addition, the Group agreed that the Government's Building Safety Fund will not
be used to remediate those buildings and to reimburse any amounts already paid
by the Building Safety Fund.
Sustainability is one of the foundations of our business strategy and we
continue to embed responsible practices throughout our operations. We have
made good progress in reducing our scope 1 and 2 greenhouse gas (GHG)
emissions and I am pleased to announce that we have submitted new, challenging
GHG reduction targets to the Science Based Targets initiative for validation.
Trading
The Group has performed well in the first half, in line with our expectations.
Customer demand for our homes is strong across all regions reflecting the
continued strength of the UK housing market. Our developments are often
located in areas which benefit from the structural change that has occurred
between the balance of office and home working since COVID-19. We continue to
see this rationale being cited by customers in their reasons for moving home.
Our SPOW rate remains strong at 0.72 (HY21: 0.69) and completions are up by
7.8% at 1,096 units (HY21: 1,017). No one in the construction sector is immune
from the current impacts of input cost inflation. However, we are managing to
successfully offset this with sales price inflation in a market with strong
demand and relatively poor levels of supply. Finally, the tapering off of Help
to Buy, which is due to end in April 2023, has had no measurable impact on our
sales rate to date.
As of 10 June 2022 our order book is over 96% covered for FY22 revenue
providing good visibility and confidence in meeting our revenue targets for
the current financial year.
Operational efficiency
We continue to make good progress in delivering efficiency across all aspects
of our operations. Despite some of the ongoing challenges in materials and
labour availability, we have managed to maintain our build rate in line with
expectations in the first half. The new house type range roll out is on track
and we expect 75% of our private open market houses will be delivered using
this range in 2022. Moving to these standardised house types has been strongly
vindicated in an environment of labour and material shortages.
We continue to seek opportunities to replan our sites. Plotting efficiency is
an ongoing process to maintain flexibility in our product offerings and to
optimise the value of the developments. Replans and replotting will continue
to bring positive benefits in coverage while also enhancing the returns from
these investments.
We remain highly disciplined in managing our build costs, overheads and
work-in-progress. Our overheads remain appropriately sized for the Group's
operations today. As we open our new divisions, we will need to make further
investments both locally and centrally as the size of our overall operations
increases. On 6 May 2022 we sold our 50% share in our joint venture with
Clarion Housing Group containing the London Chest Hospital development in East
London. While we have realised a small impairment loss on our investment in
this asset, we will productively recycle the consideration into the types of
investments and housing types that fit with our strategy.
Maintaining an efficient operating platform will remain a key focus,
underpinning our margin recovery plan as the impact of older sites diminish
and the benefit of new land purchases at a higher margin takes effect.
Build cost and supply chain
The UK construction environment is experiencing disruption to materials
availability and inflationary pressures on pricing. There are several factors
contributing to this; the rapid reopening of construction activity after
COVID-19 lockdown restrictions were lifted, coupled with more recent lockdown
restrictions still being in place in some countries; the volume of large
construction and infrastructure projects creating demand such as HS2 rail; the
disruption to raw material supply from Ukraine and the boycotting of products
from Russia; rapidly rising energy costs and the transition costs as suppliers
seek to move to more sustainable methods of production.
Some materials such as steel have increased in price in direct correlation to
the rise in energy prices. Other materials, such as bricks, have been more
insulated where alternatives such as concrete (rather than clay) can be
sourced and used instead. All these material increases have been accompanied
by a moderation in the rising cost of labour. Our site teams do an outstanding
job of managing this disruption on a day-to-day basis and to ensure our build
rate remains on track. At a Group level we continue to develop strong economic
and strategic partnerships with key suppliers that create value for both
parties.
Land investment
We have been active in the land market in our existing divisions in the first
half and continued to see good opportunities for land in our new and existing
divisions. The short-term land market remains very competitive, however our
operational efficiency programme and new house type range enables us to bid
with confidence and to acquire land within our appraisal criteria. We also
have a large strategic land portfolio which we utilise whenever possible to
draw land into our short-term land portfolio. In the first half we have
approved for purchase 1,543 plots of land (HY21: 2,682) at a forecast gross
margin of 26.8% (HY21: 26.5%).
Building safety
Since the Grenfell Tragedy in 2017, and the subsequent review of building
design and the construction methods and materials used, the Group has acted
swiftly to identify and remediate any legacy buildings where it has a
constructive or legal obligation to do so. The Group recognises the
significant distress caused to residents and as such has always sought to
engage constructively with residents, building owners, Government and other
affected stakeholders. The Pledge sets out our commitment to address
life‐critical fire‐safety issues on all buildings of 11 metres and above
in England developed by the Group in the 30 years prior to 5 April 2022. In
addition, the Group agreed that the Government's Building Safety Fund will not
be used to remediate those buildings and to reimburse any amounts already paid
by the Building Safety Fund.
Accordingly, as at 31 October 2021 the Group had cumulatively recorded £47.8m
a net charge in respect of these obligations since the year ended 31 October
2019. In addition, it is contributing to the Residential Property Developer
Tax (RPDT), effective from 1 April 2022, to support the remediation programme
of all affected buildings taller than 18 metres in the United Kingdom.
Since January 2022 the Group has been in active dialogue with the Department
for Levelling Up, Housing and Communities (DLUHC) on remediation of all
buildings 11 metres and over and in April 2022 the Group announced that it has
signed The Pledge, taking further steps to support those living in affected
buildings. The Group hopes this now provides comfort and assurance to affected
residents and stakeholders. It also allows the Group to move forward in
remediating the affected buildings directly or through another party.
There continues to be speculation that the Government will go further in its
actions to obtain economic redress for 'orphaned' buildings that need fixing.
The Group has taken full financial responsibility for the buildings with which
it had involvement and would not expect to contribute to the remediation of
buildings for which it has never had any responsibility or involvement in
constructing.
As a consequence of signing The Pledge, the Group has recorded a further
£105.0m exceptional charge in the half. More detail on this is provided in
the Financial Review.
Sustainability
Our sustainability priorities are three-fold, protect the environment, make a
positive impact on communities and operate our business responsibly. We
continue to make good progress against our existing targets to reduce
greenhouse gas (GHG) emissions, waste and increase our use of renewable
electricity.
We have taken positive action to reduce our scope 1 and 2 GHG emissions and we
are on track to achieve our 25% intensity reduction target. We are also taking
steps to reduce our scope 3 emissions through our home designs, preparation
for the Future Homes Standard and engagement with our supply chain.
We have now set new science-based targets, which we have submitted to the
Science Based Targets initiative for validation. The targets are:
o Reduce absolute scope 1 and 2 GHG emissions 60% by 2030 from a 2019 base
year
o Reduce scope 3 GHG emissions intensity by 55% by 2030 from a 2019 base
year
o Reach net-zero GHG emissions across the value chain (scopes 1, 2 and 3) by
2045
Reaching net-zero across the value chain will be a significant challenge and
we look forward to continued collaboration with our stakeholders as we
transition toward a low carbon economy.
Geographical expansion
At our Capital Markets Day in October 2021 we set out our ambitious future
growth plans. Our plan will be delivered in two phases with targets aligned to
both phases. We are making excellent progress in the first phase as we target
achieving a minimum operating margin of 18.0% by FY24, returning Crest
Nicholson to normalised industry returns. Thereafter, we expect operating
margin to reach 20.0% by FY26 and deliver over 4,200 home completions.
In the early years the operating margin growth will come from our existing
divisions, depleting legacy sites with weaker margins and delivering an
increasing contribution from new land acquisitions, plotted with the new house
type. By FY24 we will have opened three new divisions with the first two being
in Yorkshire and East Anglia and the third to be announced in FY23. These new
divisions, coupled with increasing capacity expansion in our existing
divisions, will deliver the volume growth required to meet our plan
aspirations.
We have made good progress in respect of these plans in the first half. Our
adjusted operating margin has increased to 15.0% (HY21: 12.3%) demonstrating
we are on track with this element of our plan.
We are making good progress with our expansion plans. In Yorkshire we have
opened our divisional office in Thorpe Park, Leeds. The leadership team is
taking shape following several key appointments with all team members based in
the Yorkshire region and having knowledge of the area. We are busy assessing
new land opportunities and have recently approved the purchase of two sites in
South Yorkshire and East Riding. We will be looking to open our East Anglia
division in the second half, where we have already secured two sites in
Norwich and Ipswich. We look forward to providing more details on progress in
both new divisions at our preliminary results in January 2023.
Outlook
The Board remains convinced that, despite the current global economic and
geopolitical volatility, the long-term fundamentals of the UK housing market
remain strong. The Group's efficient operating model and highly experienced
leadership team position it well in times such as this. In addition, the
balance sheet is robust and adequately capitalised to fuel this growth agenda
and provide resilience if trading conditions become tougher.
As evidenced by the ongoing improvements to financial performance this year,
the Group is pleased to announce that it now expects FY22 adjusted profit
before tax to be around £135-140m. The Board remains confident that Crest
Nicholson has a unique opportunity to deliver superior returns, by way of
strong earnings growth accompanied by an attractive dividend and is committed
to giving more customers the opportunity to own a Crest Nicholson home.
Financial Review
Completions and revenue
During the first half open market (private) completions were 754 (HY21: 701),
affordable completions were 184 (HY21: 198) and bulk completions were 158
(HY21: 118). Total home completions were therefore 1,096 (HY21: 1,017), up
7.8%, reflecting the continuing recovery in volumes post the COVID-19 pandemic
and the ongoing strength of the housing market.
Open market (private) average selling price (ASP) increased slightly to £409k
(HY21: £398k), up 2.8%. The strong selling market has supported house price
inflation during the year which has been offset by the changing mix of what
the Group sells. The new house types are increasing in composition as the
remaining legacy house types, often sold at higher price points, start to
reduce.
Affordable ASP was up 1.7% to £179k (HY21: £176k) and bulk ASP was up 25.4%
to £281k (HY21: £224k) as deals for both Old Vinyl, Hayes and Brightwells
Yard, Farnham, given their respective locations and price points, drove the
increase on prior year. Group revenue, excluding joint venture revenue of
£21.1m (HY21: £13.1m), increased 12.3% to £364.3m (HY21: £324.5m) in the
first half.
Sales
Sales rates as measured by SPOW, were 0.72 for the first half compared to 0.69
in the prior year. Despite the resumption of Stamp Duty, following its
suspension during COVID-19, demand for housing has remained strong in the
first half. A lack of supply, plentiful mortgage availability and issuance and
ongoing changes to the balance of home and office working patterns have all
supported this backdrop.
Sales outlets were 58 (HY21: 57) in the first half. The speed at which
planning applications are considered and approved remains subdued.
Stakeholders have had to work through a backlog of COVID-19 delayed
applications. In addition, new environmental challenges related to the levels
of nitrates in local water have also emerged in recent months.
Forward sales as at 10 June 2022 of 2,891 units and £814.9m Gross Development
Value (GDV) (18 June 2021: 2,771 units and £691.8m GDV) with over 96% of FY22
revenue covered.
Operating profit and margin
Adjusted operating profit rose to £54.5m (HY21: £40.0m), with adjusted
operating profit margin also increasing to 15.0% (HY21: 12.3%). This
improvement is in line with the operating profit margin recovery trajectory
and targets the Group communicated at its Capital Markets Day in October 2021.
Several unprofitable legacy schemes are subject to net realisable value (NRV)
provisions and during the first half the Group fully recognised the sale of
Old Vinyl, Hayes by way of a bulk deal and similarly in the second half
expects to recognise the sale of Sherborne Wharf, Birmingham. This will leave
approximately a third of the remaining NRV provision to be used in FY23 and
FY24 and predominantly relates to the Group's development at Brightwell's
Yard, Farnham.
Operating loss after exceptional items for the first half was £50.5m (HY21:
£39.7m operating profit) reflecting the £105.0m exception combustible
materials charge in the period.
Another challenging legacy scheme held in the Group's portfolio is the London
Chest Hospital in East London. This site is held in a joint venture with a
third party and is financed by way of intercompany loans from both members.
This site has been the subject of planning objections and delays and is a
complex build programme with significant levels of peak capital investment. On
6 May 2022 the Group disposed of its 50% share in the joint venture to its
joint venture partner for a total consideration of £16.0m, half of which will
be received in the second half of this financial year and the other half in
FY23. Although this transaction was completed after 30 April 2022 the carrying
value of the intercompany loan was impaired in the first half to reflect this
latest market valuation of the scheme. Accordingly, the Group recorded a
£2.3m net impairment loss on financial assets for the first half (HY21:
£0.2m).
The continued unwinding of these poorer legacy schemes, replaced by new land
purchases, plotted with the new house types, drives the Group's forecast
margin improvement targets.
Operational efficiency is one of the Group's five strategic priorities and as
part of this focus overheads have been sustainably lowered since FY19. During
the first half administrative expenses were £20.7m (HY21: £23.1m), with the
prior year comparative containing the £2.5m repayment of the Government's Job
Retention scheme grant, received in FY20 and in respect of financial support
during the COVID-19 pandemic.
Exceptional items
Since the Grenfell Tower tragedy in 2017, the Government and construction
sector have been carefully considering what lessons must be learned, and how
buildings that are exposed to potentially life-critical fire risk can be
identified and swiftly remediated.
Since the emergence of new Government guidance in this area the Group has
worked with all impacted stakeholders to identify where it has a legal or
constructive obligation to remediate legacy buildings. The first exceptional
charge taken in this respect was in FY19 for £18.4m and by the end of FY21
the Group had cumulatively recorded £47.8m of net exceptional charges and had
an unutilised balance sheet provision of £42.6m.
In January 2022 the Secretary of State for the Department for Levelling Up,
Housing and Communities (DLUHC) announced the Government's intention to change
the regulatory and legislative framework for fire remediation. These changes
culminated in a request to housebuilders to sign the Government's Building
Safety Pledge which the Group did on 19 April 2022.
As a consequence of signing the Building Safety Pledge the Group informed the
capital markets on 5 April 2022 that it considered a further exceptional
charge of £80-120m represented its best estimate of the range of these
incremental costs. The Group has subsequently been able to refine this
estimate and has recorded an exceptional charge of £105.0m in the first half.
Tax credit on exceptional items is £22.4m (HY21: £nil).
Further detail on exceptional items can be found in note 5 and note 12 of the
condensed consolidated financial statements.
Financing and liquidity
At 30 April 2022 the Group had net cash of £173.3m (HY21: £130.4m). Net debt
including land creditors were £6.6m (HY21: £48.1m). Average net cash during
the period was £98.6m (HY21: £80.5m).
Since the Group announced its updated strategy in January 2020, the balance
sheet has progressively strengthened through a clear focus on capital
expenditure, overheads and work-in-progress management. The Group also
benefits from a £250.0m Revolving Credit Facility which remained undrawn
throughout the first half.
Return on capital employed (ROCE) for the first half was 18.3% (HY21: 10.5%)
reflecting the higher earnings delivery on prior year and the continued
strength of the balance sheet. This improvement reflects continued progress
towards the Group's five-year target for ROCE of 22-25%.
This financial position equips the Group to meet its capital allocation
priorities while maintaining adequate resilience to changing market
conditions, in a sector that has historically been cyclical in nature.
Pension
The Group operates a defined benefit pension scheme. At 30 April 2022 the
retirement benefit surplus under IAS 19 was £35.4m (HY21: £8.6m). In
February 2022 the Group finalised the latest triennial valuation with the
Trustees and agreed that the monthly cash contributions from the Group into
the scheme would reduce from £0.75m to £0.13m, effective from the February
2022 payment.
Taxation
The effective tax rate applied to adjusted profit for the period was 19.6%
(HY21: 20.1%). This reflects the best estimate of the weighted average annual
effective tax rate which is expected to apply to the Group for the year ending
31 October 2022. Over the next three years the Group's effective tax rate will
increase in line with the statutory rate increases and as the Group becomes
subject to a full year effect of the Residential Property Developer Tax (RPDT)
of 4.0%, effective from 1 April 2022.
Earnings per share
Adjusted basic earnings per share was 15.7 pence (HY21: 11.2 pence),
reflecting the increase in the Group's earnings on prior year. Basic loss per
share was 16.5 pence (HY21: earnings per share 11.3 pence), principally
reflecting the impact of the exceptional item for combustible materials.
Dividend
The Board has declared an interim dividend of 5.5 pence per share, payable on
13 October 2022 to shareholders on the register on 23 September 2022. The
dividend represents approximately one third of the dividend expected to be
paid in respect of the financial year ending 31 October 2022.
Land and planning
During the first half the Group approved 1,543 plots for purchase at a
forecast gross margin of 26.8% after sales and marketing costs.
At 30 April 2022 the short-term land portfolio includes 15,510 (FY21: 14,677)
plots. 2,204 plots were added in the half with additions across all regions.
The Group's strategic land portfolio ended the half with 22,303 (FY21: 22,308)
plots meaning the total land portfolio at 30 April 2022 was 37,813 plots
(FY21: 36,985). The total GDV of the portfolio is £12.3bn (FY21: £11.8bn).
The land market remains very competitive. In addition, approvals are being
delayed due to environmental issues such as nitrate levels and water
neutrality. The Group has a proven capability and strong track record at being
able to realise value from its strategic land portfolio. Where the Group has
been able to be active in the short-term land market it now benefits from
increased competitiveness with the new house types and its strong balance
sheet supports ongoing disciplined investment for growth.
Principal Risks and Uncertainties
The Group's financial and operational performance and reputation is subject to
a number of potential risks and uncertainties. These risks could, either
separately or in combination, have a material impact on the Group's
performance and shareholder returns.
Our divisional boards consider their divisional risk registers on a
half-yearly basis. The divisional risk reviews, alongside the Group's
principal and emerging risks are carefully considered by the Executive
Leadership Team. Both the Audit and Risk Committee and the Board have
oversight of the Group's emerging and principal risks.
We face a number of emerging risks including increased inflation and higher
energy prices, which we work closely with our supply chains to mitigate any
potential impact. This is set against the backdrop of recent rising costs of
living in the UK and the geopolitical situation in Ukraine.
Changes to the planning systems have also been proposed by the Government and
may impact our future land acquisitions and new home delivery. These risks
have the potential to further impact existing principal risks.
Our principal risks are unchanged from those set out on pages 64 to 68 of the
Group's Annual Integrated Report for the year ended 31 October 2021.
Statement of Directors' Responsibilities
The Directors confirm that these condensed consolidated half year financial
statements have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the United Kingdom
and that the interim management report includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8, namely:
· an indication of important events that have occurred during the
first six months and their impact on the condensed set of financial
statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
· material related-party transactions in the first six months and
any material changes in the related party transactions described in the last
Annual Integrated Report.
The current Directors of Crest Nicholson Holdings plc are listed in the Annual
Integrated Report for the year ended 31 October 2021 with the exception that
Tom Nicholson stepped down from the Board on 27 May 2022.
By order of the Board
Peter Truscott
Chief Executive
14 June 2022
CREST NICHOLSON HOLDINGS PLC
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2022
CONDENSED CONSOLIDATED INCOME STATEMENT
Note Half year ended Half year ended Half year ended Half year ended Half year ended Half year ended Full year ended Full year ended Full year ended
30 April 30 April 30 April 30 April 30 April 30 April 31 October 31 October 31 October
2022 2022 2022 2021 2021 2021 2021 2021 2021
Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited Audited Audited Audited
Pre-exceptional items Exceptional items (note 5) Total Pre-exceptional items Exceptional items (note 5) Total Pre-exceptional item Exceptional item (note 5) Total
£m £m £m £m £m £m £m £m £m
Revenue 4 364.3 - 364.3 324.5 - 324.5 786.6 - 786.6
Cost of sales (286.8) (105.0) (391.8) (261.2) (0.3) (261.5) (619.9) (20.8) (640.7)
Gross profit/(loss) 77.5 (105.0) (27.5) 63.3 (0.3) 63.0 166.7 (20.8) 145.9
Administrative expenses (20.7) - (20.7) (23.1) - (23.1) (51.1) - (51.1)
Net impairment losses on financial assets (2.3) - (2.3) (0.2) - (0.2) (1.0) - (1.0)
Operating profit/(loss) 6 54.5 (105.0) (50.5) 40.0 (0.3) 39.7 114.6 (20.8) 93.8
Finance income 1.3 - 1.3 1.5 - 1.5 3.4 - 3.4
Finance expense (5.2) - (5.2) (6.3) 0.5 (5.8) (12.5) 0.5 (12.0)
Net finance (expense)/income (3.9) - (3.9) (4.8) 0.5 (4.3) (9.1) 0.5 (8.6)
Share of post-tax result of joint ventures using the equity method 1.9 - 1.9 0.9 - 0.9 1.7 - 1.7
Profit/(loss) before tax 52.5 (105.0) (52.5) 36.1 0.2 36.3 107.2 (20.3) 86.9
Income tax (expense)/credit 7 (12.1) 22.4 10.3 (7.3) - (7.3) (19.9) 3.9 (16.0)
Profit/(loss) for the period attributable to equity shareholders 40.4 (82.6) (42.2) 28.8 0.2 29.0 87.3 (16.4) 70.9
Earnings/(loss) per ordinary share
Basic 8 15.7p (16.5)p 11.2p 11.3p 34.0p 27.6p
Diluted 8 15.7p (16.5)p 11.2p 11.3p 33.9p 27.5p
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half year ended Half year ended Full year ended
30 April 30 April 31 October
2022 Unaudited 2021 Unaudited 2021
Audited
£m £m £m
(Loss)/profit for the period attributable to equity shareholders (42.2) 29.0 70.9
Other comprehensive income/(expense):
Items that will not be reclassified to the consolidated income statement:
Actuarial gains of defined benefit schemes 16.4 17.2 20.2
Change in deferred tax on actuarial gains of defined benefit schemes (5.6) (3.3) (4.8)
Other comprehensive income for the period net of income tax 10.8 13.9 15.4
Total comprehensive (expense)/income for the period attributable to equity (31.4) 42.9 86.3
shareholders
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share capital Share premium account Retained earnings Total
£m £m £m £m
Half year ended 30 April 2022 (Unaudited)
Balance at 1 November 2021 12.8 74.2 814.6 901.6
Loss for the period attributable to equity shareholders - - (42.2) (42.2)
Actuarial gains of defined benefit schemes - - 16.4 16.4
Change in deferred tax on actuarial gains of defined benefit schemes - - (5.6) (5.6)
Total comprehensive expense for the period - - (31.4) (31.4)
Transactions with shareholders:
Equity-settled share-based payments - - 1.2 1.2
Deferred tax on equity-settled share-based payments - - (0.3) (0.3)
Purchase of own shares - - (0.4) (0.4)
Dividends paid - - (24.4) (24.4)
Balance at 30 April 2022 12.8 74.2 759.3 846.3
Share capital Share premium account Retained earnings Total
£m £m £m £m
Half year ended 30 April 2021 (Unaudited)
Balance at 1 November 2020 12.8 74.2 738.3 825.3
Profit for the period attributable to equity shareholders - - 29.0 29.0
Actuarial gains of defined benefit schemes - - 17.2 17.2
Change in deferred tax on actuarial gains of defined benefit schemes - - (3.3) (3.3)
Total comprehensive income for the period - - 42.9 42.9
Transactions with shareholders:
Equity-settled share-based payments - - 0.7 0.7
Deferred tax on equity-settled share-based payments - - 0.2 0.2
Balance at 30 April 2021 12.8 74.2 782.1 869.1
Share capital Share premium account Retained earnings Total
£m £m £m £m
Year ended 31 October 2021 (Audited)
Balance at 1 November 2020 12.8 74.2 738.3 825.3
Profit for the year attributable to equity shareholders - - 70.9 70.9
Actuarial gains of defined benefit schemes - - 20.2 20.2
Change in deferred tax on actuarial gains of defined benefit schemes - - (4.8) (4.8)
Total comprehensive income for the year - - 86.3 86.3
Transactions with shareholders:
Equity-settled share-based payments - - 1.8 1.8
Deferred tax on equity-settled share-based payments - - 0.1 0.1
Purchase of own shares - - (1.6) (1.6)
Transfers in respect of share options - - 0.2 0.2
Dividends paid - - (10.5) (10.5)
Balance at 31 October 2021 12.8 74.2 814.6 901.6
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Note As at As at As at
30 April 30 April 31 October
2022 2021 2021
Unaudited Unaudited Audited
ASSETS £m £m £m
Non-current assets
Intangible assets 29.0 29.0 29.0
Property, plant and equipment 1.0 1.7 1.2
Right-of-use assets 2.8 4.7 3.7
Investments in joint ventures 8.0 5.3 6.8
Financial assets at fair value through profit and loss 2.7 3.5 4.2
Deferred tax assets 5.1 7.0 4.8
Retirement benefit surplus 35.4 8.6 16.7
Trade and other receivables 32.7 59.6 44.5
116.7 119.4 110.9
Current assets
Inventories 10 1,129.6 1,038.1 1,037.5
Financial assets at fair value through profit and loss 2.1 1.7 1.1
Trade and other receivables 102.6 78.7 102.4
Current income tax receivable 17.4 4.9 5.8
Cash and cash equivalents 11 271.6 228.0 350.7
1,523.3 1,351.4 1,497.5
Total assets 1,640.0 1,470.8 1,608.4
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings 11 (98.3) (97.6) (97.9)
Trade and other payables (50.6) (126.0) (107.6)
Lease liabilities (2.0) (3.6) (2.7)
Deferred tax liabilities (10.2) (1.6) (4.1)
Provisions 12 (82.1) (8.1) (28.4)
(243.2) (236.9) (240.7)
Current liabilities
Trade and other payables (484.5) (347.2) (449.5)
Lease liabilities (1.7) (2.1) (1.9)
Provisions 12 (64.3) (15.5) (14.7)
(550.5) (364.8) (466.1)
Total liabilities (793.7) (601.7) (706.8)
Net assets 846.3 869.1 901.6
EQUITY
Share capital 15 12.8 12.8 12.8
Share premium account 15 74.2 74.2 74.2
Retained earnings 759.3 782.1 814.6
Total equity 846.3 869.1 901.6
Crest Nicholson Holdings plc Registered number 6800600. These condensed
consolidated half year financial statements were approved by the Board of
Directors on 14 June 2022.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Half year ended Half year ended Full year ended
30 April 30 April 31 October
2022 2021 2021
Unaudited Unaudited Audited
£m £m £m
Cash flows from operating activities
(Loss)/profit for the period attributable to equity shareholders (42.2) 29.0 70.9
Adjustments for:
Depreciation on property, plant and equipment 0.3 0.6 1.0
Depreciation on right-of-use assets 0.7 1.2 2.4
Net finance expense 3.9 4.3 8.6
Share-based payment expense 1.2 0.7 1.8
Share of post-tax result of joint ventures using the equity method (1.9) (0.9) (1.7)
Movement of inventories impairment (8.5) (12.4) (16.4)
Net impairment of financial assets 2.3 0.2 1.0
Income tax (credit)/expense (10.3) 7.3 16.0
Operating (loss)/profit before changes in working capital, provisions and (54.5) 30.0 83.6
contribution to retirement benefit obligations
Decrease in trade and other receivables 6.7 14.2 4.8
Increase in inventories (83.6) (8.0) (3.4)
Increase/(decrease) in trade and other payables, and provisions 79.9 (28.6) 73.5
Contribution to retirement benefit obligations (2.6) (5.6) (11.2)
Cash (used by)/generated from operations (54.1) 2.0 147.3
Finance expense paid (3.2) (3.5) (6.9)
Income tax paid (1.4) (7.4) (13.9)
Net cash (outflow)/inflow from operating activities (58.7) (8.9) 126.5
Cash flows from investing activities
Purchases of property, plant and equipment (0.1) (0.3) (0.2)
Disposal of financial assets at fair value through profit and loss 0.3 0.6 1.0
Dividends received 0.9 - -
Funding to joint ventures (3.4) (7.5) (13.0)
Repayment of funding from joint ventures 7.5 5.9 11.5
Finance income received - 0.1 0.1
Net cash inflow/(outflow) from investing activities 5.2 (1.2) (0.6)
Cash flows from financing activities
Principal elements of lease payments (0.8) (1.3) (2.7)
Dividends paid (24.4) - (10.5)
Purchase of own shares (0.4) - (1.6)
Transfer in respect of share options - - 0.2
Net cash outflow from financing activities (25.6) (1.3) (14.6)
Net (decrease)/increase in cash and cash equivalents (79.1) (11.4) 111.3
Cash and cash equivalents at the beginning of the period 350.7 239.4 239.4
Cash and cash equivalents at end of the period 271.6 228.0 350.7
CREST NICHOLSON HOLDINGS PLC
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2022
NOTES TO THE CONDENSED CONSOLIDATED HALF YEAR FINANCIAL STATEMENTS (unaudited)
1 BASIS OF PREPARATION
Crest Nicholson Holdings plc (the Company) is a public limited company
incorporated, listed and domiciled in the UK. The address of the registered
office is Crest House, Pyrcroft Road, Chertsey, Surrey KT16 9GN. The condensed
consolidated half year financial statements consolidate the results of the
Company and its subsidiaries (together referred to as the Group) and include
the Group's interest in jointly controlled entities.
These condensed consolidated half year financial statements for the six months
ended 30 April 2022 have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the UK Financial Conduct Authority and with
UK-adopted International Accounting Standard 34 'Interim financial reporting'.
These condensed consolidated half year financial statements do not include all
of the information required for full annual consolidated financial statements
and should be read in conjunction with the Group's Annual Integrated Report
for the year ended 31 October 2021, which has been prepared in accordance with
international accounting standards in conformity with the requirements of the
Companies Act 2006, and international financial reporting standards (IFRS)
adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European
Union.
These condensed consolidated half year financial statements do not constitute
statutory financial statements within the meaning of Section 434 of the
Companies Act 2006. Statutory financial statements for the year ended 31
October 2021 were approved by the Board of Directors on 19 January 2022 and
delivered to the Registrar of Companies. The report of the auditor on those
accounts was (i) unqualified, (ii) did not include a reference to any matters
to which the auditor drew attention by way of emphasis without qualifying
their report, and (iii) did not contain a statement under section 498 (2) or
(3) of the Companies Act 2006.
These condensed consolidated half year financial statements are unaudited but
have been reviewed by PricewaterhouseCoopers LLP, the Company's auditors in
accordance with International Standard on Review Engagements (UK and Ireland)
2410 'Review of Interim Financial Information performed by the Independent
Auditor of the Entity', issued by the Auditing Practices Board. The auditor's
review report for the period to 30 April 2022 is set out at the end of this
document.
Going Concern
The Directors have considered the impact of the Group's current principal
risks and uncertainties to confirm the appropriateness of the going concern
assumption in these condensed consolidated half year financial statements. The
Directors do not consider that any material or significant changes have
occurred to the risks identified and outlined in the Group's Annual Integrated
Report for the year ended 31 October 2021, and as discussed in the Financial
Review.
The Group benefits from a £250.0m revolving credit facility, which expires
June 2024, and £100.0m of senior loan notes, which mature between 2024 and
2029. Both of these arrangements are subject to three financial covenant
tests. The Group was compliant with all three tests throughout the six month
period ended 30 April 2022.
At 30 April 2022 the Group had net cash of £173.3m. Given this strong
liquidity position the Directors consider the impact of breaching one of its
covenants as being the first indication that the Group could be in distress
and should be the basis of assessing its going concern basis. The Directors
have then considered three scenarios that stress test whether the Group would
remain compliant with its covenants as a result of some principal risks
starting to crystallise:
Base case
This is the Group's latest forecast which reflects current market experience
and is reviewed by the Directors periodically.
Severe but plausible downside case
The following assumptions were applied both individually and in combination to
the base case:
· An immediate 15.0% reduction in forecast home completions
· An immediate 7.5% fall in forecast average selling prices
· An immediate 5.0% increase in build costs, this is an addition to
the build cost inflation already factored into the base case
Test to failure
The above assumptions were then applied, individually and in combination,
above a level considered plausible to help inform the Directors as to what
level of stress would be needed to realise a breach in any of the covenants.
In all 3 scenarios above, the Group remained compliant with all covenants
without the need to rely on any potential mitigations which include but are
not limited to:
· A reduction in Group overheads
· Renegotiation of supplier arrangements in a deteriorating market
· Mothballing of unprofitable or capital-intensive schemes
· Repaying interest-bearing products to reduce the net interest
charge
Conclusion on going concern
In reviewing the assessment outlined above the Directors are confident that
the Group has the necessary resources and mitigations available to continue
trading for at least 12 months from the date of approval of the condensed
consolidated half year financial statements. Accordingly, the condensed
consolidated half year financial statements continue to be prepared on a going
concern basis.
Critical accounting estimates and judgements
The preparation of the condensed consolidated half year financial statements
under IFRS requires the Directors to make estimates and assumptions that
affect the application of policies and reported amounts of assets and
liabilities, income and expenses and related disclosures. In applying the
Group's accounting policies, the key judgements that have a significant impact
on the financial statements, including those involving estimates, are as
follows; the judgement to present certain items as exceptional (see note 5),
certain revenue policies relating to part exchange sales, the identification
of performance obligations where a revenue transaction involves the sale of
both land and residential units with revenue on the units subsequently
recognised over time and the recognition of the defined benefit pension scheme
surplus.
Estimates and associated assumptions affecting the financial statements are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances. The estimates and underlying
assumptions are reviewed on an ongoing basis. Changes in accounting estimates
may be necessary if there are changes in the circumstances on which the
estimate was based or as a result of new information.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of revision and future period if the revision affects both current and future
periods.
The Directors have made estimates and assumptions in reviewing the going
concern assumption as detailed above. The Directors consider the key sources
of estimation uncertainty that have a risk of causing a material adjustment to
the carrying value of assets and liabilities are the carrying value of
inventories, estimation of development profitability, valuation of the pension
scheme assets and liabilities and the combustible materials provision. These
are detailed within the Group's consolidated financial statements for the year
ended 31 October 2021. In addition, combustible materials is presented below
following an increase in the provision in the period.
Combustible materials
The combustible materials provision requires several key estimates and
judgements in its calculation of value and probability. In line with IAS 37, a
provision is recognised if it is probable that an outflow of cash or other
economic resources will be required to settle the provision and the provision
can be reliably measured. A contingent liability is a possible obligation
depending on whether some uncertain future event occurs, or a present
obligation but payment is not probable or the amount cannot be measured
reliably. The key judgements include, but are not limited to, identification
of the properties impacted over the required period of construction considered
and which properties should then be included. The key estimates applied to the
identified properties include the potential investigation costs, rectification
costs of works and materials, disruption to customers, along with considering
the future timing of the expenditure.
If forecast remediation costs on identified buildings currently provided for
are 5% higher than is now estimated, the exceptional items charge in the
condensed consolidated income statement would be £7.3m higher. If further
buildings are identified this could result in an increase to the current
provision, but the potential value of this change cannot be reliably measured
without further claims or investigative work. See notes 5 and 12 for
additional details.
Accounting policies
The principal accounting policies adopted in the condensed consolidated half
year financial statements are consistent with those applied by the Group in
its consolidated financial statements for the year ended 31 October 2021
except in respect of taxation which is based on the expected effective tax
rate that would be applicable to expected annual earnings, and the revenue
policy relating to recognised over time housing units as detailed below.
The Group reviewed the application of its revenue policy relating to
recognised over time housing units. From 1 November 2021 revenue is now
recognised on over time units by reference to the stage of completion, via
surveys of work performed on contract activity. The Group considers this
policy more closely aligns with the benefits transferred to the customer.
Previously revenue was recognised on housing units as the build of the related
units progressed, using the input method based on costs incurred. This is
considered a change in accounting estimate and so has been implemented
prospectively.
Adoption of new and revised standards
There are no new standards, amendments to standards and interpretations that
are applicable to the Group and are mandatory for the first time for the
financial year beginning 1 November 2021 which have a material impact on the
Group.
Alternative performance measures
The Group has adopted various Alternative Performance Measures (APM), as
presented below. These measures are not defined by IFRS and therefore may not
be directly comparable with other companies' APM, and should be considered in
addition to, and are not intended to be a substitute for, or superior to, IFRS
measurements.
2 SEGMENTAL REPORTING
The Executive Leadership Team (ELT), as disclosed in the Group's consolidated
financial statements for the year ended 31 October 2021 on page 76, with the
exception that Tom Nicholson stepped down from the Board on 27 May 2022, is
accountable to the Board and has been identified as the chief operating
decision-maker for the purposes of determining the Group's operating segments.
The ELT approves investment decisions, allocates group resources and performs
divisional performance reviews. The Group operating segments are considered to
be its divisions, each of which has its own management board. All divisions
are engaged in residential-led, mixed use developments in the United Kingdom
and therefore, with consideration of relevant economic indicators such as the
nature of the products sold and customer base, and, having regard to the
aggregation criteria in IFRS 8, the Group identifies that it has one
reportable operating segment.
3 SEASONALITY
In common with the rest of the UK housebuilding industry, activity occurs
throughout the year, with peaks in sale completions in spring and autumn. This
creates seasonality in the Group's trading results and working capital.
4 REVENUE
Half year ended Half year ended Full year ended
30 April 30 April 31 October
2022 2021 2021
Revenue type £m £m £m
Open market housing including specification upgrades 328.3 287.4 654.7
Affordable housing 19.6 31.3 78.7
Total housing 347.9 318.7 733.4
Land and commercial sales 15.5 3.4 49.2
Freehold reversions 0.9 2.4 4.0
Total revenue 364.3 324.5 786.6
Half year ended Half year ended Full year ended
30 April 30 April 31 October
2022 2021 2021
Timing of revenue recognition £m £m £m
Revenue recognised at a point in time 342.5 284.9 687.7
Revenue recognised over time 21.8 39.6 98.9
Total revenue 364.3 324.5 786.6
Proceeds received on the disposal of part exchange properties, which is not
included in revenue, were £20.1m (30 April 2021: £23.6m, 31 October 2021:
£48.6m). These have been included within cost of sales.
5 EXCEPTIONAL ITEMS
Exceptional items are those which, in the opinion of the Directors, are
material by size and/or non-recurring in nature and therefore require separate
disclosure within the condensed consolidated income statement in order to
assist the users of the financial statements in understanding what the
Directors consider to be the underlying business performance of the Group.
Where appropriate any material reversal of these amounts will be reflected
through exceptional items.
Exceptional items for half year ended 30 April 2022 relate to the same
category of items booked in previous financial periods.
Half year ended Half year ended Full year ended
30 April 30 April 31 October
2022 2021 2021
Cost of sales £m £m £m
Combustible materials charge 105.0 10.3 31.2
Combustible materials credit - (2.4) (2.4)
Net combustible materials charge 105.0 7.9 28.8
Inventory impairment credit - (7.6) (8.0)
Total cost of sales exceptional charge 105.0 0.3 20.8
Net finance expense
Finance expense credit - (0.5) (0.5)
Total exceptional charge/(credit) 105.0 (0.2) 20.3
Tax credit on exceptional charge/(credit) (22.4) - (3.9)
Total exceptional charge/(credit) after tax credit 82.6 (0.2) 16.4
Net combustible materials charge
Following the fire at Grenfell Tower in 2017, and the subsequent review of
building design, construction methods and materials used, the Group has acted
swiftly to identify and remediate any legacy buildings where it has a
constructive or legal obligation to do so. The Group recognises the
significant distress caused to residents and as such has always sought to
engage constructively with residents, building owners, Government and other
affected stakeholders.
Accordingly, the Group has cumulatively recorded £47.8m of net charges in
respect of these obligations between the year ended 31 October 2019 to 31
October 2021.
On 19 April 2022 the Group signed the Government's Building Safety Pledge,
which has a wider perimeter of potential buildings impacted and has thus
contributed to a further £105.0m combustible materials charge for the half
year ended 30 April 2022. Due to the material nature of the charge, it has
been recognised as an exceptional item. See note 12 for additional
information.
Inventory impairment credit
In the half year ended 30 April 2021 and the year ended 31 October 2021 the
Group released unused inventory impairment which was previously recognised as
exceptional, resulting in a credit in those periods. For further details see
note 4 within the Group's consolidated financial statements for the year ended
31 October 2021.
Taxation
An exceptional income tax credit of £22.4m (30 April 2021: £nil, 31 October
2021: £3.9m) has been recognised in relation to the above exceptional items
using the actual tax rate applicable to these items.
6 OPERATING (LOSS)/PROFIT
Operating loss of £50.5m (30 April 2021: operating profit of £39.7m, 31
October 2021: operating profit of £93.8m) from continuing activities is
stated after (crediting)/charging:
Half year ended Half year ended Full year ended
30 April 30 April 31 October
2022 2021 2021
£m £m £m
Joint venture project management fees received (note 16) (1.0) (0.7) (1.5)
Government grants repaid - 2.5 2.5
Government grants
In the half year ended 30 April 2021 and year ended 31 October 2021 the Group
recognised a £2.5m charge within administrative expenses relating to the
voluntarily repayment of the Government JRS grant received in the year ended
31 October 2020.
7 TAXATION
The rate of taxation on (loss)/profit for the half year ended 30 April 2022 is
19.6% (30 April 2021: 20.1%, 31 October 2021: 18.4%) and reflects the best
estimate of the weighted average annual effective tax rate which is expected
to apply to the Group for the year ending 31 October 2022. This calculation
uses rates substantively enacted by 30 April 2022 as required by IAS 34
'Interim Financial Reporting'.
The Residential Property Developer Tax (RPDT) tax rate of 4.0% from 1 April
2022 has been substantially enacted during the period and its impact on
current and deferred tax is reflected within these condensed consolidated
financial statements.
8 (LOSS)/EARNINGS PER ORDINARY SHARE
Basic (loss)/earnings per share is calculated by dividing (loss)/profit
attributable to equity shareholders by the weighted average number of ordinary
shares in issue during the period. For diluted earnings per share, the
weighted average number of shares is increased by the average number of
potential ordinary shares held under option during the period. This reflects
the number of ordinary shares which would be purchased using the difference in
value between the market value of shares and the share option exercise price.
The market value of shares has been calculated using the average ordinary
share price during the period. Only share options which have met their
cumulative performance criteria have been included in the dilution
calculation. The earnings and weighted average number of shares used in the
calculations are set out below.
(Loss)/ Weighted Per
earnings average share
number of amount
shares
Half year ended 30 April 2022 - Total £m millions pence
Basic loss per share (42.2) 256.5 (16.5)
Effect of share options - - -
Diluted loss per share (42.2) 256.5 (16.5)
Half year ended 30 April 2022 - Pre-exceptional items
Basic earnings per share 40.4 256.5 15.7
Effect of share options - 0.9 -
Adjusted diluted earnings per share 40.4 257.4 15.7
Half year ended 30 April 2021 - Total
Basic earnings per share 29.0 256.8 11.3
Effect of share options - 0.7 -
Diluted earnings per share 29.0 257.5 11.3
Half year ended 30 April 2021 - Pre-exceptional items
Basic earnings per share 28.8 256.8 11.2
Effect of share options - 0.7 -
Adjusted diluted earnings per share 28.8 257.5 11.2
Full year ended 31 October 2021 - Total
Basic earnings per share 70.9 256.8 27.6
Dilutive effect of share options - 1.0 (0.1)
Diluted earning per share 70.9 257.8 27.5
Full year ended 31 October 2021 - Pre-exceptional items
Basic earnings per share 87.3 256.8 34.0
Dilutive effect of share options - 1.0 (0.1)
Adjusted diluted earnings per share 87.3 257.8 33.9
9 DIVIDENDS
Half year ended Half year ended Full year ended
30 April 30 April 31 October
2022 2021 2021
£m £m £m
Dividends recognised as distributions to equity shareholders in the period:
Final dividend for the year ended 31 October 2021 of 9.5 pence per share 24.4 - -
(2020: £nil pence per share)
Interim dividend for the year ended 31 October 2021: 4.1 - - 10.5
pence per share (2020: £nil pence per share)
24.4 - 10.5
The Board approved an interim dividend of 5.5 pence per share on 14 June 2022.
The interim dividend will be paid on 13 October 2022 to ordinary shareholders
on the Register of Members on 23 September 2022. In accordance with IAS 10
'Events After the Reporting Period' the proposed dividend has not been
included as a liability in this condensed consolidated half year financial
information.
10 INVENTORIES
As at As at As at
30 April 30 April 31 October
2022 2021 2021
£m £m £m
Work-in-progress 1,056.5 934.1 965.7
Completed buildings including show homes 58.6 85.6 57.7
Part exchange inventories 14.5 18.4 14.1
1,129.6 1,038.1 1,037.5
In the prior period the remaining unutilised residential 7.5% sales price
provision was released creating an exceptional inventory impairment credit of
£7.6m (31 October 2021: £8.0m).
Total inventories are stated net of a net realisable value provision of
£12.2m (30 April 2021: £24.7m, 31 October 2021: £20.7m), mainly relating to
the impairments as disclosed in the Group's consolidated financial statements
for the year ended 31 October 2020.
Of the £12.2m remaining NRV provision at 30 April 2022 it is currently
forecast that over half will be used in the second half of the 2022 financial
year as some sites subject to NRV are forecast to be legally completed.
Movements in the NRV provision As at As at As at
30 April 30 April 31 October
2022 2021 2021
£m £m £m
At beginning of the period 20.7 37.1 37.1
Pre-exceptional NRV charged/(credited) in the period 1.8 (0.7) 0.8
Pre-exceptional NRV used in the period (3.2) (3.7) (5.2)
Exceptional NRV credited in the period (note 5) - (7.6) (8.0)
Exceptional NRV used in the period (7.1) (0.4) (4.0)
Total movement in NRV in the period (8.5) (12.4) (16.4)
At end of the period 12.2 24.7 20.7
11 CASH AND CASH EQUIVALENTS, INTEREST-BEARING LOANS AND BORROWINGS
As at As at As at
30 April 30 April 31 October
2022 2021 2021
£m £m £m
Cash and cash equivalents 271.6 228.0 350.7
Non-current interest-bearing loans and borrowings
Senior loan notes - maturing 2024 to 2029 (100.0) (100.0) (100.0)
Revolving credit facility and senior loan notes issue costs 1.7 2.4 2.1
(98.3) (97.6) (97.9)
At 30 April 2022, the Group had undrawn revolving credit facilities of
£250.0m (30 April 2021: £250.0m, 31 October 2021: £250.0m).
12 PROVISIONS
As at As at As at As at As at As at As at As at As at
30 April 30 April 30 April 30 April 30 April 30 April 31 October 31 October 31 October
2022 2022 2022 2021 2021 2021 2021 2021 2021
Combustible materials Other provisions Total Combustible materials Other provisions Total Combustible materials Other provisions Total
£m £m £m £m £m £m £m £m £m
At beginning of the period 42.6 0.5 43.1 14.8 0.4 15.2 14.8 0.4 15.2
Provided in the period 105.0 - 105.0 10.3 - 10.3 31.2 0.1 31.3
Utilised in the period (1.5) (0.2) (1.7) (1.9) - (1.9) (3.4) - (3.4)
At end of the period 146.1 0.3 146.4 23.2 0.4 23.6 42.6 0.5 43.1
Of which:
Non-current 82.1 - 82.1 8.1 - 8.1 28.4 - 28.4
Current 64.0 0.3 64.3 15.1 0.4 15.5 14.2 0.5 14.7
146.1 0.3 146.4 23.2 0.4 23.6 42.6 0.5 43.1
Combustible materials
Following the fire at Grenfell Tower in 2017, the Government announced a
public inquiry surrounding the circumstances leading up to and surrounding the
fire, including a review of fire-related building regulations, notably those
relating to external walls, and issued a new regulatory framework for building
owners.
On joining the Group in 2019, the new ELT quickly established a dedicated
internal team, headed by a Special Projects Director, to oversee and govern
the Group's response to this changing regulatory backdrop. The interpretation
of this guidance often varies between professional advisors who are engaged to
oversee the identification and implementation of any remediation required.
To consider the ongoing changes in regulations, the ELT meets regularly,
chaired by the Chief Executive with attendance from the Group Finance
Director, Group Production Director and Special Projects Director responsible
for this area. In 2019 the team conducted a full review into all legacy
buildings it believed may be at risk based on guidance at that time, any
relevant regulations and considered any notification of claims. Accordingly,
the Group recognised a combustible materials provision. With ongoing
regulatory changes, this provision was subsequently increased in financial
years 2020 and 2021 to reflect the Group's interpretation of their legacy
portfolio following those changes to the Government regulatory framework,
along with any new notifications received if it was considered that they
represented an expected liability.
In addition, as time has passed the Group has also been able to apply the
benefit of experience to develop a more accurate assessment and forecast of
its potential liability. As such the Group now has a detailed risk register of
all legacy buildings in scope, which it regularly reviews. The team considers
the application of the latest guidelines against each affected building,
advice from its technical or legal advisors along with relevant updates or
notifications from a variety of stakeholders. Such sources can include
residents, management companies, freeholders, subcontractors, architects,
mortgage lenders, building control bodies and independent fire engineers.
The risk register considers the progress of any identified remediation works
and adjusts the provision to reflect the Group's best estimate of any future
remediation works. As such the condensed consolidated half year financial
statements are prepared on the Group's current best estimate of these future
costs and this may evolve in the future based on the result of ongoing
inspections, further advice, the progress and cost to complete of in-progress
remediation works and whether Government legislation and regulation becomes
more or less stringent in this area. See note 17 for disclosures relating to
further potential liabilities and recoveries relating to the combustible
materials provision.
In January 2022, the Secretary of State for the Department for Levelling Up,
Housing and Communities (DLUHC) announced the Government's intention to widen
and lengthen the definition of legal obligation on developers to fund the
remediation of affected buildings between 11 and 18 metres high and extending
the review period to buildings constructed within the past 30 years. On 19
April 2022 the Group signed the Government's Building Safety Pledge which
commits the Group to remediate a larger number of legacy buildings.
Accordingly, the Group recorded a further net combustible materials charge of
£105.0m in the period. This charge comprises £70.3m specifically for
buildings where Building Safety Fund (BSF) funding had been applied for, which
the Group have now agreed to cover under the Building Safety Pledge, and
£34.7m for movements in previous cost estimates and extending the liability
period to 30 years. The further charge is in addition to the £18.4m charged
in 2019, £0.6m charged in 2020 and £28.8m charged in 2021.
The Group spent £1.5m in the period across several buildings requiring
further investigative costs, including balcony and cladding related works.
The provision of £146.1m represents the Group's best estimate of costs at 30
April 2022. The provision is stated after a related discount of £2.6m, which
unwinds to the consolidated income statement as finance costs over the life of
the cash expenditure. The Group will continue to assess the magnitude and
utilisation of this provision in future reporting periods. The Group
recognises that required remediation works could be subject to further
inflationary pressures and cash outflows on currently unprovided sites may
also become probable in the future.
The Group expects to have completed any required remediation within a
five-year period, using £64.0m of the remaining provision within one year,
and the balance within one to five years.
The Group is continuing to review the recoverability of costs incurred from
third parties where it has a contractual right of recourse. In the prior half
year £2.4m was recovered from third parties, which was recorded as an
exceptional credit in the condensed consolidated income statement. See note 5
for income statement disclosure.
13 FINANCIAL ASSETS AND LIABILITIES
As at As at As at
30 April 30 April 31 October
2022 2021 2021
Financial assets £m £m £m
Sterling cash deposits 271.6 228.0 350.7
Trade receivables 43.8 28.7 27.2
Amounts due from joint ventures 51.0 56.6 56.0
Other receivables 5.5 4.0 6.0
Total financial assets at amortised cost 371.9 317.3 439.9
Financial assets at fair value through profit and loss 4.8 5.2 5.3
Total financial assets 376.7 322.5 445.2
Financial assets at fair value through profit and loss are held at fair value
and categorised as level three within the hierarchical classification of IFRS
13 'Fair Value Measurement'. The carrying value of cash and cash equivalents,
trade and other receivables and amounts due from joint ventures is a
reasonable approximation of fair value which would be measured under a level 3
hierarchy.
As at As at As at
30 April 30 April 31 October
2022 2021 2021
Financial liabilities £m £m £m
Senior loan notes 100.0 100.0 100.0
Land payables on contractual terms carrying interest 57.3 65.0 65.0
Land payables on contractual terms carrying no interest 122.6 113.5 157.9
Amounts due to joint ventures 0.2 0.1 0.1
Lease liabilities 3.7 5.7 4.6
Other trade payables 40.2 35.7 32.0
Other payables 5.7 9.2 11.2
Accruals 275.5 214.5 264.1
Total financial liabilities at amortised cost 605.2 543.7 634.9
The carrying amounts of the Group's financial liabilities is deemed a
reasonable approximation to their fair value.
14 (NET DEBT)/NET CASH INCLUDING LAND CREDITORS
As at As at As at
30 April 30 April 31 October
2022 2021 2021
£m £m £m
Cash and cash equivalents 271.6 228.0 350.7
Non-current interest-bearing loans and borrowings (98.3) (97.6) (97.9)
Net cash 173.3 130.4 252.8
Land payables on contractual terms carrying interest (57.3) (65.0) (65.0)
Land payables on contractual terms carrying no interest (122.6) (113.5) (157.9)
(Net debt)/net cash including land creditors (6.6) (48.1) 29.9
15 SHARE CAPITAL
Shares Nominal Share Share
issued value capital premium
account
number pence £m £m
As at 30 April 2022, 30 April 2021 and 31 October 2021 256,920,539 5 12.8 74.2
16 RELATED PARTY TRANSACTIONS
Related parties are consistent with those disclosed in the Group's
consolidated financial statements for the year ended 31 October 2021. On the 6
May 2022 the Group disposed of its 50% share in Bonner Road LLP to its joint
venture partner.
The Group had the following transactions with its joint ventures in the
period:
Half year ended Half year ended Full year ended
30 April 30 April 31 October
2022 2021 2021
£m £m £m
Interest income on joint venture funding 1.4 1.4 2.8
Project management fees received 1.0 0.7 1.5
Amounts due from joint ventures, net of expected credit losses 51.0 56.6 56.0
Amounts due to joint ventures 0.2 0.1 0.1
Funding to joint ventures (3.4) (7.5) (13.0)
Repayment of funding from joint ventures 7.5 5.9 11.5
17 CONTINGENT LIABILITIES
There are performance bonds and other engagements, including those in respect
of joint venture partners, undertaken in the ordinary course of business. It
is impractical to quantify the financial effect of performance bonds and other
arrangements. The Directors consider the possibility of a cash outflow in
settlement of performance bonds and other arrangements to be remote and
therefore this does not represent a contingent liability for the Group.
In the ordinary course of business, the Group enters into certain land
purchase contracts with vendors on a conditional exchange basis. The
conditions must be satisfied for the Group to recognise the land asset and
corresponding provisions within the condensed consolidated statement of
financial position. No land payable in respect of conditional land
acquisitions has been recognised.
The Group provides for all known material legal actions, where having taken
appropriate legal advice as to the likelihood of success of the actions, it is
considered probable that an outflow of economic resource will be required, and
the amount can be reliably measured. No material contingent liability in
respect of such claims has been recognised since there are no known claims of
this nature.
In 2019, the Group created a combustible materials provision, which was
subsequently increased in financial years 2020 and 2021. This provision is
subject to the Directors' estimates on costs and timing, and the
identification of legacy developments where the Group may have an obligation
to remediate or upgrade to meet new Government guidance where it is
responsible to do so. This provision has been difficult to reliably estimate
due to the changing nature of Government regulation in this area, and where
the Group is no longer the freehold owner and has no visibility over
remediation requirements. As such the Group has historically not disclosed a
range of expected future costs. As a consequence of signing the Government's
Building Safety Pledge on 19 April 2022, the Group has now become responsible
for the remediation of a larger number of buildings, constructed over a longer
historic time period. Accordingly, whilst the Group believes that most
significant liabilities will have been identified through the process of
building owners assessing buildings and applying for BSF funding, there is a
risk of contingent liabilities arising if additional buildings are
subsequently identified requiring remediation. Due to the enduring challenges
of developing a reliable estimate of these possible costs, the Group continues
to not disclose an expected range.
The Group is reviewing the recoverability of costs incurred from third parties
where it has a contractual right of recourse. As reflected in the prior year
financial statements the Group has a track record of successfully obtaining
such recoveries, however no contingent assets have been recognised in these
condensed consolidated financial statements for such items.
CREST NICHOLSON HOLDINGS PLC
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2022
ALTERNATIVE PERFORMANCE MEASURES (UNAUDITED)
The Group uses a number of alternative performance measures (APM) which are
not defined within IFRS. The Directors use the APM, along with IFRS measures,
to assess the operational performance of the Group as detailed in the
Strategic Report on pages 1 to 69 of the Group's Annual Integrated Report for
the year ended 31 October 2021, and above. Definitions and reconciliations of
the financial APM used compared to IFRS measures, are included below:
Adjusted performance metrics
Adjusted performance metrics as shown below comprise statutory metrics
adjusted for the exceptional items as presented in note 5 of the condensed
consolidated financial statements. These measures are not defined by IFRS and
therefore may not be directly comparable with other company's APM, including
those in the Group's industry. APM should be considered in addition to, and
are not intended to be a substitute for, or superior to, IFRS measurements.
The exceptional items have a material impact to reported performance and arise
from recent, unforeseen events. As such, the Directors consider these adjusted
performance metrics reflect a more accurate view of its core operations and
underlying business performance.
Half year ended 30 April 2022 Statutory Exceptional items Adjusted
Gross (loss)/profit £m (27.5) 105.0 77.5
Gross (loss)/profit margin % (7.5) 28.8 21.3
Administrative expenses £m (20.7) - (20.7)
Administrative expenses/overhead efficiency % 5.7 - 5.7
Operating (loss)/profit £m (50.5) 105.0 54.5
Operating (loss)/profit margin % (13.9) 28.8 15.0
(Loss)/profit before tax £m (52.5) 105.0 52.5
Income tax credit/(expense) £m 10.3 (22.4) (12.1)
(Loss)/profit after tax £m (42.2) 82.6 40.4
Basic (loss)/earnings per share Pence (16.5) 32.2 15.7
Diluted (loss)/earnings per share Pence (16.5) 32.2 15.7
Half year ended 30 April 2021 Statutory Exceptional items Adjusted
Gross profit £m 63.0 0.3 63.3
Gross profit margin % 19.4 0.1 19.5
Administrative expenses £m (23.1) - (23.1)
Administrative expenses/overhead efficiency % 7.1 - 7.1
Operating profit £m 39.7 0.3 40.0
Operating profit margin % 12.2 0.1 12.3
Net finance expense £m (4.3) (0.5) (4.8)
Profit/(loss) before tax £m 36.3 (0.2) 36.1
Income tax (expense)/credit £m (7.3) - (7.3)
Profit/(loss) after tax £m 29.0 (0.2) 28.8
Basic earnings/(loss) per share Pence 11.3 (0.1) 11.2
Diluted earnings/(loss) per share Pence 11.3 (0.1) 11.2
Full year ended 31 October 2021 Statutory Exceptional items Adjusted
Gross profit £m 145.9 20.8 166.7
Gross profit margin % 18.5 2.7 21.2
Administrative expenses £m (51.1) - (51.1)
Administrative expenses/overhead efficiency % 6.5 - 6.5
Operating profit £m 93.8 20.8 114.6
Operating profit margin % 11.9 2.7 14.6
Net finance expense £m (8.6) (0.5) (9.1)
Profit before tax £m 86.9 20.3 107.2
Income tax expense £m (16.0) (3.9) (19.9)
Profit after tax £m 70.9 16.4 87.3
Basic earnings per share Pence 27.6 6.4 34.0
Diluted earnings per share Pence 27.5 6.4 33.9
Gearing including land creditors
Gearing including land creditors equals (net debt)/net cash including land
creditors divided by equity shareholders' funds add net debt including land
creditors or less net cash including land creditors.
As at As at As at
30 April 30 April 31 October
2022 2021 2021
(Net debt)/net cash including land creditors (note 14) £m (6.6) (48.1) 29.9
Equity shareholders' funds £m (846.3) (869.1) (901.6)
(Net debt)/net cash including land creditors £m (6.6) (48.1) 29.9
£m (852.9) (917.2) (871.7)
Gearing including land creditors % 0.8 5.2 (3.4)
Return on capital employed (ROCE)
Return on capital employed equals rolling 12 month adjusted operating profit
before joint ventures divided by the average of opening and closing capital
employed over the same 12 months (capital employed = equity shareholders'
funds plus net borrowing or less net cash).
Half year ended 30 April 2022 Half year ended 30 April 2021 Full year ended 31 October 2021
Adjusted operating profit - rolling 12 month £m 129.1 86.0 114.6
Average of opening and closing capital employed over same 12 months £m 705.9 817.1 665.9
ROCE % 18.3 10.5 17.2
Half year ended 30 April 2022 Half year ended 30 April 2021 Half year ended 30 April 2020 Full year ended 31 October 2021 Full year ended 31 October 2020
Adjusted operating profit
For reporting period/year £m 54.5 40.0 11.1 114.6 57.1
Second half of the prior year where applicable £m 74.6 46.0 n/a
Rolling 12 month £m 129.1 86.0 114.6
As at As at As at As at As at
30 April 30 April 30 April 31 October 31 October
2022 2021 2020 2021 2020
Capital employed £m £m £m £m £m £m
Equity shareholders' funds £m 846.3 869.1 802.1 901.6 825.3
Net (cash)/net debt (note 14) £m (173.3) (130.4) 93.3 (252.8) (142.2)
Closing capital employed £m 673.0 738.7 895.4 648.8 683.1
Average closing capital employed £m 705.9 817.1 665.9
CREST NICHOLSON HOLDINGS PLC
HALF YEAR RESULTS FOR THE SIX MONTHS ENDED 30 APRIL 2022
Independent review report to Crest Nicholson Holdings plc
Report on the condensed consolidated interim financial statements
Our conclusion
We have reviewed Crest Nicholson Holdings plc's condensed consolidated interim
financial statements (the "interim financial statements") in the unaudited
interim results of Crest Nicholson Holdings plc for the 6 month period ended
30 April 2022 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
· the Condensed Consolidated Statement of Financial Position as at
30 April 2022;
· the Condensed Consolidated Income Statement and the Condensed
Consolidated Statement of Comprehensive Income for the period then ended;
· the Condensed Consolidated Cash Flow Statement for the period then
ended;
· the Condensed Consolidated Statement of Changes in Equity for the
period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the unaudited interim results of
Crest Nicholson Holdings plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
What a review of interim financial statements involves
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information
Performed by the Independent Auditor of the Entity' issued by the Auditing
Practices Board for use in the United Kingdom. A review of interim financial
information consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review
procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the unaudited interim results
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The unaudited interim results, including the interim financial statements, is
the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the unaudited interim results in accordance with
the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial
statements in the unaudited interim results based on our review. This report,
including the conclusion, has been prepared for and only for the company for
the purpose of complying with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority and for no
other purpose. We do not, in giving this conclusion, accept or assume
responsibility for any other purpose or to any other person to whom this
report is shown or into whose hands it may come save where expressly agreed by
our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
14 June 2022
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