Final Results - Year Ended 31 October 1999

Crest Nicholson PLC 27 January 2000 Preliminary Results Announcement Crest Nicholson, the residential development company with interests in property and construction, today announces results for the year ended 31 October 1999. Financial highlights: per cent increase - Operating profit £49.0m (1998: £35.9m) 36 per cent - Profit before taxation £40.0m (1998: £28.1m) 42 per cent - Earnings per share 23.88p (1998: 16.60p) 44 per cent - Proposed final dividend of 4.00p, making a total for the year of 6.00p (1998: 4.75p) 26 per cent - Compound earnings per share growth 1996-1999 68 per cent - Gearing 42 per cent (1998: 49 per cent) Operational highlights: - Short term land bank margins increase to 24 per cent - Record number of homes sold 2,422 - Nicholson Estates a leading brand in city centre development - Planning obtained on four major schemes Commenting today John Matthews, Chairman, said: 'The Group achieved another year of major profits growth. A significant achievement of the year has been the change in the balance of the land bank which has changed from a large number of small developments to a fewer number of much larger schemes. The transformation in the value and profitability of the Group's land bank will continue as more large schemes come into production for 2000 and beyond. The Group's integrated approach is opening up new areas of business and sources of land as well as providing better control on timing, cost and quality. We expect this trend towards Group integration to continue, aided by a major investment in new technology. Inevitably there remain areas of the business where further improvement can be made and, as we do so, we shall further increase our margins. The Group has the land, products and the other necessary resources and, given a stable market, 2000 should be another good year.' Enquiries to: John Callcutt, Chief Executive Rebecca Blackwood/ Clive Littler, Finance Director Caroline Roberts-West Crest Nicholson PLC Brunswick Group Limited Tel: 0171 404 5959 (on day of announcement) Tel: 0171 404 5959 Tel: 01932 847272 (thereafter) Crest Nicholson PLC Results for the year ended 31st October 1999 OVERVIEW 1999 was a year of considerable achievement for Crest. The Group produced record profits, obtained planning and commenced construction on a number of environmentally sensitive well designed and well built developments - 'concept schemes'. The most notable feature of the year, however, was the increase in both the value and profitability of its short-term residential land bank. The Group continued with its policy of investing in urban and mixed-use sites generating increased profits from its Property and Construction Divisions. Success on the planning front will ensure that the high margins in our land bank have an impact on Group returns in 2000. RESULTS Pre-tax profits reached £40m, over 42 per cent higher than last year. Turnover increased from £465m to £512m and operating profit rose from £35.9m to £49.0m. Earnings per share increased by 44 per cent to 23.88p. DIVIDEND The Board is recommending a final dividend of 4.00p (1998: 3.25p) which, together with the interim dividend of 2.00p (1998: 1.50p), gives a total for the year of 6.00p (1998: 4.75p). This is a year on year increase of 26 per cent. The Board's policy is to continue to raise dividends as profitability increases. The dividend will be paid on 6th April 2000 to shareholders on the register at 10th March 2000. REVIEW OF OPERATIONS 1999 1998 Profit Profit Turnover Operating before Operating before profit taxation Turnover profit taxation £m £m £m £m £m £m Residential 309.5 36.6 28.3 269.9 32.3 25.7 Property 75.0 10.7 9.7 36.7 3.2 1.7 Construct- 128.0 1.7 2.0 158.8 0.4 0.7 ion ---- ---- ---- ---- ---- ---- 512.5 49.0 40.0 465.4 35.9 28.1 ---- ---- ---- ---- ---- ---- RESIDENTIAL The Residential Division made a profit before taxation of £28.3m compared to £25.7m in 1998, an increase of 10 per cent. However, 1999 was essentially a year in which we continued to change the composition of our land bank, obtained planning and started construction work on a number of large concept schemes. Sales of Houses The number of houses sold was 2,422 compared to 2,210 sold in 1998. The increase was mainly due to greater volumes of social housing. Open market sales at 2,021 were a modest 87 units up on 1998. In 2000 the emphasis will be firmly on margin improvement rather than volume. Housing Association turnover was £22.3m compared to £21.5m in 1998 and was made up of nineteen schemes. The provision of social housing is generally a pre-requisite for many developments. Our skill base and knowledge of this sector of the market is an important facilitator in the development process. Sales Price Improvements The average house price was £124,500 compared to £117,800 last year. However, open market average sales prices were £138,200, an increase of £15,000 compared to 1998. Average sales prices are expected to increase to around £170,000 in 2000 due to a higher concentration of volume in London and the South East and a shift in developments outside of the South East towards city centre and urban production. Land Bank At the time of the interim results Crest highlighted the progress that it had made in changing the shape of its land bank from small sites to large concept schemes. During the year the Group spent £122m to acquire 48 sites for 2,659 plots compared to 3,155 plots acquired in the previous year. The average selling price of houses to be built on these plots was higher than in 1998. Land for immediate development, i.e. the short-term land bank, comprised 6,296 plots at the year-end compared to 6,329 plots at the same time last year. The projected development value of this land increased from £812m to £1,033m during the year with the appraised gross margin up from 20.5 per cent to 24.0 per cent. The strategic land bank consists of 11,680 plots (1998 10,924) of which 5,240 are included in areas designated for development and are likely to augment the short term land bank in the near future. Nicholson Estates successfully established itself as a leading brand in the quality urban residential market. It acquired a number of sites in city centre locations in London, Birmingham and Manchester. Several new projects involve the conversion of commercial buildings to residential rather than new build. This speeds up the development process and improves returns. Since the year-end a number of large sites have been procured or transferred from strategic to the short term land bank. Of particular note is a 50 acre 'greenfield' site for 500 houses at Haywards Heath. This site has been granted planning permission and it is intended to create a community in the Sussex style using designs and materials indigenous to the locality. This site will be the fourth major scheme that will come into production during the current year. Future Strategy The outlook for housing is good and the Group has made substantial progress during the year, however our industry is undergoing a period of significant change. Product quality and customer satisfaction have been taken up at Government level in the form of the proposed 'league tables' sponsored by the Department of the Environment, Transport and Regions. If successful this initiative will shift the priorities of housebuilders towards the cost effective delivery of quality and service to new home purchasers. Additional and potentially more far reaching changes are also occurring as environmental considerations and principles of sustainability become more central to the planning process. The Government appears to recognise that the creation of communities and the use of designs and materials that respect our heritage lie at the heart of sustainability. Crest Homes has been in the forefront of many of these changes so we believe we have a head start. These larger and more complex schemes take longer to bring into production and are more expensive to build than the traditional estates. However, the benefits of more efficient land use and better selling values should more than offset these costs. The higher margins in the short term land bank are due to premium prices and improved densities which indicate that Crest's confidence in the cost effectiveness of its strategy is well founded. PROPERTY The Property Division achieved a profit before taxation of £9.7m, an increase of £8.0m over last year. Turnover more than doubled to £75.0m (1998: £36.8m). Operating margins on the increased turnover rose to 14.3 per cent (1998: 8.7 per cent). This excellent performance demonstrates the effectiveness of the Group's integrated property strategy. The occupier risk was removed on all substantial schemes by either sale or pre-letting before the development was undertaken. During the second half of the year investment demand at the Bartley Wood Business Park at Hook continued to be strong with further pre-funded sales of 110,000 sq ft to the Norwich Union. Capital employed in the business at the year-end was £31.7m and a positive cash flow of £12m was generated for reinvestment in our residential and mixed- use schemes. The Division's growing reputation in the retail sector continues to boost turnover with a number of lettings being achieved and a major joint venture project with a national retailer under construction. Working in close co-operation with the Residential and Construction Divisions, the Property Division is active in the development of a number of major urban regeneration projects, the most prominent of which are at Bristol Harbourside and Gloucester Docks. Overall the Division controls in excess of 230 acres of land for commercial use and continues to work closely with other divisions within the Group to optimise the value of its extensive holdings. A feature of large scale residential development schemes is the significant number of major retail and leisure opportunities that are generated. During the year a food retail site adjacent to the new residential development scheme at Greenhithe was sold to ASDA. We expect a number of additional retail and leisure opportunities will be created as large schemes obtain planning. The early sale of these commercial uses provides valuable working capital as well as profits. The Division is undertaking a number of other business park developments at the edge of towns principally in Bristol, Gloucester and other well located sites on or near motorways. Business was steady for the Group's marinas, which apart from generating a good cash flow, increase the value of new homes on water related schemes. For example, we expect that house values on our major regeneration scheme around Portbury Dock near Bristol will be significantly enhanced by a new marina planned for the dock basin in the centre of the development. Whilst 1999 was an exceptional year, the Property Division should be able to deliver a stream of sustainable profits for the longer term not only through its own trading but also through participation in urban mixed-use and other large scale development projects. CONSTRUCTION The Pearce Group increased turnover to £178.9m during the year and achieved a significant £1.3m increase in profit before taxation to £2.0m (1998 £0.7m). Turnover sourced from the Group's operations amounted to £50.9m compared to £3.8m in the previous year. Crest Construction Management was formed last year to provide expertise in the project management and control of major development schemes. The move away from standard house types and traditional estate development is making new and greater demands on housebuilders' management. Participation by our Construction Division in Group projects is already delivering major benefits in both speed of build and cost control. The process of integrating building operations through Crest Construction Management and the introduction of new information technology will enable significant savings and efficiencies to be achieved throughout the Group. The specialist Retail and Leisure businesses successfully expanded their customer base, although turnover was lower than in the previous year due to work programmes being scheduled later than planned. The relentless change in the retail sector and the growth in the health and fitness sector augur well for the growth of these businesses. The recession in the semiconductor market adversely affected our joint venture company in 1999. There are now strong indications that a recovery in this sector is underway. In the meantime alternative markets in the food and biotechnology industries are being developed and the prospects for orders are promising. The Construction Division continues to trade using minimal capital employed and in the year to 31st October 1999 generated a positive cash flow of £2.2m. Pearce has established a strong reputation in its specialised markets being a preferred contractor for a number of major companies in the retail and leisure fields. However, the facilitation and management of major development projects within the Group is of growing importance. We expect profits from this division to grow steadily. FINANCE Shareholders' funds at £178.5m increased by £19.6m. The net tangible assets attributable to the ordinary shares are equivalent to 131p per share compared to 114p per share a year ago, an increase of 15 per cent. Net borrowings at 31st October 1999 were £75.2m (1998 £77.3m) and represented gearing of 42 per cent (1998 49 per cent). Interest costs at £9.0m increased from £7.8m in 1998 due to higher average borrowings and the increased cost of longer term committed borrowings. Interest cover is 5.4x compared to 4.6x in 1998. The positive cash flow of £2.1m and reduction in year-end gearing were achieved after a significant expansion of our residential land bank. Cash generated from operations of £28.5m was due to positive cash flows from all trading divisions, including £14.5m from our Property and Construction Divisions. The Group bank facilities were increased by £30.0m. Total facilities available to the Group are £197.6m of which £167.5m is either for a term in excess of 4 years or project specific finance. Facilities are now closely aligned with the longer development timescale of the Group's major land holdings. PROSPECTS The Group achieved another year of major profits growth. Our mission is to meet customers' expectations through the provision of environmentally sensitive, well designed and well built developments. The transformation in the value and profitability of the Group's land bank will continue as more large schemes come into production for 2000 and beyond. The Group's integrated approach is opening up new areas of business and sources of land as well as providing better control on timing, cost and quality. We expect this trend towards Group integration to continue, aided by a major investment in new technology. Inevitably there remain areas of the business where further improvement can be made and, as we do so, we shall further increase our margins. The Group has the land, products and the other necessary resources and, given a stable market, 2000 should be another good year. STATEMENT OF RESULTS 1999 1998 £m £m Turnover - including joint 512.5 465.4 ventures Less: attributable to joint (6.8) (8.6) ventures _______ _______ 505.7 456.8 _______ ________ Operating profit 49.4 36.6 Operating loss of joint ventures (0.4) (0.7) ______ ______ Operating profit - including 49.0 35.9 joint ventures Net interest payable Group (9.0) (7.9) Joint ventures - 0.1 ______ ______ (9.0) (7.8) ______ ______ Profit before taxation 40.0 28.1 Taxation (12.7) (8.9) ______ ______ Profit after taxation 27.3 19.2 Preference dividends (2.1) (2.1) ______ ______ Profit attributable to ordinary 25.2 17.1 shareholders Ordinary dividends (6.4) (5.0) ______ ______ Retained profit 18.8 12.1 ===== ===== Earnings per 10p ordinary share (Note 1) Basic 23.88p 16.60p Fully diluted 22.59p 16.37p Dividends per 10p ordinary share 6.00p 4.75p CONSOLIDATED BALANCE SHEET 31st October 31st October 1999 1998 £m £m £m £m Fixed assets Tangible assets 3.8 3.8 Investments in joint ventures 0.3 1.4 Other investments - 0.2 ______ _______ 4.1 5.4 Current assets Stocks 338.3 307.5 Debtors 134.7 118.7 Cash at bank and in hand 41.7 35.1 ______ ______ 514.7 461.3 Creditors: amounts falling due 193.0 151.8 within one year ______ _____ Net current assets 321.7 309.5 _______ ______ Total assets less current liabilities 325.8 314.9 Creditors: amounts falling due after more than one year 146.2 154.7 Provisions for liabilities and charges 1.1 1.3 ______ ______ 147.3 156.0 _______ _______ 178.5 158.9 ====== ====== Shareholders' funds (Note 2) 178.5 158.9 ======= ====== Net borrowings 75.2 77.3 Gearing 42 per 49 per cent cent Net assets per ordinary share (Note 3) 131p 114p CONSOLIDATED CASH FLOW STATEMENT 1999 1998 £m £m £m £m Net cash inflow/(outflow) from operating activities 28.5 (22.1) Dividends from joint ventures 0.4 - Returns on investments and servicing of finance Interest received 0.7 0.7 Interest paid (8.8) (8.7) Preference dividends paid (2.1) (2.1) _______ _______ Net cash outflow from returns on investments and servicing of finance (10.2) (10.1) Taxation Corporation tax paid (11.4) (5.8) Capital expenditure and financial investment Tangible fixed assets acquired (1.0) (1.5) Fixed asset investments acquired (0.5) (0.2) Repayment of fixed asset investment loan 0.7 2.8 _____ _____ (0.8) 1.1 Equity dividends paid (5.5) (4.1) Net cash inflow/(outflow) before financing 1.0 (41.0) ===== ====== Financing Proceeds from share issues (1.1) (6.7) Increase in bank loan and loan notes (5.5) (41.0) _____ ______ Net cash flow from financing (6.6) (47.7) Increase in cash 7.6 6.7 ______ ______ 1.0 (41.0) ______ ______ NOTES 1 Earnings per share Earnings per share are calculated on the profit attributable to ordinary shareholders of £25.2m (1998: £17.1m), on a weighted average of 105,519,334 (1998: 103,024,306) ordinary shares in issue during the year. Fully diluted earnings per share are calculated on the profit for the financial year of £27.3m (1998: £19.2m) on a weighted average of 120,866,125 (1998: 117,266,641) ordinary shares on the basis that the preference shares had been converted and the share options exercised. 2 Reconciliation of shareholders' funds 1999 1998 £m £m Retained profit 18.8 12.1 Net proceeds from share issues 0.8 6.7 ______ ______ Net increase in shareholders' funds 19.6 18.8 Opening shareholders' funds 158.9 140.1 ______ ______ Closing shareholders' funds 178.5 158.9 ====== ====== 3 Net assets per share Net assets per ordinary share is calculated on net assets of £139.8m (1998: £120.2m), after deducting the preference capital of £38.7m (1998: £38.7m) from the capital and reserves, on 106,327,352 (1998: 105,415,267) ordinary shares in issue at 31st October 1999. 4 Statutory accounts The financial information set out above does not constitute the Company's statutory accounts for the years ended 31st October 1999 or 1998 but is derived from those accounts. Statutory accounts for 1998 have been delivered to the Registrar of Companies, whereas those for 1999 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain a statement under Section 237(2) or (4) of the Companies Act 1985. 5 Annual General Meeting The Annual General Meeting will be held at the Runnymede Hotel, Windsor Road, Egham, Surrey on Thursday, 23rd March 2000 at 12.00 noon. FIVE YEAR RECORD 1995 1996 1997 1998 1999 £m £m £m £m £m Turnover (including joint ventures) Residential 186.8 192.2 201.9 269.9 309.5 Property 35.3 23.0 22.9 36.7 75.0 Construction 91.9 117.1 128.2 158.8 128.0 _______ _____ _____ _____ ______ 314.0 332.3 353.0 465.4 512.5 _______ _____ _____ _____ ______ Operating profit (including joint ventures) Residential 9.3 13.7 23.1 32.3 36.6 Property 2.3 1.5 1.5 3.2 10.7 Construction (0.6) - 0.9 0.4 1.7 _______ _____ _____ _____ ______ 11.0 15.2 25.5 35.9 49.0 _______ _____ _____ _____ ______ Pre-tax profit Residential 6.4 10.2 19.3 25.7 28.3 Property (0.3) (0.8) (0.3) 1.7 9.7 Construction 0.1 0.6 1.5 0.7 2.0 _______ _____ _____ _____ ______ 6.2 10.0 20.5 28.1 40.0 _______ _____ _____ _____ ______ Return on sales 2.0 per 3.0 per 5.8 per 6.0 per 7.8 per cent cent cent cent cent Residential Houses sold 1,717 1,902 1,965 2,210 2,422 Average selling price £90,300 £94,700 £98,400 £117,800 £124,500 Operating profit per 5.0 per 7.1 per 11.4 per 12.0 per 11.8 per cent cent cent cent cent cent Land bank - Short term 3,006 3,869 5,795 6,329 6,296 (units) Average selling price £89,900 £92,300 £105,500 £128,200 £164,200 Land bank - Strategic (units) 4,400 5,411 8,010 10,924 11,680 Balance sheet Shareholders' funds 129.5 131.8 140.1 158.9 178.5 Net borrowings 55.7 46.9 43.1 77.3 75.2 _______ ______ ______ ______ ______ Capital employed 185.2 178.7 183.2 236.2 253.7 _______ ______ ______ ______ ______ Gearing 43 per 36 per 31 per 49 per 42 per cent cent cent cent cent Return on 4.8 per 7.8 per 15.6 per 20.1 per 25.2 per shareholders' funds cent cent cent cent cent (opening) Return on capital 6.7 per 8.2 per 14.3 per 19.6 per 20.7 per employed (opening) cent cent cent cent cent Ordinary shares Earnings per share 3.02p 4.74p 11.75p 16.60p 23.88p Dividends per share 2.00p 2.50p 3.75p 4.75p 6.00p Dividend cover 1.5x 1.9x 3.1x 3.4x 3.9x Net tangible assets per share 92p 94p 101p 114p 131p

Companies

Crest Nicholson Holdings (CRST)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today