Crest Nicholson makes £70m pre-tax profit

Crest Nicholson, the housebuilder specialising in mixed-use communities, has made a £70m pre-tax profit.

The figure represents a profit margin of 10.3%, down a little on the previous year’s 11.6% margin.

However the latest figure was trimmed back by a £10m exceptional cost, resulting from the takeover of Crest in May 2007 by Castle Bidco - a deal struck at the height of the housebuilding cycle. The buyer paid £715m..

Crest was previously listed on the Stock Exchange but was taken private by its new owner, a company set up by HBOS and Sir Tom Hunter, Scotland’s richest man.

The latest figures cover the 12 months to 31 October 2007.

Turnover was little changed at £680m (figure in the previous year: £690m).

The directors stated: “We are pleased to report a year of good progress underpinned by an excellent result for the housing business.”

Crest operates through six regional business units:

• South East - 4
• South West - 1
• Midlands – 1

That tally is changing as Crest is in the process of setting up two new regional business units, one in the Southampton/M27 area and the other in London.

Total housing completions were 11% higher than in 2006 at 3,300. This tally divides between:

• 2,200 open market completions, a rise of 9%
• 1,100 affordable units, 15% more than in 2006

The average sale price of £198,000 was almost identical to the previous year’s figure of £199,000.

Crest reported that house price inflation out-weighted build cost inflation in 2007 and “benefited gross margin”.

Crest said: “2007 was a good year for land buying. We added 4,200 plots. This was 900 more plots than the 3,300 units completed in 2007, leaving us well placed for future volume growth.”

At the 2007 level of turnover, the short-term housing portfolio continues to represent over five-years supply.

In 2007, Crest’s employee turnover percentage (i.e. churn rate) was 20% including site-based staff. “While we do not regard this as unreasonable in the relatively buoyant market conditions in 2007, we will seek to reduce it in 2008.”

At the end of the period, Crest had borrowing facilities of £590m of which £220 were being utilised.

The highest-paid director was paid £722,000 though he didn’t have to struggle on this alone as the figure was topped up with another £237,000 thanks to his decision to exercise share options and then again by another £1.1m, the result of his long-term incentive scheme.

All in all, his take-home tally ran to £2.1m.

And that is before the £77,000 morsel that was slipped into his pension scheme.

In the previous year, the sum total of the benefits was much lower at £1.0m.