Affordable housing helps Crest Nicholson boost profit by 10%

Crest Nicholson has posted a record pre-tax profit of £82.1m for the year ended 31 October 2004. The housebuilder said that the 10% increase in profit was the result of a move towards affordable homes and mixed-use developments.

Chief executive John Callcutt said: “These results begin to show the success of our focus on sustainable and mixed use development.”

The company said that private housebuyers had become more cautious in the second half of 2004, though it believed that the fundamentals of the housing market remained sound. Crest said that supply in the South East would be supported by an inflexible planning system and intervention by the public sector.

The firm increased delivery of affordable housing units by 131% to 712 units, and increased commercial sales on mixed-use developments from £13.2m to £68.6m. Housing turnover was up 14% to £529.9m and the firm announced that dividend for the year would rise 12% to 12.3p.

Crest said that it had focused particularly on building more affordable homes in the South East. As a result of the increase in affordable housing units average selling price fell from £239,000 to £210,000, though Crest said that average selling price would rise in 2005 as a result of a temporary lull in the provision of affordable housing.

The firm said that the move towards less risky affordable housing and commercial sales markets meant operating margins fell in 2004. Gross margin dropped from 24.5% to 22.4%, but Crest said this was partially offset by an improvement in overhead efficiency.

In 2004 Crest said it acquired 44 sites comprising 4,661 plots with a projected development value of £883m. The company said that the short term building portfolio now stood at 15,060 plots with a projected project value of £2.89bn.

Crest said that its strategy was to be market leader in the design and delivery of sustainable housing and mixed-use development. Calcutt said: “We now look forward with confidence to making further inroads into the huge urban regeneration market and thereby serving both shareholder and community interests.”