Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — H1 2015 Earnings Presentation
48 slides from Crest Nicholson's earnings presentation, Jun 16, 2015
Slide 1: Crest Nicholson Holdings plc 2015 Interim Results
Crest Nicholson Holdings plc 2015 Interim Results 16th June 2015
Slide 2: Agenda
Agenda • Highlights Stephen Stone • Financial Results Templates Patrick Bergin Reserved 370 OM plots, 46 ahead • Operational performance Stephen Stone Legally Completed 222 units, 25 ahead • Private Sales Rental£1.5m of £56.9m, Sector behind Chris Tinker • Strategy, Outlook and Summary Stephen Stone
Slide 3: Performance highlights (1)
Performance highlights (1) Sales per Outlet Week at 0.93 (2014: 0.83) +12% Unit completions of 1,124 units (2014: 1,091) Reserved 370 OM plots, 46 ahead +3% Legally Completed 222 units, 25 ahead Open market ASP (ex-PRS land sale) £309k (2014: Sales £269k) of £56.9m, £1.5m behind +15% Forward sales a
Slide 4: Performance highlights (2)
Performance highlights (2) Revenues of £333.2m (2014: £241.1m) +38% Operating profit of £63.6m (2014: £44.7m) +43% Reserved 370 OM plots, 46 ahead Earnings Legally per share Completed 222of 18.6p units, (2014: 12.3p) 25 ahead +51% Sales of £56.9m, £1.5m behind Dividend per share of 6.4p (2014: 4.1p)
Slide 5: Financial Results
Crest NICHOLSON inancia Results LL.
Slide 6: Key metrics
Key metrics HY 2015 HY 2014 Inc/(Dec) % Outlets 44 42 +5% Sales per Outlet Week (Open market) 0.93 0.83 +12% Legal completions Open market 834 769 +8% Affordable 290 322 -10% ASP Open market* 309 269 +15% Affordable** 128 105 +22% * Excluding impact of PRS land sale revenues ** Affordable ASP varies
Slide 7: Income statement
Income statement Change Income statement (£m, unless stated) HY 2015 HY 2014 Revenue 333.2 241.1 92.1 38% Cost of sales (241.4) (171.8) (69.6) Gross profit 91.8 69.3 22.5 32% % gross profit margin 27.6% 28.7% (110 bps) Administrative expenses (28.2) (24.6) (3.6) Operating profit 63.6 44.7 18.9 42% %
Slide 8: Underlying margin growth continues
Underlying margin growth continues Gross Margins Fair Value Historic cost 28.6% 28.6% 27.5% 27.4% 26.9% 27.6% Actual & projected fair value contribution to Gross Margin:- • 2014 – £34m • 2015 - £27m • 2016 - £15m • 2017 - £12m • Underlying margin strength as ‘fair value’ impact diminishes; residual
Slide 9: Build costs (1)
Build costs (1) Templates Reserved 370 OM plots, 46 ahead Legally Completed 222 units, 25 ahead Sales of £56.9m, £1.5m behind • After initial sharp rises in 2014, rates of increase in costs slowed down; overall annual impact of c.5% • Post-MMR, moderation in sales rates (& HPI) had a similar effect
Slide 10: Build costs (2)
Build costs (2) • Build cost pressures in specific trades, primarily on labour rates; materials now experiencing more ‘normal’ inflation • Context of UK housing strength against backdrop of slower growth in Europe and elsewhere helping to keep some prices Templates lower Reserved 370 OM plots, 46 ah
Slide 11: Balance sheet
Balance sheet Balance sheet (£m, unless stated) 30th April 31st October 30th April Change Change on 2015 2014 2014 on Oct’14 Apr ’14 Non-current Assets 84.2 100.1 116.9 (15.9) (32.7) Inventory 850.1 814.1 706.4 36.0 143.7 Trade & other receivables & financial assets 54.2 48.1 40.4 6.1 13.8 Cash and
Slide 12: Cash flow
Cash flow Cash flow (£m, unless stated) HY 2015 HY 2014 Change Operating profit before changes in working capital and provisions 66.5 46.6 19.9 (Increase)/decrease in trade and other receivables (3.8) 3.6 (7.4) Increase in inventories (36.0) (128.7) 92.7 Decrease in trade and other payables (41.2) (
Slide 13: Forward sales
Forward sales YTD YTD FY14 FY13 FY15 FY14 Units – all years 2,102 1,779 1,499 1,360 % change on prior period +18% +10% GDV (£m) – all years 436.4 347.3 249.4 230.1 % change on prior period +26% +8% % of FY2015/14 target GDV 79% 87% 24% 34% • Strong forward sales position reflects OM sales rates and
Slide 14: Operational Performance
Operational Performance
Slide 15: Favourable alignment of factors
Favourable alignment of factors • Favourable sector dynamics here for the foreseeable future, underpinned by strong fundamentals in our areas of operation Templates • Against the backdrop of a growing economy and rising Reserved 370 OM plots, employment, 46 ahead mortgage access continues to improve
Slide 16: Election outcome and stated policies
Election outcome and stated policies • Conservative government provides for continuity of currently supportive policy framework Templates • Election pledges to support apprenticeships and further assist Reserved 370first-time OM plots, buyers 46 aheadare helpful • Risks Legally to London Completed m
Slide 17: On track to meet our initial targets - Revenue growth to c.£1bn by 2016
On track to meet our initial targets - Revenue growth to c.£1bn by 2016 2013 2016 • 2,172 units • Volumes 2,700 – 2,900 AND • OM ASP £250k • OM ASP £340k - £350k 14
Slide 18: Progress at the half-way mark
Progress at the half-way mark Volumes OM ASP Reserved 370 OM plots, 46 ahead Legally Completed 222 units, 25 ahead Sales of £56.9m, Actual £1.5m behind Forecast Target Actual Forecast Target • Performing just ahead of upper end of target range - Volumes growing c.30% - OM ASP growing c.40% • Cumulat
Slide 19: Land pipeline growing in value
Land pipeline growing in value Apr 2015 Apr 2014 Change % Units GDV £m Units GDV £m Units GDV £m Short-term housing 15,857 4,717 16,118 4,127 (1.6%) 14.3% Short-term commercial - 231 - 245 (5.7)% Total short-term 15,857 4,948 16,118 4,372 (1.6%) 13.2% Strategic land 18,153 5,139 15,046 3,865 20.7% 3
Slide 20: Incremental purchases to drive Outlet growth
Incremental purchases to drive Outlet growth Faster sales rates Help to Buy reduce average outlet numbers, as sites sell out in a shorter period • Three sites added year-to-date in Chiltern division, at St Reserved 370 Hitchin Albans, OM plots, & 46 ahead Bourneville Legally Completed • London 222 u
Slide 21: Private Rental Sector
Private Rental Sector
Slide 22: England & Wales Household Composition
England & Wales Household Composition • The 2011 census data showed that 8.3m (35.5%) households in England and Wales were rented. Templates Reserved 370 OM plots, 46 ahead • Of these, 4.2m, the equivalent of 17.9% of households, are Legally Completed 222 units, 25 ahead privately rented Sales of £5
Slide 23: Composition by type, size & tenure
Composition by type, size & tenure • 56% of all renters live in houses representing 4.65m households. • The majority of owner Reserved occupied370 Templates OM plots, households 46 ahead live in 2, 3 & 4 Reserved 370 OM plots, 46 ahead bedroom homes. Legally • Completed The main focus for222 Legally
Slide 24: PRS: The Barriers
PRS: The Barriers Despite Government encouragement and well publicised interest from investors and registered providers, the 2012 Montague report concluded that the main barriers to institutional PRS are: Templates Reserved 1. Lack 370 OM plots, of suitably 46 aheadPRS product designed 2. A lack of
Slide 25: PRS: Institutional Investment Criteria
PRS: Institutional Investment Criteria Demand variables: The many Institutions we have met • % of 25–34yr olds have broadly used the same • forecast growth of 23-34yr olds investment metrics to assess • % households in PRS opportunities and to appraise the Templates • Unemployment rate • Employment
Slide 26: PRS: Crest Opportunity and Objectives
PRS: Crest Opportunity and Objectives • We have already • Opportunity to deliver secured three public more tailored BTR sector sites which product on sub-urban provide for PRS to and urban A replicable be delivered to PRS developments model which land values secures more • Significant design and lan
Slide 27: PRS: The urban model is established
PRS: The urban model is established Centenary Quay • 103 PRS dwellings pre sold to A2Dominion • The first Government funded BTR scheme on public sector land • Completions due 2016/2017 Templates Reserved 370 OM plots, 46 ahead Bath Riverside Legally Completed 222 units, 25 ahead • 97 PRS dwellings p
Slide 28: PRS: R&D for a sub-urban model
PRS: R&D for a sub-urban model • Story • Visits to several American multi family housing schemes Templates • Sized in 100 dwelling increments for Reserved 370 OM plots, 46 ahead management efficiency • Scale and specification Legally Completed 222 units, 25 ahead not dissimilar to UK open market hou
Slide 29: PRS: R&D for a sub-urban model
PRS: R&D for a sub-urban model • All schemes serviced by the “club house” • Clubhouse acts as: Templates • Leasing office • Communal lounge Reserved 370 OM plots, 46 ahead • Gym • Base for other shared amenities Legally Completed 222 units, 25 ahead • Maintenance hub • Post Sales of £56.9m, £1.5m be
Slide 30: PRS: The evolving sub-urban model
PRS: The evolving sub-urban model Case Study at Faygate, Crawley • Story Templates Reserved 370 OM plots, 46 ahead Reserved 370 OM plots, 46 ahead Legally Completed 222 Legally Completed 222 units, 25 ahead units, 25 ahead Sales of £56.9m, £1.5m behind Sales of £56.9m, £1.5m behind 26
Slide 31: PRS: The town-homes range
PRS: The town-homes range 3 bed • Story • 6 person • 106 sqm • 1145 sqft Templates Reserved 370 OM plots, 46 ahead 4 bed • 8 person Legally Completed 222 units, 25 ahead • • 129 sqm 1388 sqft TOWN HOMES 100% Efficiency Communal Gardens Sales of £56.9m, £1.5m behind 3 & 4 Bed Homes Open Plan Living 3
Slide 32: PRS: The big-house concept
PRS: The big-house concept 16 Unit Templates Reserved 370 OM plots, 46 ahead 14 Unit Legally Completed 222 units, 25 ahead 4 Garage THE BIG HOUSE Sales of £56.9m, £1.5m behind 100% Efficiency Communal Gardens Individual Entrances 1 & 2 Bed Units 12 Unit Open Plan Living 10 Garage 2 Storey In Built W
Slide 33: PRS: The “E-Urban” block
PRS: The “E-Urban” block Templates Reserved 370 OM plots, 46 ahead Legally Completed 222 units, 25 ahead Sales of £56.9m, £1.5m behind E-Urban 82% Efficiency Communal Gardens 1, 2 & 3 Bed Apartments Open Plan Living Double Bedrooms In Built Wardrobes Additional Storage 29
Slide 34: PRS: The clubhouse
PRS: The clubhouse Clubhouse Shared amenities Land Take 0.37a Tennis Court Inc. Tennis Court Private Courtyard with BBQ Area and Shared Landscaped Communal Gardens Templates Bike & Storage Areas Recycling Area Reserved 370 OM plots, 46 ahead Clubhouse; – Lounge Legally Completed 222 units, 25 ahead
Slide 35: PRS: The Faygate Scheme
PRS: The Faygate Scheme Templates Reserved 370 OM plots, 46 ahead Legally Completed 222 units, 25 ahead Sales of £56.9m, £1.5m behind 31
Slide 36: PRS: Modular design for efficiency
PRS: Modular design for efficiency •• Optimised Story around 1.2m module • Timber frame construction for speed 370 OM plots, Reserved Templates 46 aheadstructural lines • Simple Reserved 370 OM plots, 46 ahead • Rationalised Legally drainage Completed 222 Legally Completed 222 units, 25 ahead units,
Slide 37: PRS: Repetition throughout
PRS: Repetition throughout • Open plan living areas • Minimal internal circulation corridors Templates • Standardisation of bed/ bath/ wardrobe relationship Reserved 370 OM plots, 46 ahead • Repeat standard Legally Completed 222 units, 25 ahead bathroom modules •Enhanced storage areas Sales of £56.9
Slide 38: PRS: Open Market & PRS Comparison
PRS: Open Market & PRS Comparison Templates Open market housing: PRS Scheme: Acres; 7.29 acres Acres; 7.29 acres Density: 14 dpa Density: 30.5 dpa Net Coverage: 129,398 sqft Net Coverage: 166,908 sqft GDV: £39.73m GDV: £47.26m** Contribution: £21.4m Contribution £21.6m Up font payments: 10% deposits
Slide 39: PRS: Wider larger site assessment
PRS: Wider larger site assessment Templates Reserved 370 OM plots, 46 ahead Legally Completed 222 units, 25 ahead Sales of £56.9m, £1.5m behind 35
Slide 40: PRS: Anticipated levels of contribution
PRS: Anticipated levels of contribution To optimise commercial returns to Crest we need Anticipated Years of Unit Completions to: Initial Sites Plots 2016 2017 2018 2019 2020 2021 Templates • Design the schemes in Faygate 200 concept Reserved 370 OM plots, 46 ahead Swindon 150 • Secure planning appr
Slide 41: Strategy, Outlook and Summary
Strategy, Outlook and Summary
Slide 42: Natural scale in a strong market
Natural scale in a strong market • Previously articulated as c.3,500 units with incremental contribution from PRS; strong market can support higher delivery Reserved 370 OM • Re-focusing plots,on London 46areas aheadof greater affordability; including outer London boroughs with strong commuter links
Slide 43: Target revenues from current operations
Target revenues from current operations Revenues - £m Actual Target Target • Initial three year forecast grows revenues to c.£1bn by 2016 • Move up ASP curve significant contributor & on track • Growth beyond 2016 primarily volume driven, from Chiltern, London & PRS 38
Slide 44: Delivering disciplined growth
Delivering disciplined growth • Strategy for medium term is delivering: − New divisions contributing well & growing − Movement up the ASP curve on target − Incremental PRS opportunityTemplates being cemented − Progression to 2x Dividend cover on schedule Reserved 370 OM plots, 46 ahead • Revenue gro
Slide 45: Outlook
Outlook • Strong sales rates look set to continue; confirmation of extension of Help to Buy helpful, albeit expected Templates • Production capacity likely to be key determinant of rate Reserved 370 OM of growth in plots, near 46 ahead term Legally • Land Completed 222remain conditions units, 25beni
Slide 46: Summary
Summary Sustainable growth • Election outcome provides for certainty and continuity • Support from Help to Buy and other initiatives Templates underpins Reserved demand; 370 OM plots, 46 challenge ahead is now on supply side • Land Legally inputs plentiful; Completed 222 units, key constraints are n
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Slide 48: Disclaimer
Disclaimer You should note that the financial projections and other statements regarding Crest Nicholson's intentions, beliefs or current expectations referred to in this document are forward looking and do not relate solely to historical or current facts. These statements are provided on a confiden
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