Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — FY2015 Earnings Presentation
29 slides from Crest Nicholson's earnings presentation, Jan 26, 2016
Slide 1: Preliminary Results for 2015
Crest Nicholson Holdings plc Preliminary Results for 2015 26th January 2016
Slide 2: Agenda
Agenda • Performance highlights and Operations Stephen Stone Templates • Financial Reserved Results 370 OM plots, 46 ahead Patrick Bergin Legally Completed 222 units, 25 ahead • Summary Stephen Stone Sales of £56.9m, £1.5m behind • Q&A 1
Slide 3: Performance highlights (1)
Performance highlights (1) • Another strong financial performance as the business continues on its growth trajectory Templates • Excellent sales environment, Reserved 370 OM plots, 46 ahead underpinned by high employment & good mortgage access Legally Completed 222 units, 25 ahead • Land pipeline in
Slide 4: Performance highlights (2)
Performance highlights (2) Turnover of £804.8m (2014: £636.3m) +26% Operating profit of £163.3m (2014: £128.1m) +27% Profit before Reserved tax plots, 370 OM of £154.0m (2014: £116.7m) 46 ahead +32% +25% Legally Completed 222 units, 25 ahead Earnings per share of 49.3p (2014: 39.3p) Sales of £56.9m,
Slide 5: Performance highlights (3)
Performance highlights (3) Open-market ASP# of £309k (2014: £282k) +10% Unit completions of 2,725 units (2014: 2,530) Reserved 370 OM plots, 46 ahead +8% +10% Legally Completed 222 units, 25 ahead Sales per Outlet Week* at 0.90 (2014: 0.82) Sales of £56.9m, £1.5m behind Forward sales at mid-January
Slide 6: On target to reach £1bn revenue in 2016
On target to reach £1bn revenue in 2016 Volumes OM ASP • Volumes: 25% up in two years; OM ASP: 24% ahead • Slower start to some sales at higher values: possible impact of stamp duty levels & lack of stock in second hand market Actual Projected 5
Slide 7: Sales rates – (excluding PRS)
Sales rates – (excluding PRS) Sales per Outlet Week • SPOW since onset of Help to Buy c.15% higher than previous ‘good’ markets • Demonstrates importance of good access to high LTV mortgages to get on housing ladder 6
Slide 8: Outlets growing
Outlets growing Help to Buy • Outlets up 5%, although strong sales rates – particularly since onset of Help to370 Reserved BuyOM - and some plots, pre-election planning delays slowed rate of 46 ahead growth Legally Completed 222 units, 25 ahead • Additional management bandwidth helpful. Five sites a
Slide 9: Strong land pipeline
Strong land pipeline Oct 2015 Oct 2014 Change % Units GDV £m Units GDV £m Units GDV £m Short-term housing 16,064 5,106 17,247 4,798 (7)% 6% Short-term commercial - 249 - 221 13% Total short-term 16,064 5,355 17,247 5,019 (7)% 7% Strategic land 17,712 5,111 16,219 4,323 9% 18% Total under contract 33
Slide 10: Disciplined investment
Disciplined investment Housing portfolio Short-term pipeline Strategic pipeline Units GDV £m Units GDV £m At 31st October 2014 17,247 4,798 16,219 4,323 Additions 2,111 684 3,033 852 Strategic conversions 534 214 (534) (214) Legal completions (2,725) (751) - - Land Sales, re-plans & other (1,103) 16
Slide 11: Benign land market continuing
Benign land market continuing Source: Source: Knight Frank Residential Development Land Index Q3 2015, Nationwide House Price Index • Land price growth likely to continue to be moderated by: - Reduced number of buyers, with disciplined capital strategies - Growing scale of public sector land release
Slide 12: Delivering volume from large sites: Case Study
Delivering volume from large sites: Case Study • Planning achieved in 2012 for 1,695 homes, on Garden Village principles • Two Crest outlets: traditional and contemporary styles Reserved 370 OM plots, 46 • Land sold to David Wilson ahead and Bovis; both delivering Investigating •Legally Completedsco
Slide 13: Key Themes for 2016
Key Themes for 2016 A sustainable housing market is continuing to emerge, albeit there are some unknowns • The Housing Bill and changes to the Registered Provider operating model need to be monitored – but are underpinned Templates by the quest for increased delivery Reserved 370 OM plots, 46 ahead
Slide 14: Affordability & interest rates
Affordability & interest rates Templates • Interest rate rises likely to be gradual when they come; probable timing continues to move back. Real incomes rising as wage and salary growth outstrips low CPI • Household debt servicing as a proportion of income still low by long-run averages and has been
Slide 15: Impact of Budget and Housing Bill
Impact of Budget and Housing Bill Average 24% Average 20% Budget changes to require RSLs to reduce rents by 1% p.a. have had an impact on contracts and viability Templates Operation of CIL alongside s.106 has also squeezed Affordable housing delivery Projected • The Housing Bill contains a number of
Slide 16: Growing capacity
Growing capacity • Skills already a significant constraint in the sector – with a lead time to resolve Templates • Action on a number of fronts, to grow and develop our own staff and support the supply- chain in delivering growth • Opportunities for learning and career progression in a growing Crest
Slide 17: Financial results
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Slide 18: Key metrics
Key metrics FY 2015 FY 2014 Inc/(Dec) % Outlets (full year equivalents) 44 42 +5% Sales per Outlet Week (OM ex-PRS) 0.90 0.82 +10% Legal completions Open market 2,151 1,855 +16% Affordable 574 675 -15% ASP Open market (inc. PRS on OM basis) 309 282 +10% Affordable 143 120 +19% • Outlets growing as b
Slide 19: Income statement
Income statement Income statement (£m, Change FY 2015 FY 2014 % increase unless stated) on 2014 Revenue 804.8 636.3 168.5 26% Cost of sales (583.5) (454.3) (129.2) Gross profit 221.3 182.0 39.3 22% % gross profit margin 27.5% 28.6% (110bps) Administrative expenses (58.0) (53.9) (4.1) Operating profi
Slide 20: Strong underlying margins
Strong underlying margins Fair Value Gross Margins Historic cost 28.6% 27.4% 28.6% 27.5% 27.5% 26.9% • Underlying margins continue to improve. Contribution from fair valuation provision diminishing as expected; c.1.5% forecast for 2016 • Strategic land pull-through, pricing gainsCompleted Legall
Slide 21: Build costs
Build costs Sharp upturn now flattening out • Material prices showing modest increases and some reductions; increased capacity and low haulage costs reducing price tension • Labour rates principal source of cost inflation, as scarcity only Legally Completed 222 units, 25 ahead addressable over time
Slide 22: Balance sheet
Balance sheet Balance sheet (£m, unless stated) 31st October 31st October Change on 2015 2014 Oct’14 Non-current Assets 110.3 100.1 10.2 • Inventory increase Inventory 904.5 814.1 90.4 consistent with Trade & other receivables 50.2 48.1 2.1 rate of business growth Cash and cash equivalents 187.4 142
Slide 23: Cash flow
Cash flow Cash flow (£m, unless stated) FY2015 FY2014 Change Operating profit before changes in working capital and provisions 169.5 133.0 36.5 (Increase)/decrease in trade and other receivables (35.3) 0.1 (35.4) Increase in inventories (90.4) (236.4) 146.0 (Decrease)/increase in trade and other pay
Slide 24: Progressively returning cash
Progressively returning cash Cash return as a % of 14th January Market Capitalisation: Fiscal Years 2015-2019 Templates Source: Bloomberg & Factset. Consensus figures & share prices on 15th January 2016 • Strong growth and disciplined investment underpins cash generation • Land pipelines increasing
Slide 25: Forward sales
Forward sales YTD YTD FY15 FY14 FY16 FY15 Units – all years 2,368 2,099 1,680 1,499 % change on prior period +13% +12% GDV (£m) – all years 511.8 399.8 328.9 249.4 % change on prior period +28% +32% % of FY2016/15 target 37% 41% 25% 24% • Strong forward sales overall; higher OM and lower Affordable
Slide 26: Summary
NICHOLSON Summary
Slide 27: Summary
Summary • Business is delivering volume and earnings growth, supporting a growing dividend and is on track to hit key financial and volume targets for 2016 and 2019 • A benign land market and moderating inflation continue Templates to support Reserved 370 OMa plots, sustainable housing market, furth
Slide 28: Q&A
Crest NICHOLSON Q&A
Slide 29: 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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