Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — FY2023 Earnings Presentation
43 slides from Crest Nicholson's earnings presentation, Jan 23, 2024
Slide 1: Preliminary Results 2023
KILNWOOD VALE HORSHAM Crest Nicholson Holdings plc PRELIMINARY RESULTS 2023 23 January 2024
Slide 2: Cautionary Statement Regarding Forward-Looking Statements
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS This presentation may include statements that are, or may be deemed to be, ‘forward-looking statements’. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms ‘believes’, ‘estimates’
Slide 3: Welcome
WELCOME IAIN FERGUSON Chairman LEWIN PARK 3 PRELIMINARY RESULTS 2023 January 2024 BIGGLESWADE
Slide 4: Agenda
AGENDA PETER TRUSCOTT • INTRODUCTION BILL FLOYDD • FINANCIAL REVIEW PETER TRUSCOTT • MARKET CONTEXT • STRATEGY UPDATE • OUTLOOK Q&A GRANGE MEADOWS 4 PRELIMINARY RESULTS 2023 January 2024 BRIDGWATER
Slide 5: Introduction
INTRODUCTION PETER TRUSCOTT Chief Executive HENLEY GATE 5 PRELIMINARY RESULTS 2023 January 2024 IPSWICH
Slide 6: Introduction: Executive Summary
INTRODUCTION EXECUTIVE SUMMARY • Challenging trading environment in FY23 − Disappointing FY23 outturn − APBT at £41.4m − SPOW rate recovering from trough • Streamlined operations in response to market conditions − Moderate pace of divisions growth − Align headcount and resources in existing division
Slide 7: Financial Review
FINANCIAL REVIEW BILL FLOYDD Group Finance Director WYCKE PLACE 7 PRELIMINARY RESULTS 2023 January 2024 MALDON
Slide 8: Income Statement
INCOME STATEMENT Profit and Loss (£m) FY23 FY22 • Revenue down 28% reflecting weakness in Revenue 657.5 913.6 housing market Adjusted gross profit 100.6 194.3 • Gross profit impacted by flat sales prices, build cost Gross margin 15.3% 21.2% inflation, overruns and mix Adjusted operating profit 44.2
Slide 9: Sales Metrics
SALES METRICS FY23 FY22 % Change • SPOW recovered from trough Outlets (full year equivalents) 47 54 (13.0) − Interest rate outlook is key SPOW (open market) 0.52 0.60 (13.3) − Recent uptick in sales activities Home completions (units) 1,2 • Pricing remained robust Open market (private) 1,222 1,775 (
Slide 10: Exceptional Items
EXCEPTIONAL ITEMS £m FY23 FY22 Fire remediation Cost of sales • £11.3m charge from build cost inflation Combustible materials charge (11.3) (102.5) and scope changes Combustible materials credit 10.0 - • £10.0m received from third parties due Net combustible materials charge (1.3) (102.5) to their d
Slide 11: Farnham: Complex Urban Regeneration Development
FARNHAM COMPLEX URBAN REGENERATION DEVELOPMENT • Urban regeneration scheme comprising 13 buildings; 239 apartments; 33 commercial units; cinema; public space landscaping; highway works and a pedestrian bridge • Nine buildings complete − Two apartment blocks to complete, substantially internal works
Slide 12: Farnham: Overview of Development
FARNHAM OVERVIEW OF DEVELOPMENT 12 PRELIMINARY RESULTS 2023 January 2024
Slide 13: Farnham: Completion of Exterior Buildings
FARNHAM COMPLETION OF EXTERIOR BUILDINGS 13 PRELIMINARY RESULTS 2023 January 2024
Slide 14: Farnham: Completion of Interior Residential Blocks
FARNHAM COMPLETION OF INTERIOR RESIDENTIAL BLOCKS 14 PRELIMINARY RESULTS 2023 January 2024
Slide 15: Farnham: Listed Heritage Project
FARNHAM LISTED HERITAGE PROJECT: SPECIALIST CONTRACTOR APPOINTED 15 PRELIMINARY RESULTS 2023 January 2024
Slide 16: Farnham: Key Financials
FARNHAM KEY FINANCIALS • c.£106m cost to date, representing 94% financial completion • £7m cost remaining to complete the programme, within our current estimate • All commercial units pre-sold • Remaining 74 of 239 apartments to be sold FY24 - FY26, pricing and sales rate in line with current experi
Slide 17: Impact of Cost Overruns at Year End
IMPACT OF COST OVERRUNS AT YEAR END £m Farnham Others Total Commercial negotiation 0.7 3.6 4.3 Scope gaps 1.1 3.7 4.8 Timing delays 0.4 1.8 2.2 Other 0.3 0.4 0.7 2.5 9.5 12.0 FY23 FY24 Beyond Year of impact (5.5) (2.7) (3.8) 17 PRELIMINARY RESULTS 2023 January 2024
Slide 18: Balance Sheet: Maintaining Robust Position
BALANCE SHEET MAINTAINING ROBUST POSITION Balance sheet – key items (£m) FY23 FY22 LAND CREDITOR ROLL OUT BY YEAR (£m) Land & WIP 1,164.8 990.1 175 Land creditors (205.5) (198.7) 150 Net cash 64.9 276.5 125 Net assets 856.3 883.1 ROCE (%) 6.3 22.4 100 75 • Debt facilities 50 • RCF facility of £250m
Slide 19: Cash Flow
CASH FLOW INCREASE IN WIP AND LAND Operating cash flow (£m) FY23 FY22 Key cash flow items are: PAT 17.9 26.4 Net cash items 25.1 11.3 • Land spend: £252m Operating cash before working capital charges 43.0 37.7 • Build spend: £464m (including combustibles) Movement in land and WIP (182.3) 55.5 Other
Slide 20: FY24 Guidance
FY24 GUIDANCE FY24 FY23 Total units 1,800 – 2,000 2,020 Outlets 46 – 50 47 SPOW 0.45 0.52 ASP £347k Gross margin % 15.3% Overhead £55.8m Net interest charge £5.5m JV income £2.7m Net (debt)/cash (£75m – £125m) £64.9m Profitability weighted to H2 in anticipation of market recovery 20 PRELIMINARY RESU
Slide 21: Market Context
MARKET CONTEXT PETER TRUSCOTT Chief Executive MIRUM PARK 21 PRELIMINARY RESULTS 2023 January 2024 LYDNEY
Slide 22: FY24 Operating Environment
MARKET CONTEXT FY24 OPERATING ENVIRONMENT • Political and economic environment − Domestic stability but global issues persist • Affordability − Base rate likely peaked, mortgage rates reducing • Land and planning − Slowing new site releases pose a sector-wide challenge for outlets − Approvals proces
Slide 23: Strategy Update
STRATEGY UPDATE PETER TRUSCOTT Chief Executive FULLERS GROVE 23 PRELIMINARY RESULTS 2023 January 2024 WANTAGE
Slide 24: Priorities for FY24
PRIORITIES FOR FY24 POSITIONING CREST TO CURRENT ENVIRONMENT Financial focus • Sales performance to drive margins • Maintain a strong balance sheet Operational focus: • Return to five star customer rating • Maintain flexible operating platform • Converting land to implementable planning consent stag
Slide 25: Land Portfolio: Continuing to Add High Quality Sites
LAND PORTFOLIO CONTINUING TO ADD HIGH QUALITY SITES AND LOCATIONS • 3,864 plots approved in FY23 at forecast GM: 25.2% Plots 1 33,752 36,700 • Average gross margin in portfolio: c.23%2 GDV (£bn) 12.2 12.1 ASP 1 (£k) 364 333 NO. OF LAND BANK PLOTS / SHARE OF PORTFOLIO PLOTS2 10,000 Short-term 50% 14,
Slide 26: Land Portfolio: Quality Land Pipeline for Outlet Growth
LAND PORTFOLIO QUALITY LAND PIPELINE FOR OUTLET GROWTH • Short term land portfolio 14,922 plots as at 31 October 2023 GROSS PROFIT EVOLUTION • Approved 3,864 plots FY23 with some high quality locations in the Oxford and Windsor markets • Sufficient land at advanced planning stages • Positioning the
Slide 27: Land Portfolio: Strategic Land
LAND PORTFOLIO STRATEGIC LAND • Dedicated specialist team driving strategic land strategy PLANNING STATUS OF STRATEGIC LAND PLOTS 20,000 • Asset light on balance sheet 39% • 39% strategic land allocated - supports growth ambitions 15,000 • Average discount on allocated plots: 16.8% Draft Allocated /
Slide 28: Case Study – Longcross
LAND PORTFOLIO CASE STUDY – LONGCROSS Staines-upon-Thames Prime Surrey location neighbouring Egham Virginia Water, Chobham and Windsor Great Park Sunningdale with easy access to public transport and roads Ascot Holding costs at substantial discount Virginia Water To London Bracknell Advance st
Slide 29: Case Study – Harpenden
LAND PORTFOLIO CASE STUDY - HARPENDEN Highly desirable location near St Albans Substantial discount to market Leighton Buzzard value with high GM embedded Luton Stevenage NO. OF PLOTS • c.1,000 SITE A1M PURCHASE DETAILS M1 Harpenden Welwyn • Strategic land discount: 23.7%, embedded enhanced marg
Slide 30: Product Update
PRODUCT UPDATE • Regulation defines many product design aspects − 2021 & 2023 regulations fully implemented − Further FHS regulations evolving − Developed high quality, sustainable and energy efficient homes • New 2023 range house types − More energy efficient than the previous house type − Enhanced
Slide 31: Group Structure
GROUP STRUCTURE • Overheads right sized • Divisional output streamlined • Simplified Management Structure Peter Truscott CEO Executive Leadership Team Bill Floydd Jane Cookson David Marchant Heather O’Sullivan Kieran Daya Penny Thomas Group Finance Group HR Group Operations General Chief Operating G
Slide 32: Multi Channel Approach
MULTI CHANNEL APPROACH • Key part of our strategy • Continue to secure good quality strategic land • Partnerships − Delivered 273 units in FY23 with our valued partners − Maintained discipline on discounts − Contracted several deals with PRS and RP partners to be delivered over next few years • Esta
Slide 33: Five-Star Customer Service
FIVE-STAR CUSTOMER SERVICE ENCOURAGING SIGNS OF IMPROVEMENT • Returning to five-star is a strategic priority • Significant investment in people, process and system in FY23 • Encouraging signs of improving trends • New Homes Quality Code implemented • Future focus − Develop enhance customer system (C
Slide 34: Sustainability & Social Value
SUSTAINABILITY & SOCIAL VALUE GOING FURTHER IN OUR SUSTAINABILITY COMMITMENTS • On track with sustainability targets, including those linked to our RCF • Mitigating our impact on climate change − Actively reducing our greenhouse gas emissions − Increased the share of electricity sourced from renewab
Slide 35: Summary and Outlook
SUMMARY AND OUTLOOK Summary • Challenging market conditions and outturns in FY23 − Maintained robust balance sheet − High quality land acquired for future outlet growth − Streamlined operations to align with market conditions Outlook and focus • Clear plan and focus for FY24 • Experienced team in pl
Slide 36: Q & A
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Slide 37: Appendix
APPENDIX GRANGE MEADOWS 37 PRELIMINARY RESULTS 2023 January 2024 BRIDGWATER
Slide 38: Case Study – Longcross
LAND PORTFOLIO CASE STUDY – LONGCROSS Prime Surrey location neighbouring Virginia Water, Chobham and Sunningdale with easy access to public transport and roads Holding costs at substantial discount Advance stage of planning process NO. OF PLOTS • 1,700 PURCHASE DETAILS • WIP to date: £40m PLAN
Slide 39: Case Study – Harpenden
LAND PORTFOLIO CASE STUDY - HARPENDEN Highly desirable location near St Albans Substantial discount to market value with high GM embedded NO. OF PLOTS • c.1,000 PURCHASE DETAILS • Strategic land discount: 23.7%, embedded enhanced margin PLANNING STATUS • Draft allocation in local plan EXPECTED B
Slide 40: Income Statement
INCOME STATEMENT £m (unless otherwise stated) FY23 FY22 % Change Revenue 657.5 913.6 (28.0) Cost of sales (556.9) (719.3) Adjusted gross profit 100.6 194.3 (48.2) Adjusted gross profit margin 15.3% 21.3% Net administrative expenses (55.8) (51.1) Net impairment losses on financial assets (0.6) (2.3)
Slide 41: Balance Sheet
BALANCE SHEET As at 31 October, £m 2023 2022 Non-current assets 69.9 96.8 Inventories 1,164.8 990.1 Cash and cash equivalent 162.6 373.6 Other current assets 133.0 118.7 Total assets 1,530.3 1,579.2 Non-current interest-bearing loans + borrowings (83.5) (97.1) Other non-current liabilities (151.8) (
Slide 42: Cash Flow (Full Version)
CASH FLOW (FULL VERSION) £m FY23 FY22 Change % Operating profit before changes in working capital and provisions1 43.0 37.7 14.1 Decrease/(increase) in trade and other receivables 27.0 (17.0) -258.8 (Increase)/decrease in inventories (182.3) 55.5 -428.5 Decrease in trade and other payables and provi
Slide 43: Capital Allocation
CAPITAL ALLOCATION A CLEAR FRAMEWORK FOR VALUE CREATION Maintain a robust Geographical Sustainable dividend Capital balance sheet expansion policy efficiency • Respecting the • Greater land release • 2.5x cover • Disciplined and cycle opportunities away • Provides right selective on new • Land Credi
Crest Nicholson Holdings — FY2023 Earnings Presentation on 6ix