Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — H1 2005 Earnings Presentation
37 slides from Crest Nicholson's earnings presentation, Jun 23, 2005
Slide 1: HY05
HY05
Slide 2: Interim Announcement 2005
ABCDEFGHIJ INTERIM ANNOUNCEMENT 2005 23 June 2005
Slide 3: Financial Highlights
Financial Highlights ABCDEFGHIJ Half Year Half Year Increase 2005 2004 Turnover £315.3m £283.0m +11% Operating Profit* £45.8m £41.7m +10% Pre-tax Profit* £38.0m £36.0m +6% Earnings per Share* 22.8p 21.8p +5% Dividends per Share 4.2p 4.0p +5% Net Assets per Share 277p 241p +15% *HY05: Before £2.1m ex
Slide 4: Development Performance
Development Performance ABCDEFGHIJ Half Year Half Year Full Year 2005 2004 2004 £m £m £m Sales: • Housing 238.9 226.8 529.9 • Land sales 32.9 18.7 44.7 • Commercial Uses 43.5 37.5 68.6 315.3 283.0 643.2 Gross Margin 69.9 65.2 143.9 % 22.2% 23.0% 22.4% Overhead (24.1) (23.5) (49.0) % 7.6% 8.3% 7.6% O
Slide 5: Housing Sales Analysis
Housing Sales Analysis ABCDEFGHIJ Half Year Half Year Full Year HY05vs 2005 2004 2004 HY04% Units Open market 830 743 1,812 12% Affordable 256 312 712 -18% Total housing units 1,086 1,055 2,524 3% Average selling price £k Open market 250 251 244 - Affordable 123 130 123 -5% Total housing ASP 220 215
Slide 6: Balance Sheet
Balance Sheet ABCDEFGHIJ Apr 2005 Apr 2004 Oct 2004 £m £m £m Fixed assets and investments 22.8 24.5 23.7 Operating Assets: Stock 786.0 735.8 771.9 Debtors 210.6 176.2 239.4 Land creditors (300.5) (326.4) (372.1) Other creditors (150.8) (124.8) (156.1) 545.3 460.8 483.1 568.1 485.3 506.8 Capital and
Slide 7: Stock and WIP
Stock and WIP ABCDEFGHIJ Apr 2005 Apr 2004 Oct 2004 £m £m £m Development land 570.6 561.9 593.0 Strategic land 9.5 9.2 9.3 580.1 571.1 602.3 Building work in progress 205.9 164.7 169.6 Total Stock and WIP 786.0 735.8 771.9
Slide 8: Financing
Financing ABCDEFGHIJ Apr 2005 Apr 2004 Oct 2004 Average borrowings £235.1m £165.2m £184.4m Interest cost £7.8m £5.7m £12.8m Interest cover 5.6x 7.3x 7.4x Facilities available £380.4m £351.9m £351.9m
Slide 9: Half Year 2005 Achievements
Half Year 2005 Achievements ABCDEFGHIJ • 12% increase in open market volumes • Affordable units: – As predicted, fewer in 2005 – Set to grow to over 700 in 2006 • Strong contribution from mixed use commercial • Land trading ability: – Increased land sales as predicted – While also increasing short t
Slide 10: Current Housing Market
Current Housing Market ABCDEFGHIJ • Less active than the exceptional first half of 2004 – Visitors down 7%, and more cautious – Net reservations down 22% • Up on 2003 – Visitors up 12% – Net reservations up 3% • Forecast net prices are being achieved but with increased use of incentives • Sales mark
Slide 11: Housing Forward Sales
Housing Forward Sales ABCDEFGHIJ Apr 2005 Apr 2004 Oct 2004 Units 1,906 1,904 1,752 Sales Value £214.5m £256.2m £201.1m Housing forward sales now £271.2m (17th June 2005) (2004:£325m)
Slide 12: Commercial Forward Sales
Commercial Forward Sales ABCDEFGHIJ Apr2005 Apr 2004 Oct2004 Total Contracted £71.2m £117.4 £109.3 Sales Value
Slide 13: Housing Land Buying
Housing Land Buying ABCDEFGHIJ Apr Apr Oct 2005 2004 2004 Plots contracted 1,794 2,144 3,570 Strategic plots converted - 405 1,091 Short term plots added 1,794 2,549 4,661 £000 £000 £000 Average sales price per plot 200.7 176.1 188.4 Average plot cost 37.9 47.1 51.4
Slide 14: Developed value of land banks
Developed value of land banks ABCDEFGHIJ Apr Apr Oct 2005 2004 2004 £m £m £m Housing 2,837 2,753 2,895 Commercial 464 467 418 Short term total 3,301 3,220 3,313
Slide 15: Overview of Land Banks
Overview of Land Banks ABCDEFGHIJ Apr Apr Oct 2005 2004 2004 Short term housing land Plots 15,138 14,700 15,060 Strategic land -greenfield Plots 12,022 12,935 13,182 Commercial Sq ft 1,955 1,830 1,833 000’s
Slide 16: Housing Portfolio Statistics
Housing Portfolio Statistics ABCDEFGHIJ Apr Apr Oct 2005 2004 2004 Short term housing plots 15,138 14,700 15,060 Average sales price £k 187.4 187.3 192.2 Average plot cost £k 35.2 35.6 37.1 Land % of sales 18.8% 18.9% 19.3%
Slide 17: Housing land bank – by region
Housing land bank – by region ABCDEFGHIJ 60 48 48 50 percentage 40 30 30 30 20 14 14 8 8 10 0 October 2004 April 2005 London and SE South West Midlands East Anglia
Slide 18: Housing land bank – by price band
Housing land bank – by price band ABCDEFGHIJ 80 67 69 70 60 percentage 50 40 29 28 30 20 10 3 1 3 0 0 October 2004 April 2005 <£250k £250k-£500k £500-£750k >£750k
Slide 19: Housing land bank – apartment content
Housing land bank – apartment content ABCDEFGHIJ 80 70 67 60 57 percentage 50 43 40 33 30 20 10 0 October 2004 April 2005 houses apartments
Slide 20: Creating Value
Creating Value ABCDEFGHIJ Simple Formula: “Applying land buying and planning skills to add value to land and create shareholder value”
Slide 21: Skills Investment for Value creation
Skills Investment for Value creation ABCDEFGHIJ We have invested overhead in Concept scheme development skills Master planning and design Product quality Sustainable development expertise Sustainable community management Major project procurement team Promoting public sector partnering
Slide 22: Skills Investment Payback
Skills Investment Payback ABCDEFGHIJ A Reputation for Quality…… Market leader in customer satisfaction surveys Market leader in design quality (3 CABE golds) Market leader in master planning and concept schemes Market leader in sustainable development capability ……which increases the land supply… La
Slide 23: Creating and Unlocking the Value
Creating and Unlocking the Value ABCDEFGHIJ Delivering value from: • Housing short term land • Commercial short term land • Strategic land • Urban regeneration pipeline
Slide 24: Short term housing land
Short term housing land ABCDEFGHIJ Housing Development value at April 05 £2.84bn • Located in economic growth areas • Located in areas of greatest supply shortage • Replacement value well in excess of cost • Continuous optimisation process to create best value • Best value delivered by build out
Slide 25: Port Marine - Before
Port Marine- Before ABCDEFGHIJ
Slide 26: Port Marine - After
Port Marine - After ABCDEFGHIJ
Slide 27: Port Marine Optimisation
Port Marine Optimisation ABCDEFGHIJ Plots on acquisition 552 Plots now 931 Plots gained 379 69% increase in plot numbers 4 fold increase in serviced land value
Slide 28: Short term commercial land
Short term commercial land ABCDEFGHIJ Commercial Development Value at April 05 £464m • Essential to truly sustainable development • Mixed use skills essential to master planning major projects • Good cash and risk characteristics • Best value delivered by build out
Slide 29: Riverside, Hemel Hempstead
Riverside, Hemel Hempstead ABCDEFGHIJ
Slide 30: Value to be unlocked from Strategic Land
Value to be unlocked from Strategic Land ABCDEFGHIJ Plots Development value Total strategic land bank 12,022 2.0bn Conversions to short term within 3,000 0.5bn 3 years Good discounts to serviced land value Premium strategic land bank Best value delivered through planning and build out
Slide 31: Huntsgrove, Gloucester
Huntsgrove, Gloucester ABCDEFGHIJ • Options over 110 net acres for Phase 1 • 19% discount to market value • Approximately 1,500 units, £250m sales • Site now allocated • Outline application to be submitted in 2005 • Outline planning consent Spring 2006 • Phase 2 a further 1,000 units
Slide 32: Urban regeneration pipeline
Urban regeneration pipeline ABCDEFGHIJ Agreed pipeline development value of £745m • Huge potential market • Crest well placed to open up a large new land supply • Significant future value for shareholders • Best value delivered through planning and build out
Slide 33: Agreed urban regeneration pipeline
Agreed urban regeneration pipeline ABCDEFGHIJ Development Value £m Oakgrove, Milton Keynes 200 Aylesbury Town Centre 162 Penarth Heights 100 Bath Western Riverside (2&3) 283 Total Agreed Pipeline 745
Slide 34: Unlocking the Value
Unlocking the Value ABCDEFGHIJ Assessing the value to shareholders of building out the contracted land banks and agreed urban regeneration pipeline
Slide 35: Future Sales and Earnings Potential
Future Sales and Earnings Potential ABCDEFGHIJ Apr 2005 £m Short term land bank 3,301 Strategic land bank (the first 3000 plots) 500 Urban regeneration pipeline 745 Total Developed Value 4,546 (excluding later strategic land and new land purchases) Pretax profit potential at, say, 11% 500 Earnings p
Slide 36: Value Added
Value Added ABCDEFGHIJ • Value to be added to £2.77p per share for present day value of £350m future earnings • Net Present Value calculation requires: – A timing assumption: around 50% of the £4.5bn is planned to be delivered by FY08 – A discount rate to reflect investors perceptions of risk and re
Slide 37: Conclusion
Conclusion ABCDEFGHIJ • A stable but challenging market now • Attractive housing market fundamentals • Asset multiple valuations miss the embedded value • Value has been created it now needs to be unlocked by build out • More value to come as regeneration grows