Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — H1 2020 Earnings Presentation
39 slides from Crest Nicholson's earnings presentation, Jun 24, 2020
Slide 1: Half Year Results 2020
FINBERRY ASHFORD Crest Nicholson Holdings plc HALF YEAR RESULTS 2020 24 JUNE 2020
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: Overview
OVERVIEW Excellent progress across all five strategic priorities Challenging trading conditions − Expected political uncertainty − Good momentum heading into spring selling season − COVID-19 an unprecedented impact Strong focus on protecting the balance sheet Health and safety our number one
Slide 4: Market Context
MARKET CONTEXT VOLATILE TRADING CONDITIONS THROUGHOUT FIRST HALF WEEKLY PROPERTY WEBSITE ENGAGEMENT (2019 & 2020 YTD) 300% COVID-19 Yomdel Top Property Clients Restriction Period 250% 31m+ web visits Lockdown imposed 200% 62 week Pre-COVID-19 average 150% ‘Boris Bounce’ 100% 50% Brexit market uncert
Slide 5: Agenda
AGENDA OVERVIEW AND MARKET CONTEXT DUNCAN COOPER FINANCIAL REVIEW PETER TRUSCOTT • COVID-19 UPDATE • STRATEGY UPDATE • OUR STRATEGY AFTER COVID-19 Q&A WESTVALE PARK 5 5 Half Year Results 2020 | June 2020 HORLEY
Slide 6: Financial Review
FINANCIAL REVIEW HOADLANDS GRANGE HAYWARDS HEATH DUNCAN COOPER GROUP FINANCE DIRECTOR 6 Half Year Results 2020 | June 2020
Slide 7: Income Statement
INCOME STATEMENT POLITICAL AND ECONOMIC UNCERTAINTY £m HY20 HY19 % Change Adjusted gross profit lower due to: Revenue 240.0 501.9 52.2% − COVID-19 impact Cost of sales 1 (204.1) (401.6) 49.2% − £12.1m lower land and commercial Adjusted gross profit 1 35.9 100.3 64.2% contribution Adjusted gross pr
Slide 8: Volume by Channel
VOLUME BY CHANNEL HY20 HY19 % Change Good progress in growing Outlets (full year equivalents) 64 58 10% outlets Sales per outlet week (Open market private) 0.37 0.46 20% SPOWs impacted by uncertainty Sales per outlet week (Open market inc-Bulk) 0.46 0.78 41% Strong conversion to receipts Home
Slide 9: Average Selling Price by Channel
AVERAGE SELLING PRICE BY CHANNEL £’000 HY20 HY19 % Change All ASPs continue to reduce Home completions % 42 ex-London units completed Open market (private) 424 441 4% Open market (inc-Bulk) 344 413 17% − 145 across 6 sites remaining Affordable 139 230 40% − 145 at London Chest Total housing ASP
Slide 10: COVID-19 Impact on H1 Results
COVID-19 IMPACT ON H1 RESULTS GOOD UNDERYLING MOMENTUM CUMULATIVE HOME COMPLETIONS (UNITS) Performance on track at start of financial year 1,400 HY19 Best 12-month rolling week prior to lockdown 1,200 1,000 Encouraging early indicators since reopening − Appointments and footfall increasing 800
Slide 11: Balance Sheet
BALANCE SHEET COVID-19 ACTIONS COMPLEMENT EXISTING INITIATIVES Net debt £93.3m (HY19: £68.3m) Net debt including land creditors £317.2m (HY19: £260.4m) Average net debt £125.0m (HY19: £136.6m) Pension deficit £8.4m (HY19: £1.2m) Inventories £1,168.3m (HY19: £1,183.9m) − £43.2m NRV impairme
Slide 12: Cash Management
CASH MANAGEMENT UPDATED STRATEGY TAKING EFFECT Receipts impacted by COVID-19 £m HY20 HY19 Change Net cash brought forward 37.2 14.1 Lower land sale contribution Housing and other receipts 278.2 422.8 144.6 Land sale receipts 10.4 60.1 49.7 Good progress on WIP optimisation Land expenditure (10
Slide 13: Protecting the Balance Sheet
PROTECTING THE BALANCE SHEET DECISIVE ACTION TAKEN AT OUTSET OF COVID-19 £241.8m of available cash at 22 June 2020 LAND CREDITOR ROLL OUT BY YEAR (£m) 120 Land payments cancelled, renegotiated or deferred 100 Further controls on WIP spend and exposure 80 Deferral of other statutory commitmen
Slide 14: Cost Management
COST MANAGEMENT ACCELERATING DELIVERY OF OPERATIONAL EFFICIENCIES HY19 to HY20 ADJUSTED ADMIN EXPENSE WATERFALL (£m) ADJ. ADMIN EXPENSES (£m) 70 29.5 60 (4.2) 50 40 30 20 10 (0.6) 24.8 Employee 0 related JRS (0.6) (0.2) (0.2) 1.1 costs credit FY19 FY20E FY21E Office & IT Professional costs fees Othe
Slide 15: Exceptional Items
EXCEPTIONAL ITEMS REPOSITIONING AND RESTRUCTURING FOR THE FUTURE £m HY20 COVID-19 trigger for impairment review COVID-19 related impairments − 7.5% sales price reduction for residential Inventory impairment 43.2 − 32.0% sales price reduction for commercial Net impairment losses on financial assets
Slide 16: Current Land Portfolio
CURRENT LAND PORTFOLIO CONTROLLED ACTIVITY IN THE FIRST HALF Short-term land Plots 1 37,575 37,646 GDV (£bn) 12.6 11.3 775 home completions ASP (£k) 328 299 422 plots added Short-term 18,060 16,263 land GDV significantly reduced − Underlying ASP difference minimal − Impact of NRV adjustments t
Slide 17: Summary
SUMMARY Trading environment will remain uncertain Funding position is secure Strong controls to stay for cash and costs Further restructuring plans announced − c.£5m of annualised savings − Similar exceptional charge for H2 Forward sales of 2,715 units and £575.1m GDV Expect FY20 net cas
Slide 18: COVID-19 Update
COVID-19 UPDATE PETER TRUSCOTT CHIEF EXECUTIVE 18 Half Year Results 2020 | June 2020
Slide 19: COVID-19 Action Plan
COVID-19 ACTION PLAN Health and safety Protect the balance sheet Quickly form a view on the future − Trading conditions likely to become more challenging − Review of strategy and accelerate efficiencies MULBERRY VIEW 19 Half Year Results 2020 | June 2020 WOKINGHAM
Slide 20: Controlled Return to Work
CONTROLLED RETURN TO WORK Signed up to a new MHCLG and HBF Charter Phased return to sites from 18 May − Detailed health and safety protocols − Strong WIP control as we match to demand Clear prioritisation of capital and effort − Affordable and PRS − Nearly completed private units 20 Half Year
Slide 21: Employee Engagement
EMPLOYEE ENGAGEMENT 75% furloughed from early April − Full pay during furlough − All employees unfurloughed by 31 May Technology worked well for all those homeworking Regular senior leadership communications Employees encouraged to volunteer − Providing care and help to at risk groups − Supp
Slide 22: Looking After Our Customers
LOOKING AFTER OUR CUSTOMERS Introduction of remote interaction options − Online video appointments with sales team − Virtual property tours − eSignature for reservations Virtual end to end sales process Emergency after care issues resolved during lockdown Regular communication to keep fully
Slide 23: Supply Chain and Subcontractors
SUPPLY CHAIN AND SUBCONTRACTORS Maintained good dialogue during lockdown All signed up to COVID-19 working practices Currently no materials or resource availability issues Strong WIP controls agreed with supply chain New communication protocols to highlight − Materials shortages or risks −
Slide 24: Strategy Update
STRATEGY UPDATE THE WATERFRONT GLOUCESTER PETER TRUSCOTT CHIEF EXECUTIVE 24 Half Year Results 2020 | June 2020
Slide 25: Our Updated Strategy
OUR UPDATED STRATEGY 25 Half Year Results 2020 | June 2020
Slide 26: Placemaking and Quality
PLACEMAKING AND QUALITY WHAT WE ARE KNOWN FOR ABORFIELD GREEN HOADLANDS GRANGE 26 Half Year Results 2020 | June 2020 WOKINGHAM HAYWARDS HEATH
Slide 27: Land Portfolio
LAND PORTFOLIO CONTROLLED ACTIVITY IN FIRST HALF Well-located with possible changes to lifestyle and working practices Southern England weighting with growth in Midlands and South West Priority to secure more outlets Opportunity to utilise existing land portfolio in the short term − Addition
Slide 28: Operational Efficiency: Standardised Housing Range
OPERATIONAL EFFICIENCY STANDARDISED HOUSING RANGE Roll out on track New range drives further efficiency and consistent quality Margin enhancement on re-plan sites and new acquisitions Target 80% for future planning applications Units Ongoing replans / replotted 3,362 on 55 schemes Planning a
Slide 29: Operational Efficiency: Plotting Efficiency
OPERATIONAL EFFICIENCY STANDARDISED HOUSING RANGE – PLOTTING EFFICIENCY LUDLOW - PHASE TWO LUDLOW - PHASE TWO PREVIOUSLY APPROVED SCHEME CURRENT PLANNING APPROVED SCHEME To date 43 plots replotted Total development units remain at 137 GM increased 120bps to 27.4% − Build costs down from £24.4m
Slide 30: Operational Efficiency: Cost Transformation
OPERATIONAL EFFICIENCY COST TRANSFORMATION PROGRESSING WELL Specification procurement of £30m identified (£20m embedded) Further savings from new house types and plot efficiency − Lower design costs through standardisation − c. £2k per plot fee savings in future developments − Reduced labour and
Slide 31: Five Star Customer Service
FIVE STAR CUSTOMER SERVICE IMPROVEMENT IN ALL AREAS Five star achieved (>90%) New processes for service and after care Currently trending above 2019 level 31 Half Year Results 2020 | June 2020
Slide 32: Multi-Channel Approach
MULTI-CHANNEL APPROACH BUILDING A MORE RESILIENT BUSINESS PRS good asset class for investors with safe yield Strong relationship with partners to procure projects Existing schemes attracting healthy interest PRS pipeline growing Price discount steady and margins maintained MORTON PARK 32 H
Slide 33: Our Strategy After COVID-19
OUR STRATEGY AFTER COVID-19 KINGSMEAD FAVERSHAM PETER TRUSCOTT CHIEF EXECUTIVE 33 Half Year Results 2020 | June 2020
Slide 34: Adapting Our Strategy
ADAPTING OUR STRATEGY POTENTIAL FOR OUTLOOK TO WORSEN Our updated strategy remains the right one − Excellent progress across all five priorities − Need to go further with operational efficiencies Full economic impact not fully realised Impairments reflect our outlook on pricing Leaner busine
Slide 35: Adapting Our Strategy: Pausing Expansion
ADAPTING OUR STRATEGY PAUSING EXPANSION FOR NOW Deferral of new division opening − Crest Nicholson Southern Counties (CNSC) Incremental overhead structure Planned assets absorbed into existing divisions Target 550-650 homes per division from 5 divisions STRAY PARK 35 Half Year Results 2020 |
Slide 36: Adapting Our Strategy: Greater Multichannel Capability
ADAPTING OUR STRATEGY GREATER MULTICHANNEL CAPABILITY Merge Crest Strategic Projects (CSP) with Crest Nicholson Partnerships and Regeneration (CNPR) Crest Nicholson Partnerships and Strategic Land (CNPSL) − Based in our Chertsey Head Office Clear synergies − Major projects or strategic land ma
Slide 37: Adapting Our Strategy: Aligning Central Functions
ADAPTING OUR STRATEGY ALIGNING CENTRAL FUNCTIONS Review of all central overheads Elimination of tasks and simplification of structures Expected completion in H2 Future head office location under review Proposed changes subject to consultation LANGFORD FIELDS 37 Half Year Results 2020 | Jun
Slide 38: Summary and Outlook
SUMMARY AND OUTLOOK Summary Excellent progress on updated strategy Resilient business and balance sheet Outlook Performance in line since re-opening Prepared for more challenging conditions Adapting our strategy Understand importance of dividends − Reinstate when appropriate HYGGE PARK 3
Slide 39: Q&A
KILNWOOD VALE FAYGATE, HORSHAM Q&A
Crest Nicholson Holdings — H1 2020 Earnings Presentation on 6ix