Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — Corporate Update (October 2018)
17 slides from Crest Nicholson's corporate update, October 2018
Slide 1: Pre-Close Trading Update
Crest Nicholson Holdings plc Pre-Close Trading Update October 2018 Restricted - External
Slide 2: Key messages
Key messages • FY18 PBT below market expectations • Decisive management actions • New strategy reflecting current market conditions • Focus on dividend, cash flow and shareholder returns • Confident in the quality of our business and long term capabilities 1
Slide 3: Current trading
Current trading • Seasonal pick up in higher priced sales did not happen • London and Home Counties market increasingly challenging • 10 challenging sites account for most of the gross margin shortfall • Mitigating actions partially offset revenue and receipts reduction, but impacting margin • Expec
Slide 4: Half year reported existing challenges…
Half year reported existing challenges… Sales at lower price-points and away from London & South East generally quite resilient, BUT: • HPI slowing - as pricing recovery moves North Source: Savills, using Land Registry • Build cost inflation abating but still present: skills data to Sept’18 shortage
Slide 5: …evident in broader market…
…evident in broader market… Total Market • Listing volumes show close relationship Referendum SDLT change in 2014 & 2015; London buoyancy in that period • Significant deviation in London & South following SDLT changes and Brexit vote • 2018 has seen already significant gap widen further New Build Re
Slide 6: …& recent trading has weakened further
…& recent trading has weakened further • September and October markets failing to show expected recovery from seasonal summer slow-down • Wider London market also seeing marked slow-down in volumes and downward pressure on price: down-valuations • Worsening consumer confidence, in part due to media
Slide 7: Impact of Brexit uncertainties
Impact of Brexit uncertainties House Price Inflation (Open Market Reservations) WEIGHTED WEIGHTED AV. SUB £600k £601K TO £1m £1m+ AVERAGE Post Bulk Sales 1.1% 0.4% 0.3% 0.2% 0.0% -0.6% -0.8% -1.3% -3.7% -4.7% Crest experience HY 18 Sep-18 6
Slide 8: Management mitigations in H2 18
Management mitigations in H2 18 • Slowed build programme to reflect current sales rates • Implemented bulk sales of c.200 units to Registered Providers and PRS investors • Selected land sales on long tail sites • Closure of London division and movement of sites into regional divisions 7
Slide 9: Majority of outlets trading well…
Majority of outlets trading well… • Operational delivery strong – unit & revenue growth in line with HY guidance • Fundamentals still good: high employment, low interest rates & good mortgage access • More discretionary buyers at higher price points significantly reduced Overview – 80% performing we
Slide 10: New strategy
New strategy
Slide 11: Long term strong and valuable business
Long term strong and valuable business • A premium quality brand, operating in the most economically prosperous part of the UK • Strong reputation for building well designed homes and sensitive place-making – developer & employer of choice • Good land and development pipeline with competitive embedd
Slide 12: Strategic framework
Strategic framework 1. Priority on • Commitment to pay ordinary dividend of 33p per cashflow and share in each of FY18 and FY19 * • Focus on shareholder returns dividends • Generating value from our well acquired land pipeline 2. Maximising • Adapting the portfolio to address housing portfolio value
Slide 13: 1. Priority on cashflow and dividends
1. Priority on cashflow and dividends 1. Pay Ordinary Dividend of 33p in each of FY18 and FY19 2. Generate a cash reserve 3. Cash reserve allocated to maximise shareholder returns, subject to market conditions 11
Slide 14: 2. Maximise portfolio value
2. Maximise portfolio value • Land and development pipeline remains significant store of value • Strong embedded margins – c.£1.6bn of Gross Margin in short term land pipeline • Increasing our portfolio of sub-£600k properties • Good conversions from Strategic land pipeline also driving lower ASPs •
Slide 15: 3. Operational efficiencies
3. Operational efficiencies New core house types introduced • New Core housing range targeted to apply to 50% of sites within three years • Drive associated procurement, build cost productivity and scale benefits Engaging with Off Site Manufacturing • Scale trials underway on housing, apartments and
Slide 16: Summary
Summary • FY 2018 PBT to be in the range of £170m to £190m • Commitment to pay ordinary dividend of 33p per share in each of for FY18 and FY19 * • Ambition to maintain profitability for 2019 at FY2018 levels, despite market uncertainty • Focus on cash generation and shareholder returns • Board remai
Slide 17: 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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