Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — H1 2014 Earnings Presentation
34 slides from Crest Nicholson's earnings presentation, Jun 17, 2014
Slide 1: Crest Nicholson Holdings plc 2014 Interim Results
Crest Nicholson Holdings plc 2014 Interim Results 17th June 2014
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 • Outlook and Summary Stephen Stone Sales of £56.9m, £1.5m behind • Q&A 1
Slide 3: Performance highlights (1)
Performance highlights (1) Revenues of £241.1m (2013: £192.0m) +26% Unit completions of 1,091 units (2013: 810) Reserved 370 OM plots, 46 ahead +35% Legally Completed 222 units, 25 ahead Sales per Outlet Week at 0.83 (2013: 0.77) Sales of £56.9m, £1.5m behind +8% Forward sales at mid-June of £347.3m
Slide 4: Performance highlights (2)
Performance highlights (2) Gross profit of £69.3m (2013: £53.4m) +30% Operating profit of £44.7m (2013: £34.8m*) +28% Reserved 370 OM plots, 46 ahead Profit before Legally tax 222 Completed of £38.4m units, 25 (2013: ahead £28.1m*) +37% Sales of £56.9m, £1.5m behind Earnings per share of 12.3p (2013
Slide 5: Sales Strategy
Sales Strategy Resumption of strong Sales per Outlet Week reservation rates Strong London sales ‘Help to Buy’ Temporary reduction drives growth as later sales release in volumes reduces availability 4
Slide 6: Demand remains strong
Demand remains strong • Unreserved build stock at very low levels • Production now the constraint on volume, rather than sales Reserved 370 OM plots, 46 ahead • Shortages of second-hand stock contributing to enhanced demand Legally for new-build Completed 222 units, product 25 ahead Key of Sales det
Slide 7: Employment – incidence and changes
Employment – incidence and changes Total Employment by Region (,000) Region 2010 Q4-13 Change East 2,796 2,961 +5.9% East Midlands 2,096 2,166 +3.4% +3.8% Templates London 3,738 4,001 +7.1% North East 1,152 1,174 +1.9% North West 3,156 3,146 -0.3% +1.9% +3.5% Northern Ireland 775 801 +3.5% -0.3% +5.
Slide 8: Resilience in earnings
Resilience in earnings +1.5% 9% +1.0% 8% +0.5% 7% 0% GDP & -0.5% 6% Unemployment -1.0% 5% -1.5% 4% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Quarterly GDP Growth Estimate Quarterly Unemployment Rate Estimate 10 40 0 20 -10
Slide 9: Mortgage access
Mortgage access 140 15% 120 10% 100 UK Mortgage 5% 80 0% Loans 60 -5% 40 Approved 20 -10% 0 -15% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Templates Monthly Mortgage Approval Growth (RHS) Monthly Mortgage Approvals (000) (LHS) Reserved 370 OM plots, 46 ahead • Mortgage access has steadi
Slide 10: Help to Buy – redressing the imbalance
Help to Buy – redressing the imbalance • Help to Buy (HTB) is recalibrating the market:- Abnormal Normal • Help where help is needed: 87.5% of all HTB transactions have been First-Time Buyers; activity in this group traditional driver of healthy housing market • Stimulating wider organic housing mar
Slide 11: Mortgage affordability
Mortgage affordability Mortgage costs as a proportion of income UK house prices to income ratio 70% Significant reduction from 48% in 2007 to 28% 6.0x Multiple dropped from 2007 peak of 5.9x currently despite flat real income growth towards long-run average of 4.1x 5.5x 60% Current 5.0x multiple: 4.
Slide 12: Mortgage affordability
Mortgage affordability Average mortgage / interest rates 10.0% 2 YR Fix 75% SVR UK Base Rate 8.0% 6.0% 4.0% 2.0% 0.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Bank of England UK mortgage volumes (house purchases) Upside in mortgage volume
Slide 13: Fundamentals provide encouraging backdrop
Fundamentals provide encouraging backdrop • Good levels of employment & mortgage access • Robust sales pricing environment • Sufficient land supply at or above hurdle rates Reserved 370 OM plots, 46 ahead • Planning gradually improving – though elections can cause delay Legally Completed 222 units,
Slide 14: Business growth
Business growth • New Division being established to take Crest Nicholson business back to natural scale of operation • Supports outlet breadth and facilitates leverage of strong Reserved 370 OM plots, 46 ahead land pipeline Legally Completed 222 units, 25 ahead • Anticipate reaching natural scale by
Slide 15: New Division
New Division Templates • Additional Division will enable Crest Nicholson to mine known, strong areas more intensively Legally Completed 222 units, 25 ahead • Supports Outlet breadth and growth beyond 3,000 units 14
Slide 16: Strong land pipeline
Strong land pipeline Apr 2014 Apr 2013 Change % Units GDV £m Units GDV £m Units GDV £m Short-term housing 16,118 4,127 17,094 3,780 (5.7%) 9.2% Short-term commercial - 245 - 288 (14.9)% Total short-term 16,118 4,372 17,094 4,068 (5.7%) 7.5% Strategic land 15,046 3,865 13,763 3,338 9.3% 15.8% Total u
Slide 17: Unprecedented forward visibility
Unprecedented forward visibility 100% 90% 80% 70% 60% Identified 50% In Solicitors hands 40% Portfolio 30% 20% 10% 0% 2014 2015 2016 • Land for next three year’s production largely owned or controlled • Underpins confidence in ASP forecasts and land input costs 16
Slide 18: Revenue growth of 70-80% in three years
Revenue growth of 70-80% in three years 2013 2016 • 2,172 units • Volumes 25%-30% higher AND • OM ASP £250k • OM ASP 35%-40% higher 17
Slide 19: Bath Riverside OM ASP of £809k
Bath Riverside OM ASP of £809k • Waterside phase in a World Heritage City Reserved 370 OM plots, 46 ahead • Villas designed by Alison Brooks Legally Completed 222 units, 25 ahead • Part of wider Bath Riverside scheme of up to 2,000 plots Sales of £56.9m, £1.5m behind • 26 plots on this phase • Compl
Slide 20: The Avenue, Sunbury OM ASP of £550k
The Avenue, Sunbury OM ASP of £550k • Former London Irish rugby ground Reserved 370 OM plots, 46 ahead • Club relocation due to complete in summer Legally 2014Completed 222 units, 25 ahead • 206 plots including Affordable Sales of £56.9m, £1.5m behind • Completions from 2015 19
Slide 21: Tileman House, Putney OM ASP of £780k
Tileman House, Putney OM ASP of £780k • Prime site on Upper Richmond Road Reserved 370 OM plots, 46 ahead • 68 plots; 56 open-market Legally • GroundCompleted 222and floor retail units, 25 first floor offices in addition ahead • Foundations Sales of £56.9m,underway £1.5m behind • Completions in 2016
Slide 22: Mulberry Grove, Wokingham OM ASP of £390k
Mulberry Grove, Wokingham • Site acquired Reserved 370 OMunder plots,strategic 46 ahead OM ASP of £390k option Legally Completed 222 units, 25 • Greenfield development of ahead family housing • 274ofplots Sales on this £56.9m, phase £1.5m behind • Completions from 2014 21
Slide 23: Financial results
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Slide 24: Key metrics
Key metrics HY 2014 HY 2013 Inc/(Dec) % Outlets 42 43 -2% Sales per Outlet Week (Open market) 0.83 0.77 +8% Legal completions Open market 769 699 +10% Affordable 322 111 +190% ASP Open market 269 241 +12% Affordable* 105 161 -35% * Affordable ASP varies depending on extent to which related Affordabl
Slide 25: Income statement
Income statement Income statement (£m, HY 2013 Exceptional HY 2013 Change HY 2014 unless stated) Pre-exceptional costs Total (pre-exceptional) Revenue 241.1 192.0 192.0 49.1 26% Cost of sales (171.8) (138.6) (138.6) (33.2) Gross profit 69.3 53.4 53.4 15.9 30% % gross profit margin 28.7% 27.8% 27.8%
Slide 26: Balance sheet
Balance sheet Balance sheet (£m, unless stated) 30th April 31st Oct 30th April Change on Change on 2014 2013 2013 Oct’13 Apr ’13 Non-current Assets 116.9 127.0 136.4 (10.1) (19.5) Inventory 706.4 577.7 542.3 128.7 164.1 Trade & other receivables 40.4 44.0 39.4 (3.6) 1.0 Cash and cash equivalents 89.
Slide 27: Cash flow
Cash flow Cash flow (£m, unless stated) HY2014 HY 2013 Change Operating profit before changes in working capital and provisions 46.6 29.5 17.1 Decrease in trade and other receivables 3.6 2.1 1.5 Increase in inventories (128.7) (72.9) (55.8) (Decrease)/increase in trade and other payables (5.1) 19.4
Slide 28: Forward sales
Forward sales YTD YTD FY13 FY12 FY14 FY13 Units – all years 1,779 1,877 1,360 837 % change on prior period -5% +62% GDV (£m) – all years 347.3 330.9 230.1 129.6 % change on prior period +5% +78% % of FY2014/13 target 87% 88% 34% 25% • YTD 2013 figure includes 148 unit/£25.3m PRS reservations • Balan
Slide 29: Cash flows and Dividend
Cash flows and Dividend • Investment in higher ASP sites and in opening up strategic sites consuming cash in 2014 Templates • Anticipate net debt at year-end in line with current Reserved levels370 OM plots, 46 ahead Legally Completed • Stronger cash222 units, 25 ahead generation as business grows t
Slide 30: Outlook and Summary
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Slide 31: Outlook
Outlook • Fundamentals of Housing Market are sound; strength based on economic recovery and mortgage access, aided by ‘Help to Buy’ Templates Reserved 370 rate • Interest OM plots, 46 aheadshould not derail momentum; movements may impact size of purchase rather than purchasing Legally Completed 222
Slide 32: Summary
Summary • Delivering further strong growth in a good market • Excellent land pipeline and high Templates levels of purchaser demand at good prices Reserved 370 OM plots, 46 ahead • Move to higher ASP product and locations a strong Legally Completed driver 222revenues of future units, 25 ahead Sales
Slide 33: Q&A
Crest NICHOLSON Q&A 32
Slide 34: 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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