Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — FY2020 Earnings Presentation
32 slides from Crest Nicholson's earnings presentation, Jan 26, 2021
Slide 1: Preliminary Results 2020
ELMSBROOK BICESTER Crest Nicholson Holdings plc PRELIMINARY RESULTS 2020 26 January 2021
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: Agenda
AGENDA PETER TRUSCOTT • FULL YEAR OVERVIEW • MARKET CONTEXT DUNCAN COOPER • FINANCIAL REVIEW PETER TRUSCOTT • STRATEGY UPDATE • SUMMARY AND OUTLOOK Q&A MORTON PARK 3 3 Full Year Results 2020 | January 2021 MILTON KEYNES
Slide 4: Full Year Overview
FULL YEAR OVERVIEW Strong progress on all five strategic priorities Internal reorganisation completed − Strong, new leadership team now established Adjusted profit before tax (APBT) delivered ahead of guidance Excellent progress on strengthening the balance sheet Reinstatement of dividend
Slide 5: Market Context
MARKET CONTEXT Good market fundamentals remain − COVID-19/ Brexit pent up demand − Government support for housing market − Stable lending backdrop Need to navigate macro environment − Furlough scheme − Stamp Duty holiday − Help to Buy phase 1 / 2 Prepared for an uncertain 2021 − Continued COVI
Slide 6: Financial Review
FINANCIAL REVIEW HIGHLANDS PARK HENLEY-ON-THAMES DUNCAN COOPER GROUP FINANCE DIRECTOR 6 Full Year Results 2020 | January 2021
Slide 7: Income Statement
INCOME STATEMENT GOOD UNDERLYING PROGRESS DESPITE COVID-19 £m FY20 FY19 % Change Revenue 677.9 1,086.4 37.6 Adjusted profit before tax ahead of Cost of sales 1 (570.2) (884.5) £35m-£45m range Adjusted gross profit 1 107.7 201.9 46.7 Adjusted gross profit lower due to Adjusted gross profit margin
Slide 8: Sales Metrics
SALES METRICS STRONG SECOND HALF AS STRATEGY TAKES EFFECT FY20 FY19 % Change Good performance post lockdown Outlets (full year equivalents) 63 59 6.8 − Further growth in outlets SPOW (Open market) 0.59 0.76 22.4 Good bulk performance Home completions (units) − 119 units at Sherborne Wharf Open m
Slide 9: Exceptional Items
EXCEPTIONAL ITEMS ADAPTING OUR STRATEGY IN THE FIRST HALF £m FY20 FY19 COVID-19 trigger for impairment review Costs of sale impairments − 7.5% residential / 32.0% commercial Inventory impairment 43.2 - − £43.2m NRV provision (incl. £9.3m abortive WIP) Net fire provision charge 0.6 18.4 − £7.6m exp
Slide 10: Site Gross Margin Evolution
SITE GROSS MARGIN EVOLUTION ANOTHER YEAR OF REPOSITIONING THE PORTFOLIO 15% 13% 3% 4% 2% 3% 4% 8% FY20 FY21 FY22 FY23 15.9% 77% 83% 93% 95% <10% 10-15% >15% 10 Full Year Results 2020 | January 2021
Slide 11: Complex and Capital Intensive Schemes
COMPLEX AND CAPITAL INTENSIVE SCHEMES DISCIPLINED OVERSIGHT AND FOCUS ON CASH GENERATION Centenary Quay Sherborne Wharf Southampton Birmingham • FY21 projected • FY21 projected sell through: 8% sell through: 100% • FY21 cash out: £15.9m • FY21 cash out: £11.5m • Bulk deal interest • Bulk deal agreed
Slide 12: Sustainable Reduction in Overheads
SUSTAINABLE REDUCTION IN OVERHEADS DELIVERING OUR OPERATIONAL EFFICIENCY PROGRAMME Administrative expenses down c.23% compared to FY19 Admin expenses £m Internal reorganisation complete − 215 fewer permanent roles 70 − Simplification of reporting lines and responsibilities 60 1 − Strong controls
Slide 13: Cash Management
CASH MANAGEMENT EARLY AND DECISIVE ACTION DRIVES IMPROVEMENT £m FY20 FY19 Change Land sale debtors settled Operating profit before changes in working capital and provisions 43.0 116.7 73.7 WIP control Decrease / (increase) in trade and other receivables 45.8 (11.5) 57.3 Tax payments Decrease i
Slide 14: Balance Sheet
BALANCE SHEET EXCELLENT PROGRESS SUPPORTS DIVIDEND REINSTATEMENT Net cash £142.2m (FY19: £37.2m) LAND CREDITOR ROLL OUT BY YEAR (£m) 100 Average net debt £99.6m (FY19: £144.2m) 80 Land creditors £205.7m (FY19: £216.5m) 60 Pension deficit £13.8m (FY19: £6.2m) 40 − £6.7m cash out in FY20 / £11
Slide 15: Balance Sheet
BALANCE SHEET FIXING INEFFICIENT USE OF WORKING CAPITAL Build programme disconnected from sales rates AV. NET DEBT VS WIP & LAND CREDITORS (£m) 250 1,220 Avg Reduction in completed stock units 1,199.7 216.5 205.7 WIP − 196 units at FY20 (459 units at FY19) 200 209.7 1,182.2 1,180 170.9 Immedia
Slide 16: Current Land Portfolio
CURRENT LAND PORTFOLIO DISCIPLINED ACTIVITY IN THE MARKET Short-term land Plots 1 37,129 37,715 2,247 home completions GDV (£bn) 12.1 11.4 ASP (£k) 324 299 952 plots added before deletions and other moves GDV significantly reduced Short-term 16,960 14,991 land − Underlying ASP difference minim
Slide 17: Summary
SUMMARY Good progress on first year commitments − Strengthened balance sheet − Cost-led recovery implemented − APBT delivered ahead of guidance Market will remain uncertain − Current trading encouraging Good visibility on gross margin progression − Strategy delivers growth in FY21 but poorer s
Slide 18: Strategy Update
STRATEGY UPDATE LANCASTER GRANGE BRICKET WOOD, ST ALBANS PETER TRUSCOTT CHIEF EXECUTIVE 18 Full Year Results 2020 | January 2021
Slide 19: Our Updated Strategy
OUR UPDATED STRATEGY STRONG PROGRESS ACROSS ALL ELEMENTS 19 Full Year Results 2020 | January 2021
Slide 20: Placemaking and Quality
PLACEMAKING AND QUALITY WHAT WE ARE KNOWN FOR LONGHURST PARK TADPOLE GARDEN VILLAGE 20 Full Year Results 2020 | January 2021 HORSHAM SWINDON
Slide 21: Land Portfolio
LAND PORTFOLIO Well located for changes to lifestyle and working practices Priority to secure more outlets Opportunity to utilise existing land portfolio in the short term − Multi tenure including bulk PRS and RPs − Joint ventures New acquisitions benefiting from operational efficiencies − N
Slide 22: Operational Efficiency
OPERATIONAL EFFICIENCY RETURNING TO SECTOR LEVEL MARGINS Key drivers Progress FY20 Medium term aim Internal re-organisation and • Sales and marketing: one-third • Align to sector average level cost saving initiatives reduction • Continued discipline as growth • Overheads: returns £15m annualised sav
Slide 23: Operational Efficiency
OPERATIONAL EFFICIENCY FULL SPECIFICATION REVIEW DELIVERED KITCHEN SANITARYWARE Multiple benefits − Standard core ranges £2,022 £206 increasing quality Total Saving Total Saving per plot1 per plot1 − Supply chain visibility and certainty − Optimum supplier manufacturing efficiency − Enhanced on-si
Slide 24: Operational Efficiency
OPERATIONAL EFFICIENCY REPLAN AND PLOTTING OPTIMISATION Plots Total Total GM Margin Scheme Division replanned plots optimisation enhancement Morton Park, Milton Keynes Chiltern 49 240 £546k 60bps Bessemer, Welwyn Chiltern 47 110 £838k 210bps Kegworth, Leicestershire Midlands 136 188 £745k 126bps Cur
Slide 25: Five Star Customer Service
FIVE STAR CUSTOMER SERVICE IMPROVEMENT IN ALL AREAS Five-star achieved (>90%) ‘Right first-time’ culture New processes and clear lines of responsibility − Build team taking greater ownership at handover − Customer service team focused on aftercare Currently trending above FY20 level 25 Full
Slide 26: Multi Channel Approach
MULTI CHANNEL APPROACH BUILDING A MORE RESILIENT BUSINESS Creation of Crest Nicholson Partnerships and Strategic Land − Coordinated approach on major projects − CNPSL focus on managing relationships − Divisions focus on build with local expertise − Kieran Daya appointed to Executive Leadership Tea
Slide 27: People
PEOPLE FOUR FOUNDATIONS Jane Cookson appointed to Executive Leadership Team Launched agile working policy Diversity and Inclusion Forum established Continued focus on employee engagement − Retain and develop our best talent Strong, new leadership team now established JANE COOKSON 27 Full Y
Slide 28: Sustainability & Social Value
SUSTAINABILITY & SOCIAL VALUE FOUR FOUNDATIONS Established Sustainability Committee New sustainability targets by 2025 − Scope 1 and 2 carbon reduced by 25% − Waste intensity reduced by 15% − 100% renewable electricity purchased Placemaking and biodiversity commitment Many examples of COVID-
Slide 29: Safety, Health & Environment
SAFETY, HEALTH & ENVIRONMENT FOUR FOUNDATIONS AIIR of 369 (FY19: 372) COVID-19 protocols quickly introduced − New induction process − New signage and extra sanitising facilities on sites − Protective measures introduced to all sales suites − Guidelines from CLC, HBF and Government Enhancements
Slide 30: Financial Targets
FINANCIAL TARGETS FOUR FOUNDATIONS Strategy implementation on track − Organisational restructure to deliver immediate savings − Greater operational discipline enhances balance sheet − Decisive action to address weaker assets Margin rebuild will now follow − FY21: another year of rebalancing the
Slide 31: Summary and Outlook
SUMMARY AND OUTLOOK Summary Strong progress on updated strategy Resilient business and balance sheet Experienced team now established Outlook Well set for all market scenarios Strong forward sales for FY21 CNPSL gives opportunity for additional revenue streams Margin rebuild now the pr
Slide 32: Q&A
FAIRFIELD GARDENS LETCHWORTH GARDEN CITY Q&A
Crest Nicholson Holdings — FY2020 Earnings Presentation on 6ix