Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — H1 2021 Earnings Presentation
30 slides from Crest Nicholson's earnings presentation, Jun 24, 2021
Slide 1: Half Year Results 2021
WESTVALE PARK HORLEY Crest Nicholson Holdings plc HALF YEAR RESULTS 2021 24 June 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 • HALF YEAR SUMMARY • MARKET OVERVIEW DUNCAN COOPER • FINANCIAL REVIEW PETER TRUSCOTT • STRATEGY UPDATE • SUMMARY AND OUTLOOK Q&A CAMPBELL WHARF MILTON KEYNES 3 Half Year Results 2021 | June 2021
Slide 4: Half Year Summary
HALF YEAR SUMMARY Strong HY21 trading performance − APBT: £36.1m (HY20: £4.5m) − Net cash: £130.4m (HY20: net debt £93.3m) − FY21 order book c.93% covered Good progress on all five strategic priorities Retained five-star customer satisfaction rating Longcross Film Studio sale for £45.0m cash
Slide 5: Market Overview
MARKET OVERVIEW Strong trading environment − Government support to keep housing market open − Robust completion profile beyond September − Positive lending backdrop Short-term operational challenges − Build costs and availability of some materials − More competitive land market on smaller sites
Slide 6: Financial Review
FINANCIAL REVIEW KINGSMEAD FAVERSHAM DUNCAN COOPER GROUP FINANCE DIRECTOR 6 Half Year Results 2021 | June 2021
Slide 7: Income Statement
INCOME STATEMENT EARNINGS RECOVERY ON TRACK £m HY21 HY20 % Change Revenue 324.5 240.0 35.2 Adjusted gross profit up 19.5% Cost of sales 1 (261.2) (204.1) − Legacy schemes still weigh on FY21 Adjusted gross profit 1 63.3 35.9 76.3 − Operational efficiencies accretive Adjusted gross profit margin %
Slide 8: Sales Metrics
SALES METRICS STRONG SALES MOMENTUM HY21 HY20 % Change Outlets (average) 57 64 10.9 Strong SPOW rate since January SPOW (Open market) 0.69 0.46 50.0 Plan to recover and grow outlets 1, 2 Home completions (units) Open market (private) 701 384 82.6 Unit presentation change for 2021 Affordable 19
Slide 9: Exceptional Items
EXCEPTIONAL ITEMS COMBUSTIBLE MATERIALS AND INVENTORY IMPAIRMENT £m HY21 HY20 Net combustible materials charge Cost of sales − £10.3m (c.50% new buildings) Inventory impairment (credit)/charge (7.6) 43.2 − £2.4m recoveries from third parties Net combustible materials charge 7.9 - − Remains complex
Slide 10: Sale of Longcross Film Studio
SALE OF LONGCROSS FILM STUDIO RECYCLING CAPITAL FOR GROWTH 50% equitable interest sold to Aviva − Expected to complete late summer 2021 − £45.0m cash consideration in H2 − >£10.0m of profit in H2 − Proportionately consolidated (not JV line) Revenue and profit recognition on legal completion − Ma
Slide 11: Clear Visibility to Gross Margin Recovery
CLEAR VISIBILITY TO GROSS MARGIN RECOVERY LOW MARGIN SITES IMPACT REDUCING 12% 2% 3% H2 GM% lower due to bulk completions (c.18.5%) − Sherborne Wharf, Birmingham 7% − Old Vinyl, Hayes FY21 FY22 Offset by Longcross Film Studio (c.19.0%) 19% 21% > 250bps GM% accretion into FY22 81% 95% Further
Slide 12: Overhead Discipline Remains a Focus
OVERHEAD DISCIPLINE REMAINS A FOCUS EXPECT A FURTHER REDUCTION IN UNDERLYING POSITION FOR FY21 Admin expenses Organisational structure fully embedded £m Continued benefits of agile working Bonus Annualised £2.5m charge from JRS repayment in 50.3 Inflation JRS & SBP savings December 2020 Oppo
Slide 13: Cash Management
CASH MANAGEMENT STRONG RECOVERY FROM COVID-19 DISRUPTION £m HY21 HY20 Change Operating profit before changes in working Trading profit and capital and provisions 30.0 12.1 17.9 inventories normalised Decrease in trade and other receivables 14.2 32.7 18.5 Increase in inventories (8.0) (60.4) 52.4
Slide 14: Balance Sheet
BALANCE SHEET TRANSFORMATIONAL PROGRESS DESPITE COVID-19 Net cash £130.4m (HY20: net debt £93.3m) LAND CREDITOR ROLL OUT BY YEAR (£m) 140 Net debt including land creditors £48.1m (HY20: £317.2m) 120 Average net cash £80.5m (HY20: av. net debt £125.0m) 100 80 £250m RCF undrawn at FY20 and thr
Slide 15: Current Land Portfolio
CURRENT LAND PORTFOLIO STRONG LIQUIDITY POSITION SUPPORTS ACTIVITY IN THE LAND MARKET Short-term land Plots 1, 2, 3 37,646 37,314 1,017 home completions GDV (£bn) 11.3 11.9 ASP (£k) 299 316 760 plots added before deletions and other moves − 360 plots at Nuneaton Short-term 16,263 15,138 − 254 pl
Slide 16: Summary
SUMMARY Strong trading performance Forward sales of 2,771 units and £691.8m GDV Transformational progress on balance sheet FY21 net cash to be around £170m − Including £45m Longcross consideration FY21 APBT upgraded to at least £100m − Including >£10m Longcross contribution HYGGE PARK KEYN
Slide 17: Strategy Update
STRATEGY UPDATE FULLERS GROVE WANTAGE PETER TRUSCOTT CHIEF EXECUTIVE 17 Half Year Results 2021 | June 2021
Slide 18: Our Strategy
OUR STRATEGY GOOD PROGRESS ACROSS ALL ELEMENTS Priorities Health and safety is always our number one priority Maintain focus on operational efficiency programme Accelerate gross margin recovery Disciplined acquisition of new land to drive volume growth Grow multichannel capability and numb
Slide 19: Placemaking and Quality
PLACEMAKING AND QUALITY CAMPBELL WHARF LONGHURST PARK CAMPBELL WHARF HORSHAM MILTON KEYNES 19 Half Year Results 2021 | June 2021
Slide 20: Land Portfolio
LAND PORTFOLIO REALISING VALUE FROM QUALITY ASSETS Non-core asset disposal of Longcross Film Studio Priority to secure more outlets More competition in land market − Stable pricing for larger sites Good progress in the half securing new land − New sites with reduced risk at lower ASPs − Oper
Slide 21: Operational Efficiency
OPERATIONAL EFFICIENCY MORE EFFICIENT PLATFORM TO DELIVER GROWTH Key drivers Progress HY21 Medium term aim Internal re-organisation and • Sales and marketing: • Align to sector average level cost saving initiatives further % of sales reduction • Continued discipline as • Overheads: growth returns fu
Slide 22: Operational Efficiency: New House Type Range
OPERATIONAL EFFICIENCY NEW HOUSE TYPE RANGE THE CHESHAM THE KESWICK THE DORKING THE KESWICK THE ROMSEY 22 Half Year Results 2021 | June 2021
Slide 23: Five-Star Customer Service
FIVE-STAR CUSTOMER SERVICE CONTINUED STRONG PERFORMANCE Retained five-star customer satisfaction rating New website launched May 2021 − Easier user interface − Contemporary look and feel New CRM system launched in January 2021 − Powerful insight generation and reporting − Targeted lead generat
Slide 24: Multi Channel Approach
MULTI CHANNEL APPROACH DIVERSIFIED REVENUE STREAM Complementary to private market operations − Lower risk profile and enhanced ROCE − Aligned placemaking principles Key capability in divesting existing apartment schemes Growing PRS demand for single family homes − Targeting key worker accommod
Slide 25: People
PEOPLE OUR FOUNDATIONS Strong competition for talent Launching new skills and development programmes − Leadership succession planning − Emerging talent − Early careers – c.50 trainees in FY21 Diversity and Inclusion a key focus − Forum ideas being implemented 25 Half Year Results 2021 | June 2
Slide 26: Sustainability & Social Value
SUSTAINABILITY & SOCIAL VALUE OUR FOUNDATIONS Embedded in business strategy − Strong governance and leadership − Targets set and linked with remuneration Good progress against 2025 sustainability targets − Reduce scope 1 and 2 carbon intensity by 25% − Reduce waste intensity by 15% − Procure 100
Slide 27: Sustainability in Action
SUSTAINABILITY IN ACTION OUR FOUNDATIONS New house types reduce waste − Efficient designs − OSM components − Standardised processes Reducing energy usage and carbon emissions − Eliminate: avoid unnecessary emissions − Reduce: run efficient operations − Substitute: biodiesel and renewable electri
Slide 28: Safety, Health & Environment
SAFETY, HEALTH & ENVIRONMENT OUR FOUNDATIONS Always our number one priority Culture and processes both important − Executive and operational committees − Regular Director-led site tours and inspections − New site and build manager protocols Further development of reporting tools and remote mon
Slide 29: Summary and Outlook
SUMMARY AND OUTLOOK Summary Turnaround of business progressing well Good progress in all five strategic priorities Earnings upgraded for FY21 Outlook Strong forward sales for FY21 Margin rebuild now the focus Clear plans for growth − Capital Markets Day on 20 October 2021 SHIPSTON GARDEN
Slide 30: Q & A
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