Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — FY2021 Earnings Presentation
31 slides from Crest Nicholson's earnings presentation, Jan 19, 2022
Slide 1: Preliminary Results 2021
MONKSMOOR PARK DAVENTRY Crest Nicholson Holdings plc PRELIMINARY RESULTS 2021 19 January 2022
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 • INTRODUCTION DUNCAN COOPER • FINANCIAL REVIEW PETER TRUSCOTT • MARKET CONTEXT • STRATEGY UPDATE • DELIVERING GROWTH Q&A ST JOHNS MEAD 3 PRELIMINARY RESULTS 2021 January 2022 BURY ST EDMUNDS
Slide 4: Introduction
INTRODUCTION PETER TRUSCOTT Chief Executive FULLERS GROVE 4 PRELIMINARY RESULTS 2021 January 2022 WANTAGE
Slide 5: Executive Summary
INTRODUCTION EXECUTIVE SUMMARY • Turnaround now complete • Strong financial performance delivered in FY21 − Net cash: £252.8m (FY20: £142.2m) − ROCE: 17.2% (FY20: 7.6%) • Excellent progress on strategy • Exciting growth plans announced at 2021 Capital Markets Day RED LODGE 5 PRELIMINARY RESULTS 2021
Slide 6: Financial Review
FINANCIAL REVIEW DUNCAN COOPER Group Finance Director TADPOLE GARDEN VILLAGE 6 PRELIMINARY RESULTS 2021 January 2022 SWINDON
Slide 7: Income Statement
INCOME STATEMENT MEDIUM-TERM MARGIN GUIDANCE ON TRACK £m (unless otherwise stated) FY21 FY20 % Change Revenue 786.6 677.9 16.0 • Adjusted gross profit up strongly Cost of sales 1 (619.9) (570.2) − Robust sales performance in FY21 Adjusted gross profit 1 166.7 107.7 54.8 − Longcross Film Studio at £1
Slide 8: Sales Metrics
SALES METRICS STRONG RECOVERY IN PRIVATE SALES RATE TAKEN INTO FY22 FY21 FY20 % Change • Consistent sales profile in FY21 Outlets (full year equivalents) 59 63 (6.3) − Outlets a function of planning SPOW (Open market) 0.80 0.59 35.6 − Equivalent unit and 100% JV unit change Home completions (units)
Slide 9: Exceptional Items
EXCEPTIONAL ITEMS COMBUSTIBLE MATERIALS CHARGE OFFSET BY NRV RELEASE £m FY21 FY20 • NRV release Cost of sales − £8.0m credit from 7.5% unutilised provision Inventory impairment (credit)/charge (8.0) 43.2 − Expect >75% of £20.7m to be utilised in FY22 Net combustible materials charge 28.8 0.6 − £0.5m
Slide 10: Exceptional Items: Combustible Materials
EXCEPTIONAL ITEMS BACKDROP REMAINS COMPLEX FOR COMBUSTIBLE MATERIALS £m FY21 • Detailed analysis on all buildings built in last 10 years Workmanship defects 12.5 − c.85% of buildings in scope have some provision or ‘low risk’ Design defects 17.7 • £3.4m spent on remedial works in FY21 Other costs (f
Slide 11: FY21 Gross Margin Delivery
FY21 GROSS MARGIN DELIVERY UNDERLYING GAIN TO HALF YEAR GUIDANCE BUT ALSO ONE-OFFS • FY21 Gross Margin % guided to 19.0% at HY21 • Longcross Film Studio at £16.0m vs £10.0m 0.7% 21.2% • Build completion slipped into FY22 Underlying − OV and SW both NRV schemes 0.7% − Margin accretive to FY21 0.8% Ol
Slide 12: Balance Sheet
BALANCE SHEET ROBUST FINANCIAL POSITION TO SUPPORT FUTURE GROWTH • Net cash at £252.8m (FY20: £142.2m) LAND CREDITOR ROLL OUT BY YEAR (£m) 140 • Net cash and land creditors at £29.9m (FY20: £63.5m credit) 120 • Average net cash at £78.4m (FY20: average net debt at £99.6m) 100 • £46.0m cash received
Slide 13: Land Portfolio
LAND PORTFOLIO A STRONG STORE OF FUTURE VALUE • 1,510 plots added to the short-term land portfolio Plots 1 36,985 37,715 − 491 plots at Moortown Lane, Ringwood GDV (£bn) 11.8 11.4 − 360 plots at Eastboro Way, Nuneaton ASP 1 (£k) 326 299 • >1,500 plots added to the short-term land portfolio in FY22 Y
Slide 14: Five-Year Financial Targets
FIVE-YEAR FINANCIAL TARGETS STRONG STRATEGIC PROGRESS REINSTATES MEDIUM-TERM GUIDANCE FY21 FY24 FY26 HOME COMPLETIONS (UNITS) 2,407 >3,000 >4,200 • Targets to reflect 2-phase growth agenda TRADING DIVISIONS 5 5+ 8 − Aspiration to deliver >4,200 units by FY26 • Growing partnerships business REVENUE C
Slide 15: Summary
SUMMARY • Strong rebound in performance post COVID-19 − Low margin sites identified and remedied − Operational efficiencies starting to take effect − Medium-term guidance reinstated • Forward sales at 14 January 2022 − 2,702 units and £719.0m GDV − c.63% of FY22 covered • Transformed balance sheet −
Slide 16: Market Context
MARKET CONTEXT PETER TRUSCOTT Chief Executive SHIPSTON GARDENS 16 PRELIMINARY RESULTS 2021 January 2022 SHIPSTON-ON-STOUR
Slide 17: Factors Affecting the Sector
MARKET CONTEXT FACTORS AFFECTING THE SECTOR • Political and economic environment – Housing supply remains a priority • Operational disruption – Materials and labour shortages – Build cost inflation – Planning and regulatory delays • Lending backdrop – Further interest rate rises could affect sentime
Slide 18: Strategy Update
STRATEGY UPDATE PETER TRUSCOTT Chief Executive WYCKE PLACE 18 PRELIMINARY RESULTS 2021 January 2022 MALDON
Slide 19: Turnaround Now Complete
TURNAROUND NOW COMPLETE TRANSFORMATIONAL PROGRESS • Delivered what we said we would do − Efficient, scalable operating platform − Robust balance sheet with resources to grow − Experienced leadership team in place • New house type rollout on track − Reduce build time by average of 7 weeks − Plots re-
Slide 20: The Next Phase of Our Strategy
THE NEXT PHASE OF OUR STRATEGY MAINTAIN OUR STANDARDS AND DELIVER GROWTH OUR AGENDA • Retain operational efficiencies and principles through growth • Accelerate operating margin recovery • Disciplined land acquisition that drives profit growth • Geographical expansion • Develop multichannel capabili
Slide 21: Margin and Volume Focus
MARGIN AND VOLUME FOCUS Operating Margin FY17 – FY26e TWO PHASES OF GROWTH 25% Phase 1 Phase 2 Phase 1 20% • Rebuilding operating margin to 18% by FY24 15% • Volume growth from existing divisions 10% − Total capacity of 3,250 units pa 5% Phase 2 0% FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 FY26 •
Slide 22: Land Portfolio
LAND PORTFOLIO INCREASED PARTICIPATION IN THE YEAR Short-Term Land Portfolio Gross Margin (after S&M) • Land to enable existing divisions to reach maturity 30% − Competition increasing 25% − Operational efficiencies key to hurdle rates 20% • 4,332 plots approved for purchase in FY21 at an average of
Slide 23: Multi Channel Approach
MULTI CHANNEL APPROACH STRONG PROGRESS DEVELOPING CAPABILITIES AND PARTNERSHIPS • CN approach to partnerships outlined at CMD in October − Complementary to open market delivery − Lower risk profile and enhanced ROCE − Shrinking discount to open market pricing − No exposure to low margin contracting
Slide 24: Five-Star Customer Service
FIVE-STAR CUSTOMER SERVICE ENHANCED CUSTOMER JOURNEY • Retained five-star customer satisfaction rating • Positive customer feedback on new house type range • New, consistent brand messaging and guidelines • Enhanced CRM system implemented − Increased lead generation and conversion • Growing digital
Slide 25: Sustainability and Social Value
SUSTAINABILITY AND SOCIAL VALUE STRONG PROGRESS AGAINST EXISTING CLIMATE CHANGE TARGETS 2025 targets Carbon emissions reduction target Renewable electricity target Waste reduction target 25% 100% 15% 21% this year 62% this year 4% this year up from 32% in 2019 • 41% reduced diesel • Circular economy
Slide 26: Sustainability & Social Value
SUSTAINABILITY & SOCIAL VALUE RECOGNISING OUR RESPONSIBILITY TO GO FURTHER • Signed up to Race to Zero − Net zero emissions no later than 2050 − Science-based targets to be announced later this year • Well placed for impact of Future Homes − New house types complement ‘Fabric First’ approach − R&D p
Slide 27: Delivering Growth
DELIVERING GROWTH PETER TRUSCOTT Chief Executive MORTON PARK 27 PRELIMINARY RESULTS 2021 January 2022 ROMSEY
Slide 28: Our Principles for Growth
OUR PRINCIPLES FOR GROWTH A CLEAR FRAMEWORK FOR EXPANSION • Build on our positive legacy − Strong brand − Reputation for placemaking − Customer service and build quality − High quality land portfolio • Leverage our scalable model − Standardised operating procedures and processes − New house type ran
Slide 29: Delivering Growth: Mobilising in Yorkshire and East Anglia
DELIVERING GROWTH MOBILISING IN YORKSHIRE AND EAST ANGLIA • Senior team recruitment progress Northumberland − New divisional leader for Yorkshire joined in January 2022 Tyne & Wear − Search for East Anglia equivalent in flight Cumbria Durham • Early land acquisition opportunities North Yorkshire Eas
Slide 30: Summary and Outlook
SUMMARY AND OUTLOOK • Turnaround now complete • Strong performance in FY21 − Delivered ahead of expectations − Operational efficiencies taking over − Low margin legacy sites receding • Enter FY22 in good shape − Strong forward order book of 2,702 units at £719.0m GDV − Robust financial position and
Slide 31: Q&A
WESTVALE PARK HORLEY Q&A
Crest Nicholson Holdings — FY2021 Earnings Presentation on 6ix