Crest Nicholson Holdings PLC · LSE:CRST
Crest Nicholson — H1 2003 Earnings Presentation
26 slides from Crest Nicholson's earnings presentation, 2003
Slide 1: Crest Nicholson
NICHOLSON
Slide 2: Financial Highlights
FINANCIAL HIGHLIGHTS Half Year Half Year Increase 2003 2002 % Pre-Tax Profit £32.0m £24.2m +32% Earnings Per Share 19.6p 14.7p +33% Dividends Per Share 3.5p 3.0p +17% All comparatives are restated
Slide 3: Contribution from Activities
CONTRIBUTION FROM ACTIVITIES Half Year Half Year 2003 2002 Turnover Operating Turnover Operating Change £m Profit £m Profit in Profit £m £m Development 249.1 38.5 210.4 32.0 6.5 Construction - 23.9 - 86.8 (1.4) 1.4 discontinued 273.0 38.5 297.2 30.6 7.9 Interest (6.5) (6.4) (0.1) Pre-Tax Profit 32.0
Slide 4: Development - Trading Results
DEVELOPMENT - TRADING RESULTS Half Year Half Year Full Year 2003 2002 Change 2002 £m £m £m £m Turnover: Houses (incl. JV) 211.0 171.1 39.9 427.6 Residential Land 30.7 22.6 8.1 40.2 Commercial Uses 7.4 16.7 (9.3) 47.7 249.1 210.4 38.7 515.5 Gross Margin (incl. JV) 61.5 52.9 8.6 122.0 % 24.7% 25.1% 23
Slide 5: Residential - Sales by Sector
RESIDENTIAL - SALES BY SECTOR Half Year Half Year Full Year 30.4.03 30.4.02 31.10.02 Total Housing: Units 833 736 1,899 Average Selling Price £253,300 £232,500 £225,100 Turnover £211.0m £171.1m £427.6m Open Market: Units 769 640 1,662 Average Selling Price £264,000 £238,000 £240,200 Turnover £203.0m
Slide 6: Balance Sheet
BALANCE SHEET 30.4.03 30.4.02 31.10.02 £m £m £m Fixed assets and investments 17.4 10.5 14.5 Operating assets: Stock 677.4 574.0 598.3 Deduct land creditors (292.5) (209.2) (262.1) 384.9 364.8 336.2 Debtors 148.2 133.7 169.8 Trade creditors (101.0) (126.9) (141.6) 432.1 371.6 364.4 449.5 382.1 378.9
Slide 7: Development Stock and Work in Progress
DEVELOPMENT STOCK AND WORK IN PROGRESS 30.4.03 30.4.02 31.10.02 £m £m £m Development portfolio 464.9 366.2 429.3 Plots 11,899 10,808 10,760 APC £40,100 £34,500 £40,200 Gross margin £501.6m £517.6m £493.2m As % sales value 22.5% 25.0% 23.2% Commercial and land held for resale 82.4 65.0 54.8 Strategic
Slide 8: Financial Position
FINANCIAL POSITION 30.4.03 30.4.02 31.10.02 £m £m £m Medium term borrowing - US Private Placement 2006 - 2011 120.1 120.1 120.1 Long term gearing 45% 53% 48% Net borrowing 184.3 154.3 131.8 Gearing (treating Prefs as shareholders’ funds) 69% 68% 53% Interest cost (fixed £4.8m) 6.5 6.4 12.8 Interest
Slide 9: The Market
THE MARKET • London – Central luxury apartment oversupplied - weak – Demand for properties under £400k still good – High demand for affordable accommodation • South East – Demand still good overall – Market for properties over £1m difficult • South West - market still strong • Midlands - market stil
Slide 10: Crest Experience
CREST EXPERIENCE • Low exposure to overheated markets • Visitor levels satisfactory • Impact of sales incentives limited - prices net • Cancellation rates low - in line with previous years
Slide 11: Order Book
ORDER BOOK 30.6.03 30.6.02 31.12.02 Units Turnover Units Turnover Units Turnover £m £m £m Exchanges 1,350 190.3 1,735 274.7 1,310 206.3 Reservations 246 59.2 229 52.6 137 33.0 Forward orders 1,596 249.5 1,964 327.3 1,447 239.3
Slide 12: Land Policy
LAND POLICY • Sourcing and adding value to land • Generating development profit and cash • Balancing land bank • Continued focus on affordability • Optimising return on capital
Slide 13: Residential - Short Term Land Portfolio Movement - 2003 Half Year
RESIDENTIAL - SHORT TERM LAND PORTFOLIO MOVEMENT - 2003 HALF YEAR Average Sales Plot Plots Selling Value Gross Margin Cost as % Price Sales Value £m £m % At start of year 10,760 £197,600 2,126.6 493.2 23.2% 20% Land bought 2,575 £167,100 430.3 89.2 20.7% 24% Layout and design improvements 148 50.0 8
Slide 14: Residential Portfolio - Location D.O.E. Regions
RESIDENTIAL PORTFOLIO - LOCATION D.O.E. REGIONS 30.4.03 30.4.02 Plots Sales % Plots Sales Value % Value £m £m Greater London 1,225 371.3 17% 1,150 309.5 15% South East 2,403 552.5 25% 2,676 675.1 33% London & S.East 3,628 923.8 42% 3,826 984.6 48% South West 4,509 771.9 35% 4,571 780.2 38% East Angl
Slide 15: Total Land Bank - Residential
TOTAL LAND BANK - RESIDENTIAL 30.4.03 30.4.02 31.10.02 Plots Plots Plots Short term portfolio 11,899 10,808 10,760 Strategic Land: Allocated for development 2,145 1,940 2,231 In planning process 10,554 9,272 11,504 12,699 11,212 13,735 Total land bank 24,598 22,020 24,495
Slide 16: Issues Facing the Industry
ISSUES FACING THE INDUSTRY • Government wants high density city living • Consumer wants – Detached bungalow with a garden – Convenient – Near the countryside – In a “nice” area • Structural under supply set to continue
Slide 17: Crest Solution
CREST SOLUTION • High density urban homes • Designs that people want • Prices they can afford • Meeting sustainability criteria
Slide 18: Case Study Attwood Green
CASE STUDY ATTWOOD GREEN
Slide 19: Appendix
Appendix
Slide 20: Attwood Green
ATTWOOD GREEN • Failing sink estate – Crime – Unemployment – Vandalism – Economic decline • Partner - Birmingham City - Optima Housing Association • Crest invest in Public Realm/Social Infrastructure • Land payment deferred until sale of units • Profit share over base price threshold
Slide 21: Planning
PLANNING • Fast track planning on submissions • Density increase from 1142 units to 1550 units • 200,000 sq.ft. commercial, 50,000 sq. ft. retail/leisure • Social content 24% i.e. 375 - total HA units – Refurbished Towers 150 units – New Social Rented Housing 165 units – Shared Ownership 60 units
Slide 22: Sales
SALES • Target market - young, skilled, professional • 44 units sold within 10 days of release of 1st phase • Letting and sale of 47,000 sq.ft. of B1 office agreed • Further phases to be released
Slide 23: Crest Strategy and Benefits
CREST STRATEGY AND BENEFITS • Broad product spread • Mixed use developments • Less competition • Economies of scale much less relevant • Planning and land buying opportunities • Able to sell land with high added value • Scope to ramp up volumes • Maintain profitability in spite of low inflation
Slide 24: Summary
SUMMARY • Confident of further strong results • Positive about prospects
Slide 25: Appendix
APPENDIX
Slide 26: Residential Land Growth of the Land Bank 1998 - 2003
RESIDENTIAL LAND GROWTH OF THE LAND BANK 1998 - 2003 31.10.98 31.10.99 31.10.00 31.10.01 31.10.02 30.4.03 Plots 6,885 6,788 7,778 10,424 10,760 11,899 £m £m £m £m £m £m Sales value 881.9 1,104.0 1,444.3 1,936.6 2,126.6 2,224.5 ASP £128,100 £162,600 £185,700 £185,800 £197,600 £186,900 Land 207.7 252.