Slide 1: Half Year Results Presentation
Crest Nicholson Half Year Results Presentation 18th June 2013
Slide 2: Half Year Results presentation
Half Year Results presentation • Performance Highlights and Operations Stephen Stone • Financial Results Patrick Bergin • Outlook & Summary Stephen Stone • Q&A 1 2
Slide 3: Business strategy set out at IPO
Business strategy set out at IPO Grow volumes back towards Outlets +8% plus ‘Natural scale’ strong sales rates Land additions Maintain focus on Southern half of centred on London & England South East Pull through Strategic land to Operational starts on support gross margins 4 strategic sites Operati
Slide 4: Performance highlights (1)
Performance highlights (1) Revenues of £192.0m (2012: £138.6m) +39% Unit completions of 810 units (2012: 746) +9% Sales per Outlet Week at 0.77 (2012: 0.65) +18% Forward sales of £330.9m (2012: £220.5m) +50% 3
Slide 5: Performance highlights (2)
Performance highlights (2) Gross profit of £53.4m (2012: £39.2m) +36% Gross profit margin of 27.8% (2012: 28.3%) -0.5% Operating profit of £34.8m* (2012: £21.7m) +60% Operating profit margin of 18.1%* (2012: 15.7%) +2.4% Profit before tax of £28.1m* (2012: £16.0m) +76% * Figures for 2013 quoted pre-
Slide 6: Outlet growth
Outlet growth • Outlets increased by 8% in the first half, averaging 43 for the period • New site openings and dual-outletting on major sites to sustain outlet growth 5
Slide 7: Strong sales performance
Strong sales performance 1.4 Sales per Outlet Week 1.2 1.0 Strong London sales May sales exceed one 0.8 per Outlet per Week, boosted by 0.6 ‘Help to Buy’ 0.4 Funding for Wet Lending impact weather coming & Jubilee through; 0.2 bank NewBuy rate holidays reductions - Nov-10 Dec-10 Jan-11 Feb-11 Mar-11
Slide 8: Supported by improving lending environment
Supported by improving lending environment • Crest’s sales rates have historically been strong versus peers • Further supported by improving mortgage market: pricing and availability Interest rate % May ‘12 Sept ‘12 Jan ‘13 May ‘13 Halifax new-build 80-90% LTV 5.39 5.19 5.09 4.39 Halifax NewBuy 5.99
Slide 9: Implications of housing stimulus
Implications of housing stimulus • Crest seeking to match demand with increased supply, but some potential for house price inflation as borrowing costs to customer reduce • Supply chain will need some time to adjust to higher demand • Recruit and train additional labour • Increase materials producti
Slide 10: Portfolio progress
Portfolio progress Apr 2013 Apr 2012 Change Units GDV Plot Units GDV Plot Units GDV Plot £m cost £m cost £m cost £’000 £’000 £’000 Short-term housing 17,094 3,780 29.3 15,413 3,233 27.8 1,681 547 1.5 Short-term commercial - 288 - 260 28 Total short-term 17,094 4,068 15,413 3,493 1,681 575 Strategic
Slide 11: Site additions
Site additions 6 SITES PURCHASED THIS YEAR: Plots 3 1 1. Sunbury 206 6 7 4 2. Beare Green 24 2 4 1 3. Woking 149 5 3 7 2 5 4. Isleworth 59 5. Kings Hill 40 8 6. Hereford 29 7. Cheddar 28 8. Southampton 329 9. Tooting 112 10Melior St., Borough 43 10 STRATEGIC SITE ADDITIONS: • Site acquisitions and o
Slide 12: Strategic land bank
Strategic land bank • 7 new sites added • 3 consents achieved in period • 4 operational commencements Units from strategically-sourced land set to rise to c.20% in FY13 (FY12: 15%) A dynamic source of high-margin land 11
Slide 13: Strong Short-Term Land Bank Characteristics
Strong Short-Term Land Bank Characteristics • Total sites: 76 – potential to dual outlet on larger schemes Unconditional • Fundamentals Right: Contract 9% Conditional • Balanced risk/reward Open Book Priority Return Contract Subject to Planning • 95% Southern half of England 13% 40% • 30% Public/pri
Slide 14: Larger sites: Maximising opportunity
Larger sites: Maximising opportunity • Drives OM volumes and market penetration Dual Out- through complementary letting forms of housing • Ancillary and complementary Mixed Large site Tenure Mix uses and • Provides progressive business opportunities community and Build Optimisation to Rent cash flow
Slide 15: Case study 1: Oakgrove
Case study 1:- Oakgrove • Partnership sourced on vision, design and sustainability principles through OJEU bid to the HCA • New £175m village for Milton Keynes • 950 dwellings • £18m District centre • Schools and community uses • Land secured under 15 year development agreement and drawn in phases:
Slide 16: Case Study 2: Faygate, Horsham
Case Study 2: – Faygate, Horsham • Strategically sourced and consented for c.2,300 dwellings • Land for first 1,416 dwellings acquired in discounted bulk deal • Balance of site held under option. • £2.3m GBB funding for the access roundabout • Land sale to help fund rest of initial infrastructure •
Slide 17: Evolving Crest's Vision: The Garden Village Principles
Evolving Crest’s Vision The Garden Village Principles: Politically and Locally Liked: Combining the best of town and country living Access to strong local, cultural, recreational and shopping facilities Integrates with and is accessible to transport systems Encourages vibrant communities and provide
Slide 18: Reinforcing "Partner of Choice" Claim
Reinforcing “Partner of Choice” Claim • Already able to demonstrate significant and strong on-going partnership record delivering vision, value and good design • Great Gateway to more public sector land: • Re-selected to HCA delivery partner panel in all three key operating areas • Negotiated and dr
Slide 19: Private Rental Sector
Private Rental Sector • Potentially good strategic fit with Crest’s larger sites, product and public sector partner’s aspirations. • Driving volume • Overhead leverage • Kicker for Return on Capital • Evolving models with HCA and two potential partners • HCA approved bid for funding to deliver circa
Slide 20: Financial Results
Financial Results
Slide 21: H1 2013 Financial Highlights
H1 2013 Financial Highlights Strong growth and good returns Revenue Open Market ASP Gross Profit £192.0m £241k £53.4m (2012: £138.6m) (2012: £233k) (2012: £39.2m) Gross Margins Operating Profit Operating Margins 27.8% £34.8m 18.1% (2012: 28.3%) (2012: £21.7m) (2012: 15.7%) Profit after tax EPS Net A
Slide 22: Key metrics
Key metrics H1 2013 H1 2012 Inc/(Dec) % Outlets 43 40 +8% Sales per Outlet Week (Open market) 0.77 0.65 +18% Legal completions Open market 699 537 +30% Affordable 111 209 -47% ASP Open market 241 233 +3% Affordable* 161 122 +32% * Affordable ASP varies depending on extent to which related Affordable
Slide 23: Income statement
Income statement Income statement (£m, H1 2013 Exceptional H1 2013 Change H1 2012 unless stated) Pre-exceptional costs Total (pre-exceptional) Revenue 192.0 192.0 138.6 53.4 38.5% Cost of goods sold (138.6) (138.6) (99.4) (39.2) Gross profit 53.4 53.4 39.2 14.2 36.2% % gross profit margin 27.8% 27.8
Slide 24: Balance sheet
Balance sheet Balance sheet (£m, unless stated) 30th Apr 31st Oct 30th Apr Change Change 2013 2012 2012 on Oct’12 on Apr’12 Non-current Assets 136.4 140.1 136.2 (3.7) 0.2 Inventory 542.3 469.4 438.3 72.9 104.0 Trade & other receivables 39.4 41.5 44.8 (2.1) (5.4) Cash and cash equivalents 79.1 150.1
Slide 25: Cash flow
Cash flow Cash flow (£m, unless stated) H1 2013 H1 2012 Change Operating profit before changes in working capital and 29.5 22.4 7.1 provisions Decrease in trade and other receivables 2.1 1.9 0.2 Increase in inventories (72.9) (44.1) (28.8) Increase/(decrease) in trade and other payables 19.4 (8.5) 2
Slide 26: Re-Financing
Re-Financing £m 30th April 31st October 2013 2012 • Term loans replaced with Cash 79.1 150.1 RCF; maturity Shareholder term loans - (151.9) extended to December 2016 Revolving Credit Facility (42.1) - Get Britain Building loans (34.6) (16.4) • Unsecured GBB Morley loan (12.5) (12.1) loans used to Ne
Slide 27: Forward sales
Forward sales YTD YTD FY12 FY11 FY13 FY12 Units – all years 1,877 1,327 837 947 % change on prior period +41% -12% GDV (£m) – all years 330.9 220.5 129.6 142.2 % change on prior period +50% -9% % of FY2013/12 target 88% 82% 25% 34% • Opened year with lower forward sales position; Open Market sales u
Slide 28: Outlook & Summary
Outlook & Summary
Slide 29: Outlook
Outlook • Improving mortgage availability and pricing, coupled with stimulus from ‘Help to Buy’ is having a positive impact on sales • Lead time to increase legal completions: supply chain, lenders and planning authorities all have to play their part – moderate impact by October’13 year-end • Benefi
Slide 30: Summary
Summary • A positive set of results on Crest Nicholson’s return to the market • Strong sales growth • Sustaining high operating margins • Positioned to continue driving value from high-quality development pipeline • Business strategy as outlined at IPO remains on track and is being delivered; Board
Slide 31: Q&A
Q&A
Slide 32: 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