Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — H1 2023 Earnings Presentation
28 slides from Crest Nicholson's earnings presentation, Jun 8, 2023
Slide 1: Half Year Results 2023
LANCASTER PARK WEST MALLING Crest Nicholson Holdings plc HALF YEAR RESULTS 2023 8 June 2023
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 DUNCAN COOPER • FINANCIAL REVIEW PETER TRUSCOTT • MARKET OVERVIEW • STRATEGY UPDATE AND OUTLOOK Q&A FERNHURST CAMBERLEY 3 HALF YEAR RESULTS 2023 June 2023
Slide 4: Half Year Summary
HALF YEAR SUMMARY Evolution of trading environment − Challenging start to HY23 − Stability returned and improving confidence levels − Latest core inflation data Steady recovery in transaction levels − Pricing remains robust High quality sites added on competitive terms Geographical expansion
Slide 5: Financial Review
FINANCIAL REVIEW DUNCAN COOPER GROUP FINANCE DIRECTOR MORTON PARK MILTON KEYNES 5 HALF YEAR RESULTS 2023 June 2023
Slide 6: Income Statement
INCOME STATEMENT A RESILIENT PERFORMANCE DESPITE ECONOMIC BACKDROP £m HY23 HY22 % Change Revenue 282.7 364.3 (22.4) Adjusted cost of sales 1 (232.1) (286.8) Admin expenses as per guidance Adjusted gross profit 1 50.6 77.5 (34.7) − Expect FY23 to be c.£60.0m Adjusted gross profit margin 1 17.9% 21.
Slide 7: Sales Metrics
SALES METRICS ‘SOFT LANDING’ SCENARIO FOR TRADING HY23 HY22 % Change Outlets (average) 48 58 (17.2) Outlet openings are challenging SPOW (open market) 0.54 0.72 (25.0) − Planning environment Home completions (units) SPOW rate steadily improved Open market (private) 532 754 (29.4) − No geographic
Slide 8: Exceptional Items
EXCEPTIONAL ITEMS GOOD PROGRESS ON REMEDIAL WORK £m HY23 HY22 Combustible materials credit (10.0) - Signed Developer Remediation Contract on Combustible materials charge 1.4 105.0 13 March 2023 Net combustible materials (credit)/ charge (8.6) 105.0 Net combustible materials credit of £8.6m − £1.
Slide 9: Operating Margin Walk
OPERATING MARGIN WALK LOWER TRANSACTION ACTIVITY AND PERSISTENT BUILD COST INFLATION Volume / rate change NRV, old sites, incentives Admin Sales & London expenses Marketing Chest Hospital HY22 HY23 9 HALF YEAR RESULTS 2023 June 2023
Slide 10: Gross Margin Evolution
GROSS MARGIN EVOLUTION CONTINUED ACCRETION FROM A CHANGING LAND PORTFOLIO FY23 and FY24 still impacted by legacy sites as guided SHORT TERM LAND PORTFOLIO (after S&M) − 45 units at Brightwells Yard, Farnham 30.0% − 51 units at Centenary Quay, Southampton 25.0% New land acquisitions at better ret
Slide 11: Balance Sheet
BALANCE SHEET INVESTING FOR FUTURE GROWTH Net cash at £66.2m (HY22: £173.3m) LAND CREDITOR ROLL OUT BY YEAR (£m) 160 Net debt including land creditors at £82.0m (HY22: £6.6m) 140 Average net cash at £104.2m (HY22: £98.6m) 120 100 Pension surplus under IAS19 at £14.1m (HY22: £35.4m) 80 60 G
Slide 12: Capital Allocation
CAPITAL ALLOCATION A CLEAR FRAMEWORK FOR VALUE CREATION Maintain a robust Geographical Sustainable Capital balance sheet expansion dividend policy efficiency • Respecting the • Greater land release • 2.5x cover • Disciplined and cycle opportunities away • Provides right selective on new • Land Credi
Slide 13: Current Land Portfolio
CURRENT LAND PORTFOLIO SEVERAL HIGH QUALITY SITES ADDED IN FIRST HALF Short-term land Plots 1 36,700 37,472 894 home completions GDV (£bn) 12.1 12.5 ASP (£k) 333 335 1,539 plots added since FY22 − 473 plots at Wheatley, Oxford Short-term − 400 plots at Harlington, Bedfordshire land 14,250 15,011
Slide 14: Summary
SUMMARY Challenging start to first half − New sites continue to enhance portfolio Balance sheet remains strong − Net cash at £66.2m − Less active in land in FY24 − Combustibles now codified − Confidence on flexing dividend policy Forward sales at 2 June 2023 − c.85% of FY23 revenue covered E
Slide 15: Market Overview and Strategy Update
MARKET OVERVIEW AND STRATEGY UPDATE PETER TRUSCOTT CHIEF EXECUTIVE HENLEY GATE IPSWICH 15 HALF YEAR RESULTS 2023 June 2023
Slide 16: Market Overview: Macro Economic Backdrop
MARKET OVERVIEW MACRO ECONOMIC BACKDROP MORTGAGE RATES (Average %) Selling environment has steadily recovered 7 − Lower sales rate in line with pre Help to Buy − Pricing remains resilient 6 95% LTV − Challenging for first-time buyers 5 Build cost inflation persisted for longer than expected 75%
Slide 17: Market Overview: Planning Environment
MARKET OVERVIEW PLANNING ENVIRONMENT QUARTERLY HOUSING STARTS IN ENGLAND (‘000) Decline in volume of allocated sites 60 − Inevitable following the removal of housing targets 50 40 Under-resourced planning departments − Increasingly inefficient 30 − Poor communication and updates on status 20 D
Slide 18: The Land Market
THE LAND MARKET LAND ENVIRONMENT Attractive opportunities in H1 as others vacated the market Signs that supply is now tightening given lower demand Planning constraints also slowing supply of new sites Strong balance sheet enabled us to be active in H1 − 1,957 plots approved for purchase at
Slide 19: Land Portfolio: Case Study – Maidenhead Road, Windsor
Redline Boundary Plan LAND PORTFOLIO CASE STUDY – MAIDENHEAD ROAD, WINDSOR SITE LOCATION CURRENT LAND USE The site is located on the western • Undeveloped Agricultural Land edge of Windsor, less than a 10 minute drive to both Windsor rail • Now outside of Green Belt boundary stations, providing a fa
Slide 20: Land Portfolio: Case Study – Wheatley Campus, Oxford
LAND PORTFOLIO Redline Boundary Plan CASE STUDY – WHEATLEY CAMPUS, OXFORD SITE LOCATION CURRENT LAND USE The site is located approximately 6 • Teaching facilities (constructed 2006+) miles from Oxford city centre on the northern edge of Wheatley (near • Student Campus - Accommodation A40), a small h
Slide 21: Land Portfolio: Case Study – Harlington, Bedfordshire
Redline Boundary Plan LAND PORTFOLIO CASE STUDY – HARLINGTON, BEDFORDSHIRE SITE LOCATION CURRENT LAND USE Located on the western edge of • Undeveloped Agricultural Land Harlington in Central Bedfordshire, within a 5-minute walk from • Greenfield with minimal technical issues Harlington train station
Slide 22: Building Blocks in Place for Recovery
BUILDING BLOCKS IN PLACE FOR RECOVERY DISCIPLINED AND SELECTIVE LAND ACQUISITION Sector normal Strong cash Well-located and Highly margins generation and high quality experienced balance sheet portfolio management team • Depleting poor GM sites (Farnham FY24) • Opportunistic and disciplined land inv
Slide 23: Delivering Growth
DELIVERING GROWTH YORKSHIRE AND EAST ANGLIA EXPANSION TAKING SHAPE Expanding into strong local markets with greater availability of land Scarborough Proportionate investment strategy YORKSHIRE HEAD OFFICE York Yorkshire Leeds Hull Halifax Wakefield − Fully operational from Leeds office Sprotbr
Slide 24: Five-Star Customer Service
FIVE-STAR CUSTOMER SERVICE SIGNIFICANT INVESTMENT AND FOCUS Five-star recovery plan implemented − Customer Relationship managers on board − Enhanced monitoring and reporting − All key metrics starting to show impact − Will take time given the lag effect New process for identifying customer after
Slide 25: Multi Channel Approach
MULTI CHANNEL APPROACH KEY CAPABILITY IN CURRENT ENVIRONMENT PRS interest remains good and strong partnerships in place Some deals support FY24 completion profile and beyond Registered Providers remain active despite tougher market High quality strategic land portfolio − A source of future a
Slide 26: Sustainability & Social Value
SUSTAINABILITY & SOCIAL VALUE GOOD PROGRESS AGAINST TARGETS Good progress on sustainability targets Reducing greenhouse gas emissions in line with science-based targets − Increased the use of HVO biodiesel − Increased the proportion of electricity on renewable tariffs − Enhanced monitoring and r
Slide 27: Summary and Outlook
SUMMARY AND OUTLOOK Summary Sales market has stabilised albeit at lower level High quality sites added in good locations Geographical expansion is on track Outlook Robust forward order book for H2 FY23 dividend to be maintained at FY22 level Well placed for recovery WATERMAN’S GATE ARBOR
Slide 28: Q&A
ACKENDER HILL ALTON Q&A
Crest Nicholson Holdings — H1 2023 Earnings Presentation on 6ix