Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — FY2016 Earnings Presentation
32 slides from Crest Nicholson's earnings presentation, Jan 24, 2017
Slide 1: Preliminary Results for 2016
Crest Nicholson Holdings plc Preliminary Results for 2016 24th January 2017
Slide 2: Agenda
Agenda • Performance highlights Stephen Stone • Investing for Growth Patrick Bergin • Financial Results Patrick Bergin • Summary Stephen Stone • Q&A 1
Slide 3: Performance highlights (1)
Performance highlights (1) • Strong operational and financial performance – delivered on our target of £1bn of sales: • £997m statutory Revenue • £3m sales within JV line Templates • Housing market continues to thrive, particularly at lower price points where Help to Buy applies; ‘Brexit’ impact sho
Slide 4: Performance highlights (2)
Performance highlights (2) Revenue of £997.0m (2015: £804.8m) +24% Operating profit of £203.8m (2015: £163.3m) +25% Profit before tax of £195.0m (2015: £154.0m) +27% Earnings per share of 62.0p (2015: 49.3p) +26% Total dividend per share of 27.6p (2015: 19.7p) +40% Operating profit margin of 20.4% (
Slide 5: Performance highlights (3)
Performance highlights (3) Open-market ASP# of £371k (2015: £309k) (Legal Completions) +20% Unit completions of 2,870 units (2015: 2,725) +5% Sales Outlets at 47 (2015: 44) +7% Sales per Outlet Week* at 0.81 (2015: 0.90) -10% Forward sales at mid-January of £533.5m (2015: £511.8m) +4% GDV of land pi
Slide 6: Current market dynamics
Current market dynamics Fundamentals of the market are still strong… • Employment and mortgage access remain strong, underpinning demand. Lender appetite good and Help to Buy a major support for the sector Templates • Land availability continues to be very good, supporting re- investment at or above
Slide 7: Post-referendum sales performance
Post-referendum sales performance OM sales Outlets SPOW ASP Sales (ex-PRS) value Aug-Dec 2016 772 50 0.74 £439k £339m Templates Aug-Dec 2015 721 44 0.78 £353k £254m Variance 51 6 (0.04) £86k £85m % change +7% +14% -5% +24% +33% • Sales rates since 2016 referendum broadly in line with prior year; low
Slide 8: London: a two speed market
London: a two speed market • Properties over £1m selling at slower rates. London Help to Buy driving strong sales rates in areas of better affordability • Sales prices in Zone 1 flat to soft, depending on location and price point Templates • £80m of revenue to achieve in Zone 1 of which only 41 unit
Slide 9: Political landscape
Political landscape • Strong political support for housing remains; no change to target of 1m new homes by 2020 • Focus moving towards improving the speed of delivery and less on increasing Templates home ownership • White Paper now somewhat overdue: expect to be supportive of means to improve deliv
Slide 10: Bench strength
Bench strength Stephen Stone Chief Executive Officer Patrick Bergin Templates Chief Operating Officer Robert Allen Group Finance Director Chris Tinker Chairman - Major Projects & Strategic Partnerships 9
Slide 11: Investing for Growth
NICHOLSON Investing for Growth
Slide 12: Investing for growth
Investing for growth • 2016 target achieved; re-iterating commitment to 2019 targets of 4,000 homes and £1.4bn sales • Having largely repositioned ASPs, growth now primarily volume driven as newer divisions reach capacity and PRS numbers increase Templates • In addition, a further division is planne
Slide 13: Strong land pipeline
Strong land pipeline Oct 2016 Oct 2015 Change % Units GDV £m Units GDV £m Units GDV £m Short-term housing 15,901 5,300 16,064 5,106 (1)% 4% Short-term commercial - 232 - 249 (7)% Total short-term 15,901 5,532 16,064 5,355 (1)% 3% Strategic land 17,026 5,114 17,712 5,111 (4)% -% Total under contract
Slide 14: Expanding width of land pipeline
Expanding width of land pipeline • Land pipeline ‘width’ – measured in Outlets – most important metric for ensuring delivery. Continual replenishment of sites important for growth • Sixty sites currently under construction; will fuel further Outlet growth, helping to drive forecast volume increases
Slide 15: Active strategic pipeline
Active strategic pipeline • Good traction with Strategic land; 7 sites and 1,536 plots consented in the year and converted into the short-term land pipeline • 82% of plots now in Draft Allocations or better; planning applications running on a number of larger schemes • 9 sites and 1,615 plots added
Slide 16: Driving delivery on major sites
Driving delivery on major sites Templates • High sales rates and variety of tenures drive strong completion levels on a number of our schemes, helping to meet delivery aspirations • Product mix includes c.50% apartments which sell at a faster rate • Crest’s ‘Garden Village’ model well established an
Slide 17: Evolving approaches in Production
Evolving approaches in Production • Production & skills increasingly a key constraint as the sector seeks to meet national volume delivery aspirations; new approaches may be required • Additional IT tools deployed to ensure Templates programme accuracy and maintenance of quality standards as the bus
Slide 18: Developing our people
Developing our people • Developing management and site skills in the business a high priority • Action on a number of fronts, to grow and develop our own staff and support the supply- chain in delivering growth • Opportunities for learning and career progression in a growing Crest business aid attra
Slide 19: Financial results
NICHOLSON Financial results
Slide 20: Key metrics (1)
Key metrics (1) FY 2016 FY 2015 Inc/(Dec) % Outlets (full year equivalents) 47 44 +7% Sales per Outlet Week (OM inc-PRS) 0.95 1.04 -9% Sales per Outlet Week (OM ex-PRS) 0.81 0.90 -10% Legal completions Open market (ex-PRS) 2,101 2,042 +3% PRS 191 109 +75% Affordable 578 574 +1% Total 2,870 2,725 +5%
Slide 21: Key metrics (2)
Key metrics (2) ASPs FY 2016 FY 2015 Inc/(Dec) % Legal completions OM ex-PRS 384 317 +21% OM inc. PRS on OM basis# 371 309 +20% Affordable* 149 143 +4% OM Reservations in 2016 OM ex-PRS 400 330 +21% OM inc. PRS 365 316 +16% Forward sales OM ex-PRS 423 352 +20% OM inc. PRS on OM basis# 314 287 +9% Af
Slide 22: Income statement
Income statement Income statement (£m, Change FY 2016 FY 2015 % increase unless stated) on 2015 Revenue 997.0 804.8 192.2 24% Cost of sales (731.2) (583.5) (147.7) Gross profit 265.8 221.3 44.5 20% % gross profit margin 26.7% 27.5% (80bps) Administrative expenses (62.0) (58.0) (4.0) Operating profit
Slide 23: Strong underlying margins
Strong underlying margins Fair Value Gross Margins Historic cost 28.6% 28.6% 27.5% 27.5% 27.4% 26.9% 26.7% • Underlying gross margin % levelling off but remain at a robust level; headline rate lower as contribution from fair valuation provision diminishes as expected • Margins tighter in higher-
Slide 24: Build costs
Build costs • Slight shift of emphasis, with higher increases on materials than labour costs; exchange rate impacts starting to work through, albeit impact on overall build cost <1% • Surveyors reporting improved overall picture for lettings against budgets • Cost inflation of 4-5%, being accommodat
Slide 25: Balance sheet
Balance sheet 31st October 31st October Change on Balance sheet (£m, unless stated) 2016 2015 Oct’15 • Modest inventory Non-current Assets 118.7 110.3 8.4 increase of 3%: completed stock Inventory 935.8 904.5 31.3 • Cash balances Trade & other receivables/assets 76.6 50.2 26.4 significantly Cash and
Slide 26: Land bank, balance sheet and cash flows
Land bank, balance sheet and cash flows Land pipeline Plots GDV £m Balance Expected Sheet land total land at cost - £m cost - £m 2016 Short-term 15,901 5,532 563 1,205 2016 Strategic 17,026 5,114 26 865 2016 Total 32,927 10,646 589 2,070 2015 Short-term 16,064 5,355 528 1,230 2015 Strategic 17,712 5
Slide 27: Cash flow
Cash flow Cash flow (£m, unless stated) FY 2016 FY 2015 Change Operating profit before changes in working capital and provisions 209.4 169.5 39.9 Increase in trade and other receivables (46.4) (35.3) (11.1) Increase in inventories (31.3) (90.4) 59.1 Increase in trade and other payables 60.0 4.1 55.9
Slide 28: Forward sales
Forward sales YTD YTD FY16 FY15 FY17 FY16 Units – all years 2,343 2,368 1,773 1,680 % change on prior period -1% +6% GDV (£m) – all years 533.5 511.8 344.5 328.9 % change on prior period +4% +5% % of FY2017/16 target 37% 37% 21% 25% • Modest growth in overall forward sales; temporary sales impact fr
Slide 29: Summary
rest NICHOLSON Summary ere Se ORL
Slide 30: Summary
Summary • Fundamentals of housing market remain strong in most areas of operation: high levels of employment and good mortgage access, supported by Help to Buy scheme • Last six months sales rates similar to prior year; higher ASPs Templates and increased outlet numbers driving revenue growth • The
Slide 31: Q&A
Crest NICHOLSON &A Q
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
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