Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — FY2017 Earnings Presentation
30 slides from Crest Nicholson's earnings presentation, Jan 24, 2018
Slide 1: Preliminary Results for 2017
Crest Nicholson Holdings plc Preliminary Results for 2017 24th January 2018
Slide 2: Agenda
Agenda • Highlights Stephen Stone • Operational performance Patrick Bergin • Financial results Robert Allen behind • Summary Patrick Bergin • Q&A
Slide 3: Strategic positioning
Strategic positioning Reaching natural scale • Operating at the quality end of the new homes market across the Southern half of England; new Chiltern & Midlands divisions complete geographic coverage • New divisions growing to scale underpins revenue and volume increases over the next 3 – 4 years; s
Slide 4: Performance highlights
Performance highlights Sales & Earnings +7% Templates Dividends +20% • Strong financial performance, delivering further growth in sales (including joint ventures), earnings and dividends, as business moves to 2x cover model • Market backdrop, with sales price inflation moderating; Zone 1 slower than
Slide 5: Operational performance
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Slide 6: Building blocks for future growth
Building blocks for future growth Divisional expansion stimulating good outlet growth • Crest now re-established in all target geographies • Growing to natural scale over next 3-4 years Evolving price & product mix • Higher ASP & lower Sales per Outlet inTemplates revenue mix • Strong volumes from m
Slide 7: Outlet growth key
Outlet growth key Templates • Steady growth in outlets over last two years; accelerated by addition of Chiltern in late 2015 • Opening Midlands in 2017 will stimulate further growth in 2018 & beyond; 3-4 additional outlets per division, per year – c.15% growth p.a. from two divisions • Good outlet b
Slide 8: Sales rates & ASP
Sales rates & ASP £’000 SPOW • Sales rates given current sales mix settling down in 0.75 – 0.8 range • OM ASP growth in line with stated strategy to reposition product & location mix, to behind drive strong revenue growth; peaks in 2018 • Volume mix in FY18 expected to comprise reduced affordable bu
Slide 9: Strong delivery on a number of sites
Strong delivery on a number of sites • Major site model continues to provide strong volume underpin; broad tenure & product mixes: Open market – traditional and contemporary Affordable housing Private Rented Sector Land sales to other developers part of our model Templates • Multi-outlet app
Slide 10: Partnerships a growing element of land pipeline
Partnerships a growing element of land pipeline Proportion of portfolio subject to partnership Our partners: • Share our ethos for high quality Partnership development working 24% • Participate in the risks and Non Partnership rewards of a project working 76% • Defer land payments, Oakgrove, MK: 1,0
Slide 11: Strategic Land Great Source of Long Term Value
Strategic Land Great Source of Long Term Value Our Strategic land: • Source of 44% of consented short-term land pipeline Strategic land pipeline • Combines backbone sites supports all with outlet breadth Operating Divisions • Increasingly supports our Garden Village brand behind • Can be drawn down
Slide 12: Land, balance sheet and cash flows
Land, balance sheet and cash flows Land pipeline Plots GDV £m Balance Expected Sheet land total land at cost - £m cost - £m 2017 Short-term 16,260 5,776 677 1,117 2017 Strategic 18,174 5,960 33 1,206 2017 Total 34,434 11,736 710 2,323 2016 Short-term 15,901 5,532 563 1,205 2016 Strategic 17,026 5,11
Slide 13: Land sources underpin forward visibility
Land sources underpin forward visibility Templates • Strong visibility on land sources for forecast horizon; over 85% of FY19 land owned with most of balance identified and procurement underway – modest requirement for additional sites • Over 80% of FY20 land sources identified, with over 60% contra
Slide 14: Driving business improvements
Driving business improvements • Seeking to increase business productivity: • On-going examination of economics of off-site manufacturing: prototype houses built & evaluation for cost & performance underway • New range of more contemporary house types progressing. Will complement existing formats and
Slide 15: Operational summary
Operational summary • Land – strong and varied supply, underpinning unit delivery and maintaining multiple channels to market • Sales – sales rates and ASPs largely re- positioned, to drive revenue growth Templates • Outlets – new Chiltern and Midlands divisions driving strong outlet growth as they
Slide 16: Financial results
Crest Financial results
Slide 17: 2017 Financial Performance - Highlights
2017 Financial Performance - Highlights Sales incl JV’s of £1,066m (2016: £1,000m) +7% Operating profit of £211.6m (2016: £203.8m) +4% Profit before tax of £207.0m (2016: £195.0m) +6% Earnings per share of 66.1p (2016: 62.0p) +7% Dividend per share of 33.0p (2016: 27.6p) +20% Operating profit margin
Slide 18: Forward sales
Forward sales YTD YTD FY17 FY16 FY18 FY17 Units – all years 2,462 2,343 1,997 1,773 % change on prior period +5% +13% GDV (£m) – all years 575.7 533.5 391.4 344.5 % change on prior period +8% +14% GDV (£m) – current year 441.0 395.8 265.3 231.0 +11% +15% • Positive momentum with forward sales for 20
Slide 19: Key Sales Metrics
Key Sales Metrics FY 2017 FY 2016 Inc/(Dec) % Outlets (full year equivalents) 51 47 +9% Sales per Outlet Week (OM inc-PRS) 0.81 0.95 (15%) Sales per Outlet Week (OM ex-PRS) 0.77 0.81 (5%) Legal completions Open market (ex-PRS) 1,982 2,101 (6%) PRS 266 191 +39% Affordable 687 578 +19% Total 2,935 2,8
Slide 20: Key Price Metrics
Key Price Metrics ASPs FY 2017 FY 2016 Inc/(Dec) % Legal completions OM ex-PRS 417 384 +9% OM inc. PRS 388 369 +5% Affordable* 174 149 +17% Total housing 338 325 +4% OM Reservations in 2017 OM ex-PRS 416 400 +4% OM inc. PRS 403 365 +10% Forward sales OM ex-PRS 433 445 (3%) Affordable* 143 136 +5% *
Slide 21: Income statement
Income statement Income statement (£m, Change FY 2017 FY 2016 % increase unless stated) on 2016 Revenue 1,043.2 997.0 46.2 5% Cost of sales (768.3) (731.2) (37.1) Gross profit 274.9 265.8 9.1 3% % gross profit margin 26.4% 26.7% (30bps) Administrative expenses (63.3) (62.0) (1.3) Operating profit 21
Slide 22: Robust Margin Delivery
Robust Margin Delivery 35.0% Gross Margins 30.0% 28.6% 28.6% 27.5% 27.4% 26.9% 27.5% 26.7% 26.4% 25.0% 5.4% 3.0% 2.0% 1.3% 6.1% 14.5% 11.0% 20.0% 17.7% 15.0% 23.2% 24.5% 24.7% 25.1% 10.0% 20.8% 16.4% 14.1% 5.0% 9.8% 0.0% FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 Historic cost Fair value • Delivered 40
Slide 23: Balance sheet
Balance sheet Balance sheet (£m, unless stated) 31st October 31st October Change on 2017 2016 Oct’16 Non-current Assets 110.0 118.7 (8.7) • Investing for growth Inventory 1,086.5 935.8 150.7 - 16% increase in Trade & other receivables/assets 106.2 76.6 29.6 inventory Cash and cash equivalents 175.2
Slide 24: Cash flow
Cash flow Cash flow (£m, unless stated) FY 2017 FY 2016 Change Operating profit before changes in working capital and provisions 217.7 209.4 8.3 Increase in trade and other receivables (26.8) (46.4) 19.6 Increase in inventories (150.7) (31.3) (119.4) Increase in trade and other payables 36.4 60.0 (2
Slide 25: Track record on Margins & ROCE
Track record on Margins & ROCE (%) EBIT% ROCE% 35 31.3% 29.7% Returns to shareholders 30 underpinned by: 26.8% 26.0% 24.1% • Strong operating profit 25 margins of 18% to 20% since 2013 20.1 20.3 20.4 20.3 20 18.5 • ROCE of 25% to 30% since 2014, underpinned by 15 strategic partnerships; expect to ma
Slide 26: Growing Returns for Shareholders
Growing Returns for Shareholders Current consensus view Cash return (% of market capitalisation) 8% 7% Returns to shareholders underpinned by: 6% • Strong operating profit 5% margins of 18% to 20% since 2013 4% • ROCE of 25% to 30% since 2014, underpinned by 3% strategic partnerships; expect to main
Slide 27: Summary
Crest NICHOLSON Summary err ee
Slide 28: Summary
Summary • Board changes reflect an orderly succession plan and secure strong expertise in the business • The fundamentals of the housing market remain strong in most Templates areas of operation: underpinned by high levels of employment and good mortgage access, supported by the Help to Buy scheme •
Slide 29: Q&A
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Slide 30: 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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