Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — FY2014 Earnings Presentation
30 slides from Crest Nicholson's earnings presentation, Jan 27, 2015
Slide 1: Preliminary Results for 2014
Crest Nicholson Holdings plc Preliminary Results for 2014 27th January 2015 Classified as General
Slide 2: Agenda
Agenda • Performance highlights and Operations Stephen Stone Templates • Financial Reserved Results 370 OM plots, 46 ahead Patrick Bergin Legally Completed 222 units, 25 ahead • Outlook and Summary Stephen Stone Sales of £56.9m, £1.5m behind • Q&A Classified as General 1
Slide 3: Performance highlights (1)
Performance highlights (1) Unit completions of 2,530 units (2013: 2,172) +16% -3% Reserved 370 OM plots, 46 ahead Sales per Outlet Week at 0.87 (2013: 0.90) Legally Completed 222 units, 25 ahead Forward sales £1.5m at mid-January of £399.8m (2013: Sales of £56.9m, £329.5m) behind +21% GDV of short t
Slide 4: Performance highlights (2)
Performance highlights (2) Operating profit of £128.1m (2013: £97.1m*) +32% Profit before tax of £116.7m (2013: £86.8m*) +34% Reserved 370 OM plots, 46 ahead Earnings per share of 39.3p (2013: 29.4p*) +34% Legally Completed 222 units, 25 ahead Dividend Sales per share of £56.9m, £1.5mofbehind 14.3p
Slide 5: Sales rates – stabilising at a good level
Sales rates – stabilising at a good level 1.6 Sales per Outlet Week 1.4 Pent-up demand after initial launch of Help 1.2 to Buy 1.0 0.8 0.6 2012 2013 2014 0.4 Nov-Apr 0.65 0.77 0.82 0.2 May-Oct 0.68 1.02 0.92 0.67 0.90 0.87 - Classified as General 4
Slide 6: Strong growth back to natural scale
Strong growth back to natural scale • New Division established to take Crest Nicholson business back to natural scale of operation – c.3,500 units • Anticipate reaching natural scale by c.2018/19 Reserved 370 OM plots, 46 ahead • More widely, investment in higher ASP areas and product mix Legally a
Slide 7: New Chiltern Division established
New Chiltern Division established Templates • Additional Division will enable Crest Nicholson to mine known, strong areas more intensively; 3 home county offices plus London • Initial portfolio of 640 plots on 7 sites Legally Completed 222 units, 25 ahead • Office in St Albans opened 3rd November 20
Slide 8: Moving up ASP curve
Moving up ASP curve Units Slight shift in centre of gravity of ASPs 98% of product benefits from SDLT changes Proportionately more product in Sales under higher-value areas Help to Buy at 33% of Open Market homes Limited product at higher levels; very Approximately few units in forecast in excess of
Slide 9: Prices strong in core areas
Prices strong in core areas • Historic price decline similar, but recovery stronger in more prime locations • Employment, prospects and affluence key drivers of demand and pricing • Areas characterised by higher ASPs Source: Land Registry Classified as General 8
Slide 10: Maintaining strong land pipeline
Maintaining strong land pipeline Oct 2014 Oct 2013 Change % Units GDV £m Units GDV £m Units GDV £m Short-term housing 17,247 4,798 16,388 3,886 5% 23% Short-term commercial - 221 - 251 (12)% Total short-term 17,247 5,019 16,388 4,137 5% 21% Strategic land 16,219 4,323 14,325 3,535 13% 22% Total unde
Slide 11: Land holdings by division
Land holdings by division Templates • Chiltern principal growth focus; other divisions primarily topping up outlet closures • London share of GDV reflects disciplined capital allocation to London schemes Classified as General 10
Slide 12: Longer term land with lower risk profile
Longer term land with lower risk profile • Strategically sourced land now 44% of Plots the short term land pipeline at 7,568 Public Sector plots (2013: 6,753 & 41%) 18% 38% Strategic • 618 strategic plots delivered in 2014; Land 24% of total units (2013: 325 & 15%) Reserved 370 OM plots, 46 ahead 44
Slide 13: Case study: DIO sites - Arborfield
Case Study: DIO Sites Case study: DIO sites - Arborfield • Crest appointed Development Manager in April 2013 • Total site comprises 2,000 units, near Reading • Crest to develop up to 1000 units (having acquired further private 3rd party land) • Expected GDV £620m • First unit completions in Autumn/W
Slide 14: Case study: DIO sites – RAF Wyton
Case study: DIO sites – RAF Wyton • Crest appointed as Development Manager in December 2014 Reserved 370 OM plots, 46 ahead • Total site comprises 4,500 units • Crest to develop up to 2,270 units Legally Completed 222 units, 25 ahead • Expected GDV £1bn • First unit completions in Autumn 2018 • Fund
Slide 15: Business outlook
Business outlook • Two years on from IPO, business in great shape • Prospects of a more sustainable housing market emerging: Templates − Improved mortgage access; Help to Buy and other higher ReservedLTV 370lender products OM plots, 46 ahead − House price and input cost inflation slowing; real incom
Slide 16: Growing towards natural scale
Growing towards natural scale IPO commitment • Improved sector outlook generating high quality returns • Natural Reserved 370scale of business OM plots, determined by: 46 ahead − Chosen area of focus – Southern England − Completed Legally Operating model: c.650 222 units, units per division; c.200 i
Slide 17: Cash flows and Dividend
Cash flows and Dividend • Investment in higher ASP sites and in opening up strategic sites has consumed cash in 2014 Templates • Stronger cash generation as business grows to natural Reserved scale370 OM plots,units of c.3,500 46 ahead over next 4-5 years Legally Completed • Proposed 222 units, divi
Slide 18: Financial results
Financial results Classified as General
Slide 19: Key metrics
Key metrics FY 2014 FY 2013 Inc/(Dec) % Outlets (full year equivalents) 42 44 -5% Sales per Outlet Week (Open 0.87 0.90 -3% market) Legal completions Open market 1,855 1,806 +3% Affordable 675 366 +84% ASP Open market 287 250 +15% Affordable* 120 151 -21% • Outlet reduction to reverse in 2015 as Chi
Slide 20: Income statement
Income statement Income statement FY 2013 Exceptional FY 2013 Change FY 2014 (£m, unless stated) Pre-exceptional costs Total (pre-exceptional) Revenue 636.3 525.7 525.7 110.6 21% Cost of sales (454.3) (384.5) (384.5) (69.8) Gross profit 182.0 141.2 141.2 40.8 29% % gross profit margin 28.6% 26.9% 26
Slide 21: Strong underlying margins
Strong underlying margins ▪ Historic cost Gross Margins ▪ Fair Value 28.6% 28.6% 27.5% 27.4% 26.9% • Underlying margin strength as ‘fair value’ impact diminishes; residual provision of £99m to unwind over time as long-tail sites complete - £55m in next 3 years • Strategic Legally land pull-through,
Slide 22: Supply chain – costs under control
Supply chain – costs under control 3-5% very consistent with Crest’s experience Sharp upturn now flattening out • Bricks and brick-laying were source of most significant increases • Increased Legally capacity Completed (domestic 222 units, & imports) now leading to some block 25 ahead price reductio
Slide 23: Balance sheet
Balance sheet Balance sheet (£m, unless stated) 31st October 31st October Change on 2014 2013 Oct’13 Non-current Assets 100.1 127.0 (26.9) • Increase in inventory driven by investment in Inventory 814.1 577.7 236.4 strategic Trade & other receivables 48.1 44.0 4.1 infrastructure and Cash and cash eq
Slide 24: Cash flow
Cash flow Cash flow (£m, unless stated) FY2014 FY 2013 Change Operating profit before changes in working capital and provisions 133.0 100.5 32.5 Decrease (increase) in trade and other receivables 0.1 (6.7) 6.8 Increase in inventories (236.4) (108.3) (128.1) Increase in trade and other payables 72.8
Slide 25: Forward sales
Forward sales YTD YTD FY14 FY13 FY15 FY14 Units – all years 2,099 1,778 1,499 1,360 % change on prior period +18% +10% GDV (£m) – all years 399.8 329.5 249.4 230.1 % change on prior period +21% +8% % of FY2015/14 target 41% 51% 24% 34% • Sales momentum strong; sales in January 2015 in line with prio
Slide 26: Outlook and Summary
Outlook and Summary Classified as General
Slide 27: Outlook
Outlook • Actions taken to cool the housing market appear to have had some effect, with the market returning to more normal, seasonal patterns Templates Reserved • Both 370 OM sales plots, and prices 46 ahead input costs have shown signs of moderating Legally Completed 222 units, 25 ahead • Availabi
Slide 28: Summary
Summary • Housing market stabilising at a good level of activity, underpinned by strong employment and good mortgage access • Business is delivering strong earnings growth, through a Templates combination Reserved of volume 370 OM plots, and product mix; cash 46 ahead generation to support increased
Slide 29: Q&A
Q&A Classified as General
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
Crest Nicholson Holdings — FY2014 Earnings Presentation on 6ix