Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — H1 2017 Earnings Presentation
28 slides from Crest Nicholson's earnings presentation, Jun 13, 2017
Slide 1: Interim Results for 2017
Crest Nicholson Holdings plc Interim Results for 2017 13th June 2017
Slide 2: Agenda
Agenda • Performance highlights Stephen Stone • Operational performance Patrick Bergin • Financial Results Robert Allen • Summary Stephen Stone • Q&A 1
Slide 3: Performance highlights (1)
Performance highlights (1) • Positioned for Growth: • £420m statutory revenue (+3%) • £76m profit before tax (+5%) • Housing market continues to be robust, Templates particularly at lower price points where Help to Buy applies • After temporary stop on land buying in H2 2016, disciplined investment
Slide 4: Performance highlights (2)
Performance highlights (2) Revenue of £419.7m (2016: £408.1m) +3% Operating profit of £80.3m (2016: £77.8m) +3% Profit before tax of £76.2m (2016: £72.6m) +5% Earnings per share of 24.4p (2016: 23.3p) +5% Dividend per share of 11.2p (2016: 9.1p) +23% Operating profit margin of 19.1% (2016: 19.1%) 3
Slide 5: Performance highlights (3)
Performance highlights (3) Open-market ASP* of £418k (2016: £372k) (Legal Completions) +12% Unit completions of 1,064 (2016: 1,206) -12% Sales Outlets at 49 (2016: 44) +11% Sales per Outlet Week* at 0.81 (2016: 0.87) -7% Forward sales at mid-June of £540.4m (2016: £520.8m) +4% Forward sales for full
Slide 6: Current market dynamics
Current market dynamics Still a good market… • Employment and mortgage access remain strong, underpinning demand. Lender appetite good and Help to Buy remains a major support for the sector Templates • Land availability continues to be benign, supporting re- investment at or above our hurdle rates …
Slide 7: Political landscape
Political landscape • Potential for uncertainty as Conservative Minority Government seeks to deliver its programme • Cross-party consensus on need for more housing, albeit preferred approaches Templates vary across parties: generally benign political environment for housing sector • Focus of No. 10
Slide 8: Sustaining our Operational Performance
Sustaining our Operational Performance
Slide 9: Sales performance – OM (excluding PRS)
Sales performance – OM (excluding PRS) Sales in last 3 months 16% ahead of same period last year Good momentum building as new outlets opening in second half Nov 15 May 17 • Sales per Outlet Week (SPOW) YTD on a par with whole of FY 2016, at 0.81 • Strong revenues reflective of higher OM ASP; shift
Slide 10: Full year vs Half year
Full year vs Half year • Over 40% of FY2016 revenues achieved in H1’16; H1’17 represents less than 40% of expected full year revenues • PRS delivery timings a significant factor: Templates Units 2017 2016 First half 43 173 Second half 167 18 Total 210 191 • Delays in land acquisitions and site start
Slide 11: Maintaining land pipeline
Maintaining land pipeline Apr 2017 Apr 2016 Inc/(Dec)% Units GDV £m Units GDV £m Units GDV £m Short-term housing 17,056 5,661 15,377 5,143 11% 10% Short-term commercial - 222 - 248 (10)% Total short-term 17,056 5,883 15,377 5,391 11% 9% Strategic land 16,902 5,229 17,820 5,191 (5)% 7% Total under co
Slide 12: Site growth underpins outlet trajectory
Site growth underpins outlet trajectory 95% of FY18 land and 78% of FY19 land secured, in line with historical experience Outlet numbers c.75% of site numbers at any time 10
Slide 13: New division on track
New division on track • New Midlands division created by re-alignments within current operating areas; familiar territory and supply chain • New office in Tamworth secured Templates and key divisional Board appointments made; primarily internally sourced • Division to be primed with three operationa
Slide 14: Retaining focus on skills & supply chain
Retaining focus on skills & supply chain • Production & skills remain a key constraint; business focused on sites, offices and supply chain – training and retaining graduates, site managers and apprentices • Economics of manufacturing elements off-site Templates continue to be examined; prototypes u
Slide 15: Financial results
Crest Financial results
Slide 16: Key metrics (1)
Key metrics (1) HY 2017 HY 2016 Inc/(Dec) % Outlets (full year equivalents) 49 44 11% Sales per Outlet Week (OM inc-PRS) 0.81 1.06 (24)% Sales per Outlet Week (OM ex-PRS) 0.81 0.87 (7)% Legal completions Open market (ex-PRS) 800 909 (12)% PRS 43 173 (75)% Affordable 221 124 78% Total 1,064 1,206 (12
Slide 17: Key metrics (2)
Key metrics (2) ASPs HY 2017 HY 2016 Inc/(Dec) % Legal completions OM ex-PRS 418 372 12% OM inc. PRS on OM basis# 409 349 17% Affordable* 186 187 - OM Reservations OM ex-PRS 411 387 6% OM inc. PRS 411 345 19% Forward sales OM ex-PRS 416 383 9% OM inc. PRS 311 307 1% Affordable* 131 130 1% • ASPs set
Slide 18: Income statement
Income statement Income statement (£m, Change HY 2017 HY 2016 % increase unless stated) on 2016 Revenue 419.7 408.1 11.6 3% Cost of sales (309.3) (297.7) (11.6) Gross profit 110.4 110.4 - -% % gross profit margin 26.3% 27.1% (80bps) Administrative expenses (30.1) (32.6) 2.5 Operating profit 80.3 77.
Slide 19: Strong underlying margins
Strong underlying margins Fair Value Gross Margins Historic cost 28.6% 28.6% 27.5% 27.4% 27.5% 26.9% 26.7% 26.3% • Underlying gross margin % levelling off; headline rate lower as contribution from fair valuation provision diminishes as expected • Margin expansion tightening across the business a
Slide 20: Build costs
Build costs Construction Material Price Indices, UK Index, 2010 = 100 • Government statistics show increasing material cost inflation; year on year increase to March 2017 was 5.9% • Overall experienced annual build cost inflation still 4-5%; cost inflation was less than 1% in the February to April q
Slide 21: Balance sheet
Balance sheet Balance sheet (£m, unless stated) 30th April 31st October 30th April Change on Change on 2017 2016 2016 Oct’16 Apr’16 Non-current Assets 125.8 118.7 115.9 7.1 9.9 Inventory 1,107.3 935.8 940.5 171.5 166.8 Trade & other receivables/assets 85.2 76.6 61.6 8.6 23.6 Cash and cash equivalent
Slide 22: Cash flow
Cash flow Cash flow (£m, unless stated) HY 2017 HY 2016 Change Operating profit before changes in working capital and provisions 83.1 81.3 1.8 Increase in trade and other receivables (17.6) (25.1) 7.5 Increase in inventories (171.5) (36.0) (135.5) Increase in trade and other payables 67.0 28.1 38.9
Slide 23: Forward sales - housing
Forward sales - housing YTD YTD FY16 FY15 FY17 FY16 Units – all years 2,323 2,336 1,773 1,680 % change on prior period -1% +6% GDV (£m) – all years 540.4 520.8 344.5 328.9 % change on prior period +4% +5% Forward sales inc. YTD completions 763.8 722.5 231.0 241.1 % change on prior period +6% -4% % o
Slide 24: Summary
Summary “lar e Babes ioe Yorn a. waa lle
Slide 25: Summary
Summary • Housing market remains robust across the Group’s principal operating areas: high levels of employment and good mortgage access, supported by Help to Buy scheme • Trading for the first six months in line with expectations and on Templates track to deliver revenue growth for the full year to
Slide 26: Don’t forget!
Don’t forget! • Invitations with full details Templates issued 2nd June • Opportunity to see & hear how Crest is shaping up for the future • RSVP by Friday 16th June to charlotte.fox@Finsbury.com 22
Slide 27: Q&A
Q&A
Slide 28: 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 — H1 2017 Earnings Presentation on 6ix