Crest Nicholson Holdings Plc · LSE:CRST
Crest Nicholson — H1 2018 Earnings Presentation
27 slides from Crest Nicholson's earnings presentation, Jun 12, 2018
Slide 1: Interim Results for 2018
Crest Nicholson Holdings plc Interim Results for 2018 12 June 2018
Slide 2: Agenda
Agenda • Key messages & Operational Highlights Patrick Bergin • Financial Results Robert Allen • Summary Patrick Bergin • Q&A 1
Slide 3: Key Messages
Key Messages • Strong operational performance underpins unit growth of 18% and revenue growth of 13% but market pricing has impacted margins Templates • Strategy to sustain margins on higher-priced properties requires slower sales rate – no longer targeting £1.4bn of revenue for FY19 • Business acti
Slide 4: Performance highlights
Performance highlights Unit completions of 1,251 (2017: 1,064) +18% Revenue of £473.8m (2017: £419.7m) +13% Operating profit of £81.4m (2017: £80.3m) +1% Profit before tax of £74.8m (2017: £76.2m) -2% Dividend per share of 11.2p (2017: 11.2p) - Operating profit margin of 17.2% (2017: 19.1%) 3
Slide 5: Outlet growth driving momentum
Outlet growth driving momentum • Steady growth in outlets over last two and a half years; accelerated by Chiltern and Midlands • Further outlets planned for the second half of 2018 with 5 opened since early May • Strong land visibility from secured portfolio, including Strategic land 4
Slide 6: Driving operational efficiency
Driving operational efficiency • Increased repetition of existing house types within divisions has delivered benefits and enabled the 1% margin hurdle rate increase in 2017 without compromising product quality. • New core house type range progressing. Scope to: – Increase extent of repetition in hou
Slide 7: Portfolio strategy rebalancing ASPs
Portfolio strategy rebalancing ASPs • Open market revenues Open Market Revenue by Price Point represent c. 85% of total (%) Group revenues • Strategy over the past 18 80% Templates months to exit central London 72% and limit land purchases with units above £1m • Midlands and Chiltern growth further
Slide 8: Adapting approach to London
Adapting approach to London • Central London investment not financially attractive, Zone 1 exit almost complete Chiltern Eastern • Land prices in outer zones increasingly stretched; Central sales have high dependency on LondonTemplates Help to Buy London • Announced our intention to close the Centra
Slide 9: PRS continues to supplement OM sales
PRS continues to supplement OM sales • PRS delivery peaked at 218 units for the half year with final 78 unit handovers to M&G at Kilnwood Vale, ahead of programme • Further 100 units to be brought forward at Kilnwood Vale • Further 52 unit PRS phase consented at Bath Riverside and first 114 units of
Slide 10: Capital efficiency & cash generation
Capital efficiency & cash generation • Capital allocation and capital efficiency is constantly under review by the Board • Large part of land pipeline held in capital efficient manner; strategic land primarily under options. Land sales on larger sites will continue Templates to form 5-7% of revenue
Slide 11: Robust business model
Robust business model A premium brand, leading housing developer • Focused geography – a long term focus on the economically prosperous Southern half of the UK Templates • A value added model - strong reputation for quality of product, design and place-making; developer & employer of choice • Balanc
Slide 12: Financial results
Crest Financial results
Slide 13: Key metrics
Key metrics HY 2018 HY 2017 Inc/(Dec) % Outlets (full year equivalents) 52 49 6% Sales per Outlet Week 0.72 0.81 (11)% (OM ex-PRS and bulk deal) Sales per Outlet Week (All) 0.78 0.81 (4)% Total Housing ASP 367 364 1% Legal completions Open market (ex-PRS) 884 800 11% PRS 218 43 407% Affordable 149 2
Slide 14: Pricing evolution across the portfolio
Pricing evolution across the portfolio Sales below £600k benefit from Portfolio strategy shifts towards units inflation. Market above £1m challenged below £600k House Price Inflation Open Market Revenue by Price Point (%) (Open Market Reservations HY18*) 80% 72% Templates SUB £600k £601K TO £1m £1m+
Slide 15: Income statement
Income statement Income statement (£m, Change HY 2018 HY 2017 % increase unless stated) on 2017 Revenue 473.8 419.7 54.1 13% Cost of sales (362.0) (309.3) (52.7) Gross profit 111.8 110.4 1.4 1% % gross profit margin 23.6% 26.3% (270bps) Administrative expenses (30.4) (30.1) (0.3) Operating profit 81
Slide 16: Underlying Margins
Underlying Margins Operating Margin Operating Margin HY18 20% 19.1% 18% 17.2% 16% Prior year comparator 19.1% 14% Fair Value unwind +0.3% 12% 10% Underlying build cost impact -1.5% 8% 6% Price/Mix -1.4% 4% Overheads/cost savings +0.7% 2% 0% Operating margin for the period 17.2% HY17 HY18 • Operating
Slide 17: Cash flow
Cash flow Cash flow (£m, unless stated) HY 2018 HY 2017 Change Operating profit before changes in working capital and provisions 83.7 83.1 0.6 Increase in trade and other receivables 2.3 (17.6) 19.9 Increase in inventories (119.6) (171.5) 51.9 Increase in trade and other payables 2.8 67.0 (64.2) Con
Slide 18: Balance sheet
Balance sheet Balance sheet (£m, unless stated) 30th April 31st October 30th April Change on Change on 2018 2017 2017 Oct’17 Apr’17 Non-current Assets 100.5 110.0 125.8 (9.5) (25.3) Inventory 1,206.1 1,086.5 1,107.3 119.6 98.8 Trade & other receivables/assets 106.8 106.2 85.2 0.6 21.6 Cash and cash
Slide 19: Forward Sales Growth
Forward Sales Growth YTD YTD FY17 FY16 FY18 FY17 Units – all years 2,387 2,323 1,997 1,773 % change on prior period +3% +13% GDV (£m) – all years 568.2 540.4 391.4 344.5 % change on prior period +5% +14% Forward sales inc. YTD completions 854.1 763.8 265.3 231.0 % change on prior period +12% +15% %
Slide 20: Financial summary
Financial summary • Solid progress on 2018 revenues. Forward sold c.70% for 2018. Sales YTD plus forward sales for FY18 up 12% at £854m • Some timing differences expected between H1 and H2 Templates • PRS bias towards H1 balanced by the affordable housing bias towards H2 • Land & commercial revenue
Slide 21: Summary
Summary c q é i, eee ee OTT ©
Slide 22: Summary
Summary • Housing market below £600k in good health. Activity above this level harder, with some specific challenges on pricing and interdependency with second-hand market • Business operations running well; Templates site numbers growing as our new divisions thrive. High standards of product qualit
Slide 23: Q&A
eB a Crest NICHOLSON Q&A
Slide 24: Appendix
Appendix 23
Slide 25: Key Price metrics
Key Price metrics ASPs HY 2018 HY 2017 Inc/(Dec) % Legal completions OM ex-PRS 439 418 5% OM inc. PRS on OM basis# 389 409 -5% Affordable* 247 186 33% Total Housing ASP 367 364 1% OM Reservations OM ex-PRS 434 411 6% OM inc. PRS 434 411 6% Forward sales OM ex-PRS 429 416 3% OM inc. PRS 370 311 19% A
Slide 26: Land pipeline
Land pipeline Land pipeline - April Plots GDV £m Balance Sheet Expected land at cost - total land £m cost - £m 2018 Short-term 16,983 Templates 5,872 697 1,337 2018 Strategic 18,125 5,960 33 1,212 2018 Total 35,108 11,832 730 2,549 2017 Short-term 17,056 5,883 653 1,315 2017 Strategic 16,902 5,229 3
Slide 27: 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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