Half Year Results – 22 February 20121St Michael’s Reach, Marazion, Cornwall Half Year Results to...
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Transcript of Half Year Results – 22 February 20121St Michael’s Reach, Marazion, Cornwall Half Year Results to...
Half Year Results – 22 February 20121 St Michael’s Reach, Marazion, Cornwall
Half Year Results to 31 December 2011Greg Fitzgerald, Chief Executive and Frank Nelson, Finance Director
Half Year Results – 22 February 20122
Agenda
• Overview and Highlights
• Strategy
• Financial Review
• Operating Review
• Outlook
• Appendices
Half Year Results – 22 February 20123
• Excellent financial results
• Housing market resilient
• Confident of delivering housebuilding strategy
• Construction performing well in difficult markets
• Strong balance sheet
Overview
Strong market outperformance in H1
Half Year Results – 22 February 20124
Highlights
Housebuilding margin1 up 69% Construction margin in line with forecasts
11.0%
6.5% 2.5% 2.2%
H1 11 H1 12 H1 11 H1 12
Excellent half year results
1 Excluding significant land sale
Profit Before Tax up 89% Dividend up 100%
£32.2m
£17.0m 4.5p
9.0p
H1 11 H1 12 H1 11 H1 12
Half Year Results – 22 February 20125
Strategy
Growth beyond 2013 supports enhanced dividend policy
• Confident of delivering three year transformational expansion plan in housebuilding
• Housebuilding strategy and outputs beyond 2013
• Disciplined growth strategy based on maximising returns, not volume
• Retain strong southern bias
• Focus on increasing margins
• Construction strategy unchanged
• Maintain top quartile performance
• Focus on margins and cash rather than size of order book
• Positioned for growth when markets allow
• New enhanced and sustainable dividend policy
• Higher cash generation
• Dividend twice covered by earnings
• Progressive growth thereafter
Half Year Results – 22 February 20126 Thornbury Park, Isleworth, London
Financial Review
Half Year Results – 22 February 20127
£m 2011 2010 % Increase
Group revenue 746.8 575.9 30%
Profit from operations 38.6 17.9 116%
EBIT 35.6 17.1 108%
Net finance costs (3.4) (0.1)
Profit before tax 32.2 17.0 89%
Taxation (7.1) 22% (4.9) 29%
Profit after tax 25.1 12.1 107%
Financial Review
Earnings Per Share: basic 31.1p 14.8p 110%
diluted 30.4p 14.8p 105%
Strong growth in EBIT, PBT & EPS
Income Statement, Half Year to 31 December
Half Year Results – 22 February 20128
1. Operating profit excluding Group2. Revenue includes share of joint ventures3. Includes significant land sale. Underlying margin 11.0%4. Group includes £3.6m additional LTIP charge
Financial Review
2011 2010
£m Revenue2
Profit/(Loss)from
Operations Margin MarginHousebuilding 277.0 35.0 12.6%3 6.5%
Construction 499.9 10.9 2.2% 2.5%
PPP Investments 7.7 1.1 NA NA
Group 0.3 (8.4)4 NA NA
TOTAL 784.9 38.6 4.9% 3.0%
75% of Group profits from housebuilding1
Housebuilding completions 2011 2010
Gross units 1,352 851
Net of JV partners’ share 1,216 779
Segmental Analysis, Half Year to 31 December
Half Year Results – 22 February 20129
-80
-60
-40
-20
0
20
40
60
Financial Review
Movement in net debt – reflects investment in housebuilding
• Net debt in line with expectations
• Investment in land
• Average debt of £86m over 12 months to 31 December 2011
• £325m bank facility in place until 2015
£m
Openingnet debt1 Jan 11
Cash fromoperatingactivities
Workingcapitalmovtshouse-building
Workingcapitalmovtscon-struction
Interest Tax Other Dividend Closingnet debt31 Dec 11
(31)
60
(18)
(38)
(10)(5)
(13)
(70)(15)
Half Year Results – 22 February 201210
Financial Review
£m 2011 2010
Total equity 468.6 435.1
Tangible Net Assets 342.5 313.7
Net debt (69.8) (30.7)
Amounts invested in joint ventures 63.3 53.4
Land 436.4 392.1
Work in progress 250.9 193.1
Land creditors (138.4) (74.2)
Total invested in housebuilding developments and JVs 612.2 564.4
Strength maintained
See Appendix 3 for balance sheet sector analysis
Balance Sheet Highlights, Half Year to 31 December
Half Year Results – 22 February 201211
Financial Review
Dividend – new enhanced policy
• Interim dividend doubled
• Twice covered by earnings
• Enhanced, sustainable and progressive
0
5
10
15
20
7.6p
10.9p
3.3p
9.2p
11.5p
4.5p
9.0p
12.5p
16.0p
FY 09 FY 10 FY 11 H1 12
Final Interim
3.3p
Half Year Results – 22 February 201212
0%
10%
20%
30%
Financial Review
Housebuilding - gross margin %1 Construction - cash as % of revenue
FY 09 H1 10 FY 10 H1 11 FY 11 H1 12
1 Before significant land sale and after sales costs of circa 2%
0%
5%
10%
15%
20%
Operating margin Overhead
3.7
6.2 7.1 8.0
5.6
8.1 9.9
12.7
16.1
FY 09 FY 10 FY 11 H1 12
20 22 23
15
11.0
6.1
17.1
19 21
Housebuilding margin progression, construction cash in line with forecast
Half Year Results – 22 February 201213
0%
5%
10%
15%
20%
8.6
0%
5%
10%
15%
20%
Financial Review
Housebuilding2Group1
FY 09 FY 10 H1 11 FY 11 H1 12
10.9
8.6
15.6
FY 09 FY 10 H1 11 FY 11 H1 12
4.2 4.5 6.2
14.1
Return on net assets growing strongly
1 Group RONA is calculated as EBITA divided by average net assets including goodwill2 Housebuilding RONA is calculated as housebuilding EBITA divided by average net assets including goodwill
8.2
4.3
Half Year Results – 22 February 201214 Kingston Mills, Bradford-on-Avon, Gloucestershire
Operating ReviewHousebuilding
Half Year Results – 22 February 201215
Operating Review - Housebuilding
COMPLETIONS up 59%
1,352 (H1 11: 851)
Record completions with margin significantly up
SALES IN HAND1 up 34%
£605m (H1 11: £450m)
LAND BANK1 up 7%
10,700 (H1 11: 10,000)
AVGE SALES PRICE3 up 17%
£239k (H1 11: £204k)
MARGIN up 69%
11.0%2 (H1 11: 6.5%)
1 Current at 19 February2 12.6% after significant land sale3 Excludes affordable
Half Year Results – 22 February 201216
Operating Review - Housebuilding
South 1,081 Midlands/East 271 1,352
Post July 2008 846 Legacy 506
1,352
By land bank
Completions Analysis – strong southern focus
By area of operation
63%
80%
Private 974 Affordable 378 1,352
By sector
72%
Half Year Results – 22 February 201217
Operating Review - Housebuilding
By acquisition period Product mix1Geographical split
Post July 2008 8,150 Legacy 2,550 10,700
Houses 5,600 Apartments 3,000 8,600
South 7,700 Midlands/East 3,000 10,700
Land Bank Analysis – 76% of land bank acquired at current market prices
By sector
Current at 19 February1 Excludes affordable
Private 8,600 Affordable 2,100
10,700
76% 65%72% 80%
Half Year Results – 22 February 201218
Operating Review - Housebuilding
Legacy Post July 2008 TOTAL
10,000
8,000
6,000
4,000
2,000
0
Development Revenue £m
Average Margin1
£0.6bn £1.8bn £2.4bn
10% 21% 18%
Current at 19 February
1 Blended private/affordable – after sales costs of circa 2%
Land Bank Delivery – over 20% gross margin on post July 2008 land
2,550
8,150 10,700
Half Year Results – 22 February 201219
0%
25%
50%
75%
100%
Jan Jan Jan Jan Jan
Operating Review - Housebuilding
Forecast Land Bank/Completions – disciplined growth strategy from 2013
0
30
60
90
120
Number of sales outlets
FY 11 HY 12 FY 12 FY 13 FY 14
78
95
0
3000
6000
9000
12000
Land bank by acquisition period
FY 11 HY 121 FY 12 FY 13 FY 14
Revenue by period %
FY 11 HY 12 FY 12 FY 13 FY 14
Acquired post July 2008 Legacy
Not yet acquired Acquired post July 2008 Legacy
100 10086
1 Current at 19 February
Half Year Results – 22 February 201220
• Affordable rent delivering enhanced revenues
• Secured one of highest awards (£17m) to private developers under Affordable Homes Programme
• Acquired further public land releases under Delivery Partner Panel
• Established joint venture arrangements for partnering with key Registered Providers
• Increased presence within frameworks
Affordable Housing – expertise optimising margins
Operating Review - Housebuilding
Half Year Results – 22 February 201221 Edgbaston Cricket Ground
Operating ReviewConstruction
Half Year Results – 22 February 201222
Operating Review - Construction
MARGIN upper quartile
2.2% (H1 11: 2.5%)
Performing well in difficult markets
CASH upper quartile
£149m (H1 11: £174m)
ORDER BOOK1 in line
£1.6bn (H1 11: £1.75bn)
WORK SECURED1 maintained
67% (for 2013) (H1 11: 61%)
1 Current at 19 February
Half Year Results – 22 February 201223
Operating Review - Construction
Order Book – good visibility of revenues
£m
Infrastructure 877
Building 534
Partnerships 165
By Client TypeBy Division
0%
25%
50%
75%
100%
FY 09 FY 10 FY 11 H1 12
Private
Regulated
Public
56 52 42
403732
181112
44
42
14
Current at 19 February
Half Year Results – 22 February 201224
Operating Review - Construction
Order Book – strength in selected sectors
£m
Commercial 152 Education 86 FM 111 Health
59 Other Public & 126 Regulated
£m
Water 431 Transport 245 Other Civil Engineering 120 Renewables 42 Communications 33 Energy from Waste 6
Building Infrastructure
Current at 19 February
Half Year Results – 22 February 201225 M74, Glasgow
Outlook
Half Year Results – 22 February 201226
Market Outlook
Housebuilding
• Mortgage availability continues to improve
• Government initiatives supporting the market
• Active land market
• Planning environment remains uncertain
• Build costs remain stable
• Market strongest in south
Housebuilding resilient, construction difficult
Construction
• Difficult market conditions
• Regulated sector strong
• London and South East most resilient
• Government support for infrastructure investment
Half Year Results – 22 February 201227
Divisional Outlook
Housebuilding
• Strong southern bias and focus on mainstream markets
• Legacy land bank significantly reduced
• Good land opportunities
• Focus on margin growth
• Strong start to second half
Strong housebuilding momentum, visibility in construction
Construction
• Resilient performance maintained
• Strong foundations in client relationships and frameworks
• Robust risk management maintained
• Focus on workload with acceptable returns
Half Year Results – 22 February 201228
Group Outlook
• Confident in ability to further enhance value
• Housebuilding – disciplined growth strategy
• Construction – strategy unchanged
• Dividend policy – enhanced, sustainable and progressive
Well positioned to deliver profitable growth
Half Year Results – 22 February 201229 Halley VI Research Station, Antarctica
Half Year Results to 31 December 2011Greg Fitzgerald, Chief Executive and Frank Nelson, Finance Director
Half Year Results – 22 February 201230
Appendices
1. Investment proposition
2. Cash flow summary
3. Balance sheet/debt profile
4. Net finance costs
5. Housebuilding data
5.1 Revenue analysis
5.2 Sales, completions by buyer type
5.3 Forecast land creditors’ payment profile
5.4 Trading overview
5.5 Analysis of sales reserved, contracted and completed
5.6 Private sales, analysis of incentives on reservations
5.7 Land bank valuation
Half Year Results – 22 February 201231
ROBUST BUSINESS MODEL
• Top 5 UK housebuilder, top 10 in UK construction
• Complementary economic cycles
• Competitive advantage in range of services offered to clients
WELL POSITIONED IN ATTRACTIVE MARKETS• Southern focused land bank where
risk/return is most attractive
• Delivering strong momentum in margins, profits and returns
• Higher than average visibility of revenues in construction through regulated exposure
• Construction offers medium term potential
Appendices
1. Investment proposition
STRATEGIC CLARITY
• Successful execution of three year transformation plan in housebuilding
• Disciplined approach to capital allocation
• Clear growth strategy for housebuilding beyond 2012/13
DELIVERING GROWTH AND INCOME
• Value creating strategy fit for market environment
• Enhanced, sustainable and progressive dividend policy – twice covered by earnings
• Balance sheet strength retained
Half Year Results – 22 February 201232
£m 2011 2010Cash from operating activities 31.1 9.7Working capital movements (120.3) (105.9)Net cash used in operations (89.2) (96.2)Interest, tax and dividends (14.3) (10.6)Other (2.6) (0.4)Net cash outflow (106.1) (107.2)Opening net cash 36.3 76.5Closing net debt (69.8) (30.7)
Appendices
Cash Analysis
Housebuilding (includes loans to JVs) (579.3) (517.2)Construction 149.4 174.0Group and Others 360.1 312.5TOTAL (69.8) (30.7)
2. Cash Flow Summary – Half Year to 31 December
Half Year Results – 22 February 201233
£mTangible
Net AssetsAverage
Cash/(Debt)
Construction (60) 160
Housebuilding and Group(NAV after deduction of debt)
403 (246)
Net Tangible Assets 343 (86)
Notes £m
Total net assets per B/S 469
Less intangibles (126)
Net tangible assets 343
3. Balance Sheet/debt profile by sector – illustrative only
Appendices
Half Year Results – 22 February 201234
£m 2011 2010
Net interest payable on borrowings (3.9) (1.4)
Interest receivable from joint ventures 0.5 0.9
Fair value gains on financing activities - interest rate swaps 0.3 0.7
Unwind of discount on shared equity receivables 0.8 0.6
Unwind of discount on payables (1.0) (0.6)
Net finance cost of pension fund - (0.3)
Other (0.1) -
TOTAL (3.4) (0.1)
4. Net Finance Costs – Half Year to 31 December
Appendices
Half Year Results – 22 February 201235
Appendices
5.1 Housebuilding - Revenue analysis, regional
TOTAL Units 1,352 Revenue £277m
WEST Units 287 (21%) Revenue £46.1m (17%)
EAST & NORTH Units 271 (20%) Revenue £42.4m (15%)
SOUTH EAST Units 794 (59%) Revenue £188.5m (68%)
Half Year Results – 22 February 201236
Appendices
46%
30%
13%
6%5%
H1 12 FY 11H1 11
36%
28%
9%
9%
18%
41%
33%
11%
7%
8%
Affordable
Private with Shared Equity
Private with Part Exchange
Private - Investor
Private
Based on 1,352 completions
5.2 Housebuilding - Sales, completions by buyer type
Half Year Results – 22 February 201237
Appendices
FY12 FY13 TOTAL
150
125
100
75
50
25
0
42.5
77.3
138.4
FY14
18.6
£m
5.3 Housebuilding - Forecast land creditors’ payment profile
Half Year Results – 22 February 201238
Appendices
5.4 Housebuilding - Trading overview
H1 121 H1 11 FY 11
Revenue (£m) 256 153 388
Land cost 29.7% 28.0% 27.4%
Build cost 53.2% 57.7% 56.5%
Gross margin 17.1% 14.3% 16.1%
Admin expense 6.1% 7.8% 8.0%
Operating margin 11.0% 6.5% 8.1%
1 Excludes significant land sale
Half Year Results – 22 February 201239
Appendices
5.5 Housebuilding - Analysis of sales reserved, contracted, and completed
Feb 12 Dec 11 Feb 11
£m
Private 417.3 339.9 286.4
Affordable 166.4 161.0 155.7
Land Sales 21.1 21.1 7.9
Total 604.8 522.0 450.0
For completion in FY12 480.2 416.2 293.9
For completion post FY12 124.6 105.8 156.1
Total 604.8 522.0 450.0
% of projected FY revenue secured 78% 68% 76%
Plots
Private 1,655 1,358 1,243
Affordable 1,480 1,438 1,444
Total 3,135 2,796 2,687
Half Year Results – 22 February 201240
Appendices
5.6 Housebuilding - Private sales, analysis of incentives on reservations
H1 12 H2 11 H1 11
None 52% 58% 50%
Incentives
Part exchange 12% 11% 10%
Assisted move 5% 5% 4%
Shared equity 11% 14% 27%
Investor sales 20% 12% 9%
TOTAL 100% 100% 100%
Half Year Results – 22 February 201241
Appendices
5.7 Housebuilding - Land bank valuation
Strategic land bank of 6,750 plots
Cost per plot £000 H1 12 H1 11 FY 11 FY 10
Opening land bank 51 51 51 45
Closing land bank 53 52 51 51
Weighted ASP in land bank 217 202 215 203
Plot cost as % of weighted ASP 24% 26% 24% 25%
Half Year Results – 22 February 201242
DisclaimerSub- Heading
This presentation is being made only to and is directed at persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or any other persons to who it may otherwise lawfully be communicated (all such persons being referred to as “relevant persons”).
Any person who is not a relevant person should not act or rely on this presentation or any comments made during the presentation. This presentation does not constitute or form part of, and should not be construed as, any offer or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or any member of its group nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities in the Company or any member of its group or any commitment whatsoever. This presentation does not purport to contain all the information that may be required to evaluate any proposed transaction and should not be relied on in connection with any such potential transaction. Any recipient hereof should conduct its own independent analysis of the Company. Recipients should note that the Company will not update or otherwise revise this presentation.
The financial information set out in this document does not constitute the Company’s statutory accounts. Statutory accounts for the financial year ended 30 June 2011, which received an auditors’ report that was unqualified and did not contain any statement concerning accounting records or failure to obtain necessary information and explanations, have been filed with the Registrar of Companies.