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St Michael’s Reach, Marazion, Cornwall

Half Year Results to 31 December 2011 Greg Fitzgerald, Chief Executive and Frank Nelson, Finance Director. St Michael’s Reach, Marazion, Cornwall. Agenda. Overview and Highlights Strategy Financial Review Operating Review Outlook Appendices. Overview. Strong market outperformance in H1.

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St Michael’s Reach, Marazion, Cornwall

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  1. Half Year Results to 31 December 2011 Greg Fitzgerald, Chief Executive and Frank Nelson, Finance Director St Michael’s Reach, Marazion, Cornwall

  2. Agenda • Overview and Highlights • Strategy • Financial Review • Operating Review • Outlook • Appendices

  3. Overview Strong market outperformance in H1 • Excellent financial results • Housing market resilient • Confident of delivering housebuilding strategy • Construction performing well in difficult markets • Strong balance sheet

  4. Highlights Excellent half year results Housebuilding margin1 up 69% Construction margin in line with forecasts 11.0% 2.5% 2.2% 6.5% H1 11 H1 12 H1 11 H1 12 Profit Before Tax up 89% Dividend up 100% £32.2m 9.0p £17.0m 4.5p H1 11 H1 12 H1 11 H1 12 1 Excluding significant land sale

  5. 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

  6. Financial Review Thornbury Park, Isleworth, London

  7. Financial Review Strong growth in EBIT, PBT & EPS Income Statement, Half Year to 31 December

  8. Financial Review 75% of Group profits from housebuilding1 Segmental Analysis, Half Year to 31 December • Operating profit excluding Group • Revenue includes share of joint ventures • Includes significant land sale. Underlying margin 11.0% • Group includes £3.6m additional LTIP charge

  9. Financial Review Movement in net debt – reflects investment in housebuilding £m • 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 60 (38) (18) (31) (10) (5) (13) (15) (70) Opening net debt 1 Jan 11 Cash from operating activities Working capital movts house- building Working capital movts con- struction Closing net debt 31 Dec 11 Interest Tax Dividend Other

  10. Financial Review Strength maintained Balance Sheet Highlights, Half Year to 31 December See Appendix 3 for balance sheet sector analysis

  11. Financial Review Dividend – new enhanced policy • Interim dividend doubled • Twice covered by earnings • Enhanced, sustainable and progressive 16.0p 12.5p 10.9p 11.5p 9.2p 7.6p 9.0p 4.5p 3.3p 3.3p FY 09 FY 10 FY 11 H1 12 • Final • Interim

  12. Financial Review Housebuilding margin progression, construction cash in line with forecast Housebuilding - gross margin %1 Construction - cash as % of revenue 17.1 16.1 23 22 21 20 11.0 19 12.7 8.1 15 9.9 5.6 3.7 8.0 7.1 6.1 6.2 FY 09 FY 10 FY 11 H1 12 FY 09 H1 10 FY 10 H1 11 FY 11 H1 12 • Operating margin • Overhead 1 Before significant land sale and after sales costs of circa 2%

  13. Financial Review Return on net assets growing strongly Group1 Housebuilding2 15.6 14.1 10.9 8.6 8.6 8.2 6.2 4.5 4.3 4.2 FY 09 FY 10 H1 11 FY 11 H1 12 FY 09 FY 10 H1 11 FY 11 H1 12 1 Group RONA is calculated as EBITA divided by average net assets including goodwill 2 Housebuilding RONA is calculated as housebuilding EBITA divided by average net assets including goodwill

  14. Operating Review Housebuilding Kingston Mills, Bradford-on-Avon, Gloucestershire

  15. Operating Review - Housebuilding Record completions with margin significantly up SALES IN HAND1 up 34% £605m (H1 11: £450m) COMPLETIONS up 59% 1,352 (H1 11: 851) MARGIN up 69% 11.0%2(H1 11: 6.5%) LAND BANK1 up 7% 10,700 (H1 11: 10,000) AVGE SALES PRICE3 up 17% £239k (H1 11: £204k) 1 Current at 19 February 2 12.6% after significant land sale 3 Excludes affordable

  16. Operating Review - Housebuilding Completions Analysis – strong southern focus By area of operation By sector By land bank 72% 63% 80% • South 1,081 • Midlands/East 271 1,352 • Private 974 • Affordable 378 1,352 • Post July 2008 846 • Legacy 506 1,352

  17. Operating Review - Housebuilding Land Bank Analysis – 76% of land bank acquired at current market prices By acquisition period Geographical split By sector Product mix1 76% 72% 80% 65% • Post July 2008 8,150 • Legacy 2,550 10,700 • South 7,700 • Midlands/East 3,000 10,700 • Private 8,600 • Affordable 2,100 10,700 • Houses 5,600 • Apartments 3,000 8,600 Current at 19 February 1 Excludes affordable

  18. Operating Review - Housebuilding Land Bank Delivery – over 20% gross margin on post July 2008 land Development Revenue £m Average Margin1 £0.6bn £1.8bn £2.4bn 10% 21% 18% 10,700 8,150 10,000 8,000 6,000 4,000 2,000 0 2,550 Legacy Post July 2008 TOTAL Current at 19 February 1 Blended private/affordable – after sales costs of circa 2%

  19. Operating Review - Housebuilding Forecast Land Bank/Completions – disciplined growth strategy from 2013 Number of sales outlets Land bank by acquisition period Revenue by period % 100 100 95 86 78 FY 11 HY 12 FY 12 FY 13 FY 14 FY 11 HY 121 FY 12 FY 13 FY 14 FY 11 HY 12 FY 12 FY 13 FY 14 • Acquired post July 2008 • Legacy • Not yet acquired • Acquired post July 2008 • Legacy 1 Current at 19 February

  20. Operating Review - Housebuilding Affordable Housing – expertise optimising margins • 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

  21. Operating Review Construction Edgbaston Cricket Ground

  22. Operating Review - Construction Performing well in difficult markets MARGIN upper quartile 2.2% (H1 11: 2.5%) 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

  23. Operating Review - Construction Order Book – good visibility of revenues By Division By Client Type 12 11 18 14 32 37 40 42 56 52 42 44 • Private • Regulated • Public £m • Infrastructure 877 • Building 534 • Partnerships 165 Current at 19 February

  24. Operating Review - Construction Order Book – strength in selected sectors Building Infrastructure £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 Current at 19 February

  25. Outlook M74, Glasgow

  26. 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 Market Outlook Housebuilding resilient, construction difficult Construction • Difficult market conditions • Regulated sector strong • London and South East most resilient • Government support for infrastructure investment

  27. Divisional Outlook 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 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

  28. Group Outlook Well positioned to deliver profitable growth • Confident in ability to further enhance value • Housebuilding – disciplined growth strategy • Construction – strategy unchanged • Dividend policy – enhanced, sustainable and progressive

  29. Half Year Results to 31 December 2011 Greg Fitzgerald, Chief Executive and Frank Nelson, Finance Director Halley VI Research Station, Antarctica

  30. Appendices • Investment proposition • Cash flow summary • Balance sheet/debt profile • Net finance costs • 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

  31. Appendices 1. Investment proposition ROBUST BUSINESS MODEL • Top 5 UK housebuilder, top 10 in UK construction • Complementary economic cycles • Competitive advantage in range of services offered to clients STRATEGIC CLARITY • Successful execution of three year transformation plan in housebuilding • Disciplined approach to capital allocation • Clear growth strategy for housebuilding beyond 2012/13 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 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

  32. Appendices 2. Cash Flow Summary – Half Year to 31 December

  33. Appendices 3. Balance Sheet/debt profile by sector – illustrative only

  34. Appendices 4. Net Finance Costs – Half Year to 31 December

  35. Appendices 5.1 Housebuilding - Revenue analysis, regional TOTAL • Units 1,352 • Revenue £277m EAST & NORTH • Units 271 (20%) • Revenue £42.4m (15%) WEST • Units 287 (21%) • Revenue £46.1m (17%) SOUTH EAST • Units 794 (59%) • Revenue £188.5m (68%)

  36. Appendices 5.2 Housebuilding - Sales, completions by buyer type H1 12 H1 11 FY 11 • Private • Private with Shared Equity • Private with Part Exchange • Private - Investor • Affordable Based on 1,352 completions

  37. Appendices 5.3 Housebuilding - Forecast land creditors’ payment profile £m 150 125 100 75 50 25 0 18.6 138.4 77.3 42.5 FY14 FY12 FY13 TOTAL

  38. Appendices 5.4 Housebuilding - Trading overview 1 Excludes significant land sale

  39. Appendices 5.5 Housebuilding - Analysis of sales reserved, contracted, and completed

  40. Appendices 5.6 Housebuilding - Private sales, analysis of incentives on reservations

  41. Appendices 5.7 Housebuilding - Land bank valuation Strategic land bank of 6,750 plots

  42. Disclaimer Sub- 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.

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