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Investor Relations Presentation. Half Year to 31 st December 2005. Disclaimer.

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slide1

Investor Relations Presentation

Half Year to 31st December 2005

slide2

Disclaimer

This presentation is being made only to and is directed at (a) 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 (b) any other persons to who it may otherwise lawfully be communicated, falling within Article 49(2) of the Order (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 of its comments.

The financial information set out in this document does not constitute the Company’s statutory accounts. Statutory accounts for 2005, 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.

slide3

Introduction

Overview

  • Record results again through good operational performance
  • Acquisition of Chartdale Homes
  • Construction
    • Margins at 2%
    • Order book at £1.1b
  • Housebuilding
    • Record operating profits
    • Margin maintained
    • In hand position at all time high
  • Affordable Housing Director appointed
  • Sale and leaseback on two properties
  • Strong platform for future growth
slide4
Turnover up 7% at £372 million

Profit before tax up 10% at £14 million

Earnings per share up 10% at 4.4p

Interim dividend up 17% to 0.7p per share

Net debt of £8.9 million (2004 £10.1m) represents gearing of 15% (2004 21%)

NB – 2004 comparison based on restated IFRS figures

Financial Review

Highlights

slide5

Financial Review

Summary Profit & Loss Account

(£m)

Dec 2005

(£m)

Dec 2004*

Turnover 372.2 347.2

Profit before interest 16.3 14.7

Interest (2.3) (2.0)

Profit before tax 14.0 12.7

Diluted earnings per share 4.4p 4.0p

Dividend per share 0.7p 0.6p

Interest Analysis

Bank interest 0.6 0.5

Interest on unwinding of discounted creditors 1.4 1.1

Net return on liability of pension fund 0.3 0.4

Total Interest 2.3 2.0

* based on restated IFRS figures

slide6

Financial Review

Segmental Analysis

Group Turnover (£m)

Profit/(loss) (£m)

Dec 2004*

Dec 2005

Dec 2005

Dec 2004 *

Construction 272.8 255.8 5.6 5.3

PPP Investments 0.8 - (0.5) (1.2)

Housebuilding 98.3 91.1 13.9 12.7

Group 0.3 0.3 (2.7) (2.1)

372.2 347.2 16.3 14.7

Less net interest payable (2.3) (2.0)

Profit before tax 14.0 12.7

* based on restated IFRS Figure

slide7

Financial Review

Cash Flow Summary

Dec 2004* (£m)

Dec 2005 (£m)

From operating activities 17.5 16.0

Increase in inventories and developments 3.0 (10.2)

Decrease in land creditors (10.9) (3.7)

Decrease in trade and other receivables 7.4 23.6

Increase/(decrease) in trade and payables (1.8) (10.9)

Decrease in retirement benefit obligation (1.2) (3.4)

Interest, tax, dividends, share capital & other

movements (10.5) (9.4)

Net inflow 3.5 2.0

Net debt brought forward (12.4) (12.1)

Net debt carried forward (8.9) (10.1)

* based on restated IFRS figures

slide8

Financial Review

Balance Sheet, Financing

Dec 2005 (£m)

Dec 2004* (£m)

Shareholders’ funds 58.2 48.3

Net debt 8.9 10.1

Total capital employed 67.1 58.4

Gearing 15% 21%

Interest cover > 7 times > 7 times

* based on restated IFRS figures

slide9

Construction

Key Highlights

  • 2% margin achieved ahead of schedule
  • Affordable Housing expansion continues
  • Increased presence in Water
  • Financial Close Northampton Schools PFI
  • Successful integration of Pentland
slide10

Construction

Profitability

RECOVERY

STABILISATION

GROWTH

2.0

2.0%*

1.7%*

1.5

1.1%

1.0

0.5

0.0

(0.01)%

2003

2004

2005

2006

* based on restated IFRS figures

slide11

Construction

Forward Order Book

Work In Hand (£m)

Turnover (£m)

Half Year to Dec 05

Total Work In Hand

Non Price Competitive

Market Sectors

Total

Non Price Competitive

37 Water 233 233

19 Rail 65 65

18 Infrastructure 45 30

15 Health 126 126

47 Education 330 282

89 Commercial 112 99

4 Interiors 14 13

21 Affordable Housing 145 110

15 Telecommunications 10 10

8 Ground Engineering 3 2

273 1082 969

90%

slide12

Construction

Water

  • Leading Framework Contractor
  • Scottish Water
  • United Utilities
  • Anglian Water
slide13

Construction

Education

  • Acknowledged as education specialists
  • Bedford Schools PFI handed over on time
  • Caludon Schools PFI Phase 1 handed over on time
  • Northampton Schools PFI – on site
  • Solihull Building Schools for the Future – ITN Stage
slide14

Construction

Health

  • Current LIFT schemes at FC 2/3
  • Fourth Wave - selected on three schemes
  • Potential future opportunities in Scotland
  • Government Initiatives - Community Hospital Schemes
slide15

Construction

Summary and Outlook

  • Profit growth by volume
  • Order book exceeds £1billion
  • Partnering culture integrated throughout business
  • Profit margins now in upper quartile
slide16

Investments

PPP Investments

  • Northampton Closed – Construction commenced
  • BSF Solihull - £75m ITN stage
  • LIFT 4th Wave ITN
    • South East Essex
    • South East Midlands
    • Bury Tameside Glossop
  • Community Hospital
    • Hinckley - £30m
    • Market Harborough - £30m
  • BSF
    • Birmingham - £60m First Wave
    • Nottingham - £35m First Wave
slide17
Acquisition of Chartdale Ltd.

Record profits and margins maintained

Sales volumes at all time high

Significant cost reductions achieved

Excellent customer satisfaction results

Strengthened ‘in-hand’ position

Housebuilding

Housing Highlights

slide18
Negotiated, ‘bolt-on’ acquisition

Well established regional housebuilder

Substantial land bank c. 1350 plots on 23 sites

Acquisition on deferred payment terms

200 units per annum projected

95% of land bank for houses

Housebuilding

Acquisition of Chartdale Ltd.

slide19

Housebuilding

Key Statistics

* based on restated IFRS figures

slide20
Challenging market, but encouraging start to 2006

Difficulties with planning system remain

Highly competitive land market

Expertise in affordable Housing

Individually designed schemes and conversions

Avoid consortium sites and high rise apartments

Shortage in supply continues to underpin the market

Housebuilding

Market Conditions and Focus

slide21

Housebuilding

Midas & Gerald Wood Homes

  • Units 200
  • Average selling price £000 170
  • Brownfield and conversion 87%
  • Customer satisfaction 93%
  • Two ‘Golds’ at the What House Awards
slide22

Housebuilding

Stamford Homes

  • Units 128
  • Average selling price £000 168
  • Brownfield and conversion 51%
  • Customer satisfaction 82%
slide23

Housebuilding

Try Homes Southern

  • Units 73
  • Average selling price £000 278
  • Brownfield and conversion 100%
  • Customer satisfaction 89%
  • ‘Silver’ at the What House Awards
slide24

Housebuilding

Try Homes Thames Valley

  • Units 83
  • Average selling price £000 272
  • Brownfield and conversion 100%
  • Customer satisfaction 93%
  • ‘Silver’ at the What House Awards
slide25
All business units performing well

Land bank boosted by acquisition of Chartdale

Exposure to apartments reduced

Land and planning remain difficult

Well placed to maximise opportunities in Affordable Housing

Confident of achieving expansion plan

Housebuilding

Summary & Outlook

slide26

Affordable Housing

Construction and Housebuilding Divisions

  • Director of Affordable Housing appointed
  • Work in hand up to £145m
  • Strategic Alliances & Framework Agreements
  • Strong Opportunities - East London Regeneration
  • Mixed Tenure Expertise
  • Opportunities for grant direct from Housing Corporation
  • Considerable scope for growth
slide27

Summary and Outlook

  • Strong financial position
  • Construction:
    • Maintain profit margins
    • Increase turnover and cash generation
    • Growth in chosen markets
  • Housebuilding:
    • Continuing to perform in challenging market
    • Uncertain land and planning environment
    • Proven business model
  • Cost reduction plan
  • Excellent opportunities in affordable housing
  • Confidence in growth plans:
    • Organic and by acquisition