Results Presentation 23 February 2016 50
Agenda Results Presentation 23 February 2016 Page Presented by • Chairman’s overview 1 Nicholas Wrigley • Review of strategy and operations 3 Jeff Fairburn • Outlook 13 Jeff Fairburn • Financial review 15 Mike Killoran • Summary 26 Nicholas Wrigley Appendices 1 to 11 27 - 48 Results Presentation 23 February 2016
Chairman’s overview • A year of substantial growth − 13% increase in turnover − underlying profit before tax increased by 34% • Performance highlights: 2014 Change 2015 Underlying performance: Turnover * + 13% £2,901.7m £2,573.9m Operating profits * + 34% £634.5m £473.3m Operating margin * 21.9% 18.4% + 3.5% Pre-tax profits * £637.8m £475.0m + 34% Earnings per share 173.0p 124.5p + 39% Cash n/a £570.4m £378.4m Return on Average Capital Employed ** + 30% 32.1% 24.6% Underlying performance presented before goodwill impairment (where applicable) * Stated after fair value charge of £0.6m on shared equity sales (201 4: £1 .1 m) ** 1 2 month rolling average and stated after fair value charge of £0.6m on shared equity sales (201 4: £1 .1 m) Results Presentation 23 February 2016 1
Chairman’s overview • Disciplined growth of high quality − 8% growth in volume − 350bps increase in underlying operating margin − forward sales revenue increased 12% to £1.7bn • Strong liquidity − £483m of free cash generated pre capital returns - 24% increase on 2014 • Acceleration of Capital Return Plan for 2016 - 110p per share to be paid 1 April • 45% increase in Capital Return Plan by £2.80 per share - total returns of £9.00 per share to be paid by 2021 “Disciplined growth and increased capital returns” Results Presentation 23 February 2016 2
Review of strategy and operations Page • Strategy 4 • Group overview 5 • Consented land 8 • Strategic land 9 • Current trading 10 • Accelerated and increased returns 12 • Outlook 13 Results Presentation 23 February 2016 3
Strategy to maximise long term shareholder value Growth to Optimise Long term optimal Disciplined Surplus cash capital scale in land capital efficiency of returns to regional investment generated operations shareholders markets Results Presentation 23 February 2016 4
Review of operations - Group overview • Strong network of sites across the UK - 252 new outlets opened during the year • Strengthened control of operations − Teesside and Central opened during 2015 − North Scotland and Cornwall opened January 2016 • Scalable growth to match market demand − over half of private sales priced below £200,000 − c. 90% of sales are traditional house types • Customer confidence improving − 13% annual increase in private sales rates − over 6,100 Help to Buy completions in the year − mortgage market responded well to customer demand Regional Offices Results Presentation 23 February 2016 5
Review of operations - Group overview • Over 1,000 additional new homes delivered year on year • Solid growth in average selling price - 4.5% increase to £199,173 • Earnings quality improving - operating margin of 21.9% increased 350bps • Pre working capital cash inflows increased 31% to £653.6m • Excellent return on capital at 32.1% 2014 Change 2015 Underlying performance: Unit completions 14,572 13,509 + 8% Average selling price * £190,667 + 4.5% £199,173 Operating profits ** £634.5m £473.3m + 34% Operating margin ** 18.4% + 3.5% 21.9% Pre-tax profits ** £637.8m £475.0m + 34% Net cash inflow from operations (pre working capital) £498.5m + 31% £653.6m Cash £570.4m £378.4m n/a Return on Average Capital Employed *** 32.1% 24.6% + 30% Net asset value per share 800.7p 715.4p + 12% Underlying performance presented before goodwill impairment (where applicable) * Calculated from nominal value of turnover (201 5: before fair value charge of £0.6m on shared equity sales; 201 4: £1 .1 m) ** Stated after fair value charge of £0.6m on shared equity sales (201 4: £1 .1 m) *** 1 2 month rolling average and stated after fair value charge of £0.6m on shared equity sales (201 4: £1 .1 m) Results Presentation 23 February 2016 6
Review of operations - Group overview Product Profile - 12 months ended 31 December 2015: Unit Completions Average selling Average price Plots owned and Plot count completions change price * change under control change 5,681 + 15% £170,464 + 0.6% 33,773 + 10% Persimmon North 39% 36% 4,362 + 23% £237,840 + 7.6% 29,194 + 5% Persimmon South 30% 31% 2,382 (13%) £283,690 + 7.6% 11,991 (2%) Charles Church 16% 13% 2,147 (5%) £102,810 + 2.4% 18,691 + 9% Partnerships 15% 20% Total 14,572 £199,173 93,649 Change vs 31 December 2014 + 8% + 4.5% +7% * Calculated from nominal value of turnover (201 5: before fair value charge of £0.6m on shared equity sales; 201 4: £1 .1 m) • Demand from first time buyers and first time movers remains robust • Charles Church brand focused on executive housing in premium locations • Optimised scheme layouts supports strong demand Results Presentation 23 February 2016 7
Review of operations - Consented land • Focus on delivering superior return on capital from new land investment − continued margin growth to be supported by reduction in plot cost to revenue ratio (Dec 2015: 16.3%; Dec 2014: 17.1%) − strategic land content within land bank at c. 44% • Total plots owned and under control increased 7% to 93,649 (Dec 2014: 87,720) − represents c. 6.4 years forward supply − £632m of land payments (including land creditors) in the year (2014: £572m) − 20,501 new plots added to the consented land bank across 123 locations Results Presentation 23 February 2016 8
Review of operations - Strategic land • New investment and its subsequent � � Strategic sites � � pulled through conversion remains a strategic priority during 2015 • c. 2,100 acres of new strategic land interests � � Strategic � � interests acquired in the year acquired during 2015 • 6,739 plots successfully converted from strategic land to consented land bank − Bramley, Thames Valley (200 plots) − Lowton, North West (150 plots) − Mountsorrel, North Midlands (130 plots) − Northiam, South East (66 plots) • c. 17,700 acres held at 31 December 2015 Results Presentation 23 February 2016 9
Review of operations - Current trading • Encouraging start to 2016: − new year visitor numbers over 12% stronger than prior year − cancellation rates continue at historically low levels − weekly private sales rates 13% ahead of last year • Site activity: − availability of site construction skills remains constrained − 65 new outlets already opened in the new year − delays to new site openings constraining build • Pricing and incentives: − modest selling price improvement across the regions − Help to Buy continues to support entry to the market − part exchange remains attractive for home movers - 14% of customers utilised Results Presentation 23 February 2016 10
Review of operations - Current trading • Customer confidence reflected in strong forward orders 1 January Forward Sales Units ASP Revenue 2016 6,967 £158,336 £1,103.1m 2015 6,320 £153,964 £973.1m Movement +10% +3% +13% Current Forward Sales (inc. first 7 week sales) Units ASP Revenue 2016 9,862 £169,926 £1,675.8m 2015 9,171 £162,486 £1,490.2m Movement +8% +5% +12% Calculated from nominal value of turnover (before fair value charge on shared equity sales) Results Presentation 23 February 2016 11
Review of operations - Accelerated and increased returns • Third payment of 95p paid on 2 April 2015 • Further acceleration - 110p per share payable 1 April 2016 • Increase of £2.80 per share in Capital Return Plan to £9.00 per share - 45% increase on original £6.20 per share Paid Paid Paid 2013 2014 2015 2016 2017 2018 2019 2020 2021 TOTAL 75p 95p 110p 110p 115p 115p 620p Original Plan February 2014 Announcement 75p 70p 95p 10p 110p 10p 110p 115p 25p 620p Current Plan - existing 75p 70p 95p 110p 110p 110p 50p 620p - increase 60p 110p 110p 280p 75p 70p 95p 110p 110p 110p 110p 110p 110p 900p Results Presentation 23 February 2016 12
Outlook - Overall market • Strong job creation and increasing household incomes supporting confidence • Improved land release with continuity of NPPF • Extension of Help to Buy to 2021 provides additional visibility • Lenders supporting customers in increasing numbers with compelling deals • Mortgage approvals strengthened in the second half of the year - disciplined lending practices will support market sustainability • Key challenges to output growth − opening sites in a timely manner but further planning improvements should help − tight supply of construction skills - industry wide training measures will improve Results Presentation 23 February 2016 13
Outlook - Operational priorities • Maintain market coverage on all sites across the UK • Commence new sites at earliest opportunity • Increase construction activity to support growth • Improve provision of new skills - Combat to Construction, Upskill to Construction, Apprentices, Graduate trainees • Disciplined investment in new land including strategic land conversion “Our value added model includes disciplined growth to meet market demand” Results Presentation 23 February 2016 14
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