Results Presentation 24 February 2015 52
Agenda Results Presentation 24 February 2015 Page Presented by • Chairman’s overview 1 Nicholas Wrigley • Review of strategy and operations 3 Jeff Fairburn • Outlook 15 Jeff Fairburn • Financial review 17 Mike Killoran • Summary 28 Nicholas Wrigley 29 – 50 Appendices 1 to 11 Results Presentation 24 February 2015
Chairman’s overview • Performance highlights 2014 2013 Change Underlying performance: Turnover * £2,573.9m £2,085.9m + 23% Operating profits * + 42% £473.3m £333.1m Operating margin * + 2.4% 18.4% 16.0% Pre-tax profits * + 44% £475.0m £329.6m Earnings per share 124.5p 83.3p + 49% Cash £378.4m £204.3m n/a Return on Average Capital Employed ** 24.6% 17.6% + 40% • Strong and well balanced performance − underlying profit before tax increased by 44% − 40% improvement in ROACE Underlying performance presented before goodwill impairment and exceptional items (where applicable) * Stated after fair value charge of £1 .1 m on shared equity sales (201 3: £6.6m) ** 1 2 month rolling average and stated after fair value charge of £1 .1 m on shared equity sales (201 3: £6.6m) Results Presentation 24 February 2015 1
Chairman’s overview • Delivering profitable growth − 17% growth in volume − 240 bps increase in underlying operating margin − increased forward sales revenues by 5% to £1.5bn • Significant cash generation − over £950m of cash generation of which £572m spent on land and £214m surplus capital returned to shareholders • Substantial investment in new land sustaining value creation for shareholders • Third Capital Return Plan payment of 95p per share to be accelerated to 2 April “ Profitable growth and significant returns of capital ” Results Presentation 24 February 2015 2
Review of strategy and operations Page • Strategy 4 • Key objectives 5 • Group overview 6 • Consented land 10 • Strategic land 11 • Current trading 12 • Accelerated returns 14 • Outlook 15 Results Presentation 24 February 2015 3
Strategy to maximise long term shareholder value Growth to Optimise Long term optimal cash Disciplined Surplus capital land capital scale in efficiency returns to investment generated regional of shareholders markets operations Results Presentation 24 February 2015 4
Review of operations - Key objectives • Optimise sales to suit market conditions • Provide a range of quality homes to our customers • Maximise value from each new home sold • Capture cost efficiencies and control costs to maximise profitability • Grow site based skills to support expansion in construction capacity • Disciplined high quality land replacement including conversion of our strategic land portfolio • Invest in land and infrastructure at the optimal time in the housing cycle • Achieve strong cash generation through a combination of trading and balance sheet management • Deliver capital which is surplus to reinvestment requirements to shareholders through the cycle by way of a long term Capital Return Plan commitment Results Presentation 24 February 2015 5
Review of operations - Group overview • Strong network of sites across all regions of the UK - currently 385 active outlets • Remain committed to providing choice at affordable prices − c. 57% of private sales priced below £200,000 − c. 90% of sales are traditional house types • Return to more balanced market conditions − improved supply of competitive mortgage products − over 5,350 Help to Buy completions in the year − UK consumer confidence improving Regional Offices Results Presentation 24 February 2015 6
Review of operations - Group overview • Substantial increase in legal completions - 17% up on prior year • 42% growth in operating profits • 41% increase in pre working capital cash flows 2013 Change 2014 Underlying performance: Unit completions 13,509 11,528 + 17% Average selling price * £181,861 + 5% £190,667 Operating profits ** £473.3m £333.1m + 42% Operating margin ** 18.4% 16.0% + 2.4% Pre-tax profits ** £475.0m £329.6m + 44% Net cash inflow from operations (pre working capital) £487.9m £345.5m + 41% Cash £204.3m n/a £378.4m Return on Average Capital Employed *** 17.6% + 40% 24.6% Net asset value per share 715.4p 671.4p + 7% Underlying performance presented before goodwill impairment and exceptional items (where applicable) * Calculated from nominal value of turnover (201 4: before fair value charge of £1 .1 m on shared equity sales; 201 3: £6.6m) ** Stated after fair value charge of £1 .1 m on shared equity sales (201 3: £6.6m) *** 1 2 month rolling average and stated after fair value charge of £1 .1 m on shared equity sales (201 3: £6.6m) Results Presentation 24 February 2015 7
Review of operations - Group overview Product Profile - 12 months ended 31 December 2014: Unit Completions Average selling Average price Plots owned and Plot count completions change price * change under control change 4,950 + 27% £169,514 + 5% 30,713 + 15% Persimmon North 37% 35% 3,553 + 21% £221,001 + 4% 27,692 + 23% Persimmon South 26% 32% 2,750 + 7% £263,637 + 7% 12,198 + 14% Charles Church 20% 14% 2,256 + 6% £100,357 + 1% 17,117 + 18% Partnerships 17% 19% Total 13,509 £190,667 87,720 Change vs 31 December 2013 + 17% + 5% +18% * Calculated from nominal value of turnover (201 4: before fair value charge of £1 .1 m on shared equity sales; 201 3: £6.6m) • Volume growth across all brands - Help to Buy impact greater for Persimmon • Successful targeting of first time buyer, and first mover, markets • c. 2.5% underlying selling price growth added to by mix Results Presentation 24 February 2015 8
Review of operations - Group overview Half Year Sales Profile 3,500 3,000 .) 2,500 o (N s 2,000 n tio le 1,500 p m o C 1,000 500 - 1 13 2 13 1 14 2 14 1 13 2 13 1 14 2 14 1 13 2 13 1 14 2 14 H H H H H H H H H H H H North Division South Division Partnerships • Traditional seasonal trading pattern re-emerging • Improved build processes supporting legal completion delivery • Increased Space4 production helping to satisfy increased sales rates Results Presentation 24 February 2015 9
Review of operations - Consented land • Excellent liquidity has supported strong investment in new land − £572m of land payments (including land creditors) in the year (2013: £510m) − 26,822 new plots added to the consented land bank across 156 locations • Land replacement focus remains on securing high quality returns − identify compelling land opportunities in short term, and strategic, land markets • Total plots owned and under control increased 18% to 87,720 (Dec 2013: 74,407) − represents c. 6.5 years forward supply − strategic land content within land bank at c. 44% − further margin growth to be supported by reduction in plot cost to revenue ratio (Dec 2014: 17.1%; Dec 2013: 17.5%) Results Presentation 24 February 2015 10
Review of operations - Strategic land • Continued investment in strategic land � ���������� � � � ������������� remains a key element of our business model ��������������� ���� • c. 17,000 acres held at 31 December 2014 � ���������� � � � • Over 2,650 acres of new strategic land ���������� ��������� ����������� interests acquired in the year • 9,386 plots successfully converted from strategic land to consented land bank − Wallsend, North East (642 plots) − Banbury, Oxfordshire (350 plots) − Rugby, South Midlands (150 plots) − Standish, North West (125 plots) Results Presentation 24 February 2015 11
Review of operations - Current trading • Encouraging opening to 2015: − visitor numbers in line with the prior year − weekly private sales rate per site 5% stronger − historically low cancellation rates at 16% (2014: 15%) • Site activity: − 50% of the planned new outlets for H1 2015 already open − Space4 productivity increasing to support future growth of the business − site skills resourcing remains tight • Pricing and incentives: − experiencing modest selling price improvement − customers remain keen to secure Help to Buy supported mortgages − opportunity to increase part exchange usage as consumer confidence grows Results Presentation 24 February 2015 12
Review of operations - Current trading • Strong forward orders despite substantial growth in 2014 legal completions 1 January Forward Sales Units ASP Revenue 2015 6,320 £153,964 £973.1m 2014 6,038 £150,383 £908.0m Movement +5% +2% +7% Current Forward Sales (inc. first 8 week sales) Units ASP Revenue 2015 9,171 £162,486 £1,490.2m 2014 9,105 £156,419 £1,424.2m Movement +1% +4% +5% Calculated from nominal value of turnover (before fair value charge on shared equity sales) Results Presentation 24 February 2015 13
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