CAPITAL MARKETS DAY 11 October 2018 Peter Truscott, Chief Executive - PowerPoint PPT Presentation

CAPITAL MARKETS DAY 11 October 2018 Peter Truscott, Chief Executive Great Eastern Quays, East London

GROUP HIGHLIGHTS FOR FY18 2 PBT 1 up 28% EPS 1,3 up 21%  Strong progress against strategic objectives 200 160 150 180  Total homes built up 13% to 6,193 (FY17: 5,490) 140 160 130 158.4p  Record pre-exceptional profit of £188.7m, up by £188.7m 140 120 131.1p £147.6m 120 110 28% and increased operating margins across all 100 100 three businesses: FY17 FY18 FY17 FY18 • Linden Homes margin up to 19.5% (FY17: Dividend 3 down 10% RoNA 1,2 up 1.7% pts 18.2%) 40 100 • Partnerships & Regeneration margin up to 80 30 5.0% (FY17: 4.5%) 60 20 86.0p 40 • Construction margin up to 0.9% (FY17: 0.0%) 77.0p 29.2 % 27.5% 10 20  Full year dividend of 77.0p, covered 2.0x by 0 0 FY17 FY18 FY17 FY18 pre-exceptional profits  Successful 1 for 3 rights issue in April 2018 resulting 1 Pre-exceptional 2 Group pre-exceptional Return on Net Assets (RoNA) is calculated as pre-exceptional EBITA in net proceeds of £150m divided by average pre-exceptional net assets including goodwill 3 FY17 EPS and dividend restated to reflect the shares issued in the rights issue in April 2018 Capital Markets Day 2018

GROUP FINANCIAL TARGETS TO 2021 3 Sustainable profit Improving margins Strong returns growth PBT 1 growth £m Dividend per share 2 p Group RoNA 1 % CAGR ≥60% 29.2 >5% 27.5 growth 86.0 >25.0 189 148 77.0 FY17 FY18 FY21 FY17 FY18 FY21 FY17 FY18 FY21 1 FY17 and FY18 figures based on pre-exceptional profits 2 FY17 restated as a result of the rights issue Capital Markets Day 2018

BUSINESS TARGETS TO 2021 4 Busi usiness ss Metric FY18 FY18 FY21 FY21 Units 3,442 4,200 - 4,500 pa Revenue £947m £1.25bn Operating margin 19.5% 20% Units 2,751 4,200 - 4,400 pa Revenue £475m £700m - £750m Operating margin 5.0% 6% - 7% RoNA 48.2% >50% Revenue £1.7bn £1.8bn Operating margin 1 0.9% >2% (Debt)/cash £(26.0)m £200m 1 FY18 excludes exceptional items Capital Markets Day 2018

AGENDA 5  Introduction  Tour of Great Eastern Quays  Light lunch  Linden Homes presentation  Tea-break  Partnerships & Regeneration presentation  Depart Great Eastern Quays Capital Markets Day 2018

LINDEN HOMES Tom Nicholson Divisional Chairman East Andrew Hammond Divisional Chairman West Crowdhill Green, Fair Oak, Hampshire

AGENDA 8  Progress on strategy delivery  Standardisation  Land strategy  Continued targeted optimisation Tom Nicholson, Divisional Chairman East  Profit and volume growth  Outlook and Q&A Andrew Hammond, Divisional Chairman West Capital Markets Day 2018

PROGRESS ON STRATEGY DELIVERY 9 Three strategic priorities to drive volume growth and margin S1 S2 S3 Profit and Volume Standardisation Land Strategy Growth Capital Markets Day 2018

STANDARD HOUSETYPES 10 Product and delivery Linden Homes Layouts (LHL) V1 Linden Homes Layouts (LHL) V2 The Linden Collection (LC) 2014 2015 2016 First iteration First stage optimisation Major review 22 housetypes, incorporating 13 39 housetypes 32 housetypes core designs Capital Markets Day 2018

STANDARDISATION 11 Product and delivery  Target production delivery of 80% Linden Collection in 2021  Achieved 85% of planning submissions of combined standard product in 2018  Planning submissions for Apr – June 2018 show an increase to 65% Linden Collection Capital Markets Day 2018

STANDARDISATION 12 Linden Homes Layouts Varying plot Varying eaves heights – depths – lost complex scaffolding land Complicated ridge lines Complicated Steps and staggers – build masonry details delays – expensive Capital Markets Day 2018

STANDARDISATION 13 Linden Collection Standard plot depths – efficient use of land Minimal eaves height differences Timber replaces Simple plot substitution – masonry – quicker, less footprint identical on Steps and staggers removed – expensive three housetypes efficient build Capital Markets Day 2018

STANDARDISATION 14 LHL V1 to Linden Collection Utility Optimised kitchen Dining/Family Area Effective utilisation of Increased bay feature reception room Reduced frontage LH LHL L 40 404 4 The Pem embroke Capital Markets Day 2018

STANDARDISATION 15 LHL V1 to Linden Collection Enhanced bedroom four Efficient space utilisation Increased floor plan optimisation and reduced cost LH LHL L 40 404 4 The Pem embroke Capital Markets Day 2018

STANDARDISATION 16 Sales optimisation 2016 v 2018 Capital Markets Day 2018

STANDARDISATION 17 Operational delivery 2016 v 2018 Capital Markets Day 2018

STANDARDISATION: CASE STUDY 18 Kitchen standardisation  Optimised layouts based on third Linden LHL V2 generation standard housetypes Collection Saving (£) Saving (%) average achieved  Design process undertaken with partner supplier 2 £2,331 £1,558 £773 33%  Quality functional designs bedroom  Rationalisation of standard ranges 3 £2,325 £1,542 £783 34% bedroom  Standard ‘package upgrades’ simplifies process 4 £3,677 £1,798 £1,879 51%  Significant reduction in cost and bedroom management time 5 £4,123 £1,798 £2,325 56% bedroom Capital Markets Day 2018

STANDARDISATION: CASE STUDY 19 Kitchen procurement Capital Markets Day 2018

STANDARDISATION 20 Overhead efficiency Capital Markets Day 2018

LAND STRATEGY 22 Improvements in quality of acquisitions Capital Markets Day 2018

PLOT SUBSTITUTION CASE STUDY 23 Copperfields, Malton Capital Markets Day 2018

REPLAN CASE STUDY 24 Riverside, Boroughbridge Capital Markets Day 2018

REPLAN CASE STUDY 25 Riverside, Boroughbridge Capital Markets Day 2018

STRATEGIC LAND 26 Growth and delivery Capital Markets Day 2018

CONTINUED TARGETED OPTIMISATION 28 Regional operational delivery Capital Markets Day 2018

FUTURE TARGETED OPTIMISATION 29 Operational delivery Capital Markets Day 2018

FUTURE TARGETED OPTIMISATION 30 Sales optimisation Capital Markets Day 2018

PROFIT AND VOLUME GROWTH 31 Outlook S1 S2 S3  2021 target operating margin achieved in 2018 Profit and Volume Standardisation Land Strategy Growth  Further margin improvement possible without sales inflation  Full benefits of standardisation yet to be realised  Embedded margin in forward landbank will improve operating profit further in plan period Capital Markets Day 2018

QUESTIONS & ANSWERS

PARTNERSHIPS & REGENERATION Stephen Teagle Chief Executive of Partnerships & Regeneration Devons Road, London

STEPHEN TEAGLE Chief Executive of Partnerships & Regeneration

AGENDA A leading partnerships specialist with a differentiated strategy Introduction to Partnerships Market Opportunity The Partnerships Business Model 1 Upton Village, London

AN INTRODUCTION TO PARTNERSHIPS 36 Capital Markets Day 2018 Marldon, Devon

A FEW BASICS An introduction to Partnerships • An established national brand delivering accelerated growth • Identifies land, invests, develops, constructs and sells • A proven capital-efficient model that turns assets quickly, balancing cash discipline with margin • A reputation for delivery, quality and sector knowledge Adam, Graduate Surveyor & Joyce, Project Document Controller • Resilient earnings across cycle 37

DELIVERING ACCELERATED GROWTH Current strategy driving profitable growth and improving returns S1 S2 S3 Grow national footprint Drive margin through continued improvement through Unlock our partners’ expansion into new focus on land-led and capacity in sub markets geographies mixed-tenure Units Revenue (£m) Operating Margin 700-750 4,200-4,400 6-7% 3.9% 4.5% 5.0% 475 2,026 2,194 2,751 330 301 70 1.4% 0 620 97 FY13 FY16 FY17 FY18 FY21 FY13 FY16 FY17 FY18 FY21 FY13 FY16 FY17 FY18 FY21 38

FINANCIAL REVIEW Full year results 30 June 2018 Partnerships & Regeneration REVENUE/OPERATING PROFIT Mixed-tenure: £66.7m FY16 Contracting/Land-led Solutions: £233.9m Equivalent contracting Operating profit: £11.7m units UNITS DELIVERED REVENUE/OPERATING PROFIT Up £29.6m Mixed-tenure: £82.2m 2,000 /£3.2m FY17 Contracting/Land-led Solutions: 1,600 £248.0m 1,500 Mixed- Operating profit: £14.9m tenure 751 594 526 Up REVENUE/OPERATING PROFIT £145.2m FY16 FY17 FY18 Mixed-tenure: £124.1m /£8.7m Contracting/Land-led Solutions: FY18 £351.3m 39 Operating profit : £23.6m

FINANCIAL REVIEW Full year results 30 June 2018 ORDER BOOK/SALES IN HAND Overheads FY18 Contracting/Land-led Solutions: £1,200m Mixed-tenure £188m 5.7% 6.0% FY17 Contracting/Land-led Solutions: £1,050m 5.4% Operating profit Mixed-tenure £93m 4.8% 3.9% Contracting/Land-led Solutions: £865m FY16 5.0% 4.5% 3.9% Mixed-tenure £73m 2.9% 2.1% 40