Bovis Homes Group PLC Full year results 2017 1 March 2018 www.bovishomesgroup.co.uk
Agenda • Full year performance • Financial review • CEO review - Operational update - Medium term targets • Outlook • Q&A Furlong Rise, Cheltenham slide 1
Full year performance • Profjt before tax, exceptional and one-off items in-line with expectations • Strong increase in average selling price, with robust underlying prices • Year end completions delivered in a controlled and disciplined manner • Restructuring initiatives complete - business well positioned for FY18 • Investment in people, product and systems • Launch of four major margin initiatives • Excellent progress with balance sheet optimisation • Strong forward sales position • Step change in customer satisfaction - HBF score trending at well above 80% slide 2
Good progress with medium term targets Progress to date 2020 Target 4 star HBF customer satisfaction rating - HBF score since 1 October 2017 trending at 4 star - Contolled delivery in FY17 4,000 completions - Expect to deliver increase in completions in FY18 in a controlled and disciplined manner - Slowed rate of land acquisition - Progress made with divestment of sites outside our 3.5 to 4.0 year owned land bank core operating area - Ongoing focus on reducing our investment on larger sites - Operational issues addressed 23.5% gross margin with further - Embedded land bank margin strong opportunity beyond 2020 from new land - Four new major margin initiatives launched - Restructuring initiatives complete 5% admin expense as a % of revenue - On track to deliver 5% overhead in FY18 - Signifjcant progress with land disposals, reduction in part exchange stock, and completed disposal of shared equity Min £180m additional cash delivered - Focus on WIP levels and reduction of investment on larger sites in FY18 - Increase in FY18 profjtability and balance sheet optimisation 25% ROCE expected to drive signifjcant improvement in ROCE in FY18 slide 3
Financial review Earl Sibley Group Finance Director Burfjeld Grange, Hailsham www.bovishomesgroup.co.uk slide 4 slide 4
Income statement (£m) FY16 FY17 Change (restated) Revenue 1,054.8 1,028.2 -3% (1) Gross profjt 209.0 184.6 -12% (1) Administrative expenses (49.0) (56.6) +16% Operating profjt before exceptional items 160.0 128.0 -20% Exceptional items - (6.8) Share of profjt of Joint Ventures 0.3 - Profjt before interest and tax 160.3 121.2 -24% Finance cost (5.6) (7.2) Profjt before tax 154.7 114.0 -26% Taxation charge (33.9) (22.7) Profjt after tax 120.8 91.3 -24% Note: (1) The Group has reclassifjed certain costs from administrative expenses to cost of sales - see appendix slide 40 for details slide 5
Housing revenue analysis FY16 FY17 Change Average sales price (£k) Private 306.0 334.5 +9% PRS 151.1 - Affordable 119.5 123.4 +3% 272.4 +7% Total 254.9 Volume 2,573 -11% Private 2,884 PRS 19 - Affordable 1,074 1,072 0% Total 3,977 3,645 -8% Housing revenue (£m) Private 882.6 860.6 -2% PRS 2.9 - Affordable 137.3 132.3 -4% 992.9 -3% Net housing revenue 1,022.8 3.3 Other income 6.2 996.2 -3% Total housing revenue 1,029.0 slide 6
Analysis of profjt FY17 FY16 (restated) £m unless otherwise stated Housing Housing Land Total Land Total sales sales Revenue 1,029.0 25.8 1,054.8 996.2 32.0 1,028.2 Gross profjt 201.3 7.7 209.0 182.2 2.4 184.6 Administrative expenses (49.0) (56.6) Operating profjt pre exceptional items 160.0 128.0 (1) (2) Gross margin (%) 19.6 29.8 19.8 18.3 7.5 18.0 Operating margin pre exceptional (%) 15.2 12.5 • Gross margin impacted by reclassifjcation of certain project specifjc costs from administrative expenses to cost of sales (£28.6m in FY17 (FY16: £26.7m)) and additional £3.5m customer care provision • High overheads driven by overweight operating structure and increased investment • On track to deliver 5% overhead for FY18 slide 7
One-ofg and exceptional costs in FY17 (£m) FY16 FY17 Customer care provision 3.5 7.0 Advisory fees - 2.8 Restructuring costs - 4.0 Total 7.0 10.3 • Additional one-off £3.5m customer care provision taken through gross profjt in H1 17 • £2.8m advisory fees taken as an exceptional item in H1 17 • Restructuring of regional business, planning, design, engineering and other functions taken as an exceptional item of £4.0m in H2 17 slide 8 slide 8
Sales prices and construction costs FY16 FY17 Change (restated) Sales price per home (£000’s) 254.9 272.4 +7% Sales price per sq ft (£’s) 243.4 251.3 +3% Private sales price (£000’s) 306.0 334.5 +9% Private sales price per sq ft (£’s) 268.1 279.6 +4% Construction cost per home (£000’s) (1) 146.8 165.2 +13% Construction cost per sq ft (£’s) (1) 140.1 152.5 +9% • Market sales price infmation estimated at c.1-2% • Product mix and higher value locations increased sales prices by c.2-3% • Construction cost infmation estimated at c.4% over the last 12 months, with c.3% increase from mix • Remaining c.2% from additional costs including customer care provision (£3.5m) Note: (1) After reclassifjcation of certain costs from administrative expenses to cost of sales - see appendix slide 40 for details slide 9
Signifjcant cash generation (£m) FY16 FY17 (restated) 1,086.9 Housing receipts 1,061.9 Construction expenditure (703.0) (681.6) Overheads (51.4) (54.7) Operating cash flow 307.5 350.6 (225.8) Cash expenditure on land (227.6) 36.9 Land sales receipts 22.0 Dividend payment (55.4) (60.4) Non-trading items (37.9) 5.0 Net cash flow 8.6 106.3 Opening net cash 30.0 38.6 144.9 Closing net cash 38.6 • Cash expenditure on land related to the settlement of creditors in the 12 months of £189.1m (FY16: £144m) and new land investment of £36.7m (FY16: £84m) • Non-trading items includes proceeds from disposals of shared equity and fjxed assets in FY17 (see slide 14 for details) slide 10
Land acquisition in the year • Continue to see good opportunities in the land market • With reduced land requirement for FY17, able to be even more selective • 2,550 plots acquired Wellington Lichfjeld - Includes 821 plots representing final tranche at Stanton Cross Bishops Itchington Wellingborough Drakes Broughton (Wellingborough) Bishop’s Stortford Witney • High quality pull through from Wantage Didcot strategic land bank • FY17 land acquired at over 26% Horam Petersfjeld gross margin and average ROCE exceeding min 25% hurdle rate Strategically sourced slide 11 slide 11
Net assets (£m) 31 Dec 2016 30 June 2017 31 Dec 2017 Land 1,020.6 1,022.0 913.4 Land creditors (343.3) (324.7) (246.7) Land net of creditors 677.3 697.3 666.7 Work in progress 428.6 470.2 408.6 Other assets 142.5 135.4 92.1 (255.7) Other liabilities (271.1) (256.4) Net (debt)/cash 38.6 (32.4) 144.9 Net assets 1,015.9 1,014.1 1,056.6 757p 756p 787p Net assets per share • Valuable land bank supports business fundamentals and long term prospects • Signifjcant improvement in working capital through reduction in other assets • Further opportunity to reduce work in progress slide 12
Balance sheet optimisation Progress in FY18 Opportunity for FY18 Land - Five land disposals (£30.5m) - Reduction of investment on larger sites c.£80m - 100m - Signifjcant reduction in part - Optimising site by site WIP Work in progress exchange (£28.9m) (foundations, roads etc) c.£40 - £80m - Reduction in stock (£10m) - Show homes sale and leaseback (£3.5m) Non returning assets - Disposal of shared equity - Further opportunities including portfolio (£28.8m cash receipts) HA cash fmow and PRS JVs c. £50 - 60m - Disposal of three owned offjces (£8.4m) - Reduction in Help to Buy debtor (£11.5m) slide 13 slide 13
Operating metrics FY16 FY17 Sales outlets Average active sales outlets 99 92 Reservations Private reservations in year 2,960 2,274 Affordable reservations in year 1,022 1,730 Year end forward sales Private units 917 926 PRS 19 - Affordable units 1,072 1,730 Total forward sales (units) 2,008 2,656 Total forward sales (£m) 421 518 slide 14
Operational Update Greg Fitzgerald Chief Executive Offjcer Mildenhall, Sherborne www.bovishomesgroup.co.uk slide 15
Very signifjcant improvements across all areas • Key operational issues identifjed • Excellent progress in every area in H2 17 • Group started FY18 from a position of strength CEO review - initial impressions • Limited benefjt to date from recent investment in people and infrastructure • Greater ‘hands on’ approach commenced • Continued priority in relation to customer satisfaction and handover process • Impact on build quality standards most signifjcant on sites remote from regional offjces • Processes need to be simplifjed with focus on root causes • Further improvement in forecasting • Standard house types - some good ones with opportunities to improve • Signifjcant opportunity from increased focus on affordable housing • Management of capital employed has been infmuenced by drive for growth “Issues identifjed with progress already made” slide 16
Recommend
More recommend
