Full year results For the year ended 30 June 2019 11 September 2019 - PowerPoint PPT Presentation

Full year results For the year ended 30 June 2019 11 September 2019

Agenda Graham Prothero Full year results to 30 June 2019 Proposed transaction Group performance Chief Executive, Financial review Galliford Try plc Operating review Outlook Q&As Appendices 2

Proposed transaction As announced 10 September 2019 Transactio ion d details ils  Exciting opportunity to strengthen and advance all three businesses. Proceed eeds £1.075bn  Combination of housebuilding operations creates a stronger platform for both businesses. £675m paper  Construction remains a well-capitalised, standalone, construction facing business. Financi cing £300m cash  Significant work still to be completed.  Generates significant benefit for shareholders and wider £100m debt transfer stakeholders. 3

Group performance Full year results for the year ended 30 June 2019 4 Meadow V View w in Cholsey, O Oxfordshire

Group performance  Performance in line with guidance.  Strong succession planning facilitated transition, stability and leadership.  Leadership refocused in all three businesses.  Further progress in transforming Linden; operational improvements continued, delivering margin improvement in tougher conditions.  Continuing strong growth in Partnerships, increasing geographic spread, revenues and margins.  Construction reorganised to exploit key skills St L Lawr wrence, Bod odmin in, C Cor ornwall ll and strengths. 5

PBT 2 down 18% Total new homes completed up 5% Group performance 200 7,000 150 6,000 100 £188.7m 6,507 £155.5m 6,193 5,000  Revenue 1 of £2.9bn (2018: £3.1bn). 50 0 4,000  Pre-exceptional profit before tax in line with FY18 FY19 FY18 FY19 expectations at £155.5m (2018: £188.7m). Average net debt Total order book 3  Total new homes completed up by 5% to 6,507 down by £41m (2018: 6,193). 250 6 5 200  Total order book 3 of £4.5bn (2018: £5.0bn). 4 150 3  Average net debt of £186.0m as guided (2018: £227m 100 £5.0bn £186m £4.5bn 2 £227.0m). 50 1 0 0  Final dividend of 35.0p, making a full year dividend FY18 FY19 FY18 FY19 of 58.0p, which is covered by 2x pre-exceptional 1 Includes share of joint ventures and excludes sales from part-exchange. earnings. 2 Pre-exceptional. 3 Current at 9 September 2019. 6

Andrew Financial Duxbury review Finance Director, Galliford Try plc 7

£m £m FY19 Y19 FY18 Y18 Var Financial review Revenue 1 2,862. 2, 862.5 3,132.3 (9)% Profit from operations before Group financial performance 177. 177.8 213.1 (17)% exceptional items 2 Profit before exceptional  Solid financial performance. 155.5 155. 188.7 (18)% items and tax • Strong margins in Linden. • Impressive growth in Partnerships. Profit before tax 104.7 104. 143.7 (27)% • Underlying Construction performance Earnings per share encouraging. 115. 115.7p 7p 158.4p (27)%  Pre-exceptional profit before tax of £155.5m Pre-exceptional includes £33.0m of previously announced 78.5p 78. 121.1p (35)% Post-exceptional write-downs. Dividend per share 58. 58.0p 77.0p (25)%  Exceptional items of £50.8m. Group pre-exceptional RoNA 3 22.1% 22. 1% (7.1)pts 29.2%  Dividend per share 58.0p, covered by 1 Pre-exceptional and includes share of joint ventures. Excludes sales from part-exchange. 2x pre-exceptional earnings. 2 Profit from operations stated before finance costs, amortisation, joint ventures’ interest and tax. 3 Group pre-exceptional Return on Net Assets (RoNA) is calculated as pre-exceptional EBITA  Pre-exceptional RoNA remains robust at 22.1%. divided by average pre-exceptional net assets including goodwill. 8

FY19 19 Financial review Pro Profit/( /(loss) Oper erating ing £m £m Reven enue 1, 1,2 from o oper peratio ions 2,3 ,3 margin gin 2 Linden en H Homes es 820.4 160.5 19.6% Segmental analysis Partner ership hips 623.2 34.8 5.6% & Re Regen Construction 1,386.8 (15.0) (1.1)%  Linden Homes maintained strong margin at 19.6%. PPP I Investments 31.5 4.5 n/a • Revenue reduction includes planned lower ASP. Group 0.6 (7.0) n/a • Profit from operations of £160.5m. TOTA TAL 2, 2,862 862.5 177. 177.8 6.2% 6. 2% FY18  Partnerships & Regeneration delivered rapid growth in contracting Profit/(loss) Operating and higher-margin mixed-tenure revenues. £m Revenue 1 from operations 2,3 margin 2 • Revenue growth of 31%, including 55% growth in mixed-tenure. Linden Homes 947.3 184.4 19.5% Partnerships • Profit from operations up 47%, reflecting gross margin growth and 475.2 23.6 5.0% & Regen improved overhead leverage. 1,687.4 15.9 0.9% Construction • Margin expansion to 5.6%. PPP Investments 21.7 6.8 n/a Group 0.7 (17.6) n/a  Construction’s performance impacted by previously announced TOTAL 3,132.3 213.1 6.8% one-off charge. 1 Revenue includes share of joint ventures and excludes part-exchange. • Underlying business performing well, with margins that reflect the lower 2 Pre-exceptional. risk profile. 3 Profit/loss from operations stated before finance costs, amortisation, • Revenue reduced to £1.4bn as guided. exceptional items, joint ventures’ interest and tax. 9

Linden Homes gross margin Partnerships & Regen gross margin Financial 24.0% 23.8% 23.6% 11.1% 23.0% 22.5% 10.7% 25% 12% 10.5% 9.3% 4.4% 4.1% 10% 6.3% 4.8% 20% 7.7% 6.5% review 5.5% 8% 5.7% 6.0% 15% 5.4% 6% 4.8% 10% 19.5% 19.6% 18.2% 4% 17.5% 16.0% 5.6% 5% 5.0% 2% 4.5% 3.9% Gross margin by 2.9% 0% 0% FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 business Operating profit Overhead Operating profit Overhead  Linden gross margin showing continued progression, Construction gross margin 1 benefiting from standardisation strategy. 7% 5.8% 4.9% 4.9%  Partnerships delivered rising 4.4% 3.2% 5% margin, with increasing 4.6% 3% 3.8% 4.0% proportion of mixed-tenure 4.4% 4.3% 1% revenue. 1.2% 1.1% 0.0% 0.9% (1.1%) -1% (1%)  Construction margin includes FY15 FY16 FY17 FY18 FY19 impact of contract write- Operating profit Overhead downs. 1 Pre-exceptional. 10

Financial review Accounting p policy change At 1 July Year t to 30 30 New accounting standards and exceptional items £m £m 2018 June 2019 2019 Opening Exc xceptional reserves item ems  IFRS 15 ‘Revenue from Contracts with Customers’. IFRS 9 (11.2) (2. 2.8) 8) • Timing impact only – no effect on profitability of individual contracts or cash flows. IFRS 15 (35.4) (6. 6.3) 3) • Higher hurdle for third-party (downstream) recoveries on an IAS 37 basis. Note: stated before tax and deferred tax. • Resulting opening reserves adjustment and additional exceptional charge related to AWPR. Excep eptional i item ems £m £m • Sales from part-exchange properties now included in revenue (no impact AWPR 26.0 on net assets). Queensferry Crossing 6.7  IFRS 9 ‘Financial Instruments’. Pensions 4.4 • ‘Expected credit loss’ adjustment to opening reserves. Restructuring 4.6 • Small increase in value of PPP and other investments. Previously a announced 41. 41.7  IFRS 16 ‘Leasing’ applicable from 31 December 2019. IFRS 15/IFRS 9 9.1 TOTA TAL 50.8 50.  Exceptional items of £50.8m. 11 11

Financial review 2018 1 £m £m 2019 2019 2018 Net assets 751.7 751. 776.5 Balance sheet highlights Tangible net assets 580.3 580. 601.6 Net (debt)/cash (56. 56.6) 98.2 Gearing % 8% 8% -  Maintained a strong balance sheet. Net pension surplus 7.0 7. 7.0  Working capital increased to £636.9m (2018: Workin ing c g capit ital 2019 2019 2018 2018 £503.4m), including £99.7m increase in net Land and developments net of investment in housebuilding to £991.4m 659.8 659. 580.5 land creditors (2018: £891.7m). Investments in joint ventures 331. 331.6 311.2  Net debt £56.6m (2018: net cash £98.2m) Net investment in housebuilding 991.4 991. 891.7 and average net debt £186m (2018: £227m). Other working capital (354. 354.5) 5) (388.3)  Total committed debt facilities of £550m. Total working capital 636. 636.9 503.4 1 Stated before total net £32.3m opening reserves adjustment (or IFRS 9 and IFRS 15) transition adjustments on adoption of IFRS 9 and IFRS 15 on 1 July 2018. 12

Financial review Cash management remains priority 96.8 £m 150 98.2 100 4.5 50 (63.7) (99.7) 0 (50) -50 (79.9) (56.6) (12.8) (100) -100 Opening Impact of Cash from Net investment Other working Dividend Interest, tax Closing net cash AWPR operating in housebuilding 2 capital and other net debt 1 2 1 July 2018 activities movements 30 June 2019 1 Includes £150m rights issue net proceeds in 2018. 2 Includes movements in working capital in respect of our joint ventures and PPP and other investments. 13

Operating review By business 14 M49 9 Avonmouth th

Our Executive Board Leadership restructured in each of the businesses. 15