Half Year Results to 31 December 2015 Peter Truscott, Chief - PowerPoint PPT Presentation

Half Year Results to 31 December 2015 Peter Truscott, Chief Executive, and Graham Prothero, Finance Director Bell’s Yard, Lincolnshire 1 HY16 Results – Analyst Presentation, 25 February 2016

Peter Truscott CHIEF EXECUTIVE 2 HY16 Results – Analyst Presentation, 25 February 2016

Agenda  Highlights  Operating Review  Financial Review  Strategy to 2018  Outlook  Appendices 3 HY16 Results – Analyst Presentation, 25 February 2016

Highlights The Sycamores, Birtley St David’s RC School, Edinburgh 4 HY16 Results – Analyst Presentation, 25 February 2016

Highlights Group  Record half year profit before tax of £52.9m  Return on net assets increased to 21.7%  Interim dividend up 18% to 26p per share  Net debt of £95.7m, increased in accordance with plan  Total of 2,403 units delivered across Linden Homes and Galliford Try Partnerships  Plans include new Linden Homes and Galliford Try Partnerships business units  Continued encouraging progress of disciplined strategy to 2018 5 HY16 Results – Analyst Presentation, 25 February 2016

Highlights Overview EPS up 15% 1 PBT up 15% 1 Dividend up 18% 26p £52.9m 52.2p 22p £45.9m 45.5p 26p H1 16 H1 15 H1 15 H1 15 H1 16 H1 16 1 Stated before exceptional items of £3.4m at December 2014 6 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review LINDEN HOMES Bradley Meadow, Yorkshire Ridgeway Manor, Wiltshire 7 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review – Linden Homes Overview  1,357 completions in the period, generating increase in revenue and 17.0% operating margin  12,800 plots in landbank with GDV of £3.8bn  Strong in-hand position of £793m  Average outlets increased to 76; sales per outlet per week increased to 0.57 (HY15: 0.51) and improved further in 2016  Recent rationalisation reduces cost base by £5 million (neutral in current year), but does not reduce capacity; further Yorkshire business unit to open in 2016  Land market remains positive  Planning environment remains favourable although detailed planning consents still subject to delay 8 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review – Linden Homes Landbank analysis 1 Gross margin of landbank ASP in landbank £k % £k 25 400 22.5% 22.5% 22.5% 350 £291k £291k £281k 300 20 250 200 150 15 100 50 10 0 Dec 14 June 15 Dec 15 Dec 14 June 15 Dec 15 Cost per plot Plot cost as % of ASP £k % 80 30 £70k £69k 70 £64k 24% 24% 23% 60 20 50 40 30 10 20 10 0 0 1 Includes affordable Dec 14 June 15 Dec 15 Dec 14 June 15 Dec 15 9 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review – Linden Homes Market opportunity  Encouraging sales since 1 January 2016  100% of land secured for FY17 and 75% for FY18  1,700 acres in strategic land, 245 plots granted planning in period  Margin improvement strategy continues to progress with focus on standardising operating processes  Capacity to grow business organically within current structure 10 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review GALLIFORD TRY PARTNERSHIPS New Brunswick, Manchester 765 Finchley Road, NW11 11 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review – Galliford Try Partnerships Overview  Combination of contracting and mixed tenure development  Growth in landbank to 2,700 units with GDV of £664m  Largely self funded, with impressive returns on capital  Contracting work cash generative  Opportunity to invest further in mixed tenure to accelerate margin improvement 12 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review – Galliford Try Partnerships Units delivered 2500 2,208 1,800 2000 1,720 1,500 1500 1,215 1,046 1,050 1000 800 726 600 500 408 246 220 165 126 0 FY13 FY14 H1 15 FY15 H1 16  Contracting – equivalent units  Mixed tenure units 13 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review – Galliford Try Partnerships Market opportunity  Client business plans re-profiled, restoring investment and activity levels  Growth in platform of joint ventures with registered providers  Increased commissioning from local authorities in joint venture model on public land Partnerships Division  Client emphasis on home ownership driving Regional Offices mixed tenure opportunities Potential operating area  Scope for further geographical expansion Current operating area Bristol 14 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review CONSTRUCTION Stephenson Quarter, Newcastle Alford Community Campus, Aberdeenshire 15 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review - Construction Overview  Revenue increased, as new opportunities begin to take effect  Margin stable, and remains constrained pending completion of historical projects and until benefit of new work comes through  £3.7bn order book; 71% of work secured for 2016/17  New work contains appropriate margin and inflation allowances; focus on frameworks and two-stage negotiated work  High-quality people and order book provide confidence for future targets  Market outlook continuing to improve, but at a slower rate than anticipated Courtesy of Hotel Football 16 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review - Construction Major wins Building  East Lothian Community Hospital (£72m)  Arena Central, Birmingham (HSBC) (£66m)  Anderson High School, Shetland (£55m)  Ministry of Defence Frameworks, South West/South East (£1bn framework value) Infrastructure  Smart Motorways Framework, M1 (£1.5bn framework value)  Biomass energy plants (£75m)  AMP 6 (Water Frameworks) starting to come through FM  Crown Commercial Service Framework (£3.5bn Arena Central, Birmingham framework value) 17 HY16 Results – Analyst Presentation, 25 February 2016

Operating Review - Construction Order book strengthened By client type Building  Education  Commercial  Health 100%  28 19 12 10 FM  Other Public & Regulated 19 16  Defence 75% 23 19 72 71 50% 58 53 25% Infrastructure 0% FY 13 FY 14 FY 15 H1 16  Transport  Water   Private Power   Regulated Flood Alleviation   Public Other Civil Engineering 18 HY16 Results – Analyst Presentation, 25 February 2016

Graham Prothero FINANCE DIRECTOR 19 HY16 Results – Analyst Presentation, 25 February 2016

Financial Review The Residence, SE1 55 St James's Street, SW1A South Devon Highway, Devon Norwood Hall, London 20 HY16 Results – Analyst Presentation, 25 February 2016

Financial Review Summary Income Statement: Half Year to 31 December FY to £m 2015 2014 30 June 2015 Revenue 1 1,264.9 1,124.6 2,430.7 Profit from operations 2 65.9 55.3 138.9 Profit before exceptional items 3 52.9 45.9 117.7 and tax 114.0 Profit before tax 52.9 42.5 Earnings per share: Pre-exceptional 3 52.2p 45.5p 116.3p Post-exceptional 52.2p 42.0p 112.8p Dividend per share 26.0p 22.0p 68.0p 1 Includes share of joint ventures 2 Profit from operations stated before finance costs, amortisation, exceptional items, joint ventures’ interest and tax, and taxation 2 Exceptional items represent £3.4m in the period to 31 December 2014 and £3.7m in the year to 30 June 2015 21 HY16 Results – Analyst Presentation, 25 February 2016

Financial Review Financial Review Segmental Analysis: Half Year to 31 December 2015 FY to 30 June 15 Profit/(Loss) Operating Operating £m Revenue 1 from Operations 2 Margin Margin Linden Homes 362.7 61.5 17.0% 16.0% Partnerships 150.2 4.5 3.0% 2.9% Construction 738.6 8.5 1.2% 1.2% PPP Investments 12.9 (1.7) NA NA Group 0.5 (6.9) NA NA TOTAL 5.2% 1,264.9 65.9 5.7% 2014 Profit/(Loss) Operating Revenue 1 from Operations 2 £m Margin Linden Homes 346.1 52.1 15.1% 2.3% Partnerships 157.6 3.6 Construction 604.8 5.9 1.0% PPP Investments 15.9 (0.6) NA Group 0.2 (5.7) NA TOTAL 1,124.6 55.3 4.9% 1 Revenue includes share of joint ventures 2 Profit from operations stated before finance costs, amortisation, exceptional items, joint ventures’ interest and tax, and taxation 22 HY16 Results – Analyst Presentation, 25 February 2016

Financial Review – Linden Homes Linden Homes gross margin COMPS/REVENUE Revenue up 5% Units: 1,357 (H1 15:1,364) 25% 23.5 Revenue: £362.7m (H1 15: £346.1m) 22.5 21.7 21.4 6.5 6.5 SALES MIX (UNITS) 20% 6.6 6.3 Private: 1,124 (H1 15: 984) 17.0 15% Affordable: 233 (H1 15: 380) 16.0 15.1 15.1 AVERAGE SALES PRICE 1 up 8% 10% £334k (H1 15: £310k) 5% RETURN up 1.3pts 0% Return on net assets: FY14 H1 15 FY15 H1 16 (H1 15: 18.9%) 20.2%  Overhead  Operating margin SALES IN HAND 2 £793m (H1 15: £677m) 1 Excludes affordable 2 Current at 14 February 2016 23 HY16 Results – Analyst Presentation, 25 February 2016