HALF YEAR RESULTS TO 31 DECEMBER 2017 14 February 2018 Peter Truscott, Chief Executive Graham Prothero, Finance Director Royal Birmingham Conservatoire
Peter Truscott CHIEF EXECUTIVE
AGENDA Half year results to 31 December 2017 Group highlights Impact of Carillion Financial review Strategic and operating review Outlook Q&A Appendices Half year results to 31 December 2017
GROUP HIGHLIGHTS Half year results to 31 December 2017 Great Eastern Quays, East London
GROUP HIGHLIGHTS 5 Strong first half performance Excellent progress against strategic PBT 1 up 29% EPS 1 up 31% objectives in all three businesses 100 100 80 80 Linden Homes margin up from 18.2% to 60 60 18.5%, Partnerships & Regeneration £81.3m 80.8p 40 40 £63.0m 61.9p margin up from 3.4% to 4.8%, and pre- 20 20 exceptional Construction margin up 0 0 from 0.4% to 0.9% HY17 HY18 HY17 HY18 Half year pre-exceptional profit before Dividend RoNA 1,2 up 5.8% pts 60 34 tax of £81.3m, up by 29% 32 30 Half year dividend of 28.0p 40 28 26 Pre-exceptional Return on Net Assets of 30.7% 20 24 32.0p 28.0p 24.9% 30.7% 22 0 20 HY17 HY18 HY17 HY18 1, Pre-exceptional (no exceptional charge in HY17) 2 Group pre-exceptional Return on Net Assets (RoNA) is calculated as pre-exceptional EBITA divided by average pre-exceptional net assets including goodwill Half year results to 31 December 2017
IMPACT OF CARILLION 6 Group continues to operate well within its financial covenants Aberdeen Western Peripheral Route (AWPR) over-run costs, compounded by the compulsory liquidation of Carillion, have increased the Group’s total cash commitments on the project by in excess of £150m This continuing cost burden will impair ability to realise the significant growth opportunities of Linden Homes and Partnerships & Regeneration Half year results to 31 December 2017
RESPONSE 7 Equit ity c capit ital r l raise Fully underwritten standby equity capital raise of £150m Divide dend d Planned increase in dividend cover to 2.0x pre-exceptional earnings brought forward and effective immediately Use o of proceed eeds 1 2 Demonstrate continued financial strength to Ensure the Group has access to the appropriate shareholders, customers, suppliers and other capital to maintain strong growth trajectory stakeholders Half year results to 31 December 2017
Graham Prothero FINANCE DIRECTOR
FINANCIAL REVIEW Camomile Lawn, Totnes
FINANCIAL REVIEW 10 Group financial highlights FY to £m HY18 HY18 HY17 Var 30 June 2017 Revenue 1 1, 1,495. 495.0 1,307.6 +14% 2,820.2 Profit from operations before 94. 94.7 74.7 +27% 171.2 exceptional items 2 Profit before exceptional items 81. 81.3 63.0 +29% 147.6 and tax Profit before tax 56.3 56. 63.0 -11% 58.7 Earnings per share 80. 80.8p 61.9p +31% Pre-exceptional 145.8p 56. 56.3p 61.9p -9% 59.1p Post-exceptional Dividend per share 28. 28.0p 0p 32.0p -13% 96.0p Group pre-exceptional RoNA 3 30. 30.7% 7% 24.9% +5.8% pts 27.5% 1 Includes share of joint ventures 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 divided by average pre-exceptional net assets including goodwill Half year results to 31 December 2017
FINANCIAL REVIEW 11 Linden Homes REVENUE/OPERATING PROFIT Profit up 9% Linden Homes margin Units: 1,587 (HY17: 1,491) 23.8% 23.5% 25% Revenue: £436.8m (HY17: £407.6m) 23.0% 23.0% Operating £80.9m (HY17: £74.3m) 5.3% 4.5% 6.3% 4.8% 20% profit: SALES MIX (UNITS) Units up 6% 15% Private: 1,170 (HY17: 1,155) Affordable: 417 (HY17: 336) 10% 18.5% 18.2% 18.2% 17.5% AVERAGE SALES PRICE 1 Up 9% 5% Total: £370k (HY17: £338k) RETURN Up 4.4% pts 0% FY16 HY17 FY17 HY18 RoNA: 36.2% (HY17: 31.8%) Operating margin Overhead SALES IN HAND 2 Up 3% Total: £879m (HY17: £857m) 1 Excludes affordable 2 Current at 12 February 2018 Half year results to 31 December 2017
FINANCIAL REVIEW 12 Construction REVENUE/OPERATING PROFIT Profit up 167% Construction margin Revenue: £823.6m (HY17: £742.0m) 4.9% 4.9% 5% 4.5% 4.4% Pre-exceptional £7.2m (HY17: £2.7m) operating profit: 4% Exceptional £25.0m (HY17: £Nil) charge: 3% 3.8% 4.0% CASH Down £66.3m 4.1% 4.4% 2% Total: £44.5m (HY17: £110.8m) 1% ORDER BOOK 1 Up £0.1bn 1.1% 0.9% 0.0% Total: £3.5bn (HY17: £3.4bn) 0.4% 0% FY16 HY17 FY17 HY18 WORK SECURED 1 Down 1%pt Operating margin Overhead Total: 61% (for FY19) (HY17: 62%) 1 Current at 12 February 2018 Half year results to 31 December 2017
FINANCIAL REVIEW 13 Partnerships & Regeneration REVENUE/OPERATING PROFIT Mixed-tenure up 61% Partnerships & Regeneration margin Contracting: £167.9m (HY17: £109.7m) Mixed-tenure: £55.6m (HY17: £34.6m) 12% 10.8% 10.5% Operating £10.8m (HY17: £4.9m) 9.3% 10% profit: 8.8% 6.0% UNITS DELIVERED ASP up 17% 8% 6.0% ASP: £220k (HY17: £188k) 5.4% 5.4% 6% Mixed-tenure: 331 (HY17: 257) Equivalent 4% contracting 1,343 (HY17: 730) units: 4.8% 4.5% 2% 3.9% 3.4% RETURN Up 19.0% pts 0% RoNA: 48.4% (HY17: 29.4%) FY16 HY17 FY17 HY18 ORDER BOOK/SALES IN HAND 1 Up 41%/40% Operating margin Overhead Contracting: £1.3bn (HY17: £925m) Mixed-tenure: £129m (HY17: £92m) 1 Current at 12 February 2018 Half year results to 31 December 2017
FINANCIAL REVIEW 14 Segmental analysis HY18 1 Revenue includes share Profit/(Loss) of joint ventures from Operating 2 Pre-exceptional £m Revenue 1 Operations 2,3 Margin 2 3 Profit/loss from Linden Homes 436.8 80.9 18.5% operations stated before finance costs, Partnerships & Regeneration 223.5 10.8 4.8% amortisation, exceptional Construction 823.6 7.2 0.9% items, joint ventures’ interest and tax 10.7 2.1 NA PPP Investments Group 0.4 (6.3) NA TOTAL 1,495.0 94.7 6.3% HY17 FY to 30 June 17 Profit/(Loss) Operating Operating £m Revenue 1 from Operations 3 Margin Margin Linden Homes 407.6 74.3 18.2% 18.2% Partnerships & Regeneration 144.3 4.9 3.4% 4.5% Construction 742.0 2.7 0.4% 0.0% PPP Investments 12.8 (0.2) NA NA Group 0.9 (7.0) NA NA TOTAL 1,307.6 74.7 5.7% 6.1% Half year results to 31 December 2017
FINANCIAL REVIEW 15 Cash management Bank facilities of £450m secure out to 2022; debt private placement of £100m to 2027 Continue to operate well within banking covenants Net debt at 31 December 2017 of £85m (HY17: £114m, FY17: net cash of £7m) Gearing at 31 December of 15%, well below our target maximum of 30% Average net debt for the six months of £203m (HY17: £231m), below previous guidance Continue to benefit from deferred land payments, with land creditors at £188.8m (HY17: £193.3m) Half year results to 31 December 2017
FINANCIAL REVIEW 16 Cash management £m 80 51.1 60 40 20 7.2 0 -20 (71.2) (3.6) (3.7) -40 -60 -80 (52.6) (12.1) (84.9) -100 -120 Opening Cash from Working Interest Tax Dividend Other Closing net cash operating capital net debt 1 July 2017 activities movements 31 Dec 2017 Half year results to 31 December 2017
FINANCIAL REVIEW 17 Balance sheet highlights Dec ecem ember er June December £m £m 2017 2017 2017 2016 Net asset value 567.0 575.5 598.1 Tangible net assets 389.6 396.4 447.5 Net (debt)/cash (84.9) 7.2 (113.8) Gearing % 15% - 19% Net pension deficit 2.7 3.2 10.6 Half year results to 31 December 2017
FINANCIAL REVIEW 18 Segmental balance sheet Linden en Partner ership hips & & PPP Net a asse ssets £ s £m Homes es Regen ener eratio ion Construction Investmen ents Centra ral Total To 31 31 December r 2017 2017 Goodwill & intangible assets 52. 52.5 35. 35.1 83.3 83. - 6. 6.5 177. 177.4 Working capital employed 660. 660.2 70.0 70. (66. 66.2) 23.7 23. (213. 213.2) 474. 474.5 Net cash/(debt) (560. 560.6) 6) (57. 57.2) 44. 44.5 (13. 13.7) 7) 502. 502.1 (84. 84.9) Net et asset ets 152.1 152. 47.9 47. 61.6 61. 10. 10.0 295. 295.4 567. 567.0 31 31 December r 2016 2016 Net assets 114.4 34.8 92.1 7.1 349.7 598.1 30 30 June 2017 2017 Net assets 171.6 41.4 77.7 8.8 276.0 575.5 Half year results to 31 December 2017
FINANCIAL REVIEW 19 Dividend Planned increase in cover to 2.0x Cover 1.7x 1.6x 1.6x now effective from current year 96p 100 Full year dividend expected to be 90 82p based on pre-exceptional 80 earnings 68p 70 64p Interim dividend declared of 60 Pence 56p 28.0p per share 50 46p 40 30 20 32p 28p 26p 22p 10 0 FY15 FY16 FY17 FY18 Interim Final Half year results to 31 December 2017
Peter Truscott CHIEF EXECUTIVE
LINDEN HOMES Strategic and operating review Meadow Gardens, Essex
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