RESULTS PRESENTATION Year ended 30 June 2020 2 September 2020 Saviours Place, Warrington 1
David Thomas Chief Executive Officer St Rumbold’s Fields, Buckingham 2
KEY HIGHLIGHTS Before COVID-19 strong progress on volume growth and margin improvement • All operational sites reopened by 30 June 2020 • Health and safety remains our first priority • Strong balance sheet - £308m year end net cash and significant undrawn facilities • Leadership in quality and customer service • 3
OPERATIONAL TARGETS FY20 Areas of focus for FY21 Medium term targets Driving site based construction activity Maximising sales for customers who will not Disciplined growth in wholly owned Wholly owned 12,034 qualify under the new Help to Buy scheme home completions homes home completions Wholly owned home completion growth to 14,500 - 15,000 in FY21 Land acquisition at a minimum 23% Rebuilding site based construction activity to gross margin and optimising Gross margin 18.0% improve fixed cost recovery Controlling material and labour cost inflation performance Tight control of working capital with build Minimum of 25% delivered through release aligned with home completion cash improving margin and return to ROCE 15.6% generation operating framework Focus on cash with selective land spend beyond land creditor settlements 4
Steven Boyes Chief Operating Officer Cane Hill Park, Coulsdon 5
SALES PERFORMANCE Net private reservations per active outlet per average week (1) Good sales rate at 0.60 given challenging • backdrop Pre lockdown (2) Lockdown (3) Post lockdown (4) Full year Sales rate was 7.4% ahead prior to • lockdown FY20 0.73 (0.10) 0.63 0.60 Strong recovery with positive trend • FY19 (5) 0.68 0.82 0.69 0.70 Variance % 7.4% n/m (8.7%) (14.3%) (1) An active outlet is defined as an outlet with at least one plot for sale. Our definition remains consistent with previous reporting periods, unaffected by the closure of our sales centres across the Group during the lockdown period (2) Pre lockdown period of 38 weeks from 01/07/19 - 22/03/20 (3) Lockdown period of 8 weeks from 23/03/20 - 17/05/20 (4) Post lockdown period of 6 weeks from 18/05/20 - 30/06/20 (5) FY19 is equivalent period 6
COMPLETIONS Completions COVID-19 halted the significant progress made in H1 • FY20: FY20 FY19 Change - H1 wholly owned completions were ahead 8.1% Private 9,568 13,533 (29.3%) - H2 wholly owned completions declined by 58.5% Affordable 2,466 3,578 (31.1%) Wholly owned 12,034 17,111 (29.7%) JV 570 745 (23.5%) Total (inc JVs) 12,604 17,856 (29.4%) 7
COMPLETIONS ANALYSIS – BUYER TYPE Investor 4% 5% • Similar profile year on year 11% Part-exchange 11% • Help to Buy is an important customer proposition 20% 21% Affordable • Help to Buy is tapering from 1 April 2021: - First time buyers only Other private 30% - Regional price caps 27% • Existing homeowners: Help to Buy - Alternative mortgage products eligible post 19% 21% taper - Part-exchange option Help to Buy 16% 15% ineligible post taper FY20 FY19 8
PRICING TRENDS REMAIN POSITIVE • Regional pricing reflects change in geographical mix Private completions average selling price (£’000) • London driven by trade through of central London FY20 FY19 Change and outer London site mix • Modest underlying house price inflation in FY20 Regional 303.6 297.2 2.2% London 754.8 628.5 20.1% Group 310.6 312.0 (0.4%) JV 585.0 537.9 8.8% 9
OPERATIONAL ACTIVITY Health and safety remains our key concern, all operations • comply with our enhanced COVID-19 working practices Site activity recommenced in waves from 11 May 2020 in • England and Wales and 1 June 2020 in Scotland All operational sites were restarted with our employees • (1) returned to work by 30 June 2020 (1) Except those shielding 10
REBUILDING OUR CONSTRUCTION ACTIVITY Management and trades headcount on site Return to site managed within COVID-19 • 16,500 protocols and site specific considerations 15,000 Initial focus managing construction to • 13,500 meet forward sale commitments 12,000 Headcount on site has expanded: • 10,500 - Phased site reopening 9,000 - Site headcount optimisation within 7,500 social distancing requirements 6,000 - Construction activity across all build 4,500 stages 3,000 1,500 - 7 May 14 May 21 May 28 May 4 Jun 11 Jun 18 Jun 25 Jun 2 Jul 9 Jul 16 Jul 23 Jul 30 Jul 6 Aug 13 Aug 20 Aug 2020 11
OPTIMISING OUR CONSTRUCTION ACTIVITY Weekly build equivalent unit production (homes) Focused on optimising site construction activity • 400 to levels prior to lockdown through: 361 361 361 361 347 350 - Extended site operating hours 300 - Improved build scheduling to reduce unit down time 250 - Continued broadening of build activity 200 including new site infrastructure construction 150 - Increasing proportion of standard house 100 types adding simplicity, repeatability and 50 efficiency - Optimisation of build mix with Oregon 0 FY19 FY20 FY20 Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8 timber frames playing an important role in Weeks 1-38 FY21 accelerating build time Weekly equivalent unit production (homes) FY21 target weekly equivalent unit production (homes) 12
DRIVING OPERATING MARGIN – NEW PRODUCT ROLL OUT Proportion of regional completions using new product ranges (%) 70% • Continual process of product range review and refinement for further build efficiencies 60% 60% 60% • Regional completion momentum from new product 50% ranges maintained +19% 40% 36% 36% • 60% of all regional completions in FY20 (FY19: 36%) (1) 30% • Suitable for Modern Methods of Construction 20% 9% 9% 10% 0% FY18 FY19 FY20 42% 72% 79% % of active outlets with new product range (1)(2) (1) Including JVs in which the Group has an interest (2) As at 30 June 13
LEADING CONSTRUCTION – MODERN METHODS OF CONSTRUCTION Use of Modern Methods of Construction continues to • grow 21% of completions in FY20 vs 20% in FY19 • On track to deliver our target of 25% of completions • by 2025 Oregon successfully integrated and key to increasing • use of timber frame Oregon timber frame installation at East Ardsley, West Yorkshire 14
LAND BANK Land bank remains strong • Land bank plots 30 June 2020 30 June 2019 Land approvals totalled 9,441 plots across 51 sites • Owned 68,393 66,423 Continue to operate a shorter land bank model • Controlled 11,931 13,599 Medium term land bank targets remain: • - c. 3.5 years owned and c. 1.0 year controlled land in Total 80,324 80,022 each division Land bank years (exc JVs) 6.7 4.7 Selective and disciplined land buying recommenced • JV – Owned and controlled 5,400 5,207 Total including JV 85,724 85,229 15
LAND MARKET Savills UK Greenfield Development Land Index versus English Planning Consents (1) • Land prices have remained broadly stable HOLDING PICTURE – CB Savills UK Greenfield Development Land Index 120 450 • High quality land opportunities remain plentiful England moving annual planning consents ('000s) SPEAKING TO PHIL BARNES 400 across the country 100 350 (100 = 2007 peak) • Planning consents remain ahead of development 80 300 suggesting continued attractive supply: demand dynamics 250 60 200 • Will evolve post COVID-19 40 150 100 20 50 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Savills UK Greenfield Development Land Price Index England - Planning consents ('000's) (1) Data to 31 March 2020 16
MANAGING THE COST ENVIRONMENT Materials Labour • Limited signs of cost • Limited inflation likely pressures given excess capacity and lower energy costs • Increased use of off-site manufacturing – Oregon • 95% of pricing fixed to timber frame optimisation December 2020 • 219 new apprentices, • 62% of pricing fixed to trainees and graduates in June 2021 FY20 Build cost inflation FY21: c.1-2% 17
SUMMARY • Lower completions due to lockdown • Sales rates have shown a strong recovery • Construction activity now close to pre lockdown levels • Delivering industry-leading quality and customer service • Continued focus on Health & Safety Ridgeway Views, London Octavia Gardens, Chapel-en-le-Frith 18
Jessica White Chief Financial Officer Fairfield Croft, York 19
PERFORMANCE FY20 FY19 Change £m (unless otherwise stated) 3,419.2 4,763.1 (28.2%) Revenue 614.3 1,084.2 (43.3%) Gross profit 18.0 22.8 (480 bps) Gross margin % 493.4 901.1 (45.2%) Operating profit 14.4 18.9 (450 bps) Operating margin % 491.8 909.8 (45.9%) PBT 39.4 73.2 (46.2%) Earnings per share pence 308.2 765.7 (59.7%) Net cash 15.6 29.7 (1,410 bps) ROCE % 20
REVENUE SUMMARY FY20 FY19 Change Home completions (units) 9,568 13,533 (29.3%) Private 2,466 3,578 (31.1%) Affordable 12,034 17,111 (29.7%) Total home completions 20% 21% (100 bps) % Affordable 570 745 (23.5%) JV 12,604 17,856 (29.4%) Total home completions (inc JVs) ASP (£’000) 310.6 312.0 (0.4%) Private 163.0 132.2 23.3% Affordable 280.3 274.4 2.2% Total 472.9 487.8 (3.1%) JV 21
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