RESULTS PRESENTATION Half year ended 31 December 2018 Sandridge Place, Melksham 1
David Thomas Chief Executive Lloyd Mews, Stoke-on-Trent 2
KEY HIGHLIGHTS Strong first half of the year • Resilient business model with strong financial and operational performance • Strong housing market fundamentals • Good progress on medium term targets • Strong cash generation - attractive cash returns • Encouraging current trading • 3
OUR VISION OUR VISION To lead the future of housebuilding by putting customers at the heart of everything we do 4
INVESTMENT PROPOSITION Highly Strong balance Industry leading Broad Shorter owned experienced sheet and cash quality and geographic build and sales land bank generation service standards spread teams Growing Delivering margin Attractive volumes improvement cash returns 3-5% volume growth per 2.5x dividend cover supplemented Land acquisition hurdle rate of annum over the medium by special returns when minimum 23% gross margin term market conditions allow 5
OPERATIONAL TARGETS – PROGRESS UPDATE Medium term targets Progress in the half year 3-5% growth per annum 4.1% increase in half year total completions (1) Completions Present business capacity of 20,000 per annum to 7,622 200 bps increase in gross margin to 22.6%, New land acquisitions at minimum 23% Gross margin resulting in 130 bps improvement in gross margin operating margin to 19.2% ROCE Minimum 25% Strong ROCE of 29.5% at December 2018 (1) Including JVs in which the Group has an interest 6
Steven Boyes Chief Operating Officer Riverside View, Lancaster 7
COMPLETION GROWTH Completions • Strong completion growth in H1 FY19 H1 FY19 H1 FY18 Change • Regional completions at highest level for 11 years Regional 7,138 6,782 5.2% • London and JV completions in line with build programmes London 264 264 162 63.0% Group 7,402 6,944 6.6% JV 220 220 380 (42.1%) Total 7,622 7,324 4.1% 8
COMPLETIONS ANALYSIS - BUYER TYPE 4% 4% 9% 9% 10% • Similar profile to prior year 18% 18% Investor • Help to Buy remains an important customer proposition Part exchange • Affordable in line; now expect to be c. 20% for FY19 30% 30% 33% 33% Affordable Other private Help to Buy 38% 38% 36% 36% H1 FY1 Y19 H1 FY1 Y18 9
SOLID SALES PERFORMANCE Average net private reservations per active outlet per week • Solid performance H1 FY19 H1 FY18 Change • London reservations include bespoke design and build arrangements Regional 0.62 0.67 (7.5%) • Second quarter more subdued but January trading encouraging London 1.56 56 0.86 81.4% Group 0.64 0.68 (5.9%) JV 1.70 1.08 57.4% 10
LAND MARKET Savills UK Residential Land Index versus HBF planning consents HOLDING PICTURE – CB 120 400 SPEAKING TO PHIL BARNES Favourable land market with good supply of consents • Savills UK Residential Development Land Index 350 100 Excellent opportunities available nationally • 300 Planning consents pa (‘000s) Land approvals 80 • (100 = 2007 peak) 250 - H1 FY19: 9,576 60 200 - No change on medium term target: 18,000-22,000 plots per annum 150 40 100 UK greenfield land prices 20 England planning consents 50 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 11
LAND BANK (1) – LONDON SITES EVOLUTION Central and Outer London exposure - % of plots 3,927 plot lots 3,605 plots ots 100% Repositioned London land bank • 90% Outer London has strong land bank 80% • 70% 66% 92% of London plots priced below £600k • 60% 99% 50% 40% 30% 20% 34% 10% 1% 0% Dec 13 Dec 18 Central London Outer London (1) Private owned and controlled land bank plots excluding JVs 12
DRIVING OPERATING MARGIN – STRATEGIC LAND H1 FY19 H1 FY18 • Enhanced margin of c. 300 basis points (1) • Strong strategic land bank with good geographic Completions from strategic 26% 26% 28% spread land • T argeting 30% of completions from strategic land in the 12,1 ,192 92 11,806 medium term Acres held Number of locations 271 266 (1) On strategic land approved since 2009 versus ongoing land 13
DRIVING OPERATING MARGIN – NEW PRODUCT ROLL OUT Sites s identified Sites s in build 440 240 230 398 • Increased delivery momentum from new ranges 220 400 200 360 • Completions in H1 FY19: 2,159 (H1 FY18: 269) +19% 180 320 304 +53 53% +31 31% 160 150 280 • Roll out supports margin growth 140 Number of sites 240 120 • Simpler and quicker to build 200 100 160 80 • More suitable for modern methods of construction 120 60 80 40 40 20 0 0 Feb 19 Feb 18 Feb 19 Feb 18 14
MANAGING THE SUPPLY CHAIN Active supplier management to support delivery and • ensure quality Management Centralised procurement team • Integrity and performance 90% of spend with Group suppliers manufactured or • assembled in the UK Supply base Sustainability geography 15
MANAGING THE COST ENVIRONMENT Materials Labour • Pockets of cost pressure Modest material pressures • • Simplified, faster build 98% of pricing fixed to June • 2019 • Increased use of offsite manufacturing 40% of pricing fixed to • December 2019 • Apprenticeship schemes Build costs expected to increase by c. 3-4% in FY19 16
CONTINUE TO DRIVE OPERATIONAL IMPROVEMENTS • Strong completion growth and solid sales rates • Good progress in improving operating margin from strategic land, new products and cost discipline • Delivering industry-leading quality and customer service Ashmeade Park, Pontefract 17
Jessica White Chief Financial Officer Salter’s Brook, Cudworth 18
KEY HIGHLIGHTS H1 FY19 H1 FY18 Change £m (unless otherwise stated) 2,13 ,132.0 2.0 1,988.0 7.2% Revenue 482.2 2.2 410.2 17.6% Gross profit 22.6 2.6% 20.6% 200 bps Gross margin 409.7 9.7 355.2 15.3% Operating profit 19.2% 17.9% 130 bps Operating margin 408.0 8.0 342.7 19.1% PBT 32.7 .7p 27.1p 20.7% Earnings per share 387.7 .7 165.9 133.7% Net cash 29.5% 5% 28.3% 120 bps ROCE 19
REVENUE SUMMARY H1 FY19 H1 FY18 Change Completions (units) 6,0 ,078 5,715 6.4% Private 1,32 ,324 1,229 7.7% Affordable 7,4 ,402 02 6,944 6.6% Total completions 18% 18% - % Affordable 220 380 (42.1%) JV 7,6 ,622 22 7,324 4.1% Total completions (inc JVs) ASP (£’000) 317.3 .3 314.6 0.9% Private 120.9 0.9 124.7 (3.0%) Affordable 282.2 2.2 281.0 0.4% Total 404.6 4.6 494.4 (18.2%) JV 20
PRIVATE AVERAGE SELLING PRICE H1 FY19 H1 FY18 Units ASP (£000) Units ASP (£000) Central London 106 1,306.7 06.7 107 820.2 20.2 Outer London 122 473 73.0 43 43 727. 27.1 228 28 860.6 60.6 150 793.6 93.6 London total Regional total 5,850 850 296.2 96.2 5,565 565 301 01.7 Total private 6,078 078 317 17.3 5,715 15 314 14.6 31 December 2018: 39 Central London private, wholly owned units remaining FY19 guidance: ASP to reduce due to less Central London product 21
DELIVERING MARGIN IMPROVEMENT 23% 22.6% 22% Gross margin improvement from • 20.7% 21% 20.6% - Land 20% - increased hurdle rates last year 19.2% - benefits from new product range 19% 18.6% - strategic land enhances margin 17.9% 17.8% 18% 17.4% - Reduced costs 17% 16.1% - benefits from new product range 16% - five year warranty ceased - show home leaseback ceased 15% - other operating margin improvements 14.2% 14% Minimal net impact of inflation in the half year 13% • Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Gross Margin Operating Margin 22
OPERATING MARGIN BRIDGE 20.0% Increase Decrease 19.5% 10 bps 10 bps 30 bps 10 bps 19.0% 50 bps 70 bps 30 bps 18.5% 120 bps 19.2% 18.0% 18.4% 17.5% 17.9% 17.0% H1 FY18 Regional new Regional Showhomes Central Mix / Admin Subtotal Disposal of Reversal of H1 FY19 sites starting legacy & London commercial / legacy inventory trading traded out trading other commercial provisions sites asset 23
OPERATING FRAMEWORK – PROGRESS UPDATE Operating framework Progress in the half year 31 Dec 2018: 3.7 years owned / 1.0 year controlled Land bank c. 3.5 years owned / c. 1.0 year controlled (31 Dec 2017: 3.8 years / 1.2 years) Reduce to 25-30% of the land bank Land creditors Reduced to 32.1% (31 Dec 2017: 36.7%) over medium term Modest average net cash over the financial year Expect FY19 average net cash of c. £200m Net cash Y ear-end net cash 31 Dec 2018: £387.7m (31 Dec 2017: £165.9m) Treasury Appropriate financing facilities £700m Revolving Credit Facility extended to 2023 2.5 x dividend cover Capital Return FY19 interim dividend of 9.6p per share (2017: 8.6p) Ordinary dividend supplemented by special returns when Plan Capital Return Plan extended to November 2020 market conditions allow 24
BALANCE SHEET 31 December 2018 31 December 2017 £m Goodwill and intangible assets 892.2 92.2 892.2 Investment in joint ventures and associates 246.4 228.3 Gross land bank 2,994 994.4 3,229.0 Land creditors (961.8 961.8) (1,185.4) Net land bank 2,032. 032.6 2,043.6 Land creditor % 32.1 2.1% 36.7% WIP 1,672.3 1,704.4 Net cash 387. 87.7 165.9 Trade payables (296. 296.6) (328.2) Other working capital (330. 330.2) (391.4) Other net assets / liabilities (52.7 52.7) (47.1) Net assets 4,551 51.7 4,267.7 25
Recommend
More recommend
