Galliford Try Holdings Plc · LSE:GFRD
Galliford Try — Investor Day (October 2018)
77 slides from Galliford Try's investor day presentation, Oct 11, 2018
Slide 1: Capital Markets Day
CAPITAL MARKETS DAY 11 October 2018 Peter Truscott, Chief Executive Great Eastern Quays, East London
Slide 2: Group Highlights for FY18
GROUP HIGHLIGHTS FOR FY18 2 PBT1 up 28% EPS1,3 up 21% Strong progress against strategic objectives 200 160 180 150 Total homes built up 13% to 6,193 (FY17: 5,490) 160 140 130 158.4p Record pre-exceptional profit of £188.7m, up by 140 £147.6m £188.7m 120 131.1p 120 110 28% and increased operati
Slide 3: Group Financial Targets to 2021
GROUP FINANCIAL TARGETS TO 2021 3 Sustainable profit Improving margins Strong returns growth PBT1 growth £m Group RoNA1 % Dividend per share2 p ≥60% CAGR 27.5 29.2 >5% growth >25.0 86.0 189 148 77.0 FY17 FY18 FY21 FY17 FY18 FY21 FY17 FY18 FY21 1 FY17 and FY18 figures based on pre-exceptional profits
Slide 4: Business Targets to 2021
BUSINESS TARGETS TO 2021 4 Business Metric FY18 FY21 Units 3,442 4,200 - 4,500 pa Revenue £947m £1.25bn Operating margin 19.5% 20% Units 2,751 4,200 - 4,400 pa Revenue £475m £700m - £750m Operating margin 5.0% 6% - 7% RoNA 48.2% >50% Revenue £1.7bn £1.8bn Operating margin1 0.9% >2% (Debt)/cash £(26.
Slide 5: Agenda
AGENDA 5 Introduction Tour of Great Eastern Quays Light lunch Linden Homes presentation Tea-break Partnerships & Regeneration presentation Depart Great Eastern Quays Capital Markets Day 2018
Slide 6: Linden Homes
LINDEN HOMES Tom Nicholson Divisional Chairman East Andrew Hammond Divisional Chairman West Crowdhill Green, Fair Oak, Hampshire
Slide 7: Agenda
AGENDA 8 Progress on strategy delivery Standardisation Land strategy Continued targeted optimisation Tom Nicholson, Divisional Chairman East Profit and volume growth Outlook and Q&A Andrew Hammond, Divisional Chairman West Capital Markets Day 2018
Slide 8: Progress on Strategy Delivery
PROGRESS ON STRATEGY DELIVERY 9 Three strategic priorities to drive volume growth and margin S1 S2 S3 Profit and Volume Standardisation Land Strategy Growth Capital Markets Day 2018
Slide 9: Standard Housetypes
STANDARD HOUSETYPES 10 Product and delivery Linden Homes Layouts (LHL) V1 Linden Homes Layouts (LHL) V2 The Linden Collection (LC) 2014 2015 2016 First iteration First stage optimisation Major review 22 housetypes, incorporating 13 39 housetypes 32 housetypes core designs Capital Markets Day 2018
Slide 10: Standardisation
STANDARDISATION 11 Product and delivery Target production delivery of 80% Linden Collection in 2021 Achieved 85% of planning submissions of combined standard product in 2018 Planning submissions for Apr – June 2018 show an increase to 65% Linden Collection Capital Markets Day 2018
Slide 11: Standardisation: Linden Homes Layouts
STANDARDISATION 12 Linden Homes Layouts Varying plot Varying eaves heights – depths – lost complex scaffolding land Complicated Complicated ridge lines masonry details Steps and staggers – build delays – expensive Capital Markets Day 2018
Slide 12: Standardisation: Linden Collection
STANDARDISATION 13 Linden Collection Standard plot depths – efficient use of land Minimal eaves height differences Timber replaces Simple plot substitution – masonry – quicker, less footprint identical on expensive three housetypes Steps and staggers removed – efficient build Capital Markets Day 201
Slide 13: Standardisation: LHL V1 to Linden Collection
STANDARDISATION 14 LHL V1 to Linden Collection Utility Optimised kitchen Dining/Family Area Effective Increased utilisation of reception bay feature room Reduced frontage LHL 404 The Pembroke Capital Markets Day 2018
Slide 14: Standardisation: LHL V1 to Linden Collection
STANDARDISATION 15 LHL V1 to Linden Collection Enhanced bedroom four Efficient space utilisation Increased floor plan optimisation and reduced cost LHL 404 The Pembroke Capital Markets Day 2018
Slide 15: Standardisation: Sales optimisation
STANDARDISATION 16 Sales optimisation 2016 v 2018 Capital Markets Day 2018
Slide 16: Standardisation: Operational delivery
STANDARDISATION 17 Operational delivery 2016 v 2018 Capital Markets Day 2018
Slide 17: Standardisation: Case Study
STANDARDISATION: CASE STUDY 18 Kitchen standardisation Linden Optimised layouts based on third LHL V2 generation standard housetypes Collection Saving (£) Saving (%) average achieved Design process undertaken with partner 2 supplier bedroom £2,331 £1,558 £773 33% Quality functional designs 3
Slide 18: Kitchen procurement
STANDARDISATION: CASE STUDY 19 Kitchen procurement Capital Markets Day 2018
Slide 19: Overhead efficiency
STANDARDISATION 20 Overhead efficiency Capital Markets Day 2018
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Slide 21: Land Strategy
LAND STRATEGY 22 Improvements in quality of acquisitions Capital Markets Day 2018
Slide 22: Plot Substitution Case Study
PLOT SUBSTITUTION CASE STUDY 23 Copperfields, Malton Capital Markets Day 2018
Slide 23: Replan Case Study
REPLAN CASE STUDY 24 Riverside, Boroughbridge Capital Markets Day 2018
Slide 24: Replan Case Study
REPLAN CASE STUDY 25 Riverside, Boroughbridge Capital Markets Day 2018
Slide 25: Strategic Land
STRATEGIC LAND 26 Growth and delivery Capital Markets Day 2018
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Slide 27: Continued Targeted Optimisation
CONTINUED TARGETED OPTIMISATION 28 Regional operational delivery Capital Markets Day 2018
Slide 28: Future Targeted Optimisation
FUTURE TARGETED OPTIMISATION 29 Operational delivery Capital Markets Day 2018
Slide 29: Future Targeted Optimisation
FUTURE TARGETED OPTIMISATION 30 Sales optimisation Capital Markets Day 2018
Slide 30: Profit and Volume Growth
PROFIT AND VOLUME GROWTH 31 Outlook S1 S2 S3 2021 target operating margin Profit and Volume achieved in 2018 Standardisation Land Strategy Growth Further margin improvement possible without sales inflation Full benefits of standardisation yet to be realised Embedded margin in forward landban
Slide 31: Questions & Answers
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Slide 32: Partnerships & Regeneration
PARTNERSHIPS & REGENERATION Stephen Teagle Chief Executive of Partnerships & Regeneration Devons Road, London
Slide 33: Stephen Teagle
STEPHEN TEAGLE Chief Executive of Partnerships & Regeneration
Slide 34: Agenda
AGENDA A leading partnerships specialist with a differentiated strategy Introduction to Partnerships Market Opportunity The Partnerships Business Model 1 Upton Village, London
Slide 35: An Introduction to Partnerships
AN INTRODUCTION TO PARTNERSHIPS 36 Capital Markets Day 2018 Marldon, Devon
Slide 36: A Few Basics
A FEW BASICS An introduction to Partnerships • An established national brand delivering accelerated growth • Identifies land, invests, develops, constructs and sells • A proven capital-efficient model that turns assets quickly, balancing cash discipline with margin • A reputation for delivery, quali
Slide 37: Delivering Accelerated Growth
DELIVERING ACCELERATED GROWTH Current strategy driving profitable growth and improving returns S1 S2 S3 Grow national footprint Drive margin through continued improvement through Unlock our partners’ expansion into new focus on land-led and capacity in sub markets geographies mixed-tenure Units Reve
Slide 38: Financial Review: Units Delivered
FINANCIAL REVIEW Full year results 30 June 2018 REVENUE/OPERATING PROFIT Partnerships & Regeneration Mixed-tenure: £66.7m FY16 Contracting/Land-led Solutions: £233.9m Equivalent contracting Operating profit: £11.7m units UNITS DELIVERED REVENUE/OPERATING PROFIT Up Mixed-tenure: £82.2m £29.6m 2,000 F
Slide 39: Financial Review
FINANCIAL REVIEW Full year results 30 June 2018 ORDER BOOK/SALES IN HAND Overheads FY18 Contracting/Land-led Solutions: £1,200m Mixed-tenure £188m 5.7% 6.0% FY17 Contracting/Land-led Solutions: £1,050m 5.4% Mixed-tenure £93m Operating profit 4.8% 3.9% Contracting/Land-led Solutions: £865m FY16 5.0%
Slide 40: Where We Are Two Years In
WHERE WE ARE TWO YEARS IN Integrated business with unique offering to the market Demonstrable growth and margin progression Embedded capability in each business unit Delivering regional expansion Strengthened Executive to drive growth Recruiting quality people (from 420 to 880 FTE) Drew Smith acquis
Slide 41: National Footprint
NATIONAL FOOTPRINT Continued expansion into new geographies Rapid planned expansion • Southern FY17 • East Midlands FY17 • Yorkshire FY18 Potential further expansion • Eastern England 42
Slide 42: A Market of Opportunity
A MARKET OF OPPORTUNITY 43 Capital Markets Day 2018 Knowle Lane, Hampshire
Slide 43: Who We Work With
WHO WE WORK WITH The purchasing sector Long-term partnerships with five client groups: • Housing Associations (HAs) Regulated owners and managers of social housing and investors in homes for sale • Local Authorities (LAs) Owners and managers of social housing and commissioners of neighbourhood regen
Slide 44: Some of Our Clients & Stakeholders
SOME OF OUR CLIENTS & STAKEHOLDERS Homes England & Bristol City Council 45
Slide 45: Market Fundamentals & Trends
MARKET FUNDAMENTALS & TRENDS Housing shortage recognised as national infrastructure deficit Fundamentals • A historic supply deficit of circa 130k homes pa • Continuing Government support • Reliance on private sector and shortage of operators • Financially robust, value-driven clients, balancing soc
Slide 46: Operating Environment
OPERATING ENVIRONMENT Sector consolidations ramping up delivery commitments HOUSING DELIVERY TARGETS 2017-2021 • Top 50 developing HAs = 41,300 homes this year • Operating margins at 30%, £5.9bn surplus1 • Consolidation driving further investment • Average increased investment of 46% • Increased vol
Slide 47: Business Dimensions
BUSINESS DIMENSIONS Breadth, sector knowledge and experience that enable delivery Access to public sector Strong long-term relationships: Aligning growth with growing funding: capacity in the market: 48
Slide 48: Strategic Assets - Differentiation
STRATEGIC ASSETS - DIFFERENTIATION Delivery underpinned by strong relationships Joint Venture turnover per client Mixed-tenure differentiation with Linden Homes retail brand Land acquisition skills in Partnerships and Linden Homes including strategic land Significant strategic joint venture portfoli
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Slide 50: The Partnerships Business Model
THE PARTNERSHIPS BUSINESS MODEL 51 Capital Markets Day 2018 Blackberry Hill, Bristol
Slide 51: Business Overview
BUSINESS OVERVIEW Blending three propositions A Leading Brand Contracting Land-led Solutions Mixed-tenure Development Operating margins: 2-4% Operating margins: 4-6% Operating margins: 12-18% Affordable Social Supported PRS/Rent Shared Help to Private Rent Housing Intermediate To Buy Ownership Buy S
Slide 52: Blend 1 – Contracting
BLEND 1 – CONTRACTING Lower margin, cash generative, trusted brand • Manage risk, sustain margin performance • Clients’ top quartile performer • No legacy exposures • Strong visibility of order book • 76% of future three years controlled already • High volumes of repeat business • Significant percen
Slide 53: Contracting
CONTRACTING Extra Care and retirement village specialists • Long-standing relationship with ExtraCare Charitable Trust • Delivered 10 retirement villages across the Midlands, South East and South West • Framework and forward pipeline of future schemes • Providing 2,500 homes in supporting facilities
Slide 54: Contracting
CONTRACTING PRS partnerships • £635m of turnover underway with PRS providers • Client portfolio • Legal & General • Fizzy Living – Qatari fund • Sigma • Birmingham Council • HAs - Vivid Housing and Notting Hill Genesis • Delivering 2,700 homes - London, Southampton, Bristol and Birmingham • 50% of s
Slide 55: Blend 2 – Land-led Solutions
BLEND 2 – LAND-LED SOLUTIONS Margin enhancing, quick asset turn, smart growth • Introduce land, create solution and build • Increase margin • Builds client reliance • Cash generative • Successes across all regions • Opportunity to optimise design for presale • Landbank growth (28% over two years) •
Slide 56: Land-led Solutions
LAND-LED SOLUTIONS Broad client base 47 homes for Tyneside Ventures And a sense 67 homes for 105 homes for of place Accord One Manchester 115 homes for Vivid Delivered For Local Land-led across all Authorities solutions 36 homes for regions and Sanctuary Registered 50 homes for Radian 23 homes for K
Slide 57: Blend 3 – Mixed-tenure Development
BLEND 3 – MIXED-TENURE DEVELOPMENT Higher margin, risk and capital sharing • Land-led introduction with open market sale • Sharing of build risk, market risk, pursuit costs and cash tie-up • Higher margins reflecting development risk • Joint Ventures operating across all markets • Local Authorities,
Slide 58: Mixed-tenure Development
MIXED-TENURE DEVELOPMENT Opal JV • Joint Venture between Galliford Try, Metropolitan and Thames Valley • Synergy for Linden Homes and Partnerships • Delivering circa 1,700 homes across six sites • Total estimated GDV of £744m • Site specific LLP, single Board structure • Supporting geographic growth
Slide 59: Business Model Assembled
BUSINESS MODEL ASSEMBLED Putting it all together - sustained long-term growth through the cycle Contracting Land-led Solutions Mixed-tenure Development Profit margin Lower (2% - 4%) Intermediate (4% - 6%) High (12% - 18%) ROCE High High Intermediate Capital Cash generative Cash generative Cash inves
Slide 60: Targeted Blend
TARGETED BLEND Balancing risk and margin 61
Slide 61: Blended Model
BLENDED MODEL Brunel Street Works 62
Slide 62: Competitor Analysis
COMPETITOR ANALYSIS Barriers to entry, no displacement Galliford Try Countryside Kier Lovell Mears Partnerships Land finding JV expertise Contracting National Housebuilding brand 63
Slide 63: Future Vision
FUTURE VISION 64 Capital Markets Day 2018 Hatch Farm, Eastleigh
Slide 64: Accelerating Opportunity
ACCELERATING OPPORTUNITY Winning work, selective partnering • Public sector commissioning expertise - plays to our strengths Growth in Order Book and Work on the Bench • Strong position on procurement panels 1,400 • 40% success rate, 11% market share of Delivery Partner Panel (DPP) 1,200 • Targeting
Slide 65: Future Outlook
FUTURE OUTLOOK Excellent growth prospects • Strategy working and delivering ahead of expectations • Reputation supporting further growth • Quality people, quality order book • Demonstrable growth - £1bn business • Resilient earning across cycle • Sustained value in differentiated business model Stev
Slide 66: Questions & Answers
QUESTIONS & ANSWERS 67 Capital Markets Day 2018 Grace, Site Manager
Slide 67: Summary
SUMMARY 68 Well positioned to meet our 2021 targets and significant opportunities lie ahead for the Group beyond the strategy period Riverside Mills, Boroughbridge Capital Markets Day 2018
Slide 68: Appendices
APPENDICES 69 Capital Markets Day 2018 Jo, Quantity Surveyor
Slide 69: Resilience & Agility
RESILIENCE & AGILITY All tenure delivery • Sustained across cycle • Politically agnostic - continued emphasis on supply • No displacement of competitors to achieve our ambition Resilient earnings • Excellent people retention during growth • Hard won, long-term client relationships • Proximity to Hom
Slide 70: Procurement Panel
Radstock 12 Sandymoor Lane 21 Dukeminster 3 210 units for Bath North Extracare 83 units Enabling works for for Central PROCUREMENT PANEL & NE Council Homes England Bedfordshire Council Scalable success 4 Willesden Green 88 units for 13 Langbourne 78 units for 22 Site J Goscote 29 units for London Bo
Slide 71: Drew Smith
S2 DREW SMITH Excellent cultural fit and integration • Strong cultural and strategic fit • Highly complementary geography • Drew Smith a strong regional brand • Excellent retention of staff • Capitalising on land positions • Exceeding forward order book trajectory • Former shareholders continuing to
Slide 72: Evolution
EVOLUTION Joint Venture, co-investment and management • Joint Venture between Home Group and Galliford Try • Over 3,700 homes across sites ranging from Northumberland to Berkshire • GDV of over £800m • Joint Venture between Gateshead Council, Partnerships and Home Group • Part of a £350m, 15-year re
Slide 73: Homes for Cornwall
HOMES FOR CORNWALL Joint Venture, co-investment and management • Working with HA and council to deliver additional homes across all tenures • 1,149 new homes to be delivered across Devon and Cornwall • Estimated GDV £221m • Homes for Cornwall partnership incentivised for build rates • Partnership to
Slide 74: Eastleigh Borough Council
EASTLEIGH BOROUGH COUNCIL Development and enabling partnership • Delivery model where the council takes a direct role in new housing delivery • Council acquired land with outline planning permission in Horton Heath, a minimum of 1,400 new homes across a range of tenures • Secured allocation of £9.3m
Slide 75: Ellesmere Port - Sigma
ELLESMERE PORT - SIGMA • Framework agreement completed in March 2018 allowing Partnerships regions to deliver sites to Sigma • Model is predominantly based on housing schemes • Ellesmere Port is the first scheme to be delivered via the framework in the North West • The 40-unit scheme was contracted
Slide 76: Disclaimer
DISCLAIMER 77 This document contains statements that are, or may be deemed to be, “forward- directors, officers or advisers, provides any representation, assurance or guarantee looking statements” which are prospective in nature. These forward-looking that the occurrence of the events expressed or i
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