Galliford Try Holdings Plc · LSE:GFRD

Galliford Try — FY2019 Earnings Presentation

53 slides from Galliford Try's earnings presentation, Sep 11, 2019

1. Slide 1: Full year results

   Full year results For the year ended 30 June 2019 11 September 2019

2. Slide 2: Agenda

   Graham Agenda Prothero Full year results to 30 June 2019 Proposed transaction Group performance Chief Executive, Financial review Galliford Try plc Operating review Outlook Q&As Appendices 2

3. Slide 3: Proposed transaction

   Proposed transaction As announced 10 September 2019 Transaction details  Exciting opportunity to strengthen and advance all three businesses. Proceeds £1.075bn  Combination of housebuilding operations creates a stronger platform for both businesses. £675m paper  Construction remains a well-capita

4. Slide 4: Group performance

   Group performance Full year results for the year ended 30 June 2019 4 Meadow View in Cholsey, Oxfordshire

5. Slide 5: Group performance

   Group performance  Performance in line with guidance.  Strong succession planning facilitated transition, stability and leadership.  Leadership refocused in all three businesses.  Further progress in transforming Linden; operational improvements continued, delivering margin improvement in toughe

6. Slide 6: Group performance

   PBT2 down 18% Total new homes Group performance 200 completed up 5% 7,000 150 6,000 100 £188.7m £155.5m 6,507 5,000 6,193  Revenue1 of £2.9bn (2018: £3.1bn). 50 0 4,000  Pre-exceptional profit before tax in line with FY18 FY19 FY18 FY19 expectations at £155.5m (2018: £188.7m). Average net debt Tot

7. Slide 7: Financial review

   Andrew Financial Duxbury review Finance Director, Galliford Try plc 7

8. Slide 8: Financial review

   Financial review £m FY19 FY18 Var Revenue1 2,862.5 3,132.3 (9)% Group financial performance Profit from operations before 177.8 213.1 (17)% exceptional items2  Solid financial performance. Profit before exceptional 155.5 188.7 (18)% items and tax • Strong margins in Linden. • Impressive growth in P

9. Slide 9: Financial review

   Financial review FY19 Profit/(loss) Operating £m Revenue from operations2,3 margin2 1,2 Linden Homes 820.4 160.5 19.6% Segmental analysis Partnerships 623.2 34.8 5.6% & Regen Construction 1,386.8 (15.0) (1.1)%  Linden Homes maintained strong margin at 19.6%. PPP Investments 31.5 4.5 n/a • Revenue r

10. Slide 10: Financial review: gross margin by business

    Linden Homes gross margin Partnerships & Regen gross margin Financial 25% 22.5% 23.8% 6.3% 23.0% 4.8% 23.6% 4.1% 24.0% 4.4% 12% 10% 9.3% 10.5% 10.7% 11.1% review 20% 6.5% 7.7% 8% 5.7% 5.5% 15% 6.0% 6% 5.4% 10% 4.8% 17.5% 18.2% 19.5% 19.6% 4% 16.0% 5% 4.5% 5.0% 5.6% 2% Gross margin by 0% 0% 2.9% 3.9%

11. Slide 11: Financial review: accounting policy change

    Financial review Accounting policy change At 1 July Year to 30 New accounting standards and exceptional items £m 2018 June 2019 Opening Exceptional  IFRS 15 ‘Revenue from Contracts with Customers’. reserves items • Timing impact only – no effect on profitability of individual contracts or IFRS 9 (1

12. Slide 12: Financial review: balance sheet highlights

    Financial review £m Net assets 2019 751.7 20181 776.5 Balance sheet highlights Tangible net assets 580.3 601.6 Net (debt)/cash (56.6) 98.2 Gearing % 8% -  Maintained a strong balance sheet. Net pension surplus 7.0 7.0  Working capital increased to £636.9m (2018: £503.4m), including £99.7m increase

13. Slide 13: Financial review: cash management remains priority

    Financial review Cash management remains priority £m 150 96.8 98.2 100 50 4.5 0 (63.7) (99.7) (50) -50 (79.9) (12.8) (56.6) (100) -100 Opening Impact of Cash from Net investment Other working Dividend Interest, tax Closing net cash AWPR operating in housebuilding 2 capital and other net debt 1 July

14. Slide 14: Operating review

    Operating review By business 14 M49 Avonmouth

15. Slide 15: Our Executive Board

    Our Executive Board Leadership restructured in each of the businesses. 15

16. Slide 16: Linden Homes

    Linden Homes FY19 FY18 Units 3,229 3,442 Revenue £820m £947m Operating review Operating profit £160.5m £184.4m 19.6% 19.5%  Revenues lower, principally reflecting lower outlet Operating margin numbers (FY19: 80, FY18: 85). Sales mix:  Private ASP reflects continued repositioning. Private 2,227 2,5

17. Slide 17: Linden Homes

    Gross margin of ASP1 in landbank % 25 landbank £k 400 300 Linden Homes 20 15 200 Operating review 22.7% 23.5% 24.2% 24.4% £310k £305k £292k £303k 10 100 5 0 0  Land market conditions favourable with FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 attractive hurdle rates. 1 Includes affordable.  Landbank o

18. Slide 18: Partnerships & Regeneration

    Partnerships FY19 FY18 Revenue: Contracting Mixed-tenure £431m £192m £351m £124m & Regeneration Operating profit £34.8m £23.6m Operating review Operating margin 5.6% 5.0% Units delivered:  Further excellent progress against strategic targets. Mixed-tenure 1,178 751  Contracting revenues up 23% and

19. Slide 19: Partnerships & Regeneration

    Partnerships 2016 2019 & Regeneration North East North East Operating review Yorkshire  Business restructured into three regions, North West and 10 local business units across East Midlands Central West Midlands England. London  Completed acquisition of Strategic Team London South & South West Eas

20. Slide 20: Construction

    Construction FY19 FY18 Revenue1 £1,387m £1,687m Operating review Operating (loss)/profit1 £(15.0)m £15.9m £(15.8)m £(26.0)m  Operating loss includes £33m in respect of previously Net debt announced contract write-downs following strategic review. Order book2 £2.9bn £3.3bn  Underlying business show

21. Slide 21: Construction

    100% Order book by client type Construction 10% 12% 13% 16% 17% Operating review 16% 16% 13% 9% 4% 75%  Order book strong across all sectors and businesses, despite visible Brexit uncertainty. 50% 74% 74% 75% 79%  Restructure implemented to right-size the business 72% and strengthen the management

22. Slide 22: Outlook

    Outlook Full year results for the year ended 30 June 2019 22 Export Building, East India Dock, East London

23. Slide 23: Outlook

    Outlook  Housing market continues at a robust level of activity, supported by Help to Buy and a very strong mortgage market.  Linden seeing an improving sales rate following the typically quieter summer weeks.  Partnerships experiencing strong demand from Registered Providers and Local Authoritie

24. Slide 24: Questions & answers

    Questions & answers 24

25. Slide 25: Appendices

    Appendices 1. GROUP 2. LINDEN HOMES 3. CONSTRUCTION 1.1 Our businesses 2.1 Analysis of sales reserved, 3.1 Segmental analysis 1.2 Creating value 1.3 Operating sustainably contracted and completed 3.2 Order book 1.4 Investment in Linden Homes and Partnerships & Regeneration 2.2 Trading overview 3.3 K

26. Slide 26: Our businesses

    Appendices  Top 10 UK housebuilder.  High-quality homes for first-time buyers and families. 1.1 Our businesses  Private and affordable housing.  Top 10 UK contractor.  National coverage, local delivery.  Strong order book, mainly in public and regulated sectors. Excellent framework positions.

27. Slide 27: Creating value

    Appendices 27,000+ £85m+ homes delivered by Linden committed to communities 1.2 Creating value – Homes and Partnerships & through planning obligations. Regeneration. over the past five years £4.8bn £275m+ of contracts undertaken for of corporation tax and other public and regulated sector taxes paid

28. Slide 28: Operating sustainably

    Appendices Our People 1.3 Operating sustainably Health & Safety  FTSE4Good: 3.2 out of 5.  Further recognition for award-winning Environment Challenging Beliefs, Affecting Behaviour and & Climate Change Be Well programmes.  Awarded ‘Top Graduate Employer’ and ‘Top Communities Apprentice Employer’

29. Slide 29: Investment in Linden Homes and Partnerships & Regeneration

    Appendices £m 2019 2018 Amounts invested in joint ventures 331.6 311.2 1.4 Investment in Land 552.9 465.8 Linden Homes and Work in progress 323.8 259.1 Partnerships & Total invested in housebuilding developments 1,208.3 1,036.1 and joint ventures Regeneration Land creditors (216.9) (144.4) Net inves

30. Slide 30: IFRS 16 Leases

    Appendices BACKGROUND  On 1 July 2019, the Group will transition from IAS 17 Leases to IFRS 16 Leases. 1.5 IFRS 16 Leases  This requires all assets previously classified as operating leases to be capitalised alongside an associated liability equal to the present value of the lease commitment.  Th

31. Slide 31: Cash flow summary

    Appendices £m FY19 FY18 Cash from pre-exceptional operating activities1 144.8 176.8 Exceptional items (50.8) (45.0) 1.6 Cash flow Working capital movements1 (156.1) (79.8) Net cash used in operations (62.1) 52.0 summary – year to Interest, tax and dividends (92.6) (97.5) 30 June 2019 Other (inc proc

32. Slide 32: Working capital analysis

    2019 2018 Appendices £m Linden Homes Partnerships & Regen Construction & Investments Central TOTAL TOTAL 1.7 Working capital Land 472.4 80.5 n/a n/a 552.9 465.8 analysis Work in progress 272.3 51.5 n/a n/a 323.8 259.1 (developments) Amount due from joint 265.4 66.2 n/a n/a 331.6 311.2 ventures Devel

33. Slide 33: Net finance costs

    Appendices £m 2019 2018 Net interest payable on borrowings (16.4) (17.3) 1.8 Net finance costs Interest receivable from joint ventures 12.7 10.1 Unwind of discount on payables (0.5) (0.4) Other (1.7) 0.1 TOTAL (5.9) (7.5) 33

34. Slide 34: Joint venture impact on interest and tax

    FY19 FY18 Appendices £m £m Statutory1 JV int & tax Adjusted Statutory1 JV int & tax Adjusted Profit from 1.9 Joint venture operations 161.4 12.9 174.3 196.2 13.4 209.6 impact on interest Net finance (5.9) (12.4) (18.3) (7.5) (12.3) (19.8) costs and tax Profit 155.5 0.5 156.0 188.7 1.1 189.8 before t

35. Slide 35: Completed housing units

    Linden Linden Partnerships Partnerships Appendices Homes Homes & Regen & Regen TOTAL TOTAL Incl JVs Net of partner Incl JVs Net of partner Incl JVs Net of Units share share partner share 1.10 Completed Private 2,227 1,913 646 514 2,873 2,427 housing units Affordable 1,002 868 532 323 1,534 1,191 TOT

36. Slide 36: Forecast land creditors' payment profile

    Appendices £m 250 1.11 Forecast land 20.2 creditors’ payment profile 200 46.2 150 £m FY19 FY18 Linden Homes 182.9 136.9 216.9 100 Partnerships 150.5 34.0 7.5 & Regen 50 TOTAL 216.9 144.4 0 FY20 FY21 FY22 Total 36

37. Slide 37: Exceptional charges

    Appendices Queensferry Crossing £(m) AWPR charge charge Other1 TOTAL 1.12 Exceptional FY17 75.0 12.9 1.0 88.9 charges FY18 45.0 - - 45.0 FY19 32.3 6.7 11.8 50.8 TOTAL 152.3 19.6 12.8 184.7 1 Aborted Bovis merger professional fees (FY17) and Construction restructuring costs/GMP pension costs/buyout c

38. Slide 38: Financial calendar

    Appendices Date Event 7 November 2019 2019 Final Dividend ex-dividend date 1.13 Financial calendar 8 November 2019 2019 Final Dividend record date 12 November 2019 Annual General Meeting 4 December 2019 2019 Final Dividend payment date 12 February 2020 Half Year Results 16 September 2020 Full Year R

39. Slide 39: Linden Homes: analysis of sales reserved, contracted and completed

    Appendices £m Sept 19 June 19 Sept 18 June 18 Private 273 187 330 206 2.1 Linden Homes – Affordable 201 188 180 160 analysis of sales TOTAL 474 375 510 366 reserved, contracted, and completed For completion in FY20 295 245 412 285 For completion post FY20 179 130 98 81 TOTAL 474 375 510 366 Units Pr

40. Slide 40: Linden Homes: trading overview

    Appendices FY19 FY18 Revenue (£m) 820 947 2.2 Linden Homes – trading overview Land cost 24.9% 23.7% Build cost 51.1% 52.7% Gross margin 24.0% 23.6% Overheads 4.4% 4.1% Operating margin 19.6% 19.5% 40

41. Slide 41: Linden Homes: analysis of reservations and completions

    ANALYSIS OF RESERVATIONS: Appendices Proportion of units No incentives FY19 46% FY18 40% Incentives 2.3 Linden Homes – Part-exchange 19% 15% Assisted move 3% 2% analysis of Help to Buy 29% 40% reservations and Investor sales 3% 3% TOTAL 100% 100% analysis of completions COMPLETIONS BY BUYER TYPE: FY

42. Slide 42: Linden Homes: strategic use of joint ventures

    Revenue 4 Appendices Completions (units) (Linden Homes only) ASP3 Net of Gross JV partner £m £000 2.4 Linden Homes – Direct - private 1,598 1,598 544 340 strategic use of Joint - affordable 735 735 95 130 JOs1 - private 48 24 4 167 Ventures (JVs) 2,381 2,357 643 n/a JVs2 - private 581 291 126 433 -

43. Slide 43: Landbank analysis

    Appendices 30 % By business Linden Homes 12,600 21 % By sector Private 14,190 Affordable 3,810 2.5 Landbank 70 Partnerships 5,400 18,000 18,000 79 analysis1 % % 11% Product mix2 29 Product mix2 % Houses 9,200 Houses 2,750 Apartments 1,140 Apartments 1,100 10,340 71 3,850 89 % % 1 Current at 9 Septem

44. Slide 44: Linden Homes: movement in landbank

    Appendices Total landbank Owned Controlled At 30 June 2018 11,400 9,612 1,788 2.6 Linden Homes - Legal completions (2,781) (2,781) - movement in Land acquired 3,778 3,487 291 landbank Land now in JVs (379) (379) - Transfers - 1,353 (1,353) Aborted (150) - (150) Planning changes and other 32 32 - At

45. Slide 45: Linden Homes: forecast outlets and revenue

    Appendices Number of sales outlets1 Units by period % 100 100% 2.7 Linden Homes - 12% forecast outlets and 80 75% 38% revenue 60 97 50% 100% 100% 100% 87 92 88% 40 85 80 77 62% 25% 20 0 0% FY17 FY18 FY19 FY20 FY21 FY22 FY18 FY19 FY20 FY21 FY22 1 Average for the year. Owned or controlled Not yet acqu

46. Slide 46: Construction: segmental analysis

    Appendices June 2019 (Loss)/profit £m Revenue1,2 from operations2 Margin2 3.1 Construction – Building 859.8 (9.5) (1.1) segmental analysis Infrastructure 527.0 (5.5) (1.0) TOTAL 1,386.8 (15.0) (1.1) June 2018 Profit/(loss) £m Revenue1 from operations2 Margin2 Building 1,038.0 11.6 1.1 Infrastructure

47. Slide 47: Construction: order book

    Appendices 3.2 Construction - order book1 £2.1bn £0.8bn Building £m Infrastructure £m Education 576 Water 122 Other Public Sector 150 Roads 442 Facilities Management 469 Rail & Aviation 156 Commercial 305 Other Civil Engineering 59 Health 411 Defence 179 1 Current at 9 September 2019. 47

48. Slide 48: Construction: key framework positions

    Appendices KEY FRAMEWORK POSITIONS  Education and Skills Funding Agency’s school  Highways England Collaborative Delivery 3.3 Construction – building framework (six lots). Framework.  Next Generation Estate Contracts (NGEC)  Manchester Airports Group Capital Delivery key framework Regional Capit

49. Slide 49: Partnerships & Regeneration: units delivered

    Appendices 3500 3,278 3000 2,751 4.1 Partnerships & Regeneration – 2500 2,108 2,194 2,026 2,100 units delivered 2000 1,620 2,000 1500 1,600 1,700 1,500 1000 1,400 1,178 500 594 751 408 526 220 0 FY14 FY15 FY16 FY17 FY18 FY19 Private mixed-tenure units Contracting - equivalent units 49

50. Slide 50: Partnerships & Regeneration: background

     We are a regeneration business. Appendices  We identify land, invest, develop, contract, build and sell properties, creating homes for people to live in, and places where communities thrive. 4.2 Partnerships &  We do this in partnership with our clients: Regeneration – • Housing Associations (HA

51. Slide 51: Partnerships & Regeneration: market opportunity

     Supply deficit of circa 130k Appendices homes per annum.  High house prices exclude entry into the marketplace. 4.3 Partnerships &  Demand for subsidised social Regeneration – housing across the UK. market opportunity  Government’s ambition is to build 300,000 homes per Great Eastern Quays, Eas

52. Slide 52: Partnerships & Regeneration: business model

    Appendices A leading brand 4.4 Partnerships & Regeneration – Contracting Commissioning Developing and JVs margins: business model margins: 2-4% margins: 4-6% 12-18% Affordable Social rent Supported PRS/Rent to Shared Help to Buy Private sale rent Intermediate Buy ownership housing Housing Associatio

53. Slide 53: Disclaimer

    Disclaimer This document contains statements that are, or may be deemed to be, guarantee that the occurrence of the events expressed or implied in any “forward-looking statements” which are prospective in nature. These forward-looking statements in this document will actually occur. You are forward-

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