Vistry Group Plc · LSE:VTY
Vistry — Bovis Homes Group — H1 2018 Earnings Presentation
39 slides from Vistry's earnings presentation, Sep 6, 2018
Slide 1: Half year results 2018
Bovis Homes Group PLC Half year results 2018 6 September 2018 www.bovishomesgroup.co.uk
Slide 2: Agenda
Agenda • Highlights • Financial review • CEO review - Operational update - Medium term targets • Outlook • Q&A Hatchwood Mill, Winnersh
Slide 3: Highlights
Highlights • Strong performance with a 41% increase in PBT - ahead of our expectations • Controlled and disciplined period end • Group consistently delivering high levels of customer service • Step change in build quality • Moved to an average net cash position in the period • Excellent visibility o
Slide 4: Financial review
Financial review Earl Sibley Group Finance Director Marbury Meadows, Wrenbury www.bovishomesgroup.co.uk
Slide 5: Income statement
Income statement Six months ended 30 June (£m) 2017 2018 Change Revenue 427.8 432.2 1% Gross profit 77.4 90.4 17% Administrative expenses (28.8) (27.3) -5% Operating profit before exceptional items 48.6 63.1 30% Exceptional items (2.8) - Share of profit of Joint Ventures 0.1 0.0 Profit before intere
Slide 6: Housing revenue analysis
Housing revenue analysis Six months ended 30 June 2017 2018 Change Average sales price (£k) Private 334.7 334.7 0% Affordable 101.9 127.8 25% Total 277.4 262.7 -5% Volume Private 1,140 1,030 -10% Affordable 372 550 48% Total 1,512 1,580 4% Housing revenue (£m) Private 381.5 344.7 -10% Affordable 37.
Slide 7: Analysis of profit
Analysis of profit Six months ended 30 June 2017 2018 £m unless otherwise stated Housing Land Total Housing Land Total sales sales Revenue 420.9 6.9 427.8 425.9 6.3 432.2 Gross profit 77.2 0.2 77.4 90.4 - 90.4 Administrative expenses (28.8) (27.3) Operating profit pre exceptional items 48.6 63.1 Gro
Slide 8: Sales prices and construction costs
Sales prices and construction costs Six months ended 30 June 2017 2018 Change Sales price per home (£000’s) 277.4 262.7 -5% Sales price per sq ft (£’s) 250.1 253.5 1% Private sales price (£000’s) 334.7 334.7 0% Private sales price per sq ft (£’s) 276.6 287.5 4% Construction cost per home (£000’s) 15
Slide 9: Strong cash position
Strong cash position Six months ended 30 June (£m) 2017 2018 Housing receipts 454.6 395.7 Construction expenditure (327.0) (327.5) Overheads (27.2) (26.7) Operating cash flow 100.4 41.5 Cash expenditure on land (131.1) (81.2) Land sales receipts 11.0 0.5 Dividend payment (40.3) (43.6) Non-trading it
Slide 10: Increasing our land activity
Increasing our land activity • Continue to see good opportunities in the land market • Investment in land teams as we increase our activity • 828 plots secured across five developments in H1 • Two further developments totalling 243 plots acquired since half year Macclesfield Haslington • Terms agree
Slide 11: Net assets
Net assets (£m) 30 June 2017 30 Dec 2017 30 June 2018 Land 1,022.0 913.4 831.9 Land creditors (324.7) (246.7) (195.6) Land net of creditors 697.3 666.7 636.3 Work in progress 470.2 408.6 473.1 Other assets 135.4 92.1 117.0 Other liabilities (256.4) (255.7) (207.9) Net (debt)/cash (32.4) 144.9 42.8 N
Slide 12: Balance sheet optimisation
Balance sheet optimisation Progress in 2018 Opportunity for FY18 Land - Two development land disposals - Reduction of investment on c.£80m - 100m (£13.0m) larger sites /out of area sites - Other land disposals (£2.2m) - JV at Wellingborough - Sherford JV contracts conditionally exchanged Work in pro
Slide 13: Operational update
Operational update Greg Fitzgerald Chief Executive Officer Stondon Park, Lower Stondon www.bovishomesgroup.co.uk
Slide 14: Sales position strong
Sales position strong • Focused on price optimisation whilst maintaining required sale rate -- Sales incentive scheme -- Controlled volume growth • Launched new sales specification -- One size does not fit all • Significantly reduced dependence on part exchange -- H118 8% of total reservations versu
Slide 15: Doing it right for our customers
Doing it right for our customers • Group consistently delivering high levels of Customer Service -- Controlled and disciplined period ends -- Rigorous inspection processes -- HBF Customer Satisfaction score (1 Oct 2017 to date) continues to trend at well above 80% • Remains key priority for the Grou
Slide 16: New housing range 'The Phoenix Collection'
New housing range ‘The Phoenix Collection’ • 28 market leading house types -- Full range of private and affordable homes -- Launched in April 2018 • Replans complete or being progressed across 61 sites • First completions of the new range in Spring 2019 • Confident new range will deliver: -- Added v
Slide 17: Step change in build quality
Step change in build quality • All construction for 2018 well progressed • Investment in high quality site managers and site teams -- Site manager headcount turn reduced to 19.5% • Cuckoo Meadow, versus 42.6% in H1 17 Hailsham • Best practice pro-actively shared across the Group • Froghall Fields, -
Slide 18: NHBC Pride in the job winners
NHBC Pride in the job winners update Bovis Homes Group PLC | Issue 83 | Summer 2018 The Newspaper for Bovis Homes People Alan Cruickshanks Dale Burrell Jack Allen Oliver Cookson Jamie Reynolds Emil Lazar Six of the very best Site managers from across the regions are celebrating winning awards for th
Slide 19: Commercial and IT systems
Commercial and IT systems • Investment in efficient systems and processes, and development of commercial teams • Group successfully moved to COINS software in April -- Accurate, consistent cost reporting and forecasting “Gives the business -- Increased commercial visibility across sites far greater
Slide 20: High quality skilled people
High quality skilled people • Comprehensive learning and development programme -- Across all areas including sales, customer service, build, health and safety and IT • New trainee assistant site manager programme launched • Apprenticeship programme • Leadership programme ongoing • Bovis Homes Traini
Slide 21: Strong land bank fundamentals
Strong land bank fundamentals • Family homes in prime locations 30 June 2017 2018 • 87% of plots with price <£500k Total plots 19,341 16,107 • No exposure within M25 • Predominantly lower risk greenfield sites Average sales price £276k £294k • Traditional standard housing with Average land cost £52k
Slide 22: Sherford and Wellingborough
Sherford and Wellingborough • Sherford -- Contracts conditionally exchanged for formation of 50:50 JV (c.1,500 plots) with Clarion Housing Group • Wellingborough -- Heads of terms agreed for a 50:50 JV -- Highly successful sales launch in August -- £6.7m land sale since the half year Overall targett
Slide 23: Strategic land opportunity
Strategic land opportunity • Strategic land is an important supply of high As at 30 June 2018 Total sites Total plots quality land 0 – 150 plots 14 1,254 -- Expect to deliver c.10,000 plots from our 150 – 300 plots 15 3,170 strategic land bank over next 5 years 300 – 500 plots 11 3,820 -- Returns ex
Slide 24: Progress on affordable housing
Progress on affordable housing • Enhancing our relationships with our affordable housing providers • Development agreements -- Completion of contract at Wokingham for TVHA -- Production ongoing for Vivid at Boorley Green • JV with Clarion at Sherford leading to further opportunities • Affordable par
Slide 25: Market environment
Market environment • Fundamentals remain strong -- High level of consumer demand -- Strong support for the sector -- Low interest rate environment -- Competitive mortgage market -- High employment levels • Alternative routes to market through Heylo, PRS and Partnerships available • Government consul
Slide 26: Medium term targets
Medium term targets Greg Fitzgerald Chief Executive Officer Burfield Grange, Hailsham www.bovishomesgroup.co.uk
Slide 27: Medium term targets
Medium term targets Target Progress to date Timing 4 star HBF customer satisfaction rating - Trending at 4 star for HBF year 1 Oct 2017 to date HBF year to 30 Sept 2018 - Restructuring complete FY20 4,000 completions P.A. - Maximising economies of scale from current structure - Controlled volume gro
Slide 28: Major margin initiatives
Major margin initiatives • 1. Price optimisation -- Controlled volume growth -- New sales commission structure launched in Jan 2018 • 2. Specification review -- New sales specification launched March 2018 -- 41 active sites with new specification -- Increasing as new developments launch • 3. Cost re
Slide 29: Enhanced cash returns to shareholders
Enhanced cash returns to shareholders Ordinary dividend -- Strategy of maximising sustainable dividends to shareholders -- HY18: interim dividend up 27% to 19 pence per share -- FY18: expect 20% increase to c.57p reflecting improved profitability and strong outlook -- Ordinary dividend cover to move
Slide 30: Strong outlook
Strong outlook • Strong sales position -- Confident of delivering FY18 completions in-line with expectations • Controlled volume growth - maintain high level of customer satisfaction • Expect to deliver record profits in FY18 at the top end of Board expectations -- Robust summer trading -- Increased
Slide 31: Q&A
Q&A Wootton Park, Wootton www.bovishomesgroup.co.uk
Slide 32: Disclaimer - important notice
Disclaimer - important notice Certain statements in this presentation are forward looking statements. Forward looking statements involve evaluating a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements
Slide 33: Appendices
Bovis Homes Group PLC Half year results 2018 Appendices Saxons Plain, West Durrington www.bovishomesgroup.co.uk
Slide 34: Key metrics
Key metrics Revenue (£m) Operating profit margin (%) Profit before tax (£m) 432.2m 14.6% 60.2m 427.80 15.900 60 61.7 427.8 432.2 60.2 15.9 15.5 412.8 15.5 53.8 14.6 342.24 11.925 45 49.4 350.7 322.1 42.7 11.4 256.68 7.950 30 171.12 3.975 15 85.56 0.00 0.000 0 2014 2015 2016 2017 2018 2014 2015 2016
Slide 35: Strength of land bank across the regions
Strength of land bank across the regions • Strength of land bank across our 4315 West East operating regions 3452 3,703 • Proximity to regional office is a Owned plots key criteria for land acquisition 2589 2,843 2,543 going forward 1726 1,843 1,804 1,712 1,659 • Focus on further tightening 863 oper
Slide 36: Work in progress and other assets
Work in progress and other assets (£m) 30 June 2017 31 Dec 2017 30 June 2018 Stock (including show homes) 31.9 23.1 23.8 Roads and sewers 205.2 194.9 206.4 Housing and other WIP 169.7 139.0 187.8 Wellingborough WIP 20.9 31.9 44.6 Part exchange 42.5 19.7 10.5 Total work in progress 470.2 408.6 473.1
Slide 37: Interest charge
Interest charge Six months ended 30 June (£m) 2017 2018 Bank interest and commitment fees (1.1) (0.9) Issue cost amortisation (0.3) (0.4) Imputed interest on land (2.8) (1.7) Pension financing (0.1) 0.1 Imputed interest on available for sale assets 1.1 - Total (3.2) (2.9)
Slide 38: Land creditor payments
Land creditor payments 250 200 £108m 150 £m £201m 100 £48m 50 £45m 0 <1 year 1-2 year 2 year+ Note: The above figures are on an absolute cash basis. Balance sheet land creditors figure of £196m as at 30 June 2018 is on an IFRS accounting basis
Slide 39: Other liabilities
Other liabilities (£m) 30 June 2017 31 Dec 2017 30 June 2018 Creditors 237.0 231.2 187.3 Corporation tax liability 12.2 16.9 14.0 Deferred tax liability - 0.6 1.0 Provisions - Customer care provision 3.2 1.4 - - Other 4.0 5.6 5.6 Other liabilities 256.4 255.7 207.9