Galliford Try Holdings PLC · LSE:GFRD

Galliford Try — H1 2016 Earnings Presentation

60 slides from Galliford Try's earnings presentation, Feb 25, 2016

  1. Slide 1: Half Year Results to 31 December 2015

    Half Year Results to 31 December 2015 Peter Truscott, Chief Executive, and Graham Prothero, Finance Director HY16 Results – Analyst Presentation, 25 February 2016 Bell’s Yard, Lincolnshire 1

  2. Slide 2: Peter Truscott, Chief Executive

    Peter Truscott CHIEF EXECUTIVE HY16 Results – Analyst Presentation, 25 February 2016 2

  3. Slide 3: Agenda

    Agenda  Highlights  Operating Review  Financial Review  Strategy to 2018  Outlook  Appendices HY16 Results – Analyst Presentation, 25 February 2016 3

  4. Slide 4: Highlights

    Highlights The Sycamores, Birtley St David’s RC School, Edinburgh HY16 Results – Analyst Presentation, 25 February 2016 4

  5. Slide 5: Highlights: Group

    Highlights Group  Record half year profit before tax of £52.9m  Return on net assets increased to 21.7%  Interim dividend up 18% to 26p per share  Net debt of £95.7m, increased in accordance with plan  Total of 2,403 units delivered across Linden Homes and Galliford Try Partnerships  Plans inc

  6. Slide 6: Highlights Overview

    Highlights Overview PBT up 15%1 EPS up 15% 1 Dividend up 18% 26p £52.9m 52.2p £45.9m 45.5p 22p 26p H1 15 H1 16 H1 15 H1 16 H1 15 H1 16 1 Stated before exceptional items of £3.4m at December 2014 HY16 Results – Analyst Presentation, 25 February 2016 6

  7. Slide 7: Operating Review: Linden Homes

    Operating Review LINDEN HOMES Bradley Meadow, Yorkshire Ridgeway Manor, Wiltshire HY16 Results – Analyst Presentation, 25 February 2016 7

  8. Slide 8: Operating Review – Linden Homes Overview

    Operating Review – Linden Homes Overview  1,357 completions in the period, generating increase in revenue and 17.0% operating margin  12,800 plots in landbank with GDV of £3.8bn  Strong in-hand position of £793m  Average outlets increased to 76; sales per outlet per week increased to 0.57 (HY15:

  9. Slide 9: Operating Review – Linden Homes Landbank analysis

    Operating Review – Linden Homes Landbank analysis1 % Gross margin of landbank £k £k ASP in landbank 25 400 22.5% 22.5% 22.5% 350 £281k £291k £291k 300 20 250 200 150 15 100 50 10 0 Dec 14 June 15 Dec 15 Dec 14 June 15 Dec 15 £k Cost per plot % Plot cost as % of ASP 80 30 £69k £70k 70 £64k 24% 24% 23

  10. Slide 10: Linden Homes Market opportunity

    Operating Review – Linden Homes Market opportunity  Encouraging sales since 1 January 2016  100% of land secured for FY17 and 75% for FY18  1,700 acres in strategic land, 245 plots granted planning in period  Margin improvement strategy continues to progress with focus on standardising operating

  11. Slide 11: Operating Review: Galliford Try Partnerships

    Operating Review GALLIFORD TRY PARTNERSHIPS 765 Finchley Road, NW11 New Brunswick, Manchester HY16 Results – Analyst Presentation, 25 February 2016 11

  12. Slide 12: Galliford Try Partnerships Overview

    Operating Review – Galliford Try Partnerships Overview  Combination of contracting and mixed tenure development  Growth in landbank to 2,700 units with GDV of £664m  Largely self funded, with impressive returns on capital  Contracting work cash generative  Opportunity to invest further in mixed

  13. Slide 13: Galliford Try Partnerships Units delivered

    Operating Review – Galliford Try Partnerships Units delivered 2500 2,208 1,800 2000 1,720 1,500 1500 1,215 1,050 1,046 1000 800 726 600 500 408 220 246 126 165 0 FY13 FY14 H1 15 FY15 H1 16  Contracting – equivalent units  Mixed tenure units HY16 Results – Analyst Presentation, 25 February 2016 13

  14. Slide 14: Galliford Try Partnerships Market opportunity

    Operating Review – Galliford Try Partnerships Market opportunity  Client business plans re-profiled, restoring investment and activity levels  Growth in platform of joint ventures with registered providers  Increased commissioning from local authorities in joint venture model on public land Partn

  15. Slide 15: Operating Review: Construction

    Operating Review CONSTRUCTION Stephenson Quarter, Newcastle Alford Community Campus, Aberdeenshire HY16 Results – Analyst Presentation, 25 February 2016 15

  16. Slide 16: Operating Review - Construction Overview

    Operating Review - Construction Overview  Revenue increased, as new opportunities begin to take effect  Margin stable, and remains constrained pending completion of historical projects and until benefit of new work comes through  £3.7bn order book; 71% of work secured for 2016/17  New work conta

  17. Slide 17: Construction Major wins

    Operating Review - Construction Major wins Building  East Lothian Community Hospital (£72m)  Arena Central, Birmingham (HSBC) (£66m)  Anderson High School, Shetland (£55m)  Ministry of Defence Frameworks, South West/South East (£1bn framework value) Infrastructure  Smart Motorways Framework, M1

  18. Slide 18: Construction Order book strengthened

    Operating Review - Construction Order book strengthened By client type Building  Education  Commercial 100%  Health 28 19 12 10  FM 16 19  Other Public & Regulated 75% 23  Defence 19 72 71 50% 58 53 25% 0% Infrastructure FY 13 FY 14 FY 15 H1 16  Transport  Water  Private  Power  Regulated

  19. Slide 19: Graham Prothero, Finance Director

    Graham Prothero FINANCE DIRECTOR HY16 Results – Analyst Presentation, 25 February 2016 19

  20. Slide 20: Financial Review

    Financial Review The Residence, SE1 55 St James's Street, SW1A South Devon Highway, Devon Norwood Hall, London HY16 Results – Analyst Presentation, 25 February 2016 20

  21. Slide 21: Summary Income Statement

    Financial Review Summary Income Statement: Half Year to 31 December FY to £m 2015 2014 30 June 2015 Revenue1 1,264.9 1,124.6 2,430.7 Profit from operations2 65.9 55.3 138.9 Profit before exceptional items3 52.9 45.9 117.7 and tax Profit before tax 52.9 42.5 114.0 Earnings per share: Pre-exceptional3

  22. Slide 22: Segmental Analysis

    Financial Review Financial Review Segmental Analysis: Half Year to 31 December 2015 FY to 30 June 15 Profit/(Loss) Operating Operating £m Revenue1 from Operations2 Margin Margin Linden Homes 362.7 61.5 17.0% 16.0% Partnerships 150.2 4.5 3.0% 2.9% Construction 738.6 8.5 1.2% 1.2% PPP Investments 12.9

  23. Slide 23: Financial Review – Linden Homes

    Financial Review – Linden Homes COMPS/REVENUE Revenue up 5% Linden Homes gross margin Units: 1,357 (H1 15:1,364) 25% 23.5 Revenue: £362.7m (H1 15: £346.1m) 21.7 22.5 21.4 6.5 6.5 SALES MIX (UNITS) 20% 6.3 6.6 Private: 1,124 (H1 15: 984) Affordable: 233 (H1 15: 380) 15% 17.0 16.0 15.1 15.1 AVERAGE SA

  24. Slide 24: Financial Review - Galliford Try Partnerships

    Financial Review - Galliford Try Partnerships REVENUE down £7.4m Partnerships gross margin Contracting: £120.5m (H1 15: £139.9m) 10% Mixed tenure: £ 29.7m (H1 15: £ 17.7m) 8.2 8% 7.6 UNIT SALES 5.2 4.8 Equivalent 6.0 6.1 contracting units: 800 (H1 15: 1,050) 6% 3.9 3.8 Mixed tenure: 246 (H1 15: 115)

  25. Slide 25: Financial Review - Construction

    Financial Review - Construction REVENUE up £133.8m Construction gross margin £738.6m (H1 15: £604.8m) 10% CASH robust 8% £154.7m (H1 15: £158.0m) 6.1 6% 5.8 5.5 5.1 5.0 4.6 4.5 ORDER BOOK1 high quality 4% 3.8 £3.7bn (H1 15: £3.25bn) 2% 1.0 1.0 1.2 1.2 WORK SECURED1 good visibility 0% FY14 H1 15 FY15

  26. Slide 26: Cash Management

    Financial Review Cash Management  Strong continuing focus on working capital management  Increased average borrowing as anticipated; forecast remains within plan  Average net debt for the six months of £194m  Period end gearing of 17%, in line with stated objective  Continue to benefit from def

  27. Slide 27: Cash Management: net debt bridge

    Financial Review Financial Review Cash Management £m 60 40 52 20 0 (38) -20 (17) (24) -40 (5) (13) -60 -80 (13) (38) -100 (96) Opening Cash from Working Working Interest Tax Dividend Other Closing net debt operating capital capital net debt 1 July 15 activities movements movements 31 Dec 15 Housebui

  28. Slide 28: Balance Sheet Highlights

    Financial Review Balance Sheet Highlights December June December £m 2015 2015 2014 Net asset value £m 570.0 569.2 528.2 Tangible net assets £m 415.7 412.8 375.7 Net (debt) £m (95.7) (17.3) (35.9) Gearing % 17% 3% 7% HY16 Results – Analyst Presentation, 25 February 2016 28

  29. Slide 29: Investment in Linden Homes and Galliford Try Partnerships

    Financial Review Investment in Linden Homes and Galliford Try Partnerships December June December £m 2015 2015 2014 Amounts invested in joint ventures 202.3 180.2 110.9 Land 708.5 745.4 660.1 Work in progress 253.4 234.0 234.5 Total invested in housebuilding developments & JVs 1,164.2 1,159.6 1,005.

  30. Slide 30: Return On Net Assets

    Financial Review Return On Net Assets Group1 Linden Homes2 25% 23.3 25% 22.4 22.5 20.8 20% 20% 21.7 20.1 16.7 20.2 16.6 18.9 15% 17.1 15% 17.2 14.9 13.3 10% 10% 5% 5% 0% 0% FY13 FY14 FY15 H1 16 FY13 FY14 FY15 H1 16  FY  FY  HY  HY 1 Group RONA is calculated as EBITA divided by average net assets

  31. Slide 31: Dividend

    Financial Review Financial Review Dividend Cover 1.9x 1.8x 1.7x Pence 70 68.0p  Sustainable and progressive 46.0p dividend policy 60 53.0p  Interim dividend up 18% 50 38.0p 40 37.0p 30 25.0p 20 26.0p 22.0p 10 15.0p 12.0p 0 FY13 FY14 FY15 H1 16  Final  Interim HY16 Results – Analyst Presentation,

  32. Slide 32: Peter Truscott, Chief Executive

    Peter Truscott CHIEF EXECUTIVE HY16 Results – Analyst Presentation, 25 February 2016 32

  33. Slide 33: Strategy to 2018

    Strategy to 2018 Forbury Place, Reading Lincoln High Street Footbridge, Lincolnshire Norwood Hall, London HY16 Results – Analyst Presentation, 25 February 2016 33

  34. Slide 34: Strategy to 2018

    Strategy to 2018  Linden Homes on track to achieve revenue growth target and operating margin of 18%  Galliford Try Partnerships revenue on track to exceed £400m, with margin of at least 4.0%  Construction revenue target of £1.5bn; margin improving towards target of 2.0%  Strong focus on recruit

  35. Slide 35: Outlook

    Outlook The Balk,Yorkshire Queen Elizabeth Hospital, Newcastle HY16 Results – Analyst Presentation, 25 February 2016 35

  36. Slide 36: Outlook

    Outlook  Linden Homes’ land markets and sales opportunities remain positive  Galliford Try Partnerships continues to benefit from growth in affordable demand supported by government initiatives  Construction has good visibility with a focus on frameworks and two-stage negotiations  Build cost in

  37. Slide 37: Appendices

    Appendices Photo to come Assay Office, Birmingham Lichfield Industrial Park Bridge Works, Staffordshire HY16 Results – Analyst Presentation, 25 February 2016 37

  38. Slide 38: Appendices contents

    Appendices 1. Group 3. Galliford Try Partnerships 1.1 Cash flow summary 3.1 Business model 1.2 Net finance costs 4. Construction 1.3 Completed housing units 4.1 Segmental analysis 1.4 Forecast land creditors’ payment profile 4.2 Order book 2. Linden Homes 5. Strategy assumptions 2.1 Revenue analysis

  39. Slide 39: 1.1 Cash Flow Summary – Half Year to December 2015

    Appendices 1.1 Cash Flow Summary – Half Year to 31 December 2015 £m 2015 2014 Cash from operating activities 52.3 48.2 Working capital movements (62.0) (36.5) Net cash (used in)/generated from operations (9.7) 11.7 Interest, tax and dividends (55.9) (44.6) Acquisition (including cash acquired) - 7.0

  40. Slide 40: 1.2 Net Finance Costs – Half Year to December 2015

    Appendices 1.2 Net Finance Costs – Half Year to 31 December 2015 £m 2015 2014 Net interest payable on borrowings (7.2) (5.4) Interest receivable from joint ventures 1.5 0.4 Unwind of discount on shared equity receivables - 0.7 Unwind of discount on payables (1.1) (1.0) Other 0.1 (0.2) TOTAL (6.7) (5

  41. Slide 41: 1.3 Completed housing units

    Appendices 1.3 Completed housing units Linden Homes Linden Homes Partnerships Partnerships TOTAL TOTAL net of net of net of partner Units Incl. JVs partner share Incl. JVs partner share incl. JVs share Private 1,124 964 133 108 1,257 1,072 Affordable 233 207 113 83 346 290 TOTAL 1,357 1,171 246 191

  42. Slide 42: 1.4 Forecast land creditors’ payment profile

    Appendices 1.4 Forecast land creditors’ payment profile 350 36 343 51 300 149 250 200 £m 150 107 100 50 0 FY16 FY17 FY18 Beyond TOTAL HY16 Results – Analyst Presentation, 25 February 2016 42

  43. Slide 43: 2.1 Linden Homes – revenue analysis, regional

    Appendices 2.1 Linden Homes – revenue analysis, regional at 31 December 2015 TOTAL  Units 1,357  Revenue £362.7m NORTH/ MIDLANDS/ EAST  Units 366 (27%)  Revenue £78.9m (22%) SOUTH WEST SOUTH EAST  Units 443 (33%)  Units 548 (40%)  Revenue £91.4m (25%)  Revenue £192.4m (53%) Regions updated t

  44. Slide 44: 2.2 Linden Homes – sales reserved, contracted, completed

    Appendices 2.2 Linden Homes – analysis of sales reserved, contracted, and completed Feb 16 Dec 15 Feb 15 £m Private 644.3 527.4 519.7 Affordable 143.4 140.0 147.2 Land Sales 5.6 5.6 9.7 Total 793.3 673.0 676.6 For completion in FY16 619.7 516.4 540.0 For completion post FY16 173.6 156.6 136.6 Total

  45. Slide 45: 2.3 Linden Homes – sales, completions by buyer type

    Appendices 2.3 Linden Homes – sales, completions by buyer type H1 16 H1 15 FY 15 12% 13% 12% 8% 8% 7% 17% 52% 54% 63% 28% 26%  Private  Affordable  Private with Part Exchange  Private - Investor Based on 1,357 completions HY16 Results – Analyst Presentation, 25 February 2016 45

  46. Slide 46: 2.4 Linden Homes – trading overview

    Appendices 2.4 Linden Homes – trading overview H1 16 H1 15 FY15 Revenue (£m) 363 346 779 Land cost 25.1% 22.9% 27.0% Build cost 51.4% 55.4% 50.5% Gross margin 23.5% 21.7% 22.5% Admin expense 6.5% 6.6% 6.5% Operating margin 17.0% 15.1% 16.0% HY16 Results – Analyst Presentation, 25 February 2016 46

  47. Slide 47: 2.5 Linden Homes – private sales incentives

    Appendices 2.5 Linden Homes – private sales, analysis of incentives on reservations Proportion of units H1 16 H2 15 H1 15 No incentives 44% 36% 38% Incentives Part exchange 7% 11% 11% Assisted move 3% 3% 2% Help to Buy 34% 31% 23% Investor sales 12% 19% 26% TOTAL 100% 100% 100% HY16 Results – Analys

  48. Slide 48: 2.6 Linden Homes – strategic use of joint ventures (Dec 15)

    Appendices 2.6 Linden Homes – strategic use of joint ventures (Dec 15) H1 16 Revenue Completions (Units) (Linden Homes only) ASP Net of Gross JV partner £m £000 Direct - private 804 804 252 314 - affordable 181 181 19 104 Other income, including land sales 17 - JOs1 - private 120 60 16 262 - afforda

  49. Slide 49: 2.6 Linden Homes – strategic use of joint ventures (Dec 14)

    Appendices 2.6 Linden Homes – strategic use of joint ventures (Dec 14) H1 15 Revenue Completions (Units) (Linden Homes only) ASP Net of Gross JV partner £m £000 Direct - private 883 883 274 310 - affordable 296 296 33 113 Other income, including land sales 15 - JOs1 - private 76 38 7 188 - affordabl

  50. Slide 50: 2.7 Linden Homes - landbank valuation

    Appendices 2.7 Linden Homes - landbank valuation1 December 2015 December 2014 June 2015 North/ North/ North/ Cost per plot South South Midlands/ South South Midlands/ South South Midlands/ £000 East West East East West East East West East Opening landbank 114 44 54 107 34 54 107 34 54 Closing landba

  51. Slide 51: 2.8 Landbank analysis

    Appendices 2.8 Landbank analysis1 By business By sector Product mix2 Product mix2 83% 79% 78% 70%  Linden Homes 12,800  Private 12,200  Houses 8,000  Houses 1,400  Partnerships 2,700  Affordable 3,300  Apartments 2,200  Apartments 600 15,500 15,500 10,200 2,000 1 Current at 14 February 2016

  52. Slide 52: 2.9 Linden Homes: forecast outlets and revenue

    Appendices 2.9 Linden Homes: forecast outlets and revenue Number of sales outlets1 Revenue by period % 120 100 100 100 100 75 100% 95 90 90 81 75% 73 62 60 50% 30 25% 0 0% Jan Jan Jan Jan Jan FY14 FY15 FY16 FY17 FY18 FY14 FY15 FY16 FY17 FY18  Not yet acquired  Acquired post July 2008  Legacy 1 As

  53. Slide 53: 2.10 London locations

    Appendices 2.10 London locations ELMBANK, BARNET MILLBROOK PARK ALLEN COURT ST. CLEMENTS KING EDWARD RD SILVERTOWN WAY, CANNING TOWN GOLDHAWK RD KING ST GRANGE WALK BLACKFRIARS RD GALLIONS REACH BATTERSEA BRIDGE ROAD YORK RD (LOOKERS) NEWHAM EARLSFIELD SUMMERS TOWN WIMBLEDON NEARLY COMPLETE HARTFIEL

  54. Slide 54: 3.1 Galliford Try Partnerships – business model

    Appendices 3.1. Galliford Try Partnerships – business model  Contractor/developer hybrid and partnering ethos perfectly aligned to market  Attractive financial characteristics with strong blended margin and returns • Good margin and strong cash generation in contracting • Opportunities to invest i

  55. Slide 55: 4.1 Construction – segmental analysis

    Appendices 4.1 Construction – segmental analysis December 2015 June 2015 £m Profit Revenue1 from Operations Margin Margin Building 517.8 3.7 0.7% 0.9% Infrastructure 220.8 4.8 2.2% 2.0% TOTAL 738.6 8.5 1.2% 1.2% December 2014 Profit £m Revenue1 from Operations Margin Building 413.3 3.2 0.8% Infrastr

  56. Slide 56: 4.2 Construction - order book

    Appendices 4.2 Construction - order book Building Infrastructure £m £m  Education 867  Transport 470  Commercial 254  Water 591  Health 225  Power 55  FM 400  Flood Alleviation 91  Other Public & Regulated 570  Other Civil Engineering 105  Defence 87 HY16 Results – Analyst Presentation, 2

  57. Slide 57: 5. Strategy assumptions

    Appendices 5. Strategy assumptions 1. Macro-economic assumptions  Economic stability in UK; growth continues as per current consensus  Interest rate rises gradually from end of 2016  Private housing market continues 'as is'  Mortgage availability and flexibility maintained  Help to Buy not mate

  58. Slide 58: 5. Strategy assumptions (continued)

    Appendices 5. Strategy assumptions (continued) 3. Financial assumptions Linden Homes  High single digit growth in unit numbers from FY16  Proportionate mix of private/affordable units remains stable  Operating margin progression towards 18% in 2018  One new business unit (Yorkshire) Galliford Tr

  59. Slide 59: Disclaimer

    Disclaimer This presentation is being made only to and is directed at persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or any other persons to who it

  60. Slide 60: Half Year Results to 31 December 2015

    Half Year Results to 31 December 2015 Peter Truscott, Chief Executive, and Graham Prothero, Finance Director HY16 Results – Analyst Presentation, 25 February 2016 Bell’s Yard, Lincolnshire 60

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