Galliford Try Holdings Plc · LSE:GFRD
Galliford Try — FY2015 Earnings Presentation
68 slides from Galliford Try's earnings presentation, Sep 16, 2015
Slide 1: Full year results to 30 June 2015
Full year results to 30 June 2015 Greg Fitzgerald, Executive Chairman, and Graham Prothero, Finance Director FY15 Results – Analyst Presentation, 16 September 2015 1
Slide 2: Agenda
Agenda • Overview • Strategy to 2018 • Financial review • Operating review • Outlook and summary • Appendices FY15 Results – Analyst Presentation, 16 September 2015 2
Slide 3: Overview
Overview FY15 Results – Analyst Presentation, 16 September 2015 3
Slide 4: Overview: Group
Overview Group • Record profits before tax of £114.0m; £117.7m before exceptional items • High levels of build cost inflation for all businesses; signs it is beginning to moderate • Excellent cash performance • Return on net assets improved to 23.3% • Strong executive and non-executive director appo
Slide 5: Overview: Housebuilding and Construction
Overview Housebuilding • Linden Homes margin of 16.0% in line with strategy • Linden Homes restructured in the South to improve overhead leverage; annualised savings up to £2m. • Acquisition of Shepherd Homes accelerates growth in the North • Continued strong growth in Partnerships’ revenue and marg
Slide 6: Overview: PBT, EPS and dividend
Overview PBT up 20%1 EPS up 19% 1 Dividend up 28% £114.0m 112.8p 68.0p £95.2m 94.6p 53.0p FY 14 FY 15 FY14 FY15 FY14 FY15 1 Stated after exceptional costs of £3.7m at June 2015 (June 2014: exceptional profit £0.3m) FY15 Results – Analyst Presentation, 16 September 2015 6
Slide 7: Strategy to 2018
Strategy to 2018 Norwood Hall, London FY15 Results – Analyst Presentation, 16 September 2015 7
Slide 8: Strategy to 2018
Strategy to 2018 • Linden Homes on track to achieve revenue growth target and operating margin of 18% • Galliford Try Partnerships expecting to exceed £400m revenue and achieve in excess of 4% blended operating margin. Increase in investment now incorporated into our plans • Construction revenue on
Slide 9: Financial review
Financial review Norwood Hall, London FY15 Results – Analyst Presentation, 16 September 2015 9
Slide 10: Summary income statement
Financial review Summary income statement £m 2015 2014 % Revenue1 2,430.7 1,850.8 +31% Profit from operations 138.9 110.5 +26% Profit before exceptional items2 and tax 117.7 94.9 +24% Profit before tax 114.0 95.2 +20% Earnings per share • pre-exceptional2 116.3p 94.2p +23% • post-exceptional 112.8p
Slide 11: Segmental analysis
Financial review Financial Review Segmental analysis 2015 Profit/(Loss) Operating £m Revenue1 from Operations2 Margin Housebuilding Linden Homes 779.0 124.3 16.0% Galliford Try Partnerships 329.4 9.4 2.9% Construction 1,293.2 15.7 1.2% PPP Investments 28.8 3.7 NA Group 0.3 (14.2) NA TOTAL 2,430.7 13
Slide 12: Gross margin analysis
Financial review Gross margin analysis Linden Homes gross margin Partnerships gross margin Construction gross margin 25% 10% 9.5 10% 22.5 21.4 1.1 8.6 19.8 8.2 20% 1.4 7.6 17.7 16.0 8% 8% 2.1 6.8 15.1 6.1 6.0 2.9 15% 13.3 1.6 5.8 1.0 11.9 5% 2.1 5% 1.2 10% 3% 8.4 7.2 3.9 4.8 3% 6.1 5.2 5.1 4.6 5% 5.
Slide 13: Acquisitions and exceptional items
Financial review Acquisitions and exceptional items • Miller Construction integration completed during the year o Exceptional integration costs of £3.7m; less than budgeted £4.0m o Synergy savings ahead of expectation, at £7m in 2015 and £8m thereafter o Limited variation to fair value exercise sinc
Slide 14: Sale of shared equity portfolio
Financial review Sale of shared equity portfolio • Sale of shared equity portfolio for £18.6 million • Represents 76p per £1; in line with balance sheet value • £9.1 million received July 2015; balance payable in line with redemptions of underlying assets, or by July 2016 latest • De-risks balance s
Slide 15: Cash management
Financial review Cash management • Strong focus on working capital management continues • Year end net debt of £17.3m, period end gearing of 3% • Land creditors increased to £391m, with landbank up by 13% • Cash in construction strong and up on FY14 at £172.7m and 13% of turnover • Average net debt
Slide 16: Cash flow
Financial review Cash flow £m 120 118 (69) 100 119 100 XX (XX) 80 80 18 2 (8) 60 60 XX (X) (20) (XX) 40 (XX) (49) 40 20 20 (5) (17) 0 (XX) (XX) (4) (X) 0 -20 -40 -20 Opening Cash from Working Working Acquisitions, Interest Tax Dividend Other Closing net debt operating capital capital net of cash net
Slide 17: Balance sheet highlights
Financial review Balance sheet highlights £m 2015 2014 Net asset value 569.2 534.2 Goodwill 135.5 115.0 Tangible net assets 412.8 406.1 Net (debt) (17.3) (5.1) Gearing 3% 1% FY15 Results – Analyst Presentation, 16 September 2015 17
Slide 18: Investment in housebuilding
Financial review Investment in housebuilding £m 2015 2014 Amounts invested in joint ventures 180.2 103.2 Land 745.4 607.6 Work in progress 234.0 239.6 Total invested in housebuilding developments and JVs 1,159.6 950.4 Land creditors1 (390.9) (233.4) Net capital employed 768.7 717.0 1 See Appendix 3.
Slide 19: Return on net assets
Financial review Return on net assets Group1 Linden Homes2 25% 25% 23.3 22.5 22.4 20.8 20% 20% 16.6 16.7 15.5 15.2 15% 15% 10% 10% 5% 5% 0% 0% FY12 FY13 FY14 FY15 FY12 FY13 FY14 FY15 1 Group RONA is calculated as pre-exceptional EBITA divided by average net assets including goodwill 2 Linden Homes R
Slide 20: Dividend
Financial review Dividend Cover 2.0x 1.9x 1.8x 1.7x 70 68.0p • Sustainable and progressive 65 46.0p dividend policy 60 • Full year dividend increased by 28% 55 53.0p 50 • Dividend covered 1.7x; aiming to 38.0p 45 reduce cover to 1.5x 40 37.0p 35 30.0p 25.0p 30 21.0p 25 20 22.0p 15 15.0p 10 12.0p 5 9
Slide 21: Operating review: Housebuilding – Linden Homes & Galliford Try Partnerships
Operating review Housebuilding – Linden Homes & Galliford Try Partnerships FY15 Results – Analyst Presentation, 16 September 2015 21
Slide 22: Operating review - Housebuilding
Operating review - Housebuilding REVENUE up 11% COMPLETIONS up 2% & 20% Units: 3,177 (FY14: 3,107) £1,108m (FY14: £1,002m) Equivalent Contracting Units: 1,800 (2014: 1,500) LANDBANK 1,2 up 13% & 25% SALES IN HAND/ORDER BK1 up 8% & 39% Units: 15,750 (FY14: 14,000) Sales in hand: £464m (FY14: £428m) G
Slide 23: Landbank analysis
Operating review - Housebuilding Landbank analysis1 By business By sector Product mix2 Product mix2 Galliford Try Partnerships 86% 79% 79% 63% Linden Homes 13,550 Private 12,500 Houses 8,600 Houses 1,000 Partnerships 2,200 Affordable 3,250 Apartments 2,300 Apartments 600 15,750 15,75
Slide 24: Affordable Housing & Regeneration
Operating review - Housebuilding Affordable Housing & Regeneration • Detailed sector knowledge optimising revenues and cash • Continued government support to maintain supply, and Help to Buy extended to 2020 • Impact and opportunities of social rent reforms assessed • Successful conclusion of HCA 20
Slide 25: Operating review: Housebuilding – Linden Homes
Operating review Housebuilding – Linden Homes FY15 Results – Analyst Presentation, 16 September 2015 25
Slide 26: Linden Homes
Operating review - Housebuilding Linden Homes COMPS/REVENUE Revenue up 3% MARGIN up 0.9pts Units: 2,769 (FY14: 2,887) 16.0% (FY14: 15.1%) Revenue: £779m (FY14: £760m) SALES IN HAND1 up 8% LANDBANK UNITS1,3 up 8% £413m (FY14: £384m) 13,550 (FY14: 12,500) AVERAGE SALES PRICE2 up 7%2 LANDBANK GDV 1,3 u
Slide 27: Linden Homes
Operating review - Housebuilding Linden Homes • Sales environment continues to be good • Average outlets of 62 in FY15 (FY14: 70); rising to 76 in FY16 • Sales per outlet per week stable at 0.61 (FY14: 0.62) • Mortgage availability is good and Help to Buy remains an important facility for purchasers
Slide 28: Linden Homes margin improvement
Operating review - Housebuilding Linden Homes margin improvement • Increase in operating margin from 15.1% to 16.0% • Excluding land sales, predominantly into strategic joint ventures, operating margin at 14.7% (FY14: 14.6%) • Adverse impact of supply chain cost inflation • Continue to focus on effi
Slide 29: Linden Homes: forecast outlets and revenue
Operating review - Housebuilding Linden Homes: forecast outlets and revenue Number of sales outlets1 Revenue by period % 120 100 100 100 90 70 100% 95 90 90 83 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 2
Slide 30: Linden Homes: landbank analysis
Operating review - Housebuilding Linden Homes: landbank analysis1 % Gross margin of landbank £k ASP in landbank 25 300 £291k 23% £272k 22% £249k 250 20% 20 200 150 15 100 50 10 0 FY13 FY14 FY15 FY13 FY14 FY15 £k Cost per plot % Plot cost as % of ASP 70 £69k 30 £61k £61k 60 25% 23% 24% 50 20 40 30 20
Slide 31: Operating review: Housebuilding – Galliford Try Partnerships
Operating review Housebuilding – Galliford Try Partnerships FY15 Results – Analyst Presentation, 16 September 2015 31
Slide 32: Galliford Try Partnerships
Operating review - Housebuilding Galliford Try Partnerships REVENUE up 24% & 152% MARGIN up 0.8pts Contracting: £273m (FY14: £221m) 2.9% (FY14: 2.1%) Mixed-tenure: £56m (FY14: £22m) ORDER BOOK/ LANDBANK1,2 up 47% & 82% up 39% & 16% SALES IN HAND1 Contracting: £850m (FY14: £610m) Units: 2,200 (FY14:
Slide 33: Galliford Try Partnerships
Operating review - Housebuilding Galliford Try Partnerships • New North West office opened 1 July 2015 • Housing association partnerships increasing and likely to grow in importance following budget • Mixed-tenure expertise generating significant market opportunities • Extra Care continuing to provi
Slide 34: Units delivered
Operating review - Housebuilding Units delivered 2500 2,208 2000 1,800 1,720 1,500 1500 1000 726 600 500 408 220 126 0 FY13 FY14 FY15 Contracting – equivalent units Private mixed-tenure units FY15 Results – Analyst Presentation, 16 September 2015 34
Slide 35: Operating review: Construction
Operating review Construction FY15 Results – Analyst Presentation, 16 September 2015 35
Slide 36: Operating review - Construction
Operating review - Construction MARGIN up 0.2pts CASH up £22m 1.2% (FY14: 1.0%) £173m (FY14: £151m) ORDER BOOK1 up £0.8bn WORK SECURED1 up 2pts £3.8bn (FY14: £3.0bn) 90% (for 2015/16) (FY14: 88%) 1 Current at 7 September 2015 FY15 Results – Analyst Presentation, 16 September 2015 36
Slide 37: Operating margin recovering
Operating review - Construction Operating margin recovering 2 1.8% 1.8 1.6 1.5% 1.4% 1.4 1.3% 1.2 1.0% 1 0.8 0.6% 0.6 0.4 0.2 0 H1 FY13 H2 FY13 H1 FY14 H2 FY14 H1 FY15 H2 FY15 Operating Margin FY15 Results – Analyst Presentation, 16 September 2015 37
Slide 38: Review of year
Operating review - Construction Review of year • Timely acquisition of Miller Construction advances strategy, strengthens our team and enhances order book, adding new clients and frameworks • Margin improved to 1.2%, held back in Building as we finalise work won in more difficult economic conditions
Slide 39: Building Division
Operating review - Construction Building Division • Business successfully reorganised following integration of Miller Construction • Revenue increased, partly through contribution of Miller Construction • Margin constrained by inflation as we complete historical projects, but no exceptional losses •
Slide 40: Infrastructure Division
Operating review - Construction Infrastructure Division • Revenue and margin up in period • Strong sector focus and success in securing major projects and national frameworks, comprising 68% of order book • Good progress in concluding AMP5 contracts and strong presence in AMP6 • Market strong allowi
Slide 41: Investments Division and Facilities Management
Operating review - Construction Investments Division • Financially closed five projects in the period • Continue to sell investments to maximise value, as per strategy • £10.2m portfolio – directors’ valuation £18.1m • Strong presence in Scotland proving advantageous Facilities Management • Doubled
Slide 42: Order book
Operating review - Construction Order book By client type Major wins: 100% • Southern Construction framework (£3.9bn) 16 28 19 12 16 • North West Construction hub (£400m) 75% 33 19 23 • Priority Schools Building Programme (£160m) 50% • Next Generation Estates contract framework (£250m) 25% 51 53 58
Slide 43: Outlook and summary
Outlook and summary FY15 Results – Analyst Presentation, 16 September 2015 43
Slide 44: Outlook: Housebuilding
Outlook Disciplined growth in all divisions Housebuilding Linden Homes • Confident of achieving operating margin of 18% by 2018 • Secure the benefits of the margin improvement plan • Strong in hand position at 34% of FY16 revenues following encouraging summer trading • Land market continues to be be
Slide 45: Outlook: Construction
Outlook Disciplined growth in all divisions Construction • Improving market opportunities, supporting growth to target margin of 2.0% • Order book increased to £3.8bn • 90% secured for 2016; continuing to conclude legacy contracts, with vast majority practically complete • Continuing to grow long te
Slide 46: Summary
Summary • Excellent results, with strong profits and cash, underpinning a 28% rise in dividend • Improvement in Linden Homes margin, with focus continuing • Galliford Try Partnerships delivering strong growth, with increasing demand for our offering • Construction performance robust, with transforme
Slide 47: Appendices
Appendices FY15 Results – Analyst Presentation, 16 September 2015 47
Slide 48: Appendices contents
Appendices 1. Cash flow summary 2. Group profit 2.1 Analysis of PBT, exceptional items and amortisation 2.2 Net finance costs 3. Housebuilding Division 3.1 Housebuilding – completed units 3.2 Forecast land creditors’ payment profile 4. Housebuilding: Galliford Try Partnerships business model 5. Hous
Slide 49: Cash Flow Summary
Appendices 1. Cash Flow Summary – Full Year to 30 June 2015 £m 2015 2014 Cash from operating activities 118.5 101.9 Working capital movements (50.7) (30.3) Net cash generated from operations 67.8 71.6 Interest, tax and dividends (77.5) (52.4) Acquisitions, net of cash acquired 2.0 - Other (4.5) (9.9
Slide 50: Analysis of PBT, exceptional items and amortisation
Appendices 2.1 Analysis of PBT, exceptional items and amortisation £m 2015 2014 Profit before tax, amortisation and 122.0 96.5 exceptional items Exceptional (cost)/profit (3.7) 0.3 Amortisation (4.3) (1.6) Profit before tax 114.0 95.2 FY15 Results – Analyst Presentation, 16 September 2015 50
Slide 51: Net Finance Costs
Appendices 2.2 Net Finance Costs £m 2015 2014 Net interest payable on borrowings (12.2) (12.1) Interest receivable from joint ventures 3.5 1.3 Unwind of discount on shared equity receivables 0.8 1.6 Unwind of discount on payables (2.0) (2.0) Other (0.4) 0.4 TOTAL (10.3) (10.8) FY15 Results – Analyst
Slide 52: Housebuilding – completed units
Appendices 3.1 Housebuilding – completed units Galliford Try Galliford Try Linden Homes Linden Homes Partnerships Partnerships TOTAL TOTAL net of net of net of Units Incl. JVs partner share Incl. JVs partner share incl. JVs partner share Private 2,059 1,945 188 146 2,247 2,091 Affordable 710 621 220
Slide 53: Housebuilding - forecast land creditors' payment profile
Appendices 3.2 Housebuilding - forecast land creditors’ payment profile1 £m 450 400 47.7 390.9 31.2 350 121.8 300 250 200 190.2 150 100 50 0 FY16 FY17 FY18 Beyond TOTAL 1 Land creditors include £25.9 million in relation to Shepherd Homes FY15 Results – Analyst Presentation, 16 September 2015 53
Slide 54: Galliford Try Partnerships business model
Appendices 4. Housebuilding – 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 • High developm
Slide 55: Linden Homes – Analysis of revenue 2015
Appendices 5.1 Linden Homes – Analysis of revenue 2015 FY15 Completions (Units) Revenue ASP Net of Gross JV partner £m £000 Direct - private 1,827 1,827 594 325 - affordable 523 523 59 113 Other income - - 14 - Land sales - - 51 - JOs1 - private 126 63 13 201 - affordable 28 14 1 108 2,504 2,427 732
Slide 56: Linden Homes – Analysis of revenue 2014
Appendices 5.2 Linden Homes – Analysis of revenue 2014 FY14 Completions (Units) Revenue ASP Net of Gross JV partner £m £000 Direct - private 2,038 2,038 606 297 - affordable 502 502 61 121 Other income - - 14 - Land sales - - 7 - JOs1 - private 88 44 21 497 - affordable 32 16 2 102 2,660 2,600 711 J
Slide 57: Linden Homes – sales reserved, contracted, and completed
Appendices 5.3 Linden Homes – analysis of sales reserved, contracted, and completed Sept 15 June 15 Sept 14 £m Private 309 198 301 Affordable 104 102 83 Total 413 300 384 For completion in FY16 296 175 342 For completion post FY16 117 125 42 Total 413 300 384 % of projected FY16 revenue secured 34%
Slide 58: Linden Homes – revenue analysis regional
Appendices 5.4 Linden Homes – revenue analysis regional, at 30 June 2015 TOTAL Units 2,769 Revenue £779.0m MIDLANDS/EAST/NORTH Units 658 (24%) Revenue £133.3m (17%) SOUTH SOUTH EAST Units 1,152 (42%) Units 959 (34%) Revenue £251.1m (32%) Revenue £394.6m (51%) FY15 Results – Analyst P
Slide 59: Linden Homes – sales, completions by buyer type
Appendices 5.5 Linden Homes – sales, completions by buyer type FY15 FY14 8% 12% 6% 8% 22% 54% 64% 26% Private Affordable Private with Part Exchange Private - Investor Based on 2,769 completions (2014: 2,887) FY15 Results – Analyst Presentation, 16 September 2015 59
Slide 60: Linden Homes – analysis of incentives on reservations
Appendices 5.6 Linden Homes – private sales, analysis of incentives on reservations Proportion of units FY15 FY14 No incentives 36% 47% Incentives Part exchange 11% 8% Assisted move 3% 1% Help to Buy 28% 34% Investor sales 22% 10% TOTAL 100% 100% FY15 Results – Analyst Presentation, 16 September 201
Slide 61: Linden Homes – trading overview
Appendices 5.7 Linden Homes – trading overview FY15 FY14 Revenue (£m) 779 760 Land cost 27.0% 24.4% Build cost 50.5% 54.2% Gross margin 22.5% 21.4% Admin expense 6.5% 6.3% Operating margin 16.0% 15.1% FY15 Results – Analyst Presentation, 16 September 2015 61
Slide 62: Linden Homes – landbank valuation
Appendices 5.8 Linden Homes – landbank valuation1 June 2015 June 2014 June 2013 Cost per plot South Midlands/ South Midlands/ South Midlands/ £000 East South East / North East South East / North East South East / North Opening landbank 114 38 54 108 38 45 90 32 41 Closing landbank 132 49 54 114 38 5
Slide 63: Linden Homes – Strategic land
Appendices 5.9 Linden Homes – Strategic land • 1,500 acres held in strategic landbank at June 2015; 160 acres added in the period • Circa 1,950 plots currently in planning • Planning permission for 470 units in the year • 2,430 consented plots delivered to the landbank to date • In excess of 8,000 c
Slide 64: Construction – segmental analysis
Appendices 6.1 Construction – segmental analysis June 2015 Profit £m Revenue from Operations Margin Building 906.9 8.0 0.9% Infrastructure 386.3 7.7 2.0% TOTAL 1,293.2 15.7 1.2% June 2014 Profit £m Revenue from Operations Margin Building 458.3 3.0 0.7% Infrastructure 374.6 5.0 1.3% TOTAL 832.9 8.0 1
Slide 65: Construction – Order book
Appendices 6.2 Construction – Order book Building Infrastructure £m £m Education 824 Water 419 Commercial 331 Rail 123 Other 753 Highways 444 FM 410 Utilities 62 Health 252 Flood Alleviation 124 Other Civil Engineering 58 FY15 Results – Analyst Presentation, 16 September 2015 65
Slide 66: Strategy assumptions
Appendices 7. Strategy assumptions 1. Macro-economic assumptions • Economic stability; growth continues as per current consensus • Interest rate rises gradually from first half 2016 • Private housing market demand continues 'as is' • Mortgage availability and flexibility maintained • Help to Buy not
Slide 67: Strategy assumptions (continued)
Appendices 7. Strategy assumptions (continued) 3. Operating assumptions Linden Homes • Mid/high single digit growth in unit numbers from FY16 • Proportionate mix of private/affordable units remains stable • Operating margin progression towards 18% in 2018 • No new business units in Linden Homes Gall
Slide 68: 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
Galliford Try Holdings — FY2015 Earnings Presentation on 6ix