Galliford Try Holdings Plc · LSE:GFRD
Galliford Try — H1 FY2020 Earnings Presentation
41 slides from Galliford Try's earnings presentation, Mar 12, 2020
Slide 1: Half year results
Half year results Well-capitalised and strongly positioned for the future Six months ended 31 December 2019 12 March 2020
Slide 2: Agenda
Bill Agenda Hocking Half year results to 31 December 2019 Our business Chief Executive Half year highlights Financial review Strategy & outlook Q&A 2
Slide 3: Our business
Our business A people-orientated, progressive business, driven by our values to deliver for our stakeholders and the communities we work in 3
Slide 4: Our business
Our business A well-capitalised, UK construction-focused company with a strong pipeline in chosen sectors STRENGTHS Well-capitalised and debt-free. Strong client relationships based on collaborative working. Highly-experienced management team. Disciplined approach to project selection and ri
Slide 5: Our business
BUILDING Our business Focused on sectors Education Defence Health FM & Other where we have core and proven INFRASTRUCTURE INVESTMENTS strengths Highways Environment 5
Slide 6: Our business: Fundamentals
FUNDAMENTALS Our business Health & Safety Operating sustainably (ESG) Environment & Climate Change Balance our financial performance with obligations to our stakeholders. Our People Assess and address Environmental, Social and Governance (ESG) across six areas. Underpinned by our Social Value
Slide 7: A highly-experienced Executive Board
Our business A highly-experienced Executive Board More than 150 years’ construction sector experience. Supported by a strong plc Board. 7
Slide 8: Half year highlights
HIGHLIGHTS1 Half year highlights £636m Pre-exceptional revenue £225m Net cash2 Solid progress against strategic objectives. £1.0m Pre-exceptional Construction profit £3.2bn Order book Restructure completed from operations3 Summer 2019. Successful strategic disposal of housebuilding divisions.
Slide 9: Financial review
Andrew Financial Duxbury review Finance Director 9
Slide 10: Financial performance
Financial Continuing pre-exceptional Statutory performance HY20 HY19 HY20 HY19 Revenue £636m £728m £668m £728m Results for continuing business, excludes (Loss)/profit from housebuilding divisions. £(6.7)m £2.9m £15.5m £(24.0)m operations1 Revenue reduced in line with strategic review. (Loss)/pro
Slide 11: Financial performance
Financial performance Revenue1 Profit bridge £m £m HY20 HY19 80 Continuing 636 728 48.1 60.5 60 Continuing operations Discontinued 704 677 40 Total 1,340 1,405 20 17.0 1.0 (7.7) (6.7) 0 2.1 Exceptional 32 - Total 1,372 1,405 -20 (20) Construction PPP Loss Amortisation, Exceptional Discontinued PAT 1
Slide 12: Segmental analysis
Segmental analysis £m Revenue1 HY20 636.2 HY19 728.0 Var (13)% Building 423.5 431.5 (2)% Infrastructure 208.7 286.9 (27)% Building. PPP Investments 3.8 9.3 (59)% • Revenue lower in London and commercial sectors. • Margin impacted by final account settlements. £m HY20 HY19 Infrastructure. Profit
Slide 13: One-off items
One-off items One-off items1 £m Other Transaction AWPR legacy Sub total costs Total HY20 Prior year (80.0) (9.4) (89.4) - (89.4) adjustment Exceptional items recognised in HY20. Current year – 28.0 - 28.0 (5.8) 22.2 exceptional • Net AWPR settlement. • Transaction costs incurred on Vistry deal2. T
Slide 14: Financial review: Balance sheet
31 Dec 30 June Financial review Balance sheet £m Intangible assets & goodwill 20192 85.5 20193 86.6 Balance sheet PPP & other investments 38.7 41.2 Other non-current assets4 34.8 15.6 Debt-free group. Working capital • Pro forma net cash at 31 December 2019 of £225m1. Working capital (211.7) (241.
Slide 15: Payment practices
Payment practices Performance since July 2019 substantially improved compared to prior year. Membership of Prompt Payment Code restored in December 2019. • Key to attract and retain our supply chain. Now paying over 90% of invoices within the Code’s specified 60-day time limit. 15
Slide 16: Pro forma cash flow
Pro forma cash flow >£100m average month end cash position £m 300 17 (19) 313 256 (39) 10 225 200 Free cash flow in the period 100 £(2)m (57) 0 (100) -100 Opening Pro forma for Pro forma Cash from Other working Dividend Interest, tax Pro forma closing net cash transaction 1 opening operating capital
Slide 17: Strategy & outlook
Bill Strategy Hocking & outlook Chief Executive 17
Slide 18: Business model
Business model CORE CAPABILITY BUILDING Investments FM INFRASTRUCTURE Established Investments & FM businesses complement core capability and provide opportunity. Lower risk annuity type income. Strategic flexibility to maximise value. Generation of work opportunities for wider Group. Great o
Slide 19: National strength, local delivery
Our business National strength, local delivery BUILDING KEY Morrison Construction Highland 1 National coverage through nine regions. Morrison Construction North East 2 Sector-specific support. Morrison Construction Central 3 Building North East & Yorkshire 4 INFRASTRUCTURE Building North West 5
Slide 20: Our markets
BUILDING Our markets £14bn £4.6bn £7bn Primary and secondary To optimise Capital education military sites budget Construction fundamental to Education Defence Health economy. • Growing population. • Ageing infrastructure. INFRASTRUCTURE • Climate change. • Technical/digital revolution. £28.8bn £15
Slide 21: Operating sustainably (ESG)
Operating sustainably (ESG) ISO 44001 Creating long-term value Collaborative business relationship management FTSE4Good membership. Our Award-winning Challenging Beliefs, Affecting Behaviour pillars and Be Well programmes. ‘Leaders in Diversity’ accreditation. ‘BIM Constructor of the Year’.
Slide 22: Risk management
Risk management Focus on margin improvement over top-line growth. Disciplined approach to project selection. • Comprehensive commercial training. High quality, low risk, focused • Ceased fixed-price all-risk major contacts. order book • Margin thresholds employed. • Peer review of bids and contr
Slide 23: Order book
Order book by client type Order book 100% 10% 13% 16% 17% 17% 16% 13% 9% 4% 12% 75% 50% 74% 74% 75% 79% 71% 25% 72% revenue secured for 0% 2021 and 16% in the FY16 FY17 FY18 FY19 HY20 pipeline. Public Regulated Private <£20m average contract size. Forward order book distribution – Building (excl
Slide 24: Financial outlook
Financial outlook HY20 2022 Revenue within £1.2bn-£1.5bn range. Revenue £1.3bn1 £1.2bn-£1.5bn Targeting >2% Construction margin by 2022. Focus on Group cost base. Targeting 2% Group net profit margin in medium term. Construction Average month end cash >£100m. 0.2% >2% margin 1 Annualised.
Slide 25: Summary
Summary Confident for the future Well-capitalised, UK construction-focused company. Focused on chosen sectors with education, healthcare, defence and infrastructure key drivers of growth. Strong pipeline with participation on all significant public sector frameworks. Strong and experienced m
Slide 26: Questions & answers
Questions & answers 26
Slide 27: Appendices
Appendices 1. GROUP 2. CONSTRUCTION 1.1 Investment case 2.1 Segmental analysis 1.2 Disposal of housebuilding divisions 2.2 Gross margin 1.3 IFRS 16 Leases 2.3 Order book by sector 1.4 Exceptional items 2.4 Key framework positions 1.5 Discontinued operations 3. DISCONTINUED OPERATIONS 1.6 Net finance
Slide 28: Investment case
A well-capitalised, UK construction-focused company with a strong pipeline in chosen sectors. Appendices Scale Focus National presence, local delivery. Strong position in a growing market. 1.1 Investment case Network of established regional offices. Only operate where we have proven strengths;
Slide 29: Disposal of housebuilding divisions
Appendices COMPLETED 3 JANUARY 2020 1.2 Disposal of Transaction details housebuilding Proceeds £1.075bn divisions Exciting opportunity to £675m paper1 strengthen and advance all three businesses. Financing £300m2 cash Establishes a well-capitalised, standalone construction group. £100m debt tran
Slide 30: IFRS 16 Leases
Appendices BACKGROUND On 1 July 2019, the Group transitioned from IAS 17 Leases to IFRS 16 Leases. 1.3 IFRS 16 Leases This required all assets previously classified as operating leases to be capitalised alongside an associated liability equal to the present value of the lease commitment. The o
Slide 31: Exceptional items
Appendices £(m) AWPR charge/(income) Queensferry Crossing charge Other1 TOTAL 1.4 Exceptional FY17 75.0 12.9 1.0 88.9 items FY182 125.0 - - 125.0 FY19 32.3 6.7 11.8 50.8 HY20 (28.0) - 5.8 (22.2) TOTAL 204.3 19.6 18.6 242.5 1 Aborted Bovis merger professional fees (FY17), Construction restructuring c
Slide 32: Discontinued operations
Appendices Discontinued operations £m HY20 HY19 1.5 Discontinued Adjusted revenue1 £703.8m £677.0m operations Profit from operations2 £67.2m £91.1m Profit after tax £48.1m £63.6m 1 Including share of joint ventures’ revenue and excludes part-exchange revenue. 2Excluding finance costs, amortisation a
Slide 33: Net finance income
Appendices £m HY20 HY19 Interest receivable from joint ventures and PPP 1.6 Net finance Investments 2.4 1.0 income1 Interest receivable on bank deposits 0.1 0.1 Other2 (0.4) (0.6) TOTAL 2.1 0.5 1 Continuing operations. 2 Includes interest resulting from the adoption of IFRS 16. 33
Slide 34: Working capital analysis
HY20 FY191 Appendices Total continuing Discont’d £m Construction Investments Central operations operations TOTAL TOTAL Land - - - - 504.1 504.1 552.9 1.7 Working capital Work in analysis progress (develop - - - - 317.5 317.5 323.8 ments) Amount due from - - - - 347.4 347.4 331.6 joint ventures Devel
Slide 35: Segmental analysis
Appendices HY20 Profit/(loss) FY19 from 2.1 Segmental £m Revenue1 operations1 Margin1 Margin1 (1.1) analysis Building 423.5 2.4 0.6% Infrastructure 208.7 (1.4) (0.7)% (1.0) TOTAL 632.2 1.0 0.2% (1.1) HY19 Profit/(loss) from £m Revenue operations1 Margin1 Building 431.5 4.8 1.1% Infrastructure 286.9
Slide 36: Gross margin
Appendices Construction gross margin1 2.2 Gross margin 7% 5.2% 4.9% 5% 3.2% 4.5% 3% 4.0% 4.3% 4.3% 4.3% 1% 0.9% 0.9% 0.2% (1.1)% (1%) -1% FY18 HY19 FY19 HY20 Operating profit Overhead 1 Pre-exceptional. 36
Slide 37: Order book by sector
Appendices Strong visibility of workload 2.3 Order book by sector – 31 December 2019 £2.1bn £1.1bn Building £m Infrastructure £m Education 502 Defence and Custodial 409 Roads 657 Facilities Management 398 Health 291 Water 409 Other public sector 235 Commercial 218 Other civil engineering 43 Rail & A
Slide 38: Key framework positions
Appendices KEY FRAMEWORK POSITIONS Department for Education’s school building Scottish Procurement Alliance. 2.4 Construction – framework (six lots). Southern Construction Framework. LHC Schools and Community Buildings North West Construction Hub. key framework Framework. YORbuild/YORciv
Slide 39: Discontinued operations operating review
Linden Homes Partnerships & Regeneration Appendices HY20 HY19 HY20 HY19 Revenue1: 3.1 Discontinued Total £333.8m £392.1m £370.0m £284.9m operations – Contracting n/a n/a £269.4m £186.9m operating review Mixed-tenure n/a n/a £100.6m £98.0m Operating profit £49.2m £76.8m £18.0m £14.5m Operating margin
Slide 40: Discontinued operations completed housing units
Appendices Linden Linden Partnerships Partnerships Homes Homes & Regen & Regen TOTAL TOTAL 3.2 Discontinued Units Incl JVs Net of partner share Incl JVs Net of partner share Incl JVs Net of partner share operations - Private 929 783 385 330 1,314 1,113 completed housing Affordable 364 315 199 132 56
Slide 41: 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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