Galliford Try Holdings Plc · LSE:GFRD

Galliford Try — FY2018 Earnings Presentation

71 slides from Galliford Try's earnings presentation, Sep 12, 2018

  1. Slide 1: Full Year Results

    FULL YEAR RESULTS To 30 June 2018 12 September 2018 Peter Truscott Chief Executive Graham Prothero Finance Director Riverside Mills, Boroughbridge

  2. Slide 2: Peter Truscott, Chief Executive

    Peter Truscott CHIEF EXECUTIVE

  3. Slide 3: Agenda

    AGENDA Full year results to 30 June 2018  Group highlights  Financial review  Strategic and operating review  Outlook  Q&A  Appendices Full year results to 30 June 2018

  4. Slide 4: Group Highlights

    GROUP HIGHLIGHTS Full year results to 30 June 2018 Great Eastern Quays Phase 1, East London

  5. Slide 5: Group Highlights

    GROUP HIGHLIGHTS 5 Strong underlying performance across the Group  Strong progress against strategic objectives PBT1 up 28% EPS1,3 up 21% 200 160  Total homes built up 13% to 6,193 (FY17: 180 150 5,490) 160 140 130 158.4p £188.7m  Record pre‐exceptional profit of £188.7m, 140 120 £147.6m 131.1p u

  6. Slide 6: Graham Prothero, Finance Director

    Graham Prothero FINANCE DIRECTOR

  7. Slide 7: Financial Review

    FINANCIAL REVIEW Stansted Airport

  8. Slide 8: Group financial highlights

    FINANCIAL REVIEW 8 Group financial highlights £m 2018 2017 % Revenue1 3,132.3 2,820.2 +11 Profit from operations before 213.1 171.2 +24 exceptional items2 Profit before exceptional items and tax 188.7 147.6 +28 Exceptional items (45.0) (88.9) ‐49 Profit before tax 143.7 58.7 +145 Earnings per share:

  9. Slide 9: Linden Homes

    FINANCIAL REVIEW 9 Linden Homes REVENUE/OPERATING PROFIT profit up 8% Revenue: £947m (FY17: £937m) Linden Homes gross margin Operating 25% 23.8% 23.6% £184.4m (FY17: £170.3m) 22.5% 23.0% profit: 4.1% SALES MIX (UNITS) total up 4% 20% 6.3% 4.8% 6.5% Units: 3,442 (FY17: 3,296) 15% Private: 2,587 (FY17

  10. Slide 10: Construction

    FINANCIAL REVIEW 10 Construction REVENUE & OPERATING PROFIT/(LOSS)1 profit up £16.8m Construction gross margin1 Revenue: £1,687m (FY17: £1,527m) 8% Operating £15.9m (FY17: £(0.9)m) profit/(loss): 5.8% 6% (DEBT)/CASH down £163.4m 4.9% 4.9% 4.4% (Debt)/cash: £(26.0)m (FY17: £137.4m) 4% 4.6% 3.8% 4.0%

  11. Slide 11: Partnerships & Regeneration

    FINANCIAL REVIEW 11 Partnerships & Regeneration REVENUE/OPERATING PROFIT profit up 58% Partnerships & Regeneration Contracting: £351m (FY17: £248m) gross margin Mixed‐tenure: £124m (FY17: £82m) 12% 10.5% 10.7% Operating profit: £23.6m (FY17: £14.9m) 10% 9.3% UNITS DELIVERED ASP up 18% 7.7% 8% 5.7% A

  12. Slide 12: Segmental analysis

    FINANCIAL REVIEW 12 Segmental analysis 2018 Profit/(Loss) Operating £m Revenue 1 from Operations2,3 Margin2 Linden Homes 947.3 184.4 19.5% Partnerships & Regeneration 475.2 23.6 5.0% Construction 1,687.4 15.9 0.9% PPP Investments 21.7 6.8 n/a Group 0.7 (17.6) n/a TOTAL 3,132.3 213.1 6.8% 2017 Profit

  13. Slide 13: Cash management

    FINANCIAL REVIEW 13 Cash management  Rights issue generated £150m of net cash  Net cash at 30 June 2018 of £98.2m (FY17: £7.2m)  Gearing at 30 June 2018 of nil, well below our target maximum of 30%  Average net debt of £227m, excluding the net cash received from the rights issue, (FY17: £240m),

  14. Slide 14: Cash management

    FINANCIAL REVIEW 14 Cash management £m 160 131.8 140 120 153.2 98.2 100 80 60 (79.8) (6.0) 40 (15.6) 20 7.2 0 ‐20 ‐40 (75.9) ‐60 (16.7) ‐80 ‐100 ‐120 Opening Cash from Working Interest Tax Dividend Other Issue of shares Closing net cash operating capital net cash 1 July 2017 activities movements 30

  15. Slide 15: Balance sheet highlights

    FINANCIAL REVIEW 15 Balance sheet highlights £m 2018 2017 Net assets 776.5 575.5 Tangible net assets 601.6 396.4 Net cash 98.2 7.2 Gearing % ‐ ‐ Net pension surplus/(deficit) 7.0 (3.2) Full year results to 30 June 2018

  16. Slide 16: Segmental balance sheet

    FINANCIAL REVIEW 16 Segmental balance sheet Linden Partnerships & PPP Net assets £m Homes Regeneration Construction Investments Central Total 30 June 2018 Goodwill & intangible 52.5 33.7 82.8 ‐ 5.9 174.9 assets Working capital employed 623.1 64.7 36.7 26.0 (247.1) 503.4 Net (debt)/cash (463.1) (41.8

  17. Slide 17: Dividend

    FINANCIAL REVIEW 17 Dividend  Planned increase in cover to 2.0x Cover 1.7x 1.6x 1.6x 2.0x now effective from current year 100  Full year dividend based on pre‐ 86p 90 82p exceptional earnings 77p 80 68p  Prior year restated for effect of 70 rights issue 60 57p Pence 56p 49p 50 46p 40 30 20 26p 29

  18. Slide 18: Peter Truscott, Chief Executive

    Peter Truscott CHIEF EXECUTIVE

  19. Slide 19: Linden Homes

    LINDEN HOMES Strategic and operating review The Orchards, Gloucestershire

  20. Slide 20: Linden Homes strategic and operating review

    LINDEN HOMES 20 Strategic and operating review  Strategic objectives driving very strong performance, with efficiencies delivering increased volumes and improved margins  Operating margin up 1.3% pts to 19.5% (FY17: 18.2%) • Introduction of the third‐generation standard layouts • Rationalisation o

  21. Slide 21: Landbank analysis

    LINDEN HOMES 21 Strategic and operating review Landbank analysis1 Gross margin of landbank ASP in landbank % 25 £k 400 20 300 15 22.7% 23.5% 24.2% 200 10 £310k £305k £292k 5 100 0 0 FY16 FY17 FY18 FY16 FY17 FY18 Cost per plot Plot cost as % of ASP £k 80 % 30 60 20 40 £73k £71k £69k 24% 24% 10 23% 20

  22. Slide 22: Linden Homes Outlook

    LINDEN HOMES 22 Outlook  Homebuyer confidence remains encouraging despite political uncertainty  Pricing stable across housing sites below £600k  Conditions remain manageable for both labour and materials, with cost inflation around 3%  Well positioned to improve operating margin further  Land

  23. Slide 23: Construction

    CONSTRUCTION Strategic and operating review RNAS Yeovilton, Somerset

  24. Slide 24: Construction strategic and operating review

    CONSTRUCTION 24 Strategic and operating review  Strong underlying performance, with the pre‐exceptional margin increasing to 0.9% (FY17: 0.0%), and encouraging performances on new contracts  Good progress on resolution of legacy contracts  High‐quality order book of £3.3bn1 (FY17: £3.6bn), focuse

  25. Slide 25: Aberdeen Western Peripheral Route status

    CONSTRUCTION 25 Aberdeen Western Peripheral Route (AWPR) status  Significant sections open to the public  Outstanding section due to be completed in Autumn  2018 exceptional item of £45.0m, including the share of costs from the Carillion insolvency  Constructive ongoing dialogue to resolve outst

  26. Slide 26: Slide 26

  27. Slide 27: Construction order book

    CONSTRUCTION 27 Strategic and operating review Order book1 By Building By client client type type 100% Education 100% 10% 12% 12% 13% 10% 16% Other Public and Regulated 13% 19% £2.4bn Facilities Management 16% 16% 13% 9% 16% 16% 13% Commercial 75% 75% 23% Health Defence 50% 50% 72% 74% 74% 75% 72% 7

  28. Slide 28: Construction Outlook

    CONSTRUCTION 28 Outlook  Underlying performance continues to improve through focus on risk management and careful contract selection  Conditions in the supply chain have improved generally, with more capacity available  Continuing rigorous focus on core sectors and risk management in bidding  89

  29. Slide 29: Partnerships & Regeneration

    PARTNERSHIPS & REGENERATION Strategic and operating review Brunel Street Works, East London

  30. Slide 30: Partnerships & Regeneration strategic and operating review

    PARTNERSHIPS & REGENERATION 30 Strategic and operating review  Excellent performance against strategic targets driven by further geographic Key expansion and increased client investment Current North East  Growth in mixed‐tenure driving operating H1 19 margin Yorkshire  Secured major project wins

  31. Slide 31: Partnerships & Regeneration Outlook

    PARTNERSHIPS & REGENERATION 31 Outlook  Positive market conditions • Growing demand and opportunities in both contracting and mixed‐tenure  Strong visibility of future work • Robust pipeline of projects at preferred bidder stage • On track to open a new office in Yorkshire by end of H1 19  Furthe

  32. Slide 32: Galliford Try Partnerships Skills Academy

    Galliford Try Partnerships Skills Academy

  33. Slide 33: Operating Sustainably: Key achievements

    OPERATING SUSTAINABLY 33 Key achievements  Continued to attract graduates, apprentices and trainees who make up 7.6% of our workforce  Continued to develop our best‐in‐class behavioural safety programme, ‘Challenging Beliefs, Affecting Behaviour’  Launched the award‐winning ‘Be Well’ programme fo

  34. Slide 34: Outlook

    <4 GallifordTry i OUTLOOK Derby Rail Station

  35. Slide 35: Business Targets

    BUSINESS TARGETS 35 Business Metric FY18 FY21 Units 3,442 4,200 ‐ 4,500 Revenue £947m £1.25bn Operating margin 19.5% 20% Units 2,751 4,200 ‐ 4,400 Revenue £475m £700m ‐ £750m Operating margin 5.0% 6% ‐ 7% RoNA 48.2% >50% Revenue £1.7bn £1.8bn Operating margin1 0.9% >2% (Debt)/cash £(26.0)m £200m 1 F

  36. Slide 36: Group Financial Targets

    GROUP FINANCIAL TARGETS 36 Sustainable profit Improving margins Strong returns growth PBT1 growth £ Group RoNA1 % Dividend per share2 p ≥ 60% CAGR 27.5 29.2 >5% growth 86.0 189 > 25.0 148 77.0 FY17 FY18 FY21 FY17 FY18 FY21 FY17 FY18 FY21 1 FY17 and FY18 figures based on pre‐exceptional profits 2 FY1

  37. Slide 37: Summary Outlook

    SUMMARY 37 Outlook  Remain cautious around current political uncertainty, macro‐economic conditions and resulting consumer confidence but take confidence from our focused strategy, strong order book and disciplined approach  Continued commitment from the Government through Help to Buy, coupled wit

  38. Slide 38: Capital Markets Day

    CAPITAL MARKETS DAY 38 Focus on housebuilding  Thursday 11 October 2018 at Great Eastern Quays, (Partnerships & Regeneration site in East London)  To register your interest, please email gallifordtry@tulchangroup.com Great Eastern Quays Phase 1, East London Full year results to 30 June 2018

  39. Slide 39: Q&A Full year results

    Z GallifordTry Q&A Full year results

  40. Slide 40: Appendices

    Z GallifordTry APPENDICES

  41. Slide 41: Appendices contents

    APPENDICES 41 1. Group 1.1 Investment case 2.5 Private sales, analysis of incentives on reservations 1.2 Investment in Linden Homes and Partnerships & Regeneration 2.6 Strategic use of joint ventures (FY18 and FY17) 1.3 Cash flow summary 2.7 Landbank valuation 1.4 Net finance costs 2.8 Landbank anal

  42. Slide 42: Investment case

    APPENDICES 42 1.1 Investment case Breadth of capabilities provides a unique and exciting proposition for investment Significant growth opportunities Improving margins Solid order book • Structural undersupply of • Benefiting from efficiency • Landbank of 3.5 years housing in the UK through standardi

  43. Slide 43: Investment in Linden Homes and Partnerships & Regeneration

    APPENDICES 43 1.2 Investment in Linden Homes and Partnerships & Regeneration £m 2018 2017 Amounts invested in joint ventures 311.2 248.6 Land 465.8 456.6 Work in progress 259.1 266.0 Total invested in housebuilding developments and joint 1,036.1 971.2 ventures Land creditors (144.4) (144.5) Net inve

  44. Slide 44: Cash flow summary

    APPENDICES 44 1.3 Cash flow summary £m 2018 2017 Cash from pre‐exceptional operating activities 176.8 144.7 Exceptional items (45.0) (88.9) Cash from operating activities 131.8 55.8 Working capital movements (79.8) 65.3 Net cash generated from operations 52.0 121.1 Interest, tax and dividends (97.5)

  45. Slide 45: Net finance costs

    APPENDICES 45 1.4 Net finance costs £m 2018 2017 Net interest payable on borrowings (17.2) (16.2) Interest receivable from joint ventures 10.1 4.9 Unwind of discount on payables (0.4) (0.7) Other ‐ 0.1 TOTAL (7.5) (11.9) Full year results to 30 June 2018

  46. Slide 46: Completed housing units

    APPENDICES 46 1.5 Completed housing units Partnerships & Partnerships & Linden Homes Linden Homes Regeneration Regeneration TOTAL TOTAL Net of Net of Net of Units Incl. JVs partner share Incl. JVs partner share Incl. JVs partner share Private 2,587 2,191 551 409 3,138 2,600 Affordable 855 712 200 15

  47. Slide 47: Forecast land creditors' payment profile

    APPENDICES 47 1.6 Forecast land creditors’ payment profile £m 250 200 7.5 144.4 150 71.3 100 65.6 50 0 FY19 FY20 FY21 Total Full year results to 30 June 2018

  48. Slide 48: AWPR charges

    APPENDICES 48 1.7 AWPR charges Pre‐exceptional £(m) Exceptional charge charge Total 2016 ‐ 3.0 3.0 2017 75.0 ‐ 75.0 2018 45.0 ‐ 45.0 TOTAL 120.0 3.0 123.0 Full year results to 30 June 2018

  49. Slide 49: Number of shares

    APPENDICES 49 1.8 Number of shares Weighted average Year end number of number of shares Millions shares allotted (exc shares in EST3) 30 June 2017 (as originally stated) 83 82 Application of TERP factor as required by IAS 331,2 n/a 10 30 June 2017 (as restated for rights issue) 83 92 Allotted under

  50. Slide 50: Dividend

    APPENDICES 50 1.9 Dividend 2018 Pre‐exceptional earnings £154.7m Dividend cover 2.0 x Dividend payable £77.7m Less: interim dividend paid £(23.3)m Final dividend payable £54.4m Number of shares 111.0 million Final dividend per share payable 49.0p Interim dividend per share paid 28.0p Full year divid

  51. Slide 51: Financial calendar

    APPENDICES 51 1.10 Financial calendar DATE EVENT 11 October 2018 Capital Markets Day 8 November 2018 2018 Final Dividend ex‐dividend date 9 November 2018 2018 Final Dividend record date 9 November 2018 Annual General Meeting 5 December 2018 2018 Final Dividend payment date 13 February 2019 Half Year

  52. Slide 52: Linden Homes revenue analysis, regional

    APPENDICES 52 2.1 Linden Homes – revenue analysis, regional at 30 June 2018 TOTAL Units 3,442 Revenue £947.3m EAST DIVISION Units 1,657 (48%) Revenue £471.0m (50%) WEST DIVISION Units 1,785 (52%) Revenue £476.3m (50%) Full year results to 30 June 2018

  53. Slide 53: Linden Homes sales reserved, contracted and completed

    APPENDICES 53 2.2 Linden Homes – analysis of sales reserved, contracted, and completed £m Sept 18 June 18 Sept 17 Private 330 206 376 Affordable 180 160 169 TOTAL 510 366 545 For completion in FY19 412 285 437 For completion post FY19 98 81 108 TOTAL 510 366 545 Units Private 1,023 657 1,017 Afforda

  54. Slide 54: Linden Homes sales by buyer type

    APPENDICES 54 2.3 Linden Homes – sales, completions by buyer type FY18 FY17 11% 9% 2% 9% Private Affordable 25% 23% 59% Private ‐ Investor 62% Private with part exchange Based on 3,442 completions (FY17: 3,296) Full year results to 30 June 2018

  55. Slide 55: Linden Homes trading overview

    APPENDICES 55 2.4 Linden Homes – trading overview FY18 FY17 Revenue (£m) 947 937 Land cost 23.7% 23.9% Build cost 52.7% 53.1% Gross margin 23.6% 23.0% Overheads 4.1% 4.8% Operating margin 19.5% 18.2% Full year results to 30 June 2018

  56. Slide 56: Linden Homes private sales incentives

    APPENDICES 56 2.5 Linden Homes – private sales, analysis of incentives on reservations Proportion of units FY18 FY17 No incentives 40% 33% Incentives Part exchange 15% 13% Assisted move 2% 2% Help to Buy 40% 47% Investor sales 3% 5% TOTAL 100% 100% Full year results to 30 June 2018

  57. Slide 57: Linden Homes strategic use of JVs (FY18)

    APPENDICES 57 2.6 Linden Homes – strategic use of Joint Ventures (JVs) (FY18) Revenue Completions (units) (Linden Homes only) ASP3 Net of Gross JV partner £m £000 Direct ‐ private 1,794 1,794 646 360 ‐ affordable 569 569 72 127 Other income, including land sales 45 ‐ JOs1 ‐ private 74 37 6 168 2,437

  58. Slide 58: Linden Homes strategic use of JVs (FY17)

    APPENDICES 58 2.6 Linden Homes – strategic use of Joint Ventures (JVs) (FY17) Revenue Completions (units) (Linden Homes only) ASP3 Net of Gross JV partner £m £000 Direct ‐ private 1,907 1,907 652 342 ‐ affordable 548 548 61 111 Other income, including land sales 68 ‐ JOs1 ‐ private 181 91 23 257 2,6

  59. Slide 59: Linden Homes landbank valuation

    APPENDICES 59 2.7 Linden Homes ‐ landbank valuation1 June 2018 June 2017 June 2016 East West East West East West Cost per plot £000 Division Division Division Division Division Division Opening landbank 78 66 79 69 76 65 Closing landbank 75 64 78 66 79 69 Weighted ASP 289 295 309 302 301 317 in land

  60. Slide 60: Landbank analysis

    APPENDICES 60 2.8 Landbank analysis1 By business By sector Product mix2 Product mix2 10% 24% 22% 39% 61% 76% 78% 90% Linden Homes 11,830 Private 12,090 Houses 8,480 Houses 1,620 Partnerships 3,760 Affordable 3,500 Apartments 940 Apartments 1,050 15,590 15,590 9,420 2,670 1 Current at 10 September 20

  61. Slide 61: Linden Homes movement in landbank

    APPENDICES 61 2.9 Linden Homes ‐ movement in landbank Total Landbank Owned Controlled At 30 June 2017 10,650 8,791 1,859 Legal completions (2,903) (2,903) ‐ Land acquired 4,013 3,244 769 Transfers to Partnerships & Regeneration (109) ‐ (109) Transfers ‐ 826 (826) Aborted (290) ‐ (290) Planning chang

  62. Slide 62: Linden Homes forecast outlets and revenue

    APPENDICES 62 2.10 Linden Homes ‐ forecast outlets and revenue Number of sales outlets1 Units by period % 120 100% 17% 40% 90 75% Not yet acquired 60 50% 100% 100% Owned or controlled 96 102 83% 85 85 77 60% 30 25% 0 0% FY17 FY18 FY19 FY20 FY21 FY18 FY19 FY20 FY21 1 Average for the year Full year re

  63. Slide 63: Construction segmental analysis

    APPENDICES 63 3.1 Construction – segmental analysis June 2018 £m Profit/(loss) Revenue1,2 from Operations2 Margin2 Building 1,038.0 11.6 1.1 Infrastructure 649.4 4.3 0.7 TOTAL 1,687.4 15.9 0.9 June 2017 Profit/(loss) £m Revenue1,2 from Operations2 Margin2 Building 1,014.1 (12.0) (1.2)% Infrastructur

  64. Slide 64: Construction order book

    APPENDICES 64 3.2 Construction ‐ order book £2.4bn £0.9bn Building £m Infrastructure £m Education 760 Water 232 Other Public Sector 185 Roads 430 Facilities Management 494 Rail & Aviation 201 Commercial 330 Other Civil Engineering 85 Health 424 Defence 178 1 Current at 10 September 2018 Full year re

  65. Slide 65: Construction contract awards

    APPENDICES 65 3.3 Construction ‐ contract awards Building  Won contracts and positions on frameworks worth over £400m including being appointed to: • All six lots of the business bid on the new Education and Skills Funding Agency’s school building framework, worth up to £3.1bn • £750m North Eastern

  66. Slide 66: Partnerships & Regeneration units delivered

    APPENDICES 66 4.1 Partnerships & Regeneration – units delivered 3000 2,751 2500 2,194 2,108 2,026 2000 1,620 2,000 1500 1,600 1,700 1,500 1000 1,400 500 751 526 594 408 220 0 FY14 FY15 FY16 FY17 FY18 Private mixed‐tenure units Contracting ‐ equivalent units Full year results to 30 June 2018

  67. Slide 67: Partnerships & Regeneration background

    APPENDICES 67 4.2 Partnerships & Regeneration – background  We are a regeneration business  We identify land, invest, develop, contract, build and sell properties, creating homes for people to live in, and places where communities thrive  We do this in partnership with our clients: • Housing Asso

  68. Slide 68: Partnerships & Regeneration market opportunity

    APPENDICES 68 4.3 Partnerships & Regeneration – market opportunity  Supply deficit of circa 130k homes per annum  High house prices exclude entry into the marketplace  Demand for subsidised social housing across the UK Great Eastern Quays, East London  Government’s ambition is to build 300,000 h

  69. Slide 69: Partnerships & Regeneration business model

    APPENDICES 69 4.4 Partnerships & Regeneration – business model Strategy to 2021 A leading brand  £700m ‐ £750m turnover  6% ‐ 7% operating margin Contracting Commissioning Developing & JVs  4,200 ‐ 4,400 homes per Margins: 2‐4% Margins: 4‐6% Margins: 12‐18% annum  10 operating businesses Afforda

  70. Slide 70: Disclaimer

    DISCLAIMER 70 This document contains statements that are, or may be deemed to representation, assurance or guarantee that the occurrence of the be, “forward-looking statements” which are prospective in nature. events expressed or implied in any forward-looking statements in this These forward-lookin

  71. Slide 71: Gallifordiry

    ‘a Gallifordiry

Galliford Try Holdings — FY2018 Earnings Presentation on 6ix