Vistry Group Plc · LSE:VTY
Vistry — Bovis Homes Group — FY2015 Earnings Presentation
43 slides from Vistry's earnings presentation, Feb 22, 2016
Slide 1: Final results 2015
Bovis Homes Group PLC Final results 2015 Issued 22 February 2016 www.bovishomesgroup.co.uk
Slide 2: Agenda
Agenda • Highlights • Financials • Strategy • Summary Haversham Gardens, Newport
Slide 3: Profits and returns growing strongly
Profits and returns growing strongly Profit before tax (£m) Strong financial performance • Record legal completions of 3,934 homes 2014 133.5 +20% (2014: 3,635) 2015 160.1 • 17% increase in revenue to £947m (2014: £809m), exceeding 1 times capital turn Basic earnings per share (p) • Operating profit
Slide 4: Strong investment continues to drive growth
Strong investment continues to drive growth Year ended 31 December 2014 2015 Change Land investment Consented plots added 7,300 6,058 Sites added 42 35 Year end owned sites 128 142 +11% Sales outlets Average active sales outlets in year 97 102 +6% Active sales outlets at year end 103 101 -2% Reserva
Slide 5: Agenda
Agenda • Highlights • Financials • Strategy • Summary The Fairways, Leamington Spa
Slide 6: Growth in revenue and profit
Growth in revenue and profit Year ended 31 December (£m) 2014 2015 Change Revenue 809.4 946.5 +17% Gross profit 197.2 232.3 +18% Administrative expenses (59.6) (68.8) +15% Operating profit 137.6 163.5 +19% Share of profit of Joint Ventures 0.3 1.8 Profit before interest and tax 137.9 165.3 +20% Fina
Slide 7: Analysis of profit growth
Analysis of profit growth Year ended 31 December (£m) 2014 2015 Land Land Housing sales Total Housing sales Total Revenue 787.8 21.6 809.4 916.5 30.0 946.5 Gross profit 193.3 3.9 197.2 223.5 8.8 232.3 Administrative expenses (59.6) (68.8) Operating profit 137.6 163.5 Gross margin 24.5% 18.1% 24.4% 2
Slide 8: Housing revenue analysis
Housing revenue analysis Average sales price (£k) 2014 2015 Change Private 250.8 272.1 +8% PRS 166.9 131.8 Social 108.2 114.9 +6% Total 216.6 231.6 +7% Volume Private 2,645 2,901 +10% PRS 286 185 Social 704 848 +20% Total 3,635 3,934 +8% Housing revenue (£m) Private 663.4 789.4 +19% PRS 44.0 23.2 So
Slide 9: Impacts on housing gross margin
Impacts on housing gross margin 2011 2012 2013 2014 2015 Revenue 334.8 407.7 553.0 787.8 916.5 Revenue 100.0% 100.0% 100.0% 100.0% 100.0% Land 23.9% 23.8% 24.7% 24.3% 22.5% Build and other costs 55.3% 53.6% 51.8% 51.2% 53.1% Gross margin 20.8% 22.6% 23.5% 24.5% 24.4% • Land investment delivering sta
Slide 10: Market effects on sales prices and construction costs
Market effects on sales prices and construction costs 2014 2015 Change Sales price per home 216.6 231.6 +7% Sales price per sq ft 216.8 224.9 +4% Sales price (private homes excl. PRS) 250.8 272.1 +8% Sales price per sq ft (private homes excl. PRS) 234.0 245.6 +5% Construction cost per home 110.5 122
Slide 11: Cash generation enables continued investment
Cash generation enables continued investment Year ended 31 December (£m) 2014 2015 Housing receipts 797.3 918.1 Construction expenditure (401.2) (520.1) Overheads (60.0) (69.0) Operating cash flow 336.1 329.0 Cash expenditure on land (265.8) (230.6) Land sales receipts 19.6 24.8 Dividend payment (28
Slide 12: Increase in net assets
Increase in net assets Year ended 31 December (£m) 2014 2015 Land 874.7 1,013.7 Land creditors (198.2) (322.9) Land net of creditors 676.5 690.8 Work in progress 225.5 275.3 Other assets 151.9 194.6 Other liabilities (180.0) (232.9) Net cash 5.2 30.0 Net assets 879.1 957.8 Net assets per share 655p
Slide 13: Consented land investment in 2015
Consented land investment in 2015 Penwortham • 6,058 consented plots added to the land bank during Nantwich Haslington Malpas 2015 across 35 sites Eccleshall - Current day GDV of c£1.7bn Radford Wymondham - Location of sites aligned with Semele Redditch Warwick Hillmorton Waterbeach Soham Salford Pr
Slide 14: Land bank provides growing gross profit potential
Land bank provides growing gross profit potential Consented Revenue ASP Gross Gross Plots profit margin £m £000 £m % 2013 additions 3,737 841 225.0 216 25.7% 31 December 2013 14,638 3,007 205.4 727 24.2% 2014 additions 7,300 1,717 235.2 447 26.0% 31 December 2014 18,062 4,040 223.7 1,017 25.2% 2015
Slide 15: Land bank aligned with strategy
Land bank aligned with strategy As at 31 Dec 2012 31 Dec 2013 31 Dec 2014 31 Dec 2015 % land Plots % land Plots % land Plots % land Plots South 74% 10,171 71% 10,401 75% 13,565 76% 15,041 Midlands 17% 2,335 19% 2,705 17% 3,024 15% 2,962 North 19% 1,270 10% 1,532 8% 1,473 9% 1,811 Group 100% 13,776 1
Slide 16: New land investment driving future margin growth
New land investment driving future margin growth 100 Land bank plots 31 Dec 31 Dec 31 Dec 31 Dec 2012 2013 2014 2015 Post downturn at cost 7,368 54% 9,197 63% 13,700 76% 16,814 85% 80 Pre downturn at cost 4,587 33% 3,943 27% 3,334 18% 2,559 13% Written down 1,821 13% 1,498 10% 1,028 6% 441 2% Land b
Slide 17: Post downturn land now driving returns
Post downturn land now driving returns 100 Written down 10% 8% 6% 11% 17% Pre downturn at cost 26% 12% 17% 17% Post downturn at cost 80 27% Legal completions (%) 38% 60 • Launch of newly acquired sites will deliver increasing percentage 58% 82% of higher margin completions 40 75% 73% • Proportion of
Slide 18: All metrics moving positively
All metrics moving positively Revenue (£m) Operating profit margin (%) Profit before tax (£m) £946.5m 17.3% £160.1m 947.0 17.300 160.100 160.1 17.3 946.5 17.0 14.9 757.6 809.4 133.5 12.975 120.075 13.4 568.2 556.0 10.0 8.650 80.050 78.8 378.8 425.5 364.8 53.2 4.325 40.025 189.4 32.1 0.0 0.000 0.000
Slide 19: Agenda
Agenda • Highlights • Financials • Strategy • Summary The Homelands, Cheltenham
Slide 20: The growth strategy
The growth strategy • Long term land investment including increased delivery from strategic land providing growth in volume at strong sales prices and high profit margins • Strong growth in revenue with improved capital efficiency which drives higher capital turn and increases ROCE • Growth focus du
Slide 21: Managing the business through the cycle
Managing the business through the cycle • Household formation continues to run Annual household growth and Net stock additions (England) ahead of new housing numbers 300,000 • Changes to UK planning system (NPPF) 240,000 have increased residential land supply 180,000 120,000 • Government support con
Slide 22: Strategic and operational priorities
Strategic and operational priorities • Focus on Portfolio standard housing range of great quality traditional family homes • Conversion of high return strategic land assets • Implementation of structure changes to control increased volumes and enhance operational effectiveness • Delivery of more eve
Slide 23: Land investment delivering growth
Land investment delivering growth • With positive market conditions, c40 site additions per annum will support volume plans • Highly attractive strategic land bank will contribute strongly over coming years - aiming for c50% of new land acquired through strategic conversion • Land trading will facil
Slide 24: Strong progress with land bank
Strong progress with land bank • Larger land bank with increased site numbers 2010 2015 delivering strong increase in volume Land bank • Significant increase in land bank average sales South 69% 76% price to £247,000 with gross margin at 25.5% Midlands 21% 15% • Geographical spread of land bank reac
Slide 25: Improving returns on new land investments
Improving returns on new land investments 2009 2010 2011 2012 2013 2014 2015 Land plots added 353 3,690 2,552 2,651 3,737 7,300 6,058 Expected gross margin % 24.1% 25.5% 25.3% 26.0% 25.7% 26.0% 26.4% Expected ROCE % 21% 19% 23% 25% 23% 32% 28% Expected capital turn 1.2 1.1 1.2 1.3 1.3 1.7 1.5 • Cons
Slide 26: Strategy delivery in land bank
Strategy delivery in land bank Portfolio housing range (private exc Sherford) Greenfield land Traditional housing 17% 24% 29% 6% 57% 71% 83% 13% Portfolio Greenfield Two storey Apartments Non portfolio Brownfield Three storey Social • Having launched the new Portfolio range in 2011, 71% of private p
Slide 27: The strategic land bank
The strategic land bank Potential plots as at 31 Dec 2013 31 Dec 2014 31 Dec 2015 % land Plots % land Plots % land Plots South 63% 12,568 65% 13,946 68% 15,579 Midlands 32% 6,503 30% 6,450 29% 6,716 North 5% 1,037 5% 954 3% 788 Total 20,108 21,350 23,083 • 23,083 strategic plots controlled on 80 str
Slide 28: Increasing strategic land opportunity
Increasing strategic land opportunity 2009 2010 2011 2012 2013 2014 2015 Consented plots added 353 3,690 2,552 2,651 3,737 7,300 6,058 Strategic conversion 175 822 991 1,193 1,380 2,975 2,217 Strategic conversion as % of plots added 50% 22% 39% 45% 37% 41% 37% • Changes in planning process have incr
Slide 29: Structured for operational effectiveness and growth
Structured for operational effectiveness and growth • 8 operating regions West division from 1 January 2016 East division • Greater management focus in regional geographies Northern • Structure provides platform to deliver between 5,000 and West Midlands 6,000 homes per annum in East Eastern line wi
Slide 30: Operational effectiveness
Operational effectiveness • Investment in people - Leadership development for senior teams in progress - Build academy ongoing - Apprenticeship programme expanded - Improved communication and flexible working - Evolved management structure in place • Safely Building Quality on Time - Uncompromising
Slide 31: Enhanced capital management
Enhanced capital management • Focus on turning capital more quickly • Deferring capital investment in land through agreements with vendors • Improving land bank with land sales in 2015 driving ROCE on key sites in Bristol and Wokingham • Seeking development partners on key sites • Continuous focus o
Slide 32: Delivering increased returns for shareholders
Delivering increased returns for shareholders 2014 2015 Change Dividend per share 35.0p 40.0p +14% Earnings per share 78.6p 95.4p +21% Dividend cover 2.25 2.39 • Progressive dividends as earnings grow and business returns improve - base dividend policy being a pay out ratio of one third of earnings
Slide 33: Agenda
Agenda • Highlights • Financials • Strategy • Summary Abbotswood, Romsey
Slide 34: 2015 summary
2015 summary • Strategy remains on track towards steady state • A year of strong growth with record volume and profit • Increase in operating profit margin • Material increase in capital turn delivered • Robust progress with ROCE, achieving 2015 target • Strong year of land investment at the right p
Slide 35: 2016 outlook
2016 outlook • Volume growth expected in 2016 - at week 7 we are selling from 102 outlets (2015: 99) - sales rate of 0.60 in the first 7 weeks (2015: 0.68) - H1: H2 weighting expected similar to 2015 • Increase in average sales price, due to further mix improvements and continuation of the market pr
Slide 36: Final results 2015 Q&A
Bovis Homes Group PLC Final results 2015 Q&A www.bovishomesgroup.co.uk slide 36
Slide 37: 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 38: Appendices
Bovis Homes Group PLC Final results 2015 Appendices www.bovishomesgroup.co.uk slide 38
Slide 39: Imputed interest on land creditors drives the financial charge
Imputed interest on land creditors drives the financial charge Year ended 31 December (£m) 2014 2015 Bank interest and commitment fees (3.6) (2.8) Issue cost amortisation (0.9) (0.5) Imputed interest on land (3.0) (4.9) Pension financing 0.1 0.1 Imputed interest on available for sale assets 3.0 2.9
Slide 40: Land creditor payments
Land creditor payments 330 300 270 240 £164m 210 180 £m £323m 150 120 90 £159m 60 30 0 2016 2017+ slide 40
Slide 41: Other assets
Other assets As at 31 December (£m) 2014 2015 Fixed assets 13.6 14.0 Investments 8.1 9.0 Part exchange properties 25.3 29.5 Debtors 60.5 89.6 Retirement benefit asset - 7.1 Land sales debtors 5.0 10.1 Available for sale assets 39.4 35.3 Other assets 151.9 194.6 • Higher debtors due to: - amounts due
Slide 42: Work in progress
Work in progress As at 31 December (£m) 2014 2015 Housing and site overheads 111.7 129.4 Roads and sewers 113.8 145.9 Work in progress 225.5 275.3 slide 42
Slide 43: Other liabilities
Other liabilities As at 31 December (£m) 2014 2015 Creditors 162.2 212.4 Corporation tax liability 14.0 16.9 Retirement benefit obligations 0.7 - Provisions 3.1 3.6 Other liabilities 180.0 232.9 slide 43