Bellway P.l.c. · LSE:BWY
Bellway P.l.c — H1 2018 Earnings Presentation
32 slides from Bellway P.l.c's earnings presentation, Mar 20, 2018
Slide 1: Results Presentation Half year ended 31 January 2018
Results Presentation Half year ended 31 January 2018
Slide 2: Agenda
Agenda 1. Highlights 2. Strategic update 3. Finance review 4. Operating review 5. Current trading and outlook 6. Questions and answers 7. Appendices Results presentation 20 March 2018
Slide 3: Highlights
Highlights John Watson Executive Chairman Results presentation 20 March 2018
Slide 4: Further disciplined volume growth
Further disciplined volume growth Volume Operational highlights Return on capital + 6.3% + 20 bps § Expect to maintain 5* homebuilder status § Commitment to grow in a EPS up 16.9% responsible and sustainable manner. Interim dividend Net asset value § Order book has risen by 7.7% + 28.0% + 17.4% to £
Slide 5: Strategic update
Strategic update John Watson Executive Chairman Results presentation 20 March 2018
Slide 6: Strategic update
Strategic update § Responsible and disciplined volume growth will deliver long term value for shareholders. § Cross party support to increase supply of new homes. § Good availability of land at attractive margins. § Sustainable mortgage environment aided by Help to Buy. § Cost of servicing a mortgag
Slide 7: Finance review
Finance review Keith Adey Finance Director Results presentation 20 March 2018
Slide 8: Operating result
Operating result For the half year ended 31 January 2018 2017 Mvt Homes sold 4,741 4,462 6.3% Average selling price £275,945 £256,140 7.7% Housing revenue £1,308.3m £1,142.9m 14.5% Other revenue £16.1m £5.6m 187.5% Total revenue £1,324.4m £1,148.5m 15.3% Gross profit £343.1m 25.9% £296.7m 25.8% 10bp
Slide 9: Further revenue growth
Further revenue growth For the half year ended 31 January Average selling price (£000) 2018 2017 § Growth in ASP influenced by:- Private Social Total Private Social Total North 255.9 94.3 223.0 223.7 101.0 203.2 – Investment in higher value South 373.0 151.6 327.2 365.2 132.7 308.4 locations. Group
Slide 10: Operating performance
Operating performance 2018 2017 2017 2017 Operating profit bridge H1 H1 H2 FY Gross profit £343.1m £296.7m £364.9m £661.6m 25.9% 25.8% 25.9% 25.9% Administrative (£48.9m) (£44.1m) (£45.9m) (£90.0m) expenses (3.7%) (3.8%) (3.3%) (3.6%) Operating £294.2m £252.6m £319.0m £571.6m profit 22.2% 22.0% 22.6
Slide 11: Earnings growth
Earnings growth For the half year ended 31 January 2018 2017 Mvt Operating profit £294.2m £252.6m 16.5% Net finance expense (£6.3m) (£5.0m) 26.0% Share of JV result £0.8m - 100.0% Profit before tax £288.7m £247.6m 16.6% Taxation (£53.7m) (£46.9m) 14.5% Effective tax rate 18.6% 18.9% (30 bps) Profit
Slide 12: Balance sheet
Balance sheet As at 31 January 2018 2017 Mvt Assets Fixed assets and investment in joint ventures £51.1m £48.6m £2.5m Inventory £3,184.7m £2,796.7m £388.0m Land £1,985.4m £1,761.7m £223.7m WIP £1,199.3m £1,035.0m £164.3m Debtors £100.9m £113.7m (£12.8m) £3,336.7m £2,959.0m £377.7m Liabilities Pensio
Slide 13: Land bank
^ Land bank As at 31 January 2018 2017 Average Average Plots Cost Plots Cost plot cost plot cost Land with DPP Brought forward 1 August 25,655 £1,546.1m £60.3k 24,879 £1,373.1m £55.2k Net purchases 5,380 £338.8m £63.0k 5,914 £401.9m £68.0k Sold (4,741) (£254.6m) £53.7k (4,462) (£244.0m) £54.7k Carri
Slide 14: Work in progress
Work in progress As at 31 Januaryy 2018 2017 Mvt Site construction £1,081.0m £941.0m £140.0m Showhomes £85.4m £71.8m £13.6m Part exchange stock £32.9m £22.2m £10.7m Total WIP £1,199.3m £1,035.0m £164.3m § Continuous monitoring of WIP to Units in production ensure capital invested is appropriate to t
Slide 15: Capital employed
Capital employed As at 31 January 2018 2017 Land creditor payment profile NAV £2,323.9m £1,977.3m Net bank debt £131.4m £175.1m Capital employed £2,455.3m £2,152.4m Land creditors £367.3m £301.7m £289.4m Adjusted capital £2,822.6m £2,454.1m employed Results presentation 20 March 2018
Slide 16: A focus on return on capital employed
A focus on return on capital employed As at 31 January § High RoCE achieved notwithstanding investment in 2018 2017 land and WIP to achieve future RoCE 25.3% 25.1% growth. § Every site is acquired with RoCE as a key metric. 2018 2017 § Continually review larger sites Adjusted RoCE 21.9% 21.8% and th
Slide 17: Strong cash generation
Strong cash generation For the half year ended 31 January £18.9m cash generated from operations Gearing of 5.7% Average net bank debt of £151m Gearing of 21.5% inclusive of land creditors £228.9m generated before increasing investment in land and WIP Results presentation 20 March 2018
Slide 18: Investing for growth
Investing for growth Cash generation pre incremental Investing for growth land and WIP investment Total £3.15bn * Average £263m * Cash generated before net reinvestment in land and Investment in land and WIP (net of exceptionals) (LHS) WIP Revenue as a multiple of July 2007 (RHS) * Average cash gene
Slide 19: Dividend
Dividend For the half year ended 31 January 2018 2017 Mvt § Still substantial potential for growth. Interim dividend 48.0p 37.5p 28.0% § Expect to maintain sustainable level of cover Dividend per share (p) of three times earnings for full year. § Increase in interim dividend is to help rebalance the
Slide 20: Value creation
Value creation As at 31 January 86.2% return over 3 years + 86.2% 2018 2017 Mvt NAV 1,892p 1,612p 17.4% 2018 2017 Mvt RoE 20.8% 20.9% (10 bps) NAV at Jan 15 NAV growth Cumulative dividend paid The strategy for growth is still delivering substantial value for shareholders Results presentation 20 Marc
Slide 21: Operating review
Operating review Jason Honeyman Chief Operating Officer Results presentation 20 March 2018
Slide 22: Trading review
Trading review Weekly reservation rate* § Cancellation rate <11%. 2018 2017 Mvt § New site openings improve sales North 86 78 10.8% rate. § Sales in north influenced by South 91 88 4.2% strong demand, investment in land and contribution from newer Total 178 166 7.2% divisions. § Positive pricing env
Slide 23: London
London London land bank Plots Under £250 psf 117 Under £500 psf 575 Under £800 psf 1,051 Under £1,000 psf 317 Over £1,000 psf 149 Total 2,209 § Only 466 homes priced above £800 psf including 320 homes at Nine Elms. § Nine Elms is performing well and is over 80% sold at prices in line with or § Londo
Slide 24: Strong operational focus
Strong operational focus § Three priorities are: Customer care – Customer care § Expect to maintain status as – Health and safety a 5* homebuilder. – Good planning and site management § Customer Experience Committee driving best practice. § Focus on meeting customers’ expectations. Results presentat
Slide 25: Strong operational focus
Strong operational focus Health and safety Good planning and site management § Frequent training and site § Working with HBF and inspections. Home Building Skills Partnership to improve skills. § High standards maintained. § Good forward planning § Independent scores are disciplines. better than ind
Slide 26: Construction costs and supply chain
Construction costs and supply chain Materials § Bricks, roof tiles and insulation § Construction costs remain materials are in short supply with longer lead in times. under pressure but are under control. § Imported items such as timber have been adversely affected by the weaker exchange rate. § Ove
Slide 27: Land buying
Land buying Land spend and contracted land (£m) Battle Hospital, Portman Road, Reading Land spend Contracted land Contracted sites 2018 2017 § 217 units at ASP of c.£270k. § Bought unconditionally for £10 million. Total 56 Total 50 § Opportunity to generate higher (6,726 plots) (6,287 plots) margins
Slide 28: Strategic land and planning
Strategic land and planning Strategic land Planning § Investment in strategic land § Welcome government initiatives function is showing benefits. to improve planning. § Acquired or obtained DPP on § Growth strategy aligned to 1,053 plots previously reported government targets. within strategic land
Slide 29: Current trading and outlook
Current trading and outlook Jason Honeyman Chief Operating Officer Results presentation 20 March 2018
Slide 30: Current trading and order book
Current trading and order book Current order book § Reservations are slightly ahead at Units +0.4% 248 per week since 1 February. § Equivalent period in the prior year was 18% up and included 52 reservations at Nine Elms. § Indicators suggest a positive spring Value (£m) selling season reinforced by
Slide 31: Outlook
Outlook § Land in place with DPP to meet 90% of FY19’s forecast. § Significant investment in WIP. § Beyond Scotland East, plans afoot to open one to two more divisions in the foreseeable future, subject to market conditions. § This could take capacity to 13,000 homes per annum, 30% more than current
Slide 32: Questions and answers
Questions and answers Trinity Point, Pendlebury, Manchester Results presentation 20 March 2018