Vistry Group Plc · LSE:VTY
Vistry — Bovis Homes Group — H1 2019 Earnings Presentation
39 slides from Vistry's earnings presentation, Sep 10, 2019
Slide 1: Half year results 2019
Bovis Homes Group PLC Half year results 2019 10 September 2019 Furrowfields, Bishops Itchington
Slide 2: Agenda
Agenda ●● Highlights ●● Financial review ●● CEO review ǣǣ Operational update ǣǣ Strategy update and medium term targets ●● Outlook ●● Q&A
Slide 3: Excellent first half performance
Excellent first half performance ●● Record profits with profit before tax increasing by 20% to £72.4m ●● Step up in profitability inc. 140 basis points improvement in operating margin to 16% ●● 15% increase in private sales rate to 0.6 per site per week, in an uncertain market ●● 5-star HBF customer
Slide 4: Strong position for the full year
Strong position for the full year ●● Ongoing high quality land acquisition, with 2,007 plots acquired in YTD ●● Excellent visibility on land supply with all plots for 2020 secured ●● Continued investment in people, processes and systems delivering operational improvements ●● Achieved over £250m net
Slide 5: Financial review
Financial review Earl Sibley Group Finance Director Stanton Cross, Wellingborough
Slide 6: Income statement
Income statement Six months ended 30 June (£m) 2018 2019 Change Revenue 432.2 472.3 9% Gross profit 90.4 101.8 13% Administrative expenses (27.3) (26.0) (5)% Operating profit 63.1 75.8 20% Finance cost (2.9) (2.8) (3)% Share of JV result - (0.6) - Profit before tax 60.2 72.4 20% Taxation charge (11.
Slide 7: Development revenue analysis
Development revenue analysis Six months ended 30 June 2018 2019 Change Volume ●● JVs in H1 are gross completions Private 1,030 1,028 0% at Stanton Cross Affordable 550 616 12% ●● Proportion of affordable 37%, JVs - 3 - following natural construction Total inc. JVs 1,580 1,647 4% routes - expect c. 3
Slide 8: Analysis of profit
Analysis of profit 2018 2019 Six months ended 30 June Development Land Total Development Land Total £m unless otherwise stated sales sales Revenue 425.9 6.3 432.2 465.8 6.5 472.3 Gross profit 90.4 - 90.4 102.0 (0.2) 101.8 Administrative expenses (27.3) (26.0) Operating profit 63.1 75.8 Gross margin
Slide 9: Sales prices and construction costs
Sales prices and construction costs Six months ended 30 June 2018 2019 Change Sales price per home (£000’s) 262.7 269.2 2% Sales price per sq ft (£’s) 253.5 264.0 4% Private sales price (£000’s) 334.7 342.8 2% Private sales price per sq ft (£’s) 287.5 297.9 4% Construction cost per home (£000’s)(1)
Slide 10: Cash generation
Cash generation Six months ended 30 June (£m) 2018 2019 ●● Cash expenditure on land Development receipts 395.7 440.2 relates to the settlement of Construction expenditure (320.1) (342.1) creditors in the 6 months of £86.2m (2018: £77.2m) Overheads (34.1) (33.4) and new land investment of Operating c
Slide 11: Land activity in the year to date
Land activity in the year to date ●● Continue to see good opportunities in the land market ●● 2,007 plots acquired across 12 developments -- Only 6 units with an ASP >£600k Wombourne ●● High quality conversion from valuable strategic land Kidderminster Thurston Warwick bank totalling 372 plots in th
Slide 12: Land bank
Land bank 30 June 2018 2019 ●● Owned land bank reduced to Owned land bank plots 16,107 13,161 3.7 years as at 30 June and - 3,054 expect to maintain 3.5 to 4.0 Joint venture plots years owned land bank Total consented land bank 16,107 16,215 going forward Land bank years(1) 4.0 yrs 3.7 yrs ●● JV plo
Slide 13: Strong land bank fundamentals
Strong land bank fundamentals ●● 96% of private land bank plots with ASP <£600K, 39% with ASP <£300k ●● Focus on acquisition of smaller product, increasing our proportion of 2/3 bedroom homes and reducing overall Group ASP ●● Balanced land portfolio across all seven regions 8% 4% 24% 24% 39% 4% 72%
Slide 14: Net assets
Net assets (£m) 30 June 2018 31 Dec 2018 30 June 2019 ●● Land creditors reduced as % and includes significant balances Land 831.9 858.7 769.8 for long term schemes, North Land creditors (195.6) (293.3) (249.4) Whiteley and Exeter Land net of creditors 636.3 565.4 520.4 ●● Work in progress includes W
Slide 15: Operational update
Operational update Greg Fitzgerald Chief Executive Phoenix range The Aspen, Wellington
Slide 16: Excellent levels of customer satisfaction
Excellent levels of customer satisfaction Existing logo ● Customer satisfaction remains our key priority ● Group now trending at a 5-star HBF customer satisfaction rating - above 90% score Key - majority of responses submitted for new HBF year from 1 October 2018 - consistent high quality across all
Slide 17: Building high quality homes
Building high quality homes ●● Consistently high quality build ●● All construction for 2019 well progressed ●● Improvement across all metrics - Whitehouse Park, -- NHBC reportable items for 2019 down 33% on 2018 Milton Keynes average and significantly lower than industry benchmark - The Landings, Br
Slide 18: First Phoenix completions
First Phoenix completions ●● Phoenix Collection launched in April 2018 -- 28 new house types for private and affordable homes ●● First completions in June 2019 -- Excellent customer feedback ●● 880 Phoenix units currently under construction Phoenix range - The Maple, -- c. 15% of 2019 private comple
Slide 19: Ongoing investment in our business
Ongoing investment in our business Existing logo Brand Customer - Refreshed brand identity Keys - Customer relationship management system Revised logo (positive) Revised logo (negative) Building a better Bovis Homes Enterprise system People Sales and - Employee management - Further functionality for
Slide 20: Value from strategic land
Value from strategic land l Strategic land remains very well positioned As at 30 June 2019 Total sites Total plots -- Major progress on a number of significant 0 – 150 plots 17 1,369 land projects during 2019 150 – 300 plots 16 3,790 -- Deliverability of high quality developments in 300 – 500 plots
Slide 21: Progress with our Partnerships division
Progress with our Partnerships division ●● Launch of new Partnerships Housing Division in Development Partner Total units Feb 2019 Stanton Cross, Riverside 1,558 -- Working alongside our operating regions Wellingborough -- Significantly strengthened relationships with HAs Whiteley Meadows, Vivid 160
Slide 22: People remain a key priority
People remain a key priority ●● People want to work for Bovis Homes -- Consistent high level employee engagement scores ahead of benchmark -- Further reduction in Group headcount turn ●● Investment in our full range of training and development programmes -- 1,870 training days delivered YTD ●● Leade
Slide 23: High quality being recognised across the business
High quality being recognised across the business ●● Awarded Gold for the Armed Forces Covenant Employer Recognition Scheme -- Only housebuilder at this level ●● NHBC Pride in the Job Awards -- Six winners ●● NHBC Health & Safety Award ●● Shortlisted for Building Awards 2019 -- Housebuilder of the Y
Slide 24: Strategy update and medium term targets
1 2 Strategy update and medium term targets 4 Greg Fitzgerald Chief Executive 3
Slide 25: Strategy update - controlled volume growth
Strategy update - controlled volume growth ●● Land acquisition - increasing proportion of smaller product with lower ASP -- Stronger market demand -- Drive higher sales rates ●● Maintain 3.5 to 4.0 years land supply for housebuild and appropriate land for development of partnerships business ●● Cont
Slide 26: Strategy update - focus on margin progression
Strategy update - focus on margin progression ●● Continued focus on margin progression ●● Programme of targeting cost savings across all areas of build -- Working with supply chain to counter build cost inflation -- Group wide specification changes where appropriate ●● Specific margin initiatives --
Slide 27: Progress with medium term targets
Progress with medium term targets Target Progress to date Timing / outlook 4-star HBF customer satisfaction rating - Trending at 5-star for 2019 YTD - 4-star HBF customer satisfaction score for 2018 Achieved - Maintain minimum 4-star rating 3 - 3,759 completions in FY 18 Targeted for 2020 - 4% incre
Slide 28: Enhanced cash returns to shareholders
Enhanced cash returns to shareholders Ordinary dividend -- Strategy of maximising sustainable dividends to shareholders -- HY19: interim ordinary dividend up 8% to 20.5p per share (H1 18: 19p per share) Special cash returns -- Further £60m of capital to be returned to shareholders in second half --
Slide 29: Market environment
Market environment ●● Supportive market fundamentals ●● Sales rates proving robust -- Low interest rate environment -- Forward order books remain strong -- Competitive mortgage market with -- Cancellation rates at historical lows appetite to lend -- Increase in use of part exchange -- Government sup
Slide 30: Well positioned with strong outlook for full year
Well positioned with strong outlook for full year ●● Group turnaround nearly complete -- Trending at 5 HBF star customer satisfaction rating -- High quality build -- First class people -- Excellent land supply -- Investment in systems and processes -- Launch of partnerships business ●● Strong sales
Slide 31: Q&A
Q&A The Meadows, Staplehurst
Slide 32: 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 stat
Slide 33: Appendices
Appendices
Slide 34: Key metrics
Key metrics Revenue (£m) Operating profit margin (%) Profit before tax (£m) 472.3m 16.0% 72.4m 16 72.500 16.0 72.4 472.3 15.5 15.5 432.2 427.8 14.6 377.84 412.8 61.7 60.2 12 54.375 53.8 350.7 10.7 283.38 42.7 8 36.250 188.92 4 18.125 94.46 0.00 0 0.000 2015 2016 2017 2018 2019 2015 2016 2017 2018 20
Slide 35: Strength of land bank across the regions
Strength of land bank across the regions West East 4315 ●● Strength of land bank across our operating regions 1,496 3452 1,558 ●● Proximity to regional office remains a Owned plots 2589 2,633 key criteria for land acquisition going 2,340 1,981 1726 forward 1,963 1,646 1,381 1,217 ●● Stanton Cross, W
Slide 36: Work in progress and other assets
Work in progress and other assets (£m) 30 June 2018 31 Dec 2018 30 June 2019 Stock (including show homes) 23.8 28.6 28.9 Housing WIP infrastructure 438.8 416.6 453.4 Part exchange 10.5 16.3 17.5 Total work in progress 473.1 461.5 499.8 Debtors - Help to Buy 4.8 1.2 4.0 - HA 42.5 24.2 41.4 - Other re
Slide 37: Interest charge
Interest charge 6 months ended 30 June (£m) 2018 2019 Net bank interest and commitment fees (0.9) (0.9) Issue cost amortisation (0.4) (0.3) Imputed interest on land (1.7) (1.7) Pension financing 0.1 0.1 IFRS 16 interest on leases - (0.3) Interest receivable on JV loans - 0.3 Total (2.9) (2.8)
Slide 38: Land creditor payments
Land creditor payments 250 200 £132m 150 £m £253m 100 £72m 50 £49m 0 <1 year 1-2 year 2 year+ Note: T he above figures are on an absolute cash basis. Balance sheet land creditors figure of £249.4m as at 30 June 2019 is on an IFRS accounting basis
Slide 39: Other liabilities
Other liabilities (£m) 30 June 2018 31 Dec 2018 30 June 2019 Creditors 187.3 169.2 199.3 Lease liabilities - - 22.4 Corporation tax liability 14.0 18.1 14.3 Deferred tax liability 1.0 0.7 2.2 Provisions 5.6 4.8 3.8 Other liabilities 207.9 192.8 242.0