Bellway P.l.c. · LSE:BWY
Bellway P.l.c — H1 2024 Earnings Presentation
45 slides from Bellway P.l.c's earnings presentation, Jan 31, 2024
Slide 1: Results Presentation Half year ended 31 January 2024
Results Presentation Half year ended 31 January 2024
Slide 2: Agenda
Agenda 1. Introduction 2. Finance review 3. Operating review 4. Q&A 5. Appendices Unless otherwise stated, all numbers throughout this presentation exclude the Group’s share of its joint ventures. Results presentation Results presentation2616March 2024 October 2018 - Page 2 -
Slide 3: Introduction
Introduction Jason Honeyman Chief Executive Results presentation Results presentation2616March 2024 October 2018 - Page 3 -
Slide 4: Maintaining resilience and positioning for recovery
Maintaining resilience and positioning for recovery Underlying Optimism about return to growth Housing completions profit before taxation Improving levels of customer demand. 4,092 homes £134.2m (2023 – 5,695 homes) (2023 – £312.1m) Land in place with DPP for targeted FY25 output. Robust Interim div
Slide 5: Finance review
Finance review Keith Adey Finance Director Results presentation Results presentation2616March 2024 October 2018 - Page 5 -
Slide 6: Housing revenue
Housing revenue For the half year ended 31 January 2024 2023 First half performance Units ASP Units ASP Housing revenue reduced to £1.3bn, reflecting the weaker trading backdrop since summer 2022. Private 3,078 £349.6k 4,519 £358.1k Accelerated delivery of social Social 1,014 £186.9k 1,176 £158.7k h
Slide 7: Two brands support growth
Two brands support growth Dual branding benefits Ashberry outlets as a percentage of total outlets Provides customer choice of layouts and elevations. Standard Artisan house type range supports Bellway and Ashberry brands. Enhanced sales rates. Higher RoCE. Supports bidding on larger sites. Ashberry
Slide 8: Operating performance
Operating performance For the half year ended 31 January Underlying gross margin Underlying operating margin 500 bps reduction due to: Admin expense of £69.7m in H1. Targeted sales Extended site Build cost inflation. As a proportion of revenue, admin incentives. durations. expense was 5.5%. Underlyi
Slide 9: Underlying earnings
Underlying earnings For the half year ended 31 January Underlying 2024 2023 Change FY24 guidance Operating profit £139.9m £317.7m (£177.8m) Share of loss from JVs to increase to c.£4m due to upfront site Net finance expenses (£4.3m) (£6.0m) £1.7m financing costs. Share of result of JVs (£1.4m) £0.4m
Slide 10: Adjusting items
Building safety 2024 2023 Building safety division momentum SRT – expense (£8.0m) (£53.0m) SRT – recoveries - £50.0m 32 buildings where initial SRT – net cost of sales (£8.0m) (£3.0m) works are complete. SRT – finance expense (£8.8m) (£3.2m) Total SRT expense (£16.8m) (£6.2m) Work underway on 62 bui
Slide 11: Balance sheet
Balance sheet As at 31 January 2024 2023 Change Fixed assets £30.1m £33.4m (£3.3m) Investments in joint arrangements £51.1m £34.8m £16.3m Inventory £4,542.4m £4,417.3m £125.1m Land £2,438.2m £2,696.6m (£258.4m) Assets Work-in-progress £2,104.2m £1,720.7m £383.5m Well-capitalised and asset- Debtors £
Slide 12: Overall land bank
Overall land bank1 As at 31 January 2024 2023 2024 2023 Change Land with DPP 29,765 31,420 Land with DPP £1,788.1m £1,794.4m (£6.3m) Pipeline and strategic £650.1m £902.2m (£252.1m) Pipeline 19,600 26,300 Total land value £2,438.2m £2,696.6m (£258.4m) Bellway owned and controlled 49,365 57,720 plots
Slide 13: Work-in-progress
Work-in-progress As at 31 January Ongoing controlled investment in WIP 2024 2023 Change Modest increase of £92m in site WIP since 31 July 2023 reflects site progress, build cost inflation and slower sales market. Site WIP £1,953.8m £1,602.5m £351.3m Disciplined investment in site infrastructure to s
Slide 14: Balance sheet resilience and platform for growth
Balance sheet resilience and platform for growth For the half year ended 31 January Significantly lower Low adjusted gearing, Closing net cash land creditor balance incl. land creditors, of £76.6m. of £238.5m. of 4.7%. Shareholder returns Results presentation Results presentation2616March 2024 Octob
Slide 15: Capital returns and value creation
Capital returns and value creation For the half year ended 31 January Shareholder returns 8.6% p.a. return over 3 years, despite significant market challenges. Completed £100m Interim dividend FY24 guidance share buyback Total dividend At a c.24% NAV at Jan 21 16.0p cover of 2.5x discount to (2023 –
Slide 16: Reducing carbon emissions
Reducing carbon emissions Bellway’s commitment to a significant reduction in carbon emissions. Scope 1 and 2 Scope 1 and 2 emissions reduction progress Target to reduce scope 1 and scope 2 emissions by 46% from 25,715t in 2019 to 13,886t by 2030. Strong progress to date, driven by increased use of r
Slide 17: Summary of guidance
Summary of guidance FY24 guidance Volume output On track for c.7,500 completions. Overall ASP c.£295k. Underlying operating margin Reduction of at least 600 bps from 16.0% in FY23. Dividend cover c.2.5x underlying earnings. Cash, land, WIP and outlet opening programme to support Positioned for recov
Slide 18: Operating review
Operating review Jason Honeyman Chief Executive Results presentation Results presentation2616March 2024 October 2018 - Page 18 -
Slide 19: Trading review
Trading review Weekly reservation and cancellation rates 1 Weekly private reservation rate per outlet 2024 2023 Change 0.60 Private 105 91 15.4% 0.51 0.50 Social 35 47 (25.5%) 0.44 0.43 0.42 Total 140 138 1.4% 0.40 0.38 0.30 Private rate per outlet 0.43 0.38 13.2% 0.27 Social rate per outlet 0.15 0.
Slide 20: Mortgage market and affordability
Mortgage market and affordability Private reservations and mortgage interest rates (year to January 2024) Trading backdrop High 0.8 4% 0.7 Reduction in mortgage interest rates led to a recovery in private 0.6 reservations throughout H1 of FY24. Average monthly mortgage interest rate (%) Private rese
Slide 21: Current trading and order book
Current trading and order book First six weeks since 1 February Order book at 10 March (2023: 12 March) Further improvement in private Order book units (number) Order book value (£m) reservations to 163 per week (2023 – 135). The private reservation rate per site per week increased by 19.6% to 0.67
Slide 22: Positioning the Group for recovery
Positioning the Group for recovery Well-positioned to return to growth in FY25 Outlet opening programme to support backdrop of improving demand. Well-placed to deliver further outlet growth in FY25. Healthy WIP position. Rebuilding the order book. Strength and depth of land bank. Results presentatio
Slide 23: Productivity and costs
Productivity and costs Materials and labour backdrop Build cost inflation moderated to low single digits by the end of H1. Good levels of materials and labour availability. Clear focus on cost control and margin protection. Established a commercial training academy for quantity surveyors. Driving fu
Slide 24: Land and planning
Land and planning As at 31 January Bellway’s land bank Strength of land bank enabled limited land buying activity in H1, with 1,237 owned and controlled plots contracted. Increased land activity since the start of the new calendar year. Rebuilding future pipeline of acquisitions with Heads of Terms
Slide 25: 'Better with Bellway'
‘Better with Bellway’ Recent awards ‘Large Housebuilder of the Year’. ‘Best Staff Development Award’ for ‘Employer of Choice’. Bellway’s ‘Future Home’ project won several awards including ‘Major Project of the Year’. Ongoing focus on customer service Five-star homebuilder for the 8th consecutive yea
Slide 26: Outlook
Outlook On track for output of c.7,500 homes in Volume FY24. Strong outlet opening programme and Platform for rebuilding of the order book to support growth return to growth in FY25. Improving Focus on margin protection and returns improving underlying RoCE. Maintain financial and operational Resili
Slide 27: Q&A
Q&A Midway, Springwood Derbyshire Results presentation Results presentation2616March 2024 October 2018 - Page 27 -
Slide 28: Appendices
Appendices 1. Income statement 2. Net finance expenses 3. Housing revenue 4. ASP per square foot 5. Geographic split 6. Product analysis 7. Buyer analysis: completions 8. Buyer analysis: reservations 9. Order book at 31 January 10. Mortgages and affordability 11. Land with DPP 12. Land supply 13. St
Slide 29: Appendix 1 – Income statement
Appendix 1 – Income statement For the half year ended 31 January 2024 2023 Change Adjusting Adjusting Underlying items Total Underlying items Total Homes sold 4,092 - 4,092 5,695 - 5,695 (28.1%) Average selling price £309,278 - £309,278 £316,929 - £316,929 (2.4%) Housing revenue £1,265.6m - £1,265.6
Slide 30: Appendix 2 – Net finance expenses
Appendix 2 – Net finance expenses For the half year ended 31 January 2024 2023 Change Net bank interest receivable £0.5m £1.3m (61.5%) Fixed rate sterling USPP notes (£1.7m) (£1.7m) - Other interest: (£3.1m) (£5.6m) 44.6% Made up of:- Land creditors – IFRS 9 (£5.3m) (£6.3m) 15.9% Lease liabilities –
Slide 31: Appendix 3 – Housing revenue
Appendix 3 – Housing revenue For the half year ended 31 January Homes sold (number) 2024 2023 Change Average selling price (‘ASP’) Private Social Total Private Social Total Private Social Total (2.4%) North 1,651 268 1,919 2,368 473 2,841 (30.3%) (43.3%) (32.5%) (2.4%) South 1,427 746 2,173 2,151 70
Slide 32: Appendix 4 – ASP per square foot
Appendix 4 – ASP per square foot For the half year ended 31 January 2024 2023 Change Private Social Total Private Social Total Private Social Total North 285 192 276 288 165 274 (1.0%) 16.4% 0.7% South - comprising: 383 243 341 404 224 365 (5.2%) 8.5% (6.6%) London 451 299 371 513 233 497 (12.1%) 28
Slide 33: Appendix 5 – Geographic split
Appendix 5 – Geographic split For the half year ended 31 January Completion analysis Revenue analysis 2024 2023 2024 2023 North South (excl. London) London Results presentation Results presentation2616March 2024 October 2018 - Page 33 -
Slide 34: Appendix 6 – Product analysis
Appendix 6 – Product analysis For the half year ended 31 January Product mix analysis Selling price analysis 2024 2023 2024 2023 London flats Townhouses 1 & 2 bed < £200,000 £200,000 - £300,000 £300,001 - £400,000 Non-London flats 3 bed 4+ bed £400,001 - £500,000 £500,001 - £600,000 > £600,000 Flats
Slide 35: Appendix 7 – Buyer analysis: completions
Appendix 7 – Buyer analysis: completions For the half year ended 31 January 2024 2023 Homes sold 2024 2023 Second time buyers Deposit assisted and first time Other buyers buyers Other second time buyers Unassisted first time buyers Housing Association Part-exchange Help to Buy – non-London Investor
Slide 36: Appendix 8 – Buyer analysis: reservations
Appendix 8 – Buyer analysis: reservations For the half year ended 31 January 2024 2023 Reservations 2024 2023 Second time buyers Deposit assisted and first time Other buyers buyers Other second time buyers Unassisted first time buyers Housing Association Part-exchange Help to Buy – non-London Invest
Slide 37: Appendix 9 – Order book at 31 January
Appendix 9 – Order book at 31 January 2024 2023 Change Private Social Total Private Social Total Private Social Total At 1 August 2,191 2,220 4,411 4,712 2,511 7,223 (53.5%) (11.6%) (38.9%) Reservations 2,717 934 3,651 2,361 1,219 3,580 15.1% (23.4%) 2.0% Completions (3,078) (1,014) (4,092) (4,519)
Slide 38: Appendix 10 – Mortgages and affordability
Appendix 10 – Mortgages and affordability Mortgage costs as a proportion of disposable income Mortgage costs as a proportion of disposable income (1995 – 2023, annual data) (Q4 2021 – Q1 2024, monthly data) Mortgage as a % of disposable income (LHS) Five-year 75% LTV mortgage rate (%) (RHS) Mortgage
Slide 39: Appendix 11 - Land with DPP
Appendix 11 - Land with DPP¹ As at 31 January 2024 2023 Average Average Plots Cost Plots Cost plot cost plot cost Land bank At 1 August 32,229 £1,913.3m £59.4k 32,344 £1,812.3m £56.0k Good visibility Net purchases 1,628 £111.3m £68.4k 4,771 £326.9m £68.5k with regards to construction and sales profi
Slide 40: Appendix 12 – Land supply
Appendix 12 – Land supply Bellway owned and controlled land (plots) Cash land spend and value of new land contracts (£m) Land with DPP1 Pipeline1 North South New land contracts Cash land spend 1 See appendix 15 for definitions. Results presentation Results presentation2616March 2024 October 2018 - P
Slide 41: Appendix 13 – Strategic land
Appendix 13 – Strategic land As at 31 January 2024 2023 Total: 44,200 plots Total: 41,700 plots Positive planning status Longer-term interests Allocated Longer-term interests Application Both Results presentation Results presentation2616March 2024 October 2018 - Page 41 -
Slide 42: Appendix 14 – Land creditors
Appendix 14 – Land creditors As at 31 January Land creditor payment profile Often able to secure a discount on land deals in return for making upfront payments. Seek to defer payments where it is cost effective to do so. £151.9m due for payment in the next 12 months. £151.9m Results presentati
Slide 43: Appendix 15 – Land bank glossary
Appendix 15 – Land bank glossary Owned and controlled plots Land with DPP: Plots owned or unconditionally contracted by the Group where there is an implementable detailed planning permission. Pipeline: Plots which are either owned or contracted by the Group, pending an implementable detailed pla
Slide 44: Disclaimer
Disclaimer This presentation is not intended to, and does not constitute or form part of, any offer, invitation or the solicitation of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities in Bellway p.l.c. or any other invitation or inducement to engag
Slide 45: Results presentation Results presentation 26 16 March
Results presentation Results presentation2616March 2024 October 2018 - Page 45 -