Vistry Group Plc · LSE:VTY
Vistry — Bovis Homes Group — Merger or Acquisition (November 2019)
30 slides from Vistry's merger presentation, November 2019
Slide 1: Acquisition of Galliford Try's Housing Businesses
Bovis Homes Group plc Acquisition of Galliford Try’s Housing Businesses November 2019
Slide 2: Disclaimer
Disclaimer NOT FOR RELEASE, PRESENTATION, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISIDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF SUCH JURISDICTION. This p
Slide 3: Transaction overview
Transaction overview • Acquisition of Galliford Try's Linden Homes and Partnerships & Regeneration divisions (the "Housing Businesses") • Housing Businesses valued at £1.075 billion(1): − Linden Homes valued as a multiple of 2019 TGAV(2) − Partnerships & Regeneration valued as a multiple of earnings
Slide 4: Strong strategic and financial rationale
Strong strategic and financial rationale • Creation of a top 5 housebuilder by volume, with capacity to deliver >12k completions p.a. (1) Top 5 national • Platform with national scale and coverage to compete against established major housebuilding players housebuilder • Over 33k owned land plots and
Slide 5: Creation of a top 5 national housebuilder
Creation of a top 5 national housebuilder UK Housebuilders by volume (homes p.a.) • Transaction creates a top 5 UK housebuilder by volume 20k • High-quality land bank 17.6 18k 16.4 • Lower risk, diversified and more resilient business 16k 15.3 − Bovis Homes will become a leading provider 14k of Part
Slide 6: Bovis Homes becomes a market leader in Partnerships housing
Bovis Homes becomes a market leader in Partnerships housing 1 Attractive growth market • Strong growth market less connected to the housing market cycle • Government ambition to build 300k new homes p.a. across all tenures • Support from all political parties for greater mixed tenure and partnership
Slide 7: Enhanced geographic footprint
Enhanced geographic footprint Housebuilding Combined Group • Geographic reach is highly complementary: • Attractive new region - Yorkshire • Strengthens core areas - South Coast • Ability for controlled growth nationally • Synergy opportunities from significant geographic overlap • Creation of optim
Slide 8: Group structure and management team
Group structure and management team Group Structure Executive Leadership Team Greg Fitzgerald Group CEO (Bovis Homes) [New name] plc Graham Prothero Chief Operating Officer (Galliford Try) [New name] [New name] Earl Sibley Housebuilding Partnerships Group Finance Director Limited Limited (Bovis Home
Slide 9: Housebuilding
Housebuilding
Slide 10: Two leading housing brands
Two leading housing brands • New Phoenix housing range • The Linden collection • 28 new house types for both • 22 standard house types private and affordable with 13 core designs • First completions in June • Strategy to increase 2019; excellent customer standardisation of layouts feedback and proce
Slide 11: High-quality homes leading to excellent customer feedback
High-quality homes leading to excellent customer feedback Consistent high-quality build • Focus on increased standardisation and improved processes is delivering higher quality • Development and recruitment of top-rated site managers • 4 star housebuilder • Build quality metrics at least in line wit
Slide 12: Attractive market positioning
Attractive market positioning Tenure • Balanced land portfolio across the Pro forma enlarged business Houses • Enlarged group has 96% of private Apartments 24% 18% 21% land bank plots with Average Affordable 4% 72% 9% 6% Selling Price (ASP)(1) <£600K, 43% with ASP <£300k 73% 72% • Land acquisition f
Slide 13: Partnerships
Partnerships
Slide 14: Galliford Try's Partnerships and Regeneration
Galliford Try’s Partnerships and Regeneration The business Geographic coverage • A market leader within the highly attractive partnerships business, delivering accelerated growth in revenue and earnings • Resilient earnings across the cycle North East 294 units per region • Established national scal
Slide 15: The Partnership's business model
The Partnership’s business model Securing revenue opportunities across the housing market Affordable rent Social rent Supported Discounted Market PRS/Rent to Shared Help to Buy Private sale housing Sale Buy ownership • Unique and powerful platform combining contracting and development capabilities •
Slide 16: Accelerated growth and margin potential
Accelerated growth and margin potential 1 Grow business through 2 3 Drive margin improvement existing structure and Growth from increasing further expansion into new through change in overall development revenues geographies revenue mix Units Revenue (£m) Margin (%) 5,000+ 1,000+ 10.0%+ 15.5% 27.4%
Slide 17: Strong order book underpins future growth
Strong order book underpins future growth Order book / sales in hand (£m) • £970m contracting order book(1) (2018: £1.2bn) Contracting Development • Future growth underpinned 1200 − Development sales reserved, contracted or completed of 1050 970 £184m (2018: £160m) underpins future growth 865 • ‘Wor
Slide 18: Partnerships & Regeneration - competitor landscape
Partnerships & Regeneration - competitor landscape GT Partnerships Countryside Kier Lovell Mears Land sourcing JV expertise Contracting National Housebuilding brand Source: Company information 16
Slide 19: Land bank
Land bank
Slide 20: High-quality combined land bank
High-quality combined land bank Bovis Linden Partnerships & (30-Jun-19) (30-Jun-19) Regeneration • Detailed due diligence review has been undertaken on the (30-Jun-19) land bank being acquired Owned land bank plots 13,161 8,600 3,050 • Combined consented land bank of 33,415 plots • More competitive
Slide 21: Strength in Strategic Land
Strength in Strategic Land Summary The Opportunity Pro forma • The enlarged group is well positioned to continue developing its strategic land bank Total Total Total Total Total Total − Combined strategic land bank of 32,985 plots sites plots sites plots sites plots − Good track record with establis
Slide 22: Financials and transaction structure
Financials and transaction structure
Slide 23: Segmental financial information
Segmental financial information 2017 2018 2019 • Linden Homes performance Linden Homes • Slightly reduced unit numbers, from 3,442 in 2018 to 3,229 in 2019, Units 3,296 3,442 3,229 reflecting market conditions and a desire to refocus from London which Revenue £937m £947m £820m has also seen a reduct
Slide 24: Synergies and integration plan
Synergies and integration plan Sources of synergies • The Directors expect: £35.0m • the Acquisition to result in estimated run-rate pre-tax cost synergies of at least £35 million per annum by the end of the second year following Completion (2020 c.£12m)(1) £30.0m • the realisation of these cost syn
Slide 25: Transaction and funding highlights
Transaction and funding highlights Sources & Uses Sources £m • Capital structure of Enlarged Group retains capital discipline • New banking facilities include: Shares issued to Galliford Try(1) 675 • £375m RCF 9.99% share placing(2) 157 • £100m Term Loan New Term Loan 100 • £100m USPP Utilisation of
Slide 26: 2019 dividend and future dividend policy
2019 dividend and future dividend policy 2019 dividends • Final dividend: replaced by a second interim cash dividend to be paid in May only to existing Bovis shareholders (Ex-dividend date on 24 December 2019) • Special dividend: £60m to be paid as a bonus issue only to Bovis shareholders on 3 Janua
Slide 27: Current trading
Current trading • The Group has traded well during H2 to date maintaining an average sales • Since 11 September 2019 there has continued to be political and rate per outlet per week of 0.6 macroeconomic uncertainty affecting the markets in which our businesses operate, particularly Linden Homes and
Slide 28: Enlarged Group guidance
Enlarged Group guidance Enlarged group guidance • It is anticipated that the transaction will be low double digit EPS enhancing in the first full year post completion with further significant EPS enhancement in the second full year Housebuilding • During 2020 the intention is to steady state both Bo
Slide 29: Investment highlights
Investment highlights 1 Creation of a new top 5 housebuilder 2 Bovis Homes becomes a market leader in Partnerships housing 3 Strong geographic complementarity with two leading housing brands 4 Management capability to ensure successful integration 5 Attractive financial returns whilst retaining a ro
Slide 30: Q&A
Q&A
Bovis Homes Group — Merger or Acquisition (November 2019) on 6ix