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Preliminary Results Presentation

Preliminary Results Presentation. Year to 30 th June 2005. Introduction. Greg Fitzgerald - Chief Executive. Introduction. Overview. Record results through good operational performance Construction Margins up to 1.5% Housebuilding

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Preliminary Results Presentation

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  1. Preliminary Results Presentation Year to 30th June 2005

  2. Introduction Greg Fitzgerald - Chief Executive

  3. Introduction Overview • Record results through good operational performance • Construction • Margins up to 1.5% • Housebuilding • Record profits and increase in margins in difficult market • Potential in affordable housing • Proven and motivated management • Strong platform for future growth

  4. Financial Review Frank Nelson – Finance Director

  5. Financial Review Summary • Exceeded targets in 2005 • Group turnover £718m - up 5% • Profit before tax £26.3m - up 16% • Earnings per share 8.4p - up 17% • Dividend 2.1p - up 24% • Strong Construction cash flow - gearing of 15% • Return on shareholders’ funds of 33% • Tax charge reduced to 29.3%

  6. Financial Review Segmental Analysis to 30th June 2005 (including Joint Ventures) Group Turnover Profit/(loss) 2004 (£m) 2005 2005 2004 Construction 537.7 512.9 7.8 5.7 PPP Investments - - (1.2) (1.5) Housebuilding 188.0 182.0 26.4 25.5 Group 0.5 0.5 (4.5) (3.9) 726.2 695.4 28.5 25.8 Less net interest payable (2.2) (3.1) Profit before tax 26.3 22.7

  7. Financial Review International Financial Reporting Standards Profit & Loss Effect Balance Sheet Effect Pensions Low High Share based payments Low Low Dividend recognition Timing Low

  8. Financial Review Balance Sheet Highlights (£m) 2005 2004 Shareholders’ funds 86.2 72.3 Net debt 12.5 12.3 Total capital employed 98.7 84.6 Gearing 15% 17% Interest cover 12.8 8.5 Land 143.9 122.4 Work in Progress 64.1 53.8 Land Creditors (48.7) (44.7)

  9. Financial Review Cash Flow Summary (£m) 2005 2004 Group operating profit 26.9 24.5 Depreciation and amortisation 1.8 1.8 Working capital and other movements (14.9) (9.2) Net cash flow from operating activities 13.8 17.1 Interest (1.6) (2.0) Tax (8.5) (5.6) Capital expenditure (1.6) (1.2) Dividends (3.9) (3.4) Other 1.6 0.6 Movement in net debt (0.2) 5.5

  10. Construction Andy Sturgess – Managing Director

  11. Construction Key Highlights • Margins up to 1.5% in line with expectation • Excellent cash generation circa £40m throughout year • Quality order book maintained • Management team further strengthened

  12. Construction Profitability % Net Margin RECOVERY STABILISATION GROWTH 1.5% 1.5 1.1% 1.0 0.5 0.0 (0.01)% 2003 2004 2005

  13. Construction Forward Order Book Work In Hand (£m) Total Work In Hand Non Price Competitive Market Sectors Non Price Competitive Total Water 229.4 229.4 Rail 65.7 65.7 Infrastructure 61.3 61.3 Health 117.8 115.8 Education 137.7 104.7 Commercial 152.6 129.9 Interiors 24.0 14.9 Affordable Housing 144.2 116.1 Telecommunications 7.7 5.3 Ground Engineering 3.5 2.5 943.9 845.6 90%

  14. Construction Key Opportunities • LIFT second tranche in design • United Utilities AMP4 • Affordable Housing remains strong • BSF – Shortlisted Solihull • Northampton Schools PFI

  15. Construction Northampton Schools PFI • 41 schools • 34 month construction period • 80% new build • 20% refurbishment • Planning achieved on all but one school • Late autumn financial close

  16. Construction Summary & Outlook • Strong management teams • Sector focus well established • Earliest possible involvement • Partnership approach • Profitability towards 2% margins

  17. PPP Investments Andy Sturgess – Managing Director

  18. PPP Investments Overview • Creating construction opportunities • Stringent selection criteria • Equity stake 15%-50% • Performance 2004 – 2005 • Financial close on four projects Value £120m • Preferred bidder Northampton Schools Value £150m • Future prospects • LIFT – 2nd tranche • LIFT – 4th wave • BSF Solihull – short listed

  19. Housebuilding Greg Fitzgerald – Chief Executive

  20. Record profits and increase in margins Further cost reductions achieved Exceptional customer satisfaction results Controlled increase in land bank Encouraging ‘in-hand’ position Planning permissions in place for current year Housebuilding Housing Highlights

  21. Housebuilding Key Statistics (including Joint Ventures) 12 months to June 2005 2004 Increase % Units 853 761 12.1 Average Selling Price £000 208 224 (7.1) Income per Sq. Ft. £ 222 209 6.2 Turnover £m 188 182 3.3 Operating Profit £m 26.4 25.5 3.5 Margin % 14.1 14.0 0.7 ROCE % 22.3 23.6 (5.5) Sales in hand August 05 £m 100.4 95.3 5.3 Landbank August 05 units 260525203.4 Strategic land August 05 acres 695 660 5.3

  22. Encouraging sales activity since July No house price inflation for next two years Planning process continues to be difficult Labour readily available Differentiation through individual design Avoid consortium sites and high rise apartments Capitalise on strengths in affordable housing Housebuilding Market Conditions and Focus

  23. Housebuilding Midas & Gerald Wood Homes • Units 310 • Average selling price £000 191 • Brownfield and conversion % 65 • Land bank 985 • Customer satisfaction % 91 • Planning for Truro hospital site • First completions from expansion area

  24. Housebuilding Stamford Homes • Units 269 • Average selling price £000 169 • Brownfield and conversion % 53 • Land bank 599 • Customer satisfaction % 91 • Good progress in affordable housing • Land acquired from Coventry LIFT

  25. Housebuilding Try Homes Southern • Units 144 • Average selling price £000 267 • Brownfield and conversion % 100 • Land bank 385 • Customer satisfaction % 89 • Large conversion site in Banstead acquired • Expansion into Kent and East Sussex

  26. Housebuilding Try Homes Thames Valley • Units 130 • Average selling price £000 258 • Brownfield and conversion % 100 • Land bank 636 • Customer satisfaction % 95 • Substantial eight acre site acquired in West London

  27. All business units performing well Expansion proceeding to plan More opportunities for land acquisition Expertise in affordable housing Comfortable with current market conditions Housebuilding Summary & Outlook

  28. Affordable Housing Greg Fitzgerald – Chief Executive

  29. Affordable Housing Construction and Housebuilding Divisions • Comprehensive capability for affordable housing • Working with 16 affordable housing providers • Work in hand up to £152 million • New opportunities through: • Construction taking development role • Planning requirements on housebuilding sites • Pre-qualified for grant direct from the Housing Corporation • Considerable scope for growth

  30. Summary and Outlook Greg Fitzgerald - Chief Executive

  31. Summary and Outlook Platform for Growth • Strong financial position • Construction: • Increase in profit margins and cash generation • Growth in chosen markets • Housebuilding: • Performing in a difficult market • Proven business model • Synergies between divisions • Excellent opportunities in affordable housing • Confidence in growth plans • Organic and by acquisition

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