Bellway P.l.c. · LSE:BWY
Bellway P.l.c — FY2013 Earnings Presentation
90 slides from Bellway P.l.c's earnings presentation, Oct 15, 2013
Slide 1: Results Presentation Year ended 31 July 2013
Results Presentation Year ended 31 July 2013
Slide 2: Agenda
Agenda 1. Highlights 2. Strategy 3. Finance review 4. Operating review 5. Current trading and outlook 6. Questions and answers 7. Appendices Results presentation 15 October 2013 - Page 2 -
Slide 3: Highlights
Highlights Ted Ayres Chief Executive Results presentation 15 October 2013 - Page 3 -
Slide 4: Highlights
Highlights + 8.2% + 3.4% + 220bps + 6.0% No. of homes sold Average selling price Operating margin Land bank plots 2012 5,226 2012 £186,648 2012 11.4% 2012 31,136 2013 5,652 2013 £193,025 2013 13.6% 2013 32,991 4,500 5,000 5,500 6,000 £180,000 £190,000 10% 12% 14% 30,000 31,000 32,000 33,000 + 36.3%
Slide 5: Notes
Notes Results presentation 15 October 2013 - Page 5 -
Slide 6: Strategy
Strategy Ted Ayres Chief Executive Results presentation 15 October 2013 - Page 6 -
Slide 7: Notes
Notes Results presentation 15 October 2013 - Page 7 -
Slide 8: Building shareholder value through…
Building shareholder value through… Volume growth due to operational and balance Growth in net asset value sheet capacity A strong focus on return Progressive dividend policy on capital Results presentation 15 October 2013 - Page 8 -
Slide 9: Notes
Notes Results presentation 15 October 2013 - Page 9 -
Slide 10: Operational and balance sheet capacity
Operational and balance sheet capacity Operational capacity Balance sheet capacity - 13 divisions at 31 July 2013 - - Bank facilities of £300m - - Two new divisions since 1 August 2013 - - Low net debt - - Total capacity of c. 7,500 units - Land creditors used only when and beyond - cost effective -
Slide 11: Notes
Notes Results presentation 15 October 2013 - Page 11 -
Slide 12: A strong focus on ROCE
A strong focus on ROCE Land acquisitions Operational efficiency - ROCE and gross margin – key - Reviewing national house types - metrics in appraisal of new sites - - Trading out old, impaired land - - Focus on land with DPP and - London apartments generate conditional contracts - higher returns - -
Slide 13: Notes
Notes Results presentation 15 October 2013 - Page 13 -
Slide 14: Finance review
Finance review Keith Adey Finance Director Results presentation 15 October 2013 - Page 14 -
Slide 15: Notes
Notes Results presentation 15 October 2013 - Page 15 -
Slide 16: Group results
Group results For the year ended 31 July 2013 2012 Mvt Revenue £1,110.7m £1,004.2m 10.6% Gross profit £203.3m 18.3% £162.1m 16.1% 25.4% Administrative expenses (£52.2m) (4.7%) (£47.5m) (4.7%) 9.9% Operating profit £151.1m 13.6% £114.6m 11.4% 31.8% Net finance costs (£10.2m) (£9.3m) 9.7% Profit befor
Slide 17: Notes
Notes Results presentation 15 October 2013 - Page 17 -
Slide 18: Revenue
Revenue For the year ended 31 July 2013 2012 Mvt Homes sold 5,652 5,226 8.2% Average selling price £193,025 £186,648 3.4% Housing revenue £1,091.0m £975.4m 11.9% Non housing revenue £19.7m £28.8m (31.6%) Total revenue £1,110.7m £1,004.2m 10.6% Results presentation 15 October 2013 - Page 18 -
Slide 19: Notes
Notes Results presentation 15 October 2013 - Page 19 -
Slide 20: Housing revenue
Housing revenue For the year ended 31 July 2013 2012 Mvt Private housing Homes sold 4,694 4,358 7.7% Average selling price £207,322 £200,287 3.5% Social housing Homes sold 958 868 10.4% Average selling price £122,971 £118,171 4.1% Results presentation 15 October 2013 - Page 20 -
Slide 21: Notes
Notes Results presentation 15 October 2013 - Page 21 -
Slide 22: Average selling price growth
Average selling price growth ASP £000 200.0 Prices stable but 3.4% incentives falling 190.0 6.3% Expect ASP of c.£200k for 180.0 full year ending 31 July 7.6% 2014 193.0 170.0 186.6 6.0% 175.6 25% improvement in 160.0 average selling price (9.3%) 163.2 achieved since 2009 154.0 150.0 July 09 J
Slide 23: Notes
Notes Results presentation 15 October 2013 - Page 23 -
Slide 24: National coverage
National coverage 60% of housing revenue 100% generated in the south 90% c. 15% c. 19% 80% 53% Ability to respond to 70% c. 38% 60% c. 41% strengthening demand 60% in regional markets 50% 40% 30% 19% of housing revenue c. 47% c. 40% 20% generated in London 10% Boroughs 0% Units Revenue North S
Slide 25: Notes
Notes Results presentation 15 October 2013 - Page 25 -
Slide 26: Apartments
Apartments For the year ended 31 July 2013 Tend to have a faster sales rate 30% Nearly half of all apartment sales are in London 70% 2012 ASP of London apartments is c. £240,000 31% Demand is robust in this 69% relatively affordable segment of the London market Houses Apartments Results pres
Slide 27: Notes
Notes Results presentation 15 October 2013 - Page 27 -
Slide 28: A wide product mix
A wide product mix For the year ended 31 July Product mix analysis 2013 2012 2013 2012 13% 17% 15% 16% Size 9% 13% Av. Sq. feet / home 988 951 61% 56% ASP / square foot £195 £196 High value product 2013 – 74%, 2012 – 71% Non-London flats 1 & 2 bed 3 + bed London flats Selling price analysis Contin
Slide 29: Notes
Notes Results presentation 15 October 2013 - Page 29 -
Slide 30: Operating performance
Operating performance For the year ended 31 July 2013 2013 2013 2012 Completions by land type FY H2 H1 FY 2013 c. 16% Gross profit £203.3m £113.6m £89.7m £162.1m 18.3% 18.7% 17.9% 16.1% c. 20% Admin. Expenses £52.2m £26.9m £25.3m £47.5m c. 64% 4.7% 4.4% 5.1% 4.7% Operating profit £151.1m £86.7m £64.
Slide 31: Notes
Notes Results presentation 15 October 2013 - Page 31 -
Slide 32: Finance expense
Finance expense For the year ended 31 July 2013 2012 Mvt Land creditors / debtors – IAS 39 £4.7m £3.0m 56.7% Net bank interest payable inc. fees £3.7m £4.7m (21.3%) Preference dividend £1.9m £1.9m - Pension cost £0.3m £0.5m (40.0%) Other interest (£0.4m) (£0.8m) (50.0%) Net finance expense £10.2m £9
Slide 33: Notes
Notes Results presentation 15 October 2013 - Page 33 -
Slide 34: Earnings
Earnings For the year ended 31 July 2013 2012 Mvt Profit before taxation £140.9m £105.3m 33.8% Taxation (£32.3m) (£26.0m) 24.2% Effective tax rate 23.0% 24.7% Profit after taxation £108.6m £79.3m 36.9% Earnings per share 89.3p 65.5p 36.3% Dividend 30.0p 20.0p 50.0% Dividend cover 3.0 3.3 Results pre
Slide 35: Notes
Notes Results presentation 15 October 2013 - Page 35 -
Slide 36: Balance sheet
Balance sheet as at 31 July 31 July 2013 2012 Assets Fixed assets £19.0m £21.2m Inventory £1,513.5m £1,399.8m Shared equity £34.5m £35.1m Debtors £60.4m £74.4m £1,627.4m £1,530.5m Liabilities Pension deficit (£9.0m) (£11.5m) Creditors (£227.8m) (£204.7m) Land creditors (£146.0m) (£120.6m) (£382.8m)
Slide 37: Notes
Notes Results presentation 15 October 2013 - Page 37 -
Slide 38: Inventory
Inventory as at 31 July 31 July 2013 2012 DPP: land with detailed planning permission £782.5m £687.6m Pipeline and strategic land £124.8m £165.3m Work in progress £535.0m £479.5m Showhomes £52.8m £45.5m Part exchange stock £18.4m £21.9m Total £1,513.5m £1,399.8m Results presentation 15 October 2013
Slide 39: Notes
Notes Results presentation 15 October 2013 - Page 39 -
Slide 40: Land with detailed planning permission
Land with detailed planning permission Average Average Plots Cost selling plot cost price Brought forward 1 August 2012 17,636 £687.6m £39.0k c. £193k Sold (5,652) (£273.4m) £48.4k £193k 11,984 £414.2m £34.6k c. £193k Net purchases 7,007 £368.3m £52.6k c. £205k Carried forward 31 July 2013 18,991 £7
Slide 41: Notes
Notes Results presentation 15 October 2013 - Page 41 -
Slide 42: Analysis of plots with DPP
Analysis of plots with DPP 100% 90% 80% 54% 42% 65% of land bank with 70% 65% DPP now at a gross 60% margin in excess of 20%. 50% 40% 35% Average gross margin of 27% 30% 23% 20% land with DPP is between 23% 10% 19% 12% 19% and 20%. 0% Jul 13 Jul 12 Jul 11 Newly acquired plots (> 20%) Plots witho
Slide 43: Notes
Notes Results presentation 15 October 2013 - Page 43 -
Slide 44: Shared equity
Shared equity as at 31 July 31 July 2013 2012 Number of assets owned 2,843 2,728 Book value (BV) £34.5m £35.1m Original loan (OL) £74.9m £74.6m BV / OL 46% 47% Cumulative redemptions to date (units) 310 232 Cumulative redemption proceeds as % of OL 76% 72% Results presentation 15 October 2013 - Page
Slide 45: Notes
Notes Results presentation 15 October 2013 - Page 45 -
Slide 46: Cash flow
Cash flow For the year ended 31 July £93.8m 453.9 (4.6) (55.5) Average debt of £64.9m 425 (300.0) Peak debt of £98.9m 325 225 £m 125 (34.7) 3.7 (28.0) (5.8) 25 (75) (40.6) Opening net Cash from Change in Investment in Land Interest and Investing & Dividend Closing net bank debt operations working WI
Slide 47: Notes
Notes Results presentation 15 October 2013 - Page 47 -
Slide 48: Capital structure
Capital structure as at 31 July 31 July 2013 2012 Net bank borrowings - average cost < 200 bps above LIBOR £5.8m £40.6m Preference debt - 9.5% dividend £20.0m £20.0m Net debt £25.8m £60.6m Equity £1,218.8m £1,133.1m Capital employed £1,244.6m £1,193.7m Gearing 2.1% 5.3% Land creditors £146.0m £120.6
Slide 49: Notes
Notes Results presentation 15 October 2013 - Page 49 -
Slide 50: Value creation
Value creation For the year ended 31 July 2013 2012 Pre write downs Post write downs Dividend 30.0p 20.0p 1,200 re er sha 1,100 23 %p ow th > lg r 1,000 To ta 2013 2012 Pence NAV 1,001p 933p 900 800 2013 2012 700 Jul 07 Jul 08 Jul 09 Jul 10 Jul 11 Jul 12 Jul 13 RoCE 12.3% 10.1% Net asset value per s
Slide 51: Notes
Notes Results presentation 15 October 2013 - Page 51 -
Slide 52: Finance summary
Finance summary Movement Volume growth +8.2% Average selling price growth +3.4% Operating margin growth +220 bps Earnings per share growth +36.3% Return on capital growth +220 bps Dividend growth +50.0% Net asset value growth +7.3% Results presentation 15 October 2013 - Page 52 -
Slide 53: Notes
Notes Results presentation 15 October 2013 - Page 53 -
Slide 54: Operating review
Operating review For the year ended 31 July Ted Ayres Chief Executive Results presentation 15 October 2013 - Page 54 -
Slide 55: Notes
Notes Results presentation 15 October 2013 - Page 55 -
Slide 56: Volume growth
Volume growth Volume Opened 40 outlets during the year 5,750 8.2% Two new divisions will contribute completions this year 5,500 Existing divisions have capacity to deliver more 6.2% 5,250 Expect outlets to increase by around 5% 5,000 7.1% 5,652 Average active outlets 4,750 4.9% 5,226 July 12
Slide 57: Notes
Notes Results presentation 15 October 2013 - Page 57 -
Slide 58: National coverage
National coverage 2013 2012 Mvt North Homes sold 2,652 2,375 11.7% Average selling price £163,534 £151,376 8.0% Existing offices New offices South (inc. London) Homes sold 3,000 2,851 5.2% Average selling price £219,094 £216,031 1.4% London Boroughs Homes sold 865 906 (4.5%) Average selling price £2
Slide 59: Notes
Notes Results presentation 15 October 2013 - Page 59 -
Slide 60: Strong presence in London
Strong presence in London Results presentation 15 October 2013 - Page 60 -
Slide 61: Notes
Notes Results presentation 15 October 2013 - Page 61 -
Slide 62: Focus on return on capital
Focus on return on capital Case study Site contracted conditionally for £11.4 million Completion deferred pending planning and vacant possession Two blocks bulk sold to investors with the benefit of a 10% deposit 129 affordable housing units sold with payments on monthly valuations Gross m
Slide 63: Notes
Notes Results presentation 15 October 2013 - Page 63 -
Slide 64: Completion analysis
Completion analysis For the year ended 31 July 2013 2012 1035, 20% 915, 16% 958, 17% 868, 17% 205, 4% 702, 13% 814, 14% 426, 8% 288, 6% 40, 1% 147, 3% 226, 4% 155, 3% 6% 4% 105, 2% 38, 1% 1994, 34% 1962, 37% Second time buyers Other buyers Deposit assisted Other second time buyers Unassisted first t
Slide 65: Notes
Notes Results presentation 15 October 2013 - Page 65 -
Slide 66: Strong cost control
Strong cost control Build costs relatively benign Vast majority of materials are centrally procured Small increases in timber, chipboard and brick prices Some material and sub-contract shortages in recent months Industry volume growth will lead to cost pressures Strong relationships with
Slide 67: Notes
Notes Results presentation 15 October 2013 - Page 67 -
Slide 68: Standard house types
Standard house types Designed 33 two storey house types Two divisions are trialling the new range Intend to undertake a full critique before further roll out Possible procurement savings could help control cost base Results presentation 15 October 2013 - Page 68 -
Slide 69: Notes
Notes Results presentation 15 October 2013 - Page 69 -
Slide 70: Land buying
Land buying Expended £300m on land and land creditors Focus on land with DPP, or conditional on implementable DPP Focus on brownfield opportunities Achieving at least 20% gross margin and minimum ROCE of 15% to 20% All land in place for this financial year 80% of land in place for next y
Slide 71: Notes
Notes Results presentation 15 October 2013 - Page 71 -
Slide 72: Land bank
Land bank For the year ended 31 July 2013 2012 3 levels to our land bank DPP: Plots with detailed planning permission 18,991 17,636 Pipeline: Plots pending an implementable DPP 14,000 13,500 Total plots 32,991 31,136 Strategic: Long term potential plots >4,400 >3,900 Heads of terms agreed on further
Slide 73: Notes
Notes Results presentation 15 October 2013 - Page 73 -
Slide 74: Current trading and outlook
Current trading and outlook as at Ted Ayres Chief Executive Results presentation 15 October 2013 - Page 74 -
Slide 75: Notes
Notes Results presentation 15 October 2013 - Page 75 -
Slide 76: Market place
Market place Reservations during year av. 128 per week – up 27% Reservations since 1 August av. 122 per week – up 33% Sales rates improved since introduction of Help to Buy equity loan Results presentation 15 October 2013 - Page 76 -
Slide 77: Notes
Notes Results presentation 15 October 2013 - Page 77 -
Slide 78: Order book
Order book Order book at 29 September – 3,316 plots – £644.2m – Value up 47% compared to last year Results presentation 15 October 2013 - Page 78 -
Slide 79: Notes
Notes Results presentation 15 October 2013 - Page 79 -
Slide 80: Summary
Summary Increased operational capacity of 7,500 homes Volume growth of up to 15% by July 2014 H1 2014 will benefit from strong order book Strong balance sheet Further value creation through growth in net asset value and dividend Results presentation 15 October 2013 - Page 80 -
Slide 81: Notes
Notes Results presentation 15 October 2013 - Page 81 -
Slide 82: Questions and answers
Questions and answers The Asters, Sunningdale Results presentation 15 October 2013 - Page 82 -
Slide 83: Notes
Notes Results presentation 15 October 2013 - Page 83 -
Slide 84: Appendices
Appendices 1.Land creditor payments 2.Land buying 3.Order book at 31 July Results presentation 15 October 2013 - Page 84 -
Slide 85: Notes
Notes Results presentation 15 October 2013 - Page 85 -
Slide 86: Appendix 1 - Land creditor payments
Appendix 1 - Land creditor payments 160 146.0 57.1 140 120 100 Land creditors represent only 49.9 16% of land book value £m 80 60 40 39.0 Only £107m of committed land 20 expenditure within next twelve months - Balance at 31 H1 H2 Thereafter July 2013 2013/2014 2013/2014 Due date Results presenta
Slide 87: Notes
Notes Results presentation 15 October 2013 - Page 87 -
Slide 88: Appendix 2 – Land buying
Appendix 2 – Land buying Cumulative land expenditure since downturn (£m) 1,200 1,000 Over £1.1bn expended on higher margin land since 800 downturn. 600 Average gross margin on 1,156 400 856 new land acquisitions is c. 22% 551 200 301 93 0 Jul-09 Jul-10 Jul-11 Jul-12 July 13 Results presentation
Slide 89: Notes
Notes Results presentation 15 October 2013 - Page 89 -
Slide 90: Appendix 3 – Order book at 31 July
Appendix 3 – Order book at 31 July 31 July 2013 31 July 2012 Movement Private Social Total Private Social Total Private Social Total % % % At 1 August 1,499 1,034 2,533 1,485 1,012 2,497 0.9% 2.2% 1.4% Reservations 5,698 946 6,644 4,372 890 5,262 30.3% 6.3% 26.3% Completions (4,694) (958) (5,652) (4