Bellway P.l.c. · LSE:BWY
Bellway P.l.c — H1 2023 Earnings Presentation
97 slides from Bellway P.l.c's earnings presentation, Mar 28, 2023
Slide 1: Results Presentation Half year ended 31 January 2023
Results Presentation Half year ended 31 January 2023
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 presentation2816March 2023 October 2018 - Page 2 -
Slide 3: Introduction
Introduction Jason Honeyman Chief Executive Results presentation Results presentation2816March 2023 October 2018 - Page 3 -
Slide 4: Highlights
Highlights Underlying Record housing Interim dividend profit before Share buyback completions per share taxation 5,695 homes £312.1m 45.0p £100m (2022 – 5,694 homes) (2022 – £327.2m) (2022 – 45.0p) Results presentation Results presentation2816March 2023 October 2018 - Page 4 -
Slide 5: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 5 -
Slide 6: Resilience in a challenging market
Resilience in a challenging market Delivering against H1 priorities Strategic flexibility and a strong capital base Depth in all tiers of the land bank. Cash generated by: - — Building out strong order Scope to increase outlet numbers. book; and H1 efforts focused on — Accelerating production mainta
Slide 7: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 7 -
Slide 8: Finance review
Finance review Keith Adey Finance Director Results presentation Results presentation2816March 2023 October 2018 - Page 8 -
Slide 9: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 9 -
Slide 10: Financial performance
Financial performance For the half year ended 31 January 2023 2022 Change Adjusting Adjusting Underlying Total Underlying Total Underlying Total items items Housing revenue £1,804.9m - £1,804.9m £1,775.7m - £1,775.7m 1.6% 1.6% Revenue Other revenue £4.4m - £4.4m £4.3m - £4.3m 2.3% 2.3% Total revenue
Slide 11: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 11 -
Slide 12: Housing revenue
Housing revenue For the half year ended 31 January 2023 2022 Robust H1 volume output Units ASP Units ASP Delivered against priorities for WIP investment and cash generation. Private 4,519 £358.1k 4,701 £345.1k Record completions despite sector-wide Social 1,176 £158.7k 993 £154.3k production constra
Slide 13: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 13 -
Slide 14: Geographic and brand analysis
Geographic and brand analysis For the half year ended 31 January 2023 2022 2023 2022 Group Units ASP Units ASP Units ASP Units ASP North 2,841 £299.0k 2,865 £283.6k Ashberry 631 £297.4k 478 £288.3k South 2,854 £334.8k 2,829 £340.5k Dual outlets help stimulate sales rates. Total 5,695 £316.9k 5,694 £
Slide 15: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 15 -
Slide 16: Operating performance
Operating performance For the half year ended 31 January H1 performance Gross margin guidance Robust gross profit but 80bps Admin expense higher due to new Build cost inflation and increased moderation in underlying gross Building Safety division and use of sales incentives. margin to 21.5%. general
Slide 17: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 17 -
Slide 18: Underlying earnings
Underlying earnings For the half year ended 31 January Underlying 2023 2022 Change FY23 guidance Operating profit £317.7m £332.2m (£14.5m) Share of JV result expected Net finance expense (£6.0m) (£6.0m) - to be a small loss. Share of result of JVs £0.4m £1.0m (£0.6m) Profit before taxation £312.1m £
Slide 19: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 19 -
Slide 20: Self-Remediation Terms
Self-Remediation Terms Converts the principles of the Building Safety Pledge into a binding agreement with Government. Self-Remediation Terms (‘SRT’) contract Potential consequences of Signing the SRT Standard of remediation not signing Does not change our Future prohibition on new Clarifies require
Slide 21: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 21 -
Slide 22: Ongoing responsible approach to building safety
Ongoing responsible approach to building safety 2023 2022 Prudent and proactive Legacy building safety (£53.0m) (£22.1m) improvements provision Cost estimates prudently revised due to Reimbursement assets £50.0m £2.5m inflationary environment. Net cost of sales (£3.0m) (£19.6m) Widening of scope on
Slide 23: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 23 -
Slide 24: Balance sheet
Balance sheet As at 31 January 2023 2022 Change Fixed assets £33.4m £35.0m (£1.6m) Robust, asset-backed Investments in joint arrangements £34.8m £52.0m (£17.2m) balance sheet. Inventory £4,417.3m £4,083.1m £334.2m Land £2,696.6m £2,607.9m £88.7m Assets Work-in-progress £1,720.7m £1,475.2m £245.5m In
Slide 25: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 25 -
Slide 26: Overall land bank
Overall land bank 1 As at 31 January 2023 2022 2023 2022 Mvt Land with DPP 31,420 29,876 Land with DPP £1,794.4m £1,686.3m £108.1m Pipeline 26,300 27,600 Pipeline and strategic £902.2m £921.6m (£19.4m) Bellway owned & controlled Total land value £2,696.6m £2,607.9m £88.7m 57,720 57,476 plots Bellway
Slide 27: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 27 -
Slide 28: Work-in-progress
Work-in-progress As at 31 January Strong controls over WIP investment 2023 2022 Change Investment matched to order book Site WIP £1,602.5m £1,360.1m £242.4m and localised demand. Continued focus on accelerating production Showhomes £107.5m £110.1m (£2.6m) of contracted social homes. Part-exchange st
Slide 29: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 29 -
Slide 30: Strong cash balance provides resilience
Strong cash balance provides resilience For the half year ended 31 January Average month end cash balance of £253m. Low adjusted gearing, including land creditors, of 2.3%. Results presentation Results presentation2816March 2023 October 2018 - Page 30 -
Slide 31: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 31 -
Slide 32: Capital returns and value creation
Capital returns and value creation For the half year ended 31 January 8.2% p.a. return over 3 years, £100m share despite significant market challenges. Interim dividend FY23 dividend buyback Expect to maintain Return of surplus NAV at Jan 20 45.0p full year dividend capital with initial (2022: 45.0p
Slide 33: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 33 -
Slide 34: Ambitious carbon reduction targets
Ambitious carbon reduction targets Bellway’s commitment to a significant reduction in carbon emissions. Scope 1 and 2 Energy House 2.0 Target to reduce scope 1 and scope 2 emissions by 46% by 2030. Energy House 2.0 is a flagship research project at the University of Salford. Successful trial of HVO
Slide 35: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 35 -
Slide 36: Summary of guidance
Summary of guidance FY23 Volume output Around 11,000 homes. Overall ASP Around £300k. Underlying operating Moderation from the 17.6% achieved in H1. margin Expect to maintain full year dividend per share in line with prior Dividend year at 140.0p, subject to Board and shareholder approval. Share buy
Slide 37: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 37 -
Slide 38: Operating review
Operating review Jason Honeyman Chief Executive Results presentation Results presentation2816March 2023 October 2018 - Page 38 -
Slide 39: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 39 -
Slide 40: Trading review
Trading review For the half year ended 31 January Reservation rates in H1 Weekly reservation and cancellation rates ~ (26.5%) (59.6%) (45.1%) (43.8%) +66.7% -% (2.1%) +17.5% 2023 2022 Change (12.4%) (45.8%) (36.6%) (31.7%) Private 91 162 (43.8%) Social 47 40 17.5% Total 138 202 (31.7%) Cancellation
Slide 41: Notes
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Slide 42: Mortgage market
Mortgage market Average 5 year fixed rate (%) 7.0% Nov 22 6.20% Current backdrop Feb 23 5.39% 6.0% Healthy underlying demand with customers adapting to Mortgage Rates (%) Oct 22 5.0% 5.61% new mortgage rates. 4.0% Feb 23 4.38% Increase in mortgage products 3.0% in early 2023. 2.0% Mar-22 Apr-22 May-
Slide 43: Notes
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Slide 44: Current trading and order book
Current trading and order book First six weeks since 1 February Order book at 12 March (2022: 13 March) Against a very strong comparative, reservations in 6 weeks since 1 February averaged 192 per week (2022 – 291). Order book units (number) Order book value (£m) The private reservation rate was 135
Slide 45: Notes
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Slide 46: Land bank
Land bank As at 31 January Bellway land bank1 c.58,000 plots representing a land bank length of 5 years. Limited activity in H1 but strong foundation for selective investment. Helps mitigate ongoing delays and complexity in planning system. Well placed to grow outlet numbers in summer and beyond. Be
Slide 47: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 47 -
Slide 48: Strategic land
Strategic land Strengthening our strategic land bank Financial flexibility through use of option agreements. Relatively low initial capital outlay. Driven by combination of organic growth and small corporate acquisitions. Growth of c.50% to 41,700 plots over the last two years (2021 – 27,700 plots).
Slide 49: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 49 -
Slide 50: Productivity and costs
Productivity and costs Materials and labour backdrop Build cost inflation approaching 10% in H1. Cost pressures persist, though seeing improved rates from some suppliers and subcontractors. Availability of labour and materials beginning to ease. Marked improvement in brick availability with limited
Slide 51: Notes
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Slide 52: Artisan – driving efficiencies
Artisan – driving efficiencies Range rationalised since launch in 2018 to drive further efficiencies. Cost savings from improved site layouts and value engineering initiatives. Subcontractors becoming increasingly familiar with Artisan standard house-types. Will increase to over 40% of FY23 completi
Slide 53: Notes
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Slide 54: Operational strengths
Operational strengths Clear focus for our experienced teams Investing for Bellway’s future Tight control of WIP investment 9% of employees in ‘earn and learn’ roles and Construction and accelerating the delivery of plan to continue graduate and apprentice social homes. intake later this year. Drivin
Slide 55: Notes
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Slide 56: Better with Bellway - Customer First
Better with Bellway - Customer First Working towards our targets Customer First is a flagship strategic priority Recognised as 5 star homebuilder for 7th consecutive year, despite pressures in the supply chain. Target to improve 9 month Customer Satisfaction Initiatives underway, including training
Slide 57: Notes
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Slide 58: ‘Meet the Builder’
‘Meet the Builder’ Opportunity for customers to gain useful Customers are provided with information insight into the build process and have questions on the sustainability and energy answered by our site managers. efficiency benefits of our homes. Detailed guide to costs of running a Range of constr
Slide 59: Notes
Notes Results presentation Results presentation2816March 2023 October 2018 - Page 59 -
Slide 60: Outlook
Outlook Focus on the key stages of land CMA Market acquisition, planning, construction and Study sales. Currently 95% forward sold. FY23 volume Targeting FY23 volume of c.11,000 homes. The order book will reduce by July 2023, Order book with a lower volume output expected in FY24. Resilience Maintai
Slide 61: Notes
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Slide 62: Q&A
Q&A Jubilee Green Warwickshire Results presentation Results presentation2816March 2023 October 2018 - Page 62 -
Slide 63: Notes
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Slide 64: Appendices
Appendices 1. Income statement 2. Net finance expense 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. S
Slide 65: Notes
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Slide 66: Appendix 1 - Income statement
Appendix 1 - Income statement For the half year ended 31 January 2023 2022 Change Adjusting Adjusting Underlying items Total Underlying items Total Homes sold 5,695 - 5,695 5,694 - 5,694 -% Average selling price £316,929 - £316,929 £311,849 - £311,849 1.6% Housing revenue £1,804.9m - £1,804.9m £1,77
Slide 67: Notes
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Slide 68: Appendix 2 – Net finance expense
Appendix 2 – Net finance expense For the half year ended 31 January 2023 2022 Change Net bank interest (receivable)/payable including fees (£1.3m) £1.3m (200.0%) Fixed rate sterling USPP notes £1.7m £1.7m - Other interest: £5.6m £3.0m 86.7% Made up of:- Land creditors – IFRS 9 £6.3m £3.3m 90.9% Leas
Slide 69: Notes
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Slide 70: Appendix 3 – Housing revenue
Appendix 3 – Housing revenue For the half year ended 31 January Homes sold (No.) 2023 2022 Change Average selling price (‘ASP’) Private Social Total Private Social Total Private Social Total + 3.8% North 2,368 473 2,841 2,471 394 2,865 (4.2%) 20.1% (0.8%) + 1.6% South 2,151 703 2,854 2,230 599 2,829
Slide 71: Notes
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Slide 72: Appendix 4 – ASP per square foot
Appendix 4 – ASP per square foot For the half year ended 31 January 2023 2022 Change Private Social Total Private Social Total Private Social Total North 288 165 274 263 151 252 9.5% 9.3% 8.7% South - made up of:- 404 224 365 372 221 346 8.6% 1.4% 5.5% London 513 233 497 516 339 492 (0.6%) (31.3%) 1
Slide 73: Notes
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Slide 74: Appendix 5 – Geographic split
Appendix 5 – Geographic split For the half year ended 31 January Completion analysis Revenue analysis 2023 2022 2023 2022 North South (excl. London) London Results presentation Results presentation2816March 2023 October 2018 - Page 74 -
Slide 75: Notes
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Slide 76: Appendix 6 – Product analysis
Appendix 6 – Product analysis For the half year ended 31 January Product mix analysis Selling price analysis 2023 2022 2023 2022 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 77: Notes
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Slide 78: Appendix 7 – Buyer analysis: completions
Appendix 7 – Buyer analysis: completions For the half year ended 31 January 2023 2022 Homes sold 2023 2022 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 79: Notes
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Slide 80: Appendix 8 – Buyer analysis: reservations
Appendix 8 – Buyer analysis: reservations For the half year ended 31 January 2023 2022 Reservations 2023 2022 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 81: Notes
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Slide 82: Appendix 9 – Order book at 31 January
Appendix 9 – Order book at 31 January 2023 2022 Change Private Social Total Private Social Total Private Social Total At 1 August 4,712 2,511 7,223 4,991 2,091 7,082 (5.6%) 20.1% 2.0% Reservations 2,361 1,219 3,580 4,214 1,026 5,240 (44.0%) 18.8% (31.7%) Completions (4,519) (1,176) (5,695) (4,701) (
Slide 83: Notes
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Slide 84: Appendix – Mortgages and affordability
Appendix 10 – Mortgages and affordability Mortgage costs as a proportion of disposable income 45% 10% 9% 40% Mortgage costs as a proportion of UK average household disposable Mortgage as a % of disposable income Five year 75% LTV mortgage rate (%) 8% 35% 7% income, based on Bellway private 6% ASP in
Slide 85: Notes
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Slide 86: Appendix 11 - Land with detailed planning permission
Appendix 11 - Land with detailed planning permission¹ As at 31 January 2023 2022 Average Average Plots Cost Plots Cost plot cost plot cost Land bank At 1 August 32,344 £1,812.3m £56.0k 30,933 £1,808.4m £58.5k Good visibility Net purchases 4,771 £326.9m £68.5k 4,637 £234.6m £50.6k with regards to con
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Slide 88: Appendix 12 – Land supply
Appendix 12 – Land supply Bellway owned and controlled land (plots) Cash land spend and value of new land Land with DPP1 Pipeline1 contracts (£m) North South New land contracts Cash land spend 1 See appendix 15 for definitions. Results presentation Results presentation2816March 2023 October 2018 - P
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Slide 90: Appendix 13 – Strategic land
Appendix 13 – Strategic land As at 31 January 2023 2022 Total: 41,700 Total: 30,500 Positive planning status Longer term interests Allocated Longer term interests Application Both Results presentation Results presentation2816March 2023 October 2018 - Page 90 -
Slide 91: Notes
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Slide 92: 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 up front payments. Seek to defer payments where it is cost effective to do so. £263.9m due for payment in the next 12 months. £263.9m Results presentat
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Slide 94: 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 owned or controlled by the Group pending an implementable detailed planning permission,
Slide 95: Notes
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Slide 96: 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 97: Results presentation Results presentation 28 16 March
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