Bellway P.l.c. · LSE:BWY
Bellway P.l.c — FY2021 Earnings Presentation
91 slides from Bellway P.l.c's earnings presentation, Oct 19, 2021
Slide 1: Results Presentation Year ended 31 July 2021
Results Presentation Year ended 31 July 2021
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 excludes the Group’s share of its joint ventures. Results presentation Results presentation1916October October2021 2018 ‐ Page 2 ‐
Slide 3: Introduction
Introduction Jason Honeyman Chief Executive Results presentation Results presentation1916October October2021 2018 ‐ Page 3 ‐
Slide 4: Highlights
Highlights Underlying Record Record Housing revenue profit before taxation order book land bank £3,107.1m £530.8m £2,022.3m 86,571 plots1 +40.9% +71.6% +14.9% +19.6% 1 Includes the Group’s share of land owned and controlled through joint venture partners comprising 938 plots (2020: 472 plots). Resul
Slide 5: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 5 ‐
Slide 6: Strategic priorities
Strategic priorities Volume growth Value creation Results presentation Results presentation1916October October2021 2018 ‐ Page 6 ‐
Slide 7: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 7 ‐
Slide 8: Record land investment supports growth
Record land investment supports growth Land contracted in year Three investment drivers Front footed and disciplined approach to acquire sites Contracted value1 Contracted plots1 at good margins. Strengthened land bank, providing greater depth and platform for growth. £1,066.0m 19,819 plots +37.1% +
Slide 9: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 9 ‐
Slide 10: Volume growth
Volume growth Short‐term Longer‐term Structural Political Strengthened Land Increased Strong order demand support land bank investment selling outlets book Further divisional Strong financial returns expansion and balance sheet c.20% growth in output by FY23. Target of 16,000 – 18,000 homes p.a. Dis
Slide 11: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 11 ‐
Slide 12: Finance review
Finance review Keith Adey Finance Director Results presentation Results presentation1916October October2021 2018 ‐ Page 12 ‐
Slide 13: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 13 ‐
Slide 14: Financial performance
Financial performance For the year ended 31 July 2021 2020 Change Adjusting Adjusting Underlying Total Underlying items Total Underlying Total items Housing revenue £3,107.1m - £3,107.1m £2,204.4m - £2,204.4m 40.9% 40.9% Revenue Other revenue £15.4m - £15.4m £21.0m - £21.0m (26.7%) (26.7%) Total rev
Slide 15: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 15 ‐
Slide 16: Housing revenue
Housing revenue For the year ended 31 July 2021 2020 Strong H1 completions reflecting pent up demand and Units ASP Units ASP brought forward WIP investment. Private 7,896 £346.7k 5,851 £332.9k Rise in ASP driven by focus on higher value homes prior to Social 2,242 £165.0k 1,671 £153.4k Help‐to‐Buy r
Slide 17: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 17 ‐
Slide 18: Geographic and brand analysis
Geographic and brand analysis For the year ended 31 July Group 2021 2020 2021 2020 Units ASP Units ASP Units ASP Units ASP North 4,697 £275.9k 3,708 £257.7k Private 417 £408.1k 348 £514.3k South 5,441 £332.9k 3,814 £327.4k Social 301 £239.4k 118 £258.2k Total 10,138 £306.5k 7,522 £293.1k Total 718 £
Slide 19: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 19 ‐
Slide 20: Legacy building safety
Legacy building safety For the year ended 31 July 2021 Responsible approach £165m set aside since 2017. Additional provision (£66.9m) £116m provision remaining at 31 July 2021. In the year ahead Recoveries £15.1m Could be some additional costs but known issues are fully provided. Continuing to pursu
Slide 21: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 21 ‐
Slide 22: Operating performance
Operating performance For the year ended 31 July FY21 Looking forward Higher admin. expense due £22m site based drag due Still some legacy effect of to recommencement. of New land and commercial to COVID-19. historical cost increases. divisional incentive initiatives will improve margin in schemes.
Slide 23: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 23 ‐
Slide 24: Taxation
Taxation For the year ended 31 July Effective tax rate of 18.4% will increase. 2021 Standard rate of corporation tax will increase to 25% Profit before taxation £479.0m from April 2023. Taxation (£88.3m) Residential Property Developer Tax (‘RPDT’) likely to affect all housebuilders, possibly from Ap
Slide 25: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 25 ‐
Slide 26: Balance sheet
Balance sheet As at 31 July 2021 2020 Change Fixed assets £35.7m £36.7m (£1.0m) Investments in joint arrangements £55.3m £60.8m (£5.5m) Pension asset of £10.2m. Inventory £4,032.2m £3,863.0m £169.2m Land £2,483.9m £2,216.2m £267.7m Assets WIP £1,548.3m £1,646.8m (£98.5m) Debtors £93.3m £71.7m £21.6m
Slide 27: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 27 ‐
Slide 28: Highly cash generative
Highly cash generative For the year ended 31 July Committed facilities at 18 October, including Average net cash, excluding land creditors, Low gearing of 3.8% including land creditors. USPP, of £500m, provides resilience and of £75m in FY22. strategic flexibility. Unwinding b/f site construction Re
Slide 29: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 29 ‐
Slide 30: Land with detailed planning permission
Land with detailed planning permission 1 As at 31 July 2021 2020 Land bank ASP Average Average Additions in period have expected Plots Cost Plots Cost plot cost plot cost ASP of c.£280k. ASP of DPP land bank is c.£290k. At 1 August 28,289 £1,743.3m £61.6k 26,421 £1,630.6m £61.7k Net 12,782 £722.2m £
Slide 31: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 31 ‐
Slide 32: Overall land bank
Overall land bank 1 As at 31 July 2021 2020 Bellway owned and controlled land bank is c.5.4x FY21’s actual output. Land with DPP 30,933 28,289 Pipeline 24,300 16,300 Strengthened land bank – more outlets and future growth. Bellway owned and controlled plots 55,233 44,589 Bellway share of land owned
Slide 33: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 33 ‐
Slide 34: Work-in-progress
Work‐in‐progress As at 31 July 2021 2020 Change Site WIP is at earlier Manageable, yet stages of production ongoing sector‐wide compared to a year ago. supply chain constraints. Site WIP £1,431.4m £1,496.1m (£64.7m) Showhomes £115.1m £124.6m (£9.5m) Part‐exchange stock £1.8m £26.1m (£24.3m) Volume g
Slide 35: Notes
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Slide 36: Dividend and value creation
Dividend and value creation For the year ended 31 July 12.9% p.a. return over three years 2021 2020 Change Interim dividend 35.0p nil 100.0% NAV at July 18 Proposed final dividend 82.5p 50.0p 65.0% NAV growth Total dividend 117.5p 50.0p 135.0% Cumulative dividend paid Dividend cover of 3x underlying
Slide 37: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 37 ‐
Slide 38: Better with Bellway
Better with Bellway Long‐term approach to Integral part of our culture sustainable and and day‐to‐day responsible business operations. practices. Flagship priorities Positive influence on our Future operational and Employer of Carbon stakeholders and the Customer First financial success. Choice redu
Slide 39: Notes
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Slide 40: Carbon reduction
Carbon reduction Developing strategy to reduce: Actions Carbon Carbon arising Future Homes Standard working group. Carbon output embedded through within our throughout the household business. Controllable office, stock plot and compound supply chain. emissions. energy supplies use renewable sources.
Slide 41: Notes
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Slide 42: Summary of guidance
Summary of guidance FY22 FY23 Long‐term +10% +10% y.o.y Volume growth 16,000 to 18,000 to > 11,100 to c.12,200 Overall ASP c.£295k c.£290k Underlying operating margin c.18% 18% to 19% without HPI Underlying profit before tax £1.25bn Dividend 1/3 of underlying after tax earnings Results presentation
Slide 43: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 43 ‐
Slide 44: Operating review
Operating review Jason Honeyman Chief Executive Results presentation Results presentation1916October October2021 2018 ‐ Page 44 ‐
Slide 45: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 45 ‐
Slide 46: Trading review
Trading review For the year ended 31 July Weekly reservation rate ~ Sales at start of FY21 were inflated due to 2021 2020 Change pent up demand and stamp duty holiday before moderating. Private 169 141 19.9% Social 36 37 (2.7%) HPI of around 3% to 5% in FY21 – expect it to Total 205 178 15.2% modera
Slide 47: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 47 ‐
Slide 48: Land
Land For the year ended 31 July Contracted plots and sites Investment of over £1bn. 2021 2020 Change Bellway 18,937 11,921 7,016 Large sites provide foundation for growth and Bellway’s share of JVs 882 203 679 higher margins. Total contracted plots 19,819 12,124 7,695 Investment in London is focused
Slide 49: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 49 ‐
Slide 50: Productivity and costs
Productivity and costs Production Artisan Collection Realistic construction plans Supply chain constraints Procurement benefits, and strong management not expected to ease in Plotted across 29,000 including economies of teams. immediate future. plots on 212 scale, help mitigate cost developments. pr
Slide 51: Notes
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Slide 52: Future Homes Standards
Future Homes Standards Artisan provides a solid platform to meet the 2023 and 2025 building regulations. Artisan can be updated centrally, avoiding duplication of costs. Three sites identified as case studies to develop knowledge on energy efficiency and running costs. Partnered with the University
Slide 53: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 53 ‐
Slide 54: Better with Bellway – employer of choice
Better with Bellway – employer of choice Being an ‘Employer of Choice’ is a key priority. Senior Leaders Flexible Working Policy. Development Programme. Equality, Diversity and Early careers programme. Inclusion Policy. 8.5% of colleagues are in 89% of colleagues say ‘learning and earning’ Bellway i
Slide 55: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 55 ‐
Slide 56: Better with Bellway - Customer First
Better with Bellway ‐ Customer First Target to further improve build quality and customer service levels. Re‐training all staff across the business and training business partners. More quality inspections. New customer portal. More resources in customer care. Results presentation Results presentatio
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Slide 58: Current trading and order book
Current trading and order book Order book at 3 Oct 2021 (2020: 4 Oct) Robust reservation rate of 218 per week in the first nine weeks (FY20: 239, FY19: 183). Order book units (number) Order book value (£m) 9% behind unusually strong FY20 comparator, but 19% ahead of +1.6% +5.2% FY19 in first 9 weeks
Slide 59: Notes
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Slide 60: Outlook
Outlook Growth of 20% across next two financial years. Volume growth Opportunity to grow business to beyond 16,000 homes p.a. in the longer‐term. Anticipated improvements in underlying operating margin. Value creation Significant value for shareholders through growth in NAV and dividends. Responsibl
Slide 61: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 61 ‐
Slide 62: Q&A
Q&A The Vickers Ely, Cambridgeshire Results presentation Results presentation1916October October2021 2018 ‐ Page 62 ‐
Slide 63: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 63 ‐
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 8. Order book at 31 July 9. Land supply 10. Strategic land 11. Land creditors 12. Land bank glossary Results presentation Results presentation1916
Slide 65: Notes
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Slide 66: Appendix 1 - Income statement
Appendix 1 ‐ Income statement For the year ended 31 July 2021 2020 Change Adjusting Adjusting Underlying Total Underlying Total items items Homes sold 10,138 - 10,138 7,522 - 7,522 34.8% Average selling price £306,479 - £306,479 £293,054 - £293,054 4.6% Housing revenue £3,107.1m - £3,107.1m £2,204.4
Slide 67: Notes
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Slide 68: Appendix 2 – Net finance expense
Appendix 2 – Net finance expense For the year ended 31 July 2021 2020 Change Net bank interest payable including fees £3.1m £6.0m (48.3%) Fixed rate sterling USPP notes £1.6m ‐ 100.0% Other interest: £6.4m £7.4m (13.5%) Made up of:‐ Land creditors / debtors – IFRS 9 £6.5m £6.9m (5.8%) Lease liabilit
Slide 69: Notes
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Slide 70: Appendix 3 – Housing revenue
Appendix 3 – Housing revenue For the year ended 31 July Homes sold (No.) 2021 2020 Change Average selling price (‘ASP’) Private Social Total Private Social Total Private Social Total + 4.1% North 3,983 714 4,697 3,182 526 3,708 25.2% 35.7% 26.7% + 4.6% South 3,913 1,528 5,441 2,669 1,145 3,814 46.6%
Slide 71: Notes
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Slide 72: Appendix 4 – ASP per square foot
Appendix 4 – ASP per square foot For the year ended 31 July 2021 2020 Change Private Social Total Private Social Total Private Social Total North 250 147 240 236 142 227 5.9% 3.5% 5.7% South ‐ made up of:‐ 360 235 333 367 214 330 (1.9%) 9.8% 0.9% London 516 316 434 585 299 513 (11.8%) 5.7% (15.4%) N
Slide 73: Notes
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Slide 74: Appendix 5 – Geographic split
Appendix 5 – Geographic split For the year ended 31 July Completion analysis Revenue analysis 2021 2020 2021 2020 North South (excl. London) London Results presentation Results presentation1916October October2021 2018 ‐ Page 74 ‐
Slide 75: Notes
Notes Results presentation Results presentation1916October October2021 2018 ‐ Page 75 ‐
Slide 76: Appendix 6 – Product analysis
Appendix 6 – Product analysis For the year ended 31 July Product mix analysis Selling price analysis 2021 2020 2021 2020 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 Houses
Slide 77: Notes
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Slide 78: Appendix 7 – Buyer analysis
Appendix 7 – Buyer analysis For the year ended 31 July 2021 2020 Homes sold 2021 2020 Second time buyers Deposit assisted and first time buyers Other buyers Other second time buyers Unassisted first time buyers Housing Association Part‐exchange Help to Buy – non‐London Investor Help to Buy – London
Slide 79: Notes
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Slide 80: Appendix 8 – Order book at 31 July
Appendix 8 – Order book at 31 July 2021 2020 Change Private Social Total Private Social Total Private Social Total At 1 August 4,101 2,487 6,588 2,634 2,244 4,878 55.7% 10.8% 35.1% Reservations 8,786 1,846 10,632 7,318 1,914 9,232 20.1% (3.6%) 15.2% Completions (7,896) (2,242) (10,138) (5,851) (1,67
Slide 81: Notes
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Slide 82: Appendix 9 – Land supply
Appendix 9 – Land supply Bellway owned and controlled land (plots) Cash land spend and value of new land Land with DPP Pipeline contracts (£m) New land contracts1 Cash land spend 1 Includes the Group’s share of land contracted through joint venture partners North South with a contract value of £39m
Slide 83: Notes
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Slide 84: Appendix 10 – Strategic land
Appendix 10 – Strategic land As at 31 July 2021 2020 Total: 30,400 Total: 27,300 Positive planning status Longer term interests Allocated Longer term interests Application Both Results presentation Results presentation1916October October2021 2018 ‐ Page 84 ‐
Slide 85: Notes
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Slide 86: Appendix 11 – Land creditors
Appendix 11 – Land creditors As at 31 July 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. £380.4m due for payment in the next 12 months. £380.4m Results presentation
Slide 87: Notes
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Slide 88: Appendix 12 – Land bank glossary
Appendix 12 – Land bank glossary Owned and controlled plots 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, with develo
Slide 89: Notes
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Slide 90: 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 91: Results presentation
Results presentation Results presentation1916October October2021 2018 ‐ Page 91 ‐