Galliford Try plc

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Galliford Try plc Investor Relations Presentation
September 2003
2
Agenda

• Introduction David Calverley
• Financial Review Frank Nelson
• Construction Business Review Andy Sturgess
• Housebuilding Business Review Greg Fitzgerald
• Summary and Outlook David Calverley

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David Calverley - Chief Executive
Introduction
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Introduction
Strategy

• Construction
• A market leader in the delivery of a complete
  construction service through a partnership
  approach with a strong sector focus.

• Housebuilding
• A leading regional developer with strong local
  brands, specialising in individually designed
  developments with expertise in brownfield,
  conversion and a strong focus on customer service.

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Introduction
Highlights

• Board structure streamlined and strengthened
• Housebuilding operating profits rise to record
  24.1m
• Construction returns to profit in second half and
  restructuring delivers 4m of annual cost savings
• Scottish Water project consolidates position as
  framework contractor for water industry

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Financial Review
Frank Nelson Finance Director
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Financial Review
Summarised Profit Loss Account to 30th June 2003
2002
2003
(m)
Turnover 640.4 649.8
Profit before interest (pre exceptional) 20.6
20.2
Interest charge (3.2) (2.2)
Profit before tax (pre exceptional) 17.4 18.0
Exceptional charge (3.9) -
Profit before tax (post exceptional) 13.5 18.0
Earnings per share Pre exceptional 5.7p 5.8p P
ost exceptional 4.5p 5.8p
Dividend per share 1.5p 1.5p
Return on shareholders funds (pre exceptional)
30.5 36.8
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Financial Review
Segmental Analysis to 30th June 2003
Group Turnover (including joint ventures)
Profit/(loss)
2002
2003
(m)
2002
2003
Construction 480.3 487.3 (0.4) 0.4
Housebuilding 159.5 162.0 24.1 22.5
Group 0.6 0.5 (3.1) (2.7)
Exceptional charge (3.9)
640.4 649.8 16.7 20.2
Less net interest payable (3.2) (2.2)
Profit before tax 13.5 18.0
3.4m of the exceptional charge is in
construction and 0.5m is in group.
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Financial Review
Balance Sheet - Financing
2002
2003
(m)
Shareholders funds 60.3 53.7
Net debt 17.8 12.9
Total capital employed 78.1 66.6
Gearing 30 24
Interest cover (post exceptional charge) 5.2
9.4
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Financial Review
Cash Flow Summary
2002
2003
(m)
Group operating profit (post exceptional) 15.5 19
.7
Depreciation and amortisation 1.9 2.0
Land spend (46.8) (48.0)
Land realisations 36.9 36.1
Work in progress movement (18.9) 4.1
Other working capital 18.6 2.5
Net cash flow from operating activities 7.2 16.4
Interest (2.5) (1.8)
Tax (4.2) (3.5)
Capital expenditure (1.7) (1.5)
Dividends (3.3) (3.0)
Other (0.4) (5.4)
Movement in net debt (4.9) 1.2
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Construction Business Review
Andy Sturgess Managing Director
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Construction Business Review
Sector Analysis - Pre Restructuring
Business Units
Communications
Rock Alluvium
Try Accord
Partnerships
Central
North
South
Turnover
Market Sectors
Water 9.0
Rail 6.0
Infrastructure 9.0
Health Education 12.0
PFI/PPP 1.0
Commercial 32.0
Interiors 12.0
Affordable Housing 8.0
Telecommunications 8.0
Ground Engineering 3.0
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Construction Business Review
Objectives

• Sustainable predictable profitability
• National sector focus
• Alignment of skills base to opportunities
• Involvement at earliest possible stage in project
  development
• Partnering approach
• Margins initially minimum of 1

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Construction Business Review
Remedial Action

• Six business units
• Three offices closed
• Tier of management removed
• Cost reduction of 4m
• Improved risk management
• Increased selectivity
• Our people

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Construction Business Review
Sector Focus 2003/04
Business Units
Communications
Rock Alluvium
Partnerships
Central
North
South
Market Sectors
Water
Rail
Infrastructure
Health Education
PFI/PPP
Commercial
Interiors
Affordable Housing
Telecommunications
Ground Engineering
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Construction Business Review
Total Work In Hand (m)
Total Work In Hand Non Price Competitive
Market Sectors
Total Work In Hand
Water 237.0 237.0
Rail 76.0 76.0
Infrastructure 75.0 51.0
Health 15.0 12.0
Education 83.0 53.0
Commercial 126.0 87.0
Interiors 14.0 10.0
Affordable Housing 38.0 37.0
Telecommunications 7.0 -
Ground Engineering 2.0 -
Total 673.0 563.0
84.0
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Construction Business Review
Work In Hand 2003/04 (m)
Work In Hand Non Price Competitive
Market Sectors
Work In Hand
Water 92.0 92.0
Rail 24.0 24.0
Infrastructure 22.0 17.0
Health 14.0 12.0
Education 73.0 46.0
Commercial 105.0 74.0
Interiors 14.0 10.0
Affordable Housing 31.0 30.0
Telecommunications 7.0 -
Ground Engineering 2.0 -
Total 384.0 305.0
80 secure
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Construction Business Review
Market Trends

• Public Regulated
• Water
• Health
• Education
• Affordable Housing
• Communications
• Commercial

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Construction Business Review
Conclusion

• Sustainable predictable profitability
• Focus on profit before turnover
• Dedicated fields of expertise have been created
  in all business units
• Framework partnering give more sustainable
  profit
• Appropriate cost base
• Moving towards 2 margins

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Housebuilding Business Review
Greg Fitzgerald Managing Director
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Housebuilding Business Review
Housing Highlights

• Improved margins
• Performance of Midas Homes, equal to the best in
  the industry
• Encouraging customer satisfaction levels achieved
• Value of order book up 8 over last year
• Divisional Board formed provide platform for
  further expansion

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Housebuilding Business Review
Housing Highlights - Fairfield

• Planning and commencement on site achieved
• Non-recourse joint venture with Linden Homes
• 44 acre development
• Stamford project manager with infrastructure
  works being carried out by Galliford Try
  Construction
• Joint venture revenues from land sales to exceed
  45m
• Stamford commenced development of 83 houses

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Housebuilding Business Review
Strong Regional Brands
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Housebuilding Business Review
Market Trends

• Return to sustainable levels of house price
  inflation
• Continuation of low mortgage rates
• Difficult planning environment
• New build residential units extremely popular in
  all market sectors
• PPG3 Planning Guidelines leading to higher
  density developments

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Housebuilding Business Review
Key Statistics
12 months to June
2003
2002
Increase
Units 741.0 899.0 (18.0)
ASP 000 200.0 177.0 13.0
Turnover m 159.0 162.0 (1.0)
Operating Profit m 24.1 22.5 7.1
Margin 15.1 13.9 1.2
ROCE 23.7 25.5 (1.8)
Order Book m 67.0 62.0 8.0
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Housebuilding Business Review
Geographical Spread
Average Price 000
Turnover
Units
Midas Homes 253.0 161.0
30.0
Gerald Wood 13.0 519.0
Stamford 285.0 160.0
33.0
Try Southern 93.0 234.0
37.0
Try Thames Valley 97.0 344.0
741.0 200.0
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Housebuilding Business Review
Land Bank Owned or Under Our Control

12 months to June
2003
2002
Land Bank - Units 2236.0 2252.0
Value - m 97.0 94.0
Average cost of plots - 000s 44.0 42.0
Plot cost as of sales 22.0 23.7
Strategic land Acres 640.0 607 .0
Probable plot numbers 2000 plus
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Housebuilding Business Review
Summary

• Strong overall performance
• Fairfield development underway
• Detailed planning consent for all units proposed
  this year
• Scope to raise the performance of operating
  companies
• Southwest to expand
• Expect to achieve half and full year planned
  performance

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Summary and Outlook
David Calverley - Chief Executive
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Summary and Outlook

• Board structure streamlined and strengthened
• Construction
• Market conditions remain healthy, particularly in
  the public and regulated sectors
• New sector focus will lead to sustainable growth
  in margins
• 80 construction order book for 2003/04 in hand
• Housebuilding
• Market conditions remain healthy in mainstream
  market
• Continuing opportunity to grow our strong
  regional brands
• 67m of 2003/04 order book in hand
• Board is confident of achieving significant
  growth in results for the current year

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Galliford Try plc Investor Relations Presentation
September 2003