Highlights
|
Financial
|
2018 |
2017
|
Change
|
|
Revenue1 (including share of joint ventures) |
£3,132m |
£2,820m |
+11% |
|
Group revenue1 |
£2,932m |
£2,662m |
+10% |
|
Pre-exceptional profit before tax2,3 |
£188.7m |
£147.6m |
+28% |
|
Profit before tax |
£143.7m |
£58.7m |
+145% |
|
Pre-exceptional earnings per share2,3,4 |
158.4p |
131.1p |
+21% |
|
Earnings per share4 |
121.1p |
53.1p |
+128% |
|
Full year dividend per share5 |
77.0p |
86.0p |
-10% |
|
Net cash |
£98.2m |
£7.2m |
+£91.0m |
|
Group return on net assets6 |
24.9% |
14.0% |
+10.9pts |
|
Pre-exceptional Group return on net assets7 |
29.2% |
27.5% |
+1.7pts |
Group
· Very strong underlying performance reflecting excellent progress made against strategy to 2021
· 6,193 total new homes built by Linden Homes and Partnerships & Regeneration (2017: 5,490)
· Sales order books in Linden Homes and Partnerships & Regeneration robust at £698m (2017: £638m)
· Successful 1 for 3 rights issue in April 2018 resulting in net proceeds of £150m
· Average net debt at £227m (excluding the rights issue proceeds)
· Full year dividend payment of 77.0p (2017 restated: 86.0p), covered 2.0x by pre-exceptional profits in line with policy announced at the rights issue
· Pre-exceptional return on net assets improved to 29.2% from 27.5%
· On track to achieve Group 2021 strategic targets with adjustments to divisional targets
Peter Truscott, Chief Executive, commented:
“We have delivered a very strong underlying performance during the year, driven by excellent progress towards our strategic objectives across all three businesses.
Linden Homes continued to prioritise margin growth, benefiting from further standardisation and the robust control of overheads. This resulted in increased profitability in a year with modest house price inflation. Volumes also grew reflecting the strength of our product offering, and with the sector supported by Help to Buy, good mortgage availability and the cut in stamp duty for first-time buyers. The land market continues to be favourable, allowing us to buy land at robust margins, in the right locations for our new standardised product.
Partnerships & Regeneration achieved strong growth in both revenue and margin, with excellent contributions from the new businesses in Southampton, Bristol and East Midlands. The business has a strong order book and continues to see growing demand across all regions with opportunities in both contracting and mixed-tenure.
The underlying Construction business performed well and continues to see a pipeline of suitable opportunities, with new projects delivering improved margins. We have made good progress towards completion of the AWPR contract, with significant sections of the road open to traffic and the final section expected to be open by late Autumn 2018.
The rights issue in April has strengthened the balance sheet and ensures that the Group's businesses are well positioned, with the appropriate capital, to deliver on their respective growth opportunities in line with our Strategy to 2021.”
STRATEGY TO 2021
In February 2017, we set out our three-part strategy for sustainable growth:
1. Drive operating efficiencies by streamlining our operations to increase margins, so we may respond faster as markets change and ensure we have strong foundations for top-line growth.
2. Maintain capital discipline by continuing to manage capital prudently, reinvesting appropriately in growing the business and continuing to pay attractive dividends.
3. Operating sustainably is fundamental to everything that we do, with a principal focus on health and safety and the development and well-being of our people.
As part of the strategy, the Board set out Group financial targets for the five years to 2021, based on the results for FY 2016. The rights issue in April, together with the acceleration of the higher dividend cover, require a rebasing of the prospective targets for dividend CAGR, with the Group targets otherwise remaining as:
· 60% growth in profit before tax to FY 2021;
· a five year CAGR on dividend of at least 5%1; and
· a Group return on net assets in FY 2021 of at least 25%.
The Group is making strong progress towards its objectives, with each business working towards individual financial targets to drive Group profit and returns. In Linden Homes, reflecting a slightly more cautious outlook for the wider economy, the business is now focused on delivering more prudent volume growth, but a stronger improvement in margins. The business has therefore adjusted its unit volume target to a range of 4,200 – 4,500 units, and its revenue target to £1.25bn in FY 2021, but has reached its 2021 margin target (19%-20%), and expects to achieve an operating margin at the upper end of the previously guided range. Partnerships & Regeneration is performing ahead of expectations and has increased its unit volume range to 4,200 – 4,400 and revenue target to a range of £700m-£750m. Reflecting these adjustments, the business targets by which the Group targets will be achieved, have been updated as set out below: