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Preliminary Results Presentation – September 2005 Preliminary Results Presentation Year to 30 th June 2005

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Preliminary Results Presentation – September 2005

Preliminary Results PresentationYear to 30th June 2005

Preliminary Results Presentation – September 2005

Introduction

Greg Fitzgerald - Chief Executive

Preliminary Results Presentation – September 2005

Introduction

• Record results through good operational performance

• Construction

• Margins up to 1.5%

• Housebuilding

• Record profits and increase in margins in difficult market

• Potential in affordable housing

• Proven and motivated management

• Strong platform for future growth

Overview

Preliminary Results Presentation – September 2005

Frank Nelson – Finance Director

Financial Review

Preliminary Results Presentation – September 2005

Summary

• Exceeded targets in 2005

• Group turnover £718m - up 5%

• Profit before tax £26.3m - up 16%

• Earnings per share 8.4p - up 17%

• Dividend 2.1p - up 24%

• Strong Construction cash flow - gearing of 15%

• Return on shareholders’ funds of 33%

• Tax charge reduced to 29.3%

Financial Review

Preliminary Results Presentation – September 2005

Financial Review

Segmental Analysis to 30th June 2005 (including Joint Ventures)

2004 2005(£m)

Construction 537.7 512.9 7.8 5.7 2004 2005

Group Turnover Profit/(loss)

Housebuilding 188.0 182.0 26.4 25.5 Group 0.5 0.5 (4.5) (3.9)

726.2 695.4 28.5 25.8

Less net interest payable (2.2) (3.1)

Profit before tax 26.3 22.7

PPP Investments - - (1.2) (1.5)

Preliminary Results Presentation – September 2005

Financial Review

International Financial Reporting Standards

Profit & Loss

Effect

Balance Sheet

Effect

Low High

Low Low

Timing Low

Pensions

Share based payments

Dividend recognition

Preliminary Results Presentation – September 2005

Financial Review

Balance Sheet Highlights

20042005(£m)

Net debt 12.5 12.3 Shareholders’ funds 86.2 72.3

Total capital employed 98.7 84.6 Gearing 15% 17% Interest cover 12.8 8.5

Land 143.9 122.4

Work in Progress 64.1 53.8

Land Creditors (48.7) (44.7)

Preliminary Results Presentation – September 2005

Financial Review

Cash Flow Summary

20042005(£m)

Depreciation and amortisation 1.8 1.8 Group operating profit 26.9 24.5

Working capital and other movements (14.9) (9.2)

Interest (1.6) (2.0) Tax (8.5) (5.6)

Dividends (3.9) (3.4)

Net cash flow from operating activities 13.8 17.1

Movement in net debt (0.2) 5.5

Capital expenditure (1.6) (1.2)

Other 1.6 0.6

Preliminary Results Presentation – September 2005

Andy Sturgess – Managing Director

Construction

Preliminary Results Presentation – September 2005

• Margins up to 1.5% in line with expectation

• Excellent cash generation circa £40m throughout year

• Quality order book maintained

• Management team further strengthened

Construction

Key Highlights

Preliminary Results Presentation – September 2005

Construction

Profitability % Net Margin

STABILISATION GROWTHRECOVERY

2004 20052003

1.5

1.0

0.5

0.0

1.5%

1.1%

(0.01)%

Preliminary Results Presentation – September 2005

Infrastructure 61.3 61.3

Education 137.7 104.7

Water 229.4 229.4

Commercial 152.6 129.9

Interiors 24.0 14.9

Health 117.8 115.8

Telecommunications 7.7 5.3

Affordable Housing 144.2 116.1

Rail 65.7 65.7

Ground Engineering 3.5 2.5

Market Sectors

943.9 845.6

Total Work In HandNon Price Competitive

90%

Work In Hand (£m)Non Price CompetitiveTotal

Forward Order Book

Construction

Preliminary Results Presentation – September 2005

• LIFT second tranche in design

• United Utilities AMP4

• Affordable Housing remains strong

• BSF – Shortlisted Solihull

• Northampton Schools PFI

Construction

Key Opportunities

Preliminary Results Presentation – September 2005

• 41 schools

• 34 month construction period

• 80% new build

• 20% refurbishment

• Planning achieved on all but one school

• Late autumn financial close

Construction

Northampton Schools PFI

Preliminary Results Presentation – September 2005

• Strong management teams

• Sector focus well established

• Earliest possible involvement

• Partnership approach

• Profitability towards 2% margins

Construction

Summary & Outlook

Preliminary Results Presentation – September 2005

Andy Sturgess – Managing Director

PPP Investments

Preliminary Results Presentation – September 2005

• Creating construction opportunities

• Stringent selection criteria

• Equity stake 15%-50%

• Performance 2004 – 2005

• Financial close on four projects Value £120m

• Preferred bidder Northampton SchoolsValue £150m

• Future prospects

• LIFT – 2nd tranche

• LIFT – 4th wave

• BSF Solihull – short listed

PPP Investments

Overview

Preliminary Results Presentation – September 2005

Greg Fitzgerald – Chief Executive

Housebuilding

Preliminary Results Presentation – September 2005

Housing Highlights

• Record profits and increase in margins

• Further cost reductions achieved

• Exceptional customer satisfaction results

• Controlled increase in land bank

• Encouraging ‘in-hand’ position

• Planning permissions in place for current year

Housebuilding

Preliminary Results Presentation – September 2005

2005

Housebuilding

12 months to June

2004 Increase %

Average Selling Price £000 208 224 (7.1)

Turnover £m 188 182 3.3

Margin % 14.1 14.0 0.7

ROCE % 22.3 23.6 (5.5)

Sales in hand August 05 £m 100.4 95.3 5.3

Operating Profit £m 26.4 25.5 3.5

Income per Sq. Ft. £ 222 209 6.2

Landbank August 05 units 2605 2520 3.4

Strategic land August 05 acres 695 660 5.3

Key Statistics (including Joint Ventures)

Units 853 761 12.1

Preliminary Results Presentation – September 2005

Market Conditions and Focus

• Encouraging sales activity since July

• No house price inflation for next two years

• Planning process continues to be difficult

• Labour readily available

• Differentiation through individual design

• Avoid consortium sites and high rise apartments

• Capitalise on strengths in affordable housing

Housebuilding

Preliminary Results Presentation – September 2005

Housebuilding

Midas & Gerald Wood Homes

• Units 310

• Average selling price £000 191

• Brownfield and conversion % 65

• Land bank 985

• Customer satisfaction % 91

• Planning for Truro hospital site

• First completions from expansion area

Preliminary Results Presentation – September 2005

Housebuilding

Stamford Homes

• Units 269

• Average selling price £000 169

• Brownfield and conversion % 53

• Land bank 599

• Customer satisfaction % 91

• Good progress in affordable housing

• Land acquired from Coventry LIFT

Preliminary Results Presentation – September 2005

Housebuilding

Try Homes Southern

• Units 144

• Average selling price £000 267

• Brownfield and conversion % 100

• Land bank 385

• Customer satisfaction % 89

• Large conversion site in Banstead acquired

• Expansion into Kent and East Sussex

Preliminary Results Presentation – September 2005

Housebuilding

Try Homes Thames Valley

• Units 130

• Average selling price £000 258

• Brownfield and conversion % 100

• Land bank 636

• Customer satisfaction % 95

• Substantial eight acre site acquired in West London

Preliminary Results Presentation – September 2005

Housebuilding

Summary & Outlook

• All business units performing well

• Expansion proceeding to plan

• More opportunities for land acquisition

• Expertise in affordable housing

• Comfortable with current market conditions

Preliminary Results Presentation – September 2005

Affordable Housing

Greg Fitzgerald – Chief Executive

Preliminary Results Presentation – September 2005

Construction and Housebuilding Divisions

• Comprehensive capability for affordable housing

• Working with 16 affordable housing providers

• Work in hand up to £152 million

• New opportunities through:

• Construction taking development role

• Planning requirements on housebuilding sites

• Pre-qualified for grant direct from the

Housing Corporation

• Considerable scope for growth

Affordable Housing

Preliminary Results Presentation – September 2005

Summary and Outlook

Greg Fitzgerald - Chief Executive

Preliminary Results Presentation – September 2005

• Strong financial position

• Construction:

• Increase in profit margins and cash generation

• Growth in chosen markets

• Housebuilding:

• Performing in a difficult market

• Proven business model

• Synergies between divisions

• Excellent opportunities in affordable housing

• Confidence in growth plans

• Organic and by acquisition

Summary and Outlook

Platform for Growth