Investor Relations Presentation

Investor Relations Presentation – February 2006

Investor Relations PresentationHalf Year to 31st December 2005


This presentation is being made only to and is directed at (a) persons who have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (b) any other persons to who it may otherwise lawfully be communicated, falling within Article 49(2) of the Order (all such persons being referred to as “relevant persons”).

Any person who is not a relevant person should not act or rely on this presentation or any of its comments.

The financial information set out in this document does not constitute the Company’s statutory accounts. Statutory accounts for 2005, which received an auditors’ report that was unqualified and did not contain any statement concerning accounting records or failure to obtain necessary information and explanations, have been filed with the Registrar of Companies.

Disclaimer


Introduction

• Record results again through good operational performance

• Acquisition of Chartdale Homes

• Construction• Margins at 2%• Order book at £1.1b

•

Housebuilding

• Record operating profits

• Margin maintained• In hand position at all time high

•

Affordable Housing Director appointed

• Sale and leaseback on two properties• Strong platform for future growth

Overview


• Turnover up 7% at £372 million

• Profit before tax up 10% at £14 million

• Earnings per share up 10% at 4.4p

• Interim dividend up 17% to 0.7p per share

• Net debt of £8.9 million (2004 £10.1m) represents gearing of 15% (2004 21%)

NB – 2004 comparison based on restated IFRS figures

Financial Review

Highlights


Financial Review

Summary Profit & Loss Account

(£m)

Dec 2004*

(£m)

Dec 2005

Profit before interest 16.3 14.7

Interest (2.3) (2.0)

Turnover 372.2 347.2

Profit before tax 14.0 12.7

Diluted earnings per share 4.4p 4.0p

Dividend per share 0.7p 0.6p

Interest Analysis

Bank interest 0.6 0.5

Interest on unwinding of discounted creditors 1.4 1.1

Net return on liability of pension fund 0.3 0.4

Total Interest 2.3 2.0

* based on restated IFRS figures


Financial Review

Dec 2004* Dec 2005

Construction 272.8 255.8 5.6 5.3

Dec 2004 *Dec 2005

Group Turnover (£m) Profit/(loss) (£m)

Housebuilding 98.3 91.1 13.9 12.7

Group 0.3 0.3 (2.7) (2.1)

372.2 347.2 16.3 14.7

Less net interest payable (2.3) (2.0)

Profit before tax 14.0 12.7

Segmental Analysis

PPP Investments 0.8 - (0.5) (1.2)

* based on restated IFRS Figure


Cash Flow Summary

Financial Review

Dec 2005 (£m)

Increase in inventories and developments 3.0 (10.2)

Decrease in land creditors (10.9) (3.7)

Increase/(decrease) in trade and payables (1.8) (10.9)

Net inflow 3.5 2.0

Decrease in trade and other receivables 7.4 23.6

Interest, tax, dividends, share capital & othermovements (10.5) (9.4)

Net debt brought forward (12.4) (12.1)

From operating activities 17.5 16.0

Dec 2004* (£m)

Net debt carried forward (8.9) (10.1)


Decrease in retirement benefit obligation (1.2) (3.4)


Financial Review

Dec 2004* (£m) Dec 2005 (£m)

Net debt 8.9 10.1

Shareholders’ funds 58.2 48.3

Total capital employed 67.1 58.4

Gearing 15% 21%

Interest cover > 7 times > 7 times

Balance Sheet, Financing



• 2% margin achieved ahead of schedule

• Affordable Housing expansion continues

• Increased presence in Water

• Financial Close Northampton Schools PFI

• Successful integration of Pentland

Construction

Key Highlights


Construction

Profitability

STABILISATION GROWTHRECOVERY

2004 20052003

1.5

1.0

0.5

0.0

1.7%*

1.1%

(0.01)%

2006

2.0 2.0%*



Construction

Forward Order Book

18 Infrastructure 45 30

47 Education 330 282

37 Water 233 233

89 Commercial 112 99

4 Interiors 14 13

15 Health 126 126

15 Telecommunications 10 10

21 Affordable Housing 145 110

19 Rail 65 65

8 Ground Engineering 3 2

Market SectorsTurnover (£m)

Half Year to Dec 05

273 1082 969

Total Work In HandNon Price Competitive

90%

Work In Hand (£m)

Non Price CompetitiveTotal


Construction

• Leading Framework Contractor

• Scottish Water

• United Utilities

• Anglian Water

Water


Construction

• Acknowledged as education specialists

• Bedford Schools PFI handed over on time

• Caludon Schools PFI Phase 1 handed over on time

• Northampton Schools PFI – on site

• Solihull Building Schools for the Future – ITN Stage

Education


Construction

• Current LIFT schemes at FC 2/3

• Fourth Wave - selected on three schemes

• Potential future opportunities in Scotland

• Government Initiatives - Community Hospital Schemes

Health


• Profit growth by volume

• Order book exceeds £1billion

• Partnering culture integrated throughout business

• Profit margins now in upper quartile

Construction

Summary and Outlook


• Northampton Closed – Construction commenced

• BSF Solihull - £75m ITN stage

• LIFT 4th Wave ITN

• South East Essex

• South East Midlands

• Bury Tameside Glossop

• Community Hospital

• Hinckley - £30m

• Market Harborough - £30m

• BSF

• Birmingham - £60m First Wave

• Nottingham - £35m First Wave

Investments

PPP Investments


Housing Highlights

• Acquisition of Chartdale Ltd.

• Record profits and margins maintained

• Sales volumes at all time high

• Significant cost reductions achieved

• Excellent customer satisfaction results

• Strengthened ‘in-hand’ position

Housebuilding


• Negotiated, ‘bolt-on’ acquisition

• Well established regional housebuilder

• Substantial land bank c. 1350 plots on 23 sites

• Acquisition on deferred payment terms

• 200 units per annum projected

• 95% of land bank for houses

Housebuilding

Acquisition of Chartdale Ltd.


HousebuildingKey Statistics

6 Months to December

2005 2004* Increase %

Units 484 387 25.1

Average Selling Price £000 203 228 (11.0)

Income per sq. ft. £ 232 220 5.4

Turnover £m 98 91 7.7

Margin % 14.1 13.9 1.4

ROCE % 19 22 (13.6)

Sales in Hand Feb 06 £m 191 166 15.1

Land bank Feb 06 units 3,800 2,464 54.2

Strategic land Feb 06 acres 697 666 4.7



Market Conditions and Focus

• Challenging market, but encouraging start to 2006

• Difficulties with planning system remain

• Highly competitive land market

• Expertise in affordable Housing

• Individually designed schemes and conversions

• Avoid consortium sites and high rise apartments

• Shortage in supply continues to underpin the market

Housebuilding


Housebuilding

Midas & Gerald Wood Homes

• Units 200

• Average selling price £000 170

• Brownfield and conversion 87%

• Customer satisfaction 93%

• Two ‘Golds’ at the What House Awards


Housebuilding

Stamford Homes

• Units

128

• Average selling price £000

168

• Brownfield and conversion

51%



Housebuilding

Try Homes Southern

• Units 73


278


100%


• ‘Silver’ at the What House Awards


Housebuilding

Try Homes Thames Valley

• Units 83


272


100%

• Customer satisfaction

93%

• ‘Silver’ at the What House Awards


Housebuilding

Summary & Outlook

• All business units performing well

• Land bank boosted by acquisition of Chartdale

• Exposure to apartments reduced

• Land and planning remain difficult

• Well placed to maximise opportunities in Affordable Housing

• Confident of achieving expansion plan


Affordable Housing

• Director of Affordable Housing appointed

• Work in hand up to £145m

• Strategic Alliances & Framework Agreements

• Strong Opportunities - East London Regeneration

• Mixed Tenure Expertise

• Opportunities for grant direct from Housing Corporation

• Considerable scope for growth

Construction and Housebuilding Divisions


• Strong financial position

• Construction:

• Maintain profit margins

• Increase turnover and cash generation

• Growth in chosen markets

• Housebuilding:

• Continuing to perform in challenging market

• Uncertain land and planning environment

• Proven business model

• Cost reduction plan

• Excellent opportunities in affordable housing

• Confidence in growth plans:

• Organic and by acquisition

Summary and Outlook

Investor Relations Presentation

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