Half year results for the six months ended 31 December 2016

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The Group delivered another strong performance in the first half. Our reorganised management teams have settled well and are making positive strides towards their respective operating and financial targets.

We continue to see robust demand and pricing in residential markets, for both Linden Homes and Partnerships and Regeneration, driving good rates of sale, and the land market remains benign in all regions. Linden Homes continues to achieve margin improvement, including much improved overhead efficiency. Partnerships achieved a higher proportion of mixed tenure development revenue, resulting also in first-half margin growth. Construction is making steady progress in resolving legacy contracts, and the contribution from newer work is encouraging, demonstrating that the underlying business is strong. Quote

Peter Truscott / Chief Executive

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  • Revenue1
  • £1,308m
  • Group revenue1
  • £1,235m
  • Profit before tax
  • £63.0m
  • Earnings per share
  • 61.9p
  • Dividend per share
  • 32.0p
  • Net debt
  • £113.8m
  • Group return on net assets2
  • 24.9%


  • Strong first half performance with profit before tax up 19% to £63.0 million, EPS up 19% to 61.9p and interim dividend up 23% to 32.0p reflecting confidence in the full year outlook.
  • Net debt of £113.8 million (H1 2016: £95.7 million), in line with expectation.
  • Balance sheet further strengthened with £450 million bank facility extended to 2022 on same terms; debt private placement of £100 million 10 year fixed-rate notes, adding flexibility and diversity of lenders.
  • Strategy to 2021 targeting sustainable growth and strong returns across all three businesses. Targets include 60% growth in profit before tax to FY 2021, a five year CAGR3 on dividend of at least 5% and a return on net assets2 in FY 2021 of at least 25%.

Linden Homes

  • Continued significant progress with operating margin rising to 18.2% (H1 2016: 17.0%).
  • Revenue up 12% to £407.6 million (H1 2016: £362.7 million) from 1,491 unit completions, 1,319 units net of joint venture partner share (H1 2016: 1,357 and 1,171 respectively).
  • Total sales currently reserved, contracted and completed increased by 8% to £857 million (H1 2016: £793 million).
  • 2021 financial targets include 4,750 – 5,000 units per annum, revenue of £1.25 billion - £1.35 billion and operating margin of 19% - 20%.

Partnerships and Regeneration

  • Operating margin of 3.4% (H1 2016: 3.0%), driven by planned increase in proportion of higher margin mixed tenure revenue.
  • Total revenue of £144.3 million (H1 2016: £150.2 million) reflecting expected lower contracting revenue in the first half, partially offset by higher revenue from mixed tenure sales. Full year growth expectations unchanged.
  • 16% increase in total sales currently reserved, contracted and completed at £92 million (H1 2016: £79 million) with contracting order book up 6% at £925 million (H1 2016: £875 million).
  • 2021 financial targets include 4,200 units (contracting and mixed tenure) per annum, revenue of £650 million and operating margin of 6% - 7%.


  • Revenue of £742.0 million (H1 2016: £738.6 million), with cash balance of £110.8 million (H1 2016: £154.7 million) reflecting delayed cash flows on some legacy projects.
  • Operating margin at 0.4% (H1 2016: 1.2%) continues to be constrained by the resolution of legacy contracts; margins on new projects support improving divisional returns in future years.
  • Order book solid at £3.4 billion (H1 2016: £3.7 billion), as the business continues its disciplined approach to contract selection.
  • 2021 financial targets include revenue of £1.8 billion, operating margin of at least 2% and net cash of £200 million.

1'Revenue' includes share of joint ventures’ revenue of £72.3 million (H1 2016: £82.6 million). 'Group revenue', where stated, excludes share of joint ventures.

2Group return on net assets represents annualised profit before tax, exceptional items, finance costs and amortisation divided by average net assets.

3Compound annual growth rate ("CAGR")