Good morning. This is Rafael Cruz from the Aedas Homes Investor Relations Department. On behalf of the company, I'd like to thank you for attending this call on our fiscal year 2023 results, which encompass the period from April 2023 to March 2024. This presentation has been published on both the regulators and Aedas Homes website. Today's session will be covered by David Martínez, CEO, María José Leal, CFO, and Tamara Marañón, Director of Capital Markets. Afterwards, we will move to Q&A. We will start with questions from people phoning in, followed by questions sent via email or the webcast platform. For those of you phoning in, we recommend that you ask only one question at a time. Before we get started, let me remind you that this event is being recorded and it will be available for playback on our website.
I'd also invite you to review the documents' legal disclaimer. And now, I will hand things over to David. David, the floor is yours.
Thank you for joining us today for our full year 2023 results. Let me start off by saying that Aedas Homes has delivered yet another strong operating performance this year. For the first time, the company has generated over EUR 1 billion in revenue, and we successfully closed 2 major co-investment deals, despite the complex geopolitical and global macroeconomic backdrop. In this context of global headwinds, Spain continues to be a bright spot, with a growth outlook above our European peers. Spanish households are enjoying good solvency levels and are accessing mortgages at attractive conditions. We continue to see solid long-term fundamentals for the new build housing market. Demand is outpassing supply, with 2.5 new households formed for every one home completion. Transaction volumes remain stable overall, with prices trending upwards and costs are stabilizing.
At Aedas, we are constantly evolving the company in order to maintain our competitive advantage and respond to these long-term demand fundamentals, with a focus on sustainable growth and efficiency in our development business. Thanks to our three lines, residential development, real estate services, and land development and sales, our business is easy to scale, it's well-diversified, and optimizes the use of capital. As you know, land is a raw material for the developer's factory, and we continue to be leaders in land investment, but also extremely disciplined. We put over EUR 220 million towards new land in the past fiscal year, while actively rotating our land bank and divesting of non-core assets to ensure efficiency. This very liquid land bank, which 77% is active, will cover our goals for almost five years and is estimated to generate EUR 6 billion in attributable revenue.
The positive tailwinds of the Spanish economy, the strength of our business model, and the liquidity of our land bank, have helped to cement our leading position in the sector and allow us to keep our commitment to creating long-term value. We've delivered over 208 BTS and BTR homes in the past year, which generated EUR 950 million in revenue and 24.3% growth development margin for our BTS product, and put EUR 222 million towards land bank replenishment. Our asset-light real estate services division successfully closed two co-investment agreements with new financial partners for EUR 290 million of equity, which will drive future growth and further improve our return on equity.
The company's activity in the year has generated EUR 233 million in free cash flow, while keeping a healthy EUR 310 million in net financial debt, which represents 1.8 times EBITDA. All in all, this has been a very successful and profitable year for Aedas Homes and its shareholders, resulting in earnings per share of 200, sorry, EUR 2.53. Now, I hand things over to Tamara, María José, who will take you through the operating and financial results in greater detail. To conclude, I will share our proposal for dividend distribution.
Thank you, David. During fiscal year 2023, the company booked net sales of EUR 962 million, up 16% over the same period last year. On one hand, this good performance was driven by a dynamic sale activity after having sold more than 2,500 units, with net absorption rates that have risen from minimum levels of 3.1% in August 2023, to levels above 5% over the last quarter of the fiscal year. And on the other hand, by a high single-digit growth in the ASP of the BTS product, going from EUR 385 ,000 to EUR 415 ,000. I also like to point out that while our main focus continues to be on the primary residence market, international buyers, who tend to have a higher average ticket, are still showing strong behavior.
The net sales increased by 13% over fiscal year 2022, accounting for more than one-third of our total net sales. Let's move on to deliveries. From April 2023 to March 2024, the company delivered 2,839 units, up 4% over fiscal year 2022, bringing in EUR 950 million in revenue, up 7%. ASP on these deliveries increased slightly due to product mix and the fact that our customer base benefits from a solid solvency position. The majority of Aedas customers have the financial capacity to access housing well above the Spanish average, and they require less financing. Now, let's have a look at our order book.
As a result of the net sales and delivery volumes of the period, we ended up with more than 3,300 units already sold at an ASP of 11% higher than the ASP recorded as of March 2023. As a result, the order book reached a stable level of EUR 1.2 billion, fundamentally driven by BTS, which accounts for 93% of the order book. Over 70% is under private sales contract, in line with fiscal year 2022, and cancellation rate remains stable at levels of around 1%. Thus, we can reaffirm the resilience of our customer base. Over the reporting period, we have continued to focus on the operational efficiency of the business with an optimized use of resources. The number of active units has decreased over the period.
However, if we look at the non-attributable GDV of all active units, we can affirm that the company's business will be able to efficiently generate a similar gross development value compared to fiscal year 2022. Lastly, 77% of our active units are already on the market, with more than 6,100 units under construction or completed, ready for delivery, and with a total attributable GDV of around EUR 2.3 billion. This, together with our ability to break ground on new sites in the short term, with the permits we have in hand and in the pipeline, brings visibility and value crystallization in the coming years. Let's now move on to coverage ratios.
We are in a very strong position to continue achieving our business plan goals for the next two years, thanks to healthy coverage levels across all business metrics, marketing launches, pre-sales, and construction progress. Focusing on pre-sales coverage ratio, we would like to highlight the outstanding efforts made by our marketing team on pushing the sales volume of the fiscal year 2024 deliveries, which was a concern to some of you. We are happy to announce that at the end of March, the sales coverage ratio for fiscal year 2024 had surpassed by 7 percentage points, the minimum target level of 60% announced to the market in our H1 2023 results presentation.
Now, looking at construction progress, the high volume of new construction start over the last two years, this means more than 5,700 of new starts, put us in good shape in terms of construction coverage for the next two years. Now, I'd like to give you some more color on our investment activity during the past year. During fiscal year 2023, we continued to invest dynamically in new land, following our discipline and selective investment approach. As such, we made new investments for more than EUR 220 million, with a development capacity of more than 2,500 units, with a significant portion of these units concentrated in the Madrid region. The majority of the units are scheduled for delivery between fiscal year 2026 and 2028, and are forecast to generate over EUR 900 million in revenues.
Our focus on optimizing our use of capital is reflected in the structuring of transactions. Out of the total of the new investment volume, 63% are under commitment agreement and 35% of the investment volume of the transaction executing during the year benefits from payment deferral schemes. Finally, I will touch briefly on our progress on ESG matters. This past year, we continued to improve on the ESG front on the back of our full commitment to sustainable development and access to affordable housing. As a result, all our developments now have our Green Book seal or another recognized seal, as they have for 3 years now, and we are continuing to carry out the life cycle analysis on all our developments. Furthermore, 62% of the completed developments in fiscal year 2023 achieved a A A Energy Rating.
63% of the developments activated during the period for delivery in future years have a A A target. 36% of the units delivered last year were built fully or partially offsite, and we incorporated the use of low-impact materials, such as the 100% recycled aluminum. Additionally, and in line with our commitment to improve access to affordable housing, it is worth noting the delivery of more than 240 affordable units this past year, as well as the good progress on the construction front of the units under Plan Vive I, and that we have been awarded 3 lots in Plan Vive III to develop around 700 affordable units in the Madrid region. Finally, I'd like to highlight the approval of a new ESG Strategic Plan 2024-2026.
This new plan charts our course for sustainability with key new lines of action, including the calculation of Aedas Homes' carbon footprint under Scope 1, 2, and 3, the implementation of a decarbonization roadmap, and a circular economy plan. Now, I will hand things over to María José to take us through our financial results.
Thank you, Tamara. Moving into financial results, I would like to remark that we have managed to deliver revenues worth over EUR 1,145 million and gross margin of EUR 256 million. We will be disclosing over the following slides, detailed analysis per revenue line, so I will not touch on that, on this one. EBITDA came to EUR 173 million, and we have managed to keep our overhead costs in line with H2 2022, which is a significant proof of the efficiency level achieved by our teams. There has been a cost allocation change, which is disclosed in all our annual reporting documents, by which we are now allocating some of these structural costs to our services division results.
Last, we have reported net income of close to EUR 109 million, which represent diluted net income of EUR 2.53 per share, improving by 4% the figure reported in 2022. Let's look into the analysis of build to sell line. On build to sell reported figures, I would like to cover the evolution of gross margin, which has been in line with the guidance provided over the last quarters. First of all, the product mix delivered over this fiscal year showed some concentration over Andalusia region, which provides a slightly lower tickets and margins than other regions. Second, the projects delivered over this period broke ground between September 2021 and April 2022, in most, when we experienced a relevant hike in energy and construction material costs as a result of several factors.
Also, the construction financing loans associated have been referenced to EURIBOR, which has also seen a significant rise over the period. Out of the margin dilution of 3.5% compared versus last year's margin that we are reporting on this line, we estimate that 0.4% relates to financing costs increase, and 2.8% to construction cost increase. The remainder is a product mix impact. I will now move into build to rent, where we have seen certain pickup in interest as institutional investors are expecting the reduction of interest rates in the coming months. On margins, there is certain impact on this year resulting from the purchase price allocation on Á urea H omes back in 2021.
Excluding this impact, we would have reported a gross margin of 15%, which is consistent with the evolution of construction costs and previous years, and therefore is what we can expect at maximum on this business line. On services division, as we have covered in previous calls this year, we have increased significantly projects under management, where we either take minority stake or no stake at all. In this regard, I would like to reinforce that the aim at boosting this business line is to improve our return on equity by reducing equity invested while obtaining revenues with high margin. We closed in Q4 2 agreements, which have already been communicated, where we managed to attract 4 institutional investors and Spanish family offices, committing equity up to EUR 290 million.
Regarding gross margin, as we will involve our regional branches in the management of these new vehicles, we have decided to allocate to direct costs some of our overheads, thus impacting the gross margin reported on this line. Also, we have recognized revenues which relate to the progress of these developments when the deal was executed, and therefore, are accumulative over the last two years. On other management costs, we are reporting local taxes worth EUR 1.2 million, which relate to the sale of land on the seed portfolios contributed to these vehicles this year. I wouldn't like to forget that aside from these new projects, we are still managing the development of 3,600 units of affordable houses to be rented in the Madrid region, and over 2,400 of these are expected to be completed in 2024.
Our involvement in this project has let us present an offer on a new tender to develop over 700 more units, on which we expect to break ground in 2024. We shall pursue more transactions where we can benefit from our platform and expertise to provide services to third parties and keep on improving our return on equity. Last, as part of our traditional asset rotation strategy, we have decided to sell this year land plots to develop 800 units that were not to be developed by our teams in the coming 5 years. We must differentiate these land sales from the sales of our seed portfolio to co-investment vehicles, as the rationale for this is quite different. We always revisit our land bank and make these decisions when market conditions meet our expectations on prices on land. Looking into balance sheet.
Our balance sheet changes reflect the execution of the strategy we have already covered. As we apply commitment and deferred payment schemes when replenishing our land banks, and we attract new investors, by putting on the market seed portfolios, our inventories have decreased slightly and allow us to generate returns while leveraging on a lighter asset model. This strategy is combined with a prudent leverage policy, which has led us to amortize in April, and therefore is not reported on the figures we are showing today, EUR 70 million of the outstanding bond, which matures in August 2026. On net equity changes, we have distributed EUR 147 million over the period as dividends, 97 of which as interim dividends and amortized treasury stock worth EUR 60 million.
Our equity invested in associates, which is not reflected on this slide, and it's reflection of our co-investment schemes, came to EUR 88 million and will be reduced over 2024. Now, looking into our solvency, given that EUR 70 million euro bond amortization was executed on April 3rd, we are showing on this slide, the composition of our debt, including this impact. Our average cost of financing came to 4.9% at the end of the year, which compares with fiscal year 2021, where at the end of the year, the increase on reference rates. Sorry, before the increase on the reference rates, and at that time, we reported financing costs of 3.6%. Our maturities over the coming 24 months amount to EUR 89 million, which could be covered by our cash on balance.
Our liquidity at the end of the year, which came to EUR 286 million after the bond buyback, is a clear reflection of the strength of our business model. This figure does not include the availability of construction financing already in place, that would allow us to complete the existing projects under construction. Looking into cash generation, I would like to remark our free cash flow generation over the period, which has come to close to EUR 233 million, enhanced by our co-investment agreements.
As I covered on balance sheet, the improvement over last year is linked mainly, in its majority, to our land investment strategy, which allows us to commit transactions and defer payments, our boost of our co-investment line over 2023, our asset rotation strategy, and of course, the results obtained by our traditional business lines. As we have already communicated, we distributed EUR 97 million as interim dividends and amortized EUR 70 million of our corporate bond as a reflection of our focus on both improving shareholder remuneration and prudent leverage levels.
To finalize the financial results, I would like to remark the stability of our leverage profile, as we have maintained our leverage ratios at stable, low levels over the last three years, and maintain our credit ratings from the three rating agencies that cover us, S&P, Moody's and Fitch. Now, I will let David cover shareholder remuneration and closing remarks. David?
Thanks. Thanks, María José, and thanks, Tamara Marañón. On the back of these strong results, at the upcoming annual general meeting in July, the Aedas Homes board of directors will be proposing the distribution of a total dividend against the fiscal year 2023 profit of EUR 107 million, or EUR 2.49 per share. Back in March, as María José mentioned before, the company paid an interim dividend of EUR 2.25 per share, meaning that in July, we would pay a final dividend of EUR 0.24 per share. Additionally, to this ordinary dividend, the board will be proposing the payment of an extraordinary dividend of EUR 2.01 per share against the share premium account. This means that total shareholder remuneration via dividends will surpass EUR 190 million.
And now, to wrap things up, I'd like to share a few key messages with you. 2023 was a year in which Aedas Homes consolidated its leading position in the Spanish home building sector. We've delivered on the goals we've set for ourselves six years in a row now. And going forward, we will be targeting over EUR 1 billion in annual revenue, with EBITDA above EUR 160 million. Our build-to-sell operating activity is very solid. Sales pace has accelerated significantly in the recent months, and our order book, valued at EUR 1.24 billion, give us clear visibility on our fiscal year 2024 and 2025 goals.
On the operating side of our nearly 9,900 active units, 77% are on the market, with the potential to generate EUR 3.84 billion in revenue, and construction is progressing on over 5,000 units. We will continue to invest with discipline, ensuring that we deploy our capital efficiently, and aiming to have a land bank that covers close to five years of deliveries. And finally, as always, we will continue to share the value we create with our shareholders, while maintaining a stable conservative capital structure, and continue to invest selectively in land. Thank you, and, now we can open it up to Q&A.
Thank you. Ladies and gentlemen, we will now begin the Q&A session. If you'd like to ask a question, please press star five on your telephone keypad. If you change your mind, please press star five again. We kindly request that you limit your questions to one per turn. Please ensure that your device is unmuted locally before proceeding with your question. Our first question comes from the line of Fernando Abril from Alantra. Please go ahead.
Hello, thank you very much for the presentation. I have a few questions, so one at a time now. The first is on demand. So there has been a strong pickup in pre-sales in Q4. I don't know if you can provide some insights on how this is going in April and May, and whether it continues to be driven by foreign rather than domestic demand.
Hi, Fernando, this is Tamara. Thank you for your question. Regarding the sales for the period April and May, we can confirm that the levels are well above the average net sales of the last quarter of 2024, of the, s orry, of 2023. And we think, like, this upward trend is gonna to continue, because we are still seeing a strong appetite for customers for, for buying homes, so we expect that coming months will still be very strong as well.
Okay, thank you, Tamara. Then, regarding construction, you still have around 25% of the targeted deliveries for 2025 pending start. When do you expect this to reach the 100%?
Hi, Fernando, it's María José. I will cover that one, if that's okay. Yes, regarding construction starts, we have given that a significant boost over the first quarter, and I can say that as of early May, we had already started construction on more than 15% of the target deliveries. I do not have more updated figures, but I'm sure we will have 100%, because we already have over 90. Thank you.
Okay. Okay, then on guidance, just wanted to confirm that the guidance you've provided is not for 2024, but, but for the years to come. And also, I don't know what sort of recurrent land sales do you expect to have in the years to come?
Sorry, Fernando, my line is a bit poor. I understood your first question, which was basically what is our target post-2024? We're not providing much more guidance after that, but if you look at our GDV, which we are disclosing in detail per phase, you can see that we would have capacity to deliver over EUR 2 billion over the coming two years, considering business under construction, plus a completed product. And you can. I'm sure you can make up the math for the following years. On the second question, would you mind repeating that?
Yes. One point on that, María José—you—I’m not sure, but you may be including the co-investments, so in the revenues or not of in this over EUR 2 billion for the next two years.
Yeah, that includes our, our stake on those co-investments, so some of that might be reported as, as dividends. You are right on that point. But, we have given the total sales of those co-investment projects to be delivered between some of them, 25, most of them 26. So you can probably deduct that, co-investment delivery shouldn't have any impact on 2024.
Okay. Okay, and the second question was, regarding land sales. I don't know, what sort of land sales do you expect in next year?
Yeah.
and the years to come, more or less?
Yes. Regarding our recurring land sales, which is probably where we can provide a bit more visibility, because, you know, if we decide to put into place any other sheet portfolio, that would be extraordinary. Regarding our regular land sales, you know, we revisit yearly our land bank, and if we see that we're not able to deliver some of these land plots within the next five years, we tend to put that back on the market, unless there is serious reasons for us not to do so. I can say that probably for this year, the figures will be much more in line with 2021 and 2022 land sales. Mm-hmm.
Okay. Okay, and last, sorry, it's about the press reports. Now, today mentioned that you are analyzing the acquisition of Inmobiliaria Espacio in this quarter. I don't know if you can confirm this, and if so, what is the strategic fit and potential size of the deal?
Hello, Fernando, this is David. Well, as you know, our job is to explore any potential investment opportunity. And in this case, it is true that we are exploring the deal. As of today, we are conducting due diligence. This deal will provide us a lot of value for the company if we can achieve it, but this is all the information I can disclose at this time.
Okay. Okay, thank you very much.
Our next question comes from the line of Ignacio Domínguez from JB Capital Markets. Please go ahead.
Hello. Thank you for the presentation and taking our questions. Just one question from my side.
My question is on margins. What can we expect from gross development margins in the build-to-rent business in full year 2024 and 2025?
Sorry, Ignacio, you were referring to build-to-rent margins, right?
Yes.
Yes. Yes, margins going forward on this business line should be around 15%, One Five.
Okay. Thank you very much.
I believe there are no more questions from the line, but we do have some questions from the people connecting via web. I will cover the first one from Javier Díaz. Hello, thanks for taking my question, and also congratulations for the results. My question is regarding 2024 guidance, what level of deliveries, revenues, and EBITDA should we expect? Thank you, Javier. I'll cover this one. As we have mentioned, our guidance is to deliver revenues around EUR 1 billion or above that, and EBITDA above EUR 160. Thank you. We have another question from Gerardo Ibáñez from Oddo BHF. What margin do you expect on build-to-rent deliveries? As I have just mentioned, around 15%. Could we expect a lower gross margin mix as a result of higher concentration of build-to-rent deliveries?
On this one, Gerardo, yes, if we increase our, our weight of build-to-rent, that should have an impact on gross margin. However, I can confirm that at least for fiscal year 2024, the expected deliveries on build-to-rent are lower than those of the current fiscal year. Next question, again, from Gerardo: Could you please comment on news of today regarding the potential negotiation with Inmobiliaria Espacio? David, would you like to comment on, on this one?
Same question.
Yeah.
I can confirm it. We're holding conversations with the company and currently conducting due diligence, but this is all I can disclose, -
Mm-hmm
-so far.
On further opportunities like this one?
I mean, again, it's our job to analyze and scour the market for opportunities, and we do on a daily basis, but no more comments on that.
Mm-hmm. And one last question: Do you think you can additional value from buying active projects, and what would be the breakdown of commercial portfolio? If you're referring to commercial real estate, we are a pure home builder, so our aim has always been to keep within this business line. And as we saw with the Áurea Homes, we were able to deliver relevant returns on equity with that acquisition, and integrated the team successfully. So that's all we can say on potentially buying companies versus buying land. Mm-hmm.
Yeah, we at that point are agnostic whether the opportunity comes on a plot format or on a company format. Back in 2019, we acquired Áurea Homes, and it provided a lot of value for our shareholders. Well, this time we're exploring the opportunity with Espacio. Thanks.
Yes, another question from the website. Thank you for the, From Andrea Fernández: Thank you for the presentation. What are your expectations on build to sell gross margins for the incoming two years? Yes, Andrea, I will cover this one. We're just providing guidance for the current fiscal year, and our build to sell gross margin is expected to be between 23% and 24%, as we still suffer the impact from construction cost inflation. When we broke ground, we were not able to pass through to contracts already signed the increase of construction costs, and obviously, although there's expectation of interest rates to drop down, this hasn't been seen so far. We have another question from Ferran Tort. Hello, thanks for taking my question. Could you comment on any potential regulatory changes on conversion on tertiary to residential land bank?
Hello, Ferran. Well, in this case, I can say that we strongly support any regulatory initiative that helps to increase the supply of land. I guess you referred to the news that the Comunidad de Madrid is planning to approve this change, and I think this is gonna be good in order to provide more land, basically for affordable housing. And we're very interested in this to happen. Thanks.
Okay, this concludes today's presentation. If you have any follow-up questions, the Investor Relations team will be ready to take them. Thank you very much for joining us, and I remind you that Aedas Homes will be publishing trading statement on July 23, 2024. Have a good day.