Slide 1: Interim Results
Interim Results Half year ended 31 December 2021 9 February 2022 Morton Meadows, Thornbury 1
Slide 2: David Thomas, Chief Executive Officer
David Thomas Chief Executive Officer 2 Burnmill Grange, Market Harborough
Slide 3: Key Highlights
KEY HIGHLIGHTS • Excellent build performance despite supply chain challenges • Continued leadership in build quality and customer service • Improved work in progress (WIP) and build performance has driven completions upgrade • Gladman significantly enhances our strategic land credentials • Strong ca
Slide 4: Operational Targets – Progress in HY22 and Areas of Focus for 2HY22
OPERATIONAL TARGETS – PROGRESS IN HY22 AND AREAS OF FOCUS FOR 2HY22 Progress in HY22 Focus in 2HY22 Medium term targets • 8,067 total home completions (HY21: • On track to deliver between 18,000 and • Disciplined growth in home 9,077) including 395 JV completions Home completions 18,250 total home c
Slide 5: Steven Boyes, Chief Operating Officer
Steven Boyes Chief Operating Officer 5 Fleckney Fields, Leicestershire
Slide 6: Sales Performance – Sales Rates and Selling Outlets
SALES PERFORMANCE – SALES RATES AND SELLING OUTLETS HY22 HY21 Change • Excellent sales rate throughout the half year Average net private reservations per active outlet per week • Sales outlets reduction reflects the strength of Wholly owned 0.79 0.77 2.6% private sales JV 1.00 1.38 (27.5%) • Sales o
Slide 7: Completions – Volumes and Pricing
COMPLETIONS – VOLUMES AND PRICING HY22 HY21 Change • HY22 total home completions reflect: Home completions (units) - Return to normal seasonal completion phasing Private 5,896 6,903 (14.6%) - HY21 benefited from lockdown displaced Affordable 1,776 1,796 (1.1%) completions scheduled for FY20 Total ho
Slide 8: Completions Analysis – Buyer Type
COMPLETIONS ANALYSIS – BUYER TYPE 3% 4% Investor 3% 6% • Buyer profile changes significant in HY22 23% 21% Part-exchange • Rebalancing of private completions • Well positioned to navigate HTB transition: Affordable 26% - Careful site selection and bidding controls 49% Other private - Creating flexib
Slide 9: Construction Activity – Driving Build Growth
CONSTRUCTION ACTIVITY – DRIVING BUILD GROWTH 400 • 341 construction equivalent units built per week in HY22(1) (HY21: 298) despite industry supply chain 350 challenges 818 CE • Q2 build activity ahead of Q2 in prior 3 years 300 excess ‐ Organised and efficient site operations 250 ‐ Build efficiency
Slide 10: Our Cost Structure and Total Build Cost Inflation
OUR COST STRUCTURE AND TOTAL BUILD COST INFLATION Cost Structure Materials Labour % of revenue(1) • Centralised procurement • More limited signs of cost Land c. 16% team manage more than inflationary pressures 90% of materials Infrastructure and S106 c. 20% • Significant cost escalation • Desire to
Slide 11: Land Bank
LAND BANK • Land bank remains strong Land bank plots 31 December 2021 31 December 2020 • Owned land bank growth of 2,395 plots With detailed planning consent 49,622 54,079 • 75% of owned land bank now with detailed With outline planning consent and 16,933 10,081 planning consent other(1) Owned 66,55
Slide 12: Gladman – A Significant Enhancement to Our Strategic Land Credentials
GLADMAN – A SIGNIFICANT ENHANCEMENT TO OUR STRATEGIC LAND CREDENTIALS • Industry-leading team of experts in land-sourcing, promoting and planning Barratt Office Barratt Division Boundary • A portfolio of 406 sites across the UK with particular strength in the South and Sites: By number of units East
Slide 13: Summary
SUMMARY • Excellent site based construction recovery with build activity in Q2 above pre-pandemic levels • On track to deliver revised FY22 completion guidance • Our priority remains securing building product supplies • Build cost inflation remains a challenge but we continue to benefit from strong
Slide 14: Mike Scott, Chief Financial Officer
Mike Scott Chief Financial Officer 14 Merlin Gate, Newent
Slide 15: Summarised Performance
SUMMARISED PERFORMANCE £m (unless otherwise stated) HY22 HY21 Change HY20 Change Revenue 2,247.1 2,494.7 (9.9%) 2,266.2 (0.8%) Adjusted gross profit 562.4 593.0 (5.2%) 521.5 7.8% Adjusted gross margin % 25.0 23.8 120 bps 23.0 200 bps Gross profit 546.5 513.9 6.3% 503.7 8.5% Gross margin % 24.3 20.6
Slide 16: Operating Margin Bridge
OPERATING MARGIN BRIDGE Non-recurring items Trading items Non-recurring items 330 bps (30 bps) (70 bps) 22.0% Increase Decrease 21.0% 50 bps 30 bps 70 bps 100 bps 20.0% 80 bps 60 bps + 90 bps 70 bps 19.0% 20.3% 330 bps 18.0% 20.3% 20.0% 17.0% 19.3% 16.0% 17.0% 15.0% 14.0% HY21 Remove HY21 Volume Net
Slide 17: Adjusted Items
ADJUSTED ITEMS £m HY22 HY21 FY21 Operating adjusting items: CJRS grant - repayment recognised in cost of sales - 22.8 22.8 CJRS grant - repayment recognised in administrative expenses - 3.2 3.2 Total CJRS grant - repayment / (income) - 26.0 26.0 Costs associated with legacy properties 15.9 56.3 81.9
Slide 18: Operating Framework – Progress Update
OPERATING FRAMEWORK – PROGRESS UPDATE Operating framework Positions at 31 December 2021 (and 30 June 2021) Position at 31 December 2020 4.3 years owned and 0.8 years controlled Land bank(1) c. 3.5 years owned and c. 1.0 year controlled 5.0 years owned and 0.9 years controlled (FY21: 4.0 years owned
Slide 19: Balance Sheet
BALANCE SHEET £m 31 December 2021 30 June 2021 31 December 2020 Goodwill and intangible assets 905.9 905.9 906.5 Investment in joint ventures and associates 160.4 163.1 165.7 Gross land bank 3,046.1 2,946.3 2,836.7 Land creditors (682.3) (658.3) (601.1) Net land bank 2,363.8 2,288.0 2,235.6 Land cre
Slide 20: Cash Flow
CASH FLOW 27.6 Inflow Outflow 500 400 (190.7) 300 434.0 (76.8) 200 16.3 £m (100.3) 100 1,009.2 (27.1) 55.4 0 (223.0) (185.7) (223.0) (100) (18.1) (200) Profit from WIP Land JV Net cash Other non- Operating cash Dividends Other Net operations investment interest & tax cash and inflow investing cash w
Slide 21: Guidance for FY22
GUIDANCE FOR FY22 c. 18,000 – 18,250 total completions including 750 JVs Completions (previously c. 17,750 – 18,000 including 750 JVs) c. 21% affordable, c. 79% private Average sales outlet growth Average sales outlets in line with FY21 (previously c. 3% growth) Year end sales outlet position Year e
Slide 22: Financial Summary
FINANCIAL SUMMARY • Excellent financial performance • Strong cash generation and balance sheet strength have enabled the: - Acquisition of Gladman - Phased reduction in ordinary dividend cover • Board will consider further returns to shareholders when it is appropriate to do so • Well positioned for
Slide 23: David Thomas, Chief Executive Officer
David Thomas Chief Executive Officer 23 Moorland Gate, Bishops Lydeard
Slide 24: Investment Proposition
INVESTMENT PROPOSITION Strong Highly Shorter balance sheet experienced Quality and Nationally Leading owned land and cash build and service diversified sustainability bank generation sales teams Rebuilding Delivering margin Attractive volumes improvement returns Land acquisition at a minimum 23% Pha
Slide 25: Market Fundamentals
MARKET FUNDAMENTALS Government 1.54% target: average 2 year 300,000 homes fixed rate at 85% per annum LTV(1) Demand continues Attractive land market Help to Buy phase Affordable rates to exceed supply out in March 2023 (1) Rates are from an average of five lenders. Standard 85% product based on avai
Slide 26: Building Sustainably – Delivering for the Long Term
BUILDING SUSTAINABLY – DELIVERING FOR THE LONG TERM • Group Sustainability Committee now operational, with initial focus on: - Waste, diesel consumption and the shift to renewable electricity tariffs • CDP performance shows continuing improvement • Awarded “2021 Sustainable Housebuilder of the Year”
Slide 27: Sustainability – The Z House
SUSTAINABILITY – THE Z HOUSE • The Z House was completed in October 2021 • The first zero carbon house which goes beyond Future Homes Standard • An important step on our journey to zero carbon homes from 2030 • Our aim: to find commercial solutions to build high quality, zero carbon homes that our c
Slide 28: Our Approach to Building Safety
OUR APPROACH TO BUILDING SAFETY Our first priority is the safety of our buildings and the people that live in them. As a responsible business which does the right thing, our first principle is that leaseholders should not have to pay for necessary remediation Executing necessary remediation at our o
Slide 29: Current Trading
CURRENT TRADING 2HY22 2HY21 2HY20 Change Change To date To date To date Net private reservations per active outlet per average week 0.90 0.77 16.9% 0.83 8.4% Average active outlets 325 343 (5.2%) 355 (8.5%) Net private reservations per average week 291 264 10.2% 294 (1.0%) Total forward sales (inclu
Slide 30: Conclusion
CONCLUSION • Excellent first half, operationally and financially • Returns to shareholders enhanced with phased ordinary dividend cover reduction FY22 to FY24 • Strategic land position and future capabilities enhanced through the Gladman acquisition • Committed to: - Building high quality, sustainab
Slide 31: Q&A
Q&A Bishop’s Hill & The Willows, Southam 31
Slide 32: Appendices – Index
APPENDICES – INDEX Page Definitions 33 The Group cost structure 34 Administrative expenses analysis 35 Current trading - forward order book 36 Current trading - forward sales roll 37 Full income statement 38 Calendarised income statement 39 Private completions - volume and ASP 40 Driving operating m
Slide 33: Definitions
DEFINITIONS • Active outlet is a site with at least one home for sale • ASP is average selling price • Average cash (debt) is calculated on average daily closing position in period • CJRS is Coronavirus Job Retention Scheme • Contribution is surplus of revenue for a unit over the direct costs (land
Slide 34: The Group Cost Structure – Contribution and Adjusted Gross Margin
THE GROUP COST STRUCTURE – CONTRIBUTION AND ADJUSTED GROSS MARGIN 35.0% 33% 34% 32% 32% 32% 32% 32% 32% 32% 30% 30.0% 25.0% 25.0% 23.8% 22.4% 23.1% 22.8% 23.0% 23.2% 22.5% 20.0% 18.5% 15.0% 9.5% 10.0% 5.0% 0.0% HY19 2HY19 FY19 HY20 2HY20 FY20 HY21 2HY21 FY21 HY22 Contribution after land and build Ad
Slide 35: Administrative Expenses Analysis
ADMINISTRATIVE EXPENSES ANALYSIS • FY21 administrative expenses reflected the £m HY22 FY21 2HY21 HY21 FY20 resumption of employee incentive costs Sundry Income(1) (8.7) (24.5) (12.2) (12.3) (25.8) • Administrative expenses before adjusted Employee incentive costs 35.1 70.1 41.0 29.1 2.1 items in FY2
Slide 36: Current Trading – Forward Order Book
CURRENT TRADING – FORWARD ORDER BOOK 30 January 2022 31 January 2021 Change 2 February 2020 Change £m Homes £m Homes £m Homes £m Homes £m Homes Private 2,625.9 7,382 1,933.6 5,769 35.8% 28.0% 1,593.7 4,984 64.8% 48.1% Affordable 1,219.2 7,534 1,242.4 7,746 (1.9%) (2.7%) 1,118.7 7,127 9.0% 5.7% Wholl
Slide 37: Current Trading – Forward Sales Roll
CURRENT TRADING – FORWARD SALES ROLL 30 January 2022 31 January 2021 Change 2 February 2020 Change Private Total(1) Private Total(1) Private Total(1) Private Total(1) Private Total(1) 31 December 6,557 14,818 5,104 13,588 28.5% 9.1% 3,997 11,885 64.0% 24.7% Reservations 1,248 1,439 1,169 1,330 6.8%
Slide 38: Full Income Statement
FULL INCOME STATEMENT £m (unless otherwise stated) HY22 HY21 Change Revenue 2,247.1 2,494.7 (9.9%) Cost of Sales (1,700.6) (1,980.8) 14.1% Gross profit 546.5 513.9 6.3% Gross margin % 24.3 20.6 370 bps Analysed as: Adjusted gross profit 562.4 593.0 (5.2%) Adjusted gross margin % 25.0 23.8 120 bps Co
Slide 39: Calendarised Income Statement
CALENDARISED INCOME STATEMENT £m (unless otherwise stated) 12 months to December 21 12 months to December 20 Change Revenue 4,564.1 3,647.7 25.1% Cost of sales (3,521.5) (3,023.2) (16.5%) Gross profit 1,042.6 624.5 66.9% Gross margin % 22.8 17.1 570 bps Adjusted gross margin % 23.8 19.3 450 bps Admi
Slide 40: Private Completions - Volume and ASP
PRIVATE COMPLETIONS - VOLUME AND ASP Homes: 1,201 (HY21: 1,367) ASP: £260.8k (HY21: £253.3k) Homes: 776 (HY21: 775) ASP: £294.9k (HY21: £268.8k) Homes: 1,132 (HY21: 1,301) ASP: £403.9k (HY21: £377.5k) Homes: 1,278 (HY21: 1,375) ASP: £294.1k (HY21: £270.1k) London Homes: 157 (HY21: 488) ASP: £437.7k
Slide 41: Driving Operating Margin - New Product Range Roll Out
DRIVING OPERATING MARGIN - NEW PRODUCT RANGE ROLL OUT Proportion of regional completions using new product ranges (%) (1) 70% 65% 64% 60% 58% 50% 40% 30% 30% 20% 10% 4% 0% HY18 HY19 HY20 HY21 HY22 32% 58% 76% 83% 88% % of active outlets with new product range (1)(2) (1) Including JVs in which the Gr
Slide 42: Home Completions Analysis – Product Type
HOME COMPLETIONS ANALYSIS – PRODUCT TYPE 2% 3% 5 & 6 Beds 31% 31% 4 Beds 38% 34% 3 Beds 13% 1 & 2 Beds 15% 6% Flats (London) 3% 13% Flats (non-London) 11% HY22 HY21 42
Slide 43: Net Interest Charge Analysis
NET INTEREST CHARGE ANALYSIS £m HY22 HY21 Interest on term debt and overdrafts - 0.1 Interest on private placement notes 2.8 2.8 Utilisation / non-utilisation fees on RCF 1.8 1.8 Other interest 0.6 0.2 Total cash interest 5.2 4.9 Land creditors / deferred payables 8.1 8.1 Financing fees 1.1 1.0 Leas
Slide 44: Balance Sheet – Land Bank
BALANCE SHEET – LAND BANK Land bank plots 31 December 2021 31 December 2020 With detailed planning consent 49,622 54,079 With outline planning consent 16,373 9,846 With resolution to grant and other 560 235 Owned 66,555 64,160 Controlled 11,909 11,450 Total land bank plots 78,464 75,610 JV plots – o
Slide 45: Land Creditors Payment Profile by Calendar Year
LAND CREDITORS PAYMENT PROFILE BY CALENDAR YEAR £m 45
Slide 46: Average Mortgage Rate
AVERAGE MORTGAGE RATE Average 2-year fixed rate mortgage pricing (%)(1) 4.00% 3.54% 3.50% 2.98% 3.00% 3.21% 2.27% 2.50% 2.00% 1.78% 1.50% 1.97% 1.54% 1.00% 0.50% 0.00% Jun-14 Jun-15 Jun-16 Dec-15 Jun-17 Jun-18 Jun-19 Jun-20 Dec-14 Dec-16 Dec-17 Dec-18 Dec-19 Jun-21 Dec-20 Dec-21 Standard 85% LTV mor
Slide 47: Mortgage Affordability
MORTGAGE AFFORDABILITY Halifax Mortgage Affordability Index(1) 60% Mortgage costs as a proportion of earnings 55% 50% 45% 40% 35% 32.75% 30% 30.6% 25% 20% 1985 1990 1995 2000 2005 2010 2015 2020 Halifax Affordability Index Average (1985-Q4 2021) (1) The mortgage to earnings ratio is calculated using
Slide 48: English Planning Consents and Savills UK Greenfield Development Land Index
ENGLISH PLANNING CONSENTS AND SAVILLS UK GREENFIELD DEVELOPMENT LAND INDEX English Planning Consents and Net New Build Home Additions and Savills UK Greenfield Development Land Price Index 120 360 Savills UK Greenfield Development Land Index England moving annual planning consents and net new 100 30
Slide 49: External Benchmarks
EXTERNAL BENCHMARKS • 5 Star award for EXTERNAL 12 years BENCHMA • Only major RKS national • 93 awards in 2021 housebuilder to • More than any other housebuilder achieve this • Sustainable Housebuilder of the for 17 consecutive years Year 2021 • 96 accreditations including 23 outstanding • Gold awar
Slide 50: Disclaimer
DISCLAIMER This document has been prepared by Barratt Developments PLC (the “Company”) solely for use at a presentation in connection with the Company‘s Interim Results Announcement in respect of the half year ended 31 December 2021. For the purposes of this notice, the presentation (the “Presentati