Barratt Redrow Plc · LSE:BTRW
Barratt Redrow — Investor Day (February 2025)
40 slides from Barratt Redrow's investor day presentation, Feb 12, 2025
Slide 1: Capital Markets Update
Penlands Grange, Haywards Heath, Redrow Capital Markets Update 12 February 2025
Slide 2: Agenda
Agenda 1 2 3 Introducing Our brands Partner of choice Barratt Redrow 4 5 6 Current market Growth plans Capital allocation and land 2
Slide 3: Introducing Barratt Redrow
Introducing Barratt Redrow David Thomas Pinewood Park, Formby, Barratt
Slide 4: Key takeaways
Key takeaways Strong Customer Partner of Positioned for Financial fundamentals Focus choice growth strength Positioned to Unrivalled Strong Possess the Underpins capitalise on quality, service relationships scale to sustainable, underlying and giving us capture growing demand sustainability insight
Slide 5: Market fundamentals
Market fundamentals Demand Need for Government significantly homes across targeting outstrips supply all tenures increased delivery Planning reform Affordability set to unlock remains a key growth constraint 5
Slide 6: Barratt Redrow at a glance
Barratt Redrow at a glance >620k 67 yrs 8k homes built heritage employees since 1958 across England, Scotland and Wales 22k c.94k 3 capacity to high quality land distinct brands deliver 22,000 bank plots and covering all First time buyers Mover-uppers and Premium purchasers homes a year access to mu
Slide 7: Industry leading credentials in quality, service and sustainability
Industry leading credentials in quality, service and sustainability Quality Service Sustainability 2024 NHBC Pride in the Job 15 consecutive years Highest scoring national awards compared to large peers as 5 star homebuilder homebuilder for 11 years and only Global A list CDP 16 homebuilder 14 12 10
Slide 8: Leading customer proposition
Leading customer proposition Customer appeal Buying Living Our multi branded Best choice of Wide choice of developments add variety locations buying initiatives and attract diverse communities Widest choice of homes through our 3 Key worker and Redrow’s unique distinct leading Armed Forces lifestyle
Slide 9: Our leading, differentiated brands
Our leading, differentiated brands Matthew Pratt Elysian Fields, Leeds, David Wilson
Slide 10: Our leading national brands
Our leading national brands First time buyers Mover-uppers Premium purchasers and young families and growing families and downsizers 10
Slide 11: Unrivalled brand offering
Unrivalled brand offering Consumers score our brands ahead of peers on key metrics High build quality Knowledgeable staff Well designed developments Build in great locations 68% 68% 68% 68% 66% 66% 66% 66% 64% 64% 64% 64% 62% 62% 62% 62% 60% 60% 60% 60% 58% 58% 58% 58% 56% 56% 56% 56% 54% 54% 54% 54
Slide 12: The benefits of multi branding
The benefits of multi branding • Enhanced asset turn Access to Time on Viability of • Accelerated a wider site larger sites cash customer greatly unlocked generation base reduced • Improved ROCE 12
Slide 13: Partner of choice
Partner of choice David Thomas Morton Meadows, Thornbury, David Wilson
Slide 14: Strong relationships throughout value chain
Strong relationships throughout value chain Providing flexibility and resilience Land Supply People Customers supply chain Acquisition Highest Expanded our Acquisition of Glassdoor brand portfolio of Oregon Gladman in scores in with Redrow in 2019 2022 sector1 in 2024 With Lloyds With the Degree Suc
Slide 15: MADE Partnership
MADE Partnership Master developer, creating large scale communities with thousands of homes Benefits for Benefits for Barratt Redrow communities • Access to large • Strong placemaking regeneration and standards garden village sites • Mixed tenure, • Long-term land diverse communities pipeline of ser
Slide 16: University of Salford
University of Salford Unique projects testing innovative new technology and customer experience Benefits for Benefits for Barratt Redrow our customers • Working with 40 • Energy efficient and supply chain partners sustainable, future- to understand future proofed homes technologies • Effective tech
Slide 17: Ibstock
Ibstock A relationship with Redrow spanning over 40 years Benefits for Benefits for our Barratt Redrow suppliers • Longstanding • Visibility of future relationship with demand major brickmaker • New product • Meets our design and development piloting customer needs • Sharing technical and • Collabor
Slide 18: Land & planning
Land & planning Steven Boyes Kingsbourne, Nantwich, Redrow
Slide 19: Barratt Redrow land bank
Barratt Redrow land bank Strategic land Current land bank pipeline 83,636 Owned 148,000 105,000 10,586 Plots Promotional land plots Controlled 4,359 JV – owned and controlled 98,581 Total current land bank 19
Slide 20: Shifting planning landscape
Shifting planning landscape English Planning Consents and Net New Build Home Additions and 2021 revisions Savills UK Greenfield Land Price Index made to NPPF 110 360 NPPF England moving annual planning consents and net Savills UK Greenfield Development Land Index (100 100 90 introduced 300 new build
Slide 21: Strategic land opportunity
Strategic land opportunity Positive planning Scale and strength of backdrop strategic land enhanced by Redrow 2x strategic land pull through forecast in c.3ppt enhanced margin FY25 and FY26 compared to instant land 21
Slide 22: Continuing land investment discipline
Continuing land investment discipline Disciplined land bank strategy Target: 3.5 years owned 3.5 yrs Currently: 5.0 years owned Targeted owned land pipeline Leading land 23% 24% promotion business acquired in 2022 Gross margin Minimum land buying hurdle rate In partnership with Homes England and 25%
Slide 23: The strength of our land bank
The strength of our land bank Cost synergies Revenue Diversified land Flexibility on unlocking synergies pipeline, giving branding and throughout making our optionality tenure mix to existing land land work across the optimise capital bank harder cycle efficiency Current land bank Future land bank 2
Slide 24: Ready to capitalise on land bank
Ready to capitalise on land bank Increasing our use of timber frame • Expansion of existing timber frame factory • Second timber frame factory opened in 2023 • Timber frame now standard on new Barratt house type designs • c. 40% faster to progress from foundation to build completion • Reduces depend
Slide 25: Our medium-term plan for growth
Our medium- term plan for growth Mike Scott Elwick Gardens, Hartlepool, Barratt
Slide 26: Medium-term financial priorities
Medium-term financial priorities 1 2 3 Synergy Sustainable Margin delivery growth improvement Strong balance sheet 26
Slide 27: Good progress on cost synergies
Good progress on cost synergies February 2024 February 2025 Procurement-related savings £34m (primarily direct materials) and other efficiencies in build cost overheads • Positive supply chain engagement £34m £33m Optimisation of the divisional office structure • • 6 divisional offices closed Consul
Slide 28: Progress made on revenue synergies
Progress made on revenue synergies Reintroducing Redrow to Scotland 45 Incremental outlets identified: • H1 FY27 build start date • H2 FY27 first completions 28
Slide 29: Sustainable growth towards 22,000 homes
Sustainable growth towards 22,000 homes • 32 divisions will support medium-term target of 22k homes p.a. • Revenue synergies delivering 45 outlets producing 900-1,000 incremental homes p.a. from FY28 • Average sales outlets grow to 475-525 • Good visibility on planning • Operational experience gives
Slide 30: Steps to improve gross margin
Steps to improve gross margin • Embedded gross margin impacted by: Expected gross margin progression • Increased sales incentives; • Higher build costs; and 23%+ 24%+ • Less efficient overhead recovery 20%+ 18.3% • Build cost inflation moderating • Disciplined land acquisition • Synergies to be unlo
Slide 31: Medium-term ROCE evolution
Medium-term ROCE evolution Profit Margin Asset Turn = ROCE >20% • Growth drivers • More efficient use of • Adjusted operating land bank through profit divided by • Cost initiatives 1 multi branding TNAV • Synergies • Increased PRS delivery • Return to normal land creditor levels 1excluding net cash,
Slide 32: Our medium-term guidance
Our medium-term guidance Current Medium-term Outlets c.400 475-525 Total home completions 16,800 – 17,200 c.22,000 Adjusted operating margin 1 7.5% c.15% Land creditors 12.2% 20-25% ROCE 1 8.1% >20% 1Post purchase price accounting adjustments 32
Slide 33: Capital allocation framework
Capital allocation framework Mike Scott Fleckney Fields, Leicester, David Wilson
Slide 34: Our capital allocation priorities
Our capital allocation priorities Strong Investment in Shareholder A balance sheet B the business C returns • Foundation of our ability to • Capital deployed first to • Unchanged commitment to invest, grow and generate grow the business maximising shareholder returns returns • Enhanced scale present
Slide 35: Maintaining balance sheet strength
Maintaining balance sheet strength • Post-pandemic balance sheet was Average FY15-FY19 Average FY20-FY24 Medium-term conservative • Reverting to more normal balance sheet structure • Modest average net cash plus £700m RCF and £200m USPP • Balance sheet remains strong Net cash Land creditors Net inde
Slide 36: Investment in growth remains the priority
Investment in growth remains the priority Three acquisitions: Investment in Continued Redrow, Gladman infrastructure investment in and Oregon opening a high quality land second timber at £1-1.3bn of frame factory annual spend plus work in progress 36
Slide 37: Clear path to returning cash sustainably
Clear path to returning cash sustainably • Ordinary dividend remains a priority • Dividend cover set at 2x adjusted earnings (before PPA charges) from FY26 • Entering a new phase of cash generation from the enlarged group • At least £100m buyback annually • Framework maintains our disciplined approa
Slide 38: Q&A
Q&A Eagle Gate, Woodford Garden Village, Amington, Cheshire Redrow
Slide 39: Key takeaways
Key takeaways David Thomas Fernwood Village, Newark, Barratt
Slide 40: Thanks & reminder of key takeaways
Thanks & reminder of key takeaways Strong Customer Partner of Positioned for Financial fundamentals Focus choice growth strength Positioned to Unrivalled Strong Possess the Underpins capitalise on quality, service relationships scale to sustainable, underlying and giving us capture growing demand su