Slide 1: FY23 Results Presentation
Wigston Meadows Leicester FY23 Results Presentation Year ended 30 June 2023 6 September 2023
Slide 2: David Thomas, Chief Executive Officer
Elysian Fields Adel David Thomas Chief Executive Officer Barratt Developments PLC Full Year 2023 Results 2
Slide 3: Overview - FY23 performance
Overview - FY23 performance • Strong operational and good financial FY23 FY22 Change performance Total home completions (inc JVs) 17,206 17,908 3.9% • Softer pricing and ongoing build cost Adjusted PBT £884.3m £1,054.8m 16.2% inflation impacted adjusted PBT ROCE 22.2% 30.0% 780 bps • ROCE impacted b
Slide 4: Overview – Current trading
Overview – Current trading FY24 FY23 • Private reservation rate of 0.42, including to date to date Change 0.02 relating to sales to the PRS and RPs Net private reservation rate (1) 0.42 0.60 30.0% • Solid uplift to reservation rate from PRS and RPs anticipated through FY24 - of which PRS and RPs 0.0
Slide 5: Clear plan to deliver in FY24
Clear plan to deliver in FY24 • Focused on: – Driving revenue – Controlling costs – Maintaining land investment discipline – Leading sustainability • We continue to expect to deliver between 13,250 and 14,250 total completions(1) in FY24 Jackton Hall, East Kilbride (1) Including c. 650 JVs, c. 750 P
Slide 6: Steven Boyes, Chief Operating Officer
Hayes Village Hayes Steven Boyes Chief Operating Officer Barratt Developments PLC Full Year 2023 Results 6
Slide 7: Sales performance
Sales performance FY23 FY22 Change • Softening in demand through the year Average net private reservations per active outlet per week Wholly owned 0.55 0.81 32.1% • Sales rate at 0.55 includes 0.10 (FY22: 0.03) from PRS - Of which PRS and RPs 0.10 0.03 233.3% and RPs JV 0.88 1.29 31.8% • Outlet grow
Slide 8: Private reservation analysis
Private reservation analysis • Help to Buy decline reflects scheme closure 3% 4% PRS & RPs Part-exchange on 31 October 2022 17% 14% Cash buyers & investors • Part-exchange usage, to help our customers, 11% remains carefully controlled 11% • Growth in PRS and RPs centred around 37% First time buyers
Slide 9: Completions and pricing performance
Completions and pricing performance FY23 FY22 Change • Completion volumes reflects: Home completions (units) – Strong opening forward order book Private 12,456 13,327 6.5% – Disciplined site-based construction output - of which PRS with Citra Living 258 36 616.7% – Significant deterioration of deman
Slide 10: Construction output, customer service and build quality
Construction output, customer service and build quality FY23 FY22 • Adjusted construction output to align with completions Performance metrics Average construction output per week • HBF 5 star rating for 14 consecutive years (equivalent homes) 322 352 • Increase in IIR, key safety messages reinforce
Slide 11: Build cost inflation
Build cost inflation Materials • Centralised procurement team manage around 95% of materials • Inflationary pressures easing • Price reductions seen in some key areas e.g. bricks, plastics, timber and steel • Energy intensive building products remain more dependent on the unwinding of suppliers’ Tot
Slide 12: Land bank
Land bank 30 June 30 June 2023 2022 • Paused land approvals for future purchase given market Land bank plots uncertainty With detailed planning consent 48,270 51,009 • Our land bank remains strong at 4.3 years of supply on a With outline planning consent and other (1) 10,978 16,678 trailing basis, 5
Slide 13: Mike Scott, Chief Financial Officer
Grange View Hugglescote Mike Scott Chief Financial Officer Barratt Developments PLC Full Year 2023 Results 13
Slide 14: Summarised performance
Summarised performance £m (unless otherwise stated) FY23 FY22 Change Revenue 5,321.4 5,267.9 1.0% Adjusted gross profit 1,130.4 1,308.1 13.6% Adjusted gross margin % 21.2 24.8 360 bps Gross profit 974.9 899.9 8.3% Gross margin % 18.3 17.1 120 bps Adjusted operating profit 862.9 1,054.8 18.2% Adjuste
Slide 15: Adjusted operating margin bridge
Adjusted operating margin bridge (30 bps) (170 bps) Volume 20.0% impact (20 bps) (60 bps) Net inflation London mix (70 bps) increase Completed (30 bps) development provision Mix/other Admin expenses 16.2% FY22 FY23 Barratt Developments PLC Full Year 2023 Results 15
Slide 16: Administrative expenses and adjusted items
Administrative expenses and adjusted items • Administration expense increase includes: £m FY23 FY22 Sundry income (16.7) (21.2) – People costs, including salary increases and cost of Employee performance pay 44.7 78.4 living supplement Other administrative costs 242.8 199.2 – Gladman (acquired Jan 2
Slide 17: Adjusted items – legacy property costs in FY23
Adjusted items – legacy property costs in FY23 External wall Reinforced £117.7m net charge relating to external wall systems £m systems and concrete Legacy properties associated review frames Total • Pro-active contact with all building owners At 1 July 2022 434.6 44.9 479.5 • Net movement of 55 bui
Slide 18: Cash flow
Cash flow 726.9 (822.8) £m 64.3 (31.6) Utilised in Cash Other Legacy cost of sales land spend movements Net land provision utilisation Net cash, Other non-cash WIP / PX / interest and working capital Net land JV Other investing promotion and tax agreements investment and financing Profit from Operat
Slide 19: Balance sheet
Balance sheet £m 30 June 2023 30 June 2022 Change Goodwill and intangible assets 1,047.8 1,058.3 (10.5) Investment in jointly controlled entities 129.8 177.9 (48.1) Gross land bank 3,139.9 3,339.9 (200.0) Land creditors (506.7) (733.6) 226.9 Net land bank 2,633.2 2,606.3 26.9 Land creditor % 16.1% 2
Slide 20: Our land bank and gross margin
Our land bank and gross margin • Gross margin within the current land bank impacted 30 June 2023 owned land bank plots by gross margin by: No. of owned land bank plots Share of owned land bank plots – Pricing movements, given deterioration in trading 25,000 40.0% conditions 34% 34% 35.0% – Ongoing b
Slide 21: Resilience from clear operating framework
Resilience from clear operating framework As at 30 June 2023 • Strong balance sheet important in a challenging 3.6 years owned and 0.7 years controlled Land bank (1) market (2022: 3.9 years owned and 0.8 years controlled) • Clear and consistent operating framework Land creditors Reduced to 16.1% (20
Slide 22: Guidance for FY24
Guidance for FY24 c.13,250 – 14,250 total home completions, including c. 650 JV completions Completions PRS contribution expected to be c. 750 homes Affordable mix expected to be broadly in line with FY23 Average sales outlet movement (inc JV) c. 6% decline Build cost inflation c. 5% Administrative
Slide 23: David Thomas, Chief Executive Officer
Holly Blue Meadows Burntwood David Thomas Chief Executive Officer Barratt Developments PLC Full Year 2023 Results 23
Slide 24: Market fundamentals
Market fundamentals 6.4% average 2 year fixed rate at 85% LTV (1) Structural under-supply Vast majority want to Ineffective planning Mortgage rates of homes remains own - but mortgage system; land values have challenging but lending affordability a constraint not adjusted to market market remains co
Slide 25: Planning and the UK land market
Planning and the UK land market • Latest 12 month planning consents 20% down Savills UK Greenfield Development Land Index(1) (LHS) (100 = 2007 peak) England moving annual planning consents(2) and net new build home additions (RHS) ('000s) from peak 120 360 • Planning clarity has been undermined by:
Slide 26: Mortgage affordability and mortgage lending
Mortgage affordability and mortgage lending Halifax Mortgage Affordability Index (1) Average 2-year fixed rate mortgage pricing Mortgage costs as a proportion of earnings 75% and 90% LTVs January 2020 - July 2023 (2) 60% 8.0% Standard 75% LTV mortgage product (3) 30 bps 55% 7.0% Standard 90% LTV mor
Slide 27: Sustainability
Sustainability People • Cost of living support for our employees throughout FY23 • Introduced enhanced family friendly policies with extended maternity, paternity and carer leave Places • Now fully compliant with Parts F, L, O and S • Our “eHome2” prototype is delivering data and insights as we deve
Slide 28: Biodiversity Net Gain
Biodiversity Net Gain 10% net gain of biodiversity Biodiversity BASELINE Biodiversity POSITIVE TIME Biodiversity Net loss NEGATIVE of biodiversity Pre planning Construction Landscaping Management and monitoring (30 years minimum) Barratt Developments PLC Full Year 2023 Results 28
Slide 29: A business model for the long term
A business model for the long term Barratt Developments PLC Full Year 2023 Results 29
Slide 30: Conclusion
Conclusion • Strong operational and good financial performance in FY23 • Industry leading customer service, build quality and sustainability positions maintained • We expect the backdrop will continue to be difficult • But we are well positioned through our: – Financial strength – Land bank and sale
Slide 31: Q & A
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Slide 32: Appendices
Parish Brook Bristol Appendices Barratt Developments PLC Full Year 2023 Results 32
Slide 33: Appendices - Index
Appendices - Index PAGE 34 Definitions 35 Current trading - forward order book 36 Current trading - forward sales roll 37 Site based construction activity 38 Private completions - volume and ASP 39 Home completions analysis - product type 40 Full income statement 41 Group cost structure 42 Driving o
Slide 34: Definitions
Definitions Active outlet is a site with at least one home for sale ASP is average selling price Average net 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 and bu
Slide 35: Current trading
Current trading Forward order book 15.0 27 August 2023 28 August 2022 Change £m Homes £m Homes £m Homes Private 1,527.6 4,440 2,421.5 6,467 36.9% 31.3% Affordable 752.0 4,691 1,079.6 6,658 30.3% 29.5% Wholly owned 2,279.6 9,131 3,501.1 13,125 34.9% 30.4% JV 157.7 477 307.8 933 48.8% 48.9% Total 2,43
Slide 36: Current trading
Current trading Forward sales roll 27 August 2023 28 August 2022 Change Private Total(1) Private Total(1) Private Total(1) 30 June 2023 / 2022 3,884 8,995 6,108 13,579 36.4% 33.8% Reservations 1,303 1,440 1,709 2,138 23.8% 32.6% Completions (747) (827) (1,350) (1,659) 44.7% 50.2% 27 Aug 2023 / 28 Au
Slide 37: Site based construction activity
Site based construction activity Average weekly output Average weekly build equivalent unit production (homes) 400 396 384 372 350 365 365 364 363 363 361 352 351 350 350 343 341 341 340 337 333 331 331 324 322 300 317 312 311 306 302 299 298 298 296 274 250 200 197 150 100 50 53 0 Q1 Q2 H1 Q3 Q4 H2
Slide 38: Private completions
Private completions Volume and ASP Scotland Homes: 1,590 (FY22: 1,606) ASP: £309.9k (FY22: £297.6k) Northern Homes: 2,511 (FY22: 2,414) ASP: £299.9k (FY22: £271.3k) Central Homes: 2,273 (FY22: 2,685) East ASP: £354.2k (FY22: £321.3k) Homes: 2,279 (FY22: 2,274) ASP: £425.3k (FY22: £410.0k) West Londo
Slide 39: Home completions analysis
Home completions analysis Product type 3% 2% 2% 15% 30% 30% 5 & 6 bedroom homes 4 bedroom homes 23% 3 bedroom homes 1 & 2 bedroom homes 5% 38% 35% Apartments (non-London) Apartments (London) 46% 15% 13% 11% 10% 8% 6% 8% FY09 FY22 FY23 Barratt Developments PLC Full Year 2023 Results 39
Slide 40: Full income statement
Full income statement £m (unless otherwise stated) FY23 FY22 Change Revenue 5,321.4 5,267.9 1.0% Cost of Sales (4,346.5) (4,368.0) 0.5% Gross profit 974.9 899.9 8.3% Gross margin % 18.3 17.1 120 bps Analysed as: Adjusted gross profit 1,130.4 1,308.1 13.6% Adjusted gross margin % 21.2 24.8 360 bps Co
Slide 41: Group cost structure
Group cost structure Contribution and adjusted gross margin record 34% 34% 34% 33% 33% 32% 32% 32% 32% 32% 32% 32% 32% 31% 30% 25.0% 24.8% 24.7% 23.8% 23.3% 23.2% 23.1% 23.0% 22.8% 22.5% 22.4% 21.2% 19.0% 18.5% 9.5% HY19 2HY19 FY19 HY20 2HY20 FY20 HY21 2HY21 FY21 HY22 2HY22 FY22 HY23 2HY23 FY23 Cont
Slide 42: Driving operating margin
Driving operating margin New product range roll-out New product ranges (%) 80% 77% 65% 60% 36% Proportion of regional completions using new product ranges (%) (1) 79% 88% 93% 94% 72% % of active outlets with new product range (1)(2) FY19 FY20 FY21 FY22 FY23 (1) Including JVs (2) As at 30 June Barrat
Slide 43: Administrative expenses analysis
Administrative expenses analysis £m FY23 2HY23 HY23 FY22 2HY22 HY22 FY21 2HY21 HY21 Sundry income (16.7) (9.1) (7.6) (21.2) (12.5) (8.7) (24.5) (12.2) (12.3) Employee performance pay 44.7 17.3 27.4 78.4 43.3 35.1 70.1 41.0 29.1 Other administrative costs 242.8 125.7 117.1 199.2 111.1 88.1 155.6 81.3
Slide 44: Net interest charge analysis
Net interest charge analysis £m FY23 FY22 Interest on deposits, term debt and overdrafts (21.7) (1.5) Interest on private placement notes 5.5 5.6 Utilisation/non-utilisation fees on RCF 3.5 3.5 Other interest (0.7) 0.7 Total cash interest (13.4) 8.3 Land creditors/deferred payables 13.9 14.4 Interes
Slide 45: Balance sheet
Balance sheet Land bank 30 June 2023 30 June 2022 Land bank plots With detailed planning consent 48,270 51,009 With outline planning consent 9,658 15,957 With resolution to grant and other 1,320 721 Owned 59,248 67,687 Controlled 11,142 13,239 Total land bank plots 70,390 80,926 JV plots – owned 2,6
Slide 46: Land bank evolution
Land bank evolution Reconciling plots and balance sheet land investment FY23 FY22 FY21 Plots £m £k Plots £m £k Plots £m £k Land bank movements Start of period total land bank 3,339.9 2,946.3 3,112.3 Start of period strategic and WBD land (67.7) (48.7) (40.9) Start of period owned current land bank 6
Slide 47: Land creditors payment profile by financial year
Land creditors payment profile by financial year £m June 2023 FY24 FY25 FY26 FY27 & beyond Barratt Developments PLC Full Year 2023 Results 47
Slide 48: Economic backdrop charts
Economic backdrop charts GfK Consumer Confidences indices UK unemployment rate June 2018 - July 2023 Confidence June 2018 - June 2023 10 Confidence to make major purchase 5.5% Average unemployment rate Unemployment rate, age 16 and 0 5.0% June 2018 – June 2023 over, seasonally adjusted (10) 3 month
Slide 49: Housing backdrop charts
Housing backdrop charts 2-year fixed rate mortgages 5-year fixed rate mortgages 75% and 90% LTVs January 2020 – July 2023 75% and 90% LTVs January 2020 – July 2023 7.0% 7.0% 6.0% Average 2yr 90% 2yr 90% LTV 6.0% Average 5yr 90% Jan 2020 – July 2023 Jan 2020 – July 2023 5.0% 2 yr 75% LTV 5.0% 4.0% 3.
Slide 50: Planning and the UK land market
Planning and the UK land market Savills UK Greenfield Development Land Index(1) (LHS) England moving annual planning consents(2) and (100 = 2007 peak) net new build home additions (RHS) ('000s) Jun 21 120 Sep 07 360 339.5 100.00 Jun 23 320 100 94.7 Jun 09 280 53.3 Mar 23 80 219.1 240 Jun 09 270.6 Ju
Slide 51: External benchmarks
External benchmarks 5 Star award for 14 years 96 awards in 2023 Only major national More than any other housebuilder to achieve this housebuilder for 19 consecutive years Gold award for 2022 Supreme award winner Highest scoring national 6th time a Barratt site manager housebuilder has won a supreme
Slide 52: 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 Results Announcement in respect of the full year ended 30 June 2023. For the purposes of this notice, the presentation (the “Presentation”) shall m
Slide 53: www.barrattdevelopments.co.uk/investors
Environmental properties of this document This brochure is printed on paper manufactured from 100% Recycled post consumer waste without the use of optical brightening agents (OBA) www.barrattdevelopments.co.uk/investors