Slide 1: HY23 Results Presentation
Heather Croft Pickering HY23 Results Presentation Half year ended 31 December 2022 8 February 2023
Slide 2: David Thomas, Chief Executive Officer
Overstone Gate Northamptonshire David Thomas Chief Executive Officer Barratt Developments PLC Half Year 2023 Results 2
Slide 3: Overview: HY23 performance
Overview HY23 performance • Excellent operational and financial HY23 HY22 Change performance Total home completions (inc JVs) 8,626 8,067 6.9% • Record half year adjusted PBT • Further improvement in ROCE Adjusted PBT £521.5m £450.0m 15.9% • Strong net cash position ROCE(1) 29.6% 26.2% 340 bps • But
Slide 4: Overview: Current trading
Overview Current trading 2HY23 2HY22 • Private reservation rate of 0.49, to date to date Change improved on Q2 exit rate of 0.30 Net private reservations per active outlet 0.49 0.90 45.6% per week • Increase in active sales outlets Average active outlets 373 325 14.8% • c. 86% forward sold for FY23
Slide 5: Overview: Current backdrop
Overview Current backdrop • Experienced management team • Initial levers pulled: – Land approvals paused – Recruitment freeze • As the market evolves: – Trading the business week to week – Costs under constant review • Fundamentals remain attractive: – Supply and demand River Meadow, Stanford in The
Slide 6: Steven Boyes, Chief Operating Officer
Caisteal Gardens Winchburgh Steven Boyes Chief Operating Officer Barratt Developments PLC Half Year 2023 Results 6
Slide 7: Sales performance
Sales performance Sales rates and selling outlets • The reservation rate weakened sequentially HY23 HY22 Change through HY23 Average net private reservations per active outlet per week Wholly owned 0.44 0.79 44.3% • Total average sales outlet growth of c. 8% JV 0.75 1.00 25.0% expected in FY23 Total
Slide 8: Completions: Volumes and pricing
Completions Volumes and pricing HY23 HY22 Change • HY23 completion growth reflected: Home completions (units) – Strong opening forward order book Private 6,549 5,896 11.1% – Disciplined site-based construction output Affordable 1,715 1,776 3.4% Total home completions 8,264 7,672 7.7% • Private ASP g
Slide 9: Completions analysis
Completions analysis Buyer type • Help to Buy declining as the scheme draws to a close 8% 4% 3% Investor / PRS Part-exchange 3% • Investor share of completions doubled reflecting: 23% Affordable 21% – Increased London share of completions – Growth in private rental sector demand • Affordable deliver
Slide 10: Construction output, customer service and build quality
Construction output, customer service and build quality • Excellent control of construction output in the HY23 HY22 HY21 HY20 first half, aligning with completions Performance metrics Average construction output per week • Industry leading customer service: HBF 5 star (equivalent homes) 333 341 298
Slide 11: Our cost structure and total build cost inflation
Our cost structure and total build cost inflation % of Materials Cost structure revenue (1) • Centralised procurement team manage around 90% of Land c. 16% materials • Inflationary pressures remain, energy and labour being the Infrastructure and S106 c. 20% major challenges for suppliers but inflati
Slide 12: Land bank
Land bank 31 Dec 31 Dec 2022 2021 • Land approvals for future purchase paused Land bank plots given market uncertainty With detailed planning consent 47,641 49,622 • Our land bank remains strong at 4.4 years on With outline planning consent and other (1) 16,431 16,933 a trailing basis Owned 64,072 6
Slide 13: Land bank: Operational scenarios
Land bank Operational scenarios Illustrative land bank length scenarios (years) • The industry’s private reservation rate remains uncertain: At 30 June 2023 – 30 June 2025 assuming sustainable reservation rates at 0.40 and 0.60 per sales outlet per week (1) (2) (3) – HTB scheme closure & deposit con
Slide 14: Summary
Summary • An excellent operating performance, managing construction activity and home completions • Leadership in customer satisfaction and build quality continues • Build cost inflation remains challenging but inflationary pressures easing • Land buying paused but land bank strength means no pressu
Slide 15: Mike Scott, Chief Financial Officer
The Skylarks Loughborough Mike Scott Chief Financial Officer Barratt Developments PLC Half Year 2023 Results 15
Slide 16: Summarised performance
Summarised performance £m (unless otherwise stated) HY23 HY22 Change Revenue 2,783.9 2,247.1 23.9% Adjusted gross profit 647.9 562.4 15.2% Adjusted gross margin % 23.3 25.0 170 bps Gross profit 630.3 546.5 15.3% Gross margin % 22.6 24.3 170 bps Adjusted operating profit 511.8 449.9 13.8% Adjusted op
Slide 17: Adjusted operating margin bridge
Adjusted operating margin bridge 40 bps (70 bps) 40 bps Net Inflation (80 bps) Volume London mix impact (1) impact (90 bps) Mix /other Admin expenses 18.4% HY22 HY23 (1) Reflects the impact of a previously impaired site at Hounslow, the majority of which was traded through in the half Barratt Develo
Slide 18: Administrative expenses and adjusted items
Administrative expenses and adjusted items • HY23 administration expense increase reflected: £m HY23 HY22 Administrative expenses per income statement 136.9 114.5 – Gladman consolidation (acquired Jan 2022) Net part-exchange income (0.8) (2.0) – Building Safety Unit expansion Net administrative expe
Slide 19: Cash flow
Cash flow 381.4 (439.6) £m 31.0 (27.2) Utilised in Cash Other Net land cost of sales land spend movements WIP / PX / promotion Net land agreements Net cash, Other Other investing interest movements and financing and tax Profit from Operating operations cash inflow Dividends Net cash and share outflo
Slide 20: Balance sheet
Balance sheet £m 31 Dec 2022 30 Jun 2022 Change 31 Dec 2021 Goodwill and intangible assets 1,053.0 1,058.3 (5.3) 905.9 Investment in joint ventures and 188.0 177.9 10.1 160.4 associates Gross land bank 3,253.7 3,339.9 (86.2) 3,046.1 Land creditors (622.3) (733.6) 111.3 (682.3) Net land bank 2,631.4
Slide 21: Our land bank and gross margin
Our land bank and gross margin • Resilient gross margin within the current land 31 December 2022 owned land bank plots by gross margin bank, ahead of our minimum target of 23% No. of owned land bank plots Share of owned land bank plots • Our land bank reflects a relatively normal 30,000 40.1% 45.0%
Slide 22: Operating framework: Progress update
Operating framework Progress update Operating framework Positions at 31 December 2022 (and 30 June 2022) 3.6 years owned and 0.8 years controlled Land bank (1) c. 3.5 years owned and c. 1.0 year controlled (2022: 3.9 years owned and 0.8 years controlled) Reduction to 19.1% Land creditors Maintain at
Slide 23: Guidance for FY23
Guidance for FY23 c.16,500 – 17,000 total home completions, including c. 750 JV completions Completions c. 24% affordable, c. 76% private mix Average sales outlet growth (inc JV) c. 8% Build cost inflation range c. 9 - 10% Administrative expenses c. £285m (including amortisation of intangible assets
Slide 24: Financial summary
Financial summary • Strong financial performance in HY23 • Robust financial position with substantial net cash and undrawn RCF • Land bank gross margin ahead of our minimum targeted 23% with limited impairment exposure • Closely monitoring market conditions to manage cost base and balance sheet appr
Slide 25: David Thomas, Chief Executive Officer
Energy House 2.0 Salford University David Thomas Chief Executive Officer Barratt Developments PLC Half Year 2023 Results 25
Slide 26: Market fundamentals
Market fundamentals 5.04% average 2 year fixed rate at 85% LTV (1) Demand continues Consumer Land market hiatus Mortgage rates to exceed supply confidence with planning more remain elevated appears to be challenging but mortgage rate stabilising competition increasing (1) Rates are from an average o
Slide 27: 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 85% and 95% LTVs February 2022 – February 2023(2) 60% 8.0% Standard 85% LTV mortgage product (3) 55% 7.0% Standard 95% LTV mortga
Slide 28: Planning and the UK land market
Planning and the UK land market • 15% decline in planning since mid-2021 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) • Nutrient neutrality challenges remain 120 360 • Monitoring the
Slide 29: Sustainability: People, Places and Nature
Sustainability People, Places and Nature People • Cost of living support for our employees extended, with a further £1,000 supplement from 1 January 2023 through 30 June 2023 • Enhanced family friendly policies with extended maternity, paternity and carer leave introduced Places • Our sites and hous
Slide 30: The Energy House 2.0 and eHome2
Sustainability The Energy House 2.0 and eHome2 • A further milestone on our zero carbon home journey • A partnership with Saint-Gobain and the University of Salford • Testing the effects of climate change on future home designs • The aim - to ensure our zero carbon home designs are future-proofed fo
Slide 31: A business model for the long term
A business model for the long term Highly experienced Quality and build and sales teams service Strong Nationally balance sheet diversified and cash generation Shorter owned Leading in land bank sustainability Barratt Developments PLC Half Year 2023 Results 31
Slide 32: Conclusion
Conclusion • Record PBT performance in HY23, with a slowdown in the market in Q2 • A pleasing uplift in reservations since the start of 2023, reflecting: – Relative economic stability, – Tempering in energy cost expectations; and – More competitive mortgage rates • Well positioned through our: – Fin
Slide 33: Q&A
Saxon Dene Keighley Q&A
Slide 34: Appendices
Cammo Meadows Edinburgh Appendices Barratt Developments PLC Half Year 2023 Results 34
Slide 35: Appendices - Index
Appendices - Index PAGE 36 Definitions 37 Current trading - forward order book 38 Current trading - forward sales roll 39 Site based construction activity 40 Private completions - volume and ASP 41 Home completions analysis - product type 42 Full income statement 43 Calendarised income statement 44
Slide 36: 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 37: Current trading: Forward order book
Current trading Forward order book 15.0 29 January 2023 30 January 2022 Change £m Homes £m Homes £m Homes Private 1,462.4 3,961 2,625.9 7,382 44.3% 46.3% Affordable 993.3 6,213 1,219.2 7,534 18.5% 17.5% Wholly owned 2,455.7 10,174 3,845.1 14,916 36.1% 31.8% JV 209.3 680 264.6 820 20.9% 17.1% Total 2
Slide 38: Current trading: Forward sales roll
Current trading Forward sales roll 29 January 2023 30 January 2022 Change Private Total(1) Private Total(1) Private Total(1) 31 December 3,576 10,511 6,557 14,818 45.5% 29.1% Reservations 753 779 1,248 1,439 39.7% 45.9% Completions (368) (436) (423) (521) 13.0% 16.3% 29 Jan 2023 / 30 Jan 2022 3,961
Slide 39: Site based construction activity
Site based construction activity Average weekly output Average weekly build equivalent unit production (homes) 400 396 384 350 372 365 365 364 363 363 361 352 351 350 350 343 341 341 340 337 333 331 331 324 300 311 302 299 298 298 296 274 250 200 197 150 100 50 53 0 Q1 Q2 H1 Q3 Q4 H2 FY Q1 Q2 H1 Q3
Slide 40: Private completions: Volume and ASP
Private completions Volume and ASP Scotland Homes: 762 (HY22: 776) ASP: £315.2k (HY22: £294.9k) Northern Homes: 1,265 (HY22: 1,201) ASP: £295.2k (HY22: £260.8k) Central Homes: 1,210 (HY22: 1,201) East ASP: £353.5k (HY22: £303.9k) Homes: 1,127 (HY22: 1,004) ASP: £424.2k (HY22: £405.2k) West London &
Slide 41: Home completions analysis: Product type
Home completions analysis Product type HY23 HY23 HY22 Apartments non-London 7% 11% HY22 Apartments London 12% 3% 1 & 2 Beds 14% 15% 3 Beds 35% 38% 4 Beds 30% 31% 5 & 6 Beds 2% 2% Barratt Developments PLC Half Year 2023 Results 41
Slide 42: Full income statement
Full income statement £m (unless otherwise stated) HY23 HY22 Change Revenue 2,783.9 2,247.1 23.9% Cost of Sales (2,153.6) (1,700.6) 26.6% Gross profit 630.3 546.5 15.3% Gross margin % 22.6 24.3 170 bps Analysed as: Adjusted gross profit 647.9 562.4 15.2% Adjusted gross margin % 23.3 25.0 170 bps Cos
Slide 43: Calendarised income statement
Calendarised income statement 12 months 12 months £m (unless otherwise stated) to Dec 22 to Dec 21 Change Revenue 5,804.7 4,564.1 27.2% Cost of Sales (4,821.0) (3,521.5) 36.9% Gross profit 983.7 1,042.6 5.6% Gross margin % 16.9 22.8 590 bps Adjusted gross margin % 24.0 23.8 20 bps Administrative exp
Slide 44: Group cost structure
Group cost structure Contribution and adjusted gross margin record 34% 34% 34% 33% 33% 32% 32% 32% 32% 32% 32% 32% 30% 25.0% 24.8% 24.7% 23.8% 23.3% 23.2% 23.1% 23.0% 22.8% 22.5% 22.4% 18.5% 9.5% HY19 2HY19 FY19 HY20 2HY20 FY20 HY21 2HY21 FY21 HY22 2HY22 FY22 HY23 Contribution after land and build A
Slide 45: Driving operating margin: New product range roll-out
Driving operating margin New product range roll-out New product ranges (%) 81% 65% 64% 58% 30% Proportion of regional completions using new product ranges (%) (1) 76% 83% 88% 94% 58% % of active outlets with new product range (1)(2) H1 19 H1 20 H1 21 H1 22 H1 23 (1) Including JVs (2) As at 31 Decemb
Slide 46: Administrative expenses analysis
Administrative expenses analysis £m HY23 FY22 2HY22 HY22 FY21 2HY21 HY21 Administrative expenses before adjusted items 136.9 256.4 141.9 114.5 201.2 110.1 91.1 CJRS - - - - 3.2 - 3.2 Administrative expenses per income statement 136.9 256.4 141.9 114.5 204.4 110.1 94.3 Net part-exchange income (0.8)
Slide 47: Net interest charge analysis
Net interest charge analysis £m HY23 HY22 Interest on deposits, term debt and overdrafts (7.9) - Interest on private placement notes 2.8 2.8 Utilisation/ non-utilisation fees on RCF 1.8 1.8 Other interest (0.2) 0.6 Total cash interest (3.5) 5.2 Land creditors/ deferred payables 7.0 8.1 Interest on l
Slide 48: Provisions in relation to legacy properties
Provisions in relation to legacy properties EWS and Citiscape and associated associated £m review review Total At 1 July 2022 (audited) 434.6 44.9 479.5 Additions 21.0 17.6 38.6 Releases (20.4) (0.6) (21.0) Imputed interest on long term provisions 3.7 - 3.7 Utilisation (11.7) (3.8) (15.5) At 31 Dece
Slide 49: Building safety: Portfolio under review
Building safety Portfolio under review at 31 December 2022 Review confirmed no remediation / 30 June 2022 Identified for review remediation completed (1) 31 December 2022 Portfolio under review Developments Buildings Developments Buildings Developments Buildings Developments Buildings Above 18 metre
Slide 50: Balance sheet: Land bank
Balance sheet Land bank 31 Dec 2022 31 Dec 2021 Land bank plots With detailed planning consent 47,641 49,622 With outline planning consent 15,773 16,373 With resolution to grant and other 658 560 Owned 64,072 66,555 Controlled 13,322 11,909 Total land bank plots 77,394 78,464 JV plots – owned 3,104
Slide 51: Land bank evolution
Land bank evolution Reconciling plots and balance sheet land investment HY23 HY22 HY21 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 52: Land creditors payment profile by calendar year
Land creditors payment profile by calendar year £m Barratt Developments PLC Half Year 2023 Results 52
Slide 53: 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 Dec 22 100.00 97.4 100 300 Jun 09 Sep 22 53.3 80 287.8 240 Jun 09 219.1 Jun 15
Slide 54: 2022 Socio-economic footprint
2022 Socio-economic footprint Barratt Developments PLC 2022 Socio-economic footprint The infographic provides an illustration of the social and economic contribution made by the Barratt Group to people, places and nature for the financial year 2022 The assessment was carried out by independent expert
Slide 55: External benchmarks
External benchmarks 5 Star award for 13 years 98 awards in 2022 Only major national More than any other housebuilder to achieve this housebuilder for 18 consecutive years Gold award for 2022 Supreme award winner Highest scoring national 6th time a Barratt site housebuilder manager has won a supreme
Slide 56: 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 2022. For the purposes of this notice, the presentation (the “Presentati