Slide 1: Building Together: Recommended Combination of Barratt Developments and Redrow
Building Together Recommended Combination of Barratt Developments and Redrow 7 February 2024
Slide 2: Disclaimer (1/2)
Disclaimer (1/2) This Presentation has been prepared by Barratt Developments plc (“Barratt”) solely for information and for use in connection with the recommended all-share offer for the entire issued and to be issued share capital of Redrow plc (“Redrow”) by Barratt (the “Combination”) and does not
Slide 3: Disclaimer (2/2)
Disclaimer (2/2) The companies in which Barratt and Redrow directly and indirectly own investments are separate entities. In this presentation Barratt and Redrow are sometimes used for convenience where references are made to Barratt or Redrow and each of their subsidiaries in general. Likewise, the
Slide 4: Agenda
Agenda 1 Recommended Combination of Barratt and Redrow 2 Barratt Interim results 3 Redrow Interim results 4 Q&A Building Together 4 Strictly confidential
Slide 5: Recommended Combination of Barratt and Redrow
Recommended Combination of Barratt and Redrow Building Together 5 Strictly confidential
Slide 6: Recommended combination of Barratt and Redrow – building a better future together
Recommended combination of Barratt and Redrow – building a better future together 1.44x New Barratt shares per Redrow share £2.5bn Offer equity value1 27.2% Spot premium as at 6 February 20242 67.2% / 32.8% Barratt / Redrow proforma ownership Building Together £90m Run-rate synergies3 Combination re
Slide 7: A uniquely compelling opportunity to…
A uniquely compelling opportunity to… 1 2 3 4 5 Build on Create a strong brand Realise cost synergies Maintain a robust Deliver significant Barratt/Redrow’s portfolio of three from procurement balance sheet, better benefits for the excellent reputations, high quality savings and a protected to opera
Slide 8: Build on Barratt/Redrow's excellent reputations
1 Build on Barratt/Redrow’s excellent reputations Quality NHBC Pride in NHBC Pride in 96 the Job awards (2023) 20 the Job awards (2023) Bringing together two organisations with like- minded cultures and a Rated Trust Pilot Rated Trust Pilot shared commitment to excellent excellent customers, quality
Slide 9: Build on Barratt/Redrow's excellent reputations: Barratt national presence
1 Build on Barratt/Redrow’s excellent reputations Combining Barratt’s national presence… HY24 reported land pipeline (plots) Regional coverage 67,780 Scotland Northern Central East West London and Southern FY23 reported total home completions 17,206 Barratt Head Office Source: Company filings Buildi
Slide 10: Build on Barratt/Redrow's excellent reputations: Redrow presence
1 Build on Barratt/Redrow’s excellent reputations …with Redrow’s presence across England and Wales… HY24 reported land pipeline (plots) Regional coverage 24,565 FY23 reported total home completions North 5,436 Central South London (Colindale) Redrow Head Office Source: Company filings Building Toget
Slide 11: Complementary geographic breadth of combined homebuilder
1 Build on Barratt/Redrow’s excellent reputations …to create a leading UK homebuilder with complementary HY24 reported land pipeline geographic breadth (plots) 36% Regional coverage 92,345 67,780 24,565 Scotland Northern Combined Central East West London and Southern FY23 reported total home complet
Slide 12: Create a strong brand portfolio
2 Create a strong brand portfolio Complementary product range Wider customer choice around design and price points Ability to use three brands on larger sites and accelerate speed of development Value Quality Premium ASP c.£315k1 c.£430k2 c.£480k3 Avg. sq. ft c.9901 c.1,2502 c.1,3003 First time buye
Slide 13: Create a strong brand portfolio: David Wilson brand
2 Create a strong brand portfolio Barratt has been an excellent steward of the David …a national award-winning brand, representing 34% of total Wilson brand, taking it from a regional brand to… Barratt completions At acquisition Now David Wilson % of Barratt group 26% 34% completions 37 2 Pride in t
Slide 14: Multi-branded sites on delivery – Greytowers Village
2 Create a strong brand portfolio Illustrative benefits of multi-branded sites on delivery – Greytowers Village (Nunthorpe, Middlesbrough) David Wilson site from FY16 to FY20; during COVID, site was dual-branded to include Barratt Homes (incl. a Barratt sales outlet) David Wilson Homes Completions 5
Slide 15: Realise significant cost synergies
3 Realise significant cost synergies Significant cost savings through: 90 • Procurement-related savings Procurement-related 34 38% savings (primarily direct • Optimisation of the divisional office structure materials) • Consolidation of central and support functions Will draw on the best talent from
Slide 16: Maintain a robust balance sheet
4 Maintain a robust balance sheet HY24 reported net cash position Combined group leverage and dividend policy (£m) 16% Strong balance sheet consistent 753 874 with Barratt’s current approach Net cash Including land creditors 121 Combined Dividend policy will be consistent with Barratt’s existing 1.7
Slide 17: Deliver significant benefits
5 Deliver significant benefits For employees For suppliers For customers and communities • Strong cultural fit and shared values • Acceleration of developments across the • Accelerated delivery of more high-quality UK homes • Additional development opportunities • Greater visibility and certainty of
Slide 18: Board and executive leadership team of the Combined Group
Board and executive leadership team of the Combined Group Redrow board members Caroline Silver David Thomas Mike Scott Chair Chief Executive Chief Financial Officer Steven Boyes Matthew Pratt Barbara Richmond Chief Operating Officer CEO, Redrow and Integration team and Deputy CEO Group Executive Dir
Slide 19: Managing our integration
Managing our integration A robust plan to conduct an efficient integration whilst ensuring continuity in the delivery of the Combined Group's operations What we will do How we will do it Maintain Redrow’s strong brand as distinct within the Utilise the similarities between the Barratt and Redrow’s b
Slide 20: Expected transaction timetable and approvals
Expected transaction timetable and approvals Required approvals Expected offer timetable Implemented via Scheme of Arrangement Publication of offer Announcement 7 February 24 Irrevocable undertaking from Steve Morgan (16%), Redrow’s founder and largest shareholder Irrevocable undertakings from Redro
Slide 21: Business model for the long term
Building Together Business model for the long term Building Together operating framework Targeted land Building thriving communities With exceptional build quality and service pipeline 4.5 years Delivering sustainably Balance with a framework for future homes, great places and better living sheet Ne
Slide 22: HY24 Results Presentation
Wigmore Park New Waltham HY24 Results Presentation Half year ended 31 December 2023 7 February 2024
Slide 23: Overview - HY24 performance
Overview - HY24 performance • On-track for FY24 despite continuing HY24 HY23 Change uncertainties Total home completions (inc JVs) 6,171 8,626 28.5% • Reduced volumes, softer pricing and Revenue £1,850.8m £2,783.9m 33.5% ongoing, but moderating, build cost inflation impacted adjusted operating Adjus
Slide 24: Sales performance
Sales performance HY24 HY23 Change Average net private reservations per active outlet per week • Sales rate improved as mortgage rates eased lower from Wholly owned 0.48 0.44 9.1% August 2023, limited seasonal impact - Of which PRS and RPs 0.06 0.05 20.0% • Outlet numbers flattening, reflecting: JV
Slide 25: Adjusted operating margin bridge
Adjusted operating margin bridge (660 bps) 18.4% (540 bps) Volume impact 70 bps (20 bps) 70 bps 80 bps Admin Mix / other 8.4% Completed expenses Net inflation London mix development decrease(1) provision HY23 HY24 (1) Reflects the prior year impact of a previously impaired site at Hounslow, the majo
Slide 26: Adjusted items – legacy property costs in HY24
Adjusted items – legacy property costs in HY24 • £61.4m net increase in external wall systems provision: £m External wall systems and Reinforced concrete Legacy properties associated review frames Total – Increase in contingency amounts based on latest At 1 July 2023 535.9 76.4 612.3 information in
Slide 27: Guidance for FY24
Guidance for FY24 c.13,500 – 14,000 total home completions, including c. 650 JV completions (previously 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
Slide 28: Current trading
Current trading 2HY24 2HY23 • Private reservation rate of 0.60, including to date to date Change 0.04 relating to multi-unit sales Net private reservation rate (1) 0.60 0.49 22.4% • Continuing benefit from multi-unit sales - of which PRS and RPs 0.04 0.01 n/m anticipated through 2024 Average active
Slide 29: Interim Results
INTERIM RESULTS 26 WEEKS TO 31 DECEMBER 2023 FEBRUARY 2024
Slide 30: Financial overview
FINANCIAL OVERVIEW: • Revenue of £756m (2023: £1.03bn) • Pre-tax profit of £84m (2023: £198m) • EPS of 18.7p (2023: 45.4p) • Interim dividend of 5p (2023: 10p) • Net cash of £121m (2023: £107m) 2
Slide 31: Income statement
I N C O ME STATEM ENT H1 H1 Variance £m 2024 2023 £m % Revenue – Homes 752 992 (240) (24) Revenue – Other 4 39 (35) (90) Total Revenue 756 1,031 (275) (27) Gross Profit 143 257 (114) (44) Operating expenses (57) (58) 1 2 Operating profit 86 199 (113) (57) Interest (2) (1) (1) (100) Profit before tax
Slide 32: Revenue by geography
REVEN UE B Y GEO GRAP HY • Regions outside London all down proportionally due to housing market condtions • Colindale up due to the affordable sale to Barnet Council H1 2024 H1 2023 £m % £m % North 162 21 233 22 Central 252 33 348 34 South 256 34 380 37 Colindale 82 11 21 2 Total Homes Ongoing 752 9
Slide 33: Homes revenue analysis
H O M ES REVEN U E AN ALY S I S • Private Houses first half revenue of £567m, down 33% due to lower volumes • Affordable revenue up due to the timing and geographical mix • Blended ASP down 1% at £397k due to higher proportion of affordable revenue at 17% vs 10% in H1 2023 Revenue (£m) Volume ASP (£
Slide 34: Cash flow
C AS H FLO W H1 H1 Operating cash flow (£m) 2024 2023 Net cash movement (£m) 2024 2023 EBITDA 89 202 Operating cash flow (20) 43 Movement in land 83 (106) Tax paid (27) (45) Movement in land creditors (91) 36 Dividend (65) (76) Cash investment in land (8) (70) Other (including buy back) (2) (103) Mo
Slide 35: Guidance 2024
GU I D AN CE 2024 Revenue £1.65bn - £1.70bn Underlying PBT £180m - £200m As reported in the AGM trading statement on 10 November 2023, we expect the results to be towards the lower end of this range1. 1The statement above constitutes a profit forecast for the purpose of Rule 28 of the Takeover Code.
Slide 36: Sales market - trading
S ALES M ARKET - T RAD I N G H1 2024 2023 Value of private net reservations (£m) 513 571 Value of private reservations per outlet per week (£k) 166 184 Sales rate per outlet per week (no.) 1 0.36 0.38 Cancellation rate (%) 26 28 Note 1 Excluding bulk sales 0.35 (2023: 0.38) 8
Slide 37: Sales market - trading
S ALES M ARKET - T RAD I N G H2 (first 5 weeks) 2024 2023 Value of private net reservations (£m) 126 137 Value of private reservations per outlet per week (£k) 239 236 Sales rate per outlet per week (no.) 0.52 0.51 Cancellation rate (%) 20 17 9
Slide 38: Thank you
THANK YOU A BETTER WAY TO LIVE
Slide 39: Appendix - Basis of preparation and Directors' confirmations
AP P EN D I X - B ASI S O F P REP ARAT ION AN D D I REC T ORS ’ C O N FIRM ATI ONS The Redrow Profit Forecast has been prepared on a basis consistent with Redrow’s accounting policies which are in accordance with IFRS. These policies are consistent with those applied in the preparation of Redrow’s a
Slide 40: Q&A
Q&A Building Together 22 Strictly confidential
Slide 41: A uniquely compelling opportunity to…
A uniquely compelling opportunity to… 1 2 3 4 5 Build on Create a strong brand Realise cost synergies Maintain a robust Deliver significant Barratt/Redrow’s portfolio of three from procurement balance sheet, better benefits for the excellent reputations, high quality savings and a protected to opera
Slide 42: Appendix
Appendix Building Together 24 Strictly confidential
Slide 43: Historical financials Barratt Redrow
Historical financials Barratt Redrow FY21 FY22 FY23 H1 24 FY21 FY22 FY23 H1 24 Total home completions 17,243 17,908 17,206 6,171 5,620 5,715 5,436 1,894 Revenue (£m) 4,812 5,268 5,321 1,851 1,939 2,140 2,127 756 Adjusted gross profit (£m) 1,115 1,308 1,130 296 414 516 508 143 Adjusted gross margin 2