Slide 1: FY22 Results Presentation
Saviours Place Warrington FY22 Results Presentation Year ended 30 June 2022 7 September 2022
Slide 2: David Thomas, Chief Executive Officer
Pavilion Gardens Southport David Thomas Chief Executive Officer Barratt Developments PLC Full Year 2022 Results 2
Slide 3: Key highlights
Key highlights • Completions back to pre-pandemic levels • Industry leading build quality and customer service • Continuing leadership in sustainability • Adjusted gross and operating margins, as well as ROCE at 30.0%, ahead of pre-pandemic levels • Balance sheet strength maintained notwithstanding
Slide 4: Operational targets
Operational targets Progress update and areas of focus for FY23 Progress in FY22 Areas of focus for FY23 Medium term targets • 3.9% growth in total home completions • Managing the phase out of Help to Buy • Disciplined growth in total to 17,908 (FY21: 17,243) including by the end of March 2023 home
Slide 5: Steven Boyes, Chief Operating Officer
Harland Park Cottingham Steven Boyes Chief Operating Officer Barratt Developments PLC Full Year 2022 Results 5
Slide 6: Sales performance
Sales performance Sales rates and selling outlets • Strong sales rate throughout the year FY22 FY21 Change Average net private reservations per active outlet per week • Sales outlet reduction reflected the strength of private Wholly owned 0.81 0.78 3.8% sales and some planning delays JV 1.29 1.50 14
Slide 7: Completions
Completions Volumes and pricing • Completion growth supported by: FY22 FY21 Change – Strong market demand Home completions – Excellent growth in construction Private 13,327 13,134 1.5% equivalent output Affordable 3,835 3,383 13.4% – Supply chain partner relationships Total home completions 17,162 1
Slide 8: Completions analysis
Completions analysis Buyer type • Significant step up in traditional private completions 5% 3% Investor 3% 5% supported by: Part Exchange – Improved mortgage product availability 22% 20% Affordable – Increased mortgage market competition • Part-exchange at historically low levels 34% Traditional pri
Slide 9: Construction output, customer service and build quality
Construction output, customer service and build quality • Excellent improvement in construction equivalent FY22 FY21 FY20 FY19 output supported by: Performance metrics – Organised, safe and efficient site operations Average construction output per week (equivalent homes) 352 311 274 361 – Housetype
Slide 10: Our cost structure and total build cost inflation
Our cost structure and total build cost inflation % of Cost structure revenue (1) Materials • Centralised procurement team manage more than 90% of Land c. 16% materials Infrastructure and S106 c. 20% • Cost escalation has continued in energy intensive categories Total build costs • Some price soften
Slide 11: Land bank
Land bank 30 June 30 June 2022 2021 • Land bank remains strong Land bank plots • 75% of owned land bank carries detailed With detailed planning consent 51,009 52,775 planning consent With outline planning consent and other (1) 16,678 13,826 Owned 67,687 66,601 • 19,089 wholly owned plots approved in
Slide 12: Gladman
Gladman A significant enhancement to our strategic land credentials • Successfully integrated since acquisition • £23.3m revenue and £12.4m operating profit (1) contribution in 5 months of ownership in FY22 • 93,696 promotional land plots at 30 June 2022 • Industry leading team in land sourcing, pro
Slide 13: Summary
Summary • Excellent growth in construction performance, despite supply chain challenges • Industry leading customer service and build quality maintained • Building material availability issues abating • Build cost inflation remains a challenge to the industry, particularly energy cost volatility • G
Slide 14: Mike Scott, Chief Financial Officer
Notton Wood View Barnsley Mike Scott Chief Financial Officer Barratt Developments PLC Full Year 2022 Results 14
Slide 15: Summarised performance
Summarised performance £m (unless otherwise stated) FY22 FY21 Change Revenue 5,267.9 4,811.7 9.5% Adjusted gross profit 1,308.1 1,114.7 17.3% Adjusted gross margin % 24.8 23.2 160 bps Gross profit 899.9 1,010.0 10.9% Gross margin % 17.1 21.0 390 bps Adjusted operating profit 1,054.8 919.0 14.8% Adju
Slide 16: Operating margin bridge
Operating margin bridge 50 bps (30 bps) 20 bps (100 bps) 140 bps Mix / other Site Site Extension (2) Transition (1) Admin 10 bps expenses Volume Net inflation impact FY21 adjusted FY22 adjusted (1) Reflects benefits from new sites, adoption of standard housetypes and refinement of our housetype desi
Slide 17: Administrative expenses analysis
Administrative expenses analysis FY22 administrative expenses growth reflects several factors £m FY22 FY21 including: Sundry Income (21.2) (24.5) • Sundry income reduction and CRM one-off costs Employee incentive costs 78.4 70.1 CRM costs 10.4 0.4 • People related costs – headcount, inflation, accel
Slide 18: Adjusted items
Adjusted items £m FY22 FY21 Operating adjusting items: CJRS grant – repayment recognised in cost of sales - 22.8 CJRS grant – repayment recognised in administrative expenses - 3.2 Total CJRS grant - repayment - 26.0 Costs associated with legacy properties 433.2 81.9 Amounts associated with legacy pr
Slide 19: Operating framework
Operating framework Progress update Operating framework Progress in the year c. 3.5 years owned and c. 1.0 year controlled 3.9 years owned and 0.8 years controlled Land bank (1) (2021: 4.0 years owned and 0.7 years controlled) Maintain at 15 - 25% of the land bank over medium term Slight reduction t
Slide 20: Balance sheet
Balance sheet £m 30 June 2022 30 June 2021 Change Goodwill and intangible assets 1,058.3 905.9 152.4 Investment in joint ventures and associates 177.9 163.1 14.8 Gross land bank 3,339.9 2,946.3 393.6 Land creditors (733.6) (658.3) (75.3) Net land bank 2,606.3 2,288.0 318.3 Land creditor % 22.0% 22.3
Slide 21: Cash flow
Cash flow 671.5 (1,036.0) £m (316.1) Utilised in 48.4 cost of sales Cash Other Net land land spend movements WIP / PX / Other Net cash, Other non-cash interest and working and tax capital Net Land JV investment Dividends Profit from Operating operations cash inflow Other investing Net cash and finan
Slide 22: Guidance for FY23
Guidance for FY23 c.18,400 – 18,800 total home completions, including c. 750 JV completions Completions c. 21% affordable, c. 79% private mix Average sales outlet growth (inc JV) c. 3% Build cost inflation range c. 9-10% Administrative expenses c. £300m (including amortisation of intangible assets o
Slide 23: Financial summary
Financial summary • Excellent financial performance, ahead of FY19 across all key adjusted metrics • Balance sheet strength maintained • Ordinary dividend policy with phased dividend cover to 2.0x in FY23 and 1.75x in FY24 • £200m share buyback commencing and to complete during FY23 Cringleford Heig
Slide 24: David Thomas, Chief Executive Officer
Dunstall Park Tamworth David Thomas Chief Executive Officer Barratt Developments PLC Full Year 2022 Results 24
Slide 25: Investment proposition
Investment proposition Highly Shorter Strong balance experienced Quality and Nationally Leading in owned sheet and cash build and service diversified sustainability land bank generation sales teams Growing volumes Delivering sustainable margins Attractive returns Disciplined growth in Phased reducti
Slide 26: Market fundamentals
Market fundamentals 3.55% average 2 year fixed rate at 85% LTV (1) Demand continues Consumer Attractive land market More competitive to exceed supply confidence low but planning backdrop mortgage market but more challenging increasing mortgage rates (1) Rates are from an average of five lenders. Sta
Slide 27: Planning and the UK land market
Planning and the UK land market • Planning consents remain ahead of development Savills UK Greenfield Development Land Index (LHS) England moving annual planning consents(1) and • Annualised consents peaked at 335.6k in (100 = 2007 peak) net new build home additions (RHS) ('000s) June 2021 120 360 •
Slide 28: 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 June 2021 - August 2022 (2) 60% 5.0% Standard 85% LTV mortgage product (3) 55% 52 bps 148 bps Standard 95% LTV m
Slide 29: Sustainability
Sustainability Our ambitions • The leading national sustainable housebuilder • Reduce scope 1 and 2 emissions by 29% by 2025 (1) • LTPP incentive schemes incorporate scope 1 and 2 carbon emission Scope 3 reduction targets • Reduce scope 3 emission intensity by 24% per m2 of build by 2030 (2) • Net z
Slide 30: Sustainability
Sustainability Waste, the Future Homes Standard and biodiversity net gain Waste intensity reduced by 15.6% in FY22 • Action plans are delivering waste reduction and material cost savings • Waste intensity reduction will again be incorporated in the annual bonus scheme for all employees in FY23 The F
Slide 31: Current trading
Current trading FY23 FY22 Leads per active outlet (2) to date to date Change 40 FY22 35 Net private reservations per active 0.60 0.82 26.8% outlet per average week 30 25 Average active outlets 338 334 1.2% 20 FY20 Net private reservations per 15 203 274 25.9% average week 10 FY23 5 Total forward sal
Slide 32: Conclusion
Conclusion • Excellent operational and financial performance • Industry leading build quality, customer service and sustainability • Uncertainties around inflation, energy costs and interest rates are impacting current demand • Balance sheet remains strong • Order book well positioned to support FY2
Slide 33: Q&A
Lock Keeper’s Gate Barnsley Q&A
Slide 34: Appendices
Willow Grove Bedford Appendices Barratt Developments PLC Full Year 2022 Results 34
Slide 35: Appendices - Index
Appendices - Index PAGE 36 Definitions 37 Current trading - forward order book 38 Current trading - forward sales roll 39 Private completions - volume and ASP 40 Home completions analysis - product type 41 Site based construction activity 42 Full income statement 43 Administrative expenses analysis
Slide 36: 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 and build)
Slide 37: Current trading
Current trading Forward order book 15.0 28 August 2022 29 August 2021 Change £m Homes £m Homes £m Homes Private 2,421.5 6,467 2,331.1 6,851 3.9% 5.6% Affordable 1,079.6 6,658 1,250.9 7,835 13.7% 15.0% Wholly owned 3,501.1 13,125 3,582.0 14,686 2.3% 10.6% JV 307.8 933 261.4 716 17.8% 30.3% Total 3,80
Slide 38: Current trading
Current trading Forward sales roll 28 August 2022 29 August 2021 Change Private Total(1) Private Total(1) Private Total(1) 30 June 6,108 13,579 5,724 14,334 6.7% 5.3% Reservations 1,709 2,138 2,353 2,880 27.4% 25.8% Completions (1,350) (1,659) (1,226) (1,812) 10.1% 8.4% 28 Aug 2022 / 29 Aug 2021 6,4
Slide 39: Private completions
Private completions Volume and ASP Scotland Homes: 1,606 (FY21: 1,580) ASP: £297.6k (FY21: £271.2k) Northern Homes: 2,414 (FY21: 2,532) ASP: £271.3k (FY21: £255.2k) Central Homes: 2,817 (FY21: 2,673) East ASP: £306.2k (FY21: £280.1k) Homes: 2,613 (FY21: 2,612) ASP: £413.5k (FY21: £390.7k) West Londo
Slide 40: Home completions analysis
Home completions analysis Product type FY22 FY22 FY21 Apartments non-London 11% 12% FY21 Apartments London 6% 5% 1 & 2 Beds 13% 13% 3 Beds 38% 34% 4 Beds 30% 33% 5 & 6 Beds 2% 3% Barratt Developments PLC Full Year 2022 Results 40
Slide 41: Site based construction activity
Site based construction activity Average weekly output Average weekly build equivalent unit production (homes) 400 396 350 384 372 365 364 363 363 361 352 351 350 350 343 341 341 340 337 331 331 324 300 311 299 298 298 296 274 250 200 197 150 100 50 53 0 Q1 Q2 H1 Q3 Q4 H2 FY Q1 Q2 H1 Q3 Q4 H2 FY Q1
Slide 42: Full income statement
Full income statement £m (unless otherwise stated) FY22 FY21 Change Revenue 5,267.9 4,811.7 9.5% Cost of Sales (4,368.0) (3,801.7) 14.9% Gross profit 899.9 1,010.0 10.9% Gross margin % 17.1 21.0 390 bps Analysed as: Adjusted gross profit 1,308.1 1,114.7 17.3% Adjusted gross margin % 24.8 23.2 160 bp
Slide 43: Administrative expenses analysis
Administrative expenses analysis £m FY22 2HY22 HY22 FY21 2HY21 HY21 Sundry Income (21.2) (12.5) (8.7) (24.5) (12.2) (12.3) Employee incentive costs 78.4 43.3 35.1 70.1 41.0 29.1 CRM costs 10.4 1.7 8.7 0.4 0.2 0.2 Other administrative costs 188.8 109.4 79.4 155.2 81.1 74.1 Administrative expenses bef
Slide 44: Group cost structure
Group cost structure Contribution and adjusted gross margin record 34% 34% 34% 33% 32% 32% 32% 32% 32% 32% 32% 30% 25.0% 24.8% 24.7% 23.8% 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 Contribution after land and build Adjusted gross p
Slide 45: Net interest charge analysis
Net interest charge analysis £m FY22 FY21 Interest on term debt and overdrafts (1.5) 0.3 Interest on private placement notes 5.6 5.5 Utilisation / non-utilisation fees on RCF 3.5 3.5 Other interest 0.7 0.4 Total cash interest 8.3 9.7 Land creditors / deferred payables 14.4 13.7 Financing fees 4.0 2.
Slide 46: Driving operating margin
Driving operating margin New product range roll-out New product ranges (%) 77% 65% 60% 36% Proportion of regional completions using new product ranges (%) (1) 9% 72% 79% 88% 93% 42% % of active outlets with new product range (1)(2) FY18 FY19 FY20 FY21 FY22 (1) Including JVs in which the Group has an
Slide 47: Balance sheet
Balance sheet Land bank 30 June 2022 30 June 2021 Land bank plots With detailed planning consent 51,009 52,775 With outline planning consent 15,957 13,452 With resolution to grant and other 721 374 Owned 67,687 66,601 Controlled 13,239 11,041 Total land bank plots 80,926 77,642 JV plots – owned 3,01
Slide 48: Land bank evolution
Land bank evolution Reconciling plots and balance sheet land investment FY22 FY21 FY20 Plots £m £k Plots £m £k Plots £m £k Land bank movements Start of period total land bank 2,946.3 3,112.3 3,071.6 Start of period strategic and WBD land (48.7) (40.9) (45.8) Start of period owned current land bank 6
Slide 49: Land creditors payment profile by financial year
Land creditors payment profile by financial year £m June 2022 Barratt Developments PLC Full Year 2022 Results 49
Slide 50: Building safety
Building safety Portfolio under review at 30 June 2022 Review confirmed no remediation / 06 April 2022 Identified for review remediation completed 30 June 2022 Portfolio under review Developments Buildings Developments Buildings Developments Buildings Developments Buildings Above 18 metres 128 17 (5
Slide 51: 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 52: 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 2021 Sustainable Housebuilder of the Highest scoring national Year 2021 housebuilder Barratt Developments PLC Full
Slide 53: 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 2022. For the purposes of this notice, the presentation (the “Presentation”) shall m