Barratt Redrow Plc · LSE:BTRW
Barratt Redrow — Redrow — H1 2022 Earnings Presentation
32 slides from Barratt Redrow's earnings presentation, Feb 10, 2022
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION 27 WEEKS TO 2 JANUARY 2022 10 FEBRUARY 2022
Slide 2: Agenda
AG E NDA Overview Matthew Pratt Financial Review Barbara Richmond Operating Review and Outlook Matthew Pratt 2
Slide 3: Financial Overview
FINANCIAL OVERVIEW • Pre-tax profit up 17% to £203m • A return to 2019 operating margin – a full 12 months ahead of previous guidance • First half reservations of £884m (2021 LFL: £836m) • Interim dividend of 10p (2021: 6p) up 67% 3
Slide 4: Strategic Overview
S T R AT E G I C O V E R V I E W • Evolved successful strategy • Product perfectly matches customers’ needs • Capitalised on strong demand • Significant progress in Environmental, Social & Governance (ESG) 4
Slide 5: Financial Review
FINANCIAL REVIEW BARBARA RICHMOND G RO U P F I N A N C E D I R E C T O R
Slide 6: Highlights
HIGHLIGHTS • Revenue increased to a new H1 record of £1,052m (2021: £1,041m) • EPS of 48.1p (2021: 41.0p), up 17% • ROCE of 21.5% (2021: 10.6%) • Net cash of £242m (2021: £238m) 6
Slide 7: Income Statement
I N C OME S TATE ME NT H1 H1 Variance £m 2022 2021 £m % Revenue – Homes 1,034 1,030 4 - Revenue – Other 18 11 7 157 Total Revenue 1,052 1,041 11 1 Gross Profit 255 222 33 15 Operating expenses (50) (44) (6) 14 Operating profit 205 178 27 15 Interest (2) (4) 2 50 Profit before tax 203 174 29 17 7
Slide 8: Analysis of Private Plots in Cost of Sales
A N ALYSIS O F P R I VATE P LO T S I N C O S T O F S A LE S H1 H1 £m 2022 2021 Average plot cost eliminated (£k) 85 81 Average plot cost as percentage of ASP 20 21 8
Slide 9: Revenue by Geography
R E V E N UE B Y G E O GRAPHY • Strong revenue growth in the Central region • Revenue from Ongoing Homes up 3% in H1, expected to be up over 16% for the full year • H1 - H2 revenue in 2022 almost 50:50, versus 54:46 in 2021 H1 2022 H1 2021 £m % £m % North 243 23 249 24 Central 291 28 238 23 South 43
Slide 10: Homes Revenue Analysis
H O ME S R E V E N UE A N ALYSIS • Private Houses first half revenue of £887m, up 10% • Volume of private apartments down 52% to 181 due to the scale down of the London business • Affordable revenue down due to the timing of legal completions • Blended ASP up 12% due to mix and HPI Revenue (£m) Volu
Slide 11: Homes Private Revenue Analysis
H O ME S P RI VATE R E V E NUE A N ALYSIS • Heritage Collection 92% of revenue (2021: 82%) • Heritage Collection ASP up 8% due to mix, HPI and extras • Help to Buy legal completions of 362 (2021: 1,286) Revenue (£m) Volume ASP (£k) H1 22 H1 21 Var H1 22 H1 21 Var H1 22 H1 21 Var Heritage 882 774 108
Slide 12: Cash Flow
C A SH F LOW H1 H1 Operating cash flow (£m) 2022 2021 Net cash movement (£m) 2022 2021 EBITDA 208 180 Operating cash flow 213 382 Movement in land (81) 36 Tax paid (37) (25) Movement in land creditors 44 33 Dividend (65) - Cash investment in land (37) 69 Other (29) 7 Movement in WIP (50) 95 Net cash
Slide 13: Net Assets
N E T A S SE T S £m Dec 21 June 21 Movement Land 1,607 1,526 81 WIP 1,037 987 50 Land creditors (338) (294) (44) Net investment in inventory 2,306 2,219 87 Other working capital (601) (519) (82) Tax (18) (13) (5) Fixed Assets 24 25 (1) Capital Employed 1,711 1,712 (1) Net Cash 242 160 82 Net Assets
Slide 14: Plot Cost Carried Forward
P LO T C O S T C A R RIE D F O RWARD 90.0 25% 80.0 20% 70.0 60.0 15% Owned 50.0 £k 40.0 Owned & Contracted 10% 30.0 Owned & Contracted plot cost 20.0 as % of ASP in year 5% 10.0 0.0 0% June 18 June 19 June 20 June 21 Dec 21 14
Slide 15: 2024 Guidance Update
2 0 24 G U I DAN CE U P DATE Turnover £2.3bn - £2.4bn Operating Margin 19.5% - 20% EPS* ≥ 92p DPS ≥ 31p Average Outlets c134 ROCE 22% - 25% • Revenue upgraded from previous guidance • Operating margin of 19.5% - 20% • EPS and dividend growth are impacted by the introduction of the 4% Developer Tax •
Slide 16: Operating Review and Outlook
OPERATING REVIEW AND OUTLOOK M AT T H E W P R AT T G RO U P C H I E F E X E C U T I V E
Slide 17: Sales Market - Highlights
SALES MARKET - HIGHLIGHTS • Market remained strong throughout the first half • Lack of supply • Redrow product very attractive • Total order book at the end of December 2021 of £1.5bn (Dec 2020: £1.3bn) 17
Slide 18: Sales Market - Trading
S A LE S M A RKE T - T RA D ING 27 weeks LFL 2022 2021 Value of private net reservations (£m) 884 836 Value of private reservations per outlet per week (£k) 292 267 Cancellation rate (%) 18 21 18
Slide 19: Sales Market - Trading
S A LE S M A RKE T - T RA D ING 5 weeks to 6 February LFL 2022 2021 Value of private net reservations (£m) 216 173 Value excluding London Bulk Deal (£m) 190 173 Value of private reservations per outlet per week (£k) 417 301 Value excluding London Bulk Deal (£k) 367 301 Cancellation rate (%) 11 14 Ex
Slide 20: Sales Market - Order Book
S A LE S M A RKE T – O R D E R BOOK H1 2022 2021 Closing private order book (£bn) 1.1 1.0 Closing total order book (£bn) 1.5 1.3 Week 32 Private order book (£bn) 1.3 1.1 Total order book (£bn) 1.6 1.4 20
Slide 21: Sales Market - Average Outlets
S A LE S M A RKE T – AV E RAGE O UT LET S 2022 2021 H1 Actual FY Forecast H1 Actual FY Actual Ongoing Business 110 110 114 115 Build out sites 2 2 2 2 Group 112 112 116 117 21
Slide 22: Land - Highlights
L A N D - H I G HLIG HT S • Current land • 3,316 plots added in H1 • Continuing to purchase sites • Overall hurdle rates maintained • Forward land • 945 plots transferred to current land • 2,945 plots added • Continue to pursue opportunities Former University of Wales: Caerleon Campus 22
Slide 23: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • People • Redrow 2025 • Future Leaders • Industry leading well being offering • Build • Underlying inflation of c6% covered by HPI • Ongoing material shortages • New Build Compound Trial 23
Slide 24: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • Quality & Customer • 93.7% (Q3 2021 8-week customer recommend score) • Every division at 90% plus 8-week customer recommend score • Interactive screens mean we can sell any one of our sites from any location. • Buildability & Waste Workshops 24
Slide 25: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • Product & Placemaking • Heritage Collection aligns perfectly with customer requirements • Personalisation in demand with extras sales up more than 100% year on year to £19m in H1 • Fabric Energy Efficiency Standards • Future Homes Standards • Place making adapted
Slide 26: Summary and Outlook
S U M MARY A N D O UT LOOK • Market remains robust • Heritage Collect perfect for our customers and personalisation levels high • Operating margin back to normal level • Continuing to acquire land to grow the business • Significant progress on ESG with Environmental, Social and Governance principles
Slide 27: Thank You
THANK YOU A BETTER WAY TO LIVE
Slide 28: Appendices
APPENDICES wW REDROW
Slide 29: Homes Revenue - Excluding Build Out Sites
H O ME S R E V E N UE - E XC LUDI NG B UI LD O UT S I T E S Revenue (£m) Volume ASP (£k) H1 22 H1 21 Var % Var H1 22 H1 21 Var % Var H1 22 H1 21 Var % Var Private Houses 887 786 101 13 2,109 2,015 94 5 420 390 30 8 Private Apartments 62 115 (53) (46) 151 334 (183) (55) 412 346 66 19 Total Private 94
Slide 30: Homes Private Revenue - Excluding Build Out Sites
H O ME S P RI VATE R E V E NUE - E XC LUDI NG B UI LD O UT S I T E S Revenue (£m) Volume ASP (£k) H1 22 H1 21 Var H1 22 H1 21 Var H1 22 H1 21 Var Heritage 882 773 109 2,114 2,003 111 417 386 31 Bespoke 67 128 (61) 146 346 (200) 459 370 89 Total Private 949 901 48 2,260 2,349 (89) 420 384 36 30
Slide 31: Movement in Current Land Holdings
M OV E ME N T I N C U RRE N T L A ND H OLDI NGS Plots Owned Contracted Plots Total At 27 June 2021 26,130 3,330 29,460 Legal completions (2,749) - (2,749) Market additions 285 2,086 2,371 Forward land pull through 945 - 945 Transfers 1,687 (1,687) - Other (land sales and replans) 2 (29) (27) At 2 Ja
Slide 32: Movement in Forward Land Holdings
M OV E ME N T I N F O RWARD L A N D H OLDI NGS Total Plots At 27 June 2021 34,400 Additions 2,740 Transfers to current land (945) Strategic review 205 At 2 January 2022 36,400 Analysis Dec 21 June 21 Land owned without planning 3,643 2,674 Land contracted without planning 2,851 2,348 Options - alloc