Barratt Redrow Plc · LSE:BTRW
Barratt Redrow — Barratt Developments — H1 2010 Earnings Presentation
24 slides from Barratt Redrow's earnings presentation, Feb 24, 2010
Slide 1: Barratt Developments PLC Interim Results
oO BARRATT - 4 BARRATT DEVELOPMENTS PLC Interim Results 24 February 2010
Slide 2: Bob Lawson, Chairman; David Thomas, Group Finance Director
BOB LAWSON Chairman 1 1 Pavillion Place, Snodland DAVID THOMAS Group Finance Director 2 2 Halstead Place, Sevenoaks
Slide 3: Financial review: Overview
Financial review • Overview • Income Statement • Cashflow • Balance sheet 3 Overview (1) Results for the period ended 31 Dec 2008 have been restated for the change in accounting policy related to the Group’s defined benefit pension scheme (2) Pre exceptional costs of £15.8m (2008/09: H1 £513.9m, FY
Slide 4: Revenue Drivers and Income Statement
Revenue Drivers (1) In addition to the legal completions above the Group received a share of the loss on a further 25 Joint Venture completions in the 6 months to 31st Dec Actual (Last year: nil completions) (2) Plot completions (3) Includes £25m revenue from disposal of Atlantic Quay 5 (2008/09: In
Slide 5: Income Statement continued; Cashflow
Income Statement continued (1) Results for the period ended 31 December 2008 have been restated for the change in accounting policy related to the Group’s defined benefit pension scheme (2) Pre exceptional costs of £114.1m H1 09/10, £nil H1 08/09, £13.3m FY 08/09 (3) Pre exceptional costs of £nil H1
Slide 6: Balance sheet – assets; Land purchases to date
Balance sheet – assets (1) Results for the period ended 31 December 2008 have been restated for the change in accounting policy related to the Group’s defined benefit pension scheme 9 Land purchases to date Note: Unless stated otherwise, % splits are by plots 10
Slide 7: Balance sheet – landbank; Landbank valuation
Balance sheet – landbank (1) Based on 11,500 legal completions 11 Landbank valuation (1) (1) Internal management data (2) Other includes strategic land and WBD 12
Slide 8: Landbank delivery; Balance sheet – liabilities
Landbank delivery 13 Balance sheet - liabilities (1) Results for the period ended 31 December 2008 have been restated for the change in accounting policy related to the Group’s defined benefit pension scheme (2) Excluding land creditors 14
Slide 9: Financing arrangements; Mark Clare, Group Chief Executive
Financing arrangements Covenants(5) Cashflow interest cover − Initially 1.5x stepping up to 2.5x − Unlimited carry forward of excess cashflow − Additional accommodation for investment in land and WIP (£220m) Adjusted tangible net worth − Accommodation for any future impairments on the landbank and a
Slide 10: Overview; Market backdrop – pricing and mortgage approvals
Overview • Market trends • Sales performance • Key priorities • Current trading • Outlook 17 Market backdrop – pricing & mortgage approvals Source: Halifax, Nationwide, Bank of England Note: House price data rebased to 100 at January 2007 18
Slide 11: Market backdrop – mortgage approvals; Mortgage availability
Market backdrop – mortgage approvals Number of mortgage products available with LTV of 80%+ Source: Moneyfacts 19 Mortgage availability Note: Availability by lender is based on publicly available information and Barratt’s market knowledge 20
Slide 12: Visitor levels; Net private reservations
Visitor levels Number of visitors per active site per week Note: Data presented on a per active site basis. Data prior to FY 2008/09 was presented on a per total site basis 21 Net private reservations • In Nov/Dec 08, there were a significant number of bulk sales to investors Note: Data presented on
Slide 13: Total active sites; Completions analysis by product
Total active sites 2008 2009 2010 Note: Forecast active sites based on internal projections 23 Completions analysis by product Houses Flats 24
Slide 14: Completions analysis by buyer type
Completions analysis by buyer type Investor Social Private Note: Investors sales includes non section 106 sales to Housing Associations 25 Completions by buyer type Investor & Social Shared Equity PX Other 26
Slide 15: Government initiatives; Key priorities
Government initiatives (1) Total allocation (2) National Affordable Housing Programme (3) Scheme must be legally completed by end date (4) Not yet confirmed 27 Key priorities • Price optimisation • Operational efficiency • Replanning • Targeted land buying 28
Slide 16: Price optimisation – sales and marketing and pricing discipline
Price Optimisation - sales and marketing • Consumer website • Call centre • iSales • Media plan • Sales presentation • Service credentials 29 Price optimisation – pricing discipline Cumulative variance in selling prices achieved on net private reservation versus budget and on private completions ver
Slide 17: Operational efficiency – costs; Replanning
Operational efficiency – costs • Building materials • Sub contractors • Benchmarking • Overheads 31 Replanning • Actively replanning existing sites to maximise potential revenue and profitability – more appropriate product mix – changes to infrastructure, specifications and materials • Developed a n
Slide 18: Replan – Brough; Targeted land buying
Replan - Brough, Yorkshire East Division (Aug 09) 33 Targeted land buying • Land buying teams retained across business – Operations across all 25 divisions • Structured land buying process – Focus on higher growth areas – Internal hurdles based on operating margins and ROCE – Land committee approval
Slide 19: Current trading; Forward sales analysis
Current trading 35 Forward sales analysis (1) As at 21st February 2010 and 22nd February 2009 36
Slide 20: Outlook; Q&A
Outlook • Cautious on market outlook • Board confident of Group’s prospects for the full year • Optimal margin/value mix with full year completions of approx. 11,500 • ASP to increase by approx. 8-10% largely as a result of mix changes • Significant improvement in operating margin in H2 compared to
Slide 21: Appendices: Private conversion rates and completions
APPENDICES Scholars Grange, Leicester Private conversion rates and completions (1) Average in period 40
Slide 22: Regional data; Pre-tax exceptional items
Regional data (1) For the six months ended 31 December 2009 (2) As at 31st December 2009 and does not include approved land 41 Pre-tax exceptional items (1) Results for the period ended 31 December 2008 have been restated for the change in accounting policy related to the Group’s defined benefit pen
Slide 23: Balance sheet – work in progress; other non-current assets
Balance sheet - work in progress (1) Estimated values for WIP 43 Balance sheet – other non-current assets 44
Slide 24: 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 2009. For the purposes of this notice, the presentation (the “Presentati