Barratt Redrow Plc · LSE:BTRW
Barratt Redrow — Barratt Developments — FY2022 Earnings Presentation
34 slides from Barratt Redrow's earnings presentation, Sep 14, 2022
Slide 1: Full Year Results Presentation
FULL YEAR RESULTS PRESENTATION 53 WEEKS TO 3 JULY 2022 14 SEPTEMBER 2022
Slide 2: Agenda
AG E NDA Overview Matthew Pratt Financial Review Barbara Richmond Operating Review and Outlook Matthew Pratt 2
Slide 3: Overview
OVERVIEW A r e t u r n t o t h e r e c o r d u n d e r l y i n g p r o f i t s a c h i e v e d p r e C o v i d - 19 2022 2021 2019 Revenue (£m) 2,140 1,940 2,112 PBT (£m) 410 314 406 EPS (p) 96.0 73.7 92.3 DPS (p) 32.0 24.5 30.5 Order Book (£bn) 1.44 1.43 1.02 Note: all the results throughout this p
Slide 4: Operational Highlights
O P E R AT I O N A L H I G H L I G H T S • Effective management of house price inflation • Disciplined cost control • Selective land buying strategy • Quality & Customer Experience • Climate Challenge • Acting on Fire Safety pledge 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: Financial Highlights
FINANCIAL HIGHLIGHTS • Operating profit of £414m (2021: £321m) • ROCE 24.54% (2021: 18.53%) • Net cash £288m (2021: Net cash £160m) • Launch of up to £100m share buy back in July • Final dividend proposed of 22p (2021: 18.5p) making 32p for the year, up 31% (2021: 24.5p) 6
Slide 7: Income Statement
I N C OME S TATE ME NT FY FY Variance FY Variance £m 2022 2021 % 2019 % Revenue – Homes 2,119 1,902 11 2,091 1 Revenue – Other 21 37 (43) 21 - Total revenue 2,140 1,939 10 2,112 1 Gross Profit 516 414 25 504 2 Operating expenses (102) (93) (10) (93) (10) Operating profit 414 321 29 411 1 Interest (4
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 FY FY £m 2022 2021 Average plot cost eliminated (£k) 86 83 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 double digit revenue growth in all regions • Homes Revenue up 20% for the ongoing business FY 2022 FY 2021 £m % £m % North 458 21 401 21 Central 547 26 416 21 South 889 42 758 39 Colindale 173 8 146 8 Total Homes Ongoing 2,067 97 1,721 89 Build Out Sites 52 2 1
Slide 10: Homes Revenue Analysis
H O ME S R E V E N UE A N ALYSIS • Homes revenue of £2.1bn, up 11% • Apartments only 12% of private revenue (2021: 19%) • Legal completions of 5,715, up 2% • Blended ASP up 9% to £370.8k Revenue (£m) Volume ASP (£k) FY 22 FY 21 Var % Var FY 22 FY 21 Var % Var FY 22 FY 21 Var % Var Private Houses 1,6
Slide 11: Homes Private Revenue Analysis
H O ME S P RI VATE R E V E NUE A N ALYSIS • Homes private revenue of £1.9bn up 13% • Heritage Collection 88% of revenue (2021: 79%) • Extras revenue of £41m (2021: £18m) • Help to Buy legal completions of 566 (2021: 1,888) Revenue (£m) Volume ASP (£k) FY 22 FY 21 Var FY 22 FY 21 Var FY 22 FY 21 Var
Slide 12: Cash Flow
C A SH F LOW FY FY Operating cash flow (£m) 2022 2021 Net cash movement (£m) 2022 2021 EBITDA 419 328 Operating cash flow 318 362 Movement in land (184) 12 Interest (1) (4) Movement in land creditors 82 (8) Tax paid (55) (54) Cash investment in land (102) 4 Dividend (100) (21) Movement in WIP (43) 6
Slide 13: Net Assets
N E T A S SE T S £m June 22 June 21 Movement Land 1,710 1,526 184 WIP 1,030 987 43 Land creditors (376) (294) (82) Net investment in inventory 2,364 2,219 145 Other working capital (721) (519) (202) Tax (7) (13) 6 Fixed Assets 26 25 1 Capital Employed 1,662 1,712 (50) Net Cash 288 160 128 Net Assets
Slide 14: Capital Allocation
C A P I TA L A L L O C AT I O N • Priorities for use of capital - Growth - Normal dividend at 33% of underlying earnings - Capital return • Two capital return exercises in recent years - B Share Scheme of £111m in 2019 - Share Buyback of up to £100m launched in 2022 14
Slide 15: 2024 Guidance
2 0 24 G U I DAN CE Sept 2022 Feb 2022 Turnover £2.3bn - £2.4bn £2.3bn - £2.4bn Operating Margin c19.5% 19.5% - 20% EPS* > 96p ≥ 92p DPS > 32p ≥ 31p Average Outlets c134 c134 ROCE > 23% 22% - 25% Guidance updated from that given in February 2022 mainly due to the benefit of the share buyback on EPS
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 • Strong level of completions driven by • Very strong market • Differentiated and highly desirable homes • Record sales of extras • Connected and well-designed places • Resilient cash buyers • Record total order book at the end of June 2022 of £1.44bn (2021: £1.43bn) 17
Slide 18: Sales Market - Trading
S A LE S M A RKE T - T RA D ING 2022 2021 Value of private net reservations (£bn)* 1.82 1.79 Private reservations per outlet per week* 0.68 0.70 Value of private reservations per outlet per week (£k)* 311 288 Cancellation rate (%) 19 19 *2021 are 53 weeks like for like 18
Slide 19: Sales Market - Trading
S A LE S M A RKE T - T RA D ING First 10 weeks 2023 2022 Value of private net reservations (£m)* 360 340 Value of private reservations per outlet per week (£k)* 296 294 Reservations per outlet per week* 0.61 0.66 *FY2022 LFL weeks 2-11 19
Slide 20: Sales Market - Average Outlets
S A LE S M A RKE T – AV E R AGE O U T LET S 2021 Actual 2022 Actual 2023 Forecast Ongoing Business 115 109 119 Build out sites 2 2 1 Group 117 111 120 20
Slide 21: Land - Highlights
L A N D - H I G HLIG HT S • Current land • 5,958 plots added on 24 sites • Land market competitive • Planning remains difficult • Forward land • 4,741 plots added on 34 sites • 1,579 plots transferred to current land Former University of Wales: Caerleon Campus 21
Slide 22: Fire Safety
F I R E S A FET Y • Pledge signed April 2022 • Full time team of 5 people managing the project • Building management companies contacted • Detailed assessments of works and costs ongoing • Team working with the Building Safety Fund and management companies Former University of Wales: Caerleon Campus
Slide 23: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • People • 94% of colleagues proud to work for Redrow • 15% of our workforce are trainees • 261 internal promotions • 4,819 training days delivered • Build • Fourth consecutive year in which accidents resulting in injuries have declined • Build cost inflation 10% •
Slide 24: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • Quality & Customer Service • Full readiness for introduction of the New Homes Ombudsman • 94.5% NHBC 8-week customer recommend score • Rated as ‘Excellent’ on Trustpliot • Over 90% of Customers utilising Homeowner Support Portal • 24 NHBC Pride in the Job Winners
Slide 25: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • Product & Placemaking • Group prepared for the introduction of Part L • Trialing Air Source Heat Pumps • Sites scored against Placemaking principles • Meeting the climate challenge • Established Strategy • Double materiality strategy review • Carbon reduction targ
Slide 26: Summary and Outlook
S U M MARY A N D O U T LOO K • Demand has moderated to historic norm • Strong land bank • Disciplined capital allocation • Further progress on ESG • Acting on fire safety pledge • Excellent returns • Strong balance sheet 26
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 U I LD O U T S I T E S Revenue (£m) Volume ASP (£k) FY 22 FY 21 Var % Var FY 22 FY 21 Var % Var FY 22 FY 21 Var % Var Private Houses 1,680 1,344 336 25 3,844 3,383 461 14 437.0 397.3 39.7 10 Private Apartments 194 215 (21) (10) 529 600 (71) (12) 366.7 358.3 8.4
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 U I LD O U T S I T E S Revenue (£m) Volume ASP (£k) FY 22 FY 21 Var FY 22 FY 21 Var FY 22 FY 21 Var Heritage 1,686 1,303 383 3,891 3,278 613 433.3 397.5 35.8 Bespoke 188 256 (68) 482 705 (223) 390.0 363.1 26.9 Total Private 1,874 1,559 315 4,373 3,983
Slide 31: Movement in Current Land Holdings
M O V E ME N T I N C U RRE N T L A ND H O LDI NGS Plots Owned Contracted Plots Total At 28 June 2021 26,130 3,330 29,460 Legal completions (5,715) - (5,715) Market additions 2,830 1,549 4,379 Forward land pull through 945 634 1,579 Transfers 2,363 (2,363) - Other (land sales and replans) (93) (10) (
Slide 32: Movement in Forward Land Holdings
M O V E ME N T I N F O RWAR D L A N D H O LDI NG S Total Plots At 28 June 2021 34,400 Additions 4,741 Transfers to current land (1,579) Strategic review 238 At 3 July 2022 37,800 Analysis June 22 June 21 Land owned without planning 4,192 2,674 Land contracted without planning 2,833 2,348 Options - a
Slide 33: Land Holdings by Geography
L A N D H O LD ING S B Y G E O G R APHY June 22 June 21 Current Forward Current Forward % % % % Land Land Land Land North 6,995 24 9,149 24 6,796 23 9,945 29 Central 7,573 26 15,228 40 8,165 28 12,630 37 South 12,599 42 13,423 36 11,475 39 11,825 34 London 2,433 8 - - 3,024 10 - - 29,600 100 37,800
Slide 34: Plot Cost Carried Forward
P LO T C O S T C A R RIE D F O R WAR D 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 19 June 20 June 21 Jun-22 34