Barratt Redrow Plc · LSE:BTRW
Barratt Redrow — H1 2021 Earnings Presentation
34 slides from Barratt Redrow's earnings presentation, Feb 10, 2021
Slide 1: Interim Results Presentation
INTERIM RESULTS PRESENTATION 26 WEEKS TO 27 DECEMBER 2020 10 February 2021
Slide 2: Agenda
AG E NDA Chairman’s Overview John Tutte Financial Review Barbara Richmond Operating Review and Outlook Matthew Pratt 2
Slide 3: Strong Set of Results
S T R O N G S E T O F R E S U LT S • Turnover up 20% to £1,041m (2020: £870m) • Pre-tax profit up £17m to £174m • Like for like first half reservations of £827m (2020: £816m) • Interim dividend of 6p (2020: Nil) 3
Slide 4: 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 5: Highlights
HIGHLIGHTS • Homes turnover of £1,030m (2020: £863m) • EPS of 41.0p (2020: 37.2p) • Cash conversion of 211% (2020: 28%) • Net cash of £238m (June 2020: Net Debt: £126m) 5
Slide 6: Income Statement
I N C OME S TATE ME NT H1 H1 Variance £m 2021 2020 £m % Turnover – Homes 1,030 863 167 19 Turnover – Other 11 7 4 57 Total Turnover 1,041 870 171 20 Gross Profit 222 208 14 7 Operating expenses (44) (49) 5 10 Operating profit 178 159 19 12 Interest (4) (2) (2) 100 Profit before tax 174 157 17 11 6
Slide 7: 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 2021 2020 Average plot cost eliminated (£k) 81 82 Average plot cost as percentage of ASP 21 21 7
Slide 8: Revenue by Geography
R E V E N UE B Y G E O GRAPHY • Turnover for ongoing business up 23% to £991m • Growth in all regions, particularly the South H1 2021 H1 2020 £m % £m % North 249 24 212 24 Central 238 23 230 26 South 438 42 329 38 Colindale 66 6 33 4 Total Homes Ongoing 991 95 804 92 Build Out Sites 39 4 59 7 Other
Slide 9: Homes Turnover Analysis
H O ME S T U RN OV E R A N ALYSIS • Private Houses first half revenue of £808m, up 15% • Private ASP unchanged at £387k • Affordable ASP up £11k due to geographical mix • Lower margin affordable homes were 9% of turnover in H1, they will increase to 13% in H2 Turnover (£m) Volume ASP (£k) H1 21 H1 2
Slide 10: Homes Private Turnover Analysis
H O ME S P RI VATE T U RNOV E R A N ALYSI S • Heritage Collection 82% of private turnover (2020: 87%) • Help to Buy legal completions of 1,286 (2020: 866) • First time buyers comprised 41% of legal completions (2020: 31%) Turnover (£m) Volume ASP (£k) H1 21 H1 20 Var H1 21 H1 20 Var H1 21 H1 20 Var
Slide 11: Cash Flow
C A SH F LOW H1 H1 Operating cash flow (£m) 2021 2020 Net cash movement (£m) 2021 2020 EBITDA 180 162 Operating cash flow 382 45 Decrease in land 36 51 Tax paid (25) (77) Movement in land creditors 33 (84) Dividend - (72) Cash investment in land 69 (33) Other 7 (6) Movement in WIP 95 (104) Net cash
Slide 12: Net Assets
N E T A S SE T S £m Dec 20 Jun 20 Movement Land 1,502 1,538 (36) WIP 952 1,047 (95) Land creditors (335) (302) (33) Net investment in inventory 2,119 2,283 (164) Other working capital (608) (571) (37) Tax (5) 3 (8) Fixed Assets 27 28 (1) Investment in JV - 9 (9) Capital Employed 1,533 1,752 (219) Ne
Slide 13: Plot Cost Carried Forward
P LO T C O S T C A R RIE D F O R WAR D 90 25% 80 20% 70 60 15% Owned 50 £k 40 Owned & Contracted 10% 30 Owned & Contracted plot cost 20 as % of ASP in year 5% 10 0 0% June '18 June '19 June '20 Dec '20 13
Slide 14: 2021 Guidance
2 0 21 G U I DANCE Turnover > £1.8bn Operating Margin ≥ 15.5% Year end net cash > £100m ROCE > 16.0% • Q4 FY2021 expected to be lowest turnover quarter • H2 margin negatively impacted by - London revenue almost entirely from the lower margin build out sites, including 2 PRS contracts - A higher prop
Slide 15: 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 16: Sales Market - Highlights
SALES MARKET - HIGHLIGHTS • Strong H1 driven by • Delayed completions from 2020 • Strong rebound in demand • Stamp Duty holiday • Help to Buy 1 ending in March 2021 • Total order book at the end of December 2020 of £1.3bn (2019: £1.2bn) 16
Slide 17: Sales Market - Trading
S A LE S M A RKE T - T RA D ING H1 2021 2020* Value of private net reservations (£m) 827 816 Value of private reservations per outlet per week (£k) 274 243 Cancellation rate (%) 21 15 * Excluding Colindale PRS of 347 units & £120m 17
Slide 18: Sales Market - Trading
S A LE S M A RKE T - T RA D ING H2 (first 6 weeks) 2021 2020 Value of private net reservations (£m) 181 240 Value of private reservations per outlet per week (£k) 265 298 Cancellation rate (%) 14 13 18
Slide 19: Completions Analysis - Buyer Type
C O MP LE TI ONS A N A LYSIS – B UYE R T YPE 1% HY2021 42% 36% 21% 0% 4% HY2020 34% 42% 19% 1% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Investors Part Exchange HTB Other Private Affordable 19
Slide 20: Sales Market - Order Book
S A LE S M A RKE T – O R D E R B O O K H1 2021 2020 Closing private order book (£bn) 1.0 0.9 Closing total order book (£bn) 1.3 1.2 Week 32 Private order book (£bn) 1.1 1.0 Total order book (£bn) 1.4 1.3 20
Slide 21: Private Order Book Split
P RI VATE O R D E R B O O K S P LI T As at 5 February 2021 68% 32% Pre 31/03/21 Post 31/03/21 21
Slide 22: Sales Market - Average Outlets
S A LE S M A RKE T – AV E R AGE O U T LET S 2021 2020 H1 Actual FY Forecast H1 Actual FY Actual Ongoing Business 114 116 124 106 Build out sites 2 2 5 4 Group 116 118 129 110 22
Slide 23: Land - Highlights
L A N D - H I G HLIG HT S • Current land • 1,280 plots acquired in H1 • Maintaining a disciplined approach • Good pipeline of opportunities • Forward land • 1,004 plots transferred to current land • 4,601 plots added Former University of Wales: Caerleon Campus 23
Slide 24: Land Holdings by Geography
L A N D H O LD ING S B Y G E O G R APHY Dec 20 Jun 20 Current Forward Current Forward % % % % Land Land Land Land North 5,630 22 9,810 29 5,459 20 10,206 33 Central 7,724 30 10,819 32 8,024 30 7,808 26 South 10,264 39 11,710 36 10,785 40 11,673 38 London 2,512 9 1,111 3 2,732 10 1,013 3 26,130 100 3
Slide 25: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • People • Redrow 2025 • Inspiring the next generation to build • Comprehensive COVID-19 measures • Build • Underlying cost inflation reducing • Cost Saving Initiatives - Reduction of waste 25
Slide 26: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • Quality • Tablet based quality management system • Customer Service • Customer satisfaction 91.9% • Homeowner Support Portal • “Excellent” rating on • Best in digital connecting quality service 26
Slide 27: Operations - Highlights
O P E R ATIO NS - H I G HLI GHT S • Product • Heritage Collection • Increased lifestyle product rolled out • Our differentiated strategy taps into customers’ changed priorities that balance work, home and the local community into a more sustainable lifestyle. • Placemaking and Creating Communities •
Slide 28: Summary and Outlook
S U M MARY A N D O U T LOO K • Positive start to the second half • Government recognition of positive economic ripple effect on new homes market • Very strong forward sold position – beyond Help to Buy and Stamp duty schemes • Confident outlook as we grow the business • Acceleration of homebuyer tre
Slide 29: Thank You
THANK YOU A BETTER WAY TO LIVE
Slide 30: Appendices
APPENDICES WREDROW
Slide 31: Homes Turnover - Excluding Build Out Sites
H O ME S T U RN OV E R - E XC LUDI NG B U I LD O U T S I T E S Turnover (£m) Volume ASP (£k) H1 21 H1 20 Var % Var H1 21 H1 20 Var % Var H1 21 H1 20 Var % Var Private Houses 786 699 87 12 2,015 1,777 238 13 390 393 (3) (1) Private Apartments 115 45 70 156 334 129 205 159 346 349 (3) (1) Total Privat
Slide 32: Homes Private Turnover - Excluding Build Out Sites
H O ME S P RI VATE T U RNOV E R - E XC LUD ING B U ILD O U T S I T E S Turnover (£m) Volume ASP (£k) H1 21 H1 20 Var H1 21 H1 20 Var H1 21 H1 20 Var Heritage 773 695 78 2,003 1,790 213 386 388 (2) Bespoke 128 49 79 346 116 230 370 422 (52) Total Private 901 744 157 2,349 1,906 443 384 390 (6) 32
Slide 33: 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 29 June 2020 25,130 1,870 27,000 Legal completions (3,065) - (3,065) Market additions 373 907 1,280 Forward land pull through 605 399 1,004 Transfers 1,238 (1,238) - Other (land sales and replans) (91) 2 (89) At
Slide 34: 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 29 June 2020 30,700 Additions 4,601 Transfers to current land (1,004) Strategic review (847) At 27 December 2020 33,450 Analysis Dec 20 Jun 20 Land owned without planning 3,633 2,504 Land contracted without planning 3,079 2,577 Option