Barratt Redrow Plc · LSE:BTRW
Barratt Redrow — Barratt Developments — H1 2013/14 Earnings Presentation
66 slides from Barratt Redrow's earnings presentation, Feb 27, 2014
Slide 1: Results presentation: Six months ended 31 December 2013
Half Year 2013/14 1 Results presentation Six months ended 31 December 2013 27 February 2014
Slide 2: Bob Lawson, Chairman
Half Year 2013/14 2 De Fulham Riverside, London Bob Lawson De Lacy Fields, Bicester, Oxfordshire Chairman
Slide 3: David Thomas, Group Finance Director
Half Year 2013/14 3 Farndon Fields, Market Harborough, Leicestershire David Thomas Group Finance Director
Slide 4: Strong performance
Half Year 2013/14 4 Strong performance £k Private ASP Operating margin(1) £m Pre-tax profits(2) 230 12% 140 220 225.3 120 10% 210 100 8% 120.4 11.0% 80 200 6% 60 8.5% 190 201.9 4% 40 5.0% 6.4% 20 45.9 191.9 199.9 180 2% (4.6) 21.6 0 170 0% -20 H1 10/11 H1 11/12 H1 12/13 H1 13/14 H1 10/11 H1 11/12 H1
Slide 5: Summary revenue drivers
Half Year 2013/14 5 Summary revenue drivers Change H1 13/14 H1 12/13 H1 13/14 v H1 12/13 Completions Private 5,202 4,241 22.7% Affordable 751 844 (11.0%) Total 5,953 5,085 17.1% % Affordable 13% 17% (4%) (1) JV 242 109 122.0% Total completions 6,195 5,194 19.3% ASP (£’000) Private 225.3 201.9 11.6%
Slide 6: Profit & loss
Half Year 2013/14 6 Profit & loss Change £m (unless otherwise stated) H1 13/14 H1 12/13(1) H1 13/14 v H1 12/13 Revenue 1,264.9 951.1 33.0% Gross profit 176.8 111.2 59.0% Gross margin 14.0% 11.7% 230bp Administrative expenses (51.4) (40.6) (26.6%) Other income 14.1 10.2 38.2% Total administrative exp
Slide 7: Completions by land type
Half Year 2013/14 7 Completions by land type 100% 80% 45% % of total completions (1) 52% 60% 60% 40% 33% 32% 26% 20% 22% 16% 14% 0% H1 12/13 H2 12/13 H1 13/14 (2) (2) Impaired old Non impaired old New (1) Excluding joint ventures (2) Old land owned prior to re-entry into land market in mid 2009
Slide 8: Pro forma profitability
Half Year 2013/14 8 Pro forma profitability H1 13/14 H1 12/13 £m (unless otherwise stated) Housebuild JV(1) Pro forma Housebuild JV(1) Pro forma Revenue 1,262.7 55.0 1,317.7 945.8 16.2 962.0 Operating profit 140.2 12.5 152.7 78.6 1.5 80.1 Operating margin 11.1% 22.7% 11.6% 8.3% 9.3% 8.3% (1) Housebu
Slide 9: Joint ventures - performance
Half Year 2013/14 9 Joint ventures - performance FY14 (f’cast) H1 13/14 H1 12/13 Completions(1) c. 650 242 109 Share of profit(2) c. £35m £10.1m £0.5m JV owned and controlled portfolio (as at 31 Dec 2013) • 5,492 total plots(1) – majority for delivery between H2 13/14 and FY20(3) • £2.5bn total futu
Slide 10: Cash flow
Half Year 2013/14 10 Cash flow £m H1 13/14 H1 12/13 Profit from operations 139.5 80.8 Decrease in net land (pre land acquisitions and disposals) 280.1 212.9 Increase in WIP (133.8) (128.5) Decrease in part exchange and other inventories 39.0 3.6 Decrease in equity share 4.8 1.8 Movement in other wor
Slide 11: Cash flow (continued)
Half Year 2013/14 11 Cash flow (continued) £m H1 13/14 H1 12/13 Cashflow from operations (pre land acquisitions & disposals) 322.1 85.4 Land spend (340.9) (231.3) Land sales 5.0 28.3 Investments in joint ventures and associates (16.1) (22.3) Cashflow from operations (29.9) (139.9) Net interest & tax
Slide 12: Balance sheet - assets
Half Year 2013/14 12 Balance sheet - assets £m 31 Dec 2013 31 Dec 2012 Goodwill and intangibles 892.2 892.2 Deferred tax assets 64.5 108.8 Equity share 127.1 193.9 Investment in joint ventures and associates 149.7 108.4 Other non-current(1) 9.9 5.6 Gross landbank 2,257.7 2,117.3 Land creditors (835.
Slide 13: Landbank by land type
Half Year 2013/14 13 (1) Landbank by land type ASP £k 172 183 220 209 255 14,565 Number of plots 34,912 48,079 2,914 7,123 3,130 (2) (2) Impaired old(2) Non-impaired old Non-impaired old Owned new Total owned Conditional <10% GM >10% GM Category of land (1) Analysis is based on landbank as at 31 Dec
Slide 14: Investment in joint ventures
Half Year 2013/14 14 Investment in joint ventures £m 31 Dec 2013 31 Dec 2012 Housebuilding joint ventures London 82.1 52.8 Non-London 37.6 44.7 Total 119.7 97.5 Commercial 4.6 10.6 Equity share joint venture 25.6 - Associates (0.2) 0.3 Total 149.7 108.4
Slide 15: Balance sheet – liabilities
Half Year 2013/14 15 Balance sheet – liabilities £m 31 Dec 2013 31 Dec 2012 Net debt (155.0) (331.7) Trade payables (243.2) (259.3) (1) Other payables (349.5) (306.5) Current tax (0.6) - Pension obligations (4.4) (19.9) Net swaps (22.2) (51.3) (1) Excluding land creditors
Slide 16: Net interest charge analysis
Half Year 2013/14 16 Net interest charge analysis £m H1 13/14 H1 12/13 Cash interest Interest on term debt and overdrafts 5.1 6.1 Interest on private placement notes 2.0 11.3 Utilisation / Non-utilisation fees on RCF’s 2.9 3.0 Swap interest 3.6 4.5 Other interest 0.6 (0.3) Total cash interest 14.2 2
Slide 17: Guidance for FY14
Half Year 2013/14 17 Guidance for FY14 Completions: c. 14,250 (ex JV) c. 16% affordable c. 650 JV ASP: Total ASP in owned landbank of £209k Total admin expenses: c. £115m JV share of profits: c. £35m Interest cost: c. £60m (£30m cash, £30m non-cash) Land cash spend: c. £850m Land creditors: c. 35% o
Slide 18: Steven Boyes, Group Chief Operating Officer
Half Year 2013/14 18 Foundry Place, Crawley, West Sussex Steven Boyes Group Chief Operating Officer
Slide 19: Strong H1, positive outlook
Half Year 2013/14 19 Strong H1, positive outlook • All regions delivered strong performance in H1 - significant improvement across all operating metrics • Business responded quickly to improved market conditions - accelerated volume growth • Maintaining discipline and control - optimising prices - m
Slide 20: Regional performance – private sales rate
Half Year 2013/14 20 Regional performance – private sales rate Per active site per week H1 13/14 H1 12/13 % change Northern 0.62 0.40 +55.0% Central(1) 0.53 0.42 +26.2% East 0.56 0.47 +19.1% West(1) 0.61 0.45 +35.6% Southern 0.97 0.69 +40.6% London 2.00 1.33 +50.4% Group 0.67 0.49 +36.7% London JV 2
Slide 21: Regional performance – private completions
Half Year 2013/14 21 Regional performance – private completions H1 13/14 H1 12/13 % change Northern 1,127 966 +16.7% Central(1) 1,102 939 +17.4% East 1,005 857 +17.3% West(1) 765 581 +31.7% Southern 738 645 +14.4% London 465 253 +83.8% Group 5,202 4,241 +22.7% London JV 149 21 +609.5% Southern JV 74
Slide 22: Regional performance – private ASP
Half Year 2013/14 22 Regional performance – private ASP (£’000) H1 13/14 H1 12/13 % change Northern 185.0 174.3 +6.1% Central(1) 177.4 167.5 +5.9% East 223.7 200.2 +11.7% West(1) 216.2 197.9 +9.2% Southern 308.4 276.8 +11.4% London 323.1 258.4 +25.0% Group 225.3 201.9 +11.6% London JV 459.5 211.6 +1
Slide 23: Completions analysis
Half Year 2013/14 23 (1) Completions analysis 13% 17% Affordable 11% Part exchange 19% Help to Buy 29% Other shared equity 17% 1% NewBuy / Mi Newhome 4% 5% 11% 9% Investor Other private 31% 33% H1 13/14 H1 12/13 (1) Completions excluding joint ventures
Slide 24: Supply chain
Half Year 2013/14 24 Supply chain • Increased levels of production put pressure on industry supply chain • Barratt supply chain performed well - highly centralised procurement - standard product range - strength and depth of Barratt’s supplier relationships - confident FY14 and FY15 material require
Slide 25: Cost environment
Half Year 2013/14 25 Cost environment % of revenue (1) Outlook • Land price calculated on residual value basis Land c.25% • Continue to secure good opportunities across the UK that meet or exceed our minimum hurdle rates, assuming no HPI • Road and sewer construction, demolition and S.106 contributi
Slide 26: The land market
Half Year 2013/14 26 The land market London Southern Other regions Market conditions • Strong demand for smaller, • Strong demand for smaller, • Strong supply of good land lower complexity sites conventional sites opportunities • Continue to see good supply • Competition from new market of opportuni
Slide 27: Land opportunities across all regions
Half Year 2013/14 27 Land opportunities across all regions Land approved by region since 2009 (cumulative)(1) 71,883 70,000 60,176 60,000 50,000 50,069 No of plots 40,000 35,688 30,000 23,340 20,000 13,455 13,721 10,000 866 8,093 0 FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 H1 13/14 London Souther
Slide 28: Maximising public sector land opportunity
Half Year 2013/14 28 Maximising public sector land opportunity Total land approved by region since 2009(1) 100% 22% 19% 22% 32% 80% 60% 40% 78% 81% 78% 68% 20% 0% London Southern Other regions Group Private sector Public sector (1) Analysis includes 7,648 approved JV plots in which the Group has an
Slide 29: London – Nine Elms, Vauxhall
Half Year 2013/14 29 London – Nine Elms, Vauxhall Sainsbury’s Nine Elms(1) Division: Barratt London GDV: £455m Land source: Sainsbury’s Total units: 645 Private ASP: £719k On site: Feb 14 First completions: Jan 16 Excellent transport links and will be one of first Nine Elms developments to come to m
Slide 30: Southern – Hemel Hempstead
Half Year 2013/14 30 Southern – Hemel Hempstead Spencer Park Division: BDW North London GDV: £82m Land source: HCA Total units: 357 Private ASP: £303k On site: March 14 First completions: Sept 14 Public sector land deal in prime location greenfield site. Deferred terms drive significantly higher tha
Slide 31: East – Cotgrave, Nottinghamshire
Half Year 2013/14 31 East – Cotgrave, Nottinghamshire Hollygate Park Division: Barratt North Mids DWH East Mids GDV: £89m Land source: HCA Total units: 450 Private ASP: £198k On site: April 14 First completions: Feb 15 Highly prestigious scheme from public sector land. Barratt and David Wilson Homes
Slide 32: West – Keynsham, Bristol
Half Year 2013/14 32 West – Keynsham, Bristol Charlton Road Division: Barratt Bristol DWH South West GDV: £59m Land source: BANES Council Total units: 268 Private ASP: £272k On site: March 15 First completions: August 15 Public land identified for development by the adopted local plan. Very desirabl
Slide 33: Central – Barlaston, Staffordshire
Half Year 2013/14 33 Central – Barlaston, Staffordshire Wedgwood Estate Division: DWH Mercia GDV: £81m Land source: Wedgwood Total units: 209 Private ASP: £390k On site: Feb 14 First completions: Dec 14 Prime development opportunity partnering with Wedgwood. David Wilson Homes will offer executive h
Slide 34: Northern – Jesmond, Newcastle
Half Year 2013/14 34 Northern – Jesmond, Newcastle La Sagesse Division: BDW North East GDV: £20m Land source: Private vendor Total units: 48 Private ASP: £425k On site: Feb 14 First completions: May 15 One of the most prime locations in the North East. Site secured through division’s relationship wi
Slide 35: Growing importance of strategic land
Half Year 2013/14 35 Growing importance of strategic land • In the first half, c. 3,700 strategic land plots on 18 sites, pulled through to controlled landbank - strategic plots represented c. 39% of landbank additions in the period - included c. 1,400 on 5 sites in Southern region • Options over c.
Slide 36: National with a balanced land portfolio
Half Year 2013/14 36 National with a balanced land portfolio JV plots(1) Owned & owned and Years supply(2) conditionally conditionally owned and Approved plots Strategic land As at 31 Dec 2013 contracted plots contracted conditional including JV(3) plots(4) Northern 14,593 - 5.8 1,966 20,130 Central
Slide 37: Mark Clare, Group Chief Executive
Half Year 2013/14 37 Mark Clare The Gateway, Pickering, North Yorkshire Group Chief Executive
Slide 38: Market update
Half Year 2013/14 38 Market update • Market recovery now being seen across all regions • Strong increase in consumer demand - more stable economic outlook - increased availability of mortgages, at more competitive rates - Help to Buy continues to have a positive impact • Focus on maintaining discipl
Slide 39: Increased mortgage availability
Half Year 2013/14 39 Increased mortgage availability 100 120 80 Mortgage approvals (000s) 110 House price index (1) 60 100 40 90 20 0 80 Jul-09 Jul-10 Jul-11 Jul-12 Jul-13 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 (1) Mortgage approvals (LHS) Halifax HPI data (RHS)(1) Nationwide HPI data (RHS) Sourc
Slide 40: Good progress with Group’s key objectives
Half Year 2013/14 40 Good progress with Group’s key objectives Targets for FY16 On 16,000 completions (inc JV’s) track Build profitability 90% completions from higher On margin land track On 18% ROCE track Drive ROCE Minimal year end net debt Maintain appropriate Land creditors c. 35% of owned lan
Slide 41: Significant investment in land
Half Year 2013/14 41 Significant investment in land Land approvals since 2009 (cumulative)(1) 3,500 3,145 3,000 2,606 2,500 2,000 £m 1,559 1,500 981 1,000 527 500 37 0 FY 08/09 FY 09/10 FY 10/11 FY 11/12 FY 12/13 H1 13/14 (1) Not including joint ventures
Slide 42: Building profitability
Half Year 2013/14 42 (1) Building profitability 100% Total Average ASP(2) gross Land type £k margin(2) 80% Impaired 172 0% % of total completions old(3) 66% 60% 79% Non impaired 183 c. 8% 90% old(3) New 230(4) c. 20% 40% 22% 20% 13% 12% 8% 8% 2% 0% FY 13/14 FY 14/15 FY 15/16 (1) Analysis is for illu
Slide 43: Progress on ROCE (annualised)
Half Year 2013/14 43 (1) Progress on ROCE (annualised) 20% 18.0% 18% 16% 14.2% 14% 12% 11.5% 10% 9.0% 8.3% 8% 6% 4% 2% 0% Jun-12 Dec-12 Jun-13 Dec-13 Target June 16 (1) ROCE is calculated as earnings before interest, tax and operating exceptional items divided by average net assets adjusted for good
Slide 44: Performance of new land to date
Half Year 2013/14 44 Performance of new land to date Gross margin ROCE Minimum hurdle rate 20% 25% Completed new land sites to date(1) 21% 38% (1) Analysis based on total of 60 new land sites totalling 2,935 plots, that have been started and completed since May 2009
Slide 45: Capital structure and dividend policy
Half Year 2013/14 45 Capital structure and dividend policy • Forecasting minimal net debt as at 30 June 14 • Owned landbank and long term WIP - funded by shareholders and land vendors • Short and medium term WIP – funded by lending syndicate • Accelerated dividend cover to 3x(1) in FY14 - on current
Slide 46: Industry leading – design, quality & service
Half Year 2013/14 46 Industry leading – design, quality & service • Highest quality design - introduction of ‘Great Places’ - Design Council’s industry standard for well designed neighbourhoods • Highest quality construction - site managers won 102 NHBC ‘Pride in the Job’ awards - most ever won by a
Slide 47: Industry leading - sales and marketing
Half Year 2013/14 47 Industry leading - sales and marketing 5,000 • c. 80% of our customers 4,000 originate online • Barratt and DWH traffic Weekly calls / web leads 3,000 accounts for c. 30% of all homebuilders activity 2,000 • Continued investment in 1,000 digital sales and marketing platform 0 H1
Slide 48: Industry leading - investment in people
Half Year 2013/14 48 Industry leading - investment in people • Investing in c. 1,100 apprentices, graduates and trainees over 3 years - Apprenticeship schemes – trade, commercial and technical - Graduate training programme - Barratt Construction Foundation Degree Barratt apprentices on site Programm
Slide 49: Current trading
Half Year 2013/14 49 Current trading First 8 First 8 weeks weeks H2 13/14 H2 12/13 Change H1 13/14 Average net private reservations (1) 0.76 0.64 18.8% 0.67 per active site per week (2) Private forward sales £1,323.2m £897.7m 47.4% £872.9m (2) Total forward sales £1,748.1m £1,119.1m 56.2% £1,265.8m
Slide 50: Positive on outlook
Half Year 2013/14 50 Positive on outlook • Strong market conditions - recovery in regions outside of London and South East • Maintaining strong disciplines - buying the right land - delivering for our customers - controlling costs & maintaining supply relationships • Confident of delivery for FY14 -
Slide 51: Q&A
Half Year 2013/14 51 Kingfisher Park, Hertfordshire Rydon Place, Exeter Q&A Old Merchant Taylors, Croxley Green
Slide 52: Appendices
Half Year 2013/14 52 Appendices Page • Balance sheet – landbank 53 • Approved land payment profile 54 • Land creditors payment profile 55 • Land creditors by type 56 • Balance sheet – stock & WIP 57 • Net interest charge analysis – non-cash 58 • Financing arrangements 59 • Forward sales analysis – o
Slide 53: Balance sheet - landbank
Half Year 2013/14 53 Balance sheet - landbank 31 Dec 2013 31 Dec 2012 Landbank plots Owned / unconditional contracts 48,079 45,481 Conditional contracts 14,565 10,581 Total 62,644 56,062 Landbank pricing (£’000) Cost of plots acquired 46.3 37.4 Cost of plots in P&L 47.5 40.9 Cost of plots in balance
Slide 54: Approved land payment profile
Half Year 2013/14 54 (1) Approved land payment profile 31 Dec 2013 Purchased Conditional Approved Total Plots 43,473 14,274 6,488 64,235 Value (£m) 1,991 798 357 3,146(2) Payment profile (£m) Paid to date 1,204 18 2 1,224 H2 13/14 151 148 87 386 FY15 414 289 111 814 FY16 107 176 61 344 FY17 & beyond
Slide 55: Land creditors payment profile
Half Year 2013/14 55 Land creditors payment profile 900 835.5 192.6 800 700 422.0 600 500 £m 400 300 112.1 200 108.8 100 0 - 31-Dec-13 H2 13/14 FY 14/15 FY 15/16 FY 16/17 & beyond
Slide 56: Land creditors by type
Half Year 2013/14 56 Land creditors by type 31 Dec 13 31 Dec 12 21% 29% 79% 71% Government Non-government
Slide 57: Balance sheet – stock & WIP
Half Year 2013/14 57 Balance sheet – stock & WIP 31 Dec 2013 31 Dec 2012 Units £m Units £m Stock (build complete) - Reserved 300 273 - Unreserved 539 865 - Showhomes 157 234 Total 996 126 1,372 162 Unreserved per active site 1.5 2.2 WIP (including build complete 1,136 1,194 stock) Part exchange - Re
Slide 58: Net interest charge analysis – non-cash
Half Year 2013/14 58 Net interest charge analysis – non-cash £m H1 13/14 H1 12/13 Non-cash interest Land creditors 16.2 14.1 Financing fees 1.4 2.8 Equity share (2.8) (6.5) Pension 0.2 0.4(1) Total non-cash interest 15.0 10.8 (1) Restated following the adaption of IAS19 (Revised) ‘Employee Benefits’
Slide 59: Financing arrangements
Half Year 2013/14 59 Financing arrangements Loan Facility Amount Maturity Interest basis RCF facilities(1) £700m May 2018 LIBOR +2.5%(2) Lloyds facility £50m September 2015 LIBOR +2.35% Private placement notes(3) - May 2011 Issue £48m August 2017 8.1% July 2019 Pru M&G UK Companies Fund £100m 3m LIB
Slide 60: Forward sales analysis – owned
Half Year 2013/14 60 Forward sales analysis – owned 23 February 2014 24 February 2013 Change Value (£m) - Private £1,323.2m £897.7m 47.4% - Affordable £424.9m £221.4m 91.9% - due in H2 (£m) £1,291.8m £918.1m 40.7% - due after H2 (£m) £456.3m £201.0m 127.0% Total value £1,748.1m £1,119.1m 56.2% Plots
Slide 61: Forward sales analysis – joint ventures
Half Year 2013/14 61 Forward sales analysis – joint ventures (1) 23 February 2014 24 February 2013 Change Value (£m) - Private £181.8m £80.1m 127.0% - Affordable £6.2m £25.2m (75.4)% - due in H1 (£m) £152.0m £43.1m 252.7% - due after H1 (£m) £36.0m £62.2m (42.1)% Total value £188.0m £105.3m 78.5% Pl
Slide 62: Completions by product mix
Half Year 2013/14 62 (1) Completions by product mix 100% 9% 6% 4% 4% 80% 25% 26% 60% 32% 35% 40% 13% 20% 10% 16% 20% 0% H1 13/14 H1 12/13 Flats (non-London) 1 & 2 Bed 3 Bed 4 Bed 5 & 6 Bed Flats (London) (1) Completions excluding joint ventures
Slide 63: Joint ventures - London
Half Year 2013/14 63 (1) Joint ventures - London Private : Profit Total Total Affordable share (%) JV partner GDV units Private ASP (%) Altitude, Aldgate 50 : 50 L&Q £125m 235 £641k 73 : 27 Queensland 50 : 50 L&Q £160m 375 £420k 100 : 0 Terrace, Islington Fulham Riverside, 50 : 50 L&Q £469m 462 £1,1
Slide 64: London joint venture delivery profile
Half Year 2013/14 64 London joint venture delivery profile Land bank units(1) Private Affordable H2 13/14 H1 14/15 H2 14/15 H1 15/16 H2 15/16 H1 16/17 H2 16/17 Altitude, Aldgate 94 1 Queensland Terrace, 303 0 Islington Fulham Riverside, 396 27 Fulham Nine Elms 593 52 Aldgate Place, 313 150 Aldgate E
Slide 65: Joint ventures – non-London
Half Year 2013/14 65 Joint ventures – non-London (1) Profit Total Private : Housebuild only share (%) JV partner GDV Total units Affordable (%) The Acres - Horley 78.5 : 21.5 Wates £154m 511 78 : 22 Bluebell Gate - East Grinstead 50 : 50 Wates £49m 142 70 : 30 The Fieldings/ 50 : 50 Wates £71m 301 9
Slide 66: Disclaimer
Half Year 2013/14 66 Disclaimer This document has been prepared by Barratt Developments PLC (the “Company”) solely for use at a presentation in connection with the Company's Half Year Results Announcement in respect of the 6 months ended 31 December 2013. For the purposes of this notice, the present
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