RESULTS PRESENTATION Year ended 30 June 2018 5 September 2018 - PowerPoint PPT Presentation

RESULTS PRESENTATION Year ended 30 June 2018 5 September 2018 Saxon Gate, Stonehouse 1

David Thomas Chief Executive St Wilfrid’s Walk, Brayton 2

KEY HIGHLIGHTS Strong financial and operational performance for the full year • Strong market fundamentals • Highest number of completions in a decade – commitment to grow volumes • Margin improvement initiatives starting to deliver • Attractive cash returns • Confidence in the business going forward - new medium term targets • 3

INVESTMENT PROPOSITION Highly Strong balance Industry leading Broad Shorter owned experienced sheet and cash quality and geographic build and sales land bank generation service standards spread teams Growing Delivering margin Attractive volumes cash returns improvement 4

MEDIUM TERM TARGETS 3-5% growth per annum Completions Present business capacity of 20,000 Gross margin New land acquisitions at minimum 23% gross margin ROCE Minimum 25% 5

Harts Meadow, Exeter Steven Boyes Chief Operating Officer 6

STRONG SALES PERFORMANCE Average net private reservations per active outlet per week • Consistent sales rate of 0.72, in-line with strong FY18 FY17 Change prior year • H2 sales rate of 0.77, also in-line with prior year Regional 0.71 0.70 1.4% • Strong JV sales rate with prior year impacted by bulk sales London 1.08 08 1.07 07 0.9% Group 0.72 0.72 - JV 1.00 00 1.27 27 (21.3 .3%) %) 7

COMPLETION GROWTH Completions • Completions at highest level for a decade FY18 FY17 Change • Wholly owned London completions lower - in-line with build programmes Regional 15,8 ,866 66 15,5 ,500 00 2.4% - strong trading into year-end • JV completion growth driven by London sites in London 814 1,145 45 (28.9%) Outer London Group 16,6 ,680 80 16,6 ,645 45 0.2% JV 899 899 750 19.9% Total 17,579 17,395 95 1.1% 8

COMPLETIONS ANALYSIS – BUYER TYPE 5% 5% 6% 6% 9% 9% 8% 8% • Similar profile year on year Invest stor or 19% 19% 20% 20% • Help to Buy remains an important Part rt Exc Exchange ge customer proposition Afforda Af ordabl ble 31% 31% 31% 31% Oth Other r pri private Help p to o Buy 36% 36% 35% 35% FY1 Y18 FY1 Y17 9

PRICING TRENDS REMAIN POSITIVE Private completions average selling price (£’000) • Good pricing trends across the regional FY18 FY17 Change business • London up significantly due to roll-out of Regional 302.4 .4 291.5 .5 3.7% higher ASP sites London 809.8 .8 621.2 .2 30.4% Group 328.8 .8 313.1 .1 5.0% JV 520.7 .7 589.1 .1 (11.6%) 10

LAND MARKET Savills UK Residential Land Index versus HBF planning consents HOLDING PICTURE – CB Land prices remain broadly flat • 180 SPEAKING TO PHIL BARNES 160 High quality land opportunities across the country Savills UK Residential Development Land Index • 140 Significant increase in planning consents granted • 120 Improved layout coverage with standard product in (100 = 2007 peak) • regional business 100 80 Land approvals • - FY18: 20,951 60 UK greenfield land prices - Medium term: 18,000-22,000 plots per annum 40 England planning consents 20 0 11

LAND BANK 3% 6% 94% 97% (1) (2) of plots in of plots regional positioned to business benefit from HtB 94% 97% Regional London up to £600k £600k+ (1) Private owned and controlled land bank plots excluding JVs as at 30 June 2018 12 (2) Private owned land bank plots excluding JVs, in England only with selling price under £600k

BARRATT LONDON – WHOLLY OWNED LAND BANK (1) 4% 3% 8% 96% 97% of plots in of plots Outer below £1m London 89% 96% up to £600k £600k to £1m £1m+ Outer London Central London Current: 118 Central London private, wholly owned units remaining, 77 reserved 13 (1) Private owned and controlled land bank plots excluding JVs as at 30 June 2018

WESTERN CIRCUS, EAST ACTON Existing use: Homebase store T otal units: 333 • • GDV: £173m Affordable units: 114 • • Private ASP: c. £540k First private completions: March 2021 • • 14

ROMANS’ QUARTER, BINGHAM, NOTTINGHAMSHIRE Existing use: Agricultural T otal units: 1,050 • • GDV: £278m Affordable units: 200 • • Private ASP: c. £300k First private completions: May 2019 • • 15

DRIVING OPERATING MARGIN - STRATEGIC LAND FY18 FY17 • Made good progress towards medium term target of 30% of completions 27% 25% 25% Completions from strategic land (1) • Enhanced margin of c. 300 basis points 12,4 ,435 35 11,7 ,737 37 Acres held • Strategic land bank increased in size and quality Number of locations 268 268 267 267 (1) On strategic land approved since 2009 versus ongoing land 16

DRIVING OPERATING MARGIN - NEW PRODUCT ROLL-OUT Identified for new Barratt range ge Buildi ding g new Barratt range ge New product ranges and floorplans well • 187 200 120 received by customers 101 95 Build teams finding ranges easier and quicker • 150 132 +98% to build +42% Number of new sites 70 Completions (1) in FY18 100 51 • - Barratt: 1,209 45 - All (2) : 1,522 50 20 Roll-out of the new product ranges will • increasingly benefit margin going forward 0 -5 (1) Including JVs 17 (2) All includes: Barratt Homes and David Wilson main and Scottish ranges

PRODUCT RATIONALISATION 140 118 120 New ranges developed with customer • involved focus groups 100 92 Development of core and occasional ranges • 80 74 - target 80% plotted from core range +41% +92% 60 55 Continual reviews have allowed further • 43 rationalisation 40 40 20 23 22 17 13 0 2010 2016 2018 Barratt total DW total New core ranges 18 Note: Data based on Barratt and DW England ranges

MANAGING THE COST ENVIRONMENT Materials Labour • Regional pockets of cost pressures • Some specific pressures • Simplified, faster build • 96% of pricing fixed to • Increased use of off-site December 2018 manufacturing • 75% of pricing fixed to • 204 new apprentices, June 2019 trainees and graduates in FY18 Build costs increased by c. 3% in FY18 3-4% inflation expected in FY19 19

AFFORDABLE HOMES Local planning authorities determine content • Factored into land acquisition margin hurdle rates • A c critic ical al part of o our business ess Group material suppliers used • Barratt FY18 statistics 3,241 completions Standard range of affordable product • • 19% of total completions • No compromise to quality or service • 20

STRONG PERFORMANCE Consistent, strong sales rate and positive pricing trends • Continued focus on improving operating margin • Actively manage our cost base • No compromise on health and safety, customer service or • quality Wesley Chase, Fulwood 21

Ashmeade Park, Pontefract Jessica White Chief Financial Officer 22

KEY HIGHLIGHTS FY18 FY17 Change £m (unless otherwise stated) 4,87 874.8 4.8 4,650.2 650.2 4.8% 8% Revenue 1,008.9 008.9 932.0 2.0 8.3% 3% Gross profit 20.7% 20.0% 0% 70 bps Gross margin % 862.6 2.6 799.2 .2 7.9% Operating profit 17.7% 17.2% 2% 50 bps Operating margin % 835.5 5.5 765.1 .1 9.2% 2% PBT 66.5p .5p 61.3p .3p 8.5% 5% Earnings per share pence 791.3 .3 723.7 .7 9.3% 3% Net cash 29.6% .6% 29.8% .8% (20 bps) ROCE % 23

REVENUE SUMMARY FY18 FY17 Change £m (unless otherwise stated) Completions 13,439 439 13,303 303 1.0% Private 3,241 241 3,342 342 (3.0%) Affordable 16,680 ,680 16,645 ,645 0.2% Total completions 19% 19% 20% 20% (100bps) % Affordable 899 899 750 19.9% JV 17,579 579 17,395 395 1.1% Total completions (inc JVs) ASP (£’000) 328.8 8.8 313.1 3.1 5.0% Private 123.7 3.7 124.0 4.0 (0.2%) Affordable 288.9 8.9 275.2 .2 5.0% Total 437.8 .8 504.5 4.5 (13.2%) JV 24

PRIVATE AVERAGE SELLING PRICE FY18 FY17 Units ASP (£000) Units ASP (£000) Central London 357 357 1,02 023.9 351 351 720. 0.3 Outer London 342 586 86.4 521 521 554.5 4.5 699 99 809 09.8 872 621. 1.2 London total Regional total 12,740 40 302 02.4 12,431 431 291. 1.5 Total private 13,439 439 328 28.8 13,303 303 313. 3.1 30 June 2018: 145 Central London private, wholly owned units remaining FY19 guidance: ASP to reduce due to less Central London product 25

DELIVERING MARGIN IMPROVEMENT 21% 20.7% 20.0% 20% Margin improvement despite Central London • 19.0% 18.9% headwinds 19% New sites driving margin improvement • 18% 17.7% 17.2% Some underlying sales price inflation and build cost • 16.8% 17% inflation 15.8% 16% 15.3% 15% 14% 13.0% 13% Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 Gross Margin Operating Margin 26

OPERATING MARGIN BRIDGE 19.0% Increase Decrease 10bps 18.5% 110bps (40bps) 18.0% (30bps) 17.5% 17.7% 17.0% 17.2% 16.5% 16.0% 15.5% - 15.0% FY17 Regional new sites Regional legacy & traded Central London trading Admin, commercial & FY18 starting trading, mix & out sites adjusted items other 27