RESULTS PRESENTATION Half year ended 31 December 2017 21 February - PowerPoint PPT Presentation

RESULTS PRESENTATION Half year ended 31 December 2017 21 February 2018 Madden Gardens, Letchworth Garden City 1

Weaver View, Winsford David Thomas Chief Executive 2

SUMMARY Strong financial and operational performance in the first half Robust market fundamentals Operational improvements delivering margin benefits Disciplined volume growth with a focus on addressing supply-side challenges Delivering attractive cash returns Confidence in the business going forward 3

IMPROVING KEY FINANCIAL METRICS – DRIVING OPERATING MARGIN Achieved H1 17/18: 17.9%, +260bps since FY15 FY18 FY19 FY20 FY21 FY22 New Barratt housetypes New David Wilson housetypes Increased use of standard product Strategic land Five year warranty Show home lease back Zero P&L impact Full P&L impact 4

Steven Boyes Chief Operating Officer Saxon Gate, Stamford Bridge 5

STRONG SALES PERFORMANCE Average net private reservations per active outlet per week • Strong performance, in-line with the prior year H1 17/18 H1 16/17 Change • Group private sales rate of 0.68 Regional 0.67 67 0.66 1.5% • London sales rate lower – but still above regional • JV sales rate normalised London 0.86 86 1.20 (28.3%) Group 0.68 68 0.68 - JV 1.08 08 1.27 (15.0%) 6

COMPLETION GROWTH Completions • Regional completions at highest level for 10 years H1 17/18 H1 16/17 Change • London wholly owned completions significantly weighted to the second half Regional 6,782 782 6,630 2.3% • JV volumes on track London 162 152 6.6% Group 6,94 944 6,782 2.4% JV 380 80 (1) 398 (4.5%) 7 (1) Includes 225 completions in London (H1 16/17: 215)

COMPLETIONS ANALYSIS – BUYER TYPE 4% 4% 6% 6% 9% 9% 9% 9% • Similar profile to prior year 18% 18% 18% 18% • Affordable in-line; expect to be c. 20% for FY18 • Investors discouraged by tax changes 33% 33% 32% 32% 36% 36% 35% 35% H1 17/18 H1 16/17 Help to Buy Other private Affordable Part exchange Investor 8

PRICING TRENDS REMAIN POSITIVE Private completions average selling price (£’000) • Pricing benefiting from mix changes with H1 17/18 H1 16/17 Change some underlying house price inflation • Represents a full market mix and optimal use Regional 301. 1.7 286.0 5.5% of brands • Higher ASP sites rolled out in London London 793. 3.6 725.2 9.4% Group 314.6 296.4 6.1% JV 615. 5.7 621.7 (1.0%) 9

LAND MARKET Savills UK Residential Land Index (1) HOLDING PICTURE – CB Land prices continue to lag house price inflation 140 • Savills UK Residential Development Land Index Greenfield land SPEAKING TO PHIL BARNES House prices Excellent opportunities available nationally • 120 Increased use of standard product in regional business • 100 (100 = 2007 peak) Land approvals • 80 - H1 17/18: 13,263 - FY18e: 20,000+ 60 40 20 0 1997 2002 2007 2012 2017 (1) UK non-urban, greenfield land vs UK house prices (rebased) 10

LAND APPROVALS Lad adden en Gar arden en Villa lage, e, North th Yate te, , Avon 12 months 12 months - 1,965 plots / 213 acres Chang nge to Dec 17 to to Dec 16 to - Ideally located for the Bristol commuter and family markets, with excellent local amenities on the doorstep Site tes 118 118 115 2.6% Northsto towe we, , Longsta tanton, , South th Camb mbrid idges eshir ire - 453 plots / 34 acres - Located to take advantage of pent up demand in the Cambridgeshire area and support our new division Plot ots 26,498 498 18,682 41.8% Chape apel l Park, k, Oldmeldr meldrum, , North Scotla tland - 35 plots / 5 acres Avera erage ge plots ots per r 225 25 162 38.9% - Well located to provide family homes at affordable prices, site te with all amenities locally Media ian plots ts per site te 148 138 7.2% 11

LAND BANK – NATIONAL COVERAGE 3% 3% 6% 6% 94% 97% regional of plots business below £600k (1) (2) 94% 94% 97% 97% Regional London up to £600k £600k+ (1) Private owned and controlled land bank plots excluding JVs as at 31 December 2017 (2) Private owned land bank plots excluding JVs, in England only with selling price under £600k 12 Note: 31 December 2016: Regional: 93%, London: 7%, up to £600k: 94%, £600k+: 6%

LAND BANK – LONDON (1) 1% 5% 8% 14% 95% 91% of the London of the land bank is land bank is below now in Zones 3+ £1m 91% 81% Zones 3+ Zone 2 Zone 1 up to £600k £600k to £1m £1m+ (1) Private owned and controlled land bank plots excluding JVs as at 31 December 2017 Note: 31 December 2016: Zone 3+: 83%, Zone 2: 7%, Zone 1: 10%; up to £600k: 69%, £600k-£1m: 23%, £1m+: 8% 13

DRIVING OPERATING MARGIN - STRATEGIC LAND H1 17/18 FY17 H1 16/17 • T argeting 30% of completions from strategic land in the medium term Completions from strategic 28% 28% 25% 24% land (1) • Enhanced margin of c. 300 basis points • Strong closing acreage position 11,8 ,806 06 11,737 11,405 Acres held • Good geographic spread Number of locations 266 266 267 270 (1) On strategic land approved since 2009 versus ongoing land 14

DRIVING OPERATING MARGIN – PRODUCT Identified for new Barratt range ge Buildi ding g new Barratt range ge New product well received by customers and • 180 90 81 contractors 157 160 80 140 132 70 +19% +59% Improved layout coverage • 120 60 Number of new sites 51 Better for alternative methods of construction • 100 50 80 40 Completions in H1 17/18 • 60 30 - Barratt: 267 40 20 - All (1) : 269 20 10 0 0 Limited impact in FY18 • 15 (1) All includes: Barratt Homes and David Wilson main and Scottish ranges

CUSTOMER FIRST- WE PLACE CUSTOMERS AT THE HEART OF EVERYTHING WE DO Internal processes Customer journey Site management Quality assurance ‘Great Places’ design standards External measures HBF Customer Satisfaction survey NHBC Pride in the Job Awards National Supreme Awards First time buyers Wayne Lamb and Kelly McNab purchased a house at The Spinnings, Preston NHBC quality checks 16

CUSTOMER FIRST- OUR ACHIEVEMENTS 74 NHBC Pride in the HBF 5 star Job Awards – more than customer any housebuilder for 13 th year recommendation award – eighth Steve Wood, CEO NHBC with h Henry consecutive year Patecki cki, , winner of the 2017 NHBC Natio iona nal l Supreme Award in the Large Buil ilder category 17

MANAGING THE COST ENVIRONMENT Materials Labour • Labour inflation has eased • Modest inflationary pressure • Simplifying build • Some material pressures e.g. timber, insulation • Increased use of offsite manufacturing • 100% pricing fixed to June 2018 • 1/3 rd of pricing fixed for FY19 • Apprenticeship schemes Build costs expected to increase by c. 3-4% in FY18 Similar levels expected in FY19 18

Northwalls Grange, Taunton STRONG PERFORMANCE Continued strong sales rate • Positive pricing trends • Successfully manage our cost base • Increased delivery from strategic land • Excellent land opportunities • Continue to drive operational improvements • Delivering industry-leading build quality and customer service • 19

Jessica White Chief Financial Officer Lauder Gardens, Strathaven 20

KEY HIGHLIGHTS H1 17/18 H1 16/17 Change £m (unless otherwise stated) 1,988.0 988.0 1,816.2 9.5% Revenue 413.2 3.2 375.2 10.1% Adjusted gross profit (1) 20.8% .8% 20.7% 0.1ppts Adjusted gross margin (1) 355.2 5.2 324.0 9.6% Operating profit 17.9% 9% 17.8% 0.1ppts Operating margin 342.7 2.7 321.0 6.8% PBT 27.1p 1p 25.9p 4.6% Earnings per share 165.9 5.9 196.7 (15.7%) Net cash 28.3% 3% 27.0% 1.3ppts ROCE 21 (1) Gross profit £410.2m (H1 16/17: £375.2m), gross margin 20.6% (H1 16/17: 20.7%)

REVENUE SUMMARY H1 17/18 H1 16/17 Change £m (unless otherwise stated) Completions 5,715 15 5,561 2.8% Private 1,229 229 1,221 0.7% Affordable 6,94 944 6,782 2.4% Total completions 18% 18% 18% - % Affordable 380 380 398 (4.5%) JV 7,324 24 7,180 2.0% Total completions (inc JV’s) ASP (£’000) 314.6 4.6 296.4 6.1% Private 124.7 4.7 115.3 8.2% Affordable 281.0 1.0 263.8 6.5% Total 494.4 4.4 528.8 (6.5%) JV 22

OPERATING MARGIN BRIDGE 20.0% Increase Decrease 19.5% 19.0% 18.5% 18.0% 17.5% 17.0% 16.5% 16.0% 15.5% 15.0% H1 16/17 Regional legacy & Regional new sites Zones 1 & 2 London Admin Commercial including H1 17/18 traded out sites starting trading, mix & trading adjusted item other 23

BALANCE SHEET 31 December 2017 31 December 2016 £m Goodwill and intangible assets 892 92.2 892.2 Investment in joint ventures and associates 228 28.3 254.6 Gross land bank 3,229. 229.0 2,801.3 Land creditors (1,18 185. 5.4) 4) (961.6) Net land bank 2,043 043.6 1,839.7 Land creditor % 36.7% 7% 34.3% WIP 1,704. 04.4 1,673.8 Net cash 165. 5.9 196.7 Trade payables (328 28.2) (324.6) Other working capital (391 91.4) (434.5) Other net assets / liabilities (47.1) 1) (87.6) Net assets 4,267. 67.7 4,010.3 24