Half Year Results

25/02/2015 Archive

BARRATT DEVELOPMENTS PLC

Half Yearly Financial Report for the six months ended 31 December 2014

First half housing completions at highest level in six years

Completion volumes¹ increased by 12.5%
Significant step up in the rate of site openings, with nearly 100 new sites (including JVs) opened in the half year
Build cost pressures moderated as the supply of materials and labour increased
Land market remains attractive with good supply of high quality new development opportunities
Disciplined approach has increased ROCE2 by 740 basis points to 21.6% for the 12 months to 31 December 2014

	Half year ended 31 December 2014	Half year ended 31 December 2013	Change
Total completions (including JVs) ³	6,971	6,195	+12.5%
Revenue	£1,576.3m	£1,264.9m	+24.6%
Profit from operations	£224.1m	£139.5m	+60.6%
Operating margin⁴	14.2%	11.0%	+320bp
Profit before tax	£210.2m	£120.4m	+74.6%
Basic earnings per share	17.0p	9.5p	+78.9%
Interim dividend per share	4.8p	3.2p	+50.0%
ROCE²	21.6%	14.2%	+740bp

Outlook

Strong start to the second half with 279 (2014: 285) net private reservations per week over the last eight weeks resulting in 0.71 (2014: 0.76) net private reservations per active site per week
Total forward sales including JVs as at 22 February 2015 up by 17.5% to £2,275.3m (23 February 2014: £1,936.1m)
Group expected to have net cash of between £50m and £100m as at 30 June 2015
Interim dividend payment of 4.8 pence per share (2014: 3.2 pence per share)
Capital Return Plan expected to return a total of 97.0 pence per share over the three years to November 2017⁵

Commenting on the results Mark Clare, Group Chief Executive of Barratt Developments PLC said:

“Since 2009 we have committed to invest over £4 billion in land for new housing and this is now paying off. Housing completions were up over 12% during our first half and are running at the highest level for six years, supporting over 12,000 suppliers and subcontractor companies. Over the next six months we plan to open a further 90 sites (including JVs) that will deliver another 13,500 new homes over their lifetime.

Our investment programme and the improvements to the business have driven a significant step up in our financial performance in the past year including a 75% increase in profit before tax. Our disciplined approach to land investment, delivering high quality homes and driving efficiency across the business, means we are well on our way to hitting our FY17 targets of a gross margin of at least 20% and a return on capital employed of at least 25%.”

Includes joint venture (‘JVs’) completions in which the Group has an interest
Return on capital employed (‘ROCE’) is calculated as earnings before interest, tax and operating exceptionals for the 12 months to December divided by average net assets adjusted for goodwill and intangibles, tax, cash, loans and borrowings, retirement benefit assets/obligations and derivative financial instruments
Unless otherwise stated all numbers exclude joint ventures
Operating margin is profit from operations divided by revenue
All final dividends and the special cash payment programme are subject to shareholder approval

The Half Yearly Financial Report contains certain forward-looking statements about the future outlook for the Group. Although the Directors believe that these statements are based on reasonable assumptions, any such statements should be treated with caution as the future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

There will be an analyst and investor meeting at 9.00am today at Deutsche Bank, 1 Great Winchester Street, London, EC2N 2DB. The meeting will be broadcast live on the Barratt Developments corporate website, www.barrattdevelopments.co.uk. A listen only function will also be available.

Please dial:

UK: 0800 9531287

International: +44 (0) 1452 560297

Conference ID: 74817397

The Half Yearly Financial Report for the six month period ended 31 December 2014 is available from today, 25 February 2015, on the Barratt Developments corporate website, www.barrattdevelopments.co.uk via the following address: www.barrattdevelopments.co.uk/barratt/en/investor/results

Further copies of the announcement can be obtained from the Company Secretary’s office at:

Barratt Developments PLC, Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire, LE67 1UF.

For further information please contact:

Barratt Developments PLC
David Thomas, Group Finance Director	020 7299 4896
Susie Bell, Head of Investor Relations	020 7299 4880
For media enquiries, please contact:
Barratt Developments PLC
Patrick Law, Group Corporate Affairs Director	020 7299 4892
Maitland
Liz Morley	020 7379 5151

Group Chief Executive’s statement

Overview

The housing market has remained strong with continued growth in the number of transactions and pricing during the period. Consumer demand for new build properties has been robust across all our regions supported by the delivery of nearly 100 new sites (including JVs), a recovering mortgage market and the Government's Help to Buy (Equity Loan) scheme (‘Help to Buy’).

We have continued to focus on improving every aspect of our operational performance. Completions increased by 12.5% in the six month period compared with the prior year to 6,971 (including JVs) (2013: 6,195) with the intent of delivering a higher proportion of completions in the first half. There was a 5% increase in site numbers (including JVs) at 31 December 2014 compared to 31 December 2013, driven by our land investment strategy and our success in securing planning. Total average selling price (‘ASP’) increased by 8.5% to £229,200 and private ASP was up by 12.4% to £253,200.

To deliver sustainable shareholder value we continue to operate our successful business model of targeted land buying and effective planning, outstanding design, construction excellence and operational efficiency backed by innovative marketing and industry leading customer service.

Our disciplined approach to driving business performance has delivered a 320 basis point increase in operating margin and a 74.6% increase in profit before tax in the first half. During the period we continued our focus on increasing ROCE and for the 12 months to 31 December 2014 we saw an improvement of 740 basis points to 21.6%.

We have medium term targets of a minimum gross margin of 20% and a minimum ROCE of 25% by FY17 and are making good progress towards meeting them.

The Board is pleased to announce an interim dividend of 4.8 pence per share (2013: 3.2 pence per share). This is the second payment of our Capital Return Plan6 which is expected to return a total of £962m to shareholders by way of £562m7 of ordinary dividends and £400m of special cash payments by November 2017.

The housing market

The housing market remained strong during the period with housing transactions increasing by 6%, representing around 80% of the 2007 figure8. External indices showed house price inflation moderated, with market house price inflation of around 3% in the six months⁹.

First time buyers have continued to return to the market and the number of first time buyer completions has reached a seven year high10.

The market has been supported by improved mortgage lending conditions leading to an expansion of mortgage products and more competitive rates for borrowers. As a result the affordability index, which measures mortgage payments as a percentage of income, is at a 20 year low¹¹.

Lending to buyers in the new build sector has continued to strengthen with new providers entering the market. We continue to work with a broad set of lenders through our approved brokers to ensure that our customers have access to a wide range of mortgage products.

Help to Buy remains highly attractive to customers buying new build homes and a third (2013: 29%) of our total completions utilised the scheme. Overall our net private reservation rate was 0.58 (2013: 0.67) per active site per week in the half year. The sales rate in the prior year was exceptionally high following the initial launch of Help to Buy.

All final dividends and the special cash payment programme are subject to shareholder approval
Based on Reuters consensus estimates of earnings per share of 43.0p for FY15, 50.9p for FY16 and 54.8p for FY17 as at 23 February 2015 and applying a three times dividend cover in line with previously announced policy, and 991,943,159 shares as at 31 December 2014.
Source: HMRC seasonally adjusted UK Property Transactions Count, December 2014
Source: Halifax House Price Inflation Index, December 2014 (Issued 8 January 2015)
Source: Halifax First-Time Buyer Review, January 2015
Source: Office of National Statistics, Q3 2014

Group Chief Executive’s statement (continued)

We have seen improvements in the housing markets across all regions in the period. In London, our business continues to see strong demand across its portfolio of developments, with site launches at Enderby Wharf in Greenwich and Nine Elms Point in Vauxhall enjoying strong sales. The geographical spread and breadth of product range remain key strengths of Barratt London.

Investing in housing supply

With housing demand remaining strong, we have continued to invest, in a disciplined way, to increase housing production. There remains a long term housing shortage of all tenures that can only be addressed through an additional supply of housing; we remain committed to playing our part in addressing this issue.

Over the last three years we have:

Built more than 40,000 homes of which over 7,000 were affordable homes sold to registered providers
Increased completions by 27% over the period
Approved the investment of £3bn in almost 55,000 plots of land
Invested in employees, including 540 new apprentices, trainees and graduates

We have increased our rate of site openings, launching 96 (2013: 81) new developments (including JVs) in the first half. As at 31 December 2014 the Group operated from 399 (2013: 380) active sites (including 14 JV active sites (2013: 9)), and we expect to see further controlled growth in site numbers going forward. We expect to open a further 90 sites (including JVs) in the next six months including Hollygate Park, the former Cotgrave colliery in Nottinghamshire; Baggeridge Village in Staffordshire, built on the former Baggeridge brickworks; Brooklands in Milton Keynes; and The Chocolate Works in York, the re- development of the former Terry’s chocolate factory.

Our financial results

Total completions (including JVs) were up by 12.5% in the period to 6,971 units (2013: 6,195 units). The strong uplift in affordable completions in the half reflects the high level of new site openings, with the affordable housing typically delivered towards the start of a development.

Completions (units)	2014	2013	Variance
Private	5,563	5,202	6.9%
Affordable	1,149	751	53.0%
JV	259	242	7.0%
Total	6,971	6,195	12.5%

We have been successful in repositioning the Group to a more balanced delivery profile in terms of both revenue and profit, and given first half completions, we expect to be close to achieving our target of around 45% of completions in the first half, for FY15.

With the sales rate of 0.58 (2013: 0.67) net private reservations per active site per week in the period we expect to deliver 15,000 completions plus a further 700 JV completions in FY15.

Whilst delivering increased completion volumes we also remain focused on achieving the best possible prices for the homes we sell. Total average selling price (‘ASP’) increased by 8.5% in the period to £229,200 (2013: £211,200). Private ASP increased by 12.4% in the period to £253,200 (2013: £225,300) split broadly equally between changes in mix and underlying sales price inflation. Affordable housing ASP was £113,000 (2013: £113,800).

Operating profit increased by £84.6m to £224.1m (2013: £139.5m). Operating margin was up by 320 basis points to 14.2% (2013: 11.0%) reflecting the higher proportion of completions from newer higher margin land, growth in volumes, operational efficiencies, and the benefit of underlying house price inflation net of cost inflation.

In the half year, the Group’s share of JV profit was £15.6m (2013: £10.1m). We continue to make good progress on all JV sites and expect a high level of completions in the full year from our Queensland Road and Fulham Wharf developments, both Barratt London JVs with London & Quadrant Housing Trust.

Group Chief Executive’s statement (continued)

At 31 December 2014, we had a total of 14 active housebuild JV sites, of which six are in London. Our JVs have a total future gross development value of £3.1bn, the majority of which is expected to be delivered over the next 5 years.

Net finance charges increased to £29.7m (2013: £29.2m) reflecting higher non cash finance charges at £16.1m (2013: £15.0m).

Profit before tax increased to £210.2m (2013: £120.4m) and basic earnings per share increased by 79% to 17.0 pence per share (2013: 9.5 pence per share).

Net debt and land creditors

Net debt as at 31 December 2014 was £20.8m lower than in the prior year at £134.2m (2013: £155.0m). The increase of £207.3m from 30 June 2014 (net cash: £73.1m) reflects normal seasonal trends, the Group’s build programme, and the £70.2m paid for the FY14 final dividend in November. We expect that the Group will have net cash of between £50m and £100m as at 30 June 2015.

On 17 December 2014 the Group amended its financing agreements relating to the £700m revolving credit facility (‘RCF’), £100m term loan and $80m (£48m) private placement notes. This resulted in slightly improved commercial terms than in the original agreements. The RCF now extends to 17 December 2019 (previously 14 May 2018) and the step down in the facility from £700m to £550m is now extended to 29 December 2017 (previously 30 June 2016).

The Group will maintain an appropriate capital structure with land and long-term work in progress funded by shareholders’ funds and land creditors. The appropriate use of land creditors drives a higher ROCE and at 31 December 2014 represented 35% (2013: 37%) of our owned land bank. We continue to secure attractive deferred payment terms on land and expect land creditors as a proportion of the owned land bank to be maintained at around one-third for the full year.

Return on capital employed

The Group is focused on driving a significant increase in ROCE and for the 12 months to 31 December 2014 generated a ROCE of 21.6% (2013: 14.2%). We continue to make good progress towards our target of a minimum 25% ROCE for FY17.

Building profitability

In addition to stronger market conditions, the increase in our profitability has been driven by our successful land investment strategy, improvements in efficiency and the growing value of the high quality homes we build.

The transformation of our land bank continues and during the period 73% (2013: 60%) of completions were from more recently acquired, higher margin land.

Land and planning

Our disciplined approach to land acquisition continues and as at 31 December 2014 we had a land bank of

4.6 years (2013: 4.4 years) based on 12 months completions to 31 December 2014, totalling 68,947 plots (2013: 62,644 plots). We also held 4,439 plots (2013: 6,488 plots) of approved land and control c. 11,000 acres (2013: c. 10,500 acres) of strategic land. At 31 December 2014, our JVs had an owned and controlled land bank in which the Group had an interest of 6,904 plots (2013: 5,492 plots), of which 4,254 plots (2013: 4,699 plots) are in London.

The land market remains attractive across all regions and our strategy is to acquire high quality land in strong market locations, and to bring that land through to planning and into production. We continue to target a regionally balanced portfolio with a c. 4.5 year owned and conditionally contracted land bank. As such, we expect to approve a total of c. 16,000 plots in the full financial year (FY14: 21,478 plots). In the last six months we have agreed to purchase £373.1m (2013: £538.9m) of land totalling 7,242 plots (2013: 11,394 plots).

Group Chief Executive’s statement (continued)

We are focused on securing our future land pipeline through the acquisition of strategic land options. We have increased our rate of approval on strategic land and expect to convert c. 20,000 plots from strategic land into the owned land bank over the next three years. We are targeting 20% of our annual completions to be from strategic land by 2017 and are making good progress, achieving 16% (2013: 9%) of total completions from strategic land during the first half.

We have strict land investment criteria. All land approvals are required to meet or exceed our minimum hurdle rates of 20% gross margin and a 25% ROCE¹² without building in assumptions of price inflation.

On the 108 sites that we have acquired and completed since 2009 we have achieved an average gross margin of 21%, and an average site ROCE of 38%.

Reflecting our success with planning over the past 12 months we are very well positioned, with 97% of expected FY16 completions (2013: 92% of FY15 completions) having outline or full planning consent.

Driving value

We are continuing to use the outstanding quality and the location of our homes to ensure that we maximise value. Private ASP on completions increased by 12.4% during the six month period to £253,200 (2013: £225,300).

We have successfully increased the proportion of larger family homes we sell in higher value locations and the proportion of apartments outside London fell to 11.4% (2013: 14.7%) of our private completions.

Costs and efficiency

The well publicised materials shortages, in particular of bricks and blocks, has eased and has had only a limited effect on the Group’s costs and supplies.

A shortage of skilled labour, particularly bricklayers, continues to affect the industry, and has resulted in increased costs. In recent months we believe the effect has moderated as more labour has returned to the industry and better production management has reduced our peaks of activity.

Our operating model of building a high proportion of standardised products, strong supplier relationships and centralised procurement has served us well. 85% of material costs for standard housing projects from floor slab up continue to be covered under centralised procurement contracts ensuring the lowest possible cost and consistency of quality and delivery from our supply chain to our 27 divisions. We source 75% of our materials within the UK with a further 15% sourced from the EU being assembled in the UK. We currently support around 5,800 suppliers and c. 6,600 subcontractor companies.

Overall build cost inflation has been limited to low single digits and we continue to expect it to be c. 3 to 4% for FY15.

Improving efficiency remains our priority and we continue to focus on mitigating, as much as possible, any future material or labour cost increases. We have commenced work on a number of process reviews in key areas of the business including commercial, sales and marketing, and construction. Over the next three years, we expect these to increase further the efficiency of our operations, in part through a greater use of technology, reduce operating cost and deliver quality and service improvements to our customers.

Our priorities

To deliver a leading financial and operational performance we have put in place a clear set of priorities - Customer First, Great Places, Leading Construction and Investing in our People. Each of these priorities is supported by underlying business principles and has a clear work plan that will drive improvements across the business. By innovating in these areas and consistently applying best practice across the Group we will maximise sustainable returns.

Site ROCE on land acquisition is calculated as site operating profit (site trading profit less sales overheads less allocated administrative overheads) divided by average investment in site land, work in progress and equity share.

Group Chief Executive’s statement (continued)

Customer First

An important part of our strategy is to maximise customer preference by building high quality homes backed by outstanding service. We have retained our Home Builders Federation (‘HBF’) five star quality ranking. Over 90% of customers would recommend us to a friend.

We are closely matching developments with local demand and during the period following careful research we have introduced a new downsizer housing range that caters specifically for this growing market segment. We have also refreshed the David Wilson brand following our recent rebranding of both Barratt Homes and Barratt London.

We continue to maximise our online marketing capability and the majority of our leads are generated through this channel. We have reviewed our contact centre support services to enhance our ability to manage and process customer enquiries.

Great Places

Building great places requires the ability to secure the right land and deliver quality designs. Achieving a strong reputation for creating great places will create competitive advantages in terms of the land we secure and our ability to achieve the right planning consents.

Our operational land bank remains strong and during the year we made good progress in increasing our strategic land bank which now stands at c. 70,600 plots (2013: c. 60,950 plots).

Our reputation as a public sector partner with the ability to handle complex sites continues to be a competitive advantage for the Group. During the period, 27% (2013: 14%) our land approvals were from this source.

In terms of design, we continue to use the Building for Life process, the HBF/Design Council Standard, to drive good design on all our new developments. During the period we received confirmation of 16 Building for Life Awards, bringing our total awards to date under the scheme to 23. We have more Building for Life accredited sites than all of the other housebuilding companies combined.

Leading Construction

Our building processes are essential to the efficiency of the organisation and underpin the quality of the homes we build. We are investing to ensure that our build processes continue to innovate - driving up quality and reducing costs.

We are particularly pleased that 90 of our site managers won NHBC ‘Pride in the Job’ awards, an industry leading performance for the tenth consecutive year, and that 25 of them went on to win ‘Pride in the Job’ seals of excellence, with five winning regional awards.

With growing labour shortages and demands for higher environmental standards we are continuing to explore the use of alternative building techniques described as Modern Methods of Construction. In the short term we are increasing the number of components that are manufactured offsite including roofing, joists and cavity wall systems. We are also trialing factory constructed interior pods and panels.

Investing in our People

Attracting and retaining a high quality labour force is now one of the largest constraints on the industry. During the period we made substantial progress in terms of our apprentice and graduate recruitment. In 2013 we set a target to recruit 1,100 graduates, apprentices and interns over three years. Thus far we have recruited 452 graduates, apprentices and interns since September 2013 and in addition we currently have 60 students on our Foundation Degree course in conjunction with Sheffield Hallam University with a further 20 starting during 2015.

During 2014 our graduate scheme was voted the best in the UK (all sectors) in the Job Crowd’s ‘Top Large Companies for Graduates to Work For’ awards, and first in Property and Housebuilding. We were named a Top 100 Apprenticeship Employer for the third time.

We are currently piloting a Regional Academy within our East Region; the main aim being to increase the skills of existing workers, attract apprentices and outside sector recruits, and re-skill former construction workers to help address current and future skills shortages, as well as increasing diversity more generally within the sector.

Health and Safety

The recovery in housebuilding with increased site openings, gearing up of production and shortages of skilled workers has placed increased pressure on site managers and workers, and increased the risk of accidents on sites. To help to address these challenges, we have enhanced our Safety, Health and Environment system and launched a series of initiatives to remind workers of the need for constant vigilance and compliance with our procedures. We have also had our safety system independently reviewed to ensure that it remains industry leading. We continue to seek to improve site safety and ensure that there is a ‘safety first’ culture across our sites.

Dividend

The Board is pleased to announce an interim dividend of 4.8 pence per share (2013: 3.2 pence per share) which is the second payment of our Capital Return Plan. This dividend, represents one third of the expected dividend for the financial year, based upon the full year dividend being covered three times by consensus earnings. It will be paid on 20 May 2015 to all shareholders on the register on 24 April 2015.

Our medium term Capital Return Plan combines the ordinary dividend together with a special cash payment programme. Under the special cash payment programme we anticipate proposing a special cash payment of £100m with our FY15 results payable in November 2015, followed by a special cash payment of £125m proposed with our FY16 results payable in November 2016, and a special cash payment of £175m proposed with our FY17 results payable in November 2017.

We therefore expect to return around £962m of cash through ordinary dividends and special cash payments to our shareholders between November 2014 and November 2017, which equates to a total of 97.0 pence per share, based upon 31 December 2014 share capital for future payments.

Capital Return Plan ^A	Ordinary dividend £m	Special cash payment £m	Total £m	Total pence per share
Paid
November 2014	70	-	70	7.1
Proposed payment
Year to November 2015	142 ^{B, C}	100	242	24.4 ^C
Year to November 2016	169 ^{B, C}	125	294	29.6 ^C
Year to November 2017	181 ^{B, C}	175	356	35.9 ^C
Total proposed payment	492 ^{B, C}	400	892	89.9 ^C
Total Capital Return Plan	562	400	962	97.0 ^C

A All final dividends and the special cash payment programme are subject to shareholder approval. The first special cash payment will be subject to shareholder approval at the Annual General Meeting in November 2015 and subsequent special cash payments will be subject to shareholder approval.

B Based on Reuters consensus estimates of earnings per share of 43.0p for FY15, 50.9p for FY16 and 54.8p for FY17 as at 23 February 2015 and applying a three times dividend cover in line with previously announced policy.

C Based upon 31 December 2014 share capital of 991,943,159 shares for proposed payments.

Current trading and outlook

The sales performance across the Group has been strong for the first eight weeks of 2015, with net private reservations per week of 279 (2014: 285), resulting in average net private reservations per active site per week of 0.71 (2014: 0.76).

Our total forward sales (including JVs) as at 22 February 2015 were up 17.5% on the strong prior year figures at a value of £2,275.3m (23 February 2014: £1,936.1m), equating to 10,740 plots (2014: 9,408 plots).

	2015		2014		Variance (£m)
	£m	Plots	£m	Plots	%
Private	1,377.5	5,239	1,323.2	5,139	4.1
Affordable	439.6	3,914	424.9	3,923	3.5
Sub total	1,817.1	9,153	1,748.1	9,062	3.9
JV	458.2	1,587	188.0	346	143.7
Total	2,275.3	10,740	1,936.1	9,408	17.5

We expect full year completion volumes for the Group to be around 15,000, plus around 700 completions delivered through our JV portfolio.

We are confident in the outlook for the Group and expect to deliver a strong performance for the full financial year and make further significant progress towards achieving our medium term targets.

Mark Clare
Group Chief Executive
24 February 2015

Principal risks and uncertainties

The Group’s financial and operational performance and reputation is subject to a number of potential risks and uncertainties, which could have a material impact on the Group’s performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Directors do not consider that the process of risk management and the principal risks and uncertainties have changed since the publication of the Annual Report and Accounts for the year ended 30 June 2014. A detailed explanation of the relevance to the Group’s strategy and mitigation of the risks outlined below can be found on pages 38 to 41 of the Annual Report and Accounts for the year ended 30 June 2014, which is available at www.barrattdevelopments.co.uk.

Economic environment, including housing demand and mortgage availability

Changes in the UK and European macroeconomic environments, including unemployment, flat economic growth, buyer confidence, availability of mortgage finance particularly for higher loan to values including Government backed schemes, the ability of purchasers to repay shared equity loans, interest rates, competitor pricing, or falls in house prices or land values, may lead to a fall in the demand for houses which in turn could result in impairments of the Group’s inventories, goodwill and intangible assets.

Land purchasing

The ability to secure sufficient consented land at appropriate cost and quality to provide profitable growth.

Liquidity

Unavailability of sufficient borrowing facilities to enable the servicing of liabilities (including pension funding) and the inability to refinance facilities as they fall due, obtain surety bonds, or comply with borrowing covenants. Furthermore, there are risks to management of working capital such as conditional contracts, build costs, joint ventures and the cash flows related to them.

Attracting and retaining high calibre employees

Inability to recruit and/or retain employees with appropriate skill sets or sufficient numbers of such employees.

Availability of raw materials, subcontractors and suppliers

Shortages or increased costs of materials and skilled labour, the failure of a key supplier or the inability to secure supplies upon appropriate credit terms could increase costs and delay construction.

Government regulation and planning policy

Inability to adhere to the increasingly stringent and complex regulatory environment, including planning and technical requirements affecting the housing market and regulatory requirements more generally.

Construction and new technologies

Failure to identify and achieve key construction milestones, due to factors including the impact of adverse weather conditions, the failure to identify cost overruns promptly, design and construction defects, and exposure to environmental liabilities which could delay construction, increase costs, reduce selling prices and result in litigation and uninsured losses. There are also risks associated with climate change and the use of new technology in the build process e.g. materials related to carbon reduction.

Joint ventures and consortia

Large development projects, some of which involve joint ventures or consortium arrangements and/or commercial developments, are complex and capital intensive and changes may negatively impact upon cash flows or returns.

Health and safety

Health and safety breaches can result in injuries to employees, subcontractors and site visitors, delays in construction/increased costs, reputational damage, criminal prosecution and civil litigation.

Information technology (‘IT’)

Failure of the Group’s IT systems, in particular those relating to surveying and valuation, could adversely impact the performance of the Group.

Return to all news