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    04/09/2024 Archive

    BARRATT DEVELOPMENTS PLC

    Annual Results Announcement for the year ended

    30 June 2024 Solid delivery in a challenging market, well positioned for FY25

    Commenting on the full year results David Thomas, Chief Executive of Barratt Developments PLC said:

    “We are pleased to have delivered total home completions at the upper end of our expectations for the year, despite the challenging backdrop. I am grateful to our skilled and dedicated teams of employees, sub-contractors and suppliers for continuing to deliver high quality homes that people want to live in. We were delighted to complete the acquisition of Redrow plc in August and are now working constructively with the CMA to finalise competition clearance so that we can begin the integration process.

    Whilst demand continues to be sensitive to mortgage affordability, and reduced land buying activity during the past two years has had a near-term impact on the number of outlets we are operating from, we are well-positioned to meet the strong underlying demand for new homes of all tenures in the UK. We welcome the Government’s proposed reforms of the planning system as one of the key levers to increase housebuilding, drive economic growth and tackle the chronic undersupply of high-quality, sustainable homes.”

    £m unless otherwise stated1,2

    Year ended 30 June 2024

    Year ended 30 June 2023

    Change

    Total completions (homes)3

    14,004

    17,206

    (18.6%)

    Revenue

    4,168.2

    5,321.4

    (21.7%)

    Alternative performance measures:4

    		      

    Adjusted gross profit

    689.0

    1,130.4

    (39.0%)

    Adjusted profit before tax

    385.0

    884.3

    (56.5%)

    Adjusted gross margin

    16.5%

    21.2%

    (470 bps)

    Adjusted operating margin

    9.0%

    16.2%

    (720 bps)

    Adjusted basic earnings per share (pence)

    28.3

    67.3

    (57.9%)

    Statutory results:

    		      

    Gross profit

    509.5

    974.9

    (47.7%)

    Profit before tax

    170.5

    705.1

    (75.8%)

    Gross margin

    12.2%

    18.3%

    (610 bps)

    Operating margin

    4.2%

    13.3%

    (910 bps)

    Basic earnings per share (pence)

    11.8

    53.2

    (77.8%)
           

    ROCE4

    9.5%

    22.2%

    (1,270 bps)

    Net cash4

    868.5

    1,069.4

    (18.8%)

    Total ordinary dividend per share (pence)

    16.2

    33.7

    (51.9%)

    Tangible net asset value per share (pence)

    452

    467

    (3.2%)

    Highlights

    • Total home completions of 14,004(3) (FY23: 17,206), at the upper end of our expected range for the year, but 18.6% lower than FY23, reflecting the lower private order book entering FY24 and lower average outlet numbers during the year.
    • Maintained industry leadership in build quality, customer service and sustainability demonstrated through:
      • 20th consecutive year of achieving more NHBC Pride in the Job Awards than any other housebuilder;
      • 15th consecutive year of receiving the maximum HBF 5 Star customer satisfaction rating; and
      • Our membership of CDP’s Climate Change A List for Leadership, one of fewer than 365 companies globally.
    • Adjusted gross profit of £689.0m (FY23: £1,130.4m), mainly reflecting lower home completions and average selling prices, reduced margin due to site based fixed cost levels and build cost inflation.
    • Adjusted profit before tax of £385.0m (FY23: £884.3m), slightly ahead of our interim expectations, reflecting home completion delivery at the upper end of the guided range.
    • Adjusted items relating to costs associated with legacy properties of £192.1m (FY22: £179.2m) and acquisition-related transaction costs of £22.4m (FY23: nil), resulted in reported profit before tax of £170.5m (FY23: £705.1m).
    • Strong balance sheet with net cash at 30 June 2024 of £868.5m (30 June 2023: £1,069.4m), after dividend payments of £270.6m, legacy properties remediation spend of £91.5m, and a further reduction in land creditors.
    • ROCE declined to 9.5% (FY23: 22.2%), reflecting the decline in profitability in the year.
    • In line with our stated policy, final ordinary dividend per share of 11.8p (FY23: 23.5p) which, together with the interim dividend of 4.4p (FY23: 10.2p), results in total ordinary dividend for the financial year of 16.2p (FY23: 33.7p).
    • Completion of the acquisition of Redrow which, subject to obtaining CMA clearance, will create an exceptional UK housebuilder and positions the business well for future growth.

    Current trading

    We entered FY25 with a solid forward sales position and as at 25 August 2024 we were 42%(5) forward sold with respect to private wholly owned home completions for FY25 (27 August 2023 for FY24: 45%(6)).

    The net private reservation rate per active outlet per average week from 1 July 2024 through to 25 August 2024 was 0.58, (FY24: 0.42), including a contribution of 0.03 (FY24: 0.02) from the private rented sector and other multi-unit sales.

    Outlook

    Whilst the housing market remains subdued due to affordability constraints, we welcome the Government’s proposed reforms of the planning system as key to both unlocking economic growth and tackling the chronic undersupply of new homes. Underlying demand in the UK is strong and we look forward to working with Government and wider stakeholders to deliver the new homes, of all tenures, the country needs.

    We were delighted to complete the acquisition of Redrow plc in August 2024 and are working constructively with the CMA to obtain competition clearance. As a combined group, we have created a leading British housebuilder focused on quality, service and sustainability which will deliver more homes across Great Britain than the two companies on a stand-alone basis, and we will also deliver significant cost synergies from the combination.

    As outlined in our trading update of 10 July 2024, given the profile of land acquisition over the past 24 months, we expect to see a short-term reduction in average outlets which will result in the delivery of 13,000 to 13,500 homes in FY25. As new outlets come into production in the latter part of the year and early FY26, we expect average sales outlet numbers in FY26 to be ahead of FY24 levels.

    Although the macro backdrop remains challenging, particularly demand sensitivity to current mortgage pricing and a lack of higher loan to value mortgage availability we have a strong balance sheet with significant net cash and a solid forward sales position, which allows us to enter FY25 with confidence.

    1. Refer to Glossary for definition of key financial metrics.
    2. Unless otherwise stated, all numbers quoted exclude JVs.
    3. Including JVs in which the Group has an interest.
    4. In addition to the Group using a variety of statutory performance measures, it also measures performance using alternative performance measures (APMs). Definitions of APMs and reconciliations to the equivalent statutory measures are detailed in the Glossary and Definitions. Net cash definition in Note 11.
    5. Our forward sold position with respect to FY25 private home completions is based on the mid-point of wholly owned completions guidance at 12,650 (13,250 total completions less 600 JVs) and assumes high teens affordable home completion mix in FY25.
    6. Our forward sold position with respect to FY24 is based on actual wholly owned private completions for the year (10,666 homes).

    Note on forward looking statements:

    Certain statements in this announcement may be forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Accordingly undue reliance should not be placed on forward looking statements. Unless otherwise required by applicable law, regulation or accounting standards, the Group does not undertake to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.

    There will be a results meeting presentation and Q&A session at the UBS Auditorium 5 Broadgate, London, EC2M 2QS at 9.00am today.

    The presentation along with Q&A will also be webcast live. Please register and access the webcast using the following link: https://broadcaster-audience.mediaplatform.com/event/66b9f3f60bfcce733acb432e

    An archived version of the webcast will also be available on our website later this afternoon and further copies of this announcement can be downloaded from the Barratt Developments PLC corporate website at www.barrattdevelopments.co.uk or by request 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:

    Analyst / investor enquiries

    		  

    Mike Scott, Chief Financial Officer

    07881 327 748

    John Messenger, Group Investor Relations Director

    07867 201 763

    Media enquiries

    Tim Collins, Group Corporate Affairs Director

    020 7299 4874

    Brunswick

    Jonathan Glass / Rosie Oddy

    020 7404 5959

    The Group's next scheduled announcement of financial information is the AGM trading update on 23 October 2024.

    Barratt Developments PLC LEI: 2138006R85VEOF5YNK

    Chair’s Statement

    Making sustainable living a reality, creating strong communities

    Since taking over as Chair on 30 June 2023, I have met many of our stakeholders, including employees, customers, shareholders, supply chain partners and sub-contractors.

    It is evident that we have a strong culture and a desire to ensure colleagues can develop to their full potential within a diverse, safe and inclusive workplace and we are fully committed to delivering high-quality homes to our customers whilst protecting the environment.

    Colleagues across the business are passionate and helped in the development and launch, earlier this year, of our new purpose: “Making sustainable living a reality, building strong communities”. Our new purpose is also supported by refreshed values which reflect the ever-changing needs of our stakeholders, the environment and our desire to lead the future of housebuilding. Input was also sought from external stakeholders to help shape our new purpose and values.

    Our performance

    Barratt has delivered a solid operational performance over the past 12 months, at the upper end our expectations against a tough trading backdrop encompassing political, economic and interest rate instability. Importantly, we have done so whilst maintaining our industry-leading quality, customer service and sustainability performance.

    Our balance sheet remains strong, with net cash of £868.5m, and provides the financial strength and flexibility to ensure we can manage and deliver the optimal integration of the Redrow business, whilst maintaining a positive and proactive approach to organic growth opportunities.

    I am incredibly proud of the external recognition we have received over the past 12 months:

    • We were awarded the Home Builders Federation (HBF) five-star status for the 15th year in a row, making us the only national housebuilder to have achieved this.
    • Our site managers secured 89 NHBC Pride in the Job awards, again more than any other housebuilder for a record 20th year.
    • We maintained our position as the only UK housebuilder on the CDP Climate Change A List for Leadership, one of fewer than 365 companies worldwide.

    Sustainability

    We have continued to deliver against our Building Sustainably framework which is designed to drive positive change for nature, places and people. This is enabling us to drive innovation, reduce costs and enhance our competitiveness.

    The housebuilding industry’s impact on climate change makes it imperative that we continually scrutinise and challenge the ways in which we operate and reduce our environmental impact. The successful opening of our new Oregon Timber Frame manufacturing facility near Derby has significantly expanded our capacity to build more homes using timber frame and will help towards meeting the requirements of the Future Homes Standard and reduce on-site labour requirements. It will also deliver benefits to the environment by reducing the embodied carbon used in build, and through thermal efficiency, reduce emissions generated when the home is occupied.

    Industry collaboration

    I am also pleased that Barratt is playing a leading role in the Future Homes Hub with David Thomas, our Chief Executive, chairing the organisation. The Future Homes Hub is enabling collaboration between Government, housebuilders, supply chain partners, mortgage providers, valuers and planners to deliver both the country’s legislated targets to 2050 and our own carbon emission reduction targets to 2040.

    Board changes

    Nigel Webb joined the Board as a Non- Executive Director in October 2023, bringing a wealth of property, construction and land experience to the Board.

    Subject to obtaining CMA clearance of the Redrow acquisition, Matthew Pratt, Geeta Nanda and Nicky Dulieu will join the Board in the coming months. Matthew will join as Chief Executive Officer, Redrow and Group Executive Director. Geeta and Nicky will join as independent Non-Executive Directors.

    Shareholder returns

    The Board paid an interim dividend for FY24 of 4.4 pence per share (FY23: interim dividend 10.2 pence per share) and is pleased to recommend a final FY24 dividend of 11.8 pence per share (FY23: final dividend of 23.5 pence per share) in line with our dividend policy of maintaining cover at 1.75 times adjusted earnings per share. Subject to shareholder approval, the final dividend will be paid on 1 November 2024 to shareholders on the register at the close of business on 27 September 2024. The total proposed dividend for FY24, including the interim dividend, is 16.2 pence per share (FY23: 33.7 pence per share) – lower than last year reflecting the reduction in adjusted basic earnings per share.

    The Board regularly reviews its approach to capital allocation. With the Redrow acquisition completed, but CMA clearance outstanding, we will assess the capital requirements for the enlarged group taking into account current market conditions, our obligations with respect to building safety and our desire to be active in the land market. We will provide an update on our policy along with our first half results in February 2025.

    CMA Market Study and CMA investigation

    The CMA completed its Housing Market Study and issued its final report in February 2024. The CMA drew clear and fair conclusions on how the planning system has negatively impacted the housebuilding industry and its detrimental impact on new housing delivery across the country over successive decades.

    On 26 February 2024, the CMA also launched an investigation into suspected breaches of competition law, relating to the exchange of competitively sensitive information by eight housebuilders, including Barratt and Redrow. This investigation remains in its early stages and we continue to co-operate with the CMA.

    The future

    The housing market faces ongoing challenges. The current interest rate environment continues to impact mortgage affordability and the ability of many first-time buyers to unlock mortgage qualification through deposit savings. There also remain uncertainties around the speed and scale of future economic, employment and earnings growth, which will be key determinants on the future direction of consumer confidence and spending. We welcome the policy changes proposed by the new UK Government which suggest a real commitment to unlock the planning system, drive national targets for housebuilding growth and support the industry in delivering the homes, across all tenures, the country so desperately needs.

    The Board recognises that it needs to manage Barratt through what may be another challenging year for the market whilst delivering a smooth, efficient and effective integration of the Redrow business once CMA clearance has been obtained. We remain focused on managing the risks and challenges within our control, whilst ensuring we are in the best possible position to create long-term value for all our stakeholders. Our operating disciplines, forward order book and strong financial position provide us with the platform to adjust to changes in the operating and political environment in the year ahead.

    Finally, on behalf of the Board, I would like to express our thanks to all our colleagues, subcontractors and our supply chain partners for their commitment to the Group, both over the last year and as we look forward to the exciting opportunities ahead bringing together the Barratt and Redrow businesses. I look forward to meeting many more colleagues across the enlarged Group in the coming year.

    Caroline Silver Chair

    3 September 2024

    Chief Executive’s Statement

    Introduction

    The past year has proved challenging for both the housebuilding industry and homebuyers, with cost-of-living pressures, much higher mortgage rates and limited consumer confidence having a negative impact on housing market activity. Against this backdrop, we have remained focused on delivering high-quality, energy-efficient and sustainable homes across the country. We have driven revenue to support our business as well as our supply chain partners to position us to meet the growing shortfall in new homes supply. We have been rigorous in controlling our build activity, managing our cost base and being highly selective in our land buying, whilst ensuring we continue to lead the industry through our unwavering commitment to build quality, customer service, social responsibility and sustainability.

    We also launched our new purpose during the year which is anchored around sustainability and building strong communities. Our new values are focused on our customers, on doing it right and doing it together, and making things happen. This framework formalises the culture and principles which have driven our success to date.

    The acquisition of Redrow

    Against this challenging backdrop, we have proactively considered opportunities to strengthen our business and give us an even stronger platform from which to deliver sustainable growth and meet housing needs throughout Great Britain. This process culminated in the announcement in February 2024 of the proposed acquisition of Redrow plc, which completed on 21 August 2024. We are working with the CMA to address the findings of its Phase 1 competition review which is expected to complete by mid-October 2024. We are excited about the opportunities for the combined group, which creates an exceptional UK housebuilder with strong quality, customer service and sustainability credentials.

    Performance summary

    We delivered a solid operating performance in FY24, at the upper end of our expectations, supported by the commitment, flexibility and determination of our employees, sub-contractors and supply chain partners, including:

    • Total home completions of 14,004 (FY23: 17,206).
    • 16.5% adjusted gross margin (FY23: 21.2%) and adjusted gross profit of £689.0m (FY23: £1,130.4m). The reduction in adjusted gross profit reflected:
      • stabilisation of customer demand at lower levels;
      • softening house prices;
      • ongoing, but moderating, build cost inflation; and
      • the operational gearing impact of lower home completions.
    • The impact of adjusting items, which reflected legacy property costs associated with building safety-related remediation activities resulted in a reported gross profit of £509.5m (FY23: £974.9m) and a reported gross margin of 12.2% (FY23: 18.3%).
    • Adjusted profit before tax of £385.0m (FY23: £884.3m).
    • Reported profit before tax, after deducting adjusting items, of £170.5m (FY23: £705.1m).
    • Maintained balance sheet strength with year-end net cash of £868.5m (FY23: £1,069.4m) after dividend payments of £270.6m (FY23: £360.0m), legacy property related cash expenditure of £91.5m (FY23: £32.9m) and a £33.9m reduction in land creditors (FY23: £226.9m reduction).
    • ROCE reduced to 9.5% (FY23: 22.2%) reflecting reduced profitability.

    Anticipating a more challenging backdrop, we set four strategic priorities in summer 2023 which supported our performance through FY24.

    Strategic Priorities - FY24 progress

    1. Driving revenue through the targeted use of incentives for private purchasers and increased sales into the private rented and social housing sectors:
      • Price deflation slowed on our underlying private home reservations, from 5.6% in H1 to 2.7% in H2
      • Private rented sector home completions increased by 306.2% to 1,048 homes (FY23: 258 homes).
      • Multi-unit sales, including those to registered providers, increased by 46.9% to 767 homes (FY23: 522 homes).
    2. Controlling build activity and managing our costs:
      • We aligned our site-based construction activity to lower reservations, with an average of 257 equivalent homes (including JVs) constructed each week in FY24, 20.2% below the 322 average equivalent homes, built weekly, in FY23.
      • We reduced our headcount by a cumulative 12% through to 30 June 2024 from 30 September 2022, delivered through our ongoing recruitment freeze. This compared with a 6% cumulative reduction from 30 September 2022 through to 30 June 2023.
    3. Maintaining our highly selective approach to land buying:
      • We approved 58 net site additions, equating to 12,439 plots in the year with activity weighted to the second half of the year.
      • We continued to rigorously apply our long-standing hurdle requirements for new land investment, at a minimum gross margin of 23% and ROCE of 25%.
      • Through our long-standing relationships, and industry-leading reputation, we have concluded important deals with both public and private landowners, which will deliver significant development pipelines over the coming years.
    4. Leading the industry around customer service, build quality, social responsibility and sustainability:
      • We maintained our five-star HBF customer satisfaction status with the latest rolling annual recommend score of 93%, the highest score for UK national housebuilders.
      • We also maintained our industry leadership position among the major UK housebuilders, registering the lowest NHBC Reportable Items per inspection at 0.13 through FY24 (FY23: 0.16).
      • The Barratt Foundation reached a significant milestone, delivering more than £10m of funding for local and national charities since its launch in 2021.
      • We were recognised, once again, as the leading national sustainable housebuilder by NextGeneration and received their Gold Award for the eighth consecutive year.

    These priorities supported our solid operational and financial performance during FY24, protected our balance sheet and our s trong financial position, and strengthened our credentials with our customers, building materials suppliers, landowners and wider stakeholders.

    Responsible development

    Keeping people safe

    Our first priority is always to provide a safe working environment for all of our employees and subcontractors, and we are committed to achieving the highest industry health and safety standards.

    We were deeply saddened by the tragic accidental death of a sub-contractor at one of our sites in November 2023.

    During FY24, despite concerted campaigns to raise health and safety issues, our Injury incidence rate increased to 302 (FY23: 289) per 100,000 workers whilst we improved our SHE audit compliance to 97% (FY23: 96%).

    We remain focused on improving our site-based processes and procedures, challenging unsafe behaviours and building on our health and safety performance through on-site induction training, safety awareness for all personnel and developing our site managers’ vigilance to health and safety risks on site.

    Fire safety and external wall systems

    We continue to make progress with the assessment and remediation of buildings covered under the Building Safety Self Remediation Terms and Contract, to which the Group became a signatory on 13 March 2023.

    Around 53% of our portfolio under review has been assessed under the Fire Risk Assessment of External Walls (‘FRAEW’) and has an appropriate PAS 9980 assessment in place. Through inspections and testing in FY24, we identified a further 26 buildings requiring potential remedial works (FY23: 65 buildings) and 42 buildings were either successfully remediated or were assessed as not requiring remediation (FY23: 10 buildings). As a result, at 30 June 2024, we have an ongoing portfolio of 262 buildings across 92 developments under review (30 June 2023: 278 buildings across 89 developments).

    Reflecting our commitment to dealing with these buildings as quickly and efficiently as possible, of the 262 buildings under review at 30 June 2024, 137 were in progress at tender, site mobilisation or remediation stage.

    In the first half of the year, we recognised a charge of £56.4m to reflect higher than expected tender returns and cost increases on buildings being remediated by the Building Safety Fund. These generally related to buildings with atypical features and costs in relation to the remaining buildings are broadly in line with our initial estimates.

    During the second half of the year we recognised a charge of £64.5m, following an initial £5.0m for fire testing recognised in the first half, in relation to a development of three buildings which we had previously disclosed as a contingent liability. We have been unable to develop a testing methodology under the FRAEW for these buildings due to the unique unitised wall system in place, which we now assess will need to be replaced. The provision is based on the current expected method of remediation, designed to minimise disruption to residents, though due to the unique nature of the building, this estimate may vary as the process is further developed.

    After incorporating the additional adjusted item charges for fire safety and external wall systems of £125.9m, as well as with remediation costs incurred during FY24 and time discounting adjustments, the provision in relation to fire safety and external wall

    systems totalled £628.1m at 30 June 2024 (30 June 2023: £535.9m). This reflects our current best estimate of the extent and future costs of remediation work required and we will continue to review these estimates as we gather data and complete the remediation of buildings within our portfolio.

    We signed the Scottish Government’s Safer Building Accord on 31 May 2023. The process to agree a legally binding, long-form contract to give effect to the Principles of the Accord remains in progress with Homes for Scotland and the Scottish Government. As a result of this uncertainty, our existing provisions for Scottish buildings have been made on a consistent basis with England and Wales but are subject to change depending on the outcome of the contract negotiations.

    Reinforced concrete frames

    We continued our remediation activities for concrete frame design and construction during FY24. Work on our developments proceeded in line with our plans and remediation is well advanced.

    During FY23, structural issues were identified at two developments where reinforced concrete frames were designed for us by a different engineering firm to that employed at Citiscape. Having initially disclosed these as contingent liabilities, following further analysis during the second half of FY24, we now expect that remediation work will be required. Based on our current assessment of the required work, a further £56.6m has been provided and an additional £7.6m recognised as our share of the costs within joint ventures in respect of these two developments.

    After the additional charge of £56.6m, as well as the costs incurred on concrete frame remediation during FY24 and time discounting adjustments, the provision for reinforced concrete frames totalled £102.2m at 30 June 2024 (30 June 2023: £76.4m) and reflects our current best estimate of the scope and future costs of remediation work required.

    Building safety considerations are paramount in prioritising and scheduling remediation works. Our dedicated Building Safety Unit manages our ongoing building safety remediation programme, which we expect to deliver over the next five years.

    Charitable giving and the Barratt Foundation

    As part of our purpose, building strong communities, we recognise we have a role to play both as a business and through the efforts of our employees in the communities in which they live and work across the country. We work with the Barratt Foundation to focus our charitable work on improving our impact across the communities we support. Thanks to Barratt Developments’ core funding, every pound raised by the Foundation is available for charitable purposes.

    The year has been an exceptional one for charitable giving, thanks to the Barratt Foundation and the fundraising and volunteering efforts of individuals and teams across the Group.

    In November 2023, the Barratt Foundation celebrated a significant milestone: it has now delivered more than £10m of funding to more than 1,000 local and national charities since it launched in January 2021. In FY24, we donated £6.4m (FY23: £6.3m) to charitable causes through the Barratt Foundation and employee fundraising.

    Our impact and reach

    In FY24, the Foundation has:

    • supported over 500 charities, with more than £4m funds donated;
    • supported around 400 local communities through funding and employee volunteering; and
    • positively changed the lives of over 90,000 children and young people through national partnerships and grants.

    The Barratt Foundation’s activities – three areas of charity support:

      1. Our national charity partners

        The Foundation supports national charities that positively affect the lives of children, young people and those most disadvantaged in communities across the UK. During FY24, the Foundation donated over £2.5m to national partnerships and grants, including our six national charity partners: Whizz Kidz, Place2Be, The Outward Bound Trust, Bookmark Reading, Magic Breakfast and Street League.

      2. The Barratt and David Wilson Community Fund

        Through this fund, our divisions and Group offices can donate £1,500 each month to different local charities and organisations that really matter to them and which enhance the lives of people living in their area. Reflecting the additional challenges that communities face in the winter, we also provided a Winter Support Fund in FY24. Our divisions and teams supported 66 selected small and local charities such as hospices, homeless charities and food banks, which each received a donation of £3,000.

      3. Match funding for our employees fundraising activities

        In FY24, our employees and divisions raised a record £1.4m (FY23: £1.3m) to support local or national charities and good causes, with an additional £0.6m (FY23: £0.8m) from the Barratt Foundation, which provides matched funding of up to £12,000 per division and up to £1,000 per employee. We also partner with Payroll Giving in Action so our employees can make regular, tax-free donations to their chosen charities – UK or international.

    Street League

    Street League, our new national charity partner, uses the power of sport to support young people into employment. With operations in 35 locations spanning London to Edinburgh, the charity works with unemployed 16 to 24 year olds who face tough life challenges and personal barriers. Many of the deprived areas where Street League operates are the most disadvantaged communities in the UK, where youth unemployment is three times the national average and can exceed 20%.

    The Foundation’s initial donation of £300,000 in FY24 is targeted to fund at least 700 young people into employment, and is vital to enhancing their life chances, social inclusion and sense of worth and wellbeing.

    Employee volunteering

    A key component to our charitable activities is our employee volunteering, where we made significant strides in FY24, notwithstanding a 100% increase in volunteering days during FY23. In FY24, our employees gave up 1,935 days to volunteer with projects in their local communities, an advance of 73% on FY23. The Big Barratt Cleanup in April 2024 was our first national volunteering campaign with CleanupUK. It gave our employees the opportunity to take part in a local litter pick to help transform their local community. More than 430 volunteered their time to take part in 25 Big Barratt Cleanup events, removing more than 500 bags of rubbish and litter from local landscapes – equivalent to 2.7 tonnes.

    Working together with our charity partners to help the Group deliver for our customers

    As part of our drive to create inclusivity and build stronger communities, we aim to improve and enhance the play areas in our developments for children and young people with physical disabilities and neurodiverse conditions.

    Through Whizz Kidz and the generous help of families supported by the charity, our designers were able to research, develop and test our newly enhanced play area designs for children with different needs. Specifically designed play areas and tailored play area equipment are set for rollout at various Barratt developments around the UK in FY25.

    Operational review

    Reservation activity

    Our net private reservation rate in FY24 was 0.58 (FY23: 0.55). The 5.5% improvement across FY24 reflected a pick-up in activity as mortgage interest rates moved lower from August 2023. Month-to-month reservation rates thereafter showed relative stability, but with a greater degree of sensitivity to mortgage interest rate movements. This sensitivity reflected the mortgage affordability and qualification challenges faced by prospective homebuyers, the majority of whom depended on access to mortgages.

    Net private reservation rate

    H1

    H2

    FY

    FY24 – reported private reservation rate

    0.48

    0.69

    0.58

    Of which: PRS and other multi-unit sales

    0.06

    0.10

    0.08

    Private reservation rate excluding PRS and other multi-unit sales

    0.42

    0.59

    0.50

    FY23 - reported private reservation rate

    0.44

    0.65

    0.55

    Of which: PRS and other multi-unit sales

    0.05

    0.13

    0.10

    Private reservation rate excluding PRS and other multi-unit sales

    0.39

    0.52

    0.45

    Change FY24 vs FY23

    		      

    Reported private reservation rate

    9.1%

    6.2%

    5.5%

    Of which: PRS and other multi-unit sales

    20.0%

    (23.1%)

    (20.0%)

    Private reservation rate excluding PRS and other multi-unit sales

    7.7%

    13.5%

    11.1%

    Reservation activity during the year reflected stabilising demand from first-time buyers. This, despite many first-time buyers finding it hard to both raise deposits, given cost of living pressures, and secure income and affordability qualification, given the higher mortgage rates available. Rental cost inflation has, however, also been a continuing challenge for first-time buyers and a key driver for those in rental accommodation looking to move into home ownership as and when mortgage qualification metrics are met.

    There was resilient demand from existing homeowners with accrued equity in their current homes. Reservation activity from existing homeowners did, however, require additional sales support with 16% (FY23: 11%) of the Group’s reservations in the year utilising part-exchange. At the end of the year we held 120 unsold part-exchange homes, lower than the 146 held at the end of the prior year.

    Increased sales into the private rented sector, along with additional multi-unit sales to registered providers of social housing and others, partly mitigated the weakness in traditional private reservations, supported our construction activity and ensured more of our homes were made available for both the private rented and affordable homes markets. The net private reservation rate into the private rented sector, along with additional multi-unit sales contributed 0.08 (FY23: 0.10) to the reservation rate in the year.

    Sales outlets

    During the year, we operated from an average of 346 active sales outlets (FY23: 367), including 9 active JV sales outlets (FY23: 8). Whilst average sales outlets were ahead in the first half, the decline in active outlets through the second half reflected two factors:

        • A conscious decision within the Group to slow site openings to ensure our new sales outlets were launched to create maximum market impact. Notwithstanding this decision, as well as ongoing planning delays, we launched a total of 57 new sales outlets (including JVs) in the year (FY23: 104); and
        • Whilst the average life of our sales outlets has been extended by the lower private sales rate experienced since Autumn 2022, we saw a significant proportion of these “extended” outlets close, as they sold through from late 2023 through to June 2024.

    At 30 June 2024 we were operating from 326 active sales outlets (FY23: 389), including 10 JV outlets (FY23: 9).

    As previously announced, in FY25 we expect average active sales outlets will reduce by approximately 9% due to lower land buying activity in 2022 and 2023 and the annualised impact of sales outlets closing in the second half of FY24. We expect this reduction to be temporary with significant net sales outlet growth in Q4 FY25 and throughout FY26 supporting average sales outlets for FY26 above FY24 levels.

    Home completions

    Total home completions including JVs reduced by 18.6% in FY24 to 14,004 (FY23: 17,206). Our reduced private forward order book at the start of FY24, in combination with the ongoing rate of weekly reservation activity, crystallised a 24.2% decline in our private wholly owned home completions (excluding homes for PRS and other multi-unit sales). Our deliberate decision to seek growth through PRS and other multi-unit sales limited the decline in total home completions, with PRS home sales advancing 306.2% and other multi-unit sales completions increasing by 46.9%.

    The affordable housing share of wholly owned home completions reduced to 20.8% (FY23: 23.9%). Many registered providers are facing operational and financial constraints due to the higher interest environment, as well as increased scrutiny on maintenance, repair and improvement of their existing housing portfolios. As a result, registered providers are less eager to secure additional affordable housing through the homes we deliver through Section 106 arrangements. In FY25 we anticipate the affordable housing share of wholly owned completions will be in the high teens.

    Completions (homes) (2)

    FY24

    FY23

    Change

    Private excluding PRS and other multi-unit sales

    8,851

    11,676

    (24.2%)

    PRS

    1,048

    258

    306.2%

    Other multi-unit sales

    767

    522

    46.9%

    Total private

    10,666

    12,456

    (14.4%)

    Affordable

    2,802

    3,922

    (28.6%)

    Wholly owned

    13,468

    16,378

    (17.8%)

    JV

    536

    828

    (35.3%)

    Total(3) (including JVs)

    14,004

    17,206

    (18.6%)

    The average selling price (ASP) of wholly owned completions reduced by 4.0% to £306.8k (FY23: £319.6k). The total private ASP reduced by 6.4% to £343.9k (FY23: £367.6k).

    Within our total private completions, we completed 1,048 PRS homes (FY23: 258). The ASP of these PRS completions was £285.1k (FY23: £280.9k) with the ASP movement reflecting the diverse geographic spread of the homes completed in the period.

    We also completed 767 other multi-unit home sales (FY23: 522) including home completions for registered providers, meeting their demand for additional homes using Government grant funding, and incremental to affordable homes provided under Section 106 requirements. The ASP of other multi-unit sales completions was £292.3k (FY23: £284.7k), with geographic mix accounting for the larger part of the ASP movement.

    The ASP of our affordable home completions reduced by 1.1% to £165.3k (FY23: £167.2k), reflecting a reduced proportion of completions from our London operations offset by site mix.

    We expect the affordable ASP in FY25 will be similar to that reported in FY24.

    Our customers

    Back in 2014, we first introduced Barratt Developments’ vision. It cemented our commitment to our customers by setting down our aims and ambitions: “To lead the future of housebuilding by putting customers at the heart of everything we do”. Over the past decade, this vision has been a constant: driving our actions and behaviours, our culture and our decision making – but first and foremost, it prioritised our unwavering commitment to our customers.

    Yet, we recognise that the needs of our many customers are constantly changing, as well as the communities in which we operate and play a key role in creating, and that we have an increasing responsibility to protect our environment. Through engagement with customers, our employees and teams, as well as our wider stakeholders, we have formulated our new purpose: “Making sustainable living a reality, building strong communities.”

    This evolution in our purpose is supported by our new values centred on “We do it for our customers” and “We do it right”. These values reflect not only the unwavering focus we have on our customers, but also a broadening of the expectations set by our customers and upon which we ourselves should aspire to meet and exceed.

    We put our customers and their new homes, as well as their communities and local environment, at the heart of everything we do.

    Great choice for potential customers

    Through our existing housebuilding brands, we offer a wide range of homes for our customers: from one-bedroom apartments to five and six-bedroom homes. Barratt London is our award-winning operation within the M25. Barratt Homes and David Wilson Homes operate across Great Britain outside London. Depending on the size of the development and local market dynamics, they operate single-branded sites or as dual-branded locations, creating greater variety and choice for potential homebuyers through development design, street scenes, house types and price points. As a result, dual-branded developments generate higher sales rates than those offering a single brand.

    During FY24, we operated with 252 developments on average across Great Britain: 97 developments under the Barratt Homes brand; 54 under the David Wilson Homes brand; and 101 dual-branded developments with both Barratt and David Wilson Homes. We are continually looking to enhance choices for our customers and increase the variety and diversity of our developments through our branded house types.

    The acquisition of Redrow, along with CMA approval, will support the further development of our portfolio of strong brands, with recognisable house types and reputations for great quality and customer service. It will also create greater choice for both Redrow and Barratt customers, accelerate the pace of housebuilding across our developments and is a key ingredient in making our land banks work efficiently for all stakeholders.

    Great service through the buying process and beyond

    We believe our industry leadership in customer service is fundamental to our success. We are the only major housebuilder to have been awarded the maximum five-star rating by our customers in the HBF Customer Satisfaction Survey for 15 consecutive years, with our latest customer satisfaction rating at 93%.

    We want our customers to receive the best possible service, not only throughout their home buying journey but also post-completion. We invest in training and workshops to enhance our service and our customers’ experience beyond the handover of their new home.

    New Homes Quality Code

    We operate under the New Homes Quality Code (the Code) as a registered developer with the New Homes Quality Board. Introduced in 2023, the Code covers the period from initial homebuyer enquiry through to completion and then two years post-occupation of the new home. It centres on fairness throughout the customer journey, and not simply the achievement of technical standards around build quality and defects. Since becoming a registered developer under the Code, there have been no adjudications required by the New Homes Ombudsman Service.

    New build advantages for our customers

    We are continually seeking to improve the energy and water efficiency, as well as the sustainability of our homes and adapting our home designs to respond to both changing homebuyer demands, as well as the Future Homes Standard and other changes to building regulations. We aim to build high-quality homes that optimise internal space, deliver excellent energy and water efficiency and, as a result, unlock lower lifetime costs for our customers.

    We actively promote the lower running costs and wider environmental benefits such as biodiversity features and transport connections of our homes across all our communication channels and in our sales centres. This is an increasingly important purchasing consideration for our customers. A typical Barratt or David Wilson house, built from June 2023 under latest Building Regulations, can unlock annual energy bill savings estimated at more than £2,570(5) annually when compared to an average existing house. In FY24 more than 99% of our home completions were EPC rated “B” or above, a level of energy efficiency shared by just 3.3%(6) of the existing housing stock.

    In addition, all of our homes are designed to a water use standard of 105 litres per person per day, creating the potential to reduce consumption by 25% when compared to the national average(7) and creating further cost savings for our homeowners.

    Green mortgage development reflecting new build advantages

    The financial and environmental advantages of new build homes have never been as significant as they are today, and we are committed to enhancing both the access and affordability of our new homes in partnership with both mortgage lenders and surveyors.

    Mortgage lenders, driven by their own sustainability initiatives, the growing recognition of future retrofit costs in relation energy efficiency for existing homes, and the scale of annual savings from new build home ownership, are increasingly engaging with the housebuilding industry around green mortgages.

    The surveying industry is critical in developing a consistent and enduring valuation framework that will allow the recognition of the financial and environmental advantages of high-quality, new build homes.

    As the leading national sustainable housebuilder, we have a dual approach to green mortgage development:

      • We work directly with mortgage lenders to develop enhanced mortgage products that recognise the advantages of our new build, energy-efficient homes. During FY24, Accord (The Yorkshire Building Society) joined The Leeds Building Society with the launch of a new green mortgage product. Both mortgage lenders recognise the advantages inherent in new energy efficient homes, and their mortgage products have the potential to unlock up to a 10% uplift in lending.
      • We collaborate with the wider industry and the Government, notably through the Future Homes Hub. Barratt’s Head of Mortgage Lender Relations also chairs the “Valuation Group”, which is considering how the value of sustainable benefits of new homes can be recognised in the mortgage valuation process.

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