Barratt Redrow plc

Hello and welcome to the Barrett Development's 2022 Interim Results Call. My name is Josh and I will be your coordinator for today's event. Please note that this conference is being recorded and for the duration of the call, your lives will be on listen only. However, you will have the opportunity to ask questions at the end of the call. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point, please press star 0 and you will be connected to an operator. I want to hand you over to your host, David Thomas, Group Chief Executive, to begin today's conference.

Thank you.

Thank you, and good morning, everyone, and welcome to our interim results presentation. I have with me this morning, as ever, Stephen, and also for the first time, Mike, our CFO. I'm going to start with an overview of our strong performance in the half, and then revisit our medium-term targets. Stephen will then take you through our operational performance and cover in more detail our really excellent build performance, as well as talking through build cost inflation and also the opportunities that we see the Gladman acquisition delivering. Mike will then cover off our strong financial performance over the period. And I will then return to review the industry fundamentals, the importance to us of sustainability, our position on building safety, and finally, looking at current trading and outlook. So turning first to slide three. Given the continued strength of the sales market, our results for the year are clearly going to depend on our build delivery. So it is really pleasing to report our excellent build performance, where despite the well-publicized industry supply chain challenges, we have grown our weekly build output by more than 14% year over year. Just as importantly, our site teams have delivered this step up while maintaining our industry-leading position in terms of both build quality and customer service. This excellent build performance and the continued momentum of our site has resulted in our completion guidance upgrade for FY22. I would just like to take a moment to express my thanks to our employees and our subcontractors, as well as all of our material suppliers who have helped us to generate such an excellent first half performance and position us so well for half two and beyond. We are also pleased to have completed the Gladman acquisition. Stephen will cover this in more detail. But we strongly believe that Gladman will be immediately accretive to earnings and will significantly enhance our strategic land credentials and capabilities in the short, medium, and long term. Our cash performance has been strong, and we have ended the half with 1.1 billion of net cash. And this is after a significant investment in land and working progress as well as the payment of the final dividend for FY21 of $223 million. I'm really delighted to announce the phased reduction in our dividend cover over the coming three years, with the cover reducing to 2.25 times in FY22, two times in FY23, and ultimately to 1.75 times in FY24. The interim dividend of 11.2 pence, which is up from 7.5 pence in the prior year, reflects this new policy. Looking now at slide four, which details our progress in the half year and our focus to the balance of FY22. Firstly, looking at home completions. As we guided, these are lower year on year, reflecting the return to a more normal seasonal phasing of completions. Our focus on the second half is on delivering the upgraded completion guidance, which will move completions above those delivered in FY19 when we were pre-pandemic. As you will all recall, We have the infrastructure to grow to 20,000 completions annually, and this remains our medium-term target. Our adjusted gross margin improved by 120 basis points to 25%. Our medium-term target remains unchanged and is centered on securing land at a minimum 23% gross margin. We're really delighted that through all of our actions and clearly against a strong market backdrop, we generated a return on capital employed at 26.8% over the last 12 months. This is 910 basis points ahead of the 17.7% generated in 2020 and above our minimum target So, I'm now going to hand over to Stephen, who will take you through more details around our operational performance in the half.