Last updated 7 September 2022
Barratt Developments Plc
Established in Newcastle in 1958, Barratt Developments is the largest UK housebuilder by volume and builds homes for all market sectors, plus homes for rent and shared ownership and is a significant player in brownfield development and urban regeneration.
Barratt operates through two national brands for house building – Barratt Homes and David Wilson Homes. It also has a regional brand, Ward Homes, which operates in Kent and the South East. The group’s commercial property development business, Wilson Bowden Developments, focuses on retail, leisure, office, industrial and mixed-use schemes. Barratt sells nearly 18,000 homes a year and turns over more than £5 billion annually.
Financials
In the 12 months year to June 2022, turnover rose 9.5% to £5,267.9 million (2021: £4,811.7 million)
At a statutory level, profit from operations fell 20.3% to £646.6 million (2021: £811.1 million) and pre-tax profits fell at a similar rate to £642.3 million £2021: £812.2 million), but at an adjusted level the performance was far stronger. Profits before rose 14.8% to £1,054.8 million (2021: £919.0 million).
To view the financials for Barratt Developments plc, visit Companies House and use Company ID 00604574.
Operations
Housebuilding
In the year to June 2022, Barratt completed the sale of 17,908 units (2021: 17,243 units) at an average selling price of £302,000 (2021: £288,000). The focus is on private sales and the average private selling price increased 4.7% to £340,800 (2021: £325,500).
Private completions returned to near pre-pandemic levels of 13,327 units (2021: 13,134 units) as did affordable completions, which rebounded by 13.4% to 3,835 units (2020: 3,383 units).
Commercial
Barratt London and Wilson Bowden Developments works on mixed-use regeneration projects in the private sector and also public schemes, including a development with the London Borough of Hounslow. Commercial development revenue has been falling in recent years but in the 12 months to June 2022 there was a rebound to £87.6. million (2020: £21.7 million).
Joint ventures
The group has a JV parent entity with London and Quadrant called BDWZest, which focused on large-scale complex opportunities mainly in central London but is exiting the capital.
In the year to June 2022, completions from joint venture rose to 746 units (2021: 726 units) but profits fell to £23.3 million (2021: £27.7 million).
Glenigan Data
Glenigan’s data shows that Barratt submitted 108 planning applications in 2021 (2020: 107) to build a total of 18,171 units (2020: 22,390) and was again ranked top in Glenigan’s ranking of the UK’s top housebuilders by planning activity.
Conclusion: Peaked?
The Covid-19 pandemic hit Barratt and the wider the UK housing market, but there has since been a strong rebound. After suspending the interim dividend in the immediate wake of the pandemic, along with all land buying, Barratt has swiftly returned to near normality and in the 2022 financial year adjusted profits before tax passed the £1 billion mark for the first time.
Despite this, with the cost of living crisis biting in the UK, a target of pushing annual completions up to 20,000 a year has been downgraded. In 2023, the management expect completions to edge up around 3% to between 18,400 and 18,800 homes a year despite having the capacity to deliver 21,500 units a year.
The group agreed to pay out a further £393 million to fund remediation of cladding problems spending on land rose to £1,036 million (2021: £745 million) and the owned and controlled landbank rose to 80,926 plots (2021: 77,642 plots). The current landbank represents a supply of 4.7 years at current completion rates but Barratt is aiming for a landbank of 3.5 years of owned and controlled plots.
Barratt is usually the housebuilder seeking to develop the largest number of new homes through the planning system according to Glenigan’s research. This was again the case in 2021, but the number of new homes that the group sought planning permission to build reduced by 19% despite a similar number of planning applications submitted. At 4.7 years, the length of the land bank remains well ahead of a target of 3.5 years with 1 year of controlled land.
The focus on housing remains but the group is seeking to build smaller developments. In 2021, the average planning submission contained 168 units (2020: 209). and 97% of units proposed were some form of house with the balance was made up of apartments (2019: 95% houses/5% apartments).
Moves to shift further towards modern methods of construction are increasing with the acquisition of timber frame business Oregon in June 2019. The focus has traditionally been in Scotland but is expanding into Wales and England and in 2022, 27% of Barratt’s completions used MMC including timber frame, large format block and offsite manufactured ground floor solutions and roof cassettes (2021: 25%).
Net cash slipped back to £1,138.6 million (2021: £1,317.4 million) but the order book remains strong at £3.8 billion and despite the prospect of increased interest rates hitting affordability, the management believe that the fundamentals of the housing market remains strong.
Record profits were achieved despite the end of a reduction in stamp duty and the end of the current iteration of Help to Buy but whether this can be surpassed given the wider economic instability in the UK and further afield remains to be seen.
Winning Work With Barratt Developments
Barratt has a wide network of suppliers and its procurement teams aim to create and maintain long-term partnering and open and honest, relationships. The company has a wide range of approved sub-contractors from whom its divisions can procure work but had, prior to the Brexit vote, been shifting towards more direct employment.
The group’s contractor and supplier agreements are implemented through national and local partnering frameworks, supplier workshops and training days. These events also facilitate knowledge sharing and the application of best practice.
The performance of the group’s suppliers is monitored through processes set out in a Quality Management System to ensure high standards. The group has a regional lead buyer at all 27 divisions and a strong focus on controlling costs. It continues to review its supply chain to create efficiencies by introducing new suppliers and altering build specifications. Barratt also works with the Supply Chain Sustainability School. Details on the group’s involvement can be found here.
Key Procurement Contacts at Barratt Developments
Group Procurement Director, Barratt Developments – John Adams
Tel: 0161 872 0161
Email: procurement@barrattplc.co.uk
Group Supply Chain Manager, Barratt Developments – Alex Pinnington
Tel: 0161 872 0161
Email: procurement@barrattplc.co.uk