More annual reports from Barratt Developments:
2023 ReportPeers and competitors of Barratt Developments:
The Berkeley GroupAnnual Report and Accounts 2021
B
a
r
r
a
t
t
D
e
v
e
l
o
p
m
e
n
t
s
P
L
C
A
n
n
u
a
l
R
e
p
o
r
t
a
n
d
A
c
c
o
u
n
t
s
2
0
2
1
Our purpose is to lead the future of
housebuilding by putting customers at the
heart of everything we do.
We are proud to lead the industry in both build quality and customer service. We are building the
homes Britain needs, creating jobs and supporting economic growth whilst delivering value for our
shareholders and other stakeholders.
Read more on our purpose and strategic priorities on page 04
Our third integrated report
We are committed to being a sustainable and responsible business. This is demonstrated in this integrated annual
report. Our focus is the connection of economic, environmental, social and governance matters to create and
preserve long term value for all our stakeholders.
For a detailed description of our approach to integrated reporting, go to the Appendix on page 181
Non-financial information statement
The information below is intended to help stakeholders understand our position on these key non-financial matters. We have considered
these non-financial matters and disclosed in the relevant sections, when determining what information should be included in the Annual
Report and Accounts, the information needs of different stakeholders and their relative importance as well as the relevant time horizons
in each matter. The following complies with the non-financial reporting requirements contained in sections 414CA and 414CB of the
Companies Act 2006.
Description of the
business model
Our business summary
Our business model
Social matters
Market review
Our sustainability
focus areas
Affordability
Employees
Development and training
02
10
Diversity
Wellbeing
Employee engagement
08
Gender pay gap
Board diversity
18
25
Human rights
Human rights
Third parties
30
32
32
32
32
79
33
50
Anti-bribery and corruption
Group policy
Working with suppliers
Environmental matters
Waste
Safeguarding the
environment
Greenhouse gas
emissions disclosure
33
33
29
19
21
Policy, due diligence
and outcomes
Risk management
Principal risks
Long term viability
statement
Audit Committee Report
56
58
67
85
Our policies
All of our public policies, codes
and standards are available on
www.barrattdevelopments.co.uk
Notice regarding limitations on Directors’ liability
under English Law
Cautionary statement regarding
forward-looking statements
Under the Companies Act 2006, a safe harbour limits the liability
of Directors in respect of statements in, and omissions from, the
Strategic Report contained on pages 02 to 67 and the Directors’
Report contained on pages 68 to 114. Under English Law, the
Directors would be liable to the Company (but not to any third party)
if the Strategic Report and/or the Directors’ Report contains errors
as a result of recklessness or knowing misstatement or dishonest
concealment of a material fact, but would not otherwise be liable.
Strategic Report and Directors' Report
Pages 02 to 67 inclusive, and the Non-financial information
statement above, comprise the Strategic Report, and pages 68
to 114 inclusive comprise the Directors' Report, both of which
have been drawn up and presented in accordance with, and in
reliance on, English Company Law. The liabilities of the Directors in
connection with the reports shall be subject to the limitations and
restrictions provided by such law.
The Group’s reports including this document and written
information released, or oral statements made, to the public in
future by or on behalf of the Group, may contain forward-looking
statements. Although the Group believes that its expectations
are based on reasonable assumptions, any statements about
future outlook may be influenced by factors that could cause
actual outcomes and results to be materially different. Nothing
contained in this Annual Report or on the Group’s website should
be construed as a profit forecast or an invitation to deal in the
securities of the Company.
Alternative performance measures
In addition to the Group using a variety of statutory performance
measures it also measures performance using alternative
performance measures (APMs). Definitions of the APMs and
reconciliations to the equivalent statutory measures are detailed on
pages 177 and 178. The definition of net cash is included in Note 5.1
of the Financial Statements.
Front cover: David Wilson Homes at Doseley Park, Shropshire.
Doseley Park’s Site Manager, Kirk Raine, was the 2020 Supreme Winner in the Large Builder category at the NHBC Pride in the Job Awards.
Our highlights
Our operational and sustainability highlights
5 STAR
HBF 5 STAR CUSTOMER
SATISFACTION
97%
HEALTH AND SAFETY
(SHE AUDIT COMPLIANCE)
(2020: 5 star)
(2020: 96%)
1.78
TONNES PER 100m2
CARBON INTENSITY
5.89
TONNES PER 100m2
WASTE INTENSITY
(2020 (restated): 1.80)4
17,243
TOTAL HOME
COMPLETIONS1
(2020: 12,604)
84.2%
EMPLOYEE
ENGAGEMENT SCORE3
(2020: 7.70)
343
AVERAGE ACTIVE
SALES OUTLETS2
(2020: 366)
4.7 YEARS
OWNED AND CONTROLLED
LAND BANK
(2019: 84.5%)
(2020: 6.7)
1.
2.
3.
4.
Total home completions, including JVs, were 17,243 (2020: 12,604) for the year. Private home completions
were 13,134 (2020: 9,568), affordable home completions were 3,383 (2020: 2,466) and JV home completions
in which the Group has an interest were 726 (2020: 570).
Including JVs.
Employee engagement survey deferred to October 2021 to cover response to hybrid working.
See page 173.
Our financial highlights
21.0%
GROSS MARGIN
(2020: 18.0%)
64.9p
BASIC EPS
(2020: 39.4p)
£812.2m
PROFIT BEFORE TAX
(2020: £491.8m)
23.2%
ADJUSTED GROSS MARGIN
(2020: 18.5%)
73.5p
ADJUSTED BASIC EPS
(2020: 40.5p)
28.3%
ROCE
(2020: 15.6%)
Contents
Strategic Report
Our business in summary
Our purpose and strategic priorities
Our targets
Chairman’s statement
Marketplace
Business model
Our business model in action:
Doseley Park
Chief Executive’s statement
Building Sustainably
Strategic priorities: Customer first
Strategic priorities: Great places
Strategic priorities: Leading
construction
Strategic priorities: Investing in
our people
Financial review
Key performance indicators
Section 172 statement
Stakeholder engagement
Risk management
Principal risks
Climate-related risk
Viability statement
Governance
Board of Directors
Executive Committee and Regional
Managing Directors
Corporate Governance report
Nomination Committee report
Audit Committee report
Safety, Health and
Environment Committee report
Remuneration report
Other statutory disclosures
Statement of Directors’
Responsibilities
Financial Statements
Financial Statements contents
Independent Auditor’s Report
Consolidated Income Statement
Consolidated Statement of
Comprehensive Income
Statement of Changes
in Shareholders’ Equity – Group
Statement of Changes in
Shareholders’ Equity – Company
Balance Sheets
Cash Flow Statements
Notes to the Financial Statements
Other Information
Greenhouse gas emissions
restatement
Five year record
Definitions of alternative performance
measures and reconciliation to IFRS
Glossary
Integrated reporting approach
Group advisers and
Company information
02
04
05
06
08
10
12
14
18
24
26
28
30
35
41
44
45
56
58
65
67
68
70
71
79
85
91
94
112
114
115
116
123
124
125
126
127
128
130
174
175
177
179
181
182
01
www.barrattdevelopments.co.ukStrategic Report
Our business in summary
Our homes
Our home completions (including JVs)
Our investment proposition
Developing high quality sustainable homes across Britain
where people want to live.
We are committed to
building high quality homes
and have been awarded
93 NHBC Pride in the Job
Awards on our sites in
2021, more than any other
housebuilder for
17 consecutive years.
Our customers
We put our customers first
and have a long-standing
commitment to quality and
customer service.
Our brands
We have three housebuilding
brands: Barratt Homes,
David Wilson Homes and
Barratt London. Commercial
developments are delivered
by Wilson Bowden
Developments.
Central
3,437
(2020: 2,240)
West
1,772
(2020: 1,380)
Completions by unit type
Completions by deal type
1 and 2 bedroom homes
3 bedroom homes
4 bedroom homes
5 and 6 bedroom homes
Flats London
2021 2020
13% 12%
34% 35%
33% 34%
3% 3%
5% 5%
Flats non-London
12% 11%
Scotland
1,852
(2020: 1,340)
Northern
2,859
(2020: 2,240)
East
3,645
(2020: 2,582)
London and Southern
3,678
(2020: 2,822)
Help to Buy
Part-exchange
Other private
Investor
Affordable
2021 2020
38% 35%
5% 11%
34% 30%
3% 4%
20% 20%
We have clear differentiators that underpin our investment proposition:
• We operate a fast build and sell model
and, as a result, aim to run one of the
shortest land banks in the industry.
• We maintain a resilient balance sheet
with a clearly defined and embedded
operating framework and a strong
focus on cash generation.
• We have a strong and experienced
workforce as well as a long established
and committed sub-contractor base,
who deliver high quality homes.
• Our build quality and customer service
are fundamental to our business.
We are the only major housebuilder
to be awarded a HBF 5 Star rating
for customer satisfaction for 12
consecutive years.
• We operate across Britain, diversifying
our business and managing risk.
• We are the leading sustainable
housebuilder operating nationally,
and our ambitious targets will help
support the low carbon and equitable
economic recovery.
Shorter owned
land bank
Strong balance
sheet and cash
generation
Highly
experienced
build and sales
teams
Quality and
service
Nationally
diversified
Leading in
sustainability
Rebuilding volumes
Disciplined growth in home
completions to current capacity of
20,000 homes.
Delivering margin improvement
Land acquisition at a minimum 23% gross
margin and optimising performance.
Attractive returns
2.5 times dividend cover.
Achieve a minimum ROCE of 25%
Our awards
5 Star award for 12 years
Only major national housebuilder
to achieve this
93 awards in 2021
More than any other housebuilder for
17 consecutive years
Large housebuilder of the year
Second year in a row,
three times in five years
96 accreditations including 23
outstanding awards
More awards than any other company
Gold award for 2020
Highest scoring national housebuilder
02
03
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Our purpose and strategic priorities
Our targets
↓ The team at our Whiteland Coast
site in Stonehaven, Aberdeenshire
Our purpose
To lead the future of housebuilding by putting customers at the heart
of everything we do.
We will achieve our purpose by continually innovating and applying best
practice across our four priorities:
Our strategic priorities
Customer
first
Great
places
Leading
construction
Investing in
our people
Read more on page 24
Read more on page 26
Read more on page 28
Read more on page 30
Guiding all of our actions are our principles, through which we create a more
successful and sustainable business to deliver long term value for our shareholders,
partners, communities and society:
Our principles
Keeping
people safe
Being a trusted
partner
Putting health and safety
first by committing to
the highest industry
standards. Embedding
health and safety as a
core value for which we
are all responsible.
Building meaningful,
long-term relationships
that make us the
developer of choice for
our partners. Innovating
with our supply chain
to drive efficiency
and sustainability,
whilst meeting our
customers’ needs.
Building strong
community
relationships
Engaging fully with
local communities
and customers
when creating our
developments. Ensuring
we create places
where our customers
aspire to live and local
communities thrive.
Safeguarding the
environment
Minimising the
environmental impact
of our operations and
supply chain while
increasing the energy
and resource efficiency
of our homes. Seeking
to enhance habitats,
biodiversity and local
environments across all
of our developments.
Ensuring the
financial health
of the business
We maintain financial
discipline across
all aspects of our
operations. This
enables us to deliver
our operational targets
whilst maintaining
our industry leading
standards of customer
and build quality.
We uphold these principles through our culture (see page 74) and the sustainable commitments
we make to our stakeholders (see page 18).
Our operational and sustainability targets
HBF 5 STAR
CUSTOMER SATISFACTION
94%
HEALTH AND SAFETY MONITORING
COMPLIANCE
29%
REDUCTION IN SCOPE 1 + 2
EMISSIONS BY 2025 (FROM 2018
LEVELS)
100% RENEWABLE
ELECTRICITY IN OWN
OPERATIONS BY 2025
24%
REDUCTION IN SCOPE 3
EMISSIONS INTENSITY BY 2030
(FROM 2018 LEVELS)
ZERO CARBON
NEW HOUSETYPES IN USE
FROM 2030
NET ZERO
CARBON EMISSIONS ACROSS
DIRECT OPERATIONS BY 2040
5.67
TONNES PER 100m2
WASTE INTENSITY BY 2025
20,000
TOTAL HOME COMPLETIONS
30%
OF COMPLETIONS FROM
STRATEGIC LAND BY 2025
30%
OF COMPLETIONS USING MMC
BY 2025
3.5 + 1.0 YEARS
OWNED AND CONTROLLED
LAND BANK
Our financial targets
23%
LAND ACQUISITION MINIMUM
GROSS MARGIN
MINIMAL
YEAR END NET
INDEBTEDNESS
25%
MINIMUM ROCE
15% - 25%
LAND CREDITORS FUNDING OUR
OWNED LAND BANK
AVERAGE NET CASH
ACROSS THE FINANCIAL YEAR
2.5 x
DIVIDEND COVER
04
05
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Chairman’s statement
We continue to deliver operational
improvements throughout our business
alongside high quality, sustainable homes
and developments across the country
John Allan
Chairman
We have made huge progress
in our recovery from the impact
of COVID-19 and we remain
focused on our medium term
targets. We delivered 17,243
high quality new homes
(including JVs) across Britain in
2021, 36.8% ahead of last year
and almost back to the 17,856
homes we completed in 2019.
I would like to thank all our
employees, sub-contractors
and suppliers for their
dedication and commitment,
and for delivering our excellent
operational and financial
recovery.
Our employees
Our employees deliver our success.
The Board is always keen to understand
and respond to the views, concerns and
challenges of our people - and this has
never been more important than during
recent times. Our Workforce Forum has
continued to be pivotal in engaging with
our employees, particularly in respect of
future working arrangements. This has
helped inform the Board's view that, whilst
our offices will always remain important for
encouraging the collaboration and contact,
which is fundamental to the wellbeing,
creativity and effectiveness of our teams,
the remote ways of working, which we
implemented during the pandemic, will
enable us to be more flexible in the future.
Further details can be found on pages 46
to 47.
06
The physical and mental wellbeing of
our employees remains a priority for the
Board. We continue to introduce new ways
of supporting our employees whether they
are working from home, on site or in the
office. The Board also continues to monitor
the development of diversity and inclusion
as we seek to create an environment that
promotes equal opportunities for all.
Further details, along with our revised
statement in respect of Modern Slavery and
Human Trafficking, are included within the
Chief Executive’s statement on page 33.
Our culture
Our business has a strong culture and
belief in ‘doing the right thing’ and taking
pride in the work that we do and the way in
which we operate, whilst remaining focused
on the needs of our customers and other
stakeholders.
The strength of our culture throughout
the Group has been shown through the
speed, scale and the quality of our recovery
notwithstanding the continuing challenges
created by COVID-19. We continue to seek
ways of further developing and improving
the positive culture of our business.
The Board recognises that the culture of
the Group is driven by its leadership and
continuously strives to lead by example.
Further details can be found on page 74.
Sustainability
We have continued to develop our
sustainability strategy, particularly with
regards to climate change, driven by
our belief that this is the right thing to
do for the Group’s long term prospects,
our stakeholders and wider society.
We are committed to leading our industry
in both quality and sustainability and are
striving to reduce our carbon emissions
and the environmental impacts of the
homes that we build whilst seeking
to create biodiversity net gain across
our developments. Creating a positive
environmental, social and economic legacy
for future generations is core to quality
housebuilding. This is embedded in our
business through our purpose to lead the
future of housebuilding by putting our
customers at the heart of everything we do.
By doing business sustainably we create
value for our stakeholders. However, we
recognise that, against the backdrop of
climate change pressures, we need to
accelerate change in both our operations
and our supply chain in a way that
promotes the benefits of our activities for
all stakeholders.
In 2021, we have taken several steps to
enhance our focus on sustainability.
The Board agreed to establish a new
Sustainability Committee during the year.
This Committee will report directly into the
Board and will be chaired by David Thomas,
our Chief Executive. It will play an active
role in developing, executing and monitoring
the ongoing improvements in our drive to
increase and enhance sustainability across
our business. The remit of this Committee
are set out on page 66.
In addition, the Remuneration Committee
has agreed to include a target to reduce
construction waste within the FY22 annual
bonus scheme and a carbon reduction
target in the Long Term Performance Plan
(LTPP) award due to be granted later this
year. These targets will help the Group
move closer to achieving its overall waste
intensity and carbon intensity targets as set
out on page 19.
We are also making good progress
towards our compliance with the TCFD
recommendations. Full details can be
found on page 66. In addition, following
stakeholder interest, we have for the
first time begun reporting against the
Sustainability Accounting Standards Board’s
(SASB) disclosure criteria on our website
www.barrattdevelopments.co.uk.
Remuneration Committee and his wise
counsel as Senior Independent Director.
At the end of June 2021, Jessica White
stepped down as Chief Financial Officer
and a member of the Board for personal
reasons. I would also like to thank Jessica
for her valued contribution during her 15
years with the Group, not only in her four
years as Chief Financial Officer, but also
in her previous senior finance roles. As
Chief Financial Officer, Jessica was an
integral member of our leadership team
and played an instrumental role in driving
the Group towards its medium term targets.
Information relating to the payments made
to Jessica and Richard can be found on
pages 102 and 103.
As announced on 29 June 2021, Mike
Scott will join the Board as our new Chief
Financial Officer at a date to be agreed.
Mike brings a wealth of financial experience
as he currently holds the same position
at Countryside Properties PLC and we
are delighted to be welcoming him to the
Group. Details of the recruitment process
for this appointment and the remuneration
package offered can be found on pages 100
and 102 respectively.
Stakeholder engagement
Stakeholder engagement is a key part of
the Board’s agenda. Due to COVID-19, the
Board was unable to undertake its normal
site visits during the year. The Board has
however, stayed in touch with the business
through updates from the Designated
NED for Workforce Engagement and the
Executive Directors. I also attended the
virtual Senior Leadership meeting to better
understand the challenges our employees
were facing on a day-to-day basis, and to
thank them for their support, hard work
and commitment in keeping the business
operating through these challenging times.
In addition, I have attended virtual meetings
with shareholders to discuss our approach
to the continued COVID-19 restrictions and
how we are tackling matters such as ESG
and cladding.
Our 2020 AGM was held as a closed meeting,
however we were keen to ensure that our
shareholders had the opportunity to raise
any questions ahead of the meeting. A
designated email address was set up which
allowed our shareholders to pose questions
relating to the business to be transacted
at the AGM. Each query was responded
to on an individual basis and a copy of the
questions and answers can be found on our
website www.barrattdevelopments.co.uk.
You can find out more on how we have
engaged with key stakeholders on pages 45
to 55.
Being a trusted partner is a principle
we take seriously. We are committed to
continuously enhancing our reporting
disclosures to meet changing stakeholder
needs and enable better analysis and
comparability. That means continuing
to align to best practice frameworks,
standards and indices.
I am pleased to report that the steps we
have taken to progress our sustainability
strategy during the year have resulted in
improvements in the Group's sustainability
rankings across various indices, such
as the NextGeneration sustainability
benchmark, the Responsibility 100 Index
developed by Tortoise and in our CDP
scoring. This is a great credit to the hard
work and dedication of our teams.
More information on our sustainability
strategy is detailed in the Chief Executive’s
statement on pages 18 to 29, including our
performance on health and safety, build
quality and customer service.
Building safety
We recognise that the wider complex
issues surrounding fire safety guidance
and cladding have caused distress for
affected homeowners, as regulations and
requirements have continued to evolve. A
long term solution is needed which will
require the involvement of the industry,
the supply chain and Government. We
have contributed to the Government’s
consultation on establishing a Residential
Property Developer Tax to raise tax
revenues for the Government’s Building
Safety Fund.
We will continue to dedicate significant
focus to this area, as founding signatories
to the Building Safety Charter and active
members of the Early Adopters Group,
which is committed to protecting life
by putting safety first ahead of all other
building priorities. The Executive Directors
and I also continue to engage with all
relevant stakeholders to try and identify the
much needed industry solutions to support
leaseholders and residents. For details
on the steps we have taken and the costs
associated with legacy properties see page
16 in the Chief Executive’s statement.
Board changes
It has been a year of change for the Board.
On 1 March 2021 we welcomed Katie
Bickerstaffe and Chris Weston to the
Board. They bring a wealth of experience
in business transformation, marketing,
commerce and in driving performance
and growth, which complement the
existing skills of the Board. Details of the
recruitment process for Katie and Chris can
be found on page 81.
On 4 May 2021, Richard Akers stepped
down from the Board after completing
nine years of service. I would like to thank
Richard for his significant contribution to
Barratt during his tenure; in particular,
his excellent Chairmanship of the
Dividend
The Board established a new dividend
policy based on an ordinary dividend with a
2.5 times dividend cover in 2020. The Board
was delighted to resume dividend payments
with the declaration of an interim dividend
of 7.5 pence per share in February 2021 and
is pleased to recommend a final dividend of
21.9 pence per share (2020: nil pence per
share). Subject to shareholder approval, the
final dividend will be paid on 9 November
2021 to those shareholders on the register
as at the close of business on 1 October
2021. The total proposed ordinary dividend
for 2021, including the interim dividend of
7.5 pence per share paid in May 2021, is
29.4 pence per share (2020: nil pence per
share; 2019: 29.1 pence per share).
AGM
Our 2021 AGM will be held at the
Ironmongers’ Hall in London on Wednesday
13 October 2021 at 12 noon. There are still
COVID-19 restrictions in place at the venue
and we would ask all shareholders looking
to attend the AGM to adhere to these
requirements. There will be a live webcast
and the ability to submit questions on the
day as well as in advance of the meeting.
Voting at the AGM will continue to be by way
of a poll to accurately reflect the holdings of
our shareholders. Full details can be found
in the Notice of AGM.
Looking to the future
Our business is in a strong position with
substantial net cash, a well-capitalised
balance sheet and a strong forward sales
position. We continue to deliver operational
improvements throughout our business
alongside high quality, sustainable homes
and developments across the country.
However, we recognise that the UK
economy continues to face uncertainties
arising from COVID-19.
We have a diverse and experienced Board
that is committed to promoting the success
and long term sustainable value of the
Group. We will continue to review our Board
composition to ensure it has the skills,
knowledge and experience that are aligned
with our strategy as we move forward.
We remain focused on our medium term
targets. The Board will continue to respond
to changes in the market and the wider
economy but believes that our operating
performance, strong forward order book
and further strengthened financial position
provide us with the resilience and flexibility
to react to changes in the operating
environment in FY22 and beyond.
On behalf of the Board, I would like to thank
you for the confidence you have shown in
the Group during 2021, in what has been a
challenging period for us all, and for your
continued support.
John Allan
Chairman
1 September 2021
07
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Marketplace
UK economy
UK economic output saw a sharp recovery through to October 2020,
following the end of the initial national lockdown, but renewed
restrictions on activity saw the economy then contract through to
the end of January 2021. With the gradual removal of COVID-19
restrictions, the economy has shown continuous expansion since
February 2021, although output has yet to recover to pre-pandemic
levels. Looking forward there are clear signs of optimism with the
latest HM Treasury collated economic forecasts projecting GDP
growth of 6.9%1 in 2021 and 5.6%1 in 2022. Uncertainties for the
wider economy do however remain, notably around employment
and consumer confidence, with the gradual withdrawal of furlough
arrangements for employees and income support for the self-
employed particularly important in the coming months.
Housing demand
The UK housing market, in contrast, has shown a remarkable
and continuous recovery since emerging from the initial national
lockdown, aided by the industry’s ability to continue operating over
this subsequent period. This reflects pent-up demand created by
the lockdown and the SDLT holiday. It also reflects a recovery from
the more extended period of uncertainty and suppressed housing
market activity (evident since the Brexit referendum in 2016), as
well as a reprioritisation of housing for many households since the
onset of the pandemic. Against this backdrop we believe that the
market for housebuilding remains positive.
Housing supply
Housing remains high on the Government agenda with the shortage
of housing being recognised as a critical issue for the long term
health of the UK economy and its growing population. The UK
Government reiterated its commitment to a target of building
c. 300,000 new homes per year in October 2020. New build housing
additions were 220,6002 in the last reported 12 month period to
31 March 2020 which, when combined with the net additions from
conversions and demolitions of 23,1702, resulted in net additions to
the housing stock of 243,770 homes2. There remains a significant
shortfall in new home additions, providing opportunity for industry
growth over the coming years.
Our strategy and growth plans recognise this opportunity.
We maintained our volume capacity throughout the first COVID-19
lockdown and our medium term target remains to grow completions
to 20,000 homes, 16% ahead of total completions of 17,243 in FY21.
New build and net additions to the
English housing stock
300,000
250,000
200,000
150,000
100,000
50,000
0
0
7
0
-
6
0
0
2
8
0
-
7
0
0
2
9
0
-
8
0
0
2
0
1
-
9
0
0
2
1
1
-
0
1
0
2
2
1
-
1
1
0
2
3
1
-
2
1
0
2
4
1
-
3
1
0
2
5
1
-
4
1
0
2
6
1
-
5
1
0
2
7
1
-
6
1
0
2
8
1
-
7
1
0
2
9
1
-
8
1
0
2
0
2
-
9
1
0
2
New build dwellings
Net additional dwellings
Net conversions/demolitions
Government target
08
Land supply and the planning system
There remains a good supply of planning consents coming through
the planning system in support of housebuilding growth despite
pandemic related disruption with 277,326 new detailed planning
permissions approved in England through the year to
31 December 20203.
Reflecting the good availability of land, our business model and
operating framework remain focused on operating one of the
shortest land banks in the industry as we seek to optimise return
on capital.
We await the outcome of the Government’s consultations on land
and planning proposals. The Government is seeking to streamline
the planning process and ensure local authorities have a clear local
plan. We continue to carefully monitor the planning environment to
ensure our supply of planning consents is aligned with our growth
plans.
On 6 May 2021, the temporary regulations under the Coronavirus
Act 2020 that allowed local authorities to hold planning committee
meetings virtually expired, with no alternative arrangements in
place. This has resulted in delays to the planning process.
English Planning Consents and Net New Build
Home Additions and Savills UK Greenfield
Development Land Price Index
x
e
d
n
I
d
n
a
L
t
n
e
m
p
o
l
e
v
e
D
d
l
e
i
f
n
e
e
r
G
K
U
s
l
l
i
v
a
S
)
k
a
e
p
7
0
0
2
=
0
0
1
(
120
100
80
60
40
20
0
n
e
w
b
u
i
l
d
h
o
m
e
a
d
d
i
t
i
o
n
s
(
'
0
0
0
s
)
E
n
g
l
a
n
d
m
o
v
i
n
g
a
n
n
u
a
l
p
l
a
n
n
n
g
c
o
n
s
e
n
t
s
a
n
d
n
e
t
i
360
300
240
180
120
60
0
1
2
0
2
7
0
0
2
8
0
0
2
9
0
0
2
0
1
0
2
1
1
0
2
2
1
0
2
3
1
0
2
4
1
0
2
5
1
0
2
6
1
0
2
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
Savills UK Greenfield Development Land Price Index (LHS)
England-Planning consents (‘000’s) - revised series (RHS)
England - Net New Build Home Additions (RHS)
Building materials and labour
We experienced very different rates of build cost inflation in the first
and second halves of FY21. In the first half, build cost inflation was
relatively muted, reflecting the fall in output created by the initial
national lockdown, latent supply chain capacity, as well as our
procurement planning. Building material price agreements provided
cost certainty as well as visibility for our supply chain partners.
In the second half of FY21, we saw a rebound in housebuilding
activity. In addition we saw growth in demand for commodities
including steel, timber and plastics, which resulted in greater
inflationary pressure on building material costs.
Through our centralised procurement team, careful scheduling
of building materials and the support of our long-standing supply
chain partners, we are focused on ensuring security of supply
whilst seeking to manage build cost inflation.
Housing market support
During the year, the Government’s Help to Buy scheme became
available to first time buyers only with regional price caps being
applied. Following the change for reservations from December
2020, first time buyer activity has been maintained and existing
homeowners have migrated to traditional purchase.
The SDLT holiday, introduced in July 2020, which raised the
threshold at which the tax becomes payable to £500,000, has
supported housing demand throughout the year. The holiday began
to taper from 1 July 2021 and is scheduled to finish at the end of
September 2021. Whilst our sales activity benefited from this “call
to action” in FY21, our sales reservations in recent months, for
completion beyond the SDLT holiday period, have remained robust.
In early 2021 the Government introduced the Mortgage Guarantee
Scheme to support LTV lending in excess of 90%. This scheme has
been adopted by several mainstream mortgage lenders, but as yet
has not been made available to the new build housing market.
Mortgage market
Reflecting the continuing strength of the housing recovery since
the end of the initial national lockdown and including the impact
of the SDLT holiday from July 2020, mortgage approvals for house
purchases have shown a sharp recovery and totalled more than
1,070,000 in the year to 30 June 2021. Mortgage approvals were
some 61.7% ahead of the initial national lockdown interrupted
year to 30 June 2020 but also 36.4% above the mortgage approvals
registered in the year to 30 June 2019.
We continue to work with building societies, banks and other
financial institutions to increase lender understanding and to
introduce additional lenders to the new build sector. We are also
participating in the development of green mortgages that reflect the
efficiency and environmental credentials of our homes.
Number of UK mortgage approvals
for house purchase4
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
6
0
Y
F
7
0
Y
F
8
0
Y
F
9
0
Y
F
0
1
Y
F
1
1
Y
F
2
1
Y
F
3
1
Y
F
4
1
Y
F
5
1
Y
F
6
1
Y
F
7
1
Y
F
8
1
Y
F
9
1
Y
F
0
2
Y
F
1
2
Y
F
Number of UK mortgage approvals for house purchase
(12 months July - June)
Government legislation
Government advice on cladding and external wall systems
continues to evolve. The Building Safety Bill, introduced to
Parliament in July 2021, seeks to give residents more power to
challenge developers on build quality and building safety concerns
and will retrospectively extend the current period during which
claims can be brought against developers from six to 15 years.
The Government announced in January 2021 that it would grant
leaseholders of eligible properties the right to extend their leases
free of ground rent. In addition, in June 2021 the Government
published the Leasehold Reform (Ground Rent) Bill that aims to
prevent ground rents from being charged on new homes. This
is alongside the CMA’s ongoing investigation into the leasehold
housing market.
The Government has pledged to take legislative action on climate
change. In 2021 we saw the continued progress of the Environment
Bill through Parliament, which includes the requirement to set
binding targets for biodiversity net gain, nature protection, water
stewardship, nitrate and phosphate neutrality, air quality, and
waste management.
In June 2022, changes to Part L and F of building regulations in
England come into effect. This allows for a one year transition
period and will require new homes to achieve a 31% reduction in
carbon emissions compared to current standards. The Government
has also confirmed that the 2025 Future Homes Standard will
require a reduction in emissions of 75%-80%, including the
prohibition of gas boilers in new homes.
The Government’s legally binding commitment to making the UK
net zero by 2050 will require all companies to take substantial
action to reduce the direct and indirect carbon emissions from
their operations. Carbon pricing schemes (‘cap and trade’ systems
or taxes) are anticipated to be a key tool in the global drive for
decarbonisation.
See how we are responding to the drive towards zero carbon in
Building Sustainably on pages 21 to 23
1.
HM Treasury. https://www.gov.uk/government/statistics/forecasts-for-the-uk-
economy-august-2021
2. MHCLG. https://www.gov.uk/government/statistics/housing-supply-net-
additional-dwellings-england-2019-to-2020
3.
4.
HBF & Glenigan. https://www.hbf.co.uk/documents/11164/HPL_
REPORT_2020_Q4.pdf
Bank of England. https://www.bankofengland.co.uk/boeapps/database/
09
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Business model
Key resources
Investment in the housebuilding value chain
We utilise the following key resources to
create value for our stakeholders:
Our people
• Committed and engaged employees.
• Strong and long standing sub-
contractor relationships.
• Training and development.
Health and safety
• Dedicated health & safety team.
• Continuous improvement culture.
Financial
• Strong shareholders’ capital.
• Robust cash generation.
• Access to debt facilities.
Land
• Current land bank with planning.
• Optimised site size.
• Strategic land bank.
Strong community relationships,
our partners and supply chain
• Ongoing landowner relationships.
• Local government engagement.
• Committed to community engagement.
• Mortgage lender relationships.
• Supply chain partnerships.
• Joint Venture partnerships.
Design and innovation proficiency
•
In-house technical team.
•
Investing in research and development.
• Academic research partnerships.
• Biodiversity and climate knowledge and
external partnerships.
Construction and development
expertise
•
In-house construction expertise.
• Timber frame manufacturing capacity
and timber sourcing controls.
•
Industry-leading build quality.
Sales and marketing expertise
• Dual brand marketing capabilities.
• Highly trained sales team.
• Digitally-led customer journey.
•
Industry-leading quality and
customer service.
10
Targeted land
buying and
effective planning
We acquire land in
targeted locations
across the country
where homes are
needed and where
we can achieve
attractive returns
for shareholders.
Working closely with
local communities and
stakeholders, whilst
applying our land and
planning skills, we
seek to gain planning
consents that enable
the creation of great
homes and sustainable
places where our
customers aspire
to live.
Outstanding
Design
We design homes that,
through innovation
and customer
research, meet
customers’ aspirations.
Our standardised
housetype designs are
continually evolving
and improving to meet
changing customer
demands and the
challenges of the
changing climate. We
design “Great Places”
that create a positive
impact on ecology,
biodiversity and the
health and wellbeing of
communities.
Construction
excellence,
innovation and
efficiency
Through efficient
construction and
innovation our ambition
is to maximise the
value of all materials,
resources and products
at each stage of our
value chain. We deliver
through best-in-class
site management,
centralised
procurement and
technical resources,
as well as the highest
standards of health
and safety.
Competitive advantages
Scale and technical resources
We have clear advantages of scale
with our financial strength, land bank
diversification and operating capacity.
This means that we can invest in
in-house technical expertise in
land buying, planning, design and
development, procurement, construction,
marketing and sustainability.
Commitment to quality, customer
service and sustainability
We lead the industry in build quality,
customer service and sustainability. Each
has involved significant and continuous
investment over many years, reinforced
by clear processes and supported by our
culture. We believe these are key to our
reputation with investors, landowners,
suppliers and customers, and support
our ability to operate in communities
across the country.
Innovative sales
and marketing
We look to continually
innovate our sales and
marketing methods
through technology
investment and
training. Our strong
brands - Barratt
Homes, David Wilson
Homes and Barratt
London - have clearly
defined market
positions targeted to
differentiated customer
aspirations.
Industry leading
customer
experience
From our initial
customer contact,
through the home
buying process to our
after sales service,
we aim to deliver
an industry leading
customer experience.
This is underpinned by
a strong culture and
the commitment of
our people.
Doing the right thing, customer
focus and pride in what we do
Our business is based on a culture of
doing the right thing, putting our
customers at the heart of everything we
do and having pride in the quality and
customer service we deliver. Our culture
is embedded throughout our business
and guides both management decision
making and the actions of our employees.
Resilient, adaptable and
sustainable business
Our resilient, adaptable and sustainable
approach emphasises the creation and
retention of value, driving cost reduction,
risk mitigation, sustainable growth,
transparency and trust in our business.
This in turn drives margin improvement
and increased competitiveness, as well
as an improved reputation among our
stakeholders.
Value created for stakeholders
in short, medium and long term
Our stakeholder engagement (see pages 45
to 55) allows us to align our activities to our
stakeholders’ expectations on ESG matters,
and the integration of sustainability throughout
our business decision-making enables us
to create value for all our stakeholders,
helping to mitigate risk whilst enabling us
to seek opportunities for differentiation and
margin improvement.
Customers
Through a positive home buying journey,
we deliver high quality, sustainable homes
supported by dedicated after-sales care.
Outstanding design creates developments
that enhance the wellbeing of our customers,
homes that meet changing lifestyles and,
through energy efficiency, have lower lifetime
home operating costs.
Employees
We create a great place to work, founded
on an open and honest culture, focused on
performance and personal development
which embraces diversity and inclusion. We
aim to attract and retain the best people to
whom, through business growth and employee
development, we can offer rewarding long
term career development opportunities.
Shareholders
Through our medium term targets, we strive
to improve the quality and efficiency of our
operations, generate growth in profitability and
attractive returns on capital. Our operating
framework creates financial discipline to
support the resilience of our operating
business model and balance growth with
delivering cash returns to shareholders.
Sub-contractors and suppliers
We recognise that our suppliers and sub-
contractors are critical to the delivery of
our strategic objectives and seek to be
their developer of choice. We invest in our
relationships through transparency, timely
supplier payment and the forward visibility
of building materials, products and future
workload we can offer.
Communities
We seek to create a positive legacy to help
local communities thrive. This is achieved
through planning gain contributions to
improve community infrastructure and
facilities and our place making. We create
enhanced environments that benefit all in the
communities in which we develop.
Wider society
We are building the sustainable homes the
country needs, creating jobs and supporting
economic growth. We also make substantial
taxation contributions to support wider society.
11
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Business model in action
↓ David Wilson Homes at
Doseley Park, Shropshire
↓ Doseley Park’s Site Manager, Kirk Raine, was the
2020 Supreme Winner in the Large Builder category at
the NHBC Pride in the Job Awards
Our business model in action:
Doseley Park
Doseley Park is one of
our David Wilson Homes
developments. The site has
been developed by our Mercia
Division and is an extension
to the village of Doseley,
located in Shropshire.
The village benefits from
an array of excellent local
amenities, good motorway
connectivity and is only a few
miles away from Ironbridge,
a World Heritage site.
Targeted land buying and
effective planning
The site was originally a cement works,
with the Division securing a strategic
option over the site. The site was identified
by our land teams, as having high potential
for a future housing development. The
Division, through their planning and
technical teams, supported by external
consultants, and in partnership with the
local authority and local community,
promoted the site through the planning
process and ultimately achieved a
planning consent for a development of
460 homes.
The planning consent was issued, in line
with most developments, with a section
106 agreement. Through this agreement
the Division has contributed in excess of
£1m to local facilities, the largest amount
being towards the provision of local
education needs.
Outstanding design
The site benefited from a design code
with a 'Garden City' theme. The principles
of this were contemporary homes, well
defined character areas and generous
amounts of open space, particularly
enhancing the woodland and natural
surroundings. Our teams used their
industry leading place making skills to
ensure an outstanding design was created.
The design used our standard housetypes,
with product ranging from two bedroom
first time buyer homes, to larger five
bedroom family homes, including an
affordable housing mix. The Division
developed the site utilising carefully
selected materials for feature plots (as
demonstrated in the photo above), with
character areas from higher density
apartments and boulevards featuring
townhouses in certain central areas of
the site, to executive homes in pocketed
areas around the perimeter of the site.
The design also included SUDS making a
natural feature of drainage channels whilst
benefiting wildlife and complimenting the
open spaces. The photograph on the front
cover of our Annual Report & Accounts
shows a selection of our townhouses on
Doseley Park.
Construction excellence
Construction is being led by Kirk
Raine, who is the Site Manager for the
development. Kirk joined the Group
11 years ago, starting his career as an
apprentice bricklayer. He is now a second
time NHBC Supreme Pride in the Job
Award winner, the most recent being in
2020 for his work on this development.
Kirk fought off competition from more than
16,000 Site Managers throughout Britain
to scoop this top prize. He is a mentor
for Site Managers within the Division and
around the Group, and is well-respected for
sharing his expertise and experience with
his fellow colleagues.
Kirk said "I am extremely honoured to have
been given the NHBC Supreme Award, it
is a privilege. This has been an enormous
team effort and I would like to thank the
whole site team and my Directors for their
support. As a team, we take a great amount
of pride in the high levels of quality and
service we deliver for our customers at
Doseley Park and we are proud to work for
a 5 star housebuilder”.
Innovative sales and marketing
& Industry leading customer
experience
The site has been awarded a 5 star
customer care rating from its customers
since its inception. This means that over
90% of our customers on this development
would recommend us to their friends
and families. Jack Grove and Shannon
Finnigan said: “We were aware of David
Wilson Homes and knew they were well-
respected in the industry, plus our families
recommended them to us. It is so nice
to move into a new home knowing that
everything is ready for you and is of a high
quality – it really is the perfect start.”
as part of the apprenticeship programme in
which they participate.
Alan Ferguson, Contracts Manager, who is
responsible for the Division’s Bricklaying
apprentices, said: “Our apprentices learn
a whole host of skills in their chosen trade
whilst working with us, as well as the
importance of maintaining high levels of
health and safety in everything that they do.
I am proud to work for the Mercia division
and that I am able to give something back
to the building trade. In my opinion, we
give apprentices the best opportunities and
training available and the full support of
everyone at the Division & from Group. It
is also an inspiration for the apprentices
to work with the likes of Kirk, who himself
started out as an apprentice bricklayer."
Rob and Sarah Game also moved into
a home at the development, they said:
“Overall, the house and the service from
David Wilson Homes has been outstanding.
The team here is clearly passionate about
their work and they have gone above and
beyond to make sure our move was a
smooth one.”
In response to market and product demand,
the site has had a small re-plan to offer
homes from our Barratt brand. This has
provided an expanded product choice to
our customers, whilst also resulting in an
improved sales rate.
Value for stakeholders
As well as an example of providing the
beautiful new homes that the local
community, and our country needs,
Doseley Park continues to develop value for
stakeholders in other ways. We supported
the local community through employment
opportunities and providing a development
that boasts substantial areas of green
space. In addition, our apprentices gained
valuable experience whilst working on site
12
13
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Chief Executive’s statement
Sustainability presents opportunities for business
prosperity and growth, encourages innovation and resilience,
and improves our products and customer experience
David Thomas
Chief Executive
We have made excellent
progress in what has been a
challenging year, with health
and safety remaining our
absolute priority. I thank our
employees, sub-contractors
and supply chain for their hard
work and dedication which
enabled us to successfully
rebuild our site-based
construction activity, deliver
quality homes alongside great
customer service, and achieve
our gross margin and ROCE
targets. Looking forward, our
focus remains on our medium
term targets including growing
completion volumes, and
our industry leadership of
sustainability to deliver long
term value creation for all our
stakeholders.
Introduction
Our purpose is to lead the future of
housebuilding by putting customers at the
heart of everything we do.
We are committed to playing our part in
addressing the housing shortage and
delivering the high quality, sustainable
homes and developments needed across
England, Scotland and Wales. In doing so,
we will continue to play our part rebuilding
Britain’s economy as we emerge from the
extended period of disruption created by
COVID-19.
We will continue to lead the industry on
sustainability and, in particular focus on our
environmental impact, with clear targets
and plans.
Housing market fundamentals
Despite the continued economic
uncertainties following the pandemic, the
housing market fundamentals remain
attractive. There is strong demand for high
quality new homes across the country.
The strength of new housing demand, as
well as years of undersupply, underpin
the Government’s ongoing target to build
300,000 new homes each year. We are well
positioned to deliver high quality sustainable
homes and developments needed across
England, Scotland and Wales.
The land market remains attractive with
a good supply of land opportunities, and
despite pandemic-related challenges,
planning consents remain ahead of home
building activity. We continue to secure land
opportunities at or above our minimum
hurdle rates.
For the industry to continue to increase new
home supply, it is vital that home buyers
can access affordable and competitive
mortgage finance. The revised Help to Buy
scheme continues for first time buyers
through to 31 March 2023. We continue
to explore alternative ways to support our
customers and are currently trialling the
Deposit Unlock Scheme, which offers a 95%
mortgage, with a UK mainstream lender.
Performance overview
We have delivered an excellent performance
throughout the year, making significant
financial and operational progress while
improving both build quality and customer
service. Our performance reflects the
discipline embedded by our operating
framework and the resulting strength in
our business, as well as the commitment of
our employees, sub-contractors and supply
chain.
We increased wholly owned completions by
37.3% to 16,517 homes in the year ended 30
June 2021 (2020: 12,034 homes; 2019: 17,111
homes). In addition, we delivered 726 homes
through our JVs (2020: 570 homes; 2019: 745
homes). Total completions including JVs for
the year were 17,243 homes (2020: 12,604
homes; 2019: 17,856 homes).
In the year, we achieved our medium
term gross margin target delivering a
23.2% (2020: 18.5%; 2019: 22.8%) adjusted
gross margin, with adjusted gross profit
of £1,114.7m (2020: £631.4m; 2019:
£1,087.4m), reflecting market strength
and completion volume recovery. After
the combination of legacy property
costs and our repayment of CJRS grant
income, totalling £104.7m, gross profit
was £1,010.0m (2020: £614.3m; 2019:
£1,084.2m), resulting in a gross margin of
21.0% (2020: 18.0%; 2019: 22.8%).
After administrative costs, we delivered an
adjusted profit from operations for the year
of £919.0m (2020: £507.3m; 2019: £904.3m)
at an adjusted operating margin of 19.1%
(2020: 14.8%; 2019: 19.0%). Profit from
operations was £811.1m (2020: £493.4m;
2019: £901.1m).
After finance costs and JV income we have
delivered an excellent recovery in profit
before tax for the year to £812.2m
(2020: £491.8m; 2019: £909.8m).
We have significantly strengthened our
balance sheet with year end net cash of
£1,317.4m (2020: £308.2m; 2019: £765.7m)
and in line with our operating framework,
we have reduced our land creditors to
£658.3m (2020: £791.9m; 2019: £960.7m),
achieving our minimal net indebtedness
target. We have also driven our ROCE back
to our medium term target level achieving
28.3% (2020: 15.6%; 2019: 29.7%).
Our targets for the coming year and
medium term
In 2021 our focus on rebuilding both our
completion volumes and our financial
performance has delivered an excellent
improvement on gross margin and ROCE.
Following this performance, whilst
recognising the UK economy continues to
face uncertainty, we have a clear strategy
and targets for both the year ahead and the
medium term, over the coming three to
five years.
Our business model has a present
capacity for 20,000 completions
• We intend to grow completions back to
pre-pandemic FY19 levels in FY22 with
wholly owned completions between
17,000 and 17,250 homes with an
additional c. 750 JV completions.
• Completions are expected to return to
more normal phasing between the first
and second halves of the year.
• Beyond FY22, we target disciplined
volume growth at between 3% and 5%
per year towards our current business
capacity of 20,000 completions.
Our gross margin target remains at
a minimum 23%
• We continue to buy land at a minimum
23% gross margin hurdle rate.
•
In FY22 we expect our first half and
second half margins to reflect our return
to a normal phasing of completions.
Our ROCE target remains at a
minimum 25%
•
In FY22 and beyond, we aim to continue
to deliver a minimum ROCE of 25%, in
line with our medium term target.
• We expect ROCE at the half year to
be affected by a return to the normal
phasing of first half and second half
completions as well as our planned
investment in land and work in progress
for future years.
Long term value creation
We are focused on creating long term
value for our stakeholders and recognise
that the resources we use are finite, from
the materials we consume to the land
we develop. Climate change makes it
imperative that we constantly scrutinise
and challenge the way we operate, as
well as the environmental impact of our
business. Our commitment is to remain the
leading national sustainable housebuilder -
our recognition in the sustainability indices
demonstrates that we are making very
good progress.
Set out below are our objectives for both the year ahead and the medium term, as well as our progress and activities in 2021:
Progress in FY21
Areas of focus for FY22
Medium term targets
Home
completions
• 37.3% growth in wholly owned
home completions to 16,517
(2020: 12,034) with 726 JV
completions (2020: 570).
• Rebuilding volumes back to
• Disciplined growth in home
FY19 levels.
• Wholly owned home completion
growth to between 17,000
and 17,250 with c. 750 JV
completions.
completions to current capacity
of 20,000 homes.
Gross
margin
• 470 bps increase in adjusted
gross margin to 23.2% (2020:
18.5%).
• Delivering continued operational
• Land acquisition at a minimum
improvements across our
business.
23% gross margin and optimising
performance.
• 300 bps increase in gross margin
to 21.0% (2020: 18.0%).
• 1,270 bps rebound in ROCE to
• Balanced and selective land and
• Minimum of 25% delivered
ROCE
28.3% (2020: 15.6%).
work in progress investment to
support growth.
through improving margin and
operating framework discipline.
Keeping people safe
Our priority is to provide a safe environment
for employees, sub-contractors and
customers and we are committed to
achieving the highest industry health and
safety standards.
In response to COVID-19 we implemented
extensive working practices and protocols,
which we have continued to refine and
update in line with the latest guidance from
Government, Public Health Authorities
and the Construction Leadership Council.
We also enhanced our induction, training
and support for our employees and sub-
contractors. Our arrangements were
certified by the British Safety Council that
they were in accordance with guidance
and best practice, demonstrating our
commitment to providing a safe and healthy
workplace.
We have stringent standards and a
continuous focus on health and safety
throughout our business. In line with
the wider construction industry and
reflecting increased activity levels across
housebuilding, we have unfortunately
seen an increase in our IIR in the year
at 416 (2020: 256; 2019: 297) per 100,000
workers. Our Health and Safety SHE audit
compliance rate however improved to 97%
(2020: 96%; 2019: 96%). We are committed
to improving our processes and procedures
and challenging unsafe behaviours in order
to reduce our IIR. An action plan has been
put in place, which the SHE Committee will
be monitoring closely.
We also continue to focus on ensuring
workers do not suffer long term issues
associated with their work activities.
We have implemented controls and raised
awareness in areas such as exposure to
hazardous dusts. We are also working
with our key contractors to encourage
them to implement health surveillance
programmes for their workforces.
14
15
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report ↓ Hayley Chilton, Senior Site Manager at our Hawk Rise
development in Ledbury, one of our 93 NHBC Quality
Award Winners in 2020.
Chief Executive’s statement CONTINUED
Responsible development
Citiscape and associated review
In line with our commitment to put
customers first and recognising the
responsibility we have for the work of
our partners, in July 2020 we announced
we would pay for the required remedial
action on the reinforced concrete frame
at Citiscape. This was a development
designed for us in 2001 by a third party
structural engineering firm, where
remedial costs would have otherwise fallen
on leaseholders. We are pleased to report
that over the last year the remedial action
plan with respect to Citiscape has been
completed.
As a responsible developer, we also
appointed independent structural engineers
to review all the other developments where
reinforced concrete frames were designed
for us by the same third party firm as
Citiscape. We are pleased to report that
this review is now substantially complete
and did not identify any other buildings
with issues as severe as those present at
Citiscape. The cost of any remedial works
will not be borne by leaseholders at these
other developments.
External wall systems and
associated review
As stated in the Chairman’s statement,
we remain focused on the complex issues
surrounding fire safety and cladding.
Consequently, we have established a
Building Safety Unit which will bring
additional expertise and resources to
review and assess the construction of
our multi-storey buildings in light of
Government guidance on cladding and
external wall systems.
All of our buildings, including the cladding
and complete external wall systems
used, were signed off by approved
inspectors as compliant with the relevant
Building Regulations at the time of their
construction. In the aftermath of the
tragedy at the Grenfell Tower, we acted to
remove and replace ACM cladding from
the small number of legacy developments
where this material had been installed.
Alongside evolving Government advice
on fire safety for multi-storey buildings,
we are working with building owners,
management companies and expert
engineers on assessments of buildings we
have constructed and the solutions needed
to support leaseholders and residents.
Costs in relation to legacy
properties
In aggregate, from 1 July 2017 to date, we
have incurred charges of £184.2m across
both the Citiscape, external wall systems
and associated reviews. Of this, £81.5m was
charged to adjusted items during 2021. We
have outstanding provisions of £67.6m.
Whilst the charges reflect the current best
estimate of the extent and future costs of
work required, as assessments and work
progresses or if Government legislation and
regulation further evolves, estimates will
be updated.
Following the establishment of our in-house
Building Safety Unit, in FY22 we anticipate
adjusted items of at least £40m for costs
associated with EWS and cladding related
remediation activities. These are costs
that we may agree to incur beyond our
contractual and legal obligations, and in
response to evolving legislation.
Competitions and Markets Authority
On 11 June 2019 the CMA announced
it had opened an investigation into the
leasehold housing market. On 4 September
2020 the CMA announced it had opened
cases with respect to ourselves and three
of our competitors in relation to possible
breaches of consumer protection law in the
residential leasehold sector. Following these
announcements, we have responded to a
number of CMA requests for information.
We are committed to putting our customers
first and continue to engage with the CMA
whilst it completes its investigation.
Charitable giving
We recognise the role we have in
supporting the communities in which we
operate. This is why we support a range of
both local and national good causes, and
encourage divisions to get involved with
both fundraising and volunteering. In 2021
we raised and donated £4.3m (2020: £4.4m)
for charitable causes.
The Barratt Developments PLC
Charitable Foundation
This year we launched the Barratt
Foundation. The Foundation will draw
together all of our charitable work under
one body, improving our impact across
the communities we support and, thanks
to Barratt Developments' core funding,
ensuring that every pound raised by the
Foundation is available for charitable
activities. The Foundation will support a
wide range of charities in the UK.
To mark the launch of the Foundation,
and to celebrate the completion of our
500,000th home, in January 2021 the Barratt
Foundation 500k Giveaway supported ten
employee-nominated charities.
Barratt and David Wilson
Community Fund
Throughout 2021 we continued to support
the Barratt and David Wilson Community
Fund which allows each of our divisions to
donate £1,000 to a different local charity
each month. The Community Fund helps
our employees to support the local causes
that matter to them. From the start of the
new financial year, the Community Fund is
administered by the Barratt Foundation.
Employee engagement in our
charitable activities
To encourage our employees to raise funds
for local causes, the Group operates a fund
matching scheme at both divisional and
individual employee level. During 2021 the
Group made available match funding of up
to £15,000 per division and also provided up
to £1,000 of match funding per individual for
fund raising activities.
We also provide employees with one day
of paid leave per year to encourage them
to volunteer for a charity of their choice.
In addition, we partner with Payroll Giving
in Action to enable employees to make
regular, tax-free donations to their chosen
charities. In the 12 months to December
2021 the Group has agreed to match
these donations.
Given COVID-19 restrictions it was difficult
for our colleagues to fundraise during 2021.
The Group therefore organised two virtual
events, the Big Barratt Hike and the Barratt
500k challenge, to raise funds for three
different charities. Our employees raised
an amazing £145,500 towards the chosen
charities.
In support of all the fundraising that our
employees have managed to undertake in
2021, the Company has provided match
funding totalling £363,500.
16
17
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Chief Executive’s statement CONTINUED
Building Sustainably
We are determined to be the leading national sustainable housebuilder. We believe that fundamental
to building quality homes is building a positive legacy for future generations. Sustainability presents
opportunities for business prosperity and growth, encourages innovation and resilience, and
improves our products and customer experience.
For our business to thrive and grow we know
we must give our customers confidence that
their homes are designed and built to meet
the challenges of the future. To do this, we
must protect and enhance the things upon
which our business relies – our people,
the communities and natural environment
in which we operate, our partners, and
the planet. Collectively, that means doing
business sustainably.
This year we have implemented new
sustainability governance processes to
ensure that we have the appropriate level of
scrutiny and accountability to address the
major transformations required.
Refreshing our Sustainability
Framework
As climate change impacts have become
more apparent and science-based
deadlines universally accepted, this has
accelerated a renewed commitment to
environmental legislation from the UK
explicitly linked to ‘green growth’ with a
strong emphasis on housing, alongside a
sharp focus on the social and economic
consequences of the COVID-19 pandemic.
We have refreshed and expanded our
Sustainability Framework to incorporate
new challenges and move to more
stretching targets.
Our Building Sustainably Framework
is built around three core pillars –
Environment, Communities and People
and is our blueprint for identifying and
operationally driving the positive changes
we want to make.
The Framework is informed by industry
analysis, stakeholder insight and primary
research, which includes recognition of best
practice external standards, frameworks
and indices. Seeking to build on our
robust materiality process of 2019, this
year we engaged directly with customers,
employees, government and investors to
further assess the issues that are, or will
likely become, priorities in the future. We
identified nine priority focus areas across
our three pillars, each underpinned by
ambitions, targets and delivery roadmaps.
For more on Stakeholder Engagement
see page 45.
R e s i l i e n ce
Resources
Bio div e r s it y
T
e n vir o
resilie
t e c t a n d enhance the natural
a n d its resources by buildin
t u r e - r eady, low-impact h
o
r
o p
n m e n t
n t, f u
o
g
C
a
r
b
o
n
m
e
s
.
n v i ronment
E
y
t
i
r
.
o
t
i
n
S
u
s
t
a
i
n
a
b
l
e
p
l
a
c
e
s
T
o
c
r
e
a
t
e
g
r
e
a
t
E
n
s
u
r
i
n
g
a
p
o
t
h
r
o
u
g
h
c
o
s
i
p
l
t
i
a
l
l
v
c
a
e
e
b
l
s
o
e
r
g
a
a
a
n
Building
Sustainably
C
o
m
m
u
n
ities
t
i
c
d
o
y
n
f
o
a
r
t
h
r
i
vi
n
d
p
n
e
n
g
e
o
g c
o
ple a
m
a
g
e
m
munities.
nd nature
ent.
A
ffo
rd
a
bility
e
l
p
o
e
p
r
u
O
-
r
b
p
u
o
u
s
,
s
e
e
y
o
l
p
m
r e
e
a
i
s
i
g
n
e
b
l
l
e
m
a
r
a
p
s
i
t
n
e
m
p
elo
ev
People
a rtn ers, Health, Safety & W
u r p e o ple safe. Wheth
g in th eir success and d
Keeping people s
r p
s o
s ti n
e
p o
r
o
i n v
afe
To k e e
co n t r a c t
a n d
A further critical driver for the refreshment
of our Framework is our commitment to
contribute positively to the UN Sustainable
Development Goals (UN SDGs). These
global aspirations represent the challenges
we must meet in order for the environment
and humanity to thrive. As the 2030
deadline for the UN SDGs approaches, we
recognise our responsibility to respond
further and faster. See our data and
performance table on our website for
details on how the UN SDGs inform our
decision making and Framework, and
how we are driving impact against nine
identified priority areas.
Our sustainability performance
We are pleased to have made good progress
against our previous framework and we are
now focused on driving performance against
our refreshed Framework; for example,
our waste intensity has decreased to 5.89
tonnes per 100m2 legally completed build
area, following an increase from 6.53 in 2019
to 7.70 in 2020, as a result of the strategic
interventions made (see page 29).
We have a clear process from issue
identification to operational delivery across
each of our Framework pillars and their
corresponding priority issues. This allows
us to have robust workstreams, which
inform our implementation plans, and clear
accountabilities across each stage.
We regularly track performance against
each target, reporting monthly to an
ESG Steering Committee, quarterly to
the Executive Committee and providing a
full annual update to the Board.
Our 2021 LTPP will include a carbon
reduction target.
In our refreshed Framework, as well as
introducing new targets, we have either
retained our existing targets or we have
further developed them to ensure they are
relevant and driving the activities we want
to focus on.
Our targets and 2021 performance
Environment
UN SDGs
Focus area
Target(s)
FY21
performance Progress
Biodiversity
Biodiversity
Demonstrate a minimum biodiversity net gain of
10% across all development designs submitted
for planning by 2023.
• We are in the final phase of a national rollout programme, to
embed biodiversity best practice to all regions and to drive
delivery of our net gain KPIs.
• We have committed to include hedgehog highways across our
developments and we are aiming to include 2,000 swift boxes in
our developments by December 2023.
• We launched 'Nature on Your Doorstep' in partnership with
RSPB to engage customers with digital tips and advice.
Resources
Waste And
Circular
Economy
Maintain 95% diversion of construction waste
from landfill.
Reduce construction waste intensity to 5.67
tonnes per 100m2 legally completed build area
by 2025.
• New waste strategy launched with enhanced monthly
performance management.
• New Group Waste Project Manager appointed.
•
Various innovative trials in partnership with suppliers e.g. single
use plastic and packaging reduction projects.
Water
From FY22, 100% of new homes to be built to
105 lpppd consumption limit.
• New water efficiency specification implemented
1 July 2021.
Modern
Methods of
Construction
Use offsite based products and systems in 30%
of homes by 2025.
• Offsite based products and systems used in 25% of homes.
• Previous targets:
20% by 2020 – achieved
25% by 2025 – on track to exceed.
We therefore refreshed the target to better capture our
accelerated ambition.
• Continued progress with AIMCH.
Deforestation 100% of timber certified for net zero
•
98.9% of timber purchased from FSC or PEFC certified sources:
deforestation*.
99.9% from Group agreements, Oregon and BD Living.
93.7% from sub-contractor fencing.
Carbon
Carbon
Zero Carbon
Homes
Reduce absolute scope 1 & 2 (operational) carbon
emissions by 29% by 2025 (from 2018 levels) and
to net zero by 2040.
• Net zero transition plan developed.
•
Various initiatives underway to drive reductions in line with plan,
including alternative fuel trials to replace diesel.
Reduce scope 3 (indirect) emissions intensity by
24% by 2030 (from 2018 levels).
• Working with 30 of our highest intensity suppliers and sub-
contractors to improve accuracy of data for our scope 3 footprint.
All new housetypes to be zero carbon from 2030.
• Detailed delivery roadmap developed and being implemented
business wide.
• We are nearing completion on a zero carbon prototype home
'Z house' under construction at Salford University.
Renewable
Energy
Ensure 100% of own electricity is on renewable
tariffs by 2025.
•
72% of electricity is on Renewable Energy Guarantee of Origin
(REGO) certified renewable tariffs.
Sustainable
Travel
100% of company car fleet free of diesel and
petrol cars by 2030.
• Since the introduction of EVs and hybrids into the company fleet
in September 2020, these now account for 27% of our car fleet.
• Diesel and petrol cars will no longer be available from our fleet
by 2026, allowing us to phase these out completely by 2030.
*
includes all timber procured through Group agreements, BD Living, Oregon and sub-contractor fencing.
h t s
H u m a n r i g
Performance key: ✓ Target met
On track
Monitor
Target not met
18
19
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Chief Executive’s statement CONTINUED
Building Sustainably
People
UN SDGs
Communities
UN SDGs
Focus area
Target(s)
Human Rights
FY21
performance Progress
Focus area
Target(s)
Sustainable Places
FY21
performance Progress
Maintain our status as a Living Wage Employer. ✓
• Active engagement with the Living Wage Foundation.
• Supplier and sub-contractor spot checks undertaken.
Placemaking
All completed developments designed to Great
Places Silver Standard or better.
•
93% completed developments Great Places Silver.
• Health and wellbeing integrated into Great Places placemaking
design guide.
Modern
Slavery
Our People
Attracting,
Inspiring and
Retaining
People
Aim to limit employee turnover to 15% or less.
✓
• Group Head of Talent represents the housebuilding sector on
two workstreams of the Green Jobs Taskforce.
Maintain an average of 4.0 training days per
employee per year and 7% of workforce in a
graduate, apprenticeship or trainee role.
Maintain upper quartile UK FTSE performance in
our engagement survey.
•
Training dipped to 3.9 days this year, and 6.8% of the workforce
were on trainee programmes, both negatively impacted by
COVID-19.
• Recruitment undertaken for a new degree apprenticeship in
Residential Technical Design and Management.
•
The engagement survey has been deferred to October 2021 to
capture feedback on hybrid working.
Continued support for disadvantaged groups
(ex-offenders, special needs and disabled) and
for young people.
✓
• Signatory of the Social Mobility Pledge, partnering with a
former Secretary of State for Education to launch a new social
mobility action plan.
Diversity and
Inclusion
Increase ethnic minority employees by 10% and
ethnic minority senior employees by 5%, by the
end of 2021.
Increase female employees to 34% overall and to
30% in management grades, by the end 2021.
Fulfil commitment to the FTSE 100 ‘30% Club’
target of a minimum of 30% women on our
Board.
✓
Keeping People Safe
Health and
Safety
Maintain Injury Incident Rate (IIR) at the level
recorded in 2015 (381 or less per 100,000
employees including sub- contractors).
Continually reduce sickness absence below the
industry benchmark as defined by XpertHR.
•
•
127 delegates involved in the Armed Forces Transition
Programme.
23% of apprentices recruited from the most deprived areas of
the country.
• Continued to drive key elements of our ethnic minority strategy
as well as our diversity and inclusion programmes across the
business, such as our Catalyst programme for female leaders
and reciprocal mentoring programme.
•
Internal employee networks have been set up including an
LGBTQ+ network, and networks to promote social links during
the pandemic.
• Action plan in place to improve performance (see page 15).
• Continued employee benefits including health screening,
private medical insurance, health and wellbeing services, gym
membership and dental plans.
Mental Health
and Wellbeing
To provide leading health and wellbeing
programmes to our workforce.
✓
• Signed up to the Building Mental Health Charter.
• Flexible and bespoke support for colleagues during the
pandemic.
• Successfully piloted online virtual training for Mental Health
First Aiders. There are now over 100 across the Group.
• Promoted the Construction Industry Helpline alongside our all
employee assistance programme.
Performance key: ✓ Target met
On track
Monitor
Target not met
20
Sales and
Marketing
Eliminate single use plastics from
sales and marketing merchandising by
December 2021.
• Significant progress in eliminating single use plastics in
sales and marketing merchandising, removing items such as
balloons and stocking items such as bioplastic pens.
Affordability
Unlocking
Green
Lending And
Finance
Work with lenders and government to unlock
green mortgages for customers to purchase our
homes and explore the potential of new green
finance products for our business.
•
Increased engagement and traction on green mortgages with
lenders and industry experts.
Climate change
Climate change poses multiple risks for our industry, ranging from severe weather disruption to construction, to the impact of shifting
climate patterns on supply chain security and availability of land. However, the growing demand for low-carbon homes and the societal
imperative for leadership on climate change mitigation also provide strong opportunities for our business. Together these risks and
opportunities make climate change a key business priority for which we have stretching targets. We were the first national housebuilder to
set science-based targets and we are proud to be a signatory of the United Nations Race to Zero campaign.
For more information on How we are addressing these risks and exploring opportunities see page 65.
For our emission reporting this year we have chosen to switch from the financial to the operational control method and have restated our
historic emissions accordingly (see page 173). We believe this model to be a truer reflection of our direct emissions and whilst the change
has increased our 2018 baseline by c.10%, our percentage reduction targets remain the same. In relation to FY21 our market based emission
intensity measure has remained flat (1.78 tonnes CO2e/100m2), which is due to absolute emissions increasing in line with business growth.
Whilst positively we have seen reductions in emissions from vehicles and as a result of switching to renewable energy tariffs, these gains have
been offset by natural fluctuations in diesel emissions arising from weather and increased site activities. We anticipate our absolute emissions
will reduce significantly in the next two years as reduction initiatives take effect.
Greenhouse gas emissions
Scope 1
Scope 2
Total gross scope 1 & scope 2 emissions
Scope 1 and 2 energy consumption
Market based
Location based
Market based
Location based
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
MWh
2021
26,769
2,496
5,973
29,265
32,742
2020
20,323
1,640
4,260
21,963
24,583
2019
27,169
3,413
5,162
30,582
32,331
2018
27,577
5,080
6,716
32,657
34,293
141,945
102,966
127,434
127,496
Carbon intensity (scope 1 and 2 emissions per 100m2 of
legally completed build area)
Market based
Location based
tCO2e/100m²
tCO2e/100m²
1.78
1.99
1.80
2.02
1.78
1.89
1.90
1.99
Category 1: Purchased goods & services
Category 11: Use of sold products
Other scope 3 emissions
Total gross scope 3 emissions
Total gross scope 1, 2 & 3 emissions
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
1,983,082
1,352,982
148,189
2,020,341
930,797
177,919
2,305,017
1,311,087
217,907
2,421,559
1,273,346
160,785
3,484,253
3,129,057
3,834,011
3,855,690
3,513,518
3,516,995
3,151,020
3,153,640
3,864,593
3,866,342
3,888,347
3,889,983
Market based
Location based
Scope 1, 2 and 3 GHG emissions have been measured in accordance with the operational control method of the GHG Protocol. All scope 1 and 2 GHG emissions arise in
the UK. Emission factors come from BEIS ‘UK Government Conversion Factors for Company Reporting 2020’.
Scope 1, 2 and selected scope 3 GHG emissions (business travel: 2,980 tCO2e; fuel & energy related activities: 6,176 tCO2e; and use of sold products: 1,352,982 tCO2e)
have limited independent assurance to the ISAE 3000 (revised) standard.
Comparative figures have been restated. See page 173 for detail.
For a copy of the Independent Assurance Statement, our full Carbon Reporting Methodology Statement and a full breakdown of scope 3 GHG emissions, see our website
www.barrattdevelopments.co.uk.
21
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Chief Executive’s statement CONTINUED
Building Sustainably
Scope 1 & 2 Net Zero Transition Plan
1
Energy
efficiency and
renewables:
• Energy
efficiency
measures
• Renewable
electricity
tariffs
• COVID-19
impacts
2
3
Medium/long term strategy:
• Low carbon alternatives to diesel
• Low carbon heating in homes and district heating systems
• Electric vehicles
Short term
initiatives:
• Behavioural
campaigns
• Generators –
use of hybrids
and review
of sizes
• Efficient
equipment e.g.
telehandlers
2018 baseline
y
a
w
h
t
a
p
n
o
i
t
c
u
d
e
R
30%
50%
On track to
meet our
2025 target
to reduce
emissions
by 29%
1
2
0
2
5
2
0
2
NET
ZERO
8
1
0
2
Our value chain emissions
4
New innovation
opportunities
to be identified
for residual
emissions
Emissions
with no
abatement
0
4
0
2
Net Zero Transition Plan
Our transition to net zero in our own
operations (scope 1 and 2) is focused on
achieving our two challenging targets –
an SBTi 1.5°C-aligned reduction of 29% by
2025 and net zero in our own operations
by 2040.
We already have a number of energy
reduction initiatives in place to further our
progress towards this, including the use of
LED lighting and energy efficient Stage V
engines, trialling hybrid solar generators
and the correct sizing of generators.
Working collaboratively across the business
we have undertaken a comprehensive review
of initiatives to accelerate carbon reduction
for our next phase, such as reducing the
use of diesel and switching to renewable
electricity. We are confident of meeting these
targets having started the implementation of
multiple initiatives, and we expect to see them
making a positive impact on our performance
in the next two years.
We continue to analyse all other emissions
across our value chain as we progress on our
journey, so that we can drive the initiatives
that will have a meaningful impact on our
scope 3 targets. For more on how we are
assessing climate risks see pages 65 to 66.
Value chain emissions
Value chain (scope 3) emissions account
for 99% of our total carbon footprint. Our
SBTi-aligned commitment is to reduce
scope 3 emissions per square metre of
homes completed by 24% by 2030. We have
achieved a 5% reduction against our 2018
baseline.
Around 40% of these emissions arise from
‘our homes in use’ – the electricity and
heating our customers use while living in
our homes. This is an area of increasing
regulation, with clear Government targets
for emission reductions detailed in the
Future Homes Standard. Our commitments
for carbon reductions here will be achieved
through fabric efficiency, energy efficient
equipment and the use of renewables and
alternative heating technologies where
possible (see Leading Construction on
page 28).
The remaining c.60% of our emissions
come from our supply chain – the complex
ground preparation activities that allow
us to build and the materials and sub-
contractors used during construction.
This year we have engaged with 30 of
our highest emitting suppliers and sub-
contractors to better understand our scope
3 emissions by calculating more specific
emission values. A priority has been to
better understand our carbon exposure and
we have been working closely with third
party experts to review the application of
our spend-based emissions factors, and
to analyse the emission reduction plans of
each key category in our value chain.
These activities will be used to inform our
wider reduction strategy and roadmap.
Standards, frameworks,
benchmarks and indices
Transparency is a key enabler of our Building
Sustainably Framework. We are committed
to continuously enhancing our disclosures
to meet changing stakeholder needs. That
means continuing to align to best practice
frameworks, standards and indices.
Many of the sustainability priorities for
our business and our Building Sustainably
Framework are driven by the UN SDGs.
We continue to progress on our journey
to achieve full compliance with the
recommendations of the TCFD (more
details on our progress and plans are
detailed on page 66); and have also begun
to report against the SASB criteria. For
more information see our website: www.
barrattdevelopments.co.uk.
Further, in July 2021 we became a signatory
of the UN Global Compact, reflecting our
ongoing commitment to the initiative and its
Ten Principles for Corporate Sustainability.
We are assessed on a number of key
sustainability benchmarks and indices
and have been awarded a series of
accreditations recognising our industry-
leading sustainability performance.
Reflecting our leadership status within the
FTSE100 we were ranked 11th in April 2021
by the Responsibility 100 Index developed
by Tortoise, which importantly evaluates
businesses on sustainability actions, as
well as commitments. Further, we continue
to retain our membership of FTSE4Good.
In 2020 we achieved our highest scores
for the CDP in Climate, scoring A-; Water,
scoring B- and Forests (in relation to
timber sourcing), scoring B-. We were
the only housebuilder this year to have
improved its score from the previous year
in all three disclosure categories. For the
NextGeneration sustainability benchmark,
we were the highest scoring national
housebuilder.
You can find more information on all our
inputs to our most material benchmarks
and indices on the website:
www.barrattdevelopments.co.uk
Raw materials 17%
Ground preparation 28%
The build 15%
Homes in use 39%
Timber 3% Plasterboard 3%
Clay, bricks & tiles 2% Concrete & cement 2%
Other materials 4% Transport to site 3%
22
Sub-contractor activities 14%
Barratt operations
and travel 1%
Scope 3
Scope 1 & 2
Scope 3
Other
1%
23
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Chief Executive’s statement CONTINUED
Strategic priorities: Customer first
Strategic priority
•
•
We deliver customer satisfaction through building high quality homes and creating a positive
customer experience throughout the home buying process.
We monitor our customers’ evolving needs and aspirations through continuous customer
feedback and surveys and use this to continually improve the homes and places we build.
Our objectives and value creation
Short term – 1 year
Medium term – up to 3 years
Medium term – up to 3 years
Long term – 3+ years
We will replace our CRM
system and deliver an online
portal for our customers.
This will further improve
our customer service by
providing easier access to
documentation and customer
care.
We plan to develop content for
customers allowing access to
regulated mortgage help direct
from our website.
We will also work with the
HBF on the launch of the
New Homes Ombudsman and
supporting Consumer Code.
This will provide easier access
to clear, regulated information
on the appropriate finance for
them.
This will provide further
confidence in our sales
process, the quality of our
homes and our customer care.
We will continue to work with
mortgage lenders and the
Government to develop green
mortgages that recognise the
lifetime ownership savings our
energy efficient homes provide
for customers.
This will lead to lower
mortgage interest rates or
enhanced mortgage lending
terms.
Progress
Customer service
We have an absolute commitment to quality
and customer service. Throughout the year
we have continued to drive improvements
to the customer journey and have adapted
our processes to protect and support our
customers as a result of the pandemic.
We are the only major housebuilder to have
been awarded the maximum 5 Star rating
by our customers in the HBF customer
satisfaction survey for 12 consecutive
years, with a customer satisfaction rating
above 90%.
In December 2020, we were named
‘Large Housebuilder of the Year’ at The
Housebuilder Awards 2020. This is the
second consecutive year we have won this
award and the third time we have secured
this title in the last five years.
A long term investment
We have made a significant investment
over many years in our processes and
procedures to support excellent customer
service. Every aspect of a customer’s
journey is continually re-appraised to
enhance customer service, including
24
the customer's experience from the first
visit to our website and sales centres,
their interactions with our sales teams
throughout the process, and the efficient
follow up and rectification of any issues by
our Customer Care team after moving into
their new home.
relevant communications throughout
the process. One of the main channels
of communication and marketing is our
website, which provides interactive site
plans across all device types. These enable
customers to see real time plot availability
across their chosen development.
Visits to sales centres and physical viewings
throughout the year were by appointment
only with one household visiting a property
at a time. We are signatories to the
Government and industry Charter for
Safe Working Practice – COVID-19, which
supports the adoption of best practice
across the industry.
We have continued to develop an online
portal to support home buyers during the
sales journey and after they have moved in.
In response to COVID-19 we have developed
personalised virtual show home tours using
mobile technology. We plan to continue to
use this technology more going forward to
support prospective customers.
We are committed to acting on our
customers’ feedback and driving
improvements to enhance the customer
experience. Our people are key to our
success and we continue to invest in
training and development programmes to
ensure they remain best in class.
Effective communication
using technology
We understand buying a home is a big
decision and customers need timely and
Customer care
Our Customer Care teams, after significant
restrictions on their activities during
the initial national lockdown and some
additional restrictions during the year,
have worked tirelessly to deal with
outstanding after-sales issues through
a phased and prioritised approach, while
adopting enhanced precautions to enable
social distancing.
Homes that address customer
needs and lifestyles
We understand the importance of building
homes that are right for our customers’
needs and lifestyle choices. These can
change over time and our home designs
will continue to evolve. We expect the
ability to work from home will become
more important for a large number of our
customers, so we will demonstrate how
workstations can be incorporated into those
housetypes within our core range that do
not include a separate work area.
Our commitment to design and
placemaking also includes an increasing
awareness of the wellbeing of our
customers. We expect access to private
external and communal green spaces as
well as access to walking and cycling will
be even more desirable for customers
going forward. This fits well with our long
term focus on these areas across all of
our developments.
Energy efficiency reduces whole life
costs and improves sustainability
We are continually striving to improve
the energy efficiency and sustainability
of our homes and are adapting our home
designs in response to the Future Homes
Standard and other changes to Building
Regulations. We aim to build high quality
homes that optimise internal space and
deliver excellent energy efficiency, resulting
in lower lifetime costs for our customers.
In 2021 99% of our home completions were
EPC rated ‘B’ or above (2020: 99%), a level
of energy efficiency shared by just 3.1%
of the existing housing stock. We are also
installing smart meters on an increasing
number of our properties to help customers
control and understand their energy and
water usage.
Mortgage advice and accessibility
Most of our customers require advice on
mortgages and financial assistance, which
they can obtain through our network of
independent mortgage advisers.
To provide a seamless and efficient service,
we have an online mortgage advice service
via a regulated third party to support
our customers. We are continuing trials
of a regulated ‘decision in principle’
functionality through this channel.
We have increased engagement with
lenders and third party experts regarding
green mortgages to ensure more
customers can have the cost savings
created by our energy efficient homes
considered in their mortgage applications.
Reflecting the challenge of higher LTV
mortgage availability for many home buyers
we are continuing dialogue with lenders
and also looking at new mortgage market
developments to identify how we can help
ensure mortgage availability improves for
our customers.
Supporting the NHS and our
Armed Forces
Following its launch in May 2020, we were
delighted by the take up of our 'Big Barratt
NHS Thank You' scheme which, following
its initial success, was extended through
to June 2021. The scheme, put together to
show our gratitude to all NHS employees
working hard to look after people through
the pandemic, provided a 5% deposit up
to £15,000 to help NHS employees buy
any new Barratt or David Wilson home.
Over the life of the scheme 1,943 NHS
employees took advantage of the offer, with
the Group funding over £22.8m of deposit
contributions.
We are proud to have signed the Armed
Forces Covenant and have a Deposit
Contribution Scheme to help Armed Forces
personnel onto the housing ladder. This
scheme is available to all UK Armed
Forces personnel and offers a 5%
deposit contribution, up to £15,000, toward
our homes.
↓ Priti and Akshay
Vilankar enjoying their
new apartment in
Hounslow, London
Key material issues
• Effective customer communication
and service.
• Development and training of our
employees.
• Lifetime performance of the
homes we build.
• Housing affordability.
KPIs
Customer satisfaction
HBF
5 Star
(2020: HBF 5 Star)
Why we measure
• Customer satisfaction is
fundamental to our business. The
HBF Homebuilder Survey is an
industry-recognised, independently
measured indicator of our
customer service and build quality.
I
J
L
K
H
Risks A
Industry leading quality and customer
service are key to our brand and
reputation, and to the demand for our
homes.
Changes in the economic environment
and our sales market could affect
customer confidence and the
availability of mortgages which could
reduce sales rates and volumes.
For more on Principal Risks
see page 58.
25
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Chief Executive’s statement CONTINUED
Strategic priorities: Great places
Strategic priority
•
•
We build long term relationships to secure attractive land opportunities where people
aspire to live.
Through great design and planning expertise, we aim to create sustainable homes and
developments for our customers, where they can create thriving communities with a positive
environmental legacy.
Our objectives and value creation
Short term – 1 year
Medium term – up to 3 years
Long term – 3+ years
We aim to secure 18,000 to 20,000 high-
quality land bank plots across the country
through our disciplined approval process.
We will continue to refine our housetypes
to meet changing customer demands,
planning and building regulations.
This will enable business growth whilst
creating value for stakeholders through
Great Places development design,
biodiversity net gain on all new sites,
appropriate usage of MMC and continually
refining our housetype range.
This will add value through continued
customer demand for our quality homes
and develop ongoing relationships with
landowners, planning authorities and
other stakeholders.
Our focus remains on leading the
development of sustainable places that
satisfy the country’s need for more housing
whilst also creating a positive economic,
social and environmental legacy.
This will add value by creating the
homes needed by our customers, whilst
also creating local economic growth,
enhancing local communities and creating
a positive impact on the environment in
and around the Great Places we create.
Progress
Land bank
We build homes in locations where our
customers want to live, with good access
to open space and amenities, transport
connections, schools and workplaces.
Our specialised divisional land teams
possess extensive local knowledge and
strong relationships with landowners.
This, combined with detailed research
into local market conditions, means we
can secure land in locations of strong
customer demand.
Bringing land through the planning system
and into production is the foundation
of our future operational and financial
performance. The NPPF, published in July
2018, continues to provide the framework
for the planning system to deliver a
sustainable supply of consented sites.
Throughout the last year, we have focused
on optimising our existing land bank
through replanning to deliver more efficient
use of space and attractive street scenes
for our customers, whilst delivering
additional outlets for our business
26
from further dual branding. We have
also reviewed our housetype designs in
response to changing market trends and
customer feedback.
Despite the continuing challenges posed
by COVID-19 related restrictions, periods
of lockdown and resource constraints on
many local planning departments, we have
maintained good momentum in securing
planning consents. During the year we
achieved planning on 14,280 plots (2020:
14,768 plots; 2019: 18,280 plots). We have
detailed or outline planning permission on
all of our FY22 expected home completions
and 95.5% of expected home completions
for FY23.
Continually evolving
housetype design
We have a standard housetype range for
both our Barratt and David Wilson Homes
brands, with the most popular and build-
efficient housetypes making up our core
ranges. We continuously review, consolidate
and evolve our housetypes in response
to customer, sales and construction
feedback, as well as design input reflecting
both future legislative changes and our
own targets, and to ensure that our new
standard housetype designs will be net zero
carbon in use from 2030.
Our Group Design and Technical Team are
developing plans to ensure our housetypes
meet the Future Homes Standard and
legislative requirements in England in 2023
and 2025, when our homes will be required
to deliver initially 31% and subsequently 75-
80% emission reductions relative to current
standards. We are also focused on meeting
the different legislative requirements in
Scotland and Wales.
Our housetype evolution also seeks to
ensure evolving designs can be constructed
in either traditional or timber frame format,
recognising the advantages of MMC.
Our standard housetype ranges comprised
65.3% of homes completed in the year
(2020: 60.2%; 2019: 36.4% of homes
completed). Feedback from our customers
continues to be positive and our build
↑ David Wilson Homes at our Cane
Hill Park site in Coulsdon
teams and sub-contractors appreciate our
housetypes because their simpler designs
and footprints mean they are more efficient
to build.
‘Built For Life’ –
designing great places
Placemaking principles are fundamental
to our business: our customers want to
live in great places that create a positive
legacy. Our internal ‘Great Places’ design
principles are aligned to the Government-
endorsed Building for Life 12 criteria.
We added a new Health and Wellbeing
criterion in February 2020 ahead of, and
aligned, with the updated Building for a
Healthy Life standard - the importance
of which has since been highlighted by
COVID-19. As a result, Great Places puts
greater emphasis on development design
to support good physical and mental health
and wellbeing. We shape our developments
around existing ecology, green spaces,
walkways and cycle paths to encourage social
interaction and a sense of ownership and
appreciation of the surroundings created.
Our commitment to placemaking is
reflected in our ongoing success in
achieving ‘Built For Life’ accreditations; we
have now achieved 96 awards, 23 of which
were rated Outstanding.
Biodiversity
Biodiversity Net Gain (BNG) is an approach
to development whereby a development’s
biodiversity is left in a measurably better
state than if the development had not taken
place. We have committed to demonstrating
a minimum biodiversity net gain of 10%
across all development designs submitted
for planning by 2023.
Our BNG plans are in place with resources
and models for our land buying teams and
agreed Biodiversity Net Gain Maintenance
and Monitoring Plans being developed for
these sites. BNG will become mandatory
two years after Royal Assent of the new
Environment Bill, which is now not expected
until 2023, but a number of Local Planning
Authorities are already requesting proposed
developments deliver a BNG as part of
their planning process. We have continued
to roll out our programme to achieve our
BNG targets, including running regional
workshops across the country to promote
best practice.
We continue to develop additional
biodiversity activities, benefiting from
our ongoing partnership with the RSPB.
Notable projects include our continued
installation of swift bricks in the ten ‘Swift
Cities’ identified as having experienced the
sharpest decline in swift populations, and
the mandating of hedgehog highways on
our developments.
This year also saw the launch of the RSPB
partnership’s ’Nature on your doorstep’
campaign, which encourages residents to
access and share the actions they can take
to support wildlife, while also conducting
research into the best ways to encourage
people to get involved.
Water efficiency
We recognise that water efficiency is an
increasingly important area. We must
mitigate against future risk of geographical
water scarcity and flooding through
increasing water efficiency in our homes to
complement our use of SUDS.
Following collaborative work with a water
utility company in 2020 we are developing
benchmarks and targets for the water
efficiency of our homes. As well as
environmental benefits, improving water
efficiency has the potential to create
infrastructure credits, reducing water
connection charges across our future
developments. From summer 2021 all new
homes will be built ahead of legislation to a
target of 105 lpppd.
Key material issues
• Securing land to support future
growth.
• Housetype evolution to meet
changing customer demands.
• Lifetime environmental
performance of the homes we
build.
• Biodiversity gain on development
activity.
KPIs
Owned and controlled land bank
4.7 years
(2020 – 6.7 years)
Why we measure
• Drives ownership and control of the
optimum amount of land to support
business activities.
Net land approvals (plots)
18,067
(2020 – 9,441)
Why we measure
• Monitors the intake of land for
purchase to support future growth.
I
J
L
C
K
H
Risks B
The inability to secure sufficient
consented land and strategic land
options at appropriate cost and quality
would affect our ability to provide
attractive developments that address
the housing shortage. Changes to the
regulatory environment could affect
our ability to achieve our medium term
targets.
For more on Principal Risks
see page 58.
27
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Chief Executive’s statement CONTINUED
Strategic priorities: Leading construction
Strategic priority
We deliver the highest quality homes by focusing on excellence across all aspects of construction.
•
• We continue to work with our supply chain partners to develop MMC at scale.
•
Our construction processes, in collaboration with our supply chain partners, are key to our
sustainability targets.
Our objectives and value creation
Short term – 1 year
Medium term – 3 to 5 years
Long term – 5+ years
We will focus on a further increase in
construction activity to deliver additional
output in line with our completions target
for FY22, whilst ensuring our industry
leading standards around build quality
are maintained and our waste intensity is
reduced.
This will add value through delivering
additional high quality homes for our
customers, providing incremental revenue
and profitability for our shareholders
and reduce the waste impact on the
environment from the homes we build.
Progress
Build recovery
At the start of the financial year we were
re-starting construction operations on
sites across the country following the
initial national lockdown. It is a testament
to the strength and commitment of
our construction teams and our sub-
contractors, many of whom have worked
with us for many years, as well as our
supply chain partners, that we have
successfully rebuilt our construction
activity. As a result construction activity
in the year was slightly ahead of planned
output, with an average of 311 (2020: 274;
2019: 361) equivalent homes, including JVs,
constructed each week.
Build quality
Our long standing commitment to quality
has proved itself over the year, with our
construction teams successfully delivering
both the activity rebuild and improved
construction quality scoring from the NHBC
that continues to lead the industry.
28
We will accelerate our roll out of MMC to
deliver 30% of completions from MMC by
2025.
This will add value by helping to mitigate
ongoing skilled labour supply constraints,
shorten build times improving capital
efficiency, accelerate our waste intensity
reduction and, through the use of low
embodied carbon building materials,
reduce the embodied carbon in the homes
we build.
Our objective is to deliver zero carbon
homes in use from 2030 and to be a net
zero greenhouse gas emissions business
covering all our direct operations by 2040.
This will add value through the lower
lifetime costs for our customers, deliver a
significant contribution to society and the
environment, and ensure long term value
creation for our shareholders.
Through 2021 our sites on average achieved
0.12 reportable items (RIs) per NHBC
inspection, which is the lowest of all major
housebuilders (those who build more than
1,000 homes annually).
Site management excellence
recognised for a record 17th year
Our long term focus on quality and site
management was again demonstrated by
our success in the NHBC Pride in the Job
Awards, which recognise site managers
who achieve the highest standards in
housebuilding across the UK. In February
2021, our site managers secured both
the Supreme Award and runner-up in the
Larger Builder category. This is the second
consecutive year that our site managers
have secured the Supreme Award and the
fifth time in the last six years highlighting
the long term commitment of our site
management teams to deliver excellent
build quality on safe and efficient sites
across the country.
In June 2021, our site managers won 93
awards (2020: 92), more than any other
housebuilder for 17 consecutive years.
This achievement demonstrates the high
standard of work that our site managers
and their teams deliver, and reinforces to
our customers the quality of our product.
All our sites are externally certified to
Environmental Management System
standard ISO 14001 and Health and Safety
standard OHSAS 18001.
Innovation
During the year, we delivered 4,393 homes
using MMC equating to 25% of our total
home completions (2020: 2,652 homes and
21% of total home completions).
MMC provides opportunities to address the
skills shortage facing the industry, diversify
the types of materials we use and build
with greater speed and efficiency. We have
experience of over 100 sites where we have
applied one or more MMC solutions. This
accumulation of knowledge and experience
has allowed us to define the criteria needed
to unlock the benefits of MMC and deliver a
successful site in terms of build efficiency
and sales.
As a result, we are now able to use MMC on
the right sites to compete with traditional
brick and block construction, mainly due
to the time savings we have been able to
obtain. The table below details the various
MMC used during the year.
MMC
Timber frame
Roof cassettes
Offsite ground floors
Large format block
Total*
Percentage of
completions*
FY21
3,003
696
360
334
4,393
FY20
2,031
269
143
209
2,652
25%
21%
* Total and percentage of completions includes JVs
and has been adjusted for homes where more than
one technology has been used.
A key aspect of our MMC and carbon
reduction strategy is the delivery of
timber frame homes. Timber frames are
factory assembled to high standards,
and provide a low carbon cost method of
construction with low levels of embodied
carbon. Our core English housetypes have
been designed to use timber frames and
we delivered 1,638 (2020: 469) timber
frames from Oregon, our timber frame
manufacturer, to our sites this year.
Reflecting the excellent progress made
towards our previous target of 25% of
completions using MMC by 2025 and our
understanding and confidence developed
since acquiring Oregon in 2019, we have
increased our target for completions using
MMC to 30% by 2025. We recognise that
there remains more research to be done
in exploring the advantages of MMC, in
terms of design, construction, and use
through the whole life of a building. We
are partners in the AIMCH project, jointly
funded by Innovate UK and the private
sector to identify, develop and expand new
housebuilding technology.
We recognise it is critical that the whole
sector takes on MMC and delivers robust
solutions, and the importance of knowledge
sharing. We continue to invest in research
and development into new housebuilding
technology, including in part to meet the
challenge of climate change.
Zero carbon homes in use by 2030
This year we have established a roadmap
for delivery of zero carbon homes in use
from 2030, ensuring design changes and
technologies can be tested. We are building
a zero carbon home in conjunction with the
University of Salford – the ‘Z house’ which
incorporates biodiversity, water efficiency
and zero carbon design elements and will
enable us to monitor the home in use.
We have been working with the HBF Future
Homes Task Force to communicate the
key challenges to the delivery of these
ambitions, as set out in stakeholder
engagement on pages 45 to 55, including
the time needed for supply chains and
skills development to adapt to these new
technologies.
For more on our entire value chain
carbon emissions and transition plans
see pages 10 to 11.
Waste management
The industry is seeing high levels of
demand for materials, many of which cause
environmental and social impacts in their
extraction, manufacture and transport, so
it is important that we focus on waste and
resource efficiencies.
To ensure that resource efficiency and
waste management are prioritised,
enabling us to meet our 2025 target of a
reduction in waste intensity to 5.67 tonnes
per 100m2 legally completed build area,
management annual bonus incentives
in FY22 will incorporate waste intensity
reduction targets.
Our current areas of focus are improving
on-site monitoring, plasterboard sizing,
reuse and recycling schemes and supplier
working groups. We have also rolled out
and embedded an enhanced monthly
reporting pack to monitor performance and,
in March 2021, we appointed a dedicated
Waste Project Manager.
As a result of these measures, our waste
intensity improved by 23.5% to 5.89 tonnes
per 100m2 of legally completed build
area (2020: 7.70 tonnes per 100m2 legally
completed build area). In the year our
absolute waste tonnage increased by 2.7%
(2020: decreased by 16%) reflecting the
increased level of build activity.
We continue to emphasise efficient use of
skips and segregation of waste. However,
due to a change in how we collect data, our
diversion of waste from landfill decreased
during the year to 95% (2020: 96%).
In 2021 more than 1,620 tonnes of
timber were reused or recycled through
the Community Wood Recycling social
enterprise. In addition we recycled over
10,000 (2020: over 9,000) paint tins across all
our sites.
We have also seen positive outcomes from
collaboration with our supply chain to
eliminate single use plastics and maximise
resources. We no longer dispose of timber
joists used for stairwell protection during
the build process. We also no longer
wrap timber I-beams in plastic during the
summer months, and we are conducting
a trial to reduce the use of shrink-wrap on
bricks, by either removing it or using it only
as a “top” cover to avoid rain damage.
We are collaborating with other
housebuilders to research packaging waste
at its manufacturing and supply source and
to establish a baseline across our supply
chain, in partnership with Zero Waste
Scotland and Valpak.
Key material issues
• Health and safety across our
operations.
• Build quality monitoring.
• Reducing the carbon emissions
from our construction activities.
• Reducing waste created by our
operations.
KPIs
Total home completions
17,243 homes
(2020: 12,604 homes)
Why we measure
• To monitor activity and growth in
the business.
• A benchmark by which business
capacity is monitored.
Waste intensity
5.89 tonnes
per 100sq.m. of build
(2020: 7.70)
Why we measure
• To use materials as efficiently
as possible in the construction
process.
• To improve both operating
efficiency and financial
performance.
I
J
L
E
K
H
Risks D
Delays in build programmes, poor
product quality, or a failure to
maintain sufficient material and
sub-contractor availability could
hinder the achievement of excellence
in construction, harming reputation,
increasing costs, reducing revenue
and resulting in litigation and
uninsured losses.
For more on Principal Risks
see page 58.
29
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Chief Executive’s statement CONTINUED
Strategic priorities: Investing in our people
Strategic priority
•
People are the heart of our business and we aim to attract and retain the best by investing in
their development and success. We have well established apprenticeship schemes to attract
the next generation to our industry.
•
We seek to create a great place to work, founded on an open and honest culture that embraces
diversity and inclusion.
Our objectives and value creation
Short term – 1 year
Medium term – up to 3 years
Long term – 3+ years
We will focus on retaining and attracting
the best people through our enhanced
benefits packages, our plans on returning
to our offices and new ways of working,
as well as through enhanced training and
development initiatives, in combination with
an increased focus on employee wellbeing.
This will add value by limiting staff
turnover, attracting new employees to our
business and ensuring that our employees
feel valued and motivated to deliver
excellent build quality and customer
service.
We will focus on our recruitment
programmes to broaden our talent
pipelines and bring greater diversity and
inclusion to our recruitment processes and
our workforce.
This will help our business to engage and
recruit the best employees, including
those from less socially mobile segments
of the population, addressing the skills
shortage, which is a key constraint on the
business.
Our focus remains on ensuring our
business is representative of the
communities in which we operate. Our
programmes around remuneration,
benefits, wellbeing, diversity and
inclusion, complemented by training and
development, can attract employees and
help address the skills shortage in our
industry.
This will enable us to grow volumes
in line with our medium term targets,
creating opportunities for advancement
throughout our workforce and create long
term value for shareholders.
Progress
Our continued success is achieved
through the hard work and dedication
of our employees. We aim to attract
and retain the best people by engaging
with our employees, promoting their
wellbeing, investing in their development,
recognising their dedication, and ensuring
our employee packages are effective and
competitive. We are committed to becoming
more diverse and inclusive as we believe
this will create a stronger, more dynamic
business, is better for our customers and
makes us a more attractive employer.
The development and
training of employees
We are playing our part to address the
industry skills shortage and reduce its
impact on our business. We have a number
of award winning and well-established
development programmes and plans to
expand these significantly through 2021
and 2022.
In total we have developed or are developing
127 (2020:100) delegates through our
Armed Forces transition programme, with
27 (2020: 30) currently enrolled. The skills
developed in the Armed Forces translate
well to site management, and the scheme
has brought a large number of high calibre
individuals into our business.
In January 2020 we launched our Higher
and Degree Apprenticeships in both
Residential Construction and Quantity
Surveying, which complements our existing
Residential Construction and Commercial
degrees at Sheffield Hallam University.
This includes on the job training to ensure
their academic learning is applied in their
roles, a work based learning coach who
guides them through the programme, and
support in working towards professional
accreditation. Following the success of
the Higher and Degree Apprenticeships,
we are now working with Sheffield Hallam
University to develop a similar qualification
for our Technical departments, supporting
individuals who are looking for a career in
technical design or project management.
Our programmes for bricklaying and
carpentry apprentices enable participants
to achieve apprenticeship level within a
reduced timeframe while maintaining the
same high standards. Our schemes focus
on bringing new talent to the industry and
on retaining it for the future. To date, 184
apprentices (2020: 119) have attended and
174 apprentices (2020: 112) are due to
complete the course in FY22. We currently
employ 426 apprentices, graduates and
trainees (2020: 492), around 7% (2020: 7%)
of our workforce. Apprenticeships remain a
vital route to develop skilled tradespeople
for our industry and 124 (2020: 57) have
been recruited in FY21 for our FY22 intake.
30
We also continue to collaborate with the
wider housebuilding industry, actively
participating in the Home Building Skills
Partnership, which aims to attract new
entrants to our industry, provide skills for
the future, and support the supply chain in
developing the skills they need to support
our industry.
Our Head of Talent Management led on
two workstreams within the Government’s
Green Jobs Taskforce, which was chaired
by the Minister for Business, Energy and
Green Growth and the Parliamentary Under
Secretary of State for Apprenticeships and
Skills. The Taskforce sought to identify how
to grow green jobs across the economy and
take advantage of the opportunities created
by decarbonisation.
We also address the skills shortage and
prepare for the future by developing our
people across all aspects of the business. Our
MyLearning Mobile App, provides colleagues
with even more flexibility and choice in how
they access and consume learning content
with more than 1,500 additional learning
modules added in the year.
We want to support our leaders and
managers of the future and effective
succession planning is an important
element in our long term success. In 2021,
270 (2020: 227) high potential employees
have attended or are attending our Rising
Stars programme.
We achieved 3.9 training days on average
per employee (2020: 4.1 days) just below
our target of over 4.0 average days
training days per employee. Our training
activity has been constrained by limited
classroom-based training throughout the
year, reflecting lockdown restrictions and
social distancing limitations. In FY22 we
are moving training to an 80:20 online:
classroom model to provide enhanced
training access for our employees.
How we recruit and retain
the best talent
It is vital for us to recruit the best
candidates and to develop talent within our
business to ensure we have the necessary
skills for continued operational delivery and
future growth.
We engage with our future workforce
through our work with schools, national
apprenticeship bodies, universities and
Armed Forces resettlement organisations.
This includes getting involved with campus
activities, attendance at careers fairs and
employer led events with an increasing
focus on virtual events.
In October 2020, Barratt also became a
signatory of the Social Mobility Pledge,
partnering with the former Secretary
of State for Education, Rt Hon Justine
Greening, to launch a new social mobility
plan which will ensure more people are
able to progress in careers, unhindered
by their background or lack of industry
connections.
For our 2021 recruitment, 23% (2020: 25%)
of our apprentices were recruited from the
most deprived areas according to the Index
for Multiple Deprivation. Our Construction
and Sales Academy programmes develop
talent within our business and we continue
to work with the Home Building Skills
Partnership.
In response to ongoing engagement survey
feedback we are working to improve the
visibility of career paths in all functions
with individual development plans and
the proactive prioritising and tracking of
internal promotions.
Remuneration and benefits are an important
element of employee retention. We continue
to review our employee packages to ensure
they are effective and competitive.
↑ Members of our London construction
team assembled at our Upton Gardens site.
Growing employee equity
participation in our business
In April 2021, we invited all eligible
employees to participate in the 13th grant
under the Group’s Sharesave scheme,
which allows eligible employees to
contribute a maximum of £500 per month
in one or a combination of Sharesave
schemes. At 30 June 2021, approximately
50% of employees participated in one or
more of the active Sharesave schemes,
compared to 51% as at 30 June 2020.
We believe it is important that we recognise
our colleagues’ commitment, particularly
after the challenges faced over the last
year, and that we share the success of
the business with the people who make
it possible. Reflecting this success and
to mark the milestone of completing our
500,000th home in late 2020, an award of
200 shares was made to all employees
below Managing Director level in the year.
This is the third consecutive year that the
Board has recognised our employees’
commitment and support in this way.
In continued recognition of the dedication,
commitment and loyalty of our employees
the Board has agreed that, going forward,
a share award will be made on an annual
basis. The total cost of the annual award,
in aggregate, will not exceed 2.7% of all
employee costs. Accordingly, in July 2021,
an award of shares, equating to £1,250, was
made to all full time employees (pro-rated
for part-time employees) below Managing
Director level. This award will vest in
July 2023.
Despite our ongoing efforts around
employee retention, our total Group
employee turnover has increased to
12% for the year to 30 June 2021, (2020:
10%) however this is still below our target
of 15%.
31
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Chief Executive’s statement CONTINUED
Strategic priorities: Investing in our people
CONTINUED
Male and female employees
PLC Directors
Senior Managers
Employees
Executive Committee
Reports to
Executive Committee
Male
Total
2021
2020
56% 62%
5
5
Male
Total
2020
2021
84% 86%
Male
2021
69%
2020
69%
239
246
Total
4,168 4,391
Male
Total
2021
67%
2020
67%
4
4
Male
Total
2021
66%
23
Female
44% 38%
Female
16% 14%
Female
31%
31%
Female
33%
33%
Female
34%
Total
4
3
Total
44
40
Total
1,869 1,970
Total
2
2
Total
12
2020
67%
24
33%
12
we have partnered with our benefits
providers to offer training to support
physical, mental and financial wellbeing.
Our Talent team continue to provide regular
mental wellbeing webinars.
All new employees receive mandatory
diversity and inclusion training as part of
their induction and we have been engaging
with Regional and Managing Directors
around our inclusion strategy.
Diversity and inclusion
We aim to create a working environment
that provides equal opportunities for all.
Selection for employment and promotion
is based on merit, following an objective
assessment of ability and experience,
after giving full and fair consideration to
all applications. We are also committed to
ensuring that our workplaces are free
from discrimination and that everyone is
treated with dignity and respect.
We strive to ensure that our policies and
practices provide equal opportunities
in respect of issues such as training,
career development and promotion
for all existing or potential employees,
at all levels throughout the business,
irrespective of age, disability, gender,
gender reassignment, marriage and civil
partnership, pregnancy and maternity,
race and ethnicity, nationality, religion or
belief, sex, and sexual orientation. We have
also signed the Social Mobility Pledge,
committing us to providing opportunities to
people from all different backgrounds.
Every effort is made to retain and support
employees who become disabled while
working within the Group and we continue
to remove physical barriers for disabled
colleagues or applicants.
We have made progress in female
leadership representation and continue to
focus on this area. At 30 June 2021, women
held 16% (2020: 14%) of senior manager
roles within the Group and we have
continued our focus on female leadership
development with our Catalyst programme.
We continue to work towards improving
ethnic minority representation. At 30 June
2021, 7% (2020: 7%) of employees were
from ethnic minority backgrounds and 1.5%
(2020: 2.1%) of senior leadership positions
were held by ethnic minority employees.
We have expanded our employee networks,
having launched groups to connect parents,
LGBTQ+ colleagues and allies, and a group,
“Barratt Connect”, for anyone who has felt
isolated or missed the social interaction of
work since our offices have been closed.
We have recognised that with many more
of our colleagues working effectively from
home, we can embrace a greater level of
flexibility and agility going forward.
More information regarding our inclusion
policy and initiatives can be found on our
website: https://www.barrattcareers.co.uk/
about/inclusion.
Employee engagement
We seek to create a great place to work,
founded on an open and honest culture. To
achieve this we regularly engage with our
employees to understand and address their
issues and concerns. Our Group employee
engagement score, currently 84%, has been
in the upper quartile consistently since
2014. As part of our embedded approach
to engagement, all divisions and functions
have proactively agreed and delivered
action plans.
Our Workforce Forum, comprised of
employees representing all regions and
levels of our business, continues to meet
and provide insight to inform our actions.
We share our engagement results with
the Forum and seek recommendations
on all aspects of our business that impact
our people.
For more information, go to stakeholder
engagement on pages 45 to 55.
Promoting the physical and mental
wellbeing of employees
During the year, we continued to progress
our health and wellbeing programmes,
including health and wellbeing hubs,
stress awareness training for employees
and mental health awareness training
to encourage openness and appropriate
responses between line managers
and colleagues.
Throughout the COVID-19 pandemic, a
key objective has remained the health and
safety of our employees, especially their
physical and mental wellbeing. In 2021,
32
Gender pay gap
In October 2020, we published our annual
Gender Pay Gap report. This identifies that
as a Group, our mean pay gap at 6.5% and
our median pay gap at 0.2% are relatively
low compared to the mean/median gender
pay gap across the UK. This has decreased
in the year due to an increase in the
number of men in the lower pay quartile.
Our mean bonus gap has increased slightly
to 33.4%, and continues to reflect the fact
that we have a higher proportion of men in
more senior roles, where bonus payments
make up a larger part of remuneration.
In addition there has been an increase in
cashed share options in the period, with
the majority of these (88%) relating to men.
The median bonus gap has decreased to
-1.4% in 2020, mainly because the bonus
and commission paid to sales teams in
the relevant 12 month period was greater
than the previous 12 months. This group is
predominantly female and makes up a high
proportion of our female employees. We
will continue to work hard to further close
our gender pay gap and ensure we build
a diverse, inclusive and attractive working
environment for all our employees.
A “real Living Wage” employer
During the year, we maintained our Living
Wage Foundation accreditation, showing our
commitment to our employees by paying
↓Nadia Grant, Sales Adviser, at
a Barratt Homes development in
central Birmingham
an independently calculated rate of pay that
is based on the actual cost of living. The
real Living Wage exceeds the national living
wage (set by the Government) and covers
all employees aged 18 and older as well as
incorporating a London weighting. Receiving
this accreditation demonstrates our clear
commitment to our employees as well as to
our suppliers and sub-contractors.
We have also updated our standard
sub-contractor terms and conditions to
mandate the payment of the Living Wage
within our supply chain. To support this, we
have implemented spot checks by divisions
on higher risk trades and put in place
remediation feedback systems internally.
For those working in jurisdictions other
than the UK, our expectation, included
within our contract requirements, is that
local statutory minimum wages are paid.
Human rights and anti-bribery
Our respect for human rights underpins
our strategic priorities. We have policies
and procedures in place that support the
core values of the United Nations Universal
Declaration of Human Rights and the UN
Guiding Principles of Business and Human
Rights, and we act in accordance with our
principles in relation to diversity and the
Modern Slavery Act 2015. Concerns can be
raised anonymously via our whistleblowing
process, details of which can be found in
the Audit Committee Report.
Our non-financial KPIs in respect of health
and safety and employee engagement
reflect our belief that it is a fundamental
human right to work in a safe and
supportive environment. Employees
undertake training on modern slavery and
we are rolling out diversity and inclusion
training to all employees. We have a strict
anti-bribery and corruption policy and
conduct our business in a fair, open and
transparent manner. All employees are
required to undertake training under our
anti-bribery and corruption policy at regular
intervals.
We work closely with our partners to
ensure our standards are applied to our
extended workforce. We are signatories to
the Gangmasters Labour Abuse Authority
Construction protocol, helping us share and
receive information and training materials
to prevent modern slavery. It is a condition
of all our supplier and sub-contractor
contracts that they comply with the Bribery
Act and our anti-bribery and construction
policy, which is available on our website.
For more information, go to
Whistleblowing on page 88.
Key material issues
• The development and training of
our employees.
• How we recruit and retain the best
talent.
• Our approach to health and safety.
• How we are creating opportunities
for young people.
• How we are engaging with our
employees.
• Promotion of the physical
and mental wellbeing of our
employees.
KPIs
Employee engagement
84.2%*
(2019: 84.5%)
Why we measure
• To gain insights and provide a
forum for employee views.
• To retain and invest in the
best people and focus on their
development and success.
• Feedback from the survey drives
actions and improvements and
highlights that we listen to and care
for our employees.
I
J
L
G
K
H
Risks F
The provision of a safe working
environment is a fundamental priority;
without looking after the health and
wellbeing of our employees, they could
not work with confidence. The skills
shortage in our industry means it is
of utmost importance to recruit and
retain best-in-class people.
For more on Principal Risks
see page 58.
* The engagement survey for the 2021 calendar year
has been deferred to October to capture feedback
on hybrid ways of working.
33
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Chief Executive’s statement CONTINUED
Financial review
Current trading and outlook
Our focus remains on rebuilding our
completion volumes to our medium term
target and current capacity of 20,000
homes. We have acquired land in recent
years at a minimum 23% gross margin,
and through our continued focus on
operating efficiencies and the rebuilding of
completion volumes, we continue to target
a minimum 25% ROCE in the medium term.
The sales performance in the new financial
year to date has been strong, with net
private reservations per average week of
277 (FY21: 314; FY20: 250), resulting in net
private reservations per active outlet per
average week of 0.83 (FY21: 0.94;
FY20: 0.68).
Whilst the net reservation rate is 11.7%
below that reported in FY21 it should be
highlighted that the prior year comparative
was a particularly active period, reflecting
both pent-up demand following the national
lockdown, as well as increased Help to Buy
reservation activity ahead of the changes
which would remove access to Help to Buy
for existing homeowners.
Our total forward sales, including JVs, as
at 22 August 2021 stood at 15,734 homes
(23 August 2020: 15,660 homes; 25 August
2019: 13,064 homes) at a value of £3,939.9m
(23 August 2020: £3,706.5m; 25 August
2019: £3,037.5m).
Private
Affordable
Wholly owned
JVs
Total
22 August 2021
Homes
£m
7,053
2,398.4
7,917
1,265.5
14,970
3,663.9
764
276.0
15,734
3,939.9
23 August 2020
Homes
£m
6,577
2,143.7
8,249
1,277.6
14,826
3,421.3
834
285.2
15,660
3,706.5
Variance %
£m
11.9
(0.9)
7.1
(3.2)
6.3
Homes
7.2
(4.0)
1.0
(8.4)
0.5
25 August 2019
Homes
£m
5,088
1,583.5
7,089
1,133.9
12,177
2,717.4
887
320.1
13,064
3,037.5
Variance %
£m
51.5
11.6
34.8
(13.8)
29.7
Homes
38.6
11.7
22.9
(13.9)
20.4
We are also pleased that since the start
of the new financial year we have seen a
further improvement in our construction
activity, building the equivalent of 335
homes per average week (FY21: 290 homes;
FY20: 361 homes). This is some 15.5%
ahead of the same period in FY21, when
the business was rebuilding construction
activity following the initial national
lockdown, but is 7.2% below the equivalent
financial period to date in FY20. We are on
track to deliver our planned output growth.
Based on current market conditions,
improved construction activity levels and
assuming no further COVID-19 related
disruption, we expect to grow wholly owned
completions to between 17,000 and 17,250
homes in FY22, and in addition complete
around 750 home completions from our
JVs, whilst ensuring we maintain our
industry leading standards of quality and
customer service.
secure both incremental home completion
growth and further operating efficiencies in
the year ahead.
The completion profile in FY22 is also
likely to revert back to the more typical
seasonal pattern of legal completions with
around 45% of our full year completion
guidance anticipated in the first half of the
new financial year and 55% scheduled for
completion in the balance of the year.
Looking ahead we recognise that there
continue to be macro challenges from both
COVID-19 and economic uncertainties but
we are monitoring the market closely and
we are prepared to respond as necessary.
We have substantial net cash balances, a
well-capitalised balance sheet, a strong
forward sales position and clear plans to
We also have the continued ambition to
accelerate our actions to deliver industry
leading sustainability progress, further
enhancing business resilience and our
customer proposition.
The Board will continue to monitor the
market and wider economy and believes
that our strong financial position provides
us with the platform and flexibility to react
to changes in the operating environment in
FY22 and beyond.
David Thomas
Chief Executive
1 September 2021
↓ Georgina Lindsay, Sales
Adviser, promoted to Team Leader
at Eagles Rest in Milton Keynes.
↑Embden Grange, a David Wilson development in Devon on the edge of Dartmoor
Our financial performance
this year has shown an
excellent recovery following
the substantial impact of
COVID-19 last year. The
strength and resilience of
our balance sheet, combined
with the commitment and
dedication of our employees,
sub-contractors and suppliers,
along with strong demand for
our high quality new homes
have all contributed to this.
Results for the year ended
30 June 2021
Sales activity
We delivered an excellent reservation
performance in the year with a net
private reservation rate per week of 0.78
(2020: 0.60; 2019: 0.70). In 2021 our sales
centres across the country operated on an
appointment only basis, although our sales
offices in Wales remained closed for longer
following Welsh Government guidance
during subsequent lockdown periods. The
physical closure of our sales centres from
23 March to 21 May 2020 in England, 1 June
in Scotland and 25 June in Wales impacted
our 2020 reservations, making year on
year comparisons less informative, and
therefore our net private reservation rate is
included with comparatives to 2019:
Private reservation rate
2021
2020
2019
2021 vs 2020 (%)
2021 vs 2019 (%)
H1
0.77
0.69
0.64
11.6%
20.3%
H2
0.78
0.51
0.76
52.9%
2.6%
FY
0.78
0.60
0.70
30.0%
11.4%
During the year we operated from an average of 343 active outlets (2020: 366; 2019: 379
outlets) including 8 (2020: 9; 2019: 9) active JV outlets; the reduction reflecting the delay
to site starts created by the initial national lockdown. We have made good progress on
rebuilding momentum in new site openings, launching a total of 144 new outlets (2020: 75;
2019: 163 outlets) including JVs in the year, with 81 new outlets (H2 2020: 30; H2 2019: 73)
opened in the second half. In FY22, we expect to see average sales outlet growth of around
3%, reflecting our focus on growth from both land investment and land bank optimisation
through additional dual branding of Barratt and David Wilson Homes on our sites. We
expect the affordable housing share of our home completions mix to increase to around
21% in FY22, a slight increase on the 20% in 2021.
Following the disruption to build from COVID-19 and the resulting site closures, lockdown
and the site restarts in the second half of 2020, completion volumes substantially increased
year on year. In the first half completions benefited from the elevated level of work in
progress carried into the new financial year and our higher forward sales position.
The second half benefited from continued strength of demand, as well as improved
construction activity, which delivered completions for the year ahead of both our start of the
year and half year expectations.
Completions (homes)
Private
Affordable
JVs
Total (including JVs)
2021
13,134
3,383
726
17,243
2020
9,568
2,466
570
12,604
Change
37.3%
37.2%
27.4%
36.8%
2019
13,533
3,578
745
17,856
Change
(2.9%)
(5.4%)
(2.6%)
(3.4%)
We have seen a gradual improvement in selling prices through the year, reflecting positive
house price inflation across the country. Our total average selling price (‘ASP’) was £288.8k
(2020: £280.3k; 2019: £274.4k), with private ASP at £325.5k (2020: £310.6k; 2019: £312.0k),
reflecting house price inflation and a higher proportion of completions in London. The
affordable ASP decreased by 10.1% to £146.5k (2020: £163.0k; 2019: £132.2k) reflecting
changes in mix, primarily a lower proportion of completions from our London operations.
34
35
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Financial review CONTINUED
• Mix and other items: changes in sales
mix and other smaller items combined
to create a 20 bps negative impact (2020:
60 bps negative).
• Administrative expenses: the
reintroduction of annual employee
incentives following the decision to
make no payments under the 2020
annual employee incentive schemes,
delivery against share incentive scheme
targets, and a slight reduction in
sundry income with a modest offsetting
increase in part-exchange income,
contributed to a significant increase
in net administrative expenses. This
deducted 150 bps (2020: added 120 bps)
from the adjusted operating margin. In
FY22 we expect administrative expenses
will increase to c. £230m, reflecting
a further reduction in sundry income
alongside inflationary pay increases and
disciplined investment in people and
our IT systems.
• Non-productive site overheads: costs
totalling £45.2m in 2020 that would
normally have been capitalised to WIP
but were expensed due to the absence
of activity during the initial lockdown
period did not repeat in the year and
had a 90 bps positive impact (2020: 130
bps negative impact) on the adjusted
operating margin.
•
Inventory provision release:
changes in the expected revenues
and profitability across the land bank
and development portfolio resulted
in a net provision release of £3.5m
compared to an £8.2m charge in 2020.
The net impact of £11.7m resulted in
a 20 bps incremental increase in the
adjusted operating margin (2020: 20 bps
reduction).
There were two operating adjusted items
recognised during the year:
• Cost associated with legacy
properties: the Group incurred an
additional £81.9m (2020: £39.9m) of
costs in the year. Of this £32.5m (2020:
£11.4m) relating to legacy properties
comprising costs related to external
wall systems and associated reviews.
A further £49.4m (2020: £28.5m) related
to Citiscape and associated reviews,
which were substantially completed in
the year. Following the establishment
of our in-house Building Safety Unit, in
FY22 we anticipate adjusted items of
at least £40m for costs associated with
EWS and cladding related remediation
activities. These are costs that we may
agree to incur beyond our contractual
and legal obligations, and in response
to evolving legislation.
• Repayment of CJRS grant income:
through the period of temporary closure
of the business in 2020, where around
85% of our employees were placed on
furlough, we used the Government’s
CJRS and received £26.0m of grant
income. With the Board’s decision,
in July 2020, to repay all CJRS funds
received, the Group recognised the
total grant income received in 2020 as
adjusted income. In 2021, the return of
this grant income has been recognised
as an adjusting cost.
As a result, we delivered a profit from
operations of £811.1m (2020: £493.4m;
2019: £901.1m) and an operating margin
of 16.9% (2020: 14.4%; 2019: 18.9%) in
the period.
Profitability
Adjusted gross profit improved to £1,114.7m
(2020: £631.4m; 2019: £1,087.4m) with
adjusted gross margin significantly
recovering, increasing to 23.2% (2020:
18.5%; 2019: 22.8%). The adjusted gross
margin improvement reflected house price
inflation ahead of build cost inflation and
the scale of completion volume growth,
which drove incremental fixed cost
efficiency, with each home completion
delivering a contribution of c. 32% after
land and build costs.
After adjusted items totalling £104.7m
(2020: £17.1m; 2019: £3.2m) relating to
legacy property costs and the reversal of
CJRS grant income recognised in 2020 but
repaid in 2021, gross profit was £1,010.0m
(2020: £614.3m; 2019: £1,084.2m) and the
gross margin was 21.0% (2020: 18.0%;
2019: 22.8%).
This year we delivered an adjusted operating
profit of £919.0m (2020: £507.3m; 2019:
£904.3m) with an adjusted operating margin
of 19.1% (2020: 14.8%; 2019: 19.0%). The 430
bps improvement in the adjusted operating
margin reflected a number of factors:
• Completion volumes: the most
significant item was the recovery in
our wholly owned completion volumes,
with a 37.3% or 4,483 home increase
creating a 310 bps positive impact
(2020: 190 bps negative impact).
• Net impact of selling prices relative to
build costs: sales price inflation across
the year relative to underlying build
cost inflation produced a 90 bps positive
impact (2020: 50 bps negative impact).
• New sites: the benefit of the Group’s
minimum 23% gross margin hurdle
rate on new land acquisitions and the
improved build cost performance of
our housing range generated a 60 bps
positive impact (2020: 50 bps positive
impact).
• Site extension costs: these costs
arose from the expected extension
in site durations due to COVID-19,
reflecting both the lockdown period
and incremental build time on sites, of
approximately six months. Reflecting the
recovery in site efficiency through the
year, new site starts and the completion
of sites carrying these additional costs,
there was a reduced charge of £15.8m
(2020: £29.1m) across all ongoing sites
in 2021 and a 30 bps positive impact
(2020: 90 bps negative impact) on the
adjusted operating margin.
36
Movements in Operating Margin in FY21
Non-recurring items
40 bps
Trading items
320 bps
Non-recurring items
(110 bps)
20.0%
19.0%
18.0%
17.0%
16.0%
15.0%
14.0%
13.0%
120bps
80bps
14.4%
FY20
Remove
costs on
legacy
properties
Remove
CJRS
Grant
income
30bps
20bps
60bps
20bps
150bps
90bps
90bps
310bps
19.1%
170bps
50bps
16.9%
14.8%
FY20
Adjusted
Volume
impact
Net
inflation
Regional
trading
Site
extension
Mix/
Other
Net admin
expenses
Non
productive
site overhead
costs in FY20
Inventory
provision
release
FY21
Adjusted
Costs on
legacy
properties
CJRS grant
return in
respect of
Covid-19
FY21
Net finance charges were £26.6m (2020:
£29.9m). This £3.3m decrease reflected a
£6.2m reduction in the imputed interest
on land creditors offset by the impact of
the phasing of cash balances in the year.
The cash finance charge was £9.7m (2020:
£7.3m) with non-cash charges of £16.9m
(2020: £22.6m). In FY22, finance costs are
expected to be similar to 2020 at c. £30m,
of which c. £10m is cash and c. £20m is
non-cash.
JVs delivered a decreased profit for the year
of £27.7m (2020: £28.3m; 2019: £39.2m).
The JV result in 2021 also included a
release in respect of costs associated with
JV legacy properties of £0.4m (2020: £nil;
2019: £7.0m charge).
As a result, profit before tax for the year
increased to £812.2m (2020: £491.8m;
2019: £909.8m). The tax charge for the year
increased to £152.1m (2020: £89.1m; 2019:
£170.4m) reflecting the recovery in profit
before tax and was at an effective rate of
18.7% (2020: 18.1%; 2019: 18.7%).
Basic earnings per share increased to
64.9 pence per share (2020: 39.4 pence
per share; 2019: 73.2 pence per share).
Adjusted earnings per share, before the
impact of adjusting items and associated
tax, increased by 81.5% to 73.5 pence per
share (2020: 40.5 pence per share; 2019:
74.1 pence per share).
With the substantial recovery in Group
profitability in FY21, our ROCE improved to
28.3% (2020: 15.6%; 2019: 29.7%).
Increase
Decrease
Cash flow
Net cash increased to £1,317.4m at 30
June 2021 (30 June 2020: £308.2m). The
increase in net cash reflected a £1,082.3m
net cash inflow from operating activities
(2020: £121.0m cash outflow), a £16.7m
cash inflow from net investments in and
dividends received from JVs (2020: £65.2m)
and a reduced level of dividends paid to
shareholders in the year of £76.3m (2020:
£373.2m) which reflected the absence of a
2020 final dividend payment.
The major drivers of the net cash inflow
from operating activities in the year were:
• The increased level of profit from
operations, which increased to £811.1m
(2020: £493.4m);
• A cash inflow in respect of working
capital and provisions of £407.0m (2020:
£428.5m cash outflow); and
•
Interest and tax payments, which
totalled £154.5m (2020: £199.0m).
The £407.0m inflow in respect of working
capital and provisions consisted of:
• A £385.9m decrease in inventories
reflecting the partial reversal of
elevated construction work in progress
carried at the end of last year following
the disruption to completions caused
by COVID-19, as well as a modest
decrease in land investment in the year;
• A £93.1m increase in receivables
reflecting the significantly higher level
of construction and sales activity in
the last quarter when compared with
activity in the last quarter of 2020 which
was severely disrupted by COVID-19
and the initial national lockdown;
• A £74.8m increase in respect of
payables. This consisted of a £133.6m
reduction in land creditors and a
£208.4m increase in trade and other
payables reflecting a higher level of
activity with our suppliers and sub-
contractors compared to the period
most affected by COVID-19 in our last
quarter in 2020; and
• A £39.4m increase in provisions
reflecting the additional costs
associated with legacy properties.
Balance sheet
The Group’s net assets at 30 June
2021 totalled £5,452.1m (30 June 2020:
£4,840.3m) after the payment of dividends
totalling £76.3m (30 June 2020: £373.2m).
At 30 June 2021, the Group had net cash
balances of £1,317.4m (30 June 2020:
£308.2m). As at 30 June 2021 land creditors
had reduced to £658.3m (30 June 2020:
£791.9m) and equated to 22.3% (30 June
2020: 25.4%) of the owned land bank, in line
with our operating framework.
We achieved our minimal year end total
net indebtedness target, which has, given
the strength of our cash flow performance
in the year, improved to a net surplus of
£659.1m at 30 June 2021 (30 June 2020:
£483.7m indebtedness). Investment in
land and work in progress to support our
medium term growth target, along with our
final ordinary dividend payments (subject to
shareholder approval) will, we anticipate,
reduce this total net surplus during FY22.
37
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Financial review CONTINUED
In FY22 we expect year end net cash
balances of between c. £1.0bn and £1.1bn.
During the year, £363.4m (2020: £492.9m)
of land creditors will fall due for payment.
Land creditors due beyond 30 June 2022
total £294.9m at 30 June 2021 (30 June
2020: £299.0m due beyond 30 June 2021).
Net tangible assets were £4,546.2m (446
pence per share) at 30 June 2021, (30 June
2020: £3,933.3m; 386 pence per share).
Land, net of land creditors, and work in
progress totalled £3,963.9m (389 pence
per share) at 30 June 2021 (30 June 2020:
£4,172.8m, 410 pence per share).
The key dimensions underpinning
delivery of our strategy
Land and planning
Following our return to the land market
in August 2020, we have been disciplined
in our land purchasing. We have approved
£876.8m (2020: £368.1m; 2019: £859.8m)
of operational land for purchase, which
equates to 18,067 plots (2020: 9,441 plots;
2019: 18,448 plots) on 97 new sites (2020: 51;
2019: 90) in attractive geographical locations
that meet or exceed our hurdle rates.
Our competitive position in the land
market is also being enhanced through
our ability to acquire land for both Barratt
and David Wilson Homes on dual branded
developments. This combination brings
greater housetype variety and customer
choice and enhances the speed with which
such sites can be developed and, as a
result, improves ROCE.
We continue to see a good range of land
buying opportunities and we have an
attractive pipeline. We spent around £745m
on land during the year (2020: £780m; 2019:
£941m) on both land acquisitions and the
settlement of land creditors.
We continue to target a regionally balanced
land portfolio with a supply of owned land
of c. 3.5 years and a further c. 1.0 year of
controlled land. Our target of a shorter
than sector average land bank recognises
our focus on ROCE and our fast build and
sell model. Reflecting our focus on future
growth, we remain above this target with 4.7
years land supply at 30 June 2021 (30 June
2020: 6.7; 30 June 2019: 4.7). Our land bank
comprised of 4.0 years of owned land and 0.7
years of controlled land at 30 June 2021.
More than 79% (2020: 77%) of our owned
and unconditional land bank plots have
detailed planning consent with the
deliverability of these plots supporting our
sales outlets both now and in the future. As
well as years of land supply, the planning
status of our land bank plots remains an
important determinant of the commercial
strength of our land bank.
38
Our land bank at 30 June comprised:
Our land bank
Plots with detailed planning consent
Plots with outline planning consent
Plots with resolution to grant and other
Owned and unconditional land bank (plots)
Conditionally contracted land bank (plots)
Total owned and controlled land bank (plots)
Number of years’ supply(1)
JVs owned and controlled land bank (plots)
Strategic land (acres)
Land bank carrying value (£m)
30 June 2021
52,775
13,452
374
66,601
11,041
77,642
4.7
4,661
13,754
2,946.3
30 June 2020
52,641
15,615
137
68,393
11,931
80,324
6.7
5,400
13,271
3,112.3
1.
Land supply is calculated as total land owned (owned land and land subject to unconditional contracts) and
controlled (land subject to conditional contracts) land bank plots divided by wholly owned completions in
the last 12 months.
At 30 June 2021, the ASP of plots in our owned land bank was £289k (30 June 2020: 276k;
30 June 2019: £275k).
During the year we delivered 4,172 (2020: 2,929; 2019: 4,374) home completions from
strategically sourced land. With some notable planning successes in the year, we converted
3,507 plots (2020: 3,137; 2019: 7,915 plots) of strategic land into our owned and controlled
land bank. Around 17% (2020: around 20%) of our strategic land is allocated or included in
draft local plans. We continue to target around 30% of completions from strategic land in
the medium term, which we believe is an appropriate level for our business reflecting our
operating model, targeted land bank length and focus on ROCE.
Reflecting our success with planning over the past 12 months we are well positioned, with
all of our expected FY22 completions (2020: all of our FY21 completions) having outline or
detailed planning consent.
Improving efficiency and reducing costs
Improving the efficiency of our operations and controlling costs remains a key focus for the
Group. This will enhance our margin and ROCE and improve the resilience of our business.
We have a robust and carefully managed supply chain. Approximately 95% of our housebuild
materials are sourced by our centralised procurement function and 90% of our building
materials are manufactured or assembled in the UK.
We have fixed price agreements in place for 96% of these materials to December 2021
(2020: 95% to December 2020) and 71% are fixed until June 2022 (2020: 62% fixed until June
2021).
We are currently seeing moderate inflationary pressure on skilled labour supply, reflecting
the strength of the housebuilding construction recovery balanced with a desire by sub-
contractors and skilled trades for future workload visibility. We are also improving
construction efficiency and reducing demand on labour through the continued roll-out of our
new housetype ranges, which are easier and quicker to build, and through the use of MMC.
Reflecting the ongoing strength of the market, we continue to see increases in build costs
currently running at between 4% and 5% and we now expect build cost inflation will be
within this range for FY22.
Operating framework and capital structure
Our operating framework and appropriate capital structure have served us well over the unprecedented period in the last 18 months.
The resilience of our framework and financing structure was demonstrated in 2020 and has provided the financial platform for our
operations to deliver both the speed and scale of recovery in the last year as well as the capacity to commit to investment to support
future growth.
We will continue to maintain an appropriate capital structure as part of our disciplined operating framework. Shareholders’ funds and
land creditors fund the longer term requirements of our business and term loans and bank debt fund the shorter term requirements for
working capital.
Our operating framework remains unchanged and performance against targets at 30 June 2021, 2020 and 2019 are summarised below:
Operating framework
Positions at 30 June 2021, 2020 and 2019
Land bank
c. 3.5 years owned and c. 1.0 year
controlled.
2021: 4.0 years owned and 0.7 years controlled.
(2020: 5.7 years owned and 1.0 year controlled).
(2019: 3.9 years owned and 0.8 years controlled).
Land creditors
Reduce usage to 15 - 25% of the
land bank over medium term.
Net cash
Modest average net cash over the
financial year.
Year end net cash.
2021: 22.3%.
(2020: 25.4%).
(2019: 31.3%).
2021: average net cash of £821.0m.
(2020: £348.3m).
(2019: £298.3m).
30 June 2021: £1,317.4m.
(30 June 2020: £308.2m).
(30 June 2019: £765.7m).
Total indebtedness (net
cash and land creditors)
Minimal year end total indebtedness
in the medium term.
30 June 2021: total net surplus of £659.1m.
(30 June 2020: total indebtedness of £483.7m).
(30 June 2019: total indebtedness of £195.0m).
Treasury
Dividend policy
Appropriate financing facilities.
£700m RCF extended to November 2024.
£200m USPP maturing August 2027.
2.5x dividend cover.
2021: total ordinary dividend of 29.4p.
(2020: no dividend).
(2019: total ordinary dividend of 29.1p per share).
39
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Financial review CONTINUED
Key performance indicators
Treasury
Relationships with banks and cash
management are coordinated centrally.
The Board sets and approves the Treasury
Policy and Senior Management control day-
to-day operations. The Treasury Policy is
intended to maintain an appropriate capital
structure and provide the right platform for
the business to manage its operating risks.
More detail on Treasury Policy is included in
note 5.4 of the Financial Statements.
Tax strategy
All profits of the Group are subject to full
UK corporation tax and the tax charge for
the year ended 30 June 2021 was £152.1m
(2020: £89.1m).
The Group does not enter into business
transactions that are for the sole purpose
of reducing potential tax liabilities. The
Group’s tax strategy is to only utilise any
available reliefs and exemptions which have
been set out in any current tax legislation to
minimise its tax liabilities. The rate for the
year ended 30 June 2021 was 18.7% (2020:
18.1%) which is marginally lower than
the standard effective rate of tax of 19.0%
(2020: 19.0%).
Looking ahead, the Group’s tax charge
and effective rate of tax is expected to
increase, due to changes in the future
rate of corporation tax, which is expected
to increase to 25% from 1 April 2023. In
addition, the outcome of the Government’s
consultation on a Residential Property
Developer Tax (RPDT), which began in April
2021, will have an impact on our effective
tax rate. The basis of the calculation of
our taxable profits under the RPDT is still
subject to clarification, as is the rate at
which the new tax will be applied. The new
tax is scheduled for introduction on 1 April
2022. As such, based on current proposals,
we expect the RPDT will apply for the final
quarter of FY22 with the full year impact of
the new tax applying in FY23. More details
on Tax Policy are included in note 2.6 to the
financial statements.
40
Pensions
The Group historically operated a funded defined benefit pension scheme, which, with effect
from 30 June 2009, ceased to offer future accrual. The Group operates the Scheme under
the UK regulatory framework, with a legally separate fund that is Trustee administered. The
Trustees are responsible for ensuring that the Scheme is sufficiently funded to meet current
and future benefit payments and for the investment policy with regard to Scheme assets.
In June 2021, the Trustees completed a buy-out of our defined benefit pension scheme
with a leading insurer, securing the pensions of members for the future. As a result, the
assets and liabilities of the pension scheme have been derecognised. The buy-out and
derecognition of the assets and liabilities of the pension scheme resulted in a one-off
income statement charge of £1.1m. See note 6.2.2 for more details.
Defined contribution pension arrangements are in place for current employees. During the
year we consulted with our workforce and moved three of our legacy defined contribution
pension schemes to a new Master Trust with a leading insurer. This will enhance retirement
flexibility and improve our employee benefit offer. Defined contribution scheme charges
with respect to qualifying employees totalled £13.9m (2020: £13.6m; 2019: £11.5m).
Contributions are based upon a fixed percentage of the employee’s pay and once paid the
Group has no further obligations under these schemes.
Guidance for FY22
Looking to the year ahead our guidance is summarised as follows:
Completions
Completions mix
JV completions
Completions phasing
c. 17,000 – 17,250 wholly owned completions
c. 21% affordable, c. 79% private mix
c. 750 JV completions
Return to more normal H1:H2 completion
phasing
c. 3%
4 to 5%
c. £230m
c. £30m (c. £10m cash, c. £20m non-cash)
Average sales outlet growth
Build cost inflation range
Administrative expenses
Interest cost
Adjusted items in respect of legacy properties Estimated charge of £40m - £50m
Land approvals
Land cash spend
Year end net cash
Taxation
18,000 to 20,000 plots
c. £1.0bn
c. £1.0bn - £1.1bn
Residential Property Developer Tax impact
potentially from 1 April 2022
Non-financial
Target
Customer service
HBF 5 Star customer
satisfaction.
Status
Definition
Why we measure
The percentage of homebuyers
who would recommend us to family
and friends taken from the HBF
Homebuilder Survey.
Customer satisfaction is a strategic
priority and fundamental to our
business.
HBF Homebuilder Survey is an industry
recognised independently measured
indicator of our customer service and
build quality.
Key metric for assessing performance
for Executive Directors’ remuneration.
Health and safety (SHE audit compliance)
Over 94% SHE audit
compliance.
97%
(2020: 96%)
The percentage of internal
inspections which are compliant
with SHE guidelines.
Demonstrates compliance with safety
standards on our sites. Lead indicator
highlighting areas of SHE focus.
Key metric for assessing performance
for Executive Directors’ remuneration.
Carbon intensity
Reduce greenhouse gas
intensity (tCO2e per 100m2 of
legally completed build area) for
scope 1 and 2 greenhouse gas
emissions. We have set a target
to reduce absolute scope 1 and
2 greenhouse gas emissions by
29% by 2025 from 2018 levels.
Waste intensity
Tonnes per 100m2
2.03
1.90
1.78
1.80
1.78
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Tonnes of greenhouse gas
emissions associated with our
scope 1 and market based 2 scope
emissions, which includes energy
and fuel use on our sites and in our
offices, for every 100m2 of legally
completed build area.
To minimise the environmental impact
of our business activities and reduce our
exposure to climate risk.
Updated to show market based
emissions to more accurately reflect the
source of the Group's purchased energy.
A strong financial position entering FY22
Our operating framework and strong financial position provide us with the flexibility to
focus on delivery of our medium term target to grow completions towards 20,000 homes.
Through the combination of land acquired at a minimum 23% gross margin over recent
years, operating efficiencies unlocked through completion growth, and ongoing performance
optimisation, we continue to target a minimum 25% ROCE.
Reduce construction waste
intensity (tonnes per 100m2 of
legally completed build area) to
5.67 by 2025.
Tonnes per 100m2
7.70
6.18
6.06
6.53
5.89
Tonnes of waste generated from
above ground construction for
every 100m2 of legally completed
build area.
To maximise operating efficiency and
use materials as efficiently as possible
in the construction process.
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Employee engagement score
Upper quartile engagement.
84.2%*
(2019: 84.5%)
* 2021 Survey deferred
to October 2021.
The percentage level of satisfaction
of our people measured using
an annual independently conducted
survey.
To gain an insight of, and provide a
forum for, employee views. To retain and
invest in the best people and focus on
their development and success.
Land approvals (plots)
18,000–20,000 plots approved
for purchase.
18,067
(2020: 9,441)
The number of plots approved
for purchase.
Monitors whether the Group is approving
enough land for purchase to support
future business activity. Ensures land is
approved at minimum hurdle rates.
41
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Key performance indicators CONTINUED
Financial
Metric
Target
Status
Progress
Definition
Why we measure
Metric
Target
Status
Progress
Definition
Why we measure
Growing volumes
Delivering ROCE
Home
completions
Growth to
20,000 in the
medium term.
17,243
homes
17,395 17,579 17,856
17,243
12,604
Legally completed homes
during the year including 100%
of JV homes legally completed
in which the Group has an
interest.
Reflects activity and growth.
Method by which business
capacity is monitored.
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
ROCE
Minimum 25%. 28.3%
%
29.8
29.6
29.7
28.3
15.6
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Delivering margin improvement
Gross
margin
21.0%
New land
acquisitions at
minimum 23%
gross margin.
%
20.0
20.7
22.8
21.0
18.0
Gross profit divided by total
revenue, expressed as a
percentage.
Key internal metric for
assessing site profitability.
Enables consistent
comparison of land
acquisitions.
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Adjusted
gross
margin
New land
acquisitions at
minimum 23%
gross margin.
23.2%
%
20.2
22.8
20.8
23.2
18.5
Gross profit excluding items
that are unusual or infrequent
in nature, divided by total
revenue and expressed as a
percentage.
Key internal metric for
assessing profitability.
New KPI to demonstrate
trading performance before
unusual or infrequent items.
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Operating
profit
Driving further
improvements. £811.1m
millions
799.2 862.6 901.1
£919.0m
adjusted
operating
profit
Profit from operations.
811.1
493.4
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Operating
margin
Driving further
improvements. 16.9%
%
17.2
17.7
18.9
19.1%
adjusted
operating
margin
16.9
14.4
Profit from operations divided
by total revenue, expressed as
a percentage.
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Demonstrates profitability
before finance costs, share
of profits from JVs and
associates and tax.
Assesses the efficiency of our
operations.
Demonstrates profitability
before finance costs, share
of profits from JVs and
associates and tax.
Assesses the efficiency of our
operations.
Profit before
tax
In line with
consensus at
the start of the
financial year.
£812.2m
millions
835.5
765.1
909.8
Profit before tax including the
applicable share of profits
from JVs and associates.
Shows the profitability of
the Group relative to market
expectations.
812.2
491.8
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Key metric for assessing
performance for Executive
Directors’ remuneration.
Ensures efficient and
effective use of capital.
Key metric for assessing
performance for Executive
Directors’ remuneration.
Calculated as earnings before
amortisation, interest, tax,
operating charges relating to
the defined benefit pension
scheme and adjusted items,
divided by average net assets
adjusted for goodwill and
intangibles, tax, cash, loans
and borrowings, retirement
benefit assets/ obligations
and derivative financial
instruments.
Calculated by dividing the
profit for the year attributable
to ordinary shareholders by the
weighted average number of
ordinary shares in issue during
the year, excluding those
held by the EBT on which no
dividend is paid.
Calculated by dividing adjusted
profit for the year attributable
to ordinary shareholders by the
weighted average number of
ordinary shares in issue during
the year, excluding those
held by the EBT on which no
dividend is paid.
Shows profit attributable to
each share.
Key metric for assessing
performance for Executive
Directors’ remuneration.
Shows adjusted profit
attributable to each share
and used to calculate the
amount of dividend per
share.
New KPI to demonstrate
earnings from trading
performance before unusual
or infrequent items.
Measure of the performance
of the Group’s share price
over a period of three financial
years. It combines share price
appreciation and dividends
paid to show the total return to
the shareholders expressed as
a percentage.
Shows the appreciation
and income a shareholder
receives from holding each
share.
Key metric for assessing
performance for Executive
Directors’ remuneration.
Attractive shareholder returns
Basic EPS
In line with
consensus at
the start of the
financial year.
64.9p
pence
61.3
66.5
73.2
64.9
39.4
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Adjusted
basic EPS
In line with
consensus at
the start of the
financial year.
73.5p
pence
67.0
62.0
74.1
73.5
40.5
7
1
0
2
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
Total
shareholder
return
59.8%
for the three
years ended 30
June 2021.
(2020: 6.1%
for the three
years ended
30 June 2020).
TSR FTSE
(50+/-)
Threshold
17.7%
Maximum
54.4%.
TSR
Housebuilders
Threshold
27.1%
Maximum
53.1%.
For progress against our medium term targets, go to page 15 in the Chief Executive’s statement
42
43
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report The next few pages set out the stakeholders
which continue to represent the key
resources and relationships that support
the generation and preservation of value
in the Group, as well as our culture of
openness and communication. For each
stakeholder we have explained why we
engage with them, how we engaged with
them, and how we take into consideration,
the interests and concerns of our
stakeholders who are material to the long
term success of the business.
Section 172 statement
The Board appreciates that there may be
situations where conflicts will arise between
different stakeholder groups. In such
circumstances, the Board will seek to
understand the needs and priorities of each
stakeholder group during its discussions
and as part of its decision making process.
It manages such conflicts by assessing
shareholder and stakeholder interests
from the perspective of the long term
sustainable success of the business. As
an example, during the year the Board had
to consider how to meet the increase in
demand for new homes (in part due to the
end of the SDLT holiday) as the country
emerged from the lockdown without
compromising the safety of its workforce
given that to improve productivity, the
workforce would need to work longer hours
as well as weekends. Additional reporting
requirements and further controls were put
in place to enable the Executive Directors to
closely monitor movement in build stages.
The SHE team undertook more SHE visits
across the business to ensure that SHE
policies, procedures and working practices
continued to be adhered to. Where any
areas of improvement were identified,
detailed action plans were put in place to
safeguard our employees. Such actions
and decisions by the Board represent the
Group’s culture of customer focus and
resilience and adaptability. In addition, the
Board ensures that our culture encourages
our wider workforce to take pride in what
we do, and to do the right thing when in
contact with customers and members of
the local communities.
Throughout the year, the Board remained
mindful of the implications that their
decisions would have on our stakeholders
as well as potential reputational risk for
the Group. This highlighted the continual
need for regular, clear and comprehensive
engagement with our workforce, suppliers,
shareholders and customers throughout
various decision making processes to
ensure that we continue to do the right
thing and protect the reputation of the
Group.
On the following pages
we have set out how the
Board has acted in a way
that promotes the success
of the Company for the
benefit of its members as a
whole, in accordance with
the requirements of the
Companies (Miscellaneous
Reporting) Regulations 2018,
whilst having regard to the
following matters set out in
s.172(1) of the Act:
•
•
•
•
•
•
the likely consequences of any decision
in the long term;
the interests of the Group’s employees;
the need to foster the Group’s business
relationships with suppliers, customers
and others;
the impact of the Group’s operations on
the community and the environment;
the desirability of the Group maintaining
a reputation for high standards of
business conduct; and
the need to act fairly as between
members of the Company.
We understand that it is important for
the business at all levels, including the
Board, to engage with its shareholders and
wider stakeholder groups. By engaging
with our stakeholders we gain a better
understanding of what areas they are
interested in or concerned about and
also how our decisions have impacted
them. Healthy engagement with our
stakeholders underpins our governance
framework, which is embedded throughout
our business and helps to ensure we
maintain high standards of business
conduct. The Executive Directors update
the Board on stakeholder engagement on
a regular basis and wherever possible,
members of the Board engage directly
with our stakeholders. Engagement with
shareholders and other stakeholders
supports the Board’s regard to the likely
consequences of any decision in the long
term, as explained further in the business
model on pages 10 to 11, Key activities of
the Board on page 73, Building sustainably
on pages 18 to 23 and throughout our
Strategic priorities on pages 24 to 33.
Stakeholder engagement
Stakeholder engagement plays an important part of our day to day operations. The Board is kept
appraised of the feedback received and takes this into account when making decisions that may
impact our stakeholders either collectively or individually.
Customers
Why we engage
Customers are at the heart of everything
we do. Without them there would be no
business for us to operate. It is therefore
imperative that we understand what our
customers are looking for and adapt our
product to meet their needs.
How we engage
We utilise different methods of engagement
with our customers depending on the
information that we are trying to gain or
provide.
1. Written correspondence/
questionnaires
• Customers were asked to provide direct
feedback about our products and how
we communicate with them. Their
input aids decision-making and future
business planning.
• A survey was undertaken to
understand how much customers
are aware of sustainability/energy
efficiency/biodiversity activities within
housebuilding and how much this
affects their decision when selecting
a housebuilder. In addition, questions
have been included in the NHBC
nine month survey around customer
knowledge and requirements for
sustainability in a new home.
KPIs – How is effectiveness measured
The following information is reported to the Board by the Chief Executive and/or the Group Sales and
Marketing Director to enable it to consider and agree what, if any, changes may be required to our
methods and frequency of engagement with our customers:
• HBF 5 Star rating for the 12th consecutive year.
• Average Trustpilot score for FY21 was Barratt 4.1 (FY20: 3.6) and David Wilson Homes 4.3
• Seasonal newsletters were sent to
(FY20: 3.6).
customers within warranty to provide
guidance on getting the best from their
new home.
• Continued to engage with leaseholders
on a site-by-site basis, both individually
and through their managing agents, to
discuss their concerns around cladding
and fire safety directly.
•
Invited customers to leave a review of
their experience on Trustpilot and then
followed these up to address
any concerns.
• Changed the ‘bespoke’ questions on
the HBF 8 week customer satisfaction
survey to get a better understanding of
customer perceptions of the design and
layout of our homes.
• Proactively emailed all customers to
communicate the changes to our sales,
construction and aftersales procedures
as COVID-19 restrictions were eased
across the country.
• Regularly updated our websites to
include the latest COVID-19 guidance,
to allow customers to book virtual
appointments and personalised virtual
show home tours.
2. Focus Groups/research/surveys
•
Involved customers in various
pieces of virtual research to gain an
understanding of their perceptions on
various areas including (but not limited
to): how consumers undertake property
searches; our brand positioning,
preferences for marketing photography;
post-COVID-19 working from home
arrangements; and development of a
new range of apartments.
• Click through rate for seasonal newsletters is around 10% - broadly stable over the year.
• Feedback on HBF 8 week survey is collated and used in our annual review of product specification.
Interests and concerns
Through the engagement activities undertaken, the following areas were identified as the key interests
and concerns of our customers:
• Quality and energy efficiency of the homes they are purchasing and their customer journey pre and
post move in.
• Cladding and fire-safety of multi-storey buildings.
• Mortgage availability and affordability.
• Outdoor open/green spaces and adaptability of property to support working from home.
Outcomes from engagement
• Marketing plans being adapted to ensure that we are highlighting more information about
gardens, public open spaces and how we are designing homes with more light.
• Undertook a review of our homes to ensure they have appropriate space to work from home
and displayed potential options to do this in our show homes and websites, where relevant.
• Partnered with internet providers to ensure ultrafast broadband connections were available in
all future homes, to facilitate home working in the post COVID-19 world.
• Refined our product proposition and branding for a new apartments range.
Effect of engagement with customers on Board decisions
• Continued to drive defect resolution across the divisions and updated policies and procedures to
ensure compliance with the requirements of the new Consumer Code.
• Closely monitored build movements to ensure customers receive handover of their new home
within agreed timescales and prior to the tapering of Help to Buy and the end of the SDLT holiday.
• Continue to consider the appropriateness of existing discount schemes for the benefit of
customers within certain public services such as the NHS and the Armed Forces.
• Agreed to support two projects (HBF Mortgage Indemnity Scheme and Market Mortgage) to
support 95% lending on New Build houses and flats in addition to the Government Indemnity
Scheme.
• Set up a dedicated team to assess and make recommendations with regards to cladding,
structure and fire safety of our multi-storey buildings.
44
45
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Stakeholder engagement CONTINUED
Employees
Why we engage
Without our engaged and motivated
employees the business would not be able
to operate effectively. It is due to their hard
work and commitment that the Company
is, operationally and financially, strong.
It is therefore of paramount importance
that we are able to attract, recruit and
retain the best people. To do this we need
to understand what matters most to them
and ensure that we have the right policies,
processes & procedures, remuneration,
as well as training and development
opportunities in place to support them.
How we engage
During the year we utilised a number of
methods to engage with our employees
as set out below. Most methods enable
two-way interaction with employees either
face to face or virtually whilst others
allow employees to voice their concerns
or thoughts anonymously. Either way, it
enables the Board to better understand
the issues that are important to
our colleagues and helps nurture a
mutual understanding between senior
management and their teams.
1. Workforce Forum
• Met virtually four times during the
•
year, three planned meetings and an
additional one deferred from April 2020
due to the lockdown. Moving forward,
the Forum will use a mixture of virtual
and in person meetings.
• At the last meeting, participants
were virtually split into four groups to
discuss various aspects of a phased
return to the office that had emerged
from a pulse survey completed by the
wider workforce. These areas included
working from home; return to the office;
information and communication and
site based workers' views on phased
return to offices. The groups re-joined
the main meeting in order to provide
feedback on their respective topic.
• Other areas of discussion during the
year included: the outcomes of the
2020 engagement survey; Executive
Director and employee remuneration
strategy for the year: the impact
on sites of home working; how the
business has been communicating at
Group and divisional level; ongoing
46
IT projects; the Group’s sustainability
objectives; health, safety and wellbeing;
retirement planning support and the
pension scheme transfer of the defined
contribution section of the scheme to a
Master Trust.
• As a consequence of social distancing,
the business has increased its use of
virtual methods with more videos being
available on the intranet including key
messages from the Chief Executive and
the Deputy Chief Executive.
• Supported the upgrade of the employee
• A consultation on the transfer of the
benefits platform, from tender to
implementation, and testing of the
portal before it went live.
Defined Contribution section of the
Barratt pension scheme to a Master
Trust was carried out in May and June.
• All employees are able to engage
• Senior Management conference
directly or via the Workforce forum
members, with the Designated NED
(Richard Akers until 4th May 2021
and Sharon White thereafter) via a
dedicated email address on any matters
relating to the workplace, including
remuneration, on a confidential basis.
• Richard Akers attended every meeting
prior to stepping down from his position
as Designated NED and Sharon White
intends to continue with this.
• More information on the Workforce
Forum can be found on page 32.
2. Surveys
• Annual employee engagement survey to
gain insight into the issues that matter
most to our employees. This year’s
survey has been deferred until October
2021 in order to capture employees’
feedback on hybrid ways of working as
they return to the office.
Interim pulse surveys were undertaken
on an ad-hoc basis during the year to
elicit views about returning to the office
and the effectiveness of communication
regarding COVID-19 related matters.
In addition, these surveys were utilised
to assess the impact of action plans
that had been put in place following
the outcomes of the 2020 Employee
Engagement survey.
• A survey was issued to all company car
users and car allowance recipients to
gain feedback on the Company’s car
policy.
3. Internal communication
General
• Emails (to Barratt or personal email
addresses) and newsletters were
used to keep employees informed of
developments and important issues.
• We launched a new intranet platform,
allowing social interaction, enabling
colleagues to directly engage with
content shared online by posting
comments and liking stories.
was held virtually to discuss Group
performance and key areas of focus as
well as to share ideas and best practice
for cascade to the wider business
through individual teams.
Training
• The availability of online learning
and development webinars has
been increased this year, due to the
difficulties for employees in attending
training in person.
Health, safety and wellbeing
• Webinars and e-learning modules as
well as virtual classes, such as yoga,
were made available to employees
to support their physical and mental
wellbeing as they continue to work from
home.
• SHE announcements were issued to
the business informing employees of
incidents that have occurred and why,
together with how this will be mitigated
against going forward.
COVID-19
• Dedicated COVID-19 email address
continued to be made available for
employees to raise any queries,
concerns, feedback or ideas. Each
email was reviewed by the Chief
Executive, the Company Secretary and
the relevant member of the Executive
team.
• Briefings, e-learning modules,
screensavers, webinars, emails
and videos were held/issued as
the lockdown restrictions eased to
ensure all employees were informed
of any changes to working practices,
policies and procedures. For example,
we amended our policies relating to
holidays, pay, resourcing, induction,
quarantine and isolation to align them
with Government guidance. We advised
those who were shielding to not attend
site or the office and we limited the
number of people that could be in an
office at any one time whilst providing
a comprehensive home working guide
incorporating guidance on mental
health and wellbeing, safety, security,
IT and provided a wealth of support for
working parents and carers around
home schooling.
• Received Assurance Statement from
the British Safety Council certifying that
our COVID-19 workplace safety, health
and environmental arrangements are
in accordance with current guidance
and best practice, demonstrating our
commitment to providing a safe and
healthy workplace.
• Periodic email updates (to Barratt or
personal email addresses) from the
Chief Executive to advise employees of
changes in social distancing rules and
how they apply to offices and sites in
each of the nations.
Sustainability
• Updated the senior leadership team
through a virtual conference on
sustainability priorities as well as
the Group's sustainability strategy
and delivery framework, to ensure a
common understanding and to kickstart
a dialogue on how their teams can best
support and drive the strategy forward.
• Held various sessions with functional
teams, senior management and
the wider business to explain the
sustainability strategy and framework
and agree how they can contribute
to embedding this within all areas of
the business operations, in particular
in increasing their understanding of
climate risks and opportunities.
• We launched the Barratt Eco Calculator
to help our employees calculate their
individual carbon footprints as well as
advice on how to reduce them.
• We launched a new employee benefit
to help colleagues switch to 100%
renewable tariffs in their own homes.
Charitable giving
• Launched the Barratt Developments
PLC Charitable Foundation by allowing
employees to vote on how to distribute
an initial £500k between ten chosen
charities.
• Published guidance on the operation
of the Barratt Foundation encouraging
employees to participate in fundraising
(where possible) but also in determining
charities to benefit from the Barratt and
David Wilson Homes Community Fund.
• Organised The Virtual Big Barratt Hike
and Barratt 500k challenge, which
encouraged employees across the
business to participate and raise funds
for three different charities.
KPIs – How is effectiveness measured
The following information is reported to the Board by the Chief Executive to enable
it to consider and agree what, if any, changes may be required to our methods and
frequency of engagement with our employees:
• Employee engagement survey provides a quantified measurement of engagement,
and the results of the next survey will be available in October 2021.
• We monitor the number and content of emails to the Employee Communications
mailbox and the dedicated COVID-19 mailbox.
• The amount of fundraising by the employees provides an insight to the level of
engagement to the Group’s Charitable Giving.
Interests and concerns
Through the engagement activities undertaken, the following areas were identified as
the key interests and concerns of our employees:
• The Group's Sustainability Framework and wider strategy and how individuals,
teams and the business as a whole can respond to help achieve these ambitions.
• Re-instatement of salary reviews and bonus payments.
• Changes to COVID-19 restrictions.
• Their own health and wellbeing.
• Company performance and job security.
Outcomes from engagement
• Roll-out of an IIR reporting app to ensure that incidents are captured in a timely
manner and accurately recorded from site.
• Continued to provide health and wellbeing support during the year.
•
Increased the number of employees able to work in an office at any one time whilst
ensuring social distancing requirements continue to be met.
• Feedback showed that employees are keen to move over to electric vehicles.
• Successfully transferred the Defined Contribution scheme to a Master Trust
resulting in a number of benefits to employees including increased service levels,
reduced costs and improved investment options (including ESG investment options).
• Better understanding and greater employee buy-in to the Sustainability strategy
and Framework.
• At the Workforce Forum’s request, inclusion of COVID-19 FAQs to the Group’s
intranet to summarise the feedback and questions from around the business.
• Paid out £500,000 to ten charities as part of the launch of the Barratt Foundation
and provided match funding totalling £363,500 in support of all the fundraising
undertaken by our employees.
Effect of engagement with employees on Board decisions
• Continued commitment of the Board to our employees’ development, wellbeing &
diversity and inclusion strategies.
• Salary reviews for FY22 reinstated and bonus payments to be made for FY21 given
the financial resilience of the business.
• Updated the Company Car Policy to increase the number of electric and hybrid
vehicle choices, to ensure we are supporting the sustainable travel ambitions in our
Sustainability Framework whilst providing the optimum choices as an important part
of the employee benefit package without creating any immediate impacts for those
existing employees in receipt of car benefits. As a result, electric and hybrid vehicles
now account for 27% of our car fleet.
47
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Stakeholder engagement CONTINUED
Shareholders
− the Remuneration Committee
Chairman consulted with major
shareholders and proxy voting
agencies on the Group’s FY21
remuneration outcomes and plans
for FY22.
•
the Chairman, the Senior Independent
Director and other Non-Executive
Directors were available to attend
meetings with major shareholders
at the request of either party to gain
an understanding of any issues and
concerns.
•
In addition, during the year:
− the use of technology has helped
to improve our engagement with
smaller institutions, regional
pension funds and private wealth
managers on non-results cycle
roadshows, which previously have
proved to be difficult due to their
regional spread;
− the Group Investor Relations
Director and the Group
Sustainability Director attended
various ESG conferences and
meetings to provide insight into the
activities being undertaken by the
Group, in particular: our response
to the Future Homes Standard,
our value chain's carbon footprint,
our response to the impacts of
climate change, our approach to
timber frame and modern methods
of construction, and to gain an
understanding of shareholders'
expectations in respect of ESG
disclosures and alignment with
SASB and TCFD requirements;
− the Chair, Chief Executive and
Group Investor Relations Director
engaged with a majority shareholder
to discuss the Group’s policies with
respect to Modern Slavery, Human
Trafficking and the Living Wage; and
− the Group Sustainability team
and the Group Investor Relations
Director provided in depth replies
to incoming questions from both
investors and sell side analysts
across all sustainability related
areas, but in particular, climate
change.
3. Regulatory announcements
• We issued our regular trading updates
via the London Stock Exchange
Regulatory News Service in May, July
and October and the usual half and full
year announcements in February and
September respectively. An additional
trading update was issued in January
2021 and a number of announcements
were made throughout the year in
respect of various Board changes (see
page 79 for further details).
4. Annual General Meeting
• We expect to hold the 2021 AGM as a
physical meeting. A live webcast will
be available with the ability to submit
questions on the day.
• At the 2021 AGM, the Chief Executive
will update shareholders on the Group’s
performance and activities during
the year including how the business
continues to respond to the impact
of COVID-19. The Chairman and each
Board Committee Chair will also be
available throughout the AGM to answer
any queries, subject to any ongoing
restrictions.
• The Notice of AGM will be circulated
to all shareholders at least 20
business days prior to the meeting. All
resolutions will be voted on by way of
a poll, which is more representative of
shareholder voting intentions.
• As introduced last year, shareholders
will be able to submit questions to the
Board via email or post prior to the AGM.
• Our Articles of Association, as approved
at the 2020 AGM, were changed to
enable fully hybrid meetings which
allows for more flexible and meaningful
shareholder engagement and are
more resilient to external challenges
in future.
5. Website
• We reviewed and updated our
comprehensive investor website
quarterly to ensure that it contained
timely information relating to matters
such as sustainability, governance and
our response to COVID-19.
Why we engage
Shareholders own the Company. It is
therefore imperative that we listen to what
they have to say and operate the business
in a way that delivers long-term sustainable
returns. The Company’s reputation could
be damaged and it could be prevented from
attracting new investments without the
support of its shareholders.
How we engage
We utilise the following methods of
engagement with our shareholders given
that investors and retail shareholders
appreciate direct contact. More virtual
meetings were held during the year, given
the continued COVID-19 restrictions.
We will resume face to face meetings with
those shareholders who would like to do
so during FY22 and beyond, subject to
ongoing restrictions. During the year we
improved the technology in use to facilitate
these meetings.
1. Board updates
• Regular updates are provided to the
Board by the Chief Financial Officer,
the Company's brokers and the Group
Investor Relations Director on the
Company’s investor relations activities
and analyst feedback, to ensure that all
Directors are aware of, and have a clear
understanding of, the views of major
shareholders.
2. Investor meetings and
consultations
• The Executive Directors and Investor
Relations Team follow a comprehensive
programme of investor meetings and
calls, particularly following the release
of annual and half year results and
trading updates as follows:
− virtual investor roadshows with
shareholders in the UK, Europe and
the US following the Group’s final
FY20 and interim FY21 results;
− ad-hoc one-to-one meetings
(including at virtual conferences
and fireside chat events), and group
investor meetings were held, mainly
virtually, with the Group Investor
Relations Director to discuss
investors’ questions and areas of
concern; and
48
6. Correspondence
• The Company Secretarial team, together
with the Company’s Registrars, have
engaged with various retail shareholders
and dealt with enquiries relating to their
shareholdings or other information
requests. The Company Secretary
normally notifies the Chairman and
the Chief Executive of any areas of
concern or importance raised by retail
shareholders. No such queries were
raised during the year.
• We were assessed by a number of key
sustainability benchmarks and indices
such as NextGeneration and CDP.
Our performance against each of these
improved in the year, details of which
can be found on page 23.
• We wrote to retail shareholders
encouraging them to request digital
communications, in support of our
work to enhance our sustainability
credentials and reduce our carbon
footprint. They were also asked to set
up dividend mandates, to enable them
to receive their dividends faster and
more securely.
• We also undertook a tracing and
reunification exercise to reunite
shareholders, whose accounts had not
been active for more than twelve years,
with their shares and unpaid dividends.
KPIs – How is effectiveness measured
The following information is reported to the Board by the Chief Executive and the Group
Investor Relations Director to enable it to consider and agree what, if any, changes may
be required to our methods and frequency of engagement with our shareholders:
• The Executive Directors, supported by Senior Management, attended 145 investor
meetings (FY20: 135), 116 one-to-one meetings (FY20: 119) and 30 group meetings
(FY20: 15) engaging with around 48.5% (FY20: 30%) of our current shareholders (by
shareholding value).
• Qualitative feedback is sought from investors and is used to deliver improved
engagement.
Interests and concerns
Through the engagement activities undertaken, the following areas were identified as the
key interests and concerns of our shareholders:
• The Company’s strategy and impact of COVID-19.
• Operational and financial performance including impact of cladding and costs
associated with legacy properties.
• Our strategy in relation to timber frame and modern methods of construction.
• Sustainability matters including (but not limited to) the potential impact of the Future
Homes Standard, details of our value chain emissions and our strategy to mitigate
the impacts of climate change.
• Modern slavery policies and our commitment to paying the real Living Wage.
• Dividend re-instatement.
Outcomes from engagement
• Shareholders kept fully informed of the performance of the Group, including the
impact on trading of the ongoing pandemic.
• Enhanced understanding amongst investors of ESG issues relating to the industry as
a whole and to Barratt specifically.
• Reassurance that the Group continues to be in a strong position and remains a good
investment opportunity.
• Creation of opportunities through initial engagement for follow up meetings and
communication.
Effect of engagement with shareholders on Board decisions
• Better understanding of shareholder expectations in respect of ESG matters,
particularly climate change risks and opportunities and how we relate to the UN
SDGs. This resulted in enhanced disclosures within this Annual Report and Accounts,
including early partial adoption of TCFD and SASB requirements, and a commitment
to develop future investor communications which integrate ESG with financial and
operational performance.
• Decided to re-instate the dividend and paid an interim dividend in May 2021 and also
agreed to recommend the payment of a final dividend for FY21.
• Continue to be accredited as a Living Wage employer.
49
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Stakeholder engagement CONTINUED
Sub-contractors and supply chain
Banks
Why we engage
Without our sub-contractors and supply
chain we would not be able to build high
quality products at the volume expected
by the market. It is therefore important for
us to build relationships with our sub-
contractors and our supply chain in order
to secure continuity of supply of materials,
help support our productivity levels, avoid
increased costs of sourcing alternative
suppliers and avoid undue delays in
construction. We must ensure that we
have a good understanding of what they
expect from the Company in return for their
continued support.
How we engage
The following methods of engagement are
utilised as they give us the opportunity to
speak to our sub-contractors and supply
chain as a group which ensures consistency
in the messaging being provided and
enables an opportunity for networking and
sharing ideas and best practice. Individual
meetings allow us to focus on specific
areas or issues relevant to that stakeholder.
1. Supplier conferences
• We held two supplier conferences
during the year. At each conference
we shared our immediate and medium
term plans and the role our suppliers
can play in helping us to achieve our
objectives whilst gaining a better
understanding of the issues and
challenges they were facing and how we
could support them.
2. Ongoing supplier relations
• Engaged with sub-contractors and
our supply chain to understand their
capacity to continue to support our build
programmes on recommencement and
throughout each lockdown.
• Made further progress on the Supplier
Sustainability matrix developed for our
suppliers to drive performance against
our strategic priorities.
• Engaged with 30 of our highest emitting
suppliers and sub-contractors to better
understand our Scope 3 emissions.
Further information can be found on
page 23.
50
• Our divisions held sub-contractor and
supplier days to discuss local business
plans and 'Thank you’ events for our
sub-contractors and suppliers for their
continued support.
• Conducted trials to eliminate or reduce
single use plastics and involvement
collaborative projects with Zero Waste
Scotland to research packaging waste
and its manufacturing and supply
source.
• Continued to promote the Supply Chain
Sustainability School to provide targeted
learning and training resources.
KPIs – How is effectiveness measured
The following information is reported to the Board by the Chief Operating Officer and/
or the Group Procurement Director to enable it to consider and agree what, if any,
changes may be required to our methods and frequency of engagement with our sub-
contractors and supply chain:
• Feedback received from a survey which is issued following the annual conference
to help improve the conference in the following year.
• Availability of supply of materials and services to support our build delivery
programme despite shortages and/or challenges in the industry.
Interests and concerns
Through the engagement activities undertaken, the following areas were identified as
the key interests and concerns of our sub-contractors and supply chain:
• Safety and health of their employees working on our sites.
• Sustainability and carbon reduction.
• Prompt payment.
• Ability to meet demand for materials.
Outcomes from engagement
• Positive feedback regarding our leadership on sustainability issues ranging from
carbon and waste, to ensuring we uphold our commitments to modern slavery and
the real Living Wage.
• Long term relationships between sub-contractors, suppliers and the divisions
which ensured that delivery and performance standards were mutually understood
and enabled us to secure materials to support build requirements during a period
of shortage of certain components.
• Ability to introduce strategies to retain trades which remains a constant challenge.
• Better understanding on the availability of carbon emission data, and the
challenges associated with reporting this data.
Effect of engagement with sub-contractors and the supply chain on
Board decisions
• To hold an additional conference with sub-contractors and the supply chain to
further enhance relationships.
• To increase the frequency at which the availability of materials is reviewed and
considered by the Board.
• Refined the GHG emissions factors we use for specific products and services to
improve the accuracy of the baseline and yearly emissions performance.
• Considered the impact of future policy, such as carbon pricing, based on the
information obtained through engagement.
Why we engage
For the business to continue in operation
it needs to ensure that it has sufficient
finance and working capital to settle
liabilities, manage working capital, respond
to changes in the economic environment,
and take advantage of appropriate land
buying and operational opportunities to
deliver strategic priorities. In addition, it is
important to understand the banks views
on the market and their risk appetite for
lending as well as identifying ways in which
the parties can collaborate to support
mutual customers.
How we engage
We believe that using these methods of
engagement is the best way of ensuring
continued mutual understanding of our
respective businesses and of the services
the banks can provide to us and to our
customers. Virtual meetings proved an
effective way to meet with a number of
banks in a short period of time.
1. Meetings and webcasts
• The Chief Financial Officer, Head of
Treasury and Head of Mortgage Lender
Relations held update meetings and
calls after the annual results with each
of the Banks in the RCF. The Chief
Financial Officer and Head of Treasury
also met USPP investors. Additional
calls and meetings were held as
appropriate throughout the year
including after our half year results.
• We provided updates on the progress
being made in terms of sustainability
whilst the banks informed us of the
new initiatives they have, such as
sustainability linked RCFs, and how
these may impact the business and the
credit market.
• Head of Treasury has a schedule of
regular diarised calls on a one to
one basis with counterparties at the
RCF banks.
2. Mortgage lender relations
• Structured regular meetings are held
with a broad spread of lenders by the
Head of Mortgage Lender Relations.
Additional attendees at these meetings
in FY21 were the Chief Executive and
the Group Sales and Marketing Director,
as mortgage lending became more
challenging following the relaxation of
COVID-19 measures and in advance of
the cessation of the Help to Buy scheme.
• We continue to work with mortgage
lenders to encourage development of
green mortgage products, which factor
the energy efficiency of our homes into
mortgage assessment processes.
• A call was arranged with the top ten
mortgage lenders, with the Chief
Executive and Group Sales and
Marketing Director, dedicated to the
discussion of sustainability and the
environment.
• We continued to engage with a panel
of recommended mortgage brokers
through one to one meetings.
KPIs – How is effectiveness measured
The following information is reported to the Board by the Chief Financial Officer to
enable it to consider and agree what, if any, changes that may be required to our
methods and frequency of engagement with our banks:
• The banks' willingness to engage with us and discuss new opportunities to support
us and our customers.
Interests and concerns
Through the engagement activities undertaken, the following areas were identified as
the key interests and concerns of our banks:
• Sustainability – our progress, the potential for sustainability linked RCFs and
possible green mortgage products for our customers.
• New high LTV lending products for our customers.
Outcomes from engagement
• Opportunity for the Group to discuss the market environment and recent trends
and for the banks to discuss the Company’s latest results and broaden their
understanding of the Company.
• Better knowledge and understanding for the banks of sustainability and
environmental issues and direction of travel for the housebuilding industry.
• Through our existing relationships with our recommended mortgage brokers, we
were able to engage with a broader range of mortgage lenders for our customers.
• Gained a greater understanding of each other’s priorities and agreed overlapping
objectives, with a view to evolving improved lending terms for energy efficient
homes.
• Clearer understanding of banks’ concerns around climate risk and carbon
mitigation, and our response to this.
Effect of engagement with banks on Board decisions
• Agreed to support two projects (HBF Mortgage Indemnity Scheme and Market
Mortgage) to support 95% lending on new build houses and flats in addition to the
Government Indemnity Scheme.
51
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Stakeholder engagement CONTINUED
Local communities
Why we engage
It is important for us to engage with
communities in which we build to ensure
that we are responding to local needs
and are able to create value. Regular and
open engagement helps ease the whole
build process, in particular planning, as it
mitigates against objections from members
of the community which could lead to
undue delay and increased costs.
How we engage
We use a range of engagement methods
to enable the local communities to better
understand how we can benefit them, and
encourage them to ask us questions to
increase their awareness of what we do and
why. Making information available online
means it can be more readily accessed by a
wider audience.
1. Meetings and forums
• To ensure community needs and
considerations are taken into account
at the earliest stages of development,
we hold meetings which all local
residents are welcome to attend. At
these meetings we seek their views on
our plans and look to incorporate their
suggestions. This year we held these
forums virtually in order to remain
COVID-secure.
• Planning meetings were also held
virtually until 7 May 2021 at which
point the temporary regulations that
enabled virtual meetings expired. As no
alternative arrangements were in place,
and social distancing requirements
continued, this caused delays to the
planning procedures meaning members
of the public were unable to engage
with the process. We value the input
of local communities and will continue
to engage with them through the
planning process.
• Engagement with local schools, to
inform schoolchildren about site safety,
in line with our commitment to keeping
people safe, but also to provide an
opportunity to teach children about
the construction process, the careers
available, and the environmental and
sustainability initiatives that we have
implemented to create sustainable
homes and places to live. An example
of this is the new site safety films for
schools which were produced featuring
our mascot Site Safety Steve, showing
the hazards and danger of children
playing on building sites. In addition
to the films, packs for schools were
also produced with quizzes, spot the
difference sheets and certificates for
pupils who had completed all activities.
2. Written communication
(including signage)
• We write to local residents to inform
them of our development plans, and
seek their input on how we can ensure
the development has a positive impact
on the local community. We also write
to inform them of upcoming works
that have the potential to cause
disruption, such as highway and
infrastructure works.
• We use signage in and around our sites
to demonstrate our credentials and
the value our activities bring to local
communities. This is true of local,
regional and national scales, where
we highlight jobs and businesses
supported, green space created and
retained, and section 106 contributions
to local infrastructure and services.
This year we have used our signage to
share a broader range of messages
– for example we have developed a
toolkit for our divisions to promote our
partnership with the RSPB around our
sites, demonstrating our commitment
to protecting and enhancing nature to
local people.
• Local media and newspapers remain
an important tool for engagement.
We publicise the opening of new
developments and positive news
stories about charitable or other
beneficial activities with local news
outlets to promote our credentials as a
responsible business that looks to do
the right thing.
• We listen to residents’ concerns
about the impact of our activities on
the natural environment, and work
with them to find solutions that are
acceptable to all parties.
• We promote the resilience and
sustainability credentials of our
innovative homes to the wider
community, especially in low carbon
emissions and waste management.
• We are sponsoring the Regional
Property Journalist of the Year Award
and are a judge at the Property Press
Awards – reflecting the importance
with which we regard regional property
writers and journalism. This is also
why we have a network of seven PR
agencies promoting the business to
national, regional and local media.
3. Charitable giving and
volunteering
• Our charitable partnerships are
a crucial part of our strategy for
community engagement. This year,
we have established the Barratt
Developments PLC Charitable
Foundation, through which all our
charity work is now conducted.
We encourage our divisions to forge
partnerships with local charities
focused on the needs of the
communities in which they operate.
Each of our 27 divisions is given
£1,000 per month to spend on local
good causes and provided with match
funding. Employees also undertake
volunteering in the communities in
which we operate (see Employee
engagement section on page 46).
•
In spring, we ran a nationwide
campaign in support of The Tommy
Club. This is a positive initiative from
the RBLI, raising money and providing
welfare and support for our Armed
Forces veterans. We installed 300
Tommy figures at our show homes
around the country, and sent this
story out to local media timed to
coincide with VE Day. This generated
lots of positive media coverage and
local goodwill.
KPIs – How is effectiveness measured
The following information is reported to the Board by the Chief Operating Officer to
enable it to consider and agree what, if any, changes may be required to our methods
and frequency of engagement with our local communities:
• The extent of local opposition to our developments and level of planning appeals.
We are proud that 95% of the units we build are approved at a local level and do not
require a planning appeal.
Interests and concerns
Through the engagement activities undertaken, the following areas were identified as
the key interests and concerns of our local communities:
• Our local, regional and national socio-economic footprints, impact on the
environment and availability of green spaces.
• Disruption to local areas during construction of our developments including noise
and air pollution.
• Safety and protection of members of the community around developments.
Outcomes from engagement
• Enhanced understanding of the needs of local communities
• Development of community relationships creating a positive legacy from building
great places to live, with the facilities people need to help local communities thrive.
• Charitable activities that deliver a range of benefits, including enabling us to work
closely with local people to deliver tangible benefits for communities, and building
strong relationships with existing communities.
• Engaging with schools and connecting with local families, to share key messages
such as how we keep people safe and allowing us to further understand what
matters most to the community.
Effect of engagement with local communities on Board decisions
• Review of development layouts to ensure that there is appropriate green/open
space.
• Launched the ‘Nature on Your Doorstep’ project, with the RSPB to inspire and
advise members of communities on how to turn their outdoor spaces into havens
for wildlife – whether it be a garden, balcony, yard or community greenspace.
52
53
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Stakeholder engagement CONTINUED
Government and regulators
Why we engage
Government and regulators set the legal
and regulatory environment in which
we operate. It is therefore vital that they
understand the industry and the effect of
any proposed changes. Engagement with
these stakeholders enables the Company
to gain an insight into future legislation
or regulation which allows it to prepare
for potential changes in a timely manner
for the benefit of our customers and the
business.
How we engage
We use a range of methods of engagement
to provide Government and regulators
with accurate information about the
housebuilding industry and the wider
housing sector, which they can use to
develop policies that tackle their goals
(whether enhancing housing supply, quality
or energy efficiency), whilst minimising
adverse impacts on the sector and our
customers. The methods employed on
any given occasion will be dictated by
the specific issue, and will be decided
on by senior figures with experience of
stakeholder and Government engagement,
coordinated by our Corporate Affairs team.
1. Written Correspondence
• Letters to Ministers, MPs and other
senior figures to inform them about
challenges facing the industry, the
impacts of certain policies, and to
tell them more about some of the
activities we are proud of. For example,
we kept Government and regulatory
stakeholders updated about our
response to the pandemic, our support
for our employees, partners and local
communities and how our sites and
workplaces are COVID-secure.
• We respond to Government
consultations on relevant policy areas,
such as Planning for the Future White
Paper and the Future Homes Standard.
In addition, we provide insight on
upcoming legislation, such as the
Environment Bill and the Building
Safety Bill.
2. Meetings, discussions
and forums
• Representatives of our senior
leadership team met virtually with
regulators and Government figures,
to discuss specific policy issues and
the housebuilding environment more
generally.
• We provided evidence to the Housing,
Communities and Local Government
Select Committee on the proposed
planning reform.
• We spoke at a fringe event at the virtual
Conservative Party Conference and are
exploring the various party conferences
in 2021. Engaging in these events
provides a better understanding of how
each party will support the housing
industry going forward.
• Our Chairman, John Allan, chaired
the COVID Recovery Commission,
examining the impact of COVID-19 on
the Government’s Levelling-Up agenda
and how the country can emerge from
the pandemic stronger, fairer and more
resilient.
• This year, due to the increased profile
and urgency around sustainability and
planning issues, we have increased our
participation in roundtable discussions
covering the housing market and
housing policy.
• We are looking to participate in
activities around the United Nations
Climate Change Conference (COP26) in
Glasgow in November 2021.
• As part of our determination to be
the leading national sustainable
housebuilder we understand the
importance of engaging closely
with Government and regulators
on sustainability issues, to create
solutions to shared problems at
the pace appropriate to the scale of
transformation required. We have seen
this engagement increase during the
past year:
− We are members of the
Government’s Green Jobs
Taskforce, a joint BEIS and
Department of Education
initiative, that has produced
recommendations for delivering the
skills required to achieve net zero;
− We continue to sponsor the
Net Zero APPG, and our Group
Sustainability Director contributed
to their decarbonisation report,
“Putting Net Zero at the Heart of
UK Policy” as well as attending the
roundtable discussions;
− We sponsored an event on the
Green Recovery and the Built
Environment, hosted by The
House magazine, and our Group
Sustainability Director sat on a
panel discussion about how to
decarbonise the built environment;
− Our Chief Executive attended
a roundtable meeting with the
Housing Minister to discuss the
Future Homes Standard and low
carbon heating of new homes; and
− We have worked with the
Government’s Net Zero Business
Champion on how the housebuilding
sector can help the country reach
net zero, attending meetings and
signing up to the UN Race To Zero
campaign.
• We sponsor the West Midlands APPG,
which focuses on issues including
devolution, infrastructure, skills,
investment and innovation in the
region. We are now working with them
on a report that looks at the future of
strategic planning in the West Midlands,
which will be published later this year
and have joined sessions on skills and
economic growth.
• We also sponsored the Women and
Work APPG, an area of focus for us as
we work to encourage more women to
choose a career in the housebuilding
industry.
• We are founding members of the
Government’s Early Adopters Group,
which led to the creation of an industry-
wide Building Safety Charter, promoting
positive culture and behaviour change
in the safety of the built environment.
3. Site visits
• We regularly offer Government and
regulatory stakeholders the opportunity
to visit our sites and meet people at all
stages of the housebuilding process,
from trainee apprentices to our award
winning senior site managers, however
this has not been so easy in the year
under review.
• During the year, we hosted COVID-19
secure visits from the Prime Minister
Boris Johnson on our Great Oldbury site
in Gloucestershire, and the Chancellor
of the Exchequer Rishi Sunak on our
Hayes Village site in West London as
well as the Housing Minister, the Mayor
of the West Midlands, and local MPs
from the Conservative, Labour and
Scottish National Party.
KPIs – How is effectiveness measured
The following information is reported to the Board by the Chief Executive to enable it to
consider and agree what, if any, changes may be required to our methods and frequency
of engagement with the Government or regulators:
• We plan and measure proactive and reactive engagement with key political
stakeholders, allowing us to ensure we maintain constructive relationships with
policy-makers on issues that affect our customers, communities and our business.
• We track interactions, including email correspondence, meeting attendance as well
as site visits. This activity helps to build strong local and national connections, as
well providing insight and experience directly to government on key operational and
customer issues from sustainability standards to modern methods of construction.
• We report on our responses to government consultations and emerging legislation
on relevant policy areas, such as Planning for the Future White Paper, the Future
Homes Standard and the Environment Bill. This includes tracking the volume of
responses as well as the policy and legislative outcomes.
Interests and concerns
Through the engagement activities undertaken, the following areas were identified as
the key interests and concerns of the Government and the regulators:
• Sustainability – Government and regulatory understanding of the key challenges
and opportunities from a housebuilder's perspective in achieving a net zero carbon
economy.
• Housing demand and supply, and planning reform.
• Cladding and firestopping issues in respect of high rise buildings.
• The impact of COVID-19 and easing of restrictions on the economy.
Outcomes from engagement
• Built relationships with Government and regulators in order to deliver new homes at
the volume levels required.
• Government and regulators gain a better understanding of the challenges faced by
the industry and the importance of the sector to the wider economy and society.
• Seen as leading the sector on sustainability through engagement with the
Government to find solutions that create value for the sector, our key stakeholders,
the environment and local communities.
• The Government agreed with our request for a long-term roadmap that acknowledges
the timescales involved in housebuilding and gives certainty to the supply chain and
skills providers to invest in the technology required to achieve net zero.
• Able to understand what decisions or potential regulatory changes are being
considered in order to be prepared in terms of workforce and skills planning and
mitigating any impact on supply chains, minimise disruption to our operations and
safeguard the supply of new homes.
Effect of engagement with Government and regulators on
Board decisions
• Key Government asks are ensuring equal access to growth in a green economy,
influencing public behaviour to reduce energy demand and high quality skills and
training in green construction. The Board continues to seek ways in which the
business can support this, for example undertaking research and development
into alternative heat sources and adopting different methods of energy efficiency
construction whilst setting challenging sustainability targets for the business to
strive to achieve.
• Broader understanding of Government policy and regulation and the environment in
which we operate.
• Greater understanding of the key drivers for housing policy at a national and local
level and impact on the land bids.
• Better idea of the potential legislation for example around biodiversity net gain and
the Future Homes Standard. This helps to plan investment and set targets such as
all new housetypes to be zero carbon in use from 2030.
54
55
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Risk management
↓ Our SHE team completed over 5,000 site inspections during FY21,
working with Site Managers to ensure the safety of our workforce.
In pursuing our strategic priorities to create value for stakeholders, we experience risk. The Board is responsible for the overall
stewardship of risk management and ensuring the Group maintains the appropriate level of risk to achieve its objectives.
The risks facing the Group, separately or in combination, could have a material adverse effect on the implementation of the Group strategy,
our business, financial performance, shareholder value and returns, and reputation. Changes in the economic or trading environment can
affect the likelihood and potential impact of risks, and may give rise to new risks.
Risk management controls are integrated into all levels and operations of our business and across all our operations, including at site,
divisional, regional and Group level. The roles and responsibilities of the Board, its Committees and all levels of management in the
identification and management of risk are summarised below.
Risk monitoring structure
Board
Audit
Committee
(page 85)
Nomination
Committee
(page 79)
Remuneration
Committee
(page 94)
Safety,
Health and
Environment
Committee
(page 91)
Disclosure
Committee
Sustainability
Committee
(Active from
FY22)
Executive Committee
Operations
Committee
Safety,
Health and
Environment
Operating
Committee
Land
Committee
Risk
Committee
Technology
Risk Sub
Committee
Treasury
Operating
Committee
ESG
Steering
Committee
Regional and Divisional
Management
Group functions
Site management, assessments and valuations
e
c
n
a
r
u
s
s
A
t
n
e
d
n
e
p
e
d
n
I
i
g
n
w
o
l
b
e
l
t
s
i
h
W
56
Risk
identification
Risk
management
Overall
responsibility for
corporate strategy,
governance,
performance, internal
controls and risk
management.
Sets risk appetites,
taking into account
the expectations
of shareholders
and other
stakeholders, and
the macroeconomic
context.
Responsible for
ensuring that the
Risk Management
Policy is embedded
within the business
and appropriate
actions are taken to
manage risk.
Delegates risk
oversight to
appropriate
management
committees.
Responsible for risk
management and
control within the
relevant division,
region or group
discipline.
Maintains an effective
system of site-level
risk management and
internal control.
Considers high-
level strategic
risks with input
from independent
experts. Assesses
the risks identified by
management against
the Group's strategy
and the interests of
stakeholders.
Monitors business
and operational
performance and
changes in key risks.
Through the Risk
Committee, assesses
risks identified by the
Group using a defined
scoring system based
on the likelihood of the
risk materialising and
the potential impact
on the business.
Applies specialist
local and professional
knowledge and
research to identify
new and monitor
changes to existing
operational and
strategic risks at a
divisional, regional
and functional level.
Identifies and
assesses operational
risks affecting
housebuilding
activity at a site level,
including construction,
sub-contractor and
SHE risk.
The business continues to operate under
BSC-accredited COVID-19 working
practices and protocols. The risks
associated with the pandemic are
reducing as the country progresses with
its vaccination programme and lifts the
restrictions on its economy. Nonetheless,
the current public health situation,
the potential for future variants, and
subsequent economic or operational
disruption, remain factored into the
assessment of risk.
Climate change and the risk of a significant
nationwide unexpected event affecting
multiple locations have been newly
classified as principal risks to the Group.
A study of our approach to climate risk
is on page 65. The potential disruption
from a significant nationwide event
was made evident from the COVID-19
pandemic, though this also demonstrated
the effectiveness of the Group’s business
continuity action plan.
After a review of its current and forecast
exposure, the Group no longer considers
joint venture and consortia to be a
principal risk. We will continue to work
with our industry partners to develop land
opportunities where it is mutually beneficial
to all parties and presents value to our
stakeholders.
Reputational risk could potentially arise
from a number of sources including
external and internal influences relating
to the housebuilding sector that, when
combined or over a period of time,
could create a new principal risk. The
Group actively manages the impact of
reputational risk by carefully assessing the
potential impact of all the principal risks
and implementing mitigation actions to
minimise those risks.
Overall assessment
The Board has completed its assessment
of the Group’s principal and emerging
risks, including those that would threaten
its business model, future performance,
solvency or liquidity.
The current risk profile is within our
tolerance range; the Group is willing to
accept a moderate level of operational risk
to deliver financial returns.
There may be instances in which these
risks could have a moderate adverse
impact on the Group, be it financially or
operationally. To ensure that the Group’s
business model remains resilient over
the medium and long term, the Group
has modelled these scenarios alongside
achievable mitigating actions. The results
are presented in the Viability Statement on
page 67.
57
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Heat map of principal risks net of mitigation
Great places
B Land availability
Principal risks
The Group has identified 11 principal risks that it
considers to be of material operational impact
and likelihood:
A Economic environment, including housing
demand and mortgage availability
B Land availability
C Government regulation and planning policy
D Construction
E Availability of raw materials, sub-contractors
and suppliers
F Safety, health and environment
t
c
a
p
m
I
G Attracting and retaining high-calibre employees
H Availability of finance and working capital
I
IT
J Climate change
K Significant nationwide unexpected event
affecting multiple locations
K
B
H
A
F
I
D
G
J
E
C
These risks are detailed on pages 58 to 63, categorised by the strategic priorities to which they relate. Risk levels are presented net of
mitigation. Emerging risks are detailed on page 64. The illustration of the probability does not consider the relative size of any associated
financial or reputational impact of each item.
Likelihood
Customer first
A Economic environment, including housing demand and mortgage availability
Risk level M ↓
Risk appetite M —
Responsibility: Executive Committee
Risk description
Current status
Response/mitigation
Key risk indicators
Changes in the UK
macroeconomic
environment may lead to
falling demand or tightened
mortgage availability, on
which the majority of our
customers are reliant,
reducing the affordability of
our homes.
An inability to meet
customers’ needs will lead
to reduced sales volumes
and affect our ability to
provide profitable growth.
Uncertainty persists over
the recovery of the economy
from COVID-19 following the
lifting of legal restrictions
and the cessation of the
furlough scheme.
The Government’s Help
to Buy scheme is now
restricted to first time
buyers and within regional
price caps and is due to end
in March 2023.
However, demand for
housing remains strong and
mortgage approvals have
shown a sharp recovery with
some improvement in terms
on offer (see page 09).
• Continual monitoring of the market at a Board,
Executive Committee, regional and operating
divisional level, leading to amendments in the
Group’s forecasts and planning as necessary.
Gross and operating
margins, PBT, ROCE,
EPS, TSR, total home
completions.
• Comprehensive sales policies, regular reviews
of pricing in local markets and development
of good working relationships with mortgage
lenders.
• Quarterly site valuations based on the latest
market data.
• Disciplined operating framework with an
appropriate capital structure and strong
balance sheet.
• Working with industry and the banks on the
development of alternative mortgage products
for customers for when Help to Buy ends.
Risk level M —
Risk appetite M —
Responsibility: Land Committee
Risk description
Current status
Response/mitigation
The inability to secure
sufficient consented land
and strategic land options at
appropriate cost and quality
in the right locations to
enhance communities.
Securing favourable sites
that meet our margin and
site ROCE hurdle rates will
enable volume growth.
Geographically diverse land
bank across the country,
with 4.7 years owned and
controlled land.
Whilst focusing on
optimising our existing land
bank, during the year we
achieved planning on 14,280
plots, and have detailed or
outline planning permission
on all of our FY22 expected
home completions and
95.5% of expected home
completions for FY23.
• All potential land acquisitions are subject to
formal appraisal and approval by the Land
Committee.
• Group, regional and divisional review of land
currently owned, committed and identified
against requirements.
• Formal relationship management with key land
suppliers, landowners and local authorities.
• Review by Land Committee and management
on strategic land and sites.
• Land forum and academy training events.
• Appropriate usage of strategic land.
C Government regulation and planning policy
Risk level M —
Risk appetite L ↓
Responsibility: Operations Committee
Risk description
Current status
Response/mitigation
Changes in the regulatory
environment affect the
conditions and time taken
to obtain planning approval
and technical requirements
including Building
Regulations, increasing
the challenge of providing
quality homes where they
are most needed.
Sufficient, appropriate
planning permissions on
new sites will enable the
Group to deliver disciplined
volume growth at our target
margins.
The Government continues
to reiterate its commitment
to facilitating the provision of
new homes, but the planning
process remains lengthy and
complex.
Consultation is ongoing
regarding the proposed
Residential Property
Developer Tax, expected to
be introduced in April 2022.
Changes to Building
Regulations, such as
the Future Homes
Standard effective in
2025, will increase design
requirements.
• Considerable in-house technical and
planning expertise focused on complying with
regulations and achieving implementable
planning consents that meet local
requirements.
• Robust and rigorous design standards for the
homes and places we develop that exceed
current and expected statutory requirements.
• Policies and technical guidance manuals for
employees on regulatory compliance and the
standards of business conduct expected.
• Consultation with Government agencies,
membership of industry groups to help
monitor, understand and plan for proposed
regulation change.
Key risk indicators
Land approvals
(plots).
Key risk indicators
Gross and operating
margin, PBT, ROCE,
EPS, TSR, total home
completions.
58
59
Risk level/appetite H High risk M Medium risk L Low risk Change from previous year ↑ Increase ↓ Decrease — No change
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Principal risks CONTINUED
Leading construction
D Construction
Investing in our people
F Safety, health and environment
Risk level H —
Risk appetite L —
Responsibility: Operations Committee
Risk level M ↓
Risk appetite L —
Responsibility: Safety, Health and Environment Operating Committee
Key risk indicators
Customer service,
total home
completions, gross
margin, operating
margin, PBT, ROCE,
EPS, construction
waste intensity and
carbon intensity
reduction.
Key risk indicators
Customer service,
gross and operating
margin, PBT, ROCE,
EPS, TSR, total home
completions.
Risk description
Current status
Response/mitigation
Failure to achieve excellence
in construction, through
delays from adverse
conditions, a failure to
identify cost overruns
promptly, design and
construction defects,
and deviation from
environmental standards.
Delays or deficiencies in
construction could increase
costs, expose the Group to
liabilities, and result in poor
product quality, reduced
selling prices and sales
volumes.
Inefficiency and competitive
disadvantage from a failure
to develop and implement
new and innovative
construction methods.
Whilst it started the year
emerging from the first
national lockdown, the
Group has recovered its
construction activity close to
pre-pandemic levels.
The Group has again
been recognised for its
commitment to quality
through its NHBC
construction quality scoring
and success in the Pride in
the Job Awards.
In prioritising the safety
of residents, the Group
continues to incur costs on
safety improvements on
certain legacy properties
(see page 16).
The Group is further
increasing the use of MMC
to address skilled employee
shortages and reduce its
environmental impact.
• Executive Committee, regional and divisional
reviews and quarterly site valuations assess
expected margins.
• Continuous review of quality of design and
materials, which are both evaluated by external
and internal technical experts, including the
NHBC, to ensure compliance with all building
and other regulations.
• Monitoring and improving the environmental
and sustainability impact of construction
methods and materials.
• Appropriate insurance cover.
• Detailed build programmes and quality
reviews.
•
Implementation of MMC by design and
technical teams.
• Rigorous testing and analysis of new
technologies before full implementation.
• Dedicated project team, supported by external
experts, responsible for reviewing legacy
properties.
E Availability of raw materials, sub-contractors and suppliers
Risk level M ↓
Risk appetite L —
Responsibility: Operations Committee
Risk description
Current status
Response/mitigation
Shortages or increased
costs of materials and
skilled labour or the failure
of a key supplier.
Maintaining sufficient
material and skilled sub-
contractor availability will
enable disciplined growth in
the provision of high-quality
homes.
Failure to do so may lead to
increased costs and delays
in construction.
The pressure on labour
supply is currently
moderate, reflecting the
recovery in construction.
Uncertainty remains over
the impact of changes to the
rights of EU, EEA and Swiss
citizens to work from July
2021.
We have fixed price
agreements in place for
96% of centrally procured
materials to December
2021 and 71% to June 2022.
Around 10% of the Group’s
materials, by spend, are
imported and a further 30%,
by spend, contain some
imported components.
• Adhere to the Prompt Payment Code to
support the liquidity of our partners.
• Centralised team procures the majority of the
Group’s materials from within the UK including
subcontractor materials, ensuring consistent
quality and cost.
• Development of long-term supplier and sub-
contractor partnerships with all significant
supply agreements fixed in advance, usually for
12 months.
• Key supplier audit programme to assess risks
to the reliability of supply continuity.
• Requirement to develop multiple supplier
relationships for both labour contracts and
material supplies, where possible, with
contingency plans should any key supplier fail.
• Control of build and material costs throughout
build programmes.
Key risk indicators
Health and
safety (SHE audit
compliance).
Key risk indicators
Employee
engagement score.
Risk description
Current status
Response/mitigation
Health and safety or
environmental breaches can
result in incidents affecting
employees, sub-contractors
and site visitors, and
undermine the creation of a
great place to work.
SHE breaches affect
the wellbeing of our
employees and could result
in reputational damage,
criminal prosecution and
civil litigation, and delays in
construction or increased
costs.
The Group continues to
focus on health and safety,
ensuring consistent controls
are in place to reduce
accidents and injuries.
The Group IIR rate has
unfortunately increased
to 416 for the year (2020:
256) per 100,000 persons
employed (including sub-
contractors), see page 15.
BSC-accredited COVID-19
working practices and
protocols remain in place
at sales centres and
construction sites, though
the risk has diminished
as the UK’s vaccination
programme has progressed.
• Nominated social distancing marshal present
on all sites.
•
Internal committed health and safety team.
• Regular health and safety monitoring, internal
and external audits of all operational units,
and regular Senior Management reviews of
developments.
• Continued reinforcement of Group SHE policies
and procedures.
• Dedicated SHE Board and SHE Operations
Committee that review key performance
indicators and improvement plans.
• Quarterly performance reviews by divisional
management within all operating units.
•
Independent reviews of our SHE processes.
G Attracting and retaining high-calibre employees
Risk level H ↑
Risk appetite M —
Responsibility: Executive Committee
Risk description
Current status
Response/mitigation
Failure to recruit and/or
retain the best people so our
employees and business can
benefit from the available
development opportunities.
Development of skilled
employees is critical to
delivery of the Group’s
strategy of profit and volume
growth through quality and
efficiency.
The industry continues
to face a skills shortage,
further affected by the
changes to the rights of EU,
EEA and Swiss citizens to
work from July 2021.
Competitiveness for
employees in the operational
business has increased as
the economy has re-opened
after the pandemic.
• Comprehensive human resources programme
including apprenticeships, a graduate
development programme, succession planning
and training academies tailored to each
discipline.
• Signatory to the Armed Forces covenant and
recruiting through our Armed Forces Scheme.
• Ongoing monitoring of employee turnover
and absence statistics and feedback from exit
interviews.
• Annual employee engagement survey to
measure employee satisfaction.
• Remuneration benchmarking against industry
competitors.
• Signatory to the Social Mobility Pledge.
60
61
Risk level/appetite H High risk M Medium risk L Low risk Change from previous year ↑ Increase ↓ Decrease — No change
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Principal risks CONTINUED
Underpinning all priorities
H Availability of finance and working capital
Underpinning all priorities
J Climate change
Risk level L ↓
Risk appetite L —
Responsibility: Treasury Committee
Risk level M (New)
Risk appetite M (New)
Responsibility: Executive Committee
Risk description
Current status
Response/mitigation
Unavailability of sufficient
borrowing and surety
facilities to settle liabilities,
manage working capital,
respond to changes in the
economic environment,
and take advantage of
appropriate land buying and
operational opportunities to
deliver strategic priorities.
The Group closed the year
with net cash of £1,317m.
It has a £700m RCF to
November 2024 and holds
£200m of fixed rate USPP
notes that mature in 2027.
Management have stress-
tested the Group’s resilience
to a severe but plausible
realisation of risks and,
consider the funding
available to be sufficient.
• Committed bank facilities and private
placement notes of around £900m with
maturity on the RCF in 2024 and the USPP in
2027.
• Policy requiring minimum headroom of £150m
of drawings against committed facilities.
• Disciplined operating framework with an
appropriate capital structure.
• Assessed the medium and long-term viability
of the business model (see page 67).
Key risk indicators
Average net cash,
minimal year end
indebtedness.
I
IT
Risk level M —
Risk appetite L —
Responsibility: Technology Risk Sub-committee
Risk description
Current status
Response/mitigation
The Group continues to
integrate its IT systems
to enhance control and
drive efficiency. The failure
of any of these systems,
particularly those relating
to customer information,
surveying and valuation,
could restrict the Group’s
operations and disrupt
progress in its strategic
priorities. Failure to comply
with data regulations
could also incur significant
financial penalties and
reputational damage.
The threat of external
cyberattacks and phishing
attempts persists with
several high-profile
incidents being reported in
the media during the year.
The Group continues
to invest in its IT
infrastructure, including the
implementation of a new site
valuation system during the
year.
• Centrally maintained IT systems.
• Fully tested disaster recovery programme.
• Regular reviews to seek to reduce the risk of
successful cyberattacks.
• GDPR-compliant business processes and data
management.
• Technology Risk Sub-Committee provides
oversight of technology risk.
• Group-wide compliance and policies on
passwords and transferring data to third
parties.
Key risk indicators
Customer service,
gross and operating
margin, PBT, ROCE,
EPS.
Key risk indicators
Carbon intensity,
waste intensity.
Risk description
Current status
Response/mitigation
In the short-to-medium
term, Government
regulations and customer
and investor expectations
will require the Group
to further enhance its
sustainable business
practices.
In the long term the Group
must adapt to the physical
changes to the climate in
which it operates.
A great global effort is
required to keep climate
change below 1.5ºC and
avoid the most severe effects
of climate change.
The UK Government has set
a target to reduce emissions
by 78% by 2035, aiming to
become net zero carbon by
2050.
• Established the new Board Sustainability
Committee and management ESG Steering
Committee to oversee the business response
to climate risks (see page 66).
• Committed to reduce the Group’s operational
and indirect carbon emissions significantly,
including those from its completed homes and
its supply chain (see page 23).
• Review of Future Homes Standard, effective in
2025, to adapt and plan for compliance.
• Undertaken a detailed climate risk and
opportunities review in consultation with
internal business experts and external
consultants (see page 65).
• Progressed scenario analysis to determine the
resilience of the Group’s business model under
different climate related scenarios (see pages
65 to 66).
Local planning authorities
are declaring climate
emergencies, many with
ambitions of carbon
neutrality by 2030.
The introduction of the
Future Homes Standard in
2025 and the potential for
overheating due to increased
average temperatures in
summer requires the Group
to reassess its designs.
The increased frequency of
extreme weather disrupts
construction and requires
our developments to be
resilient to its effects.
K Significant nationwide unexpected event affecting multiple locations
Risk level M (New)
Risk appetite M (New)
Responsibility: Executive Committee
Risk description
Current status
Response/mitigation
A significant unexpected
event, such as the COVID-19
pandemic or the failure
of national infrastructure,
could have a material impact
on our business.
As businesses further
integrate communications
and technology into their
operations, the likelihood
of a significant event
with a nationwide impact
increases.
Whilst the Group has
demonstrated its ability to
continue trading throughout
the pandemic, the
emergence of new variants
of COVID-19 could again
disrupt operations.
• Reviewed business continuity plans in place
for possible failures in communications
or infrastructure, covering operations at a
national and local level.
• Stress-testing of the Group’s available
financing facilities to ensure resilience to a
sudden economic shock.
Key risk indicators
Total indebtedness/
surplus.
Risk level/appetite H High risk M Medium risk L Low risk Change from previous year ↑ Increase ↓ Decrease — No change
62
63
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Principal risks CONTINUED
Emerging risks
L Social trends
Risk level L
Risk appetite M
Responsibility: Operations Committee
Risk description
Current status
Response/mitigation
• Weekly monitoring of our media performance,
including monitoring of our competitors and
other industry best practice.
• Procurement of a social media specialist team
to monitor and advise usage.
• Communications and investor relations teams
regularly assess the effectiveness of the
Group’s messaging.
• Replacing the CRM system with an online
customer portal that allows for easy
communication throughout the customer
experience.
• Active working party focused on delivering
the diversity and inclusion strategy to ensure
the business is representative of, and acts in
the interests of, all within the communities in
which we operate.
Social and Demographic
changes resulting in
significant change to the
demand profile for our
products and developments.
Social developments drive
changes in customers’
expectations of the service
they receive, the ways in
which they communicate
with the Group, and the
manner in which the
Group engages with its
stakeholders. The Group
continues to monitor social
trends as an emerging risk.
The Group’s marketing
must remain relevant to
the latest developments in
communications and social
media or it will fail to engage
with new customers.
Our customers expect timely
and relevant communication
throughout the sales
process through channels
that fit their lifestyle.
Our customers increasingly
consider the Group’s social
and environmental impact
when deciding to buy our
homes. The Group must
highlight the value it creates
for communities and wider
society.
The pandemic and resultant
increase in home working
has changed the way in
which living spaces are
used.
Climate related risk
Understanding and responding to climate change
During the year, in response to developing climate science, government action and the concerns of our stakeholders, the Board classified
Climate-related risk as a principal risk to the Group. To fully understand the implications of climate change, the Board instigated a detailed review
of the key risks and opportunities to the Group’s business model, considering both the physical effects of changing weather and the economic and
regulatory transitions required for society to either mitigate climate change or adapt to a new environment. This involved consulting with external
experts to determine possible climate outcomes and senior management representing disciplines from across the Group.
Key risk indicators
Customer service.
The risks and opportunities identified are detailed below:
Key climate-related risks and opportunities
Key transition risks
m
r
e
t
t
r
o
h
S
m
r
e
t
g
n
o
L
m
r
e
t
t
r
o
h
S
m
r
e
t
g
n
o
L
Government legislation designed to reduce home emissions, for example the Future Homes Standard,
require changes to house specifications.
Government legislation designed to reduce emissions, for example through carbon taxation on suppliers,
increased material costs, amplified by an increased demand for low-carbon materials.
Implementation of new technologies in homes and methods of construction, requiring high capital
investment and upskilling of labour.
Decreasing availability of viable land due to planning and site infrastructure requirements from
government and local authorities.
Key physical risks
Reduced supply availability (for instance timber) as a consequence of changes in climate patterns and
extreme weather events where the supply is sourced.
Increased costs of site infrastructure required to mitigate extreme weather events, for example flood
barriers and balancing ponds.
Disruption to build activity due to increased frequency of severe weather such as extreme hot or cold
temperatures or heavy precipitation. Damage to construction sites from extreme weather events.
Long-term changes in climate patterns, such as prolonged increased temperatures in summer, require
changes to house specifications.
Investing in our people
Key opportunities
m Green financing opportunities for low carbon housing developments bring about low finance costs.
r
e
t
t
r
o
h
S
m
r
e
t
g
n
o
L
Eligibility for green mortgages and cost savings from energy efficiency result in new homes that are more
affordable to our customers.
Increased demand for homes that are both resilient to extreme weather events and also low carbon in nature.
Increased land buying and local partnership opportunities through strong low-carbon and sustainability
credentials .
Risk level/appetite H High risk M Medium risk L Low risk Change from previous year ↑ Increase ↓ Decrease — No change
64
Resilience of our business model
To ensure that the Group will continue to thrive under a changing climate, it is
undertaking an analysis of the resilience of its business model and future strategy
to possible climate scenarios.
Management have determined four scenarios that reflect varying manifestations
of physical and transition (to a lower carbon economy) risks, presented to the
right. These scenarios have been developed using publicly available data from the
Representative Concentration Pathways and Shared Socio-Economic Pathways
under independent expert advice.
The Group’s performance will be modelled under each scenario in FY25, FY30
and FY40, reflecting key dates in the Group’s continued progress in sustainable
development. The Future Homes Standard is effective in FY25, the Group’s
Science based targets are set to 2030, and we are committed to becoming an
operationally net zero carbon business by 2040. Scenario modelling will allow the
Group to demonstrate that achieving these targets will ensure that our business
will be resilient to all plausible climate-related outcomes.
The outcomes of this analysis will be presented in the Annual Report and
Accounts for the year ended 30 June 2022.
k
s
i
r
n
o
i
t
i
s
n
a
r
t
h
g
H
i
k
s
i
r
n
o
i
t
i
s
n
a
r
t
w
o
L
k
s
i
r
l
a
c
i
s
y
h
p
w
o
L
k
s
i
r
l
a
c
i
s
y
h
p
h
g
H
i
Sustainable transition (~1.5°C)
Policies and incentives lead to global temperature
rise meeting the Paris Agreement goal of 1.5°C
Disorderly transition (~2°C)
Extreme policies are introduced from 2030 to
limit warming to 2°C
Stated policies (~2.5°C)
Policy action and implementation continue at
the current rate of pace until 2075
Adaptation (~4°C)
No further policy action is taken to limit
temperature rises
65
Our response
Adapting our home designs to
meet the Future Homes Standard
(see page 29).
Science-based targets for
emissions reductions, including a
road map for the delivery of zero
carbon homes from 2030 (see
page 19).
Our response
Research into design changes to
mitigate overheating in homes in
at risk areas.
Continued adoption of modern
methods of construction that
use sustainable materials and
construction methods resilient to
severe weather (see page 29).
Our response
Working with building societies,
banks and other financial
institutions in the development of
Green Mortgages.
Building an example future home
in conjunction with the University
of Salford to demonstrate the
benefits of sustainable living.
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report
Climate related risk CONTINUED
Understanding and responding to climate change
Viability statement
Reflecting risk in the
Financial Statements
The Group has reviewed its long-term
assets and liabilities in light of the climate
risks and opportunities identified.
The expected costs of the Future Homes
Standard, and design changes required to
mitigate overheating in homes have been
factored into estimates of costs to complete
on sites described in note 2.3 of the
Financial Statements on page 133. They are
therefore reflected in the carrying values
of inventories and the margins we recognise
on sites on which future completions will
be affected.
We assess our proposed land acquisitions
and strategic land options using the latest
flooding reports to assess the viability of
sites and the impairment assessment of
land described in note 3.1 to the Financial
Statements on page 139.
The carrying value of goodwill and
intangible assets is compared to the
value-in-use of the Group’s housebuilding
business to check for potential impairment,
as described in note 4.2.3 to the Financial
Statements on page 146. This requires the
forecasting of future cash flows, into which
the impact of current enacted climate-
related regulations are factored.
Future oversight of climate
related risk
The assessment of and response to climate
risk is a key consideration in the Group’s
future strategy. Climate related risks
and opportunities, reviewed regularly, are
submitted to the Risk Committee as
part of the Group’s standard risk
management process.
During the year, the Board has examined its
strategy for integrating sustainable thinking
into all levels of planning and operations.
In order to ensure that its sustainability
framework is adopted throughout the
business, the Board has established a
new Sustainability Committee, which
will meet for the first time in FY22. It will
review and sign off the Building Sustainably
Framework, including performance and
targets, debate and scrutinise the business
response to climate risks and opportunities,
including the mitigation of related financial
risks, and the embedding of major business
processes required to facilitate this. It
will be supported by the ESG Steering
Committee, a body of senior management
established in September 2020 responsible
for managing the response to climate
risks and opportunities and implementing
the Framework.
66
Board
Chief Executive accountable for Sustainability
Scrutiny and oversight of sustainability ambitions, strategy and framework
NEW Sustainability Committee
Chair: Chief Executive
Review and approve sustainability framework, debate and scrutinise the business
response to climate risks and opportunities
Executive Committee
Biodiversity
Net Gain
Steering
Committee
ESG Steering Committee
Review framework progress and drive
implementation; develop the business
response to climate risks and opportunities
Risk
Committee
Operations
Committee
Progress against TCFD recommendations
In December 2020, the FCA amended the Listing Rules to require compliance with the
recommendations of the Taskforce for Climate-related Financial Disclosures (TCFD). This is
effective for the Group for the Annual Report and Accounts for the year ended 30 June 2021.
The Board fully supports the imperative to integrate climate risk into its strategy and to
communicate its response to the Group’s stakeholders. The Group already reports against
many of the TCFD recommendations and is committed to achieve full disclosure for FY22.
Our progress against the TCFD’s guidelines, and our future plans in each area, are as follows:
Section
Progress made
Focus for 2022
Governance
A sustainability governance review was
undertaken and its recommendations fed into
the development of the Sustainability Committee
and management of sustainability related
activities across the business.
The Board continue to undertake training on the
impacts of climate change.
As a starting point, from FY22
annual incentive arrangements
will include a target around
construction waste reduction, and
three-year long term incentive plan
awards will include carbon intensity
reduction targets.
Strategy
We assessed the short to long term physical
and transitional climate change risks and
opportunities for the business.
We have disclosed our most material risks
and opportunities, and published strategies to
mitigate these risks, including our roadmap for
a net zero transition. Read more on page 65.
Risk
management
We undertook a high level climate risk
management process engaging business owners
across all key functions, the results of which
have been integrated into the enterprise-wide
risk framework. Read more on page 65.
Metrics and
targets
We report our Scope 1 to 3 GHG emissions and
energy consumption data annually, plus progress
against our direct and purchased energy-related
science-based targets. See page 21.
We also report on our use of renewable energy.
Read more on page 19.
We will complete scenario analysis
of the Group's resilience to climate
change, the outcomes of which will
further inform the Group's strategy.
We will measure the potential
financial effects of climate risks
and opportunities and, based on the
outcomes, develop the mitigation
activities necessary to respond,
including engagement with our
wider stakeholders.
We will establish KPIs for our net
zero strategy and science-based
targets, and continue to analyse all
direct emissions across our value
chain in order to set further Scope
3 targets.
Going concern
In determining the appropriate basis of
preparation of the Financial Statements,
the Directors are required to consider
whether the Group can continue in
operational existence for the foreseeable
future. Accordingly, after making enquiries
and having considered forecasts and
appropriate sensitivities, the Directors
have formed a judgement, at the time of
approving the Financial Statements, that
there is a reasonable expectation that the
Group has adequate resources to continue
in operational existence for the foreseeable
future, being at least 12 months from
the date of these Financial Statements.
(More information on the going concern
judgement can be found in note 1.3 to the
Financial Statements.) For this reason,
the Directors continue to adopt the going
concern basis in the preparation of these
Financial Statements.
Viability statement
In accordance with the Code, the Directors
have assessed the prospects and financial
viability of the Group over the longer term,
considering both its current position and
circumstances, and the potential impact
of its principal risks. The Group’s business
model is presented on pages 10 and 11 and
its future prospects are primarily monitored
through the risk management processes
detailed on page 56.
For the long term viability statement, the
Directors consider that a three-year review
period is appropriate. This period is aligned
to our operating framework of a 3.5 year
owned land bank, and the Group’s bottom-
up three-year planning and forecasting
cycle, which considers a wide range of
information relating to present and future
business conditions, including those
impacting on expected profitability, cash
flows, and funding requirements.
The Group’s business plan reflects
measures the Group continues to adopt
to prioritise the safety of our employees,
sub-contractors and customers during the
COVID-19 pandemic and incorporates the
likely market impact of the planned changes
in the Help to Buy scheme in 2023. The
Group is forecast to remain profitable and
sustainable throughout the forecast period.
The Group continues to be subject to
its principal risks, which are detailed in
pages 58 to 63. In particular, there remain
economic uncertainties. This Viability
Statement considers the impact that these
risks (particularly those related to the
economic environment and availability of
finance and working capital) might have
on its ability to meet its targets in current
market conditions over the review period.
To assess the Group’s resilience to adverse
outcomes, its forecast performance over
the three-year period, including dividends,
was sensitised to reflect a series of
scenarios based on the Group’s principal
risks and the downside prospects for
the UK economy and housing market
presented in the latest external economic
forecasts. This assessment included a
reasonable worst-case scenario in which
the Group’s principal risks manifest to a
severe but plausible level. The assessed
risks, for which the impacts were applied in
aggregate, were as follows:
Where necessary, mitigating actions were
modelled that would be adopted by the
Group in response to these circumstances.
These primarily involved a reduction in
investment in inventories in line with the
fall in expected sales.
Under the described scenarios, the
Group is able to operate within its current
facilities, meet its liabilities as they fall
due, and remain in compliance with its
financial covenants in the assessed period.
The mitigating actions required do not
disrupt the Group’s ability to grow over the
long term.
Based on this review, the Directors confirm
that they have a reasonable expectation
that the Group will be able to continue in
operation and meet its liabilities as they
fall due over the three-year period of
their assessment. Assessing the Group's
prospects beyond the review period, the
Directors consider that the demand for
high-quality new homes will remain strong
due to long term undersupply. The Group
has maintained a well-capitalised balance
sheet and operates a resilient business
model focused on quality and customer
service. As a result, the Group is well
placed to grow towards its medium term
target of 20,000 wholly owned completions
per annum. Through this, disciplined
land acquisition and the optimisation of
performance across build and sales, the
Group will continue to target a minimum
gross margin of 23% and ROCE of 25%.
The Strategic Report on pages 2 to 67 was
approved by the Board and is signed on its
behalf by
Principal risk
Impact modelled
Economic environment, including housing
demand and mortgage availability.
A decline in demand, leading to a 5%
reduction in private and affordable average
selling prices and a fall in sales volumes of
between 7 and 9% across the viability review
period.
Cost and availability of raw materials, sub-
contractors and suppliers.
A 5% increase in the cost of materials and
labour arising from shortfalls in supply.
David Thomas
Chief Executive
1 September 2021
67
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukStrategic Report Board of Directors
We have an experienced and committed Board, which is focused on promoting the success
and long term sustainable value of the Group.
John Allan
Non-Executive Chairman
N R
David Thomas
Chief Executive Officer
D
Steven Boyes
Chief Operating Officer and
Deputy Chief Executive
S
Nina Bibby
Non-Executive Director
A N R
Jock Lennox
Senior Independent Director
A N R
Sharon White
Non-Executive Director
A N R
Appointment to the Board:
John joined the Board as a Non-Executive Director
in August 2014 and became Chairman in November
2014.
Skills and qualifications:
John has significant board, business and retail
experience gained from both the commercial and
financial sectors. John was President of the CBI
from 2018 to 2020, stepping down to become Vice
President until October 2021. He was CEO of Exel
PLC and, when it was acquired by Deutsche Post
in 2005, he joined the board of Deutsche Post,
becoming CFO in 2007 until his retirement in 2009.
John was also chair of Dixons Retail plc, and,
following its merger with Carphone Warehouse,
was deputy chair and senior independent director of
Dixons Carphone until 2015. He was also previously
a non-executive director of Worldpay Group PLC
(where he was previously Chair), National Grid plc,
the UK Home Office Supervisory Board, 3i plc, PHS
Group plc, Connell plc, Royal Mail plc, Wolseley plc
and Hamleys plc, and chair of London First.
External appointments:
John is currently Chairman of Tesco PLC, Chair of
the Council at Imperial College and a regent of the
University of Edinburgh.
Appointment to the Board:
David joined the Board as an Executive Director
and Group Finance Director in July 2009, and was
appointed Chief Executive in July 2015. David has
taken on the role of Chief Financial Officer on an
interim basis after Jessica White stepped down on
30 June 2021, until such time as Mike Scott, the new
CFO, joins the Group.
Skills and qualifications:
David brings a wealth of leadership and finance
experience acquired over several years in senior
positions, and is an Associate of the Institute of
Chartered Accountants in England and Wales. He was
previously Group Finance Director and Deputy Chief
Executive of The GAME Group plc, and Group Finance
Director at Millennium and Copthorne Hotels plc.
He has also held senior financial roles with House of
Fraser plc and Forte plc.
External appointments:
David is a Non-Executive Director of the HBF and
is also a Trustee of the Barratt Developments PLC
Charitable Foundation.
Appointment to the Board:
Steven joined the Board as an Executive Director in
July 2001 and subsequently Chief Operating Officer
in July 2012. He became Deputy Chief Executive in
February 2016 and is responsible for the Group’s
housebuilding operations.
Skills and qualifications:
Steven has over 40 years’ experience in the
housebuilding industry, having joined us in 1978 as a
junior quantity surveyor and progressing through the
business to assume the roles of Technical Director
and Managing Director of Barratt York, before being
appointed Regional Director for Barratt Northern in
1999. Steven was also previously a trustee of the UK
Green Building Council.
External appointments:
Steven holds no external appointments.
Appointment to the Board:
Nina joined the Board as a Non-Executive Director in
December 2012.
Skills and qualifications:
Nina brings a wealth of marketing experience to the
Board. She was formerly Chief Marketing Officer at
O2 (Telefonica UK) until July 2021, and Global Chief
Marketing Officer at Barclaycard, the payments
subsidiary of Barclays plc, until 2013. Prior to
Barclaycard, Nina was Senior Vice President, Global
Brand Management at InterContinental Hotels Group
plc, and worked at Diageo plc, latterly as Commercial
Strategy Director.
External appointments:
Nina is currently a Trustee for the Great Ormond
Street Hospital Children’s Charity.
Appointment to the Board:
Jock joined the Board as a Non-Executive Director in
July 2016 and became Senior Independent Director
on 4 May 2021.
Skills and qualifications:
Jock, a Chartered Accountant, brings significant
business and finance experience to the Board.
He was Chairman of Hill and Smith Holdings
plc and Enquest plc, stepping down from both
positions in 2019. Jock was previously Senior
Independent Director of Oxford Instruments plc
and Non-Executive Director and Chairman of the
Audit Committees of Dixons Carphone plc and A&J
Mucklow Group plc. He also spent 30 years with
Ernst & Young LLP, holding several leadership
positions in the UK and globally, including 20 years
as a partner.
External appointments:
Jock was appointed Chairman of Johnson Service
Group PLC in May 2021 and is Chair of the Audit
Committee Chairs’ Independent Forum.
Appointment to the Board:
Sharon joined the Board as a Non-Executive Director
in January 2018 and became Designated Non-
Executive Director for Workforce Engagement on
4 May 2021.
Skills and qualifications:
Sharon brings to the Board over 25 years’ experience
in the public sector, combined with strong employee
stakeholder experience, as Chair of the John Lewis
Partnership, the UK’s largest employee-owned
business. Her previous roles include Chief Executive
of Ofcom and Director General, Public Spending
and Second Permanent Secretary to HM Treasury.
She has also held roles at the British Embassy in
Washington, the No 10 Policy Unit, the World Bank
and various Government departments including
the Department for International Development, the
Department of Work and Pensions and the Ministry
of Justice.
External appointments:
As well as Chair of the John Lewis Partnership,
Sharon is Deputy Chair of Sadlers Wells, a
contemporary dance company.
New Appointments
Company Secretary
Other directors who served during FY21
Katie Bickerstaffe
Non-Executive Director
A
RN
Chris Weston
Non-Executive Director
NA
SR
Tina Bains
Company Secretary
D
Jessica White
Chief Financial Officer
D
Richard Akers
Senior Independent
Director
R S A N
Appointment to the Board:
Katie joined the Board as a Non-Executive
Director on 1 March 2021 and took over as
Chair of the Remuneration Committee with
effect from 4 May 2021.
Skills and qualifications:
Katie brings to the Board extensive experience
of business transformation in a variety
of functions, together with considerable
marketing expertise. She was a Non-Executive
Director at Marks and Spencer Group PLC,
and previously Executive Chair of SSE Energy
Services, where she led its separation from
SSE plc and subsequent sale to OVO Group
Ltd. She was also a Non-Executive Director
of SSE Plc and Chair of its Remuneration
Committee until 2018.
External appointments:
Katie is Joint Chief Operating Officer at Marks
and Spencer Group PLC and a Non-Executive
Director of the England and Wales Cricket
Board.
Appointment to the Board:
Chris joined the Board as a Non-Executive
Director on 1 March 2021 and took over as
Chair of the Safety, Health and Environment
Committee with effect from 4 May 2021.
Skills and qualifications:
Chris brings to the Board considerable
commercial experience, driving performance
and growth, including as Chief Executive
Officer at Aggreko Limited and as Managing
Director, International Downstream at Centrica
plc. Chris joined Centrica after a successful
career in the telecoms industry working for
Cable & Wireless Plc and One.Tel.
External appointments:
Chris is Chief Executive Officer at Aggreko and
a Non-Executive Director on the board of the
Royal Navy.
Appointment to the Board:
Tina was appointed to the role of Company
Secretary in January 2016.
Skills and qualifications:
Tina joined the Group in 2008 as Assistant
Company Secretary, and was promoted to the
role of Deputy Company Secretary in 2011.
Prior to this, Tina held various Company
Secretarial positions within the private and
professional services sectors including
TMF Corporate Secretarial Services Limited
and Ernst & Young LLP. Tina is a Fellow of
the Institute of Chartered Secretaries and
Administrators.
External appointments:
Tina is a Trustee of the Barratt Developments
PLC Charitable Foundation.
Appointment to the Board:
Jessica joined the Board as an Executive
Director and Chief Financial Officer on 22 June
2017 and stepped down from this position with
effect from 30 June 2021.
Skills and qualifications:
Jessica brought significant financial
experience to the Board. She joined the Group
in 2007 as Head of Financial Accounting and
was promoted to Group Financial Controller
in 2010. Prior to this, Jessica held various
positions at Wilson Bowden plc (2005–2007)
and PricewaterhouseCoopers LLP (2000–
2005). Jessica is a member of the Institute of
Chartered Accountants of Scotland.
External appointments:
Jessica holds no external appointments.
Appointment to the Board:
Richard joined the Board as a Non-Executive
Director in April 2012 and became Senior
Independent Director in November 2016. He
became the Company’s first Designated Non-
Executive Director for Workforce Engagement in
2019. After nine years of service, Richard stepped
down from his Board positions on 4 May 2021.
Skills and qualifications:
Richard has considerable board experience and
a broad range of property knowledge. He was
a senior executive at Land Securities Group plc
(joining the main Board in 2005), a Non-Executive
Director of Emaar Malls PJSC, a member of
the Advisory Board for Battersea Power Station
Development Company, and a Director and
President of the British Council of Shopping
Centres, the main industry body for retail property
owners. Richard is a Chartered Surveyor.
External appointments:
Richard is a Non-Executive Director and Senior
Independent Director of Shaftsbury plc. He is
also a Non-Executive Director of Unite Group
plc. He was appointed a Non-Executive Director
of Redrow PLC on 1 June 2021, following his
resignation from the Barratt Board.
69
Key
A Audit
Committee
N Nomination
Committee
R Remuneration
Committee
D Disclosure
Committee
S Safety, Health
and
Environment
Committee
Chair of
Committee
68
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Executive Committee and Regional Managing Directors
Corporate governance report
Introduction and overview
Executive Committee
The Executive Committee
consists of:
David Thomas
Chief Executive
Steven Boyes
Chief Operating Officer and
Deputy Chief Executive
Jessica White
Chief Financial Officer
(until 30 June 2021)
Tina Bains
Company Secretary
Jeremy Hipkiss
Group Sales and Marketing Director
Nick Worrall
Group HR Director
Biographies for David, Steven, Jessica and
Tina can be found on pages 68 – 69.
The biographies for Jeremy and Nick
are as follows:
Jeremy
Hipkiss
Group Sales
and Marketing
Director
Jeremy is responsible for the Group’s
overall sales, marketing and customer
experience strategy and delivery. In addition,
Jeremy has executive responsibility for IT,
business change and sustainability. He is
also a Trustee of the Barratt Developments
PLC Charitable Foundation.
Career and experience:
Jeremy joined the Group in 2008 and has
wide experience in marketing and retail
operations, having held a similar role at the
Spirit Group. Prior to that, Jeremy worked
for Allied Domecq PLC and Marston’s PLC,
having graduated in Economics at Leeds
University.
Nick
Worrall
Group HR
Director
Nick has responsibility for the Group’s
human resources strategy, including
recruitment, remuneration and benefits,
talent and performance management and
training and development programmes.
Career and experience:
Nick joined the Group in January 2021 from
Countryside Properties PLC where he was
Group HR Director for six years. Before
joining Countryside, Nick was HR Director
at Brighthouse and Centrica plc, and Head
of HR at National Grid plc, having begun
his career in a variety of different roles at
Barclays plc. Nick is also a Main Board
Trustee of the Anglia Ruskin University
Students’ Union and Chair of its HR sub-
committee.
70
Regional Managing Directors
From 1 July 2020 until 1 April 2021, the
Group operated through five geographic
housebuilding regions. From 1 April 2021,
the Group has reverted to operating from
six geographic housebuilding regions. The
Group also has a commercial division,
Wilson Bowden Developments. The Regional
Managing Directors and Managing Director of
Wilson Bowden Developments are as follows:
Doug McLeod
Regional Managing
Director – Scotland
Doug is responsible for the Group’s operations
in the Scotland Region, which consists of three
divisions and our timber frame operations at
Oregon.
Career and experience:
Doug joined the Group in January 1974. Formerly
Regional Director of Barratt Scotland and
Managing Director of Barratt North Scotland, he
was appointed to his current role in January 2017.
Mike Roberts
Regional Managing
Director – Northern
Dave Hesson
Regional Managing
Director – Central
Mike is responsible for the Group’s operations
in the Northern Region, which consists of four
divisions. He is also responsible for the Group’s
commercial function.
Career and experience:
Mike joined the Group in June 2004. Formerly
Managing Director of Barratt North East, he was
appointed to his current role in January 2017.
Dave is responsible for the Group’s operations
in the Central Region, which consists of five
divisions.
Career and experience:
Dave joined the Group in March 2020 as Regional
Director, and was appointed to his current
position in 1 April 2021.
Richard Brooke
Regional Managing
Director – East
Bernard Rooney
Regional Managing
Director – West
Richard is responsible for the Group’s operations
in the East Region, which consists of six
divisions. He is also responsible for the Group’s
procurement function.
Career and experience:
Richard joined the Group in 2007 following the
acquisition of Wilson Bowden plc, where he
was Operations Director and previously Finance
Director for David Wilson Homes Limited. He was
appointed to his current position in July 2008.
Bernard is responsible for the Group’s operations
in the West Region, which consists of three
divisions. In addition, he heads up Barratt
Partnerships, which is responsible for identifying
and securing public land and partnering
opportunities.
Career and experience:
Bernard joined the Group in 1981 as Managing
Director of Barratt Newcastle, and was appointed
as Regional Managing Director of the Central
Region in July 2010. He was appointed to his
current position on 1 April 2021.
Gary Ennis
Regional Managing
Director – London,
Southern and (until
1 April 2021) West
Nick Richardson
Managing Director –
Wilson Bowden
Developments
Gary is currently responsible for the Group’s
operations in the London and Southern Region,
which consists of six divisions. He handed over
responsibility for West to Bernard Rooney on 1 April
2021.
Career and experience:
Gary joined the Group in 1995. Formerly Managing
Director of Barratt North London, he was appointed
Regional Managing Director of Southern in January
2006, of London in October 2016, and West on 1
July 2020.
Nick is responsible for the Group’s commercial
business, Wilson Bowden Developments.
Career and experience:
Nick joined Wilson Bowden plc in 1991 and was
appointed to his current role in 1999. Nick joined
the Group in 2007 following the acquisition of
Wilson Bowden plc. Nick is a Chartered Surveyor.
Governance at a glance
Corporate governance
statement of compliance
The Company is subject to the Code,
which was issued by the FRC in 2018. The
Code can be found on the FRC’s website,
www.frc.org.uk. The Board confirms that
throughout the year ended 30 June 2021,
and as at the date of this report, the
Company has complied with all relevant
provisions set out in the Code, except for
Provision 38 (executive director pension
contributions) with which, as set out on
page 100, the Company will comply by 1
January 2023. This report, together with
the reports from the Nomination, Audit,
SHE and Remuneration Committees and
the other statutory disclosures, provides
details of how the Company has applied
the principles of the Code (pages 68 to
114). The Company has also complied with
the relevant requirements of the FCA’s
Disclosure and Transparency Rules and
the FCA’s Listing Rules, BEIS’ Directors’
Remuneration Reporting Regulations and
Narrative Reporting Regulations and the
FRC’s Guidance on Risk Management,
Internal Control and Related Financial and
Business Reporting.
Highlights
• Reviewed Group’s long term strategy,
capital structure and viability.
• Agreed to pay back CJRS funding and
business rates tax relief received on
showhomes and sales offices.
• Continued to monitor and make
decisions relating to legacy properties.
• Established the Barratt Developments
Board and Committee attendance
Set out below is the number of Board and Committee meetings attended by each director
during FY21 while they were a member.
Nomination
Committee
2/2
Audit
Committee
–
SHE
Committee
–
Remuneration
Committee
4/4
Board
10/10
–
–
–
–
–
–
–
–
1/1
2/2
3/3
8/8
2/2
10/10
10/10
10/10
10/10
John Allan –
Chair
David Thomas –
Chief Executive
Steven Boyes –
Chief Operating Officer and
Deputy Chief Executive
Jessica White –
Chief Financial Officer
Richard Akers1 –
Senior Independent
Non-Executive Director
Nina Bibby –
Non-Executive Director
Katie Bickerstaffe2 –
Non-Executive Director
Jock Lennox –
Senior Independent
Non-Executive Director4
Chris Weston2 –
Non-Executive Director
Sharon White –
Non-Executive Director
1 Stepped down 4 May 2021. 2 Appointed 1 March 2021. 3 Katie was unable to attend one Board meeting due
to a clash with a Marks & Spencer Board meeting that had been scheduled prior to her joining the Board.
4 Became Senior Independent Director on 4 May 2021.
Board composition statistics
The Board and Nomination Committee are mindful of the importance of diversity to the
success of the Company and continue to assess this on a regular basis.
10/10
10/10
2/3 3
4/4
n/a
n/a
3/3
2/2
2/2
2/2
1/1
4/4
1/1
1/1
4/4
–
–
–
–
–
–
–
3/3
4/4
2/2
4/4
2/2
4/4
Gender diversity
Independence
Board tenure
44%
11%
56%
33%
33%
45%
22%
33%
PLC Charitable Foundation.
56%
• Established a new Sustainability
Committee to commence work from
early FY22.
• Appointed two new Non-Executive
Directors to refresh the Board, and
implemented succession planning
outcomes for a number of Board
positions.
• Reinstated dividend payments for FY21.
• Oversaw the appointment of Mike
Scott as CFO and determined his
remuneration and that of Jessica White
on her resignation.
• Monitored and challenged, where
necessary, management’s assessment
of material risks relating to climate
change.
• Agreed ESG measures to be used for
the FY22 annual bonus and LTPP.
Female
Male
Executive Directors
Chair
Non-Executive Directors
0–3 years
6+ years
3–6 years
Board Skills and experience
All Directors are expected to devote the time necessary to fulfil their responsibilities and
duties to the Company, and to do so with the highest standards of integrity. Each Director
has demonstrable experience, skills and knowledge with which they enhance Board
effectiveness and each complements the skills and experience of other Board members so
as to achieve an overall balance on the Board. A summary of the Directors' skills is set out
below, with further details of the previous experience and particular skills of each Director
given on pages 68 and 69.
Number of Directors
0
Skill
Housebuilding
Property Industry
Leadership
Finance/Accounting
Retail
Public Policy
Marketing
Governance
Sustainability
Digital
4
4
4
4
5
5
5
6
8
9
9
71
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Corporate governance report CONTINUED
Introduction and overview
Implementation of the Code
Main activities undertaken during the financial year
The Board follows an annual agenda to ensure that all key matters are allocated adequate time for discussion. The routine duties
of the Board are detailed in the Schedule of matters reserved to the Board (which can be found on the Company’s website at
www.barrattdevelopments.co.uk/investors/corporate-governance). A description of the key non-routine activities of the Board during
the year and how these contributed to the delivery of strategy are as follows:
Section of the Code
How we have applied the Code
Further information
Key activities and discussions in FY21
Link to strategic priorities
and principles
See pages 73 to 75
Considered and agreed that the Company’s purpose remains appropriate.
Purpose, strategy, values and culture
Board leadership and company purpose
The Board:
i.
is responsible for the long term sustainable success of
the Company, determines purpose, values and strategy
and models the Group’s culture;
ii. ensures the necessary resources are available to the
Group; and
iii. engages with stakeholders to inform its decisions.
Division of responsibilities
The Chair leads the Board, the Executive Directors manage
the business on a day-to-day basis and the Non-Executive
Directors provide constructive challenge and strategic
guidance.
Board policies and processes are in place to ensure that the
Board functions effectively and efficiently.
This section details the main activities and outcomes of the
Board in FY21 and how governance contributes to strategy.
The Nomination Committee report describes management
of conflicts of interest.
See page 80
The Group’s purpose, culture and strategy and the Section
172 Statement and information on stakeholder engagement
(including engagement with shareholders) are set out in the
Strategic Report.
See pages 2 to 67
This section outlines:
• Board balance, the division of responsibilities and
See pages 76 and 77
delegations; and
• Chair and Non-Executive Director independence.
Membership of and attendance at the Board and its
Committees is given in Governance at a glance.
See page 78
See page 71
Composition, succession and evaluation
The Board regularly reviews its composition to ensure it
remains balanced.
This section details:
Board appointments are subject to a formal, rigorous and
transparent procedure and an effective succession plan is
maintained for the Board and Senior Management.
The Board undertakes an annual evaluation of its own
effectiveness, that of its committees and of individual
Directors.
Audit, risk and internal control
The Board is mindful of the risk environment in which it
operates when making any decisions and has established
formal and transparent policies and procedures to ensure
independence and effectiveness of internal and external audit
functions.
The Board satisfies itself on the integrity of the financial and
narrative statements, and that they present a fair, balanced
and understandable assessment of the Group’s position and
prospects.
It maintains sound risk management and internal control
systems and regularly reviews the principal and emerging
risks impacting the business.
The Board assesses the appropriate appetite for risk in
striving to achieve the Group’s strategic objectives.
•
the main activities of the Nomination Committee and their
outcomes;
See pages 79 and 80
•
the process for Board appointments, succession planning
and promotion of diversity and inclusion; and
See pages 80 to 82
• Board and committee evaluation actions and outcomes.
See page 83 and 84
Information on the composition of the Board can be found in
Governance at a glance and the Board of Directors.
See page 71
This section summarises:
•
•
•
•
the main activities of the Audit Committee and their
outcomes;
the significant issues the Audit Committee considered
regarding the financial statements and how they were
addressed;
systems for risk management and internal control and
the Audit Committee’s review of their effectiveness; and
the Audit Committee’s assessment of the independence
and effectiveness of the external audit process and the
re-appointment of the External Auditor.
See pages 85 and 86
See page 87
See pages 88 and 89
See page 89 and 90
The Directors’ statement of responsibility for a fair, balanced
and understandable Annual Report and Accounts can be found
at the end of the Directors’ report.
See page 114
Remuneration
The Board, through its Remuneration Committee, determines
Director and Senior Management remuneration policy and
practice in a way that supports the successful delivery of
the Group’s strategy and promotes its long term sustainable
success.
The Board ensures Executive remuneration is aligned to the
Group’s purpose and values.
This section sets out:
•
information on the Group’s remuneration policy;
• how it was operated during FY21, including performance-
based remuneration outcomes, and how independent
judgement and discretion was applied; and
• how the remuneration policy will be applied in FY22.
See pages 97 and 98
See pages 94 to 96
and 103 to 111
See pages 94 to 96
and 100 to 102
Continued to monitor the market and the resulting long term risks and opportunities, and agreed to continue
with its current strategic objectives which supported the Company’s purpose.
Discussed and agreed potential future strategy opportunities for the Group to explore further.
Arising from its annual review of Group Policies, the Board strengthened the Group Diversity Policy and Timber
Sourcing Policy, and updated its Modern Slavery Statement. These policies can be found on the Barratt website
at www.barrattdevelopments.co.uk/investors/corporate-governance.
Monitored and assessed the Company’s culture. Details of how this is assessed can be found on page 74.
The Board agreed that further work should be done on understanding culture.
Business performance and resourcing
Discussed and approved re-entry into the land market following suspension due to COVID-19.
Reviewed in depth the Group’s material sustainability issues, agreed future priorities and updated the
sustainability framework.
Reviewed progress towards TCFD compliance, undertook sustainability training and agreed to establish a
Sustainability Committee to enhance its focus in this important area, and drive progress.
Agreed that sustainability should be embedded in objectives and remuneration across the business.
Approved the launch of the Group’s Charitable Foundation, with an initial funding line of £2m.
Reviewed the SHE plan of work, the COVID controls in place, enforcement agency interventions, site monitoring,
and IIR. Key areas of future focus were agreed and are set out on pages 91 and 92.
Discussed Board succession and appointed two new Non-Executive Directors.
Considered further modern methods of construction for the Group in particular the extension of the utilisation of
timber frame across the business.
Discussed and agreed to fully pay back the CJRS funding received from the Government, and to fully pay back
business rates relief and associated grants received on show homes, marketing suites and offices due to
COVID-19. Further details can be found on page 75.
Discussed shareholder distributions and agreed the reinstatement of dividend payments for FY21.
Authorised a tender process for Registrar and Sharesave administration services and subsequently approved the
appointment of Equiniti Group PLC following a transition period.
Authorised a tracing and reunification process to reunite shareholders with their unclaimed dividends.
Shareholders were reunited with £314,000 unclaimed dividends and 64,000 shares.
Risk management and internal controls
Reviewed the Company’s appetite for risk, identified emerging risks and re-assessed the impact and likelihood of
principal risks and uncertainties affecting the business.
Continues to work with the CMA in respect of its ongoing investigation into leaseholds.
As announced in July 2020, the Board agreed that it would pay the cost of the required remedial action on the
reinforced concrete frame at Citiscape, which would otherwise fall on leaseholders, despite the Group having no
legal liability to cover these costs. Further details are given in the Chairman's Statement on page 7 and the Chief
Executive's Statement on page 16.
Reviewed relationships with stakeholders and their views and focus for engagement going forward.
Further details of engagement with our stakeholders can be found on pages 44 to 55.
Key
Customer first
Being a trusted partner
Great places
Investing in our people
Ensuring the financial health of our business
Building strong community relationships
Keeping people safe
Leading construction
Safeguarding the environment
The Board’s assessment of the Group’s emerging and
principal risks and information on how these are being
managed, together with the Viability and Going concern
statements, can be found in the Strategic Report.
See pages 56 to 67
Stakeholder engagement
72
73
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance
Corporate governance report CONTINUED
Board leadership and company purpose
Governance in action
Culture in the workplace
The Board sets the culture and tone from the top, and is responsible for ensuring that the right culture is embedded throughout the business,
including in our dealings with stakeholders. A strong culture that furthers our purpose and is firmly embedded across the workforce underpins
our success.
↓Chancellor of the Exchequer Rishi Sunak visiting our Hayes Village development, talking to
Senior Sales Advisor Saira Khan and Nick Moore, Managing Director of our West London division.
Our culture
Do the right thing
Ensure that what we do is in line with our policies
and procedures and looks after the interests of
our stakeholders.
↑Krystle Bowers, Sales Adviser, at our J One
Seven development in Cheshire.
Culture in action: During FY21, the Board agreed
to pay back in full the CJRS funding received
from the Government, and to replace cladding
on multi-storey buildings and carry out remedial
work on the concrete frame at Citiscape, which
would otherwise be borne by leaseholders,
despite the Group having no legal liability to cover
the costs of this work. The Board has also set
up a Charitable Foundation to increase focus
on charitable giving and help those that need it
the most.
Customer focus
Strive to meet the expectations and needs of our
customers, both internal and external.
↑Daniel Hancock, Apprentice at our Imperial
Park development in Northwich.
Culture in action: Customer demand for houses
during FY21 has been high, and we have focused
on increasing build levels which were adversely
affected by site closures at the end of FY20. We have
put mechanisms in place for increasing build rates,
whilst ensuring that COVID-19 safety measures
are not compromised. This included the extension
of site opening hours which was enabled by the
flexibility of the workforce staggering their working
hours, in order to increase numbers on site.
We also held short-term buffer stock of key
materials to guard against COVID-19 shortages.
Pride in what we do
Aim to operate in a way that satisfies the
expectations of our stakeholders particularly in
terms of quality and service.
↑Zoë Stothard, Senior Site Manager, received an
NHBC Pride in the Job Award for 2020.
Culture in action: We take pride in what we do
and have won multiple awards throughout FY21
for quality and service, including an HBF five-star
rating for the 12th consecutive year, and 93 NHBC
Pride in the Job awards. These are detailed on
page 3.
How the Board measures and
assesses culture
To enable the Board to identify further
actions that may be required to ensure
that the culture in our business remains
appropriate and embedded, the Board
measures and assesses culture in the
business, using both internal and external
KPIs, and in the following ways:
• Safety, health and the environment –
there is zero tolerance towards breaches
relating to the health and safety of our
↑Chloe Fitzgibbon, Sales Advisor, conducts a
virtual viewing for a customer.
Culture in action: During FY21, we put
processes in place to allow customers to view
and purchase our homes in safety, to help them
to take advantage of the government’s Help to
Buy scheme before tapering, and also the SDLT
holiday before it ended. Innovations included the
ability for customers to view homes virtually, and
this is being further enhanced with the launch of
a new CRM system.
Resilience and adaptability
Look for innovative ways to improve efficiencies
across the organisation and recognise there
is always room for improvement. Be willing
to change the way we do things to meet the
requirements of stakeholders as well as those set
by legislation or regulation.
74
employees, suppliers, sub-contractors
and the general public. The Group is
also conscious of the impact that its
operations have on the environment. The
Board is updated regularly on health,
safety and environmental matters and
on any new or ongoing investigations
and their outcomes. The SHE Audit
compliance KPI is set out on page 41 and
other environmental and safety targets
are detailed on pages 19 and 20.
• Customer satisfaction – This is
assessed using customer care survey
responses and recommendation scores,
(KPIs can be found on page 41), and
awards such as the HBF five-star rating
and NHBC Pride in the Job awards
(details of which can be found on page
3), all of which are regularly reported to
the Board.
• Employee engagement survey –
a survey is conducted annually to
assess how the business is meeting the
expectations of its employees.
It also contains several culture-related
questions, to monitor and assess
how well the culture is embedded.
The results of the survey are reviewed by
the Executive and Senior Management
team, with key findings reported to the
Board. Our 2021 Employee engagement
survey has been deferred to October
2021 in order to capture feedback on
returning to the office and our new
working arrangements.
• Employee retention – our employees
are our greatest asset. It is important
that we do everything that we can
to retain them. The Board monitors
employee leaver numbers and the steps
being taken to attract, recruit and retain
employees.
• Policies and procedures compliance –
Core governance policies are reviewed
annually by the Board with employees
required to complete a variety of
e-learning modules on a regular basis.
Completion levels are reported to the
Board. Business policies, processes
and procedures are reviewed regularly.
Our Internal Audit team conduct
regular reviews of compliance with
policies, processes and procedures,
and test that they remain up to date.
The team’s findings are reported to the
Audit Committee and ultimately to the
Board. The Internal Audit team also
provide updates to the Audit Committee
on any matters raised via the Group’s
whistleblowing procedure (see page 88).
Board consideration of CJRS
funding and business rates
As part of its ongoing response to
COVID-19, the Board has continued to
monitor the health and wellbeing of its
workforce, engage with all its stakeholders
to understand their views, and to ensure
that those views and their interests are
considered where decisions are made.
The Board periodically takes decisions
where it has to balance the interests of
different stakeholders, and does so in the
context of its culture. Two examples are
given below:
Repayment of CJRS funding:
The decision: to repay the CJRS funding
made available to the Group by the
Government, to pay employees 80% of
their salary while furloughed.
Process: Initial discussions took place at
the June Board meeting. It was agreed to
re-visit the issue once further clarification
of the financial performance of the Group
was obtained. Following a review of the
year end results in early July, the Board
agreed that returning the CJRS funding
was the right thing to do in the interests of
its stakeholders.
The considerations of the Board in making
its decision were:
• whether the repayment would
jeopardise the financial position
of the Group, or create a risk for
shareholders, employee jobs,
or supplier and sub-contractor
businesses;
• whether failure to repay the
Government would impact the Group’s
commercial freedoms, for example to
re-commence dividend payments to
shareholders and deploy capital, in the
face of a downturn;
the timing of any repayment in the
context of ongoing uncertainties,
including the possibility and extent of
any future lockdown;
the views of employees who, as
taxpayers, might consider failure to
repay the funding to be at odds with
the strength of demand for housing;
and
the reputational risk, and its
consequences for different
stakeholders, of not repaying the
funding.
•
•
•
Repayment of business rates
The decision: to repay the business rates
relief and associated grants received on
show homes and marketing suites as a
result of COVID-19.
Process: a briefing paper was presented
to the Board in March 2021 outlining the
value of the reliefs and grants obtained
along with the rationale for repaying these
sums. The Board, noting the financial
strength of the business, decided to repay
the amounts received in full.
The considerations of the Board in making
this decision were:
•
•
•
the strong financial position of the
Group and the return to payment of
dividends to shareholders;
the reputational risk, and its
consequences for stakeholders, of
not paying business rates relief and
associated grants back to the local
authorities; and
the importance of relationships with
the local communities where the
business operates.
75
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Corporate governance report CONTINUED
Division of responsibilities
Board balance
The composition of the Board, including the names, responsibilities and other details of each of the Board Directors, is set out on pages 68
to 69. The Board believes the current balance of Executive and independent Non-Executive Directors remains appropriate having regard to
the size and nature of the business, and ensures that the Board’s decision making is not dominated by any single individual or small group.
In addition, the combination of the experience, diverse backgrounds, length of service and calibre of the Non-Executive Directors further
enhances this balance and the ability to deliver the Group’s strategy whilst mitigating against the risk of ‘group think’. The responsibilities
and roles of Board members are clearly defined and set out below.
Board roles and their responsibilities
Chair
John Allan
Chief Executive
David Thomas
Chief Operating Officer and
Deputy Chief Executive
Steven Boyes
• Leads the Board in the achievement of its
• Develops the Group’s strategy for the
• Responsible for the Group’s operations,
objectives, sets its agenda and chairs its
meetings.
• Shapes the culture in the Boardroom.
• Responsible for the effectiveness of the
Board and its governance.
• Facilitates the effective contribution of
Non-Executive Directors and constructive
relations between Executive and Non-
Executive Directors.
• Ensures the Board receives accurate,
timely and clear information.
• Responsible for the identification and
provision of inductions and continued
development needs of each Director.
• Ensures effective communication with
shareholders and other stakeholders
and participates in corporate relations
activities as appropriate.
Chief Financial Officer
Jessica White (until 30 June 2021)
David Thomas (from 1 July 2021)
enhancement of long term shareholder
return taking into account the needs of the
Group’s stakeholders.
including day-to-day responsibility for SHE,
and ensuring stakeholder requirements
are appropriately addressed.
• Leads the implementation of the Group’s
• Chairs the Operations Committee
meetings, the other members of which
include the Regional Managing Directors.
Strategy approved by the Board.
• Responsible for the day-to-day leadership
and management of the operational
activities of the Group in accordance with
overall strategy and policy as determined
by the Board.
• Chairs the Executive Committee through
which he carries out his duties.
• Oversees corporate relations with
shareholders and other stakeholders.
• Responsible to the Board for sustainability
policies and practices of the Group.
Senior Independent Director
Jock Lennox
• Devises and implements the Group’s financial strategy and policies.
• Responsible for the management of the Finance, Tax, Internal Audit,
Treasury and Investor Relations functions.
In addition to his role and responsibilities as an Independent Non-
Executive Director, the Senior Independent Director is available to
shareholders, when required, to:
• Supports the Chief Executive with his corporate relations
responsibilities with shareholders and other stakeholders.
• Manages the Group’s relationship with the External Auditor.
•
•
•
•
address any material issues or concerns which the Chair and/or Chief
Executive have failed to resolve;
listen to their views to gain a balanced understanding of their issues
and concerns;
evaluate the performance of the Chair, at least annually, and meet with
the Non-Executive Directors to appraise the Chair’s performance; and
act as a sounding board for the Chair and, if necessary, an
intermediary for the other Directors.
Independent Non-Executive Directors
Nina Bibby, Katie Bickerstaffe, Chris Weston and Sharon White
Company Secretary
Tina Bains
• Provide an appropriate level of scrutiny, and constructively challenge
• Supports the Chair and Chief Executive in fulfilling their duties
the Executive Directors, holding management to account and
ensuring the needs of stakeholders are appropriately considered.
especially in respect of induction, training and Board and Committee
effectiveness evaluations.
• Using the broad range of their experience and external perspective,
• Available to all Directors for advice and support.
provide specialist advice and an independent perspective in
developing strategy.
• Monitor the implementation of the Group’s strategy within its risk and
control framework and ensure the integrity of financial reporting.
• Ensure that recruitment and succession planning is appropriate and
mindful of diversity and balance.
• Review and refresh remuneration policy in the context of stakeholder
interests, and ensure it is implemented appropriately.
• Keeps the Board regularly updated on governance matters and best
practice.
• Ensures Group policies and procedures are maintained and updated
on a regular basis.
• Attends and maintains a record of the matters discussed and
approved at Board and Committee meetings.
76
Decisions, matters reserved to the Board and delegated authorities
The Board takes decisions on strategy and in relation to items set out in the matters reserved for the Board. It has also delegated various
operational decisions to several Board and management committees (see below). The schedule of matters reserved to the Board and the
Terms of Reference of the Board Committees are available on the Company’s website at www.barrattdevelopments.co.uk/investors/corporate-
governance. During the year, it was agreed to set up a Sustainability Committee to report to the Board on ESG strategy and associated
matters. Further details are provided in Climate related risk on page 66. The Committee will present its first report to shareholders in FY22.
Board committees
Audit Committee
• Monitors the integrity of the Group’s Financial Statements and formal
announcements relating to its financial performance, including
reviewing financial reporting judgements contained within them.
• Advises the Board on whether the Group’s Financial Statements
are fair, balanced and understandable and provide the information
necessary for shareholders to assess the Group’s position and
performance, business model and strategy.
• Reviews the Group’s internal financial controls and its systems for
internal control and risk management.
• Monitors and reviews the independence, objectivity and effectiveness
of the External Auditor and the internal audit function, and reviews
and recommends to the Board the re-appointment, remuneration and
terms of engagement of the External Auditor.
• Develops and implements the Group’s policy on the engagement of the
External Auditor to supply non-audit services.
See pages 85 to 90 for full report.
Remuneration Committee
•
Designs and implements the Group’s overall remuneration strategy
and policy, ensuring alignment with purpose and strategy.
• Sets the remuneration of the Executive Directors and Senior
Management.
• Monitors performance against targets.
• Determines remuneration outcomes for Executive Directors and
Senior Management.
• Considers workforce remuneration and related policies and the
alignment of incentives and rewards with that of the wider workforce.
See pages 94 to 111 for full report.
Nomination Committee
• Monitors the composition and balance of the Board to ensure
a balance of skills, experience and knowledge, and progressive
refreshing of the Board and its Committees.
• Reviews succession plans for Board and Senior Management roles
and oversees the development of a diverse pipeline for succession.
• Promotes diversity of Board Directors and Senior Management.
• Ensures effectiveness evaluations of the Board, its committees and
individual Directors are carried out on an annual basis.
See pages 79 to 84 for full report.
Disclosure Committee
• Comprising any two of the Chief Executive, Chief Financial Officer
and the Company Secretary, meets as required to ensure that the
Company remains compliant with the requirements of the UK Market
Abuse Regime.
Safety, Health and Environment Committee
• Oversees the SHE issues impacting the business including the
Group’s compliance with the SHE management system.
• Monitors any significant SHE risks and exposure in the business and the
steps taken to mitigate against these.
See pages 91 to 93 for full report.
The
Board
Chief
Executive
Executive
Committee
Supports the
Chief Executive
in carrying out
the day-to-day
management of
the activities of
the Group.
Chief
Operating
Officer
Group management committees
Risk Committee
• Reviews the effectiveness of the Group’s
internal control policies and procedures
for the identification, assessment and
reporting of risks.
• Assesses individual key risks on a
rolling basis (including the identification
of the Group’s principal and emerging
risks) together with the appropriateness
of any mitigations.
Land Committee
• Reviews and approves all land
acquisition and disposal proposals
across the Group.
• Refers proposals to the Board for
approval depending on the value of the
land acquisition or its complexity, e.g.
joint venture arrangements.
Treasury Operating Committee
• Reviews the Group’s treasury
arrangements and approval of changes
to debt facilities.
• Obtains Board approval for certain types
of facility and where the facility is above
the levels delegated to the Treasury
Operating Committee.
Allotment Committee
• Approves the allotment of shares within
dilution limits and within the authorities
obtained from shareholders.
Operations Committee
• Manages operational performance.
Safety, Health and Environment
Operations Committee
• Develops the SHE strategy for the
Group.
• Ensures that SHE policies and
procedures are adequately implemented
and adhered to.
• Monitors the effectiveness of the
Group’s SHE systems.
• Keeps up to date with changes in
legislation surrounding SHE matters.
77
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Corporate governance report CONTINUED
Division of responsibilities
Nomination Committee report
Board composition, succession and evaluation
Fair, balanced and understandable
The Board has considered whether the
Annual Report and Accounts are fair,
balanced and understandable. As part
of their considerations, the Board has
reflected on the feedback shareholders
provided in respect of our 2020 Annual
Report and Accounts. It has also set
aside adequate time to review and
discuss significant areas of the 2021
Annual Report and Accounts. The Board
assessed the tone, balance and language
of the document being mindful of the
requirements of the Code and the need for
consistency between the narrative section
of the Annual Report and the Financial
Statements in arriving at its conclusion.
It also received a paper from the Company
Secretary explaining the process that had
been undertaken to provide assurance to
the Audit Committee that the report was
‘fair, balanced and understandable’. The
Board’s formal statement on the Annual
Report and Accounts being fair, balanced
and understandable is contained within the
Statement of Directors’ Responsibilities on
page 114. The process undertaken by the
Audit Committee to assist the Board in their
assessment can be found on page 88. After
considering the paper from the Company
Secretary, and following its own reflections,
the Board was happy to endorse the
recommendations of the Audit Committee
that the FY21 Annual Report and Accounts
are fair, balanced and understandable.
On behalf of the Board
John Allan
Chairman
1 September 2021
operating division. Material issues identified
during internal audits and follow-up
action plans are reviewed by the Executive
Directors and by the Board as necessary.
Any necessary actions are immediately
taken to remedy any significant failings in
the internal control system. Further details
of the work undertaken by Internal Audit
can be found on page 89.
The Group’s system of internal control is
designed to manage risks that may impede
the achievement of the Group’s business
objectives, and identify and appropriately
manage activities where there is a high risk
of corruption (including bribery) amongst
employees, partners or intermediaries,
rather than to eliminate those risks entirely.
The system of internal control therefore
provides only reasonable, not absolute,
assurance against material misstatement
or loss. The system of internal control does,
however, provide reasonable assurance
that potential issues can be identified
promptly and appropriate remedial action
taken. Further details can be found in the
risk management section of the Strategic
Report (pages 56 to 66).
The Group operates internal controls
to ensure that the Group’s Financial
Statements are reconciled to the
underlying financial ledgers. A review
of the consolidated accounts and
Financial Statements is completed by
management to ensure that the financial
position and results of the Group are
appropriately reflected.
We continue to cooperate fully with the
Metropolitan Police on the ongoing
investigation we instigated in 2016
regarding possible misconduct in our
London business. As stated in October
2016, we do not anticipate any materially
adverse financial effect and our London
business continues to operate well.
The Board has not identified, nor been
advised of, any failings or weaknesses that it
has determined to be significant. Therefore,
a confirmation of necessary actions has not
been considered appropriate.
Board independence
The Company considers all its Non-
Executive Directors to have been
independent in character and judgement
during the financial year, and recognises
the importance of them remaining so in
order to carry out their respective roles
effectively. John Allan was considered to
be independent on appointment to the
Board and on taking the role of Chair.
This year’s review of Directors’ conflicts of
interest confirmed that none of the Non-
Executive Directors have any business or
other relationship with the Group (or other
outside interests) that might influence their
independence or judgement.
None of the Non-Executive Directors, or the
Chair, have been an employee of any Group
companies or had a material business
relationship with them. None of them have
close family ties with any of the Company’s
advisers, directors or senior employees, or
holds cross-directorships or has significant
links with other directors. None of them
represents a significant shareholder.
Following nine years’ service, Richard Akers
stepped down from the Board on 4 May
2021. Therefore, none of the Non-Executive
directors have served on the Board for
more than nine years.
The commitment that the Chair and each
of the Non-Executive Directors have to the
business has been demonstrated during
the year, through their attendance at
several unscheduled Board calls convened
at short notice to discuss a variety of issues
requiring decisions outside the normal
scheduled meetings. The Chair and the
Non-Executive Directors meet regularly
without the Executive Directors being
present, usually prior to or immediately
following Committee meetings, and have
held eight of these meetings during the
financial year.
Internal controls and risk
management
The Board monitors and regularly reviews
the effectiveness of the Group’s risk
management and internal control systems,
including controls related to the material
financial, operational and compliance
performance (see the Audit Committee
report on pages 85 to 90).
The Internal Audit team has developed a
risk framework for all business functions,
which has been approved by the Audit
Committee. This framework forms the
basis of the internal control audit plan for
the year ahead, which tests if key controls
are being applied effectively in each
78
I am confident that the
refreshed Board will continue
to drive our strategy forward
and progress our objectives
and priorities in FY22
John Allan
Chair of the Nomination Committee
Statement from the Chair of
the Nomination Committee
I am pleased to present the Nomination
Committee report for the financial year
ended 30 June 2021. The Nomination
Committee is given its authority by the
Board, with responsibilities summarised
on page 77, and acts in accordance with
its Terms of Reference (see page 80). The
Nomination Committee plays a vital role
in ensuring that our Board and Senior
Management comprise the right individuals
to deliver our strategy.
There have been a number of changes to the
Committee’s membership during the year.
I would like to welcome Katie Bickerstaffe
and Chris Weston, who joined the Committee
on 1 March 2021. Both have a range of skills
and experience that complement existing
members but also enhance the commercial
experience on the Committee. In addition,
after nine years’ service, Richard Akers
stepped down on 4 May 2021 and I would like
to thank him for his service.
Committee, and experience in ESG, a topic
of importance to our strategy and which
has increased focus from our stakeholders.
Katie brings valuable experience to the
Remuneration Committee, and Chris brings
experience in sustainability and health and
safety matters, alongside considerable
commercial expertise.
Diversity and inclusion
Diversity and inclusion continues to be
an important part of the Nomination
Committee’s agenda. This year, the
Nomination Committee took the
opportunity to review its Board Diversity
policy in detail to ensure it remains fit for
purpose. The scope of the Board Diversity
policy was widened to include diversity in
a broader sense rather than just focusing
on gender. The Board continues to meet
the requirements of the Parker review
‘Beyond One by ‘21’, in respect of ethnic
diversity, and is committed to only work
with executive search consultants that
have adopted a voluntary code of conduct
addressing diversity in its widest sense.
The Nomination Committee also ensured
that the Board considered whether diversity
and inclusion across the wider business
was being progressed satisfactorily. Further
information on the Company’s progress
on diversity and inclusion initiatives can
be found on page 82 and in the Strategic
Report on pages 32 and 33.
FY22 priorities
Our key priorities for FY22 are the induction
of the new Chief Financial Officer and a
continued focus on succession planning.
The following pages set out further details
of the work undertaken by the Nomination
Committee during the year.
John Allan
Chair of the Nomination Committee
1 September 2021
Board changes and
succession planning
In FY21, we saw a number of changes to the
composition of the Board. On 1 March 2021,
Katie Bickerstaffe and Chris Weston joined
the Board, following a comprehensive
recruitment process as outlined on page
81. Their appointments were in response
to the Committee identifying the possible
requirement for the appointment of new
independent Non-Executive Directors, given
that Richard Akers and Nina Bibby would
complete nine years’ service during 2021.
On 4 March 2021, we announced that
Jessica White, Chief Financial Officer,
was stepping down from the Board for
personal reasons. Jessica agreed to stay
on the Board until the end of the financial
year and remain employed by the Group
until the end of July, to enable the search
for her replacement to be concluded and
to support the Group through its financial
year-end.
On 4 May 2021, Richard Akers stepped
down as a Non-Executive Director on
completion of his nine years of service.
Consequently, Jock Lennox, who has both
in-depth knowledge of our business and a
wealth of Board experience, was appointed
as the Senior Independent Director. Katie
Bickerstaffe and Chris Weston took over
the roles of Chair of the Remuneration
Committee and the SHE Committee
respectively on the same date. Sharon
White has taken over as the Designated
Non-Executive Director for Workforce
Engagement.
In June, we announced that Mike Scott will
join the Board as Chief Financial Officer at
a date to be agreed. Mike, currently Chief
Financial Officer at Countryside Properties
PLC, has extensive financial experience in
the housebuilding sector and elsewhere,
and we look forward to him joining us.
I am confident that the refreshed Board
will continue to drive our strategy forward
and progress our objectives and priorities
in FY22.
Skills and experience of the Board
As part of the recruitment process for the
new Independent Non-Executive Directors,
the Nomination Committee reviewed
the composition, skills, experience and
diversity of the Board and its Committees.
This highlighted the need to identify
candidates with experience of chairing a
Remuneration Committee, with financial
experience to support the Chair of the Audit
79
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Nomination Committee report CONTINUED
Board composition, succession and evaluation
Nomination Committee role and activity FY21
Membership and attendance at meetings
The membership of the Nomination Committee and the attendance at each of its scheduled meetings is set out on page 71. The majority of
Committee members are considered independent by the Company, and in accordance with the Code. Their biographies and qualifications
are shown on pages 68 and 69.
Main activities undertaken during the financial year
The Nomination Committee’s responsibilities are set out in its Terms of Reference which can be found on the Company’s website at
www.barrattdevelopments.co.uk/investors/corporate-governance. In addition to the tasks carried out annually, such as the review of its
Terms of Reference, effectiveness and approval of this report, the Committee carried out the following work during the year:
Priorities
Work carried out and outcomes
Governance
Composition
and
Succession
Reviewed new potential situational and transactional conflicts notified by two of the Non-Executive Directors, and
determined that there was no actual or potential conflict arising.
Considered succession plans for Non-Executive Directors, particularly for the various roles held by Richard
Akers, and made the appointments at the appropriate time.
Considered the recruitment specification, candidates and final selections of the two new Non-Executive Directors
in the context of balance of skills and experience and diversity, and nominated them to the Board for approval.
The appointments of Katie Bickerstaffe and Chris Weston were approved by the Board in November.
Considered and agreed the induction arrangements for the new Non-Executive Directors. Further details of the
appointment process and induction are shown on page 81.
Supported the Board with the change of Chief Financial Officer.
Re-appointed Sharon White for a second three-year term, having considered her effectiveness and commitment
to the role.
Directors’ conflicts of interest
The Board has authorised the Nomination Committee to oversee the process for reviewing and making recommendations to the Board
concerning any actual or potential conflicts of interest that may arise for any Board member, including details of any terms and conditions
that it deems necessary to impose on any authorisation given. Throughout FY21, the Company Secretary maintained a register of Directors’
conflicts of interest. A summary of this register is reviewed at each Board meeting so that it remains accurate and current. The full
register is reviewed annually by the Nomination Committee and recommendations are made to the Board regarding any changes to the
authorisations that may be required. The Board, when authorising any conflict or possible conflict of interest, does not count in the quorum
the Director whose conflict or possible conflict is being discussed and reserves the right to exclude a Director from a meeting whilst a
conflict or possible conflict is being considered. The Board may revoke or vary any authorisation at any time.
Board changes and
succession planning
Succession planning is a live topic at
the Board and Nomination Committee
meetings, as discussed on page 79.
All appointments and succession plans
are objective, based on merit and
promote diversity.
For Non-Executive Directors, the
Nomination Committee annually reviews
the length of service, taking into account
the cyclicality of the business as lessons
gained through one property cycle can
be useful during the next. For Executive
Directors, the Nomination Committee and
the Chief Executive annually discuss the
succession plans for the other Executive
Directors and Senior Management below
Board level. The aim of this review is
to identify suitable individuals who are
capable of filling senior managerial or
Board positions in the future and to ensure
their development needs are identified and
addressed. As part of their development,
senior managers are invited to attend part
of a Board meeting to present on their
specialist area. This also enables the Board
to assess the quality of internal talent, and
the individual to get a greater understanding
of the workings of the Board. Succession
plans are in place across the business for
the wider workforce and are set out in the
Strategic Report on pages 30 to 33. When
considering succession plans, the Board
remains cognisant of the need to ensure
that there is a diverse range of individuals
included in the plan. The business continues
to promote diversity and inclusion from
within, and further details of the work that
has been undertaken in this area can be
found on page 82.
During the year, following identification of
the skills required to ensure a continued
balance of skills on the Board, Spencer
Stuart were engaged to assist with
the search for two new Non-Executive
Directors. Following the resignation of
Jessica White in March 2021, Lygon Group
was used to assist with the search for
a new Chief Financial Officer. Spencer
Stuart also helped develop the Group’s
talent programmes during the year, but
had no other connection with the individual
Directors or the Company. Lygon Group
had no other connection with the individual
Directors or the Company.
The process used in the appointment of the two Non-Executive Directors is shown below.
Board appointment process – Katie Bickerstaffe and Chris Weston
Stage 1
The Nomination Committee determined the gaps in experience and considered the existing balance of gender,
ethnicity and social backgrounds on the Board to help inform a candidate profile.
Stage 2
Stage 3
Stage 4
Stage 5
The Committee reviewed and approved an outline brief and role specification and appointed Spencer Stuart, an
external executive search consultancy, to identify suitable candidates from a diverse pool of individuals. Spencer
Stuart is a signatory to the Voluntary Code for Executive Search Firms, accredited by the Hampton-Alexander
Enhanced Code of conduct for 2020, a member of the 30% Club and signatory to the Change the Race Ratio.
The key focus was to find candidates who had the relevant skills and experience required whilst maintaining or
enhancing the diversity of Board members. The Committee delegated authority to John Allan and Richard Akers to
select candidates for a short-list.
The selected candidates, 57% of whom were female and 14% were from ethnic minorities, met with John Allan
and Richard Akers, with the preferred candidates going on to meet members of the Committee and the Executive
Directors, following which it was determined that Katie Bickerstaffe and Chris Weston were the preferred
candidates.
The Committee agreed that Katie and Chris each had a range of skills, experience and knowledge that
complemented those of the existing Board members. Consequently, the appointment of Katie and Chris as
Non-Executive Directors was recommended to the Board, on the same terms as the incumbent Non-Executive
Directors.
The Board approved the appointment of Katie and Chris as recommended and announced the appointments.
to, their respective roles. All remaining
Directors will be standing for election
or re-election at the forthcoming AGM.
Biographical details of each of the Directors
are set out on pages 68 and 69 of this report
along with reasons why their contribution
is, and continues to be, valuable to the
Company’s long-term sustainable success,
and can also be found in the Notice of the
2021 AGM.
Induction
To ensure that both Katie and Chris had a
good understanding of the business and
how it operates, an induction programme
was prepared by the Company Secretary
in collaboration with the Chair and the
Chief Executive, which was approved by the
Committee. It included on-line meetings
with each of the Executive Directors and
Chairs of the Board committees, members
of the Executive Committee, selected
Regional and Divisional directors, heads
of key group operations, the key external
corporate advisers and the External Auditor.
The normal health and safety site visit
and general site visits were deferred until
after COVID-19 restrictions had been lifted.
Information on other heads of function
was provided to the new Non-Executive
Directors for meetings to take place later
at their request. A feedback meeting took
place between the new Non-Executive
Directors and the Chair on completion of
the induction programme from which it was
evident that the process was seen to be
comprehensive, thorough and insightful.
Re-appointment and
re-election of Directors
Non-Executive Directors are appointed
by the Board for up to three three-year
terms subject to annual shareholder
re-election and a particularly rigorous
review prior to a third term being agreed.
Non-Executive Directors will normally step
down from their position on the Board and
its Committees at the AGM following their
ninth anniversary. The length of tenure
of Board members is shown on page 71.
During the year, Richard Akers completed
nine years of service and stepped down
from the Board on 4 May 2021. Each of the
Directors, except for Jessica White who
stepped down as Chief Financial Officer
with effect from 30 June 2021, and Katie
Bickerstaffe and Chris Weston who were
appointed later in FY21, has been subject to
a formal performance evaluation process
during the year, as set out on page 84. The
Nomination Committee and the Board are
satisfied that each Director continues to be
effective in, and demonstrates commitment
80
81
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Nomination Committee report CONTINUED
Board composition, succession and evaluation
Diversity and Inclusion
Board Diversity
Board composition statistics are provided on page 71.
During the year, the Nomination Committee, and subsequently the Board, reviewed the Board’s policy on diversity and inclusion.
The policy aims to identify the most suitable candidate to join the Board having regard to the individual’s skills, experience and knowledge.
It also seeks to ensure that, in managing an appointment and in succession planning, the Nomination Committee has regard to the
recommendations of the Parker and the McGregor-Smith reviews on ethnicity and race and the benefits of diversity, including gender,
ethnicity, social background and cognitive and personal strengths. A copy of our Diversity Policy for Board appointments can be found at:
www.barrattdevelopments.co.uk/sustainability/our-policies.
Diversity and inclusion throughout the business
The Nomination Committee and the Board recognise the importance of a diverse workforce, at all levels of seniority. Promoting diversity at
Senior Management level, and more generally across the workforce, remains an objective for the Chief Executive and Group HR Director.
The Group’s aim is for its employee profile to mirror that of the communities in which it operates. Further information on the Group’s
progress on diversity and inclusion can be found on pages 32 and 33. The main objectives, how they are implemented and progress towards
them are set out below.
Objectives
Implementation
Progress
Hold leaders accountable for diversity
and inclusion goals.
Data tracking and distribution.
Ensure that diversity and inclusion
actions and results are communicated
and visible across the workforce, to
help embed appropriate behaviours.
Local actions.
Diversity data down to divisional level produced
and distributed every month to enable progress
measurement.
Presenting, educating and developing Directors
within Board meetings to promote the diversity and
inclusion message throughout the organisation.
Each division has a diversity and inclusion action
plan which is reviewed and discussed annually
with the Chief Executive and Chief Operating
Officer. Divisional boards meet monthly to discuss
progress against these plans.
We are also trialling local divisional diversity and
inclusion taskforces, where colleagues propose
ideas within their own division and, once agreed,
help to implement them.
Catalyst programme – our female
leadership development programme.
Launch of self-nomination process in January
2021 for Catalyst and Rising Stars programmes.
Improve the representation of women,
as well as ethnic minorities, LGBTQ+,
people with disabilities and other
underrepresented groups across the
business.
Rising Stars programme – open to all
employees and aimed at supporting
development for those with potential
and a desire to progress.
Supporting virtual disability work
placements.
Third Catalyst programme launch being planned
for September 2021 for 68 delegates (from 249
self-nominations).
Female representation on the Rising Stars
programme has increased by 157%, with delegates
from all areas and levels of the business, including
apprentices.
We have worked with our partner, Whizz Kids, to
support virtual work experience placements, with
two underway and another four offered.
Extended ’Under One Roof’ gender equality
employee-led network by introducing further
informal connect groups such as Parent Connect
(to support parents with home schooling during
COVID-19 lockdowns) and Barratt Connect for
non-parents.
LGBTQ+ informal connect group has been set up.
We have continued to review our marketing and
recruitment material to ensure it is fully reflective
of our diverse customer base.
Create an inclusive work environment
where everyone feels like they belong;
can be themselves; and knows that
their voice will be heard, which fosters
creativity and innovation.
Reciprocal mentoring.
Extend employee networks.
Create strong relationships with our
diverse customer base.
82
Board and Committee evaluation
Each year, the Board undertakes a formal and rigorous annual evaluation of its own performance and that of its Committees and individual
Directors. At least every three years, the Board undertakes an externally facilitated evaluation. This year, Lintstock supported the Chair
and the Company Secretary with the delivery of an internally conducted evaluation. Lintstock has no other connection with the individual
Directors or the Company. The next external evaluation will be carried out for FY22.
Progress on FY20 evaluation
Progress made against the outcomes of the internal Board evaluation undertaken in FY20 is set out below:
The Board
FY20
outcomes
Progress
made in FY21
The Committees
FY20
areas of
improvement
Progress
made in FY21
Re-establish the business
following COVID-19
Risk
Sustainability
To get the business
performing at pre-COVID-19
levels as quickly as possible
across all metrics.
To perform more horizon
scanning for remote but
potentially significant
unidentified risks.
To increase the knowledge and
understanding of the Board and Senior
Management on the key areas and how
the business may address these.
Implemented COVID-19
recovery plan and business
renewal plans.
Looked at lessons learnt and,
where appropriate, made
changes to the organisational
structure, working practices
and protocols and strategy
as COVID-19 restrictions
heightened and subsequently
were gradually lifted.
Undertook a detailed review
of the Board’s risk appetite
and principal and emerging
risks. Considered the likelihood
and impact of each risk to
determine the appropriateness
of the current principal risks
(see pages 56 to 66 for further
details).
In-depth training sessions were organised
for the Board from both internal teams
and external advisors. Progress reviewed
in terms of TCFD compliance and
established a Sustainability Committee
of the Board to monitor and drive
performance in this area going forward
(see page 66 for more detail.
Nomination Committee
Audit Committee
Remuneration Committee
Continue to monitor and
improve succession plans.
Continued to hold virtual
one-to-one meetings with
the Chief Executive to
discuss succession plans for
Executive Directors and those
below the Board. Reviewed
the succession plan for the
Chief Executive to ensure it
remains fit for purpose.
Consider lessons learnt from
the impact of COVID-19 and the
risks that arose from this.
Further training around
accounting and risk
management, and the risks
associated with sustainability
and ESG including climate
change and how the business
can look to mitigate these.
Reviewed the lessons learnt
from the impact of COVID-19
and the associated risks
as well as the actions and
steps taken to mitigate these,
adapting the actions and steps
as restrictions were lifted.
Deloitte LLP provided a teach-
in session including ESG and
TCFD requirements and the
Company’s performance in
these areas.
Improve the use of non-financial metrics
for variable pay including ESG metrics
whilst recognising the constraints and
difficulties around delivery as we come out
of the pandemic.
Increase training around wider workforce
pay matters and the broader executive
remuneration debate.
Remuneration consultants provided
detailed benchmarking for Executive
Directors, Senior Management and Non-
Executive Directors as well as highlighting
the key areas that the Remuneration
Committee should take into account when
determining executive remuneration.
Given COVID-19, no major changes were
made to the metrics other than to make
health and safety a bonusable target rather
than an underpin. For FY22, sustainability
metrics are being introduced (see page 94
for further details).
83
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Nomination Committee report CONTINUED
Board composition, succession and evaluation
Audit Committee report
Audit, risk and internal control
FY21 Board effectiveness evaluation outcomes
Board and Committee evaluation process for FY21
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
Online questionnaires issued to Board and Committee members, and also those who attend Committee meetings
on a regular basis.
A summary of the results from the questionnaire were provided to the Company Secretary for an initial review.
The reports were shared with the Chair of the Board and the Chairs of each of the Committees.
Results were presented and discussed at the June Board and Committee meetings (Nomination Committee was
at the August 2021 meeting).
Actions for improvement were agreed for the next financial year (see below).
Overall the results of the evaluation were positive and showed that the Board continues to be run effectively. It is seen as being cohesive
and comprising the appropriate balance of experience, skills and knowledge to implement the Group’s strategy over the short term.
Board meetings operate in a spirit of openness, fostered by the Chair, in which Directors are able to challenge and discuss openly ideas of
importance to the Group, its strategy and risk.
Key areas of improvement for the Board
FY21
outcomes
Actions for
FY22
Culture
Sustainability
Risk
Greater oversight of culture.
Build on last year’s progress and further
develop strategy and understanding in
this area.
Further enhance risk
management.
Further presentations to the
Board, following analysis within
the business.
Additional training on the Board’s
responsibilities in this area, external
stakeholder expectations, climate change
and its risks, and TCFD.
Factor in additional scenario
planning as part of the
ongoing work around risk.
Key Areas of improvement for the Committees
Nomination Committee
Audit Committee
Remuneration Committee
FY21
outcomes
Actions for
FY22
Succession planning,
particularly for Executive
Directors, and supplementing
skills and knowledge on the
Board.
Enhance knowledge of developing
regulatory and reporting areas.
Further work on the internal control
environment.
Additional involvement at Board
and Nomination Committee in
succession planning. Agree and
execute an action plan to fill
any skills and knowledge gaps
as they arise.
Additional training around upcoming
governance and reporting changes
including TCFD.
Benchmarking the internal control
environment against the recommendations
in the BEIS consultation.
Continue to enhance
Committee members’
knowledge of matters
such as developments in
remuneration practice,
changing reward models, and
investor sentiment.
Agree a training programme
for Committee members with
external consultants covering
the topics highlighted.
Evaluation of individual Directors
The evaluation of the effectiveness of the Chair was conducted by the Senior Independent Director with assistance from the Company
Secretary. There continues to be positive support for the Chair. He is seen as being supportive but challenging and manages meetings with
professionalism, ensuring each Director has the opportunity to express their view. Despite his other commitments, he is always available
and flexible, maintaining a high level of engagement with the Company at all times. The Chair held one-to-one meetings with each Director
to assess the effectiveness of their contributions, the appropriateness of their experience and the effectiveness with which they utilised that
experience in furthering the Company’s strategy. Any areas of improvement or training and development were agreed, based on the outcomes
of the questionnaires each of the Directors had completed on themselves. There were no issues of any substance arising from this review.
This report forms part of the Corporate Governance report and is signed on behalf of the Nomination Committee by:
John Allan
Chair of the Nomination Committee
1 September 2021
84
Areas of focus FY21
In last year’s report, I set out our priorities
for this year and I am pleased to update
these as follows:
COVID-19 impact
During the year, the Committee has
monitored both the financial and control
impact of COVID-19 as our business
has continued to adapt to new ways of
working due to the pandemic. This has
included assessing the changes made to
the control environment to accommodate
homeworking to ensure that it remains
robust. The Committee has assessed
the impact of COVID-19 on key areas of
judgement in the financial statements,
including the related site delays and
resulting estimated costs to complete.
We also challenged the economic
assumptions supporting: the carrying value
of intangible assets; the preparation of the
Financial Statements on a going concern
basis; and the conclusions of the viability
statement. This included a review and
challenge of management’s forecasts to
ensure that they have been appropriately
stress-tested using a plausible downside
scenario.
TCFD reporting and compliance
We have monitored the Group’s ongoing
assessment of the possible impact of
climate change on our business model,
including the physical effects of a warming
world and the transition to a low-carbon
society. During the year, management have
identified, in consultation with external
experts, four climate scenarios that reflect
the range of possible outcomes of climate
change. These are detailed on page 65.
A robust assessment was undertaken by
senior management to identify the material
risks and opportunities facing the Group
under each of these scenarios (see page
65). The Committee has challenged the
appropriateness of these scenarios and
reviewed the methodology and outcomes
of the risk and opportunities assessment.
We will continue to monitor progress over
the next year as the Group completes its
analysis and adapts its strategy accordingly,
and will review the extent of the external
assurance obtained.
During the year we have made good
progress towards being compliant with the
TCFD requirements, and this is outlined on
page 66. This is a developing area, and we
will move to full reporting for FY22.
Continued enhancement of risk
management and internal controls
The Committee welcomes the BEIS
consultation on restoring trust in audit
and corporate governance and will be
monitoring progress closely. Whilst
the Committee supports several of the
recommendations, in particular the
proposal for an Audit and Assurance policy,
there are others that it has some concerns
about. Accordingly, the Committee has
provided a response to the consultation
in conjunction with the Audit Committee
Chairs’ Independent Forum. The Committee
is currently developing its thinking around
the potential content of an Audit and
Assurance policy and how this can be
utilised to enhance our transparency in the
next reporting cycle. In addition, we have
started a programme to formalise reporting
on the operation of internal controls, which
we will continue to monitor. To strengthen
further our capabilities around risk and
internal controls, we have appointed a
new Group Risk and Controls Manager
to oversee the implementation of a new
controls monitoring system. Alongside this,
the Committee has overseen a revision of
the Group’s Internal Audit programme to
target better our key controls and focus on
areas of risk.
Legacy Properties
The Group continues to incur costs in
addressing issues at certain legacy
properties, rectifying structural issues
on properties related to the Citiscape
development and contributing to
improvements to external wall systems.
Throughout the year, we have monitored the
accounting for these costs and at the year
end have reviewed their recognition and
presentation in the Financial Statements.
Continued progress with the
implementation of the new
valuation system
The new COINS site valuation module has
been implemented in all 27 of our divisions
and will be extended to our joint ventures
by the end of 2021. It is already being used
on all new sites, and the transition of all
existing sites is expected to be completed
in 2022. The new module provides detailed
reporting on the costs, judgements and
estimates that underpin our assessment
of work in progress and costs to complete,
and is fully integrated into our financial
reporting system, allowing for more efficient
and robust review of site valuations. The
Committee has received regular updates
on progress and will continue to monitor
the performance of the new system as its
implementation is completed.
85
To strengthen further our
capabilities around risk and
internal controls, we have
appointed a new Group Risk
and Controls Manager to
oversee the implementation
of a new controls monitoring
system
Jock Lennox
Chair of the Audit Committee
Statement from the Chair of the
Audit Committee
I am pleased to present the Audit
Committee’s report for the year ended 30
June 2021, which sets out our work this
year and how our responsibilities in relation
to audit, risk and internal control have been
implemented. In performing our duties, we
have complied with the requirements of
the Code and followed FRC best practice
guidance. We work closely with our finance
and internal audit teams, and with Deloitte
LLP, our External Auditor, which helps us to
ensure that our internal control processes
remain robust, our financial reporting
remains clear, and our critical accounting
judgements and key sources of estimation
uncertainty are appropriate.
There have been several changes to the
Committee’s membership during the year.
I would like to welcome Katie Bickerstaffe
and Chris Weston, who joined the Committee
on 1 March 2021. Both have a range of skills
and experience that complement those of
existing members. In addition, after nine
years’ service, Richard Akers stepped down
on 4 May 2021 and I would like to thank him
for his service.
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Audit Committee report CONTINUED
Audit, risk and internal control
Key areas of focus for FY22
Our key areas of focus for FY22 will
be progressing further the TCFD
requirements, the ongoing work on the
recommendations of the BEIS White Paper,
and continuing to review and assess the
financial risks relating to cladding and
firestopping at our legacy properties.
We will also be continuing to review
the enhancement of risk management
and internal controls in preparation
for developing the Group assurance
framework, policy and integrated risk
assurance mapping.
Finally I would like to thank Jessica
White for her support and input into the
Committee’s work as Chief Financial
Officer. I look forward to working with Mike
Scott, the new Chief Financial Officer, in the
coming year.
Jock Lennox
Chair of the Audit Committee
1 September 2021
Role and activity FY21
Membership and attendance
at meetings
Details of the members and attendance
at each of the Committee’s scheduled
meetings is shown on page 71, and the
biographies and qualifications of the
members are shown on pages 68 and 69.
In compliance with the Code, the Committee
is comprised exclusively of Non-Executive
Directors, and each member is considered
to be independent by the Company. The
Chair of the Board is not a member of the
Audit Committee. The Board is satisfied
that Jock Lennox has recent and relevant
financial experience to Chair the Audit
Committee. Jock is a Chartered Accountant
who has previously chaired several other
listed companies’ audit committees. He
is also the Chair of the Audit Committee
Chairs’ Independent Forum. As part of
the effectiveness review, details of which
can be found on page 84, the Nomination
Committee was satisfied that the Audit
Committee has competence relevant to the
sector in which the Group operates.
In addition to the Company Secretary, the
Head of Internal Audit, Group Financial
Controller and representatives from the
External Auditor attended each of the
Committee meetings. The Chair, Chief
Executive, Chief Operating Officer and Chief
Financial Officer attended meetings (or
parts thereof) by invitation, along with other
members of Senior Management
as required.
86
After each meeting, the Chair of the
Committee reported to the Board on the
business undertaken by the Committee
and made recommendations to the Board
as appropriate. The Committee met the
Chief Financial Officer, the Head of Internal
Audit and the External Auditor separately
and independently of management and
the Chair of the Board. In addition, the
Committee Chair separately meets with the
External Auditor and key senior financial
managers outside formal meetings.
Main role and activities undertaken
during the financial year
The main role of the Committee is to
assist the Board in fulfilling its governance
obligations relating to the Group’s financial
reporting practices and its internal control
and risk management framework. It follows
an annual work programme to ensure that
its roles and responsibilities are completed
throughout the year. In agreeing the annual
programme, the Committee considers the
external environment, internal operation
of the business and regulatory changes
to ensure that all the main priorities are
included.
The Committee's responsibilities are set
out in its Terms of Reference, which can be
found on the Company’s website at www.
barrattdevelopments.co.uk/investors/
corporate-governance. In addition to
the tasks it carries out annually, the
Committee carried out the following work
during the year:
Priorities
Work carried out and outcomes
Integrity of
Financial
Statements and
announcements
Internal control
and risk
management
systems
Internal audit
External audit
Considered the impact of matters relating to COVID-19 such as
the repayment of CJRS funding and business rates, and made
recommendations to the Board as appropriate.
Considered the presentation of costs associated with legacy properties,
concluding that they are appropriately disclosed.
Considered and agreed mechanisms for ensuring emerging issues of
interpretation of accounting standards are considered in a timely manner
so that internal processes can be adapted where necessary.
Reviewed new guidance and regulatory requirements in respect of
corporate reporting, climate change and ESG reporting. Reviewed and
approved the plans for TCFD.
Reviewed directors’ responsibilities and the Brydon review
recommendations relating to fraud. Agreed that fraud prevention should
be reviewed annually including considering areas for potential fraud, fraud
mitigation and controls adequacy.
Instigated and reviewed an update to the Delegation of Authority matrix with
a view to making it clearer and easier to use.
Reviewed anti-money laundering policies and training in place and agreed
that recent updates were effective.
Agreed with the assessment of management that climate change and a
significant nationwide unexpected event affecting multiple locations should
be elevated to principal risks.
Considered responsibilities of the Directors and internal and external
auditors in respect of fraud, and reviewed fraud prevention activities
taking place within the Group and any gaps. Agreed recommendations for
management, that the importance of fraud prevention should be better
highlighted to employees, and that fraud prevention measures and culture
in the business should be reviewed annually.
Following matters raised during internal audit work and as part of the
annual management control self-assessment, requested and reviewed
revised customer data retention and compliance processes.
Reviewed progress made at the halfway stage of a two-year Strategy
Improvement Plan for Internal Audit, and agreed changes to the Internal
Audit work plan for the year to include a greater focus on risk-based audits.
Reviewed the Group’s assurance mapping and agreed to consider what
steps were required to produce an Audit and Assurance Policy.
Reviewed the provisions of the Kingman and Brydon reviews and CMA
recommendations and considered the implications for the Company.
Reviewed and approved the Group’s approach to the external audit quality
indicator assessment.
Considered the FRC Annual Audit Quality Inspection Results.
Governance
Discussed and reviewed proposed sustainability data collection strategy,
assurance, and principles.
FY21 Financial Statements
Significant issues considered
during the financial year
The issues considered by the Committee
to be the most significant (due to their
potential impact on the performance of
the Group’s activities) in relation to the
Financial Statements during the financial
year are set out below.
1. Critical accounting judgements and key
sources of estimation uncertainty
These are set out in the table on this page.
2. Going concern
The Committee:
• using the Group’s business plan,
assessed the Group’s available
facilities, headroom and banking
covenants;
•
reviewed management’s detailed
analysis, which included forecasts,
scenarios and sensitivities;
• concurred with management’s
conclusion, and recommended to the
Board, that the Company and the Group
continue to be a going concern and
the Financial Statements should be
prepared on a going concern basis;
• considered the going concern
requirements of the Code to ensure
compliance; and
• continued to monitor market conditions
to ensure any appropriate adjustments
are made to the Group’s strategic and
financial planning.
Further details on the Group’s going
concern assessment can be found in note
1.3 on pages 130 and 131, and the Group’s
Going Concern and Viability statements can
be found on page 67.
3. Financial reporting
The Committee reviewed the integrity of the
Financial Statements of the Group and the
Company, and all formal announcements
relating to the Group and Company’s
financial performance. This process
included the assessment of the following
primary areas of judgement and took into
account the views of the External Auditor.
Significant issues considered by the
Committee relating to the Financial
Statements for FY21 comprise:
Significant issues relating to
Financial Statements
How these issues were addressed:
Margin recognition
Development costs are allocated,
on a site by site basis, between
homes built in the current and
future years. The Group’s site
valuation process determines the
profit margin for each site. This
requires the estimation of future
sales prices and costs to complete.
Further detail is given in note 2.3
on page 133.
The Committee considered:
•
feedback from Senior Management regarding their attendance
at valuation meetings and their assurances on the efficiency
and consistency of the approach on valuation throughout the
business;
• management’s assumptions and estimates in the assessment
of margin recognition based on site performance, including the
estimated impact of extensions to site durations from COVID-19
safe practices and protocols;
•
•
the External Auditor’s findings, challenges and
recommendations following its attendance at valuation meetings
as part of the external audit process; and
the results of the Group’s internal audit reviews across the
business.
Based on this, the Committee was comfortable with the process and
controls adopted by management around the estimation of future
income and costs to complete, and thus the process by which the
Group’s inventory is valued and margin recognised.
The Committee reviewed, challenged and agreed the basis on which
the costs associated with legacy properties have been included
within the Financial Statements, including obtaining a view from
independent experts. The External Auditor challenged both the
existence and completeness of legacy property provisions.
The Committee also considered and agreed the appropriateness of
presenting these costs as an adjusted item in the income statement,
assisted by feedback from the External Auditor.
Based on this, the Committee was comfortable with the process
and controls adopted by management around the disclosures and
estimation of costs and provisions associated with legacy properties.
Costs associated with legacy properties
Estimations of costs of remedial
work relating to cladding and
EWS, as well as concrete frames
on legacy buildings have been
provided for. Government guidance
and industry regulation continues
to evolve, requiring the Group to
adjust its response and ensure
that its resultant obligations
are accounted for appropriately.
Further detail is given in note 3.6
on page 143.
CJRS repayment
Consideration has been given
to how the repayment of the
Government’s Coronavirus Job
Retention Scheme is disclosed.
Further information is given in
note 2.2 on page 132.
The Committee considered the appropriateness of disclosing this
refund as an adjusted item, considering the Group’s accounting policy
and the guidance issued by regulatory bodies on the presentation
of alternative performance measures during the pandemic.
The Committee, having sought the views of the External Auditor,
is satisfied that the presentation is appropriate and in accordance
with policy.
Derecognition of the Defined Benefit Pension Scheme
This relates to how the defined
benefit pension scheme’s assets
and liabilities have been accounted
for following the scheme’s buy-out.
Further details can be found in
note 6.2.2 on page 158.
The Pensions Sub-Committee, working with the Pensions Trustees,
monitored the buy-out process and approved the wind-up of the
Pension Trust after reviewing legal advice, and the due diligence
undertaken on the insurer, to ensure that they are appropriate
custodians for scheme members.
The Committee reviewed the presentation of the pension buy-out
in the Financial Statements, considering whether the conditions
for settlement accounting have been met and that the disposal is
correctly reflected through the Income Statement. The Committee
is satisfied that the pension buy-out has been accurately reflected in
the Financial Statements.
Completed development accruals
After all homes on our
developments have been legally
completed, the Group holds a
liability to cover further costs
that are required to complete
the development. This requires
an assessment of the cost to
complete.
Completed development accruals are raised and regularly reviewed
as part of the Group’s valuation process. The measures undertaken
by the Committee to evaluate valuations performed in the year are
detailed in the response to margin recognition above.
In addition, the Committee reviewed the quantum of the accruals,
held for completed developments. This included the average cost
to complete per development, the categorisation of the cost to
complete and the ageing of our completed development accruals.
The Committee also considered the work performed by the
External Auditor.
The Committee agreed with management's recommendation that the
completed development accrual remains appropriate.
87
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Audit Committee report CONTINUED
Audit, risk and internal control
• Accordingly, the Committee
recommended to the Board that the
FY21 Annual Report and Accounts are
fair, balanced and understandable.
The Board’s formal statement on the
Annual Report and Accounts being
fair, balanced and understandable
is contained within the Statement of
Directors’ Responsibilities on page 114.
Internal controls and the risk
management process
The Committee monitors the Group’s risk
management and internal control systems,
including their effectiveness, on behalf of
the Board. The key aspects are as follows:
• a clear organisational structure
with defined levels of authority and
responsibility at all levels of the
business;
financial and management reporting
systems under which financial and
operating performance is planned on a
three-year basis and budgeted annually.
Financial and operating performance
is consistently reviewed against budget
and forecasts at divisional, regional
and Group levels on a monthly basis;
and the information is used in the
preparation of the Annual Report and
Accounts;
•
identification and review of principal
operational risk areas to ensure they
are embedded in the Group’s monthly
management reporting system
as routine aspects of managerial
responsibility. Details of the risk
management system and the principal
risks are set out on pages 56 to 66;
• assessment of compliance with
internal control and risk management
systems, including a consideration
of controls over non-financial risks.
This assessment is supported by the
Group’s Internal Audit team, which is
responsible for undertaking an annual
audit plan, ad hoc audits and reporting
to the Committee, and if necessary,
the Board, on the operation and
effectiveness of those systems and any
material failings;
• mapping of assurance procedures to
the Group’s principal risks, to ensure
that the response is sufficiently robust;
and
• consideration and approval of the
Group's tax position and strategy.
• The balance between statutory and
adjusted performance measures.
•
Fair, balanced and understandable
considerations and conclusions
The Committee received a draft of the
Annual Report and Accounts prior to
its August 2021 meeting, together with
supporting material from management
and the External Auditor. At the meeting,
it considered and assessed the process
undertaken in drafting the Annual Report
and Accounts to determine whether the
2021 Annual Report and Accounts were fair,
balanced and understandable.
Considerations
• Feedback provided by shareholders on
the 2020 Annual Report and Accounts.
• Assurances provided in respect
of the financial and non-financial
management information.
• The internal processes underpinning
the Group’s reporting governance
framework and the reviews and findings
of the Group’s external legal advisers
and External Auditor.
• A report from the Company Secretary,
which confirmed that: i) the process
involved collaboration between various
parts of the Group, including the Group
Finance team, Company Secretariat,
Group Communications, Investor
Relations and the Sustainability team;
ii) the Annual Report and Accounts
had been reviewed by the Executive
Directors; and iii) the Company had
received confirmation from its external
advisers that the Annual Report and
Accounts adhered to the requirements
of the Companies Act, the Code,
the Listing Rules and other relevant
regulations and guidance.
Conclusions
The Annual Report and Accounts for the
year ended 30 June 2021:
• clearly, comprehensively and accurately
reflects the Group and Company’s
performance in the year under review,
including the impact of COVID-19;
• contains an accurate description of the
business model;
• correctly reflects the Group and
Company’s purpose, strategy and
culture;
•
•
includes consistent messaging and
clear linkage between each of the
sections of the Report and Accounts;
and
includes KPIs, which are consistent
with the business plan and
remuneration strategy.
88
The Group’s operations and financing
arrangements expose it to a variety of
financial risks that include the effects of
changes in borrowing and debt profiles,
Government policy, market prices, credit
risks, liquidity risks and interest rates.
There is a regular, detailed system for
the reporting of daily cash balances and
forecast cash flows from operations to
Senior Management, including Executive
Directors, to ensure that risks are promptly
identified and appropriate mitigating
actions taken. These forecasts are further
stress tested at a Group level on a regular
basis. In addition, the Group has in place a
risk management programme that seeks to
limit the adverse effects of the other risks
on its financial performance, for example
maintaining land creditors at between
15% and 25% of its owned land bank and
limiting its exposure to institutions with
high credit ratings. Financing activities are
delegated by the Board to a centralised
Treasury Operating Committee. Group
Treasury operates according to treasury
policies that are approved by the Board and
the Treasury Operating Committee.
Whistleblowing
The Group has a clear whistleblowing policy
and procedure, which is communicated
to the workforce. Concerns can be raised
by employees with managers, or can
be reported by anyone, anonymously if
necessary, to a confidential and independent
hotline. The hotline is available 24 hours a
day, with any matters raised being notified
to Internal Audit immediately by email.
Matters requiring urgent attention (including
corruption, human rights abuses and safety)
are notified to the Head of Internal Audit
by phone immediately, including outside
business hours. The Head of Internal Audit
reviews and investigates matters raised,
and any substantive issues are raised with
the Chair of the Audit Committee.
The Head of Internal Audit also updates
the Committee on whistleblowing incidents
at each of its meetings. The Committee
reviews the overall procedure, investigations
and outcomes, as well as the availability
and frequency of use of the whistleblowing
hotline. The Chair of the Committee updates
the Board on whistleblowing reports and
investigations on a regular basis, and
the Board reviews the whistleblowing
arrangements and discusses the most
significant issues as appropriate.
Internal audit
Information regarding the internal audit
matters considered by the Committee is
given in the table of work carried out on
page 86.
The Head of Internal Audit continued to
make changes as part of the ongoing two-
year Internal Audit strategic improvement
plan as follows:
• continued improvement to the risk-
based approach to internal audit with
the implementation of an Inherent Risk
Assessment Planning document;
•
•
•
•
the implementation of data-driven
insights and risk-based continuous
monitoring of key control areas;
the implementation of a post-audit
survey to drive stakeholder satisfaction
and improve the value added assurance;
the creation of an internal audit toolkit
with a new internal audit policies and
procedures manual to drive consistency
of approach and output; and
the continued documentation of the
Group’s key controls via the Barratt
Risk and Internal Control framework
and transition of ownership of this to
the Group Financial Controller and the
second line of defence.
The Group’s internal audit team have
continued to operate remotely during the
year and have effectively adapted their audit
testing accordingly to continue to obtain
and test audit evidence.
The Committee considered the
effectiveness of the internal audit team
and confirmed that, in its opinion, it
had operated effectively and provided
an appropriate level of independent
scrutiny of the operations of the Group. A
formal External Quality Assessment was
recommended by the Head of Internal Audit
at the last annual review of effectiveness
of internal audit. This will be completed
during the first half of FY22.
External audit
Audit performance and
effectiveness
The Committee annually reviews the
external audit plan and process. This year
they approved key risk elements of the audit
being brought forward to reduce pressure
on the busy financial reporting period after
year-end, and approved attendance of
the External Auditor at training sessions
for control and system-related changes
made over the year, to improve their
understanding.
In forming its conclusion, the Committee
reviewed amongst other matters:
•
•
•
•
feedback on the effectiveness and
performance of the external audit;
the External Auditor’s fulfilment of the
agreed audit plan for FY21;
reports highlighting the material issues
and critical accounting judgements and
key sources of estimation uncertainty
that arose during the conduct of the
audit;
the External Auditor’s objectivity and
independence during the process,
including its own representation about
its internal independence processes;
and
•
the challenges raised by the External
Auditor during the audit.
The assessment of the effectiveness
and performance of the External Auditor
included reviewing and approving the
Group’s approach to its external audit
quality indicator assessment. The
assessment included a questionnaire to
cover a range of the FRC’s audit quality
indicators which was completed by
management. The questionnaire was
split into six areas from risk assessment
to continuous improvement. Four of
the six areas were rated good with two
rated average. Examples of the areas
assessed included; resourcing, with
feedback being that there was appropriate
Partner presence across the audit, with
a well-established team whom had good
knowledge of Barratt and the sector; and on
timing of audit work, with feedback received
that requests around the Easter holiday,
were made at short notice, however, overall
bringing forward elements of the fieldwork
has been seen as beneficial.
During the audit, the External Auditor
challenged management’s judgements and
assertions on the following matters:
• margin recognition;
•
valuation of provisions related to legacy
developments; and
• completed development accruals.
The Committee’s response to these can
be found in the relevant section of the
table of significant issues considered by
the Committee relating to the Financial
Statements on page 87.
The Committee is also aware of the recent
FRC audit quality review and will seek to
ensure that any relevant areas identified for
improvement by the External Auditor are
adequately addressed in future audits.
The Committee concluded that the audit
process as a whole had been conducted
robustly, the External Audit team selected
to undertake the audit had done so
thoroughly and professionally, and the
External Auditor had applied sufficient
experience and understanding of the
housebuilding industry, consulted with
experts as necessary, and is of sufficient
size to conduct a national audit. Deloitte
LLP’s performance as external auditor
to the Group during FY21 was therefore
considered to be satisfactory.
In addition, the Committee was satisfied
that management had provided the External
Auditor with appropriate access to its
operations and head office teams, systems,
records and supporting information, whilst
acting professionally and with appropriate
challenge, enabling the audit to be
conducted effectively.
Auditor independence and
non-audit fees
The Company’s Policy on auditor
independence and non-audit fees is
available at www.barrattdevelopments.
co.uk/investors/corporate-governance.
With effect from 1 July 2021, the policy
caps non-audit fees at 70% of the average
audit fees over the previous three years.
The Committee continually monitors the
ratio of non-audit to audit fees to ensure
that it does not exceed this cap. For FY21,
non-audit fees (including audit-related
assurance services) for the Company and
its subsidiaries and JV’s were £45,000,
representing 4.9% of the total audit fee.
Non-audit fees based on the average of the
previous three years’ audit fees were 7.5%.
Further details of the audit and non-audit
fees incurred by the Group can be found in
Note 2.3.5 on page 134. The non-audit fees
were for work undertaken by the External
Auditor for the review of the half year
report. Accordingly, the Committee was
satisfied that both the work performed by
External Auditor, given its knowledge of the
Group, and the level of non-audit fees paid
to it, were appropriate and did not raise
any concerns in terms of External Auditor’s
independence.
This Policy also sets out the duties of the
Committee relating to the protection of the
objectivity and independence of the external
auditor. The pre-approval levels and
conditions required for different non-audit
services that might be required from the
external auditor, together with prohibited
services, are detailed in the Policy. It also
sets out restrictions on the recruitment
of employees from the Group’s external
auditor. During the year, this Policy was
reviewed and updated. It is in line with the
auditor independence rules of the FRC’s
89
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Audit Committee report CONTINUED
Audit, risk and internal control
Revised Ethical Standard 2019 and includes
the FRC’s whitelist of permitted non-audit
services. There are no conflicts of interest
between the members of the Committee
and the External Auditor.
The Committee requires written
confirmation annually from the External
Auditor that it remains independent. For
FY21, the External Auditor provided a
comprehensive report to the Committee
verifying that it had performed its
audit and audit-related services in line
with independence requirements and
explaining why it believed that it remained
independent within the requirements of
the applicable regulations and its own
professional standards. The report also
explained why the ratio of audit to non-audit
fees, and the extent and type of non-audit
services provided, was appropriate.
The Committee conducted its own review
and endorsed the External Auditor’s
conclusions on compliance with the Policy
and independence of the External Auditor.
External audit tender
Deloitte LLP were first appointed as
External Auditor to the Group in 2007, and
was reappointed following a competitive
tender in FY17. Having conducted a
competitive tender in 2017, the Company
has complied with the provisions of
The Statutory Audit Services for Large
Companies Market Investigation (Mandatory
Use of Competitive Processes and Audit
Committee Responsibilities) Order 2014
issued by the CMA on 26 September 2014.
Claire Faulkner was appointed as lead audit
partner for the FY18 audit and continues
in this role. The Group’s policy is to rotate
the lead audit partner every five years. The
team’s second audit partner was rotated for
the FY20 audit.
Under current regulations, the Company
is not due to re-tender its audit until 2027;
however, the Committee will continue to
monitor the performance of the External
Auditor during this time and will make
recommendations accordingly.
Assessment of the External Auditor
Having considered the External
Auditor’s performance, the Committee
recommended to the Board that the
External Auditor remains independent,
objective and effective in its role and
therefore should be re-appointed for a
further year. On the recommendation of the
Committee, the Board is putting forward a
resolution at this year’s AGM that Deloitte
LLP be re-appointed as external auditor for
a further year.
This report forms part of the Corporate
Governance report and is signed on behalf
of the Audit Committee by:
Jock Lennox
Chair of the Audit Committee
1 September 2021
↓↓ The Gardiner family on the site of
their new home at Fernwood Village in
Newark, Nottinghamshire.
90
Safety, Health and Environment Committee report
Focus continues on enhancing our health
and safety systems and controls.
We introduced two new mobile applications
during the year. The first enables on line
management and recording of inductions
on site, and the second enhances the
recording of accidents, incidents, near
misses and non-conformances. Training
on the apps has been rolled out and these
have now been embedded within the
business.
The SHE team, together with HR, have
continued to pro-actively drive health and
wellbeing support, particularly around
mental health given the ongoing pandemic.
During the year, our SHE management
systems were subject to a full audit by
the British Assessment Bureau (BAB),
to ensure they continued to meet the
requirements of ISO 14001 and ISO 45001.
The BAB confirmed that all requirements
continued to be met and that our systems
remained fully accredited. Over the next
three years, all our operating Divisions will
participate in audits by BAB to ensure that
the requirements are being consistently
applied across the business.
Despite the systems and controls that we
have in place, it is unfortunate that our
Group IIR has increased from 256 in FY20 to
416 per 100,000 persons. In order to reduce
our IIR, the SHE team have put in place an
action plan comprising:
•
•
relaunching our ‘Five steps to
safety’ campaign to further enhance
awareness in this area;
refocusing our site teams on ensuring
that everyone working on site is fully
aware of the high standards and
requirements we have in place; and
• engaging with our principal sub-
contractors to influence further
improvements to the requirements they
have in place for their workforce.
Slips, trips and falls accounted for 37%
of these incidents and we have raised
awareness of prevention of these injuries
with our site teams through good
housekeeping and appropriate access
routes to work locations. The Group
Construction and SHE Director will provide
a bi-monthly update to the Committee
outlining progress in the delivery of the
action plan and its impact on our IIR.
In addition, analysis shows that there
have been some incidents that involve
contact with underground services during
excavation works. Consequently, a review
has been undertaken of our procedures
to ensure that they remain clear and
comprehensive. Steps have been taken to
ensure that our site teams and contractors
understand the procedures and that they
are effectively applied. An initiative has
been implemented to increase awareness
of the requirements, including issuing
safety alerts, providing a mandatory
e-learning module for our Construction,
Technical and Commercial teams and
seminars with those involved in this work.
Enhanced methods of excavating around
underground services have been reviewed
and are being implemented by groundwork
contractors.
Two key areas of focus for the Board, the
SHE Committee and the SHE team are
waste management and fire safety. We
therefore appointed a Project Manager,
Waste Management, and a Group Fire
Safety Engineer, to support operations
in both areas and mitigate potential
operational and reputational risk.
FY22 key priorities
During FY22, the SHE Committee will
seek to support the newly established
Sustainability Committee in delivering our
sustainability framework, including finding
ways to reduce our direct and indirect
carbon emissions across our operations.
There will be a particular focus on the
reduction of waste, re-use and recycling of
construction materials, and the reduction of
diesel usage on our sites.
As COVID-19 restrictions are lifted, we
will be reviewing our procedures on
management of non-COVID-19 related
health and safety matters. In particular we
will be ensuring our offices remain safe
as our employees return during the year,
providing health and wellbeing support,
and mitigating the risk of trips, slips and
falls on our sites. The SHE Committee
will ensure that all members of the Board
take part in a SHE site visit with a
senior member of our Group SHE team.
These visits are invaluable as they not
only ensure that the Board has a full
understanding of SHE policies and
processes and how they work in practice,
but also demonstrates the Board’s
commitment to the health, safety and
wellbeing of the workforce, enhancing its
importance to the business and as part of
our culture.
Having recently visited a Barratt site as part of
my induction, it is reassuring to see the focus
on safety, health and the environment by our
workforce. The attention to detail was very
impressive and I would like to thank the SHE
team, our employees and sub-contractors for
the great work that they undertake each day
to keep our people safe.
Chris Weston
Chair of the SHE Committee
1 September 2021
91
Having recently visited
a Barratt site as part of my
induction, it is reassuring to
see the focus on safety, health
and the environment by our
workforce. The attention to
detail was very impressive.
Chris Weston
Chair of the Safety, Health and
Environment Committee
Statement from the Chair of the
SHE Committee
I am pleased to present my first report as
Chair of the SHE Committee. I would like
to thank Richard Akers for his service to
the Committee. The health and safety of
our workforce, customers and members
of the public and the protection of the
environment around our developments
remains a fundamental priority for the
Group and is embedded within the day-to-
day operations of the business.
FY21 areas of focus
FY21 was another challenging year for the
business as a consequence of the ongoing
COVID-19 pandemic. The SHE team were
fully engaged in monitoring compliance
with the British Safety Council verified
COVID-19 safety measures, and with the
procedures put in place at our construction
sites, sales centres and offices during the
last financial year. They have continued to
improve and adapt these safety measures
throughout the year as government
guidance has evolved and restrictions
have been lifted. I would like to take this
opportunity to recognise the SHE team
for the incredible work they have done to
ensure the business remains COVID-19
compliant whilst continuing to carry out
their normal day-to-day activities.
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance To enhance focus on waste reduction, the
Remuneration Committee has introduced a
waste reduction target in the FY22 annual
bonus scheme (further details can be found
on page 101).
Environmental protection
Environmental protection is a key area of
focus, given the significant environmental
impacts which could, if not carefully
controlled, arise from our sites, as well
as the impacts on the local communities
in which we operate. We therefore work
closely with our partners and contractors
to ensure we manage and control our
activities in a way which minimises
environmental impacts, supported by
monthly inspections by our technical teams.
Engagement with sub-contractors
During FY21 the SHE team have worked
closely with our groundworks contractors
with the aim of working together to
implement consistent controls and new
initiatives across the Group. These include:
•
techniques to minimise digging in close
proximity to underground services;
• ensuring all plant operators receive a
medical linked to occupational health;
•
implementing plant risk assessments
so that the appropriate plant is being
used at all locations on site;
• ensuring that localised controls
are in place to segregate plant and
pedestrians within defined working
zones; and
• carrying out regular drugs and alcohol
monitoring of their workforces.
The SHE team will monitor compliance
against these throughout FY22.
This report forms part of the Corporate
Governance report and is signed on behalf
of the SHE Committee by:
Chris Weston
Chair of the SHE Committee
1 September 2021
↓ Lavender Grange, Bedfordshire,
a Barratt Homes ‘Built for Life’
accredited site.
Safety, Health and Environment
Committee report CONTINUED
Role and activities of the SHE Committee
The SHE Committee’s activities continue to prevent and mitigate some of our key
operational risks relating to health and safety and the protection of the environment. By
receiving reports and challenging those tasked with SHE performance where necessary,
the SHE Committee helps the business to improve its SHE standards. It supports and
oversees the direction and implementation of SHE Policy and Procedures which encourage
efficient working practices, prevention of injury and illness, and support our continuous
improvement strategy and ongoing sustainability of the Group.
The SHE Committee continues to work closely with the SHE Operations Committee,
which is responsible for the implementation and oversight of the Group’s overall SHE
improvement strategy. The SHE Operations Committee reports directly to the SHE
Committee, with the Group Construction and SHE Director presenting reports to each of
these Committees and to the Board. The SHE Committee has at least one joint meeting
with the SHE Operations Committee each financial year. This enables it to gain a more in-
depth understanding of the operational issues faced by the workforce and to discuss them,
and ways to improve them, directly with those responsible for day-to-day SHE management.
Membership and attendance at SHE Committee meetings
The membership of the SHE Committee and the attendance at each of its scheduled
meetings is set out on page 71.
Only members of the SHE Committee have the right to attend meetings; however, other
individuals may be invited, at the request of the Chair, to attend all or part of any meeting
where it is deemed appropriate. Two SHE Committee meetings took place during FY21, one
of which was the joint meeting with the SHE Operations Committee. The following pages
set out the work undertaken by the SHE Committee during the year.
Main activities undertaken during the financial year
The SHE Committee’s responsibilities are set out in its Terms of Reference which can be
found on the Company’s website at www.barrattdevelopments.co.uk/investors/corporate-
governance. In addition to the tasks carried out annually, such as reviews of its Terms of
Reference and approval of this report, the SHE Committee carried out the following work
during the year:
Priorities
Work carried out and outcomes
COVID
measures
Return to
offices
IIR
Reviewed SHE team’s work in monitoring compliance with SHE practices
and protocols put in place to protect our employees, customers, suppliers
and sub-contractors as they returned to construction sites and sales offices.
Considered the policy on asymptomatic testing for employees and
contractors, and agreed that employees should be encouraged to test locally
where available, or from March 2021 at home, and that sub-contractors
should be encouraged to ensure their employees are testing regularly.
Reviewed health and wellbeing initiatives and provided feedback to further
enhance guidance and advice for employees.
Undertook a review of, and implemented, measures to enable employees
unable to continue to work from home to return to the office, ensuring that
no more than a prescribed number of employees were present in the office
at any one time.
Continued to monitor SHE performance targets, key performance
indicators and IIR, all of which are available in the Strategic Report on
pages 2 to 67.
SHE
training and
compliance
Reviewed SHE training and enabled virtual training sessions.
Continuously monitored attendance by employees at prescribed SHE
courses.
Enhanced induction processes and accident and incident reporting.
Received reports on the compliance, application and implementation of our
SHE management system and the outcomes of site monitoring visits, and
agreed the action plans put in place to address areas of improvement.
COVID-19
During the year, the in-house SHE
management system was updated to reflect
evolving COVID-19 requirements, whilst
maintaining accreditation to both ISO 14001
(Environmental Management) and ISO
45001 (Health and Safety). There have been
ongoing reviews of procedures, discussions
with colleagues in all disciplines and a
roll-out of e-learning to ensure our controls
remain appropriate and in line with national
restrictions. As lockdown measures eased,
processes continued to be reviewed, with
additional guidance issued to employees
and sub-contractors on the importance
of asymptomatic testing and attending
vaccination appointments.
Five steps to safety initiative
The Group’s 'Five steps to safety' initiative
is a key awareness strategy. This was
relaunched during the year to ensure
safety was further embedded into working
practices after sites were re-opened
and to emphasise the responsibility that
everyone has in ensuring a safe working
environment.
Occupational health and wellbeing
The Group continues to promote
occupational and mental health for
all employees, which has been vital
throughout this unprecedented time.
With support from the Group HR team,
employees were provided with access to
a variety of webinars, e-learning modules
and newsletters, all of which contained
guidance on staying healthy both physically
and mentally. Further details of our health
and wellbeing initiatives are given on page
32.
Waste management
Waste reduction is a key focus for the
business. Over the last year, the waste
strategy has been revised, with clear
accountabilities set out, a business-
wide action plan being issued to drive
performance, and the recruitment of a
project manager focused solely on this
area. More regular and higher quality
data is being provided by sites, with each
division reviewing their sites’ performance
regularly. To monitor waste and drive
compliance, monthly waste audits and cost
reviews have been set up and dedicated
waste champions have been appointed at
divisional levels and on sites. A programme
of ‘Toolbox talks’ and site visits in
partnership with our waste management
suppliers has been implemented, alongside
poster campaigns and ongoing alerts.
92
93
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Remuneration report
Annual statement from the Chair of the Remuneration Committee
A further review was undertaken during
FY21. Based on consideration of our
future business strategy and the evolving
economic environment, the Committee
concluded that the approved Policy
continues to be fit for purpose, aligns the
interests of our Executive Directors with
those of our shareholders and with our
strategy, and continues to drive appropriate
behaviours for the long-term success of the
Company. It was agreed not to make any
further amendments at this time.
As the new Chair of the Remuneration
Committee, I am keen to carry out an
ongoing review of remuneration policy to
ensure it continues to be fully aligned with
prevailing best practice and the needs of
the business. The Committee has already
committed to the use of ESG metrics in our
incentive structures. Accordingly, I am keen
to introduce further ESG metrics into our
remuneration in order to reflect Barratt’s
increased focus on sustainability, and
shareholder expectations.
In addition, the Committee has agreed that,
at its next policy renewal, it will look to
amend the bonus deferral policy so that a
fixed percentage of the final bonus outcome
is deferred into shares, as opposed to
any amount earned over 100% of salary, in
line with recent Investment Association
(IA) guidance.
2020 LTPP award and FY21 annual
bonus targets
As reported last year, the Board agreed
not to recommend a final dividend for
FY20, no pay increases were awarded
for either the Directors or employees for
FY21, and no bonus was paid in respect
of FY20 performance. The 2020 LTPP
award was granted at the usual levels,
however the outcome will be reviewed at
vesting, to ensure no windfall gains have
occurred as a result of changes in the
share price between grant in November
2020 and vesting in October 2023. Given
the uncertainty created by COVID-19,
as reported last year, and in line with IA
guidance, the Committee deferred setting
targets for both the FY21 annual bonus
and the 2020 LTPP awards. These were
set, using internal and external consensus
forecasts, in November 2020 and April 2021
respectively, and the details can be found
on pages 104 and 106.
FY21 performance and reward
Following the business restart in June
2020 following lockdown, the decision was
made at the beginning of FY21 to return
the CJRS funding and business rates
relief in full. The business has continued
to make good progress throughout the
year, recommencing dividend payments to
shareholders at the half-year. Against this
background, the outcomes for the FY21
annual bonus scheme and the 2018
LTPP award are at 98.9% and 80% of
maximum respectively.
The Committee believes that, given the
strong performance of the Company
throughout FY21, and as the LTPP awards
recognise the long term performance of
the Company over a three-year period
with a strong alignment with shareholder
experience through TSR, it is appropriate to
allow both incentives to pay out in line with
performance outcomes. The Committee
does not therefore consider it appropriate
to use its discretion. Full details can be
found on pages 104 and 105.
FY22 remuneration
The Committee has agreed to increase
the base salary for the Chief Executive,
David Thomas, by 3%, which is in line with
the salary review for the wider workforce.
The Deputy Chief Executive, Steven Boyes,
will receive a 5% base salary increase,
commensurate with the material increase
in the scope and size of his role.
In particular, he has taken over
responsibility for developing the timber
frame strategy and the associated
expansion of the business. We note that
Steven has received increases either in line
with, or slightly below, the level awarded to
the wider workforce in the last three years,
with no increase awarded last year. His
salary has been reviewed against market
benchmarks to ensure the positioning
remains appropriate.
The performance measures for the FY22
annual bonus scheme are set out on
page 101 together with the rationale for
the changes proposed. This includes the
introduction of a waste reduction target,
which is measurable and reflects our
enhanced focus on ESG. As in previous
years, we will disclose the FY22 annual
bonus targets and our performance against
them in our Remuneration Report for the
financial year ending 30 June 2022.
The 2021 LTPP will be awarded to all
eligible participants, including the Executive
Directors, as usual in October. Details of
the targets are disclosed on page 101 of
this report. The performance measures
of TSR, EPS and ROCE remain unchanged
however, given the Group’s focus on
sustainability a carbon reduction measure
has been introduced, details of which can
be found on page 101. This will help focus
the business on reducing our Scope 1 and
Scope 2 greenhouse gas emissions by
29% by 2025 compared with 2018 levels.
The Committee believes that these are
the most appropriate measures to align
As the new Chair of the
Remuneration Committee,
I am keen to carry out
an ongoing review of the
Remuneration Policy to
ensure it continues to be fully
aligned with prevailing best
practice and the needs of
the business
Katie Bickerstaffe
Chair of the Remuneration
Committee
Statement from the Chair of the
Remuneration Committee
I am pleased to present my first report
to you as Chair of the Remuneration
Committee. I would like to thank Richard
Akers for his service to the Committee and
welcome Chris Weston to the Committee.
During the year under review the
Committee took into account, amongst
other factors, the performance of the Group
in FY21 (see Chief Executive’s Statement
on pages 14 and 15) and the market
conditions in which the Group operates
(see Marketplace section on pages 8 and 9)
when considering the FY21 remuneration
outcomes for the Executive Directors and in
agreeing the targets for FY22 as set out in
this report.
Remuneration Policy
In FY20, the Committee, having delayed
undertaking a fundamental review of the
Remuneration Policy due to COVID-19,
updated it to bring it in line with market
practice. The revised Policy was approved
by shareholders at the 2020 AGM with over
98% of votes cast in favour. Our approved
Policy operated as intended throughout
the year.
94
performance with strategy and the interests
of stakeholders. Strategic KPIs for each
measure can be found on pages 41 to 43.
Change of Chief Financial Officer
As announced on 4 March 2021, Jessica
White stepped down from her role as Chief
Financial Officer on 30 June 2021. In line
with the Group’s approved remuneration
policy for leavers, the Committee agreed
that Jessica would continue to be paid up
to and including 31 July 2021, being the
date that she left the business, and that
thereafter, she would receive payment
in lieu of notice, on a monthly basis up
to and including 3 March 2022, being
the end of her notice period. Payment
in lieu of notice comprises salary, car
allowance and pension allowance, and is
subject to mitigation should she find other
employment prior to the end of her notice
period. In addition, given Jessica’s 15 years
of service to the business the Committee
agreed that, in line with our approved
Policy, Jessica should be treated as a good
leaver for the purposes of the FY21 annual
bonus, deferred bonus and LTPP awards.
Any in-flight deferred bonus and LTPP
awards will vest at the usual time with the
LTPP awards being time pro-rated to 31
July 2021 and subject to the achievement of
the relevant performance targets. Further
details of Jessica’s leaving arrangements
can be found on page 108.
On 29th June 2021, we announced the
appointment of Mike Scott, who is currently
the Chief Financial Officer of Countryside
Properties PLC (‘Countryside’), as our
new Chief Financial Officer, at a date to be
agreed. The remuneration package agreed
for Mike is in accordance with our Policy,
and can be found on pages 100 to 102
below. As permitted for new joiners under
our Policy, the Committee has agreed
to replace awards that Mike will lose on
resigning from his current position.
The value of these awards is no more than
the Countryside awards that will lapse
and are dependent on Mike being classed
as a ‘bad leaver’ by Countryside.
These replacement awards will help align
Mike to the incumbent Executive Directors,
to our strategy, and to you, our shareholders.
Shareholder engagement
I wrote out to our institutional investors in
July 2021 to gain feedback on the above
proposals and outcomes. I am pleased to
advise that the feedback was positive and
no objections were received.
Employees and remuneration
Our 2020 Gender Pay Gap report, published
in October last year, showed a further
reduction in the mean pay gap to 6.5%.
Further details are given on pages 32 and
33. We aim to publish this year’s report in
October 2021.
We continue to seek the views of our
Workforce Forum on our approach to pay
for employees and Executive Directors
during the year. Further details on the
Workforce Forum and the matters it has
discussed during the year can be found on
page 46.
For the fourth year in a row, we have
awarded our employees below senior
management level shares in the business,
to recognise their dedication, commitment
and loyalty, and have decided to continue to
do so on an annual basis. Further details
can be found on page 31.
Remit of the Remuneration
Committee
Our Remuneration report for the year
ended 30 June 2021 comprises three
parts: this Annual Statement, information
about our Remuneration Policy, and the
Annual report on remuneration. Our full
Remuneration Policy can be found in our
2020 Annual Report on our website at
www.barrattdevelopments.co.uk/investors.
Details of how we have applied the relevant
requirements of the Code can be found
throughout this Remuneration report.
Conclusion
The Committee believes that the
decisions it has taken in respect of FY21
pay outcomes, the proposed approach
to implementing the Policy in FY22, and
the remuneration arrangements for our
outgoing and incoming Chief Financial
Officers are in the best interests of our
shareholders, align with our strategy and
appropriately reflect the wider business and
economic environment. We therefore hope
that you will support the Annual report on
remuneration, which will be proposed at
the AGM in October 2021. On behalf of the
Committee and the Board, I would like to
thank you for your continued support of our
remuneration framework.
Katie Bickerstaffe
Chair of the
Remuneration Committee
1 September 2021
Our remuneration strategy
Our motivated and engaged employees
are who make our business operationally
and financially strong. It is therefore
imperative that our remuneration strategy
appropriately rewards our employees for
their performance against the Group’s key
performance indicators, whilst delivering
sustainable shareholder value. Our
Remuneration Policy therefore aims to:
• promote the long-term sustainable
success of the Company and be fully
aligned with the performance and
strategic objectives of the Group to
enhance shareholder value;
• attract, retain, motivate and
•
•
competitively reward Executive
Directors and Senior Management with
the requisite experience, skills and
ability to support the achievement of the
Group’s key strategic objectives in any
financial year;
take account of pay and employment
conditions of employees across the
Group whilst reflecting the interests
and expectations of shareholders and
other stakeholders;
reward the delivery of profit and the
continued improvement of return on
capital employed by the business, whilst
ensuring that Executive Directors and
Senior Management adopt a level of risk,
which is in line with the risk profile of the
business as approved by the Board;
• ensure that there is no reward for
failure and that termination payments
(if any) are limited to those that the
Executive Director (or member of
Senior Management) is legally entitled
to; and
• ensure that in exercising its discretion,
the Committee robustly applies the
aims above.
In developing its Remuneration Policy, the
Committee has regard to:
•
•
the Group’s purpose and strategic
priorities, ensuring that targets support
the achievement of strategic priorities;
the performance, roles and
responsibilities of each Executive
Director and members of Senior
Management;
• arrangements that apply across the
wider workforce, including average
base salary increases and pension
contributions;
•
•
information and surveys from internal
and independent sources; and
the economic environment and
underlying financial performance of the
Group.
95
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Remuneration report CONTINUED
Overview for FY21
Remuneration report CONTINUED
Directors’ Remuneration Policy
Overview for FY21
The summary below outlines the remuneration outcomes for Executive Directors for FY21, together with the minimum, on-target and
maximum (with and without share price growth) opportunities, targets set for variable remuneration and our performance against
them. Full details can be found in the Annual report on remuneration on pages 99 to 111. Details of Executive Directors’ shareholding
requirements and whether they have been met are given in Table 17 on page 107.
Executive Directors’ Remuneration Policy scenarios for FY22, and FY21 single figure outcomes
5,000
4,500
4,000
3,500
3,000
0
0
0
£
2,500
2,366
4,511
3,731
3,888
3,657
3,028
3,098
1,001
1,927
826
2,000
1,500
1,000
500
0
2,705
2,225
2,128
Salary
Pension
Benefits
Other
Annual Bonus
LTPP
Gain due to share price
1,385
545
Minimum
On-target
Maximum
CEO
Maximum
plus 50%
share price growth
Single Figure
FY21
Minimum
On-target
Maximum
Deputy CEO
Maximum
plus 50%
share price growth
Single Figure
FY21
Minimum
On-target
Maximum
CFO
Maximum
plus 50%
share price growth
Single Figure
FY21
Notes:
Minimum pay is fixed pay only (i.e. salary + benefits + pension).
On-target pay includes fixed pay, 50% of the maximum bonus (equal to 75% of salary) and 50% vesting of the LTPP awards (with grant levels of 200% of salary).
Maximum pay includes fixed pay and assumes 100% vesting of both the annual bonus and the LTPP awards.
Maximum pay plus 50% share price growth is the same as maximum pay for fixed pay and annual bonus but assumes a 50% increase in the share price over the performance period for the LTPP.
All amounts have been rounded to the nearest £1,000. Salary levels (which are the base on which other elements of the package are calculated) are based on those applying at 1 July 2021. The value of taxable benefits is the cost of
providing those benefits in the year ended 30 June 2021. The Executive Directors are also permitted to participate in HMRC tax advantaged all-employee share plans, on the same terms as other eligible employees, but they have
been excluded from the above graph for simplicity. The LTPP awards allow participants to receive dividend equivalents but these are excluded from the scenario chart, other than for the single figure bar.
For the CFO, the single figure FY21 bar relates to Jessica White’s pay, and the other bars to that of the incoming Chief Financial Officer, Mike Scott. Mike Scott’s remuneration will be pro-rated based on his start date. The value of
taxable benefits for Mike Scott’s bars is illustrative based on Jessica White’s FY21 benefits figure.
FY21 performance pay outcomes
Annual bonus outcome
Further details are set out on pages 104 and 105 in the Annual report on remuneration.
Target
PBT
Threshold
£593m
Maximum
£638m
Target
£608m
Weighting
42.5%
Outcome achieved
42.5%
Capital Employed
£1,604m
SHE (audit rating)
94%
Actual £812.2m
£1,604m
Actual £1,307.2m
94%
Actual 96.5%
£1,564m
94%
Customer Service (with SHE
gateway, see above)
Number of divisions out of 27 to achieve SHE audit rating of 94% or above, and
90% customer service target
Actual 25/27 divisions
20.0%
7.5%
15.0%
Trading outlet openings
98 openings
102 openings
107 openings
15.0%
Actual 144 openings
20.0%
7.5%
13.9%
15.0%
LTPP vesting outcome
Further details, including the share price used to calculate the estimated value, are set out in Table 13 on page 105 of the Annual report
on remuneration.
David Thomas
Steven Boyes
Jessica White
Shares awarded
Number
272,426
215,602
151,945
EPS
0%
0%
0%
Percentage of award vesting
ROCE
100%
100%
100%
TSR
100%
100%
100%
Total
80%
80%
80%
Shares vesting
Number
217,940
172,481
121,556
Estimated value
£000
1,646
1,302
918
Alignment of FY21 incentive performance measures with strategy
Strategic priorities
Customer first
Great places
Leading construction
Investing in our people
Anticipate our customers’
evolving needs by
continuously improving the
homes and places we build.
Secure good value land
and planning consents where
people aspire to live.
Deliver highest quality
homes, focus on excellence,
embrace MMC.
Attract and retain the
best people, invest in their
development.
How our incentive structures are aligned to delivering the strategic priorities
Annual bonus
✓ Customer service
LTPP
✓ TSR
✓ PBT ✓ Capital Employed
✓ Trading outlets
✓ ROCE
✓ PBT ✓ Capital Employed
✓ Customer service ✓ SHE
✓ ROCE ✓ EPS
✓ PBT ✓ SHE
✓ Customer service
✓ EPS
Directors’ Remuneration Policy
The Company’s current Directors’ Remuneration Policy (the ‘Policy’), was approved by shareholders at the 2020 AGM on 14 October 2020.
The full version of the current Policy can be found on pages 127 to 130 of the 2020 Annual Report and Accounts, which is available on our
website at www.barrattdevelopments.co.uk/investors. A description of how the Company implemented the Policy in FY21 can be found on
pages 103 to 111 and details of how the Policy will be applied for FY22 are set out on pages 100 to 102.
How the Committee has addressed the requirements of the Code in determining
Directors’ Remuneration Policy and practices
Code requirement
Clarity – remuneration arrangements
should be transparent and promote effective
engagement with shareholders and the
workforce.
Simplicity – remuneration structures
should avoid complexity and their rationale
and operation should be easy to understand.
Risk – remuneration arrangements should
ensure reputational and other risks from
excessive rewards, and behavioural risks
that can arise from target-based incentive
plans, are identified and mitigated.
Predictability – the range of possible
values of rewards to individual Directors
and any other limits or discretions should
be identified and explained at the time of
approving the policy.
Proportionality – the link between
individual awards, the delivery
of strategy and the long term performance
of the company should be clear. Outcomes
should not reward poor performance.
Alignment with culture – incentive
schemes should drive behaviours consistent
with company purpose, values and strategy.
Change of Control
The rules of each share scheme operated
by the Company contain provisions relating
to a change of control. In the event that a
change of control does occur any unvested
options or awards will become vested on
the date of the relevant event. However,
the number of options or awards that
vest will be prorated depending on the
number of weeks completed within the
relevant performance period and the level
of performance conditions achieved during
that period. The Committee has discretion
to assess the performance outcome in
respect of unvested awards and determine
the extent to which unvested awards may
vest. Options or awards which have already
vested as at the date of the relevant event
may still be exercised within the prescribed
time scales set out in the rules.
Malus and Clawback
A malus and clawback mechanism applies
to both the annual bonus (including any
deferred bonus) and the LTPP for a period
of two years following vesting.
Variable remuneration for any year is set out clearly in the prior year’s Annual Report,
together with performance targets (unless they are deemed to be commercially sensitive).
Outcomes are aligned with strategic objectives through the use of appropriate performance
targets, which align them with shareholder interests and the Group’s strategy and provides
for the long term success of the Company, which is in the interest of the workforce and
other stakeholders.
The Company operates a UK market standard approach to remuneration which is familiar to
stakeholders. Performance targets are readily understandable and published as part of the
year end results.
The Committee has discretion to ensure that variable pay outcomes are in line with
Company and individual performance. Share awards are subject to post vesting holding
periods, and malus and clawback are applicable to both LTPP and the annual bonus
(including deferred shares) for up to two years after payment or vesting in cases where the
outcome is subsequently deemed inappropriate.
Minimum, on-target and maximum outcomes for Directors are shown annually in this report
(see page 96). Limits and discretions for each type of reward are explained in the policy table
which can be found on pages 127 to 130 of the 2020 Annual Report and Accounts, which is
available on our website at www.barrattdevelopments.co.uk/investors.
The Company’s incentive plans reward the successful implementation of strategy through
the alignment of performance targets with strategic KPIs. The performance underpin which
applies to both the annual bonus and LTPP outcomes ensures that poor performance is not
rewarded. The Committee also has discretion to override formulaic outcomes.
Our remuneration strategy ensures that performance targets do not encourage
inappropriate behaviours. The targets that are selected help align the interests of the
workforce with those of the Company’s purpose and strategy as illustrated on page 96.
The mechanism applies in certain
circumstances set out in the rules of
the relevant plans, including material
misstatement in the Group’s accounts,
error, misconduct, material failure of
risk management, reputational damage
and corporate failure. Full details of
the circumstances under which malus
and clawback apply can be found in the
full Remuneration Policy set out in the
FY20 Annual report and accounts on the
Company’s website.
Differences between Executive
Directors’ and employees’
remuneration
The following differences exist between the
Company’s Policy for the remuneration of
Executive Directors and its approach to the
payment of employees generally:
• a lower level of maximum annual bonus
opportunity may apply to employees
other than the Executive Directors.
All employees, including Executive
Directors, are subject to similar
performance targets; however, the
weightings against the various targets
may vary;
• Executive Directors and some members
of Senior Management may earn an
annual bonus in excess of 100% of
salary. Any bonus earned in excess of
100% of base salary is deferred into
shares for a period of three years;
• Executive Directors and some
members of Senior Management may
opt to receive a cash supplement in
lieu of pension. The maximum cash
supplement or employer’s contribution
rate for existing Executive Directors
until 31 December 2022 does not
exceed 25% of base salary. With effect
from 1 January 2023, the pension
contribution for Executive Directors will
be at the maximum rate of employer’s
contribution for the wider workforce,
currently 10%. Any new Executive
Directors appointed on or after 1 July
2020 receive a maximum contribution
in line with the average pension
contribution available to the wider
workforce, currently 10%;
96
97
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance
Remuneration report CONTINUED
Directors’ Remuneration Policy
Remuneration report CONTINUED
Annual report on remuneration
Statement of consideration
of shareholder views
In line with the IA’s Guidelines on
Responsible Investment Disclosure, the
Committee is satisfied that the incentive
structure and targets for Executive
Directors do not raise any ESG risks by
inadvertently motivating irresponsible
or reckless behaviour, or encouraging
inappropriate risk-taking.
Each year we update our major
shareholders on the Committee’s
application of the Policy and our
performance in advance of the publication
of our Annual Report and Accounts. The
Committee takes into account shareholder
feedback received as part of the Company’s
annual review of the Policy. Details of
engagement with shareholders during the
year are given in the Chair’s statement
on page 95, and in the Stakeholder
engagement section on pages 48 and 49.
In addition, the Committee will seek to
engage directly with major shareholders
and their representative bodies should
any material changes be proposed to the
Policy. Details of the votes cast for and
against the resolution to approve last year’s
Remuneration report can be found in Table
24 on page 111.
Service contracts and letters
of appointment
The letters of appointment for Non-
Executive Directors and service contracts
for Executive Directors are available for
inspection by any person at the Company’s
registered office during normal office hours
or are available on the Company’s website:
www.barrattdevelopments.co.uk/investors.
The Executive Directors have service
contracts with the Company all with a
rolling 12-month notice period and are not
fixed term. Details are included in Table 1
below and their remuneration for FY21 is
shown in Table 8 on page 103.
Table 1 – Executive Directors’ service contracts
Executive Director
David Thomas
Steven Boyes
Jessica White1
Service contract date
16 January 2013
21 February 2013
21 June 2017
Date of appointment
21 July 2009
1 July 2001
22 June 2017
Notice period/
Unexpired term
12 months
12 months
12 months
1.
Jessica White gave notice to terminate her contract on 4 March 2021 and stepped down from the Board on
30 June 2021.
The Chair and each of the Non-Executive Directors are appointed for an initial three-year
term under terms set out in a letter of appointment. Their appointments can be terminated
by the Board without compensation for loss of office subject to the notice periods in their
respective letters of appointment. The notice periods, applicable from either party, are three
months for the Chair and one month for each of the Non-Executive Directors. The Chair
and each of the Non-Executive Directors usually serve a second three-year term subject to
performance review and can serve a further term of three years subject to rigorous review
by the Chair and the Nomination Committee. Details of Non-Executive Directors’ letters of
appointment are given in Table 2 below.
Table 2 – Non-Executive Directors’ letters of appointment
Non-Executive
Director
John Allan
Katie Bickerstaffe N/A
Nina Bibby
Jock Lennox
Chris Weston
Sharon White
Date elected/
re-elected at AGM
13 October 2020
13 October 2020
13 October 2020
N/A
13 October 2020
Date last
re-appointed
to the Board
1 August 2020
N/A
Date first
appointed
to the Board
1 August 2014
1 March 2021
3 December 2012 3 December 2018 5 months
1 July 2019
1 July 2016
N/A
1 March 2021
1 January 2021
1 January 2018
Unexpired
term
25 months
32 months
12 months
32 months
30 months
• Executive Directors are able to
participate in the LTPP. A number
of select employees at Senior
Management level may also be invited
to participate in the LTPP at the
Committee’s discretion; and
•
in each of the last four years,
employees below Senior Management
have been awarded a smaller number
of shares under an employee long term
incentive plan. This award was not
made available to Executive Directors.
In general, these differences arise
from the development of remuneration
arrangements that are market competitive
for the various categories of individuals.
They also reflect the greater emphasis
placed on performance-related pay for
Executive Directors.
Statement of consideration of
pay and employment conditions
elsewhere across the Group
The level for all employees’ salaries
is determined with reference to the
rate of inflation, salaries for similar
positions throughout the industry and
general themes and trends in respect of
remunerating employees. When reviewing
Executive Directors’ remuneration,
including increase in base salary, the
Committee takes into consideration the
pay and employment conditions of all
employees across the Group. During the
year, the Workforce Forum discussed
remuneration strategy, including executive
reward strategy, and provided feedback to
management. The Company also operates
a Sharesave scheme and in the last
four financial years (including FY22) has
made conditional awards of shares to all
employees. This enables all employees to
become shareholders in the Company, and
to comment on the Group’s Policy in the
same way as all of our other shareholders.
In addition, the Group provides a number
of ways in which employees can ask
questions and give feedback on such
matters should they so wish. This includes
the Employee Communications mailbox,
personal development reviews, the
Workforce Forum, a dedicated Workforce
Forum email address and an email
address for employees to directly contact
the designated Non-Executive Director
for workforce engagement. Details of
engagement with the workforce and
examples of feedback given are provided in
the Stakeholder engagement section of the
Strategic Report on pages 46 and 47.
98
Annual report on remuneration
In this section, we provide an overview of
the Committee and its advisers, as well as
how the Policy will be applied in FY22 and
how it has been implemented throughout
FY21, together with the resulting payments
to Directors. The Annual Report on
Remuneration will be subject to an advisory
vote at the 2021 AGM.
Membership and attendance at
Remuneration Committee meetings
Membership of the Committee comprises
all of the Non-Executive Directors, and
attendance at each of its scheduled
meetings during the year is set out on
page 71. The Committee is chaired by Katie
Bickerstaffe. The Executive Directors are
not members of the Committee and no-one
is present at the Committee’s meetings
when their own remuneration is being
considered.
Advisers to the
Remuneration Committee
In carrying out its principal responsibilities,
the Committee has the authority to
obtain the advice of external independent
remuneration consultants and is solely
responsible for their appointment, retention
and termination. In line with best practice,
the Committee assesses annually whether
the appointment remains appropriate or
if it should be put out to tender. The last
such tender took place in 2017, resulting
in PwC being appointed as the advisers
to the Committee with effect from 1
January 2018. PwC is a signatory to the
Remuneration Consultants Group’s Code of
Conduct. As part of the annual review and
re-appointment process, the Committee
satisfied itself that PwC remained objective
and independent during the year.
In addition to remuneration advice, PwC
also provides taxation, consultancy and
internal audit services to the Group. PwC
has no other connections with individual
Directors or the Company.
During the year, the Committee has
taken advice from PwC on its Policy and
remuneration practice, implementation
of its decisions and remuneration
benchmarking. The Chair of the Committee
also sought advice from PwC independent
of management on various matters to
be discussed at Committee meetings.
The fees payable to PwC are based on an
annual fixed fee for a specified service with
anything outside this scope being charged
on a time and disbursement basis.
PwC fees for services provided to the
Committee during the year under review
were £121,000.
The Committee also receives input into its
decision making from the Chief Executive
(David Thomas), the Company Secretary
(Tina Bains) and the Group HR Director
(Rob Tansey until 31 December 2020 and
Nick Worrall from 1 January 2021), none of
whom were present at any time when their
own remuneration was being considered.
Main activities undertaken
during the financial year
The Committee’s role is to determine and
agree the Policy for Executive Directors
and Senior Management whilst taking
into account the remuneration of the
wider workforce. It follows an annual work
programme which was fully completed
during the year. The Committee’s
responsibilities, as delegated by the Board,
are formally set out in its written Terms of
Reference, which are available from our
website at www.barrattdevelopments.co.uk/
investors/corporate-governance. Details
of the annual evaluation can be found on
page 84.
Priorities
Work carried out and outcomes
Integrity of
Financial
Statements and
announcements
With assistance from the Remuneration consultants, the Committee considered the Policy as approved by
Shareholders at the 2020 AGM, and confirmed that it remains fit for purpose and is in line with best practice.
Considered salaries and fees of Executive Directors and Senior Management for FY22 in the context of
employees’ pay, and agreed increases for Executive directors as set out on page 100, and an average of 4% for
Senior Management.
Considered the impact of exceptional and unusual items on the FY21 annual bonus and the 2018 LTPP vesting
and agreed that the bonus and vesting outcomes were appropriate.
Considered current performance conditions and agreed to include an ESG measure for both the FY22 annual
bonus and the 2021 LTPP awards (see page 101 for further details).
Reviewed current market practice and agreed as part of the next policy review to introduce a deferral of bonus
based on a fixed proportion of the bonus earned as opposed to any amount earned in excess of 100% of salary.
Reviewed LTPP metrics, and agreed to align metrics for LTPP awards to Senior Management with those for the
Executive Directors with the introduction of a TSR performance condition.
Considered whether the share price used to determine the number of shares awarded under the 2020 LTPP
would lead to an unjustified increase in the number of shares awarded and determined not to reduce the number
of shares awarded. The Committee retains the discretion to reduce the number of shares on vesting should it
appear that there is likely to be a windfall gain for the Executive Directors. Further details are given on page 94.
Governance
Following the resignation of Jessica White, considered the implications of the Policy on her remuneration and
how she should be treated as a leaver. Agreed the ongoing remuneration for the period to the end of her notice
period on the basis that Jessica would be treated as a good leaver and in line with the Group’s Policy.
Considered and agreed the remuneration package of the new Chief Financial Officer, Mike Scott, details of which
are provided on pages 100 to 102.
With the assistance of the Group’s legal advisors, undertook a review of Executive Directors’ service contracts and
confirmed that they remain fit for purpose.
99
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Remuneration report CONTINUED
Annual report on remuneration
Statement of implementation
of the Remuneration
Policy for FY22
Executive Directors’ remuneration for FY22
will be based on the Policy approved by
shareholders at the October 2020 AGM.
Jessica White resigned as a Director with
effect from 30 June 2021, and will therefore
not receive additional remuneration as
a Director during FY22. Details of her
agreed remuneration package are given on
page 108.
Base salary
The Committee reviewed the salaries
of the Executive Directors in June 2021,
taking into account their performance
during the year, the annual salary review
for all other employees in the Group at 3%
(including promotions the overall average
increase was 4.31%), and the multiplier
effect of an increase in base salary on
the Directors’ package as a whole. The
Committee also took into account the
performance of the Company and ensured
that after any increase the salaries would
remain within the range for similar sized
companies and the housebuilding sector.
Accordingly, it was agreed to award an
increase in salaries of 3% for David
Thomas, and 5% for Steven Boyes. The
reasons for the additional increase in salary
for Steven Boyes are set out in the Chair’s
statement on page 94. The Executive
Directors’ salaries with effect from 1 July
2021 will therefore be:
Table 3 – Executive Directors’ salaries
Executive Director
David Thomas
Steven Boyes
Jessica White1
Salary with
effect from
1 July 2021
£000
Salary with
effect from
1 July 2020
£000
780
629
–
757
599
422
1.
Jessica White stepped down from her position as an Executive Director on 30 June 2021.
Mike Scott, the new Chief Financial Officer, will receive base pay of £480,000 per annum
(pro-rata for FY22).
↓Rosewood Grange, Gloucester.
Pension
During FY22, David Thomas and Steven
Boyes will both continue to receive a
cash supplement of 25% of salary. With
effect from 1 January 2023 their pension
contributions (or cash supplement)
will be reduced to a level equivalent to
the workforce, currently 10% of base
salary. Mike Scott, will receive a pension
contribution (or cash supplement)
of 10% of base salary from the date of
his appointment.
Annual bonus
Executive Directors and Senior
Management will participate in the Group’s
annual bonus scheme in accordance
with the Policy. Mike Scott will receive
a maximum bonus of 150% of salary, in
line with Policy and the other Executive
Directors, pro-rated to reflect the amount
of FY22 he will be employed by the
Company.
In view of the economic challenges and
disruption to our business resulting
from COVID-19, we have undertaken a
comprehensive review of the measures
and their weightings for the FY22 bonus.
The Committee agreed that given that the
FY21 bonus scheme had been adapted to
take into account the impact of COVID-19,
the FY22 bonus scheme should more
closely reflect the FY20 bonus scheme
in terms of metrics and weightings, and
with an increased focus on sustainability.
Accordingly, the following changes will
apply to the FY22 bonus scheme to ensure
that Executive Directors continue to be
incentivised in line with our core business
priorities for the year:
• Profit before tax – increased the
maximum weighting back to 82.5% from
63.75% of salary;
• Capital employed – reduced the
maximum weighting from 30% back to
15% of salary; and
• Waste reduction – introduced a
new sustainability metric, within the
strategic objectives, which focuses the
business on reducing waste and making
a positive impact on the environment.
This will represent 15% of salary
maximum.
The Committee is of the view that the
individual annual bonus performance
targets are commercially sensitive and, in
line with market practice, will therefore be
disclosed, with performance against them,
in next year’s Remuneration report.
100
The performance measures, their reasons for selection and the maximum bonus payment against each of them expressed as a percentage
of salary for FY22 will be:
Table 4 – FY22 annual bonus performance measures
Performance measure
Financial/non-financial
Profit before tax
Capital employed
Financial
Financial
Quality and service
(with a health & safety underpin1)
Non-financial
Strategic objectives:
Reduction of total waste generated
compared to FY21
Trading outlets
Total bonus achievable as a % of salary
Non-financial
Non-financial
Reason for selecting
Rewards outperformance against stretching
targets and is a key measure of our
performance.
Ensures efficient use of available capital.
Ensures a focus on quality and service to our
customers without compromising the health and
safety of our employees, customers, suppliers,
sub-contractors and members of the public.
Focus individuals on specific factors required
to meet the short and long term strategy of the
business whilst aligning their interests with
those of shareholders.
Weighting (% of
salary maximum)
82.5
15.0
22.5
15.0
15.0
150.02
1.
2.
Each division must first achieve a SHE Audit gate before being considered for the quality and service element.
Any bonus earned in aggregate in excess of 100% of salary will continue to be deferred into shares and held in the DBP. Dividend equivalents will accrue against any
shares deferred into the DBP.
The Committee will continue to have an overriding discretion in respect of any bonus payment in accordance with its Policy. In addition,
any bonus awarded for FY22 will be subject to the malus and clawback provisions set out on page 97 and in detail on page 132 of the FY20
Annual Report and Accounts of the Company’s website at www.barrattdevelopments.co.uk.
LTPP
The Committee intends to grant an LTPP award to Executive Directors in October 2021 (2021 LTPP) of 200% of base salary, in line with
the Policy. An LTPP award will be granted to Mike Scott after he commences employment with the Company. The value of the award will
be 200% percent of salary, pro-rated to reflect the proportion of FY22 he will be employed by the Company. The Committee is cognisant
that the 2021 award should be subject to performance targets which are stretching and challenging whilst aligned with the short and long
term performance of the Group and its strategy as well as the interests of shareholders. The Committee has agreed that the independent
performance conditions for the 2021 LTPP will be: TSR, EPS, Underlying ROCE and carbon reduction.
Table 5 – 2021 LTPP performance measures
Performance condition
TSR against a 50+/50-
comparator group
TSR against a
housebuilder index1
Reason selected
To ensure that the comparator group
remains current and relevant whilst
factoring in the continued movement in
the Company’s market capitalisation.
To ensure rewards are linked to
outperformance of our peers.
EPS for the financial year
ending 30 June 2024
Underlying ROCE for the
financial year ending
30 June 2024
Greenhouse gas/carbon
reduction
To ensure efficient and effective
management of our business and align
interests with those of shareholders.
To ensure efficient and effective
management of our business and align
interests with those of shareholders.
To ensure focus on reducing our Scope 1
and Scope 2 greenhouse gas emissions2
by 25% (from 2018 levels) before 2025.
Weighting
(of total
award)
15%
Below
threshold
(0% vesting)
Below
median
Threshold
(25% vesting)
Median
Maximum
(100% vesting)
Upper
quartile
15%
15%
Below
index
average of
peer group
Below 79p
Index
average of
peer group
79p
Index
average
+8%
per annum
87p
40%
Below 19%
19%
22%
15% 20% reduction 25% reduction 30% reduction
1.
2.
The housebuilder index will comprise: Bellway, Berkeley Homes, Countryside Properties, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
Further information on Scope 1 and Scope 2 greenhouse gas emissions can be found in the Strategic report, pages 21 to 23.
Vesting will be on a straight-line basis between threshold and maximum. In addition, all LTPP awards are subject to a two-year post vesting
holding period and an overriding Committee discretion, as set out in the Policy table on page 129 of the FY20 Annual Report and Accounts.
The 2021 LTPP will also be subject to the malus and clawback provisions summarised on page 97 and set out in detail on page 132 of the
FY20 Annual Report and Accounts. The FY20 Annual Report and Accounts can be found on the Company’s website at
www.barrattdevelopments.co.uk.
101
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Remuneration report CONTINUED
Annual report on remuneration
Additional payments to Mike Scott following recruitment
On 29th June 2021, we announced the appointment of Mike Scott as our new CFO. Mike will join Barratt at a date to be agreed.
The remuneration package agreed for Mike is set out on pages 100 to 101 above for FY22, and is in accordance with our approved Policy.
Besides base salary, he will receive benefits including a company car allowance, private health insurance, death in service benefits, holiday
entitlement, PHI and an annual allowance towards obtaining financial and tax advice, all of which fall within the approved Policy.
In accordance with our Policy for new joiners, the Committee has agreed to grant Mike conditional awards over Barratt shares to
compensate him for the value of the awards forfeited by him on leaving his previous employment to join the Group (‘Replacement Awards’).
In accordance with our Policy, the value of the Replacement Awards is no more than awards forfeit from his previous employer. The
structure and time frames of Replacement Awards will also reflect the forfeited awards insofar as possible. The undertaking to make these
Replacement Awards facilitated the recruitment of Mike as the Group’s new CFO, and was designed to achieve a balance acceptable to Mike
and to the Company and its shareholders.
The details of the Replacement Awards are as follows:
• To compensate Mike for the loss of deferred bonus shares which have no performance conditions and are due to vest on 12 December
2022, Mike will receive Barratt shares with an equivalent face value and the same vesting date, subject to Mike remaining in Barratt’s
employment at the vesting date. The face value of the shares (£159,988) was determined by reference to share prices at 22 June 2021,
and the number of Barratt shares that will be awarded is 22,559.
• To compensate Mike for the loss of LTIP awards with his previous employer, the LTPP awards shown in Table 6 will be made over
Barratt shares vesting in October 2022 and 2023.
Table 6 – Mike Scott replacement LTPP awards
Performance period
LTPP
1 July 2019 – 30 June 2022
LTPP
1 July 2020 – 30 June 2023
LTPP total
Vesting date
Replacement awards
Value of replacement awards % of Salary (£480,000)
October 2022
October 2023
22,560
67,681
90,241
£159,996
£479,994
£639,990
33%
100%
The value of these replacement LTPP awards was set to reflect a forecast vesting outcome of awards forfeited, based on a robust testing
process and will be further subject to the achievement of Barratt LTPP performance conditions. These awards will be made on the same
terms and are subject to the same performance conditions as the awards made under the Company’s LTPP in 2019 and 2020 to the
incumbent Executive Directors.
The Replacement Awards are not pensionable or transferable. In accordance with the Policy, Mike will be required to retain all of the shares
vesting from his Replacement Awards (net of tax and NI) in order to build towards his shareholding requirement.
Non-Executive Directors’ fees
During the year, a committee of the Board comprising the Company Chair and the Executive Directors undertook a benchmarking exercise
to consider fees paid to Non-Executive Directors by companies of a similar size to Barratt and other housebuilders. This showed that the
fees paid to the Committee Chairs, the Senior Independent Director and the Designated NED for Workforce Engagement by Barratt were
all below lower quartile. It was agreed that the fees for these positions should be increased, and a fee for membership of committees
introduced in line with market practice and to reflect the increased time and commitment that Non-Executive Directors are being asked to
dedicate due to the increase in governance demands, more complexities in the business due to sustainability and the impact of COVID-19.
In addition, the Committee agreed to award a 4.8% increase to the base fee for Non-Executive Directors for FY22. The annual fee payable to
the Chair was increased by 3%, which is in line with the annual salary review for the wider workforce. The annual fees payable to the Chair
and Non-Executive Directors with effect from 1 July 2021 will therefore be as follows:
Table 7 – Non-Executive Directors’ fees
Role
Chair
Non-Executive Director base fee
Committee membership (per committee)
Chair of Audit Committee
Chair of Remuneration Committee
Chair of Safety, Health and Environmental Committee
Senior Independent Director
Designated NED for Workforce Engagement
Fee as at 1 July 2021
£000
Fee as at 1 July 2020
£000
343
66
3
17
17
17
17
10
333
63
–
12
12
6
8
6
The current aggregate limit on Non-Executive Directors’ fees is £800,000, as described in the Policy. A resolution to increase the aggregate
limit to £1,000,000 will be put to shareholders for approval at the 2021 AGM.
Directors’ remuneration outcomes for the year ended 30 June 2021
Single figure of remuneration
The total remuneration for each of the Directors serving during the year for the financial year ended 30 June 2021 is as set out in Tables 8
and 9. The salary for all Directors is the amount received in the year.
Table 8 – Executive Directors’ single figure of remuneration (audited)
Base Salary
£000
Benefits2
(taxable)
£000
Pension
benefits
£000
Total
fixed pay
£000
Annual
bonus4
£000
LTPP
£000
Sharesave
£000
Total
variable pay
£000
Total
£000
Total
£000
2020/21 2019/201 2020/21 2019/20 2020/21 2019/203 2020/21 2019/20 2020/21 2019/20 2020/215 2019/206 2020/217 2019/208 2020/21 2019/20 2020/21 2019/20
David
Thomas
Steven
Boyes
Jessica
White
Total
757
741
599
586
422
413
1,778 1,740
26
40
17
83
29
189
189
972
959 1,123
– 1,793
282
36
150
150
789
772
889
– 1,419
224
16
81
63
402
63
502
492
626
402 2,263 2,223 2,638
– 1,000
– 4,212
158
664
–
1
–
1
10 2,916
292 3,888 1,251
– 2,309
224 3,098
996
– 1,626
158 2,128
650
10 6,851
674 9,114 2,897
1.
2.
3.
4.
5.
6.
7.
8.
1.
2.
3.
4.
5.
The base salary for each of the Directors in 2019/20 is the amount received in that year, and takes into account a voluntary reduction of 20% in April and May 2020
while our construction sites were temporarily closed as a consequence of COVID-19.
Benefits (taxable) include the provision of a company car or car allowance, private medical insurance, some telephone costs and contributions towards obtaining
independent financial and tax advice, and are provided based on market rates.
The Directors' pension benefits in 2019/20 were not reduced to take into account the voluntary reduction in salary referred to in note 1 above.
Annual bonus includes amounts deferred for David Thomas, Steven Boyes and Jessica White (see Table 11 on page 104).
Performance conditions for the LTPP were tested after 30 June 2021. 80% of the award granted to each of the Executive Directors is due to vest in October 2021 (see
Tables 12 and 13 on page 105 for further details). The market price of the shares has been calculated based on an average market value over the three months to 30
June 2021 (£7.55 per share). 26% of the value of the award is attributable to share price growth.
In accordance with regulatory requirements, the values in this column have been re-calculated using a share price of £6.45 per share being the market value of
the shares on the vesting date, 24 November 2020, as opposed to the market price of £5.00 per share calculated based on an average market value over the three
months to 30 June 2020 disclosed in last year’s Remuneration report.
The Sharesave shares granted in April 2017, which matured on 1 July 2020, was subject to no performance measures other than a continued employment condition
and completion of a savings contract. The value is calculated using the difference between the exercise price of £4.64 and a share price of £4.94 (the mid-market
closing price of a share on the date of maturity).
The Sharesave shares granted in April 2014, which matured on 1 July 2019, was subject to no performance measures other than a continued employment condition
and completion of a savings contract. The value is calculated using the difference between the exercise price of £3.49 and a share price of £5.77 (the mid-market
close price of a share on the date of maturity).
Table 9 – Non-Executive Directors’ single figure of remuneration (audited)
John Allan
Richard Akers2
Nina Bibby
Katie Bickerstaffe3
Jock Lennox
Chris Weston3
Sharon White
Total
Fees
£000
Benefits (taxable)
£000
Total
£000
2020/21
333
75
63
23
77
22
64
657
2019/201
325
87
62
–
74
–
62
610
2020/214
1
–
–
–
–
–
–
1
2019/205
1
–
–
–
–
–
–
1
2020/21
334
75
63
23
77
22
64
658
2019/20
326
87
62
–
74
–
62
611
The fees for each of the Directors above who received a salary in 2019/20 is the amount received in that year, and takes into account a voluntary reduction of 20% in
April and May 2020 while our construction sites were temporarily closed as a consequence of COVID-19.
Richard Akers stood down from the Board with effect from 4 May 2021. The benefits shown for Richard include £3,029 for gifts, including the tax payable on them,
presented to Richard by the Board on his departure.
Katie Bickerstaffe and Chris Weston were appointed to the Board with effect from 1 March 2021.
Benefits (taxable) for 2020/21 include expenses incurred in attending the Company’s main corporate office and are £706 for John Allan.
Benefits (taxable) for 2019/20 include expenses incurred in attending the Company’s main corporate office and were £1,093 for John Allan.
102
103
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Remuneration report CONTINUED
Annual report on remuneration
Annual bonus
For FY21, the business was focused on increasing operational capacity after the site closures in FY20, with a strong emphasis on ensuring
the safety of its workforce, customers and suppliers and whilst maintaining high customer service levels. The bonus measures were
set accordingly, with increased weighting given to the SHE measure. Appropriate financial targets were set in November 2020, following
completion of the first quarter of the FY21 financial year, and taking into consideration internal and external consensus forecasts.
The Committee agreed to retain the outlet opening metric as it was deemed to be a more effective target than the land and sites measure
disclosed in the FY20 Remuneration report given that the definition of an outlet for bonus purposes ultimately means that land would need
to be acquired for this target to be achieved. The business remained operational throughout the year under review, all furlough money was
re-paid to the Government, all business rates were also returned in full and dividend payments for the year have been reinstated.
As in previous years, Executive Directors had the potential to earn an annual bonus of up to 150% of base salary based on the attainment
of Group performance targets which are linked directly to the Group’s strategy. Any bonus earned in excess of 100% of base salary is
deferred into shares for a period of three years and is subject to a continued employment condition. The Group performance targets and
performance against them for FY21 are set out in Table 10 below. The Committee considers the outcome is appropriate and reflects overall
performance of the Group over the year, and no discretion was exercised in relation to the bonus outcomes.
Table 10 – Annual bonus (audited)
Bonus target
Pre-tax profit
Strategic objective
To support profitability.
Capital employed1
To incentivise improvement of
capital management.
SHE2, 3
Customer care (with
health and safety
underpin)4
Outlet openings
To ensure focus on the health
and safety of our employees and
other stakeholders.
To ensure a focus on quality and
service to our customers without
compromising the health and
safety of our employees and other
stakeholders.
To open the optimum number of
trading outlets to ensure growth
and delivery of our business plan.
Targets
Threshold: £593m
Target: £608m
Maximum: £638m
Above Target
Target: £1,604m
Maximum: £1,564m
Divisions to achieve SHE audit
of 94% including measures for
COVID-19 compliance.
Divisions to achieve SHE audit
of 94% and 90% recommend
score for customer service.
Potential bonus
weighting
% of salary
12.75%
31.875%
63.75%
0%
15%
30%
11.25%
Actual
performance
achievement
£812.2m
Bonus
achieved
% of salary
63.75%
£1,307.2m
30%
96.5%
11.25%
22.5%
25/27
divisions
20.83%
Threshold: 98
Target: 102
Maximum: 107
4.5%
11.25%
22.5%
144
22.5%
1.
2.
3.
4.
See definition on page 178.
In the case of a material breach of SHE policy or procedures, the SHE Committee retained the discretion to recommend the withholding of all or part of the bonus
depending on the nature of the breach.
For the first half of FY21, to emphasise the importance of full compliance with COVID-19 safety measures, only the SHE audit score was used as a target for this
element of the bonus plan. For the second half of the year, the SHE audit score was used as a gateway to the customer service element.
The quality and service measure is pro-rated based on the number of divisions achieving both targets.
Executive Directors’ deferred bonus
Any bonus earned in excess of 100% of salary will be deferred into shares for each of the Executive Directors as set out in Table 11 below.
The number of shares that will be awarded will be calculated based on the average closing share price for the first five dealing days
following the date on which the Group publishes its FY21 annual results, and will be announced via the Regulatory Information Service
when the shares are awarded. Shares are held for three years from the date they are awarded, subject normally to continued employment.
No bonus was awarded for FY20.
Table 11 – Executive Directors’ deferred bonus (audited)
David Thomas
Steven Boyes
Jessica White
FY21 deferred bonus
Annual
bonus
£000
1,123
889
626
Salary
payable
%
148.3
148.3
148.3
Salary
in cash
%
100
100
148.3
Salary
deferred
%
48.3
48.3
01
Amount
deferred
£000
366
290
0
1.
Following Jessica White’s resignation, it was agreed that given that Jessica would step down as an Executive Director on 30 June 2021 and leave the business on
31 July 2021 that any bonus earned for FY21 would be paid entirely in cash, in accordance with the Company’s approved Policy.
Long Term Performance Plans
Vesting of 2018 LTPP (included in FY21 single figure of remuneration)
The 2018 LTPP award granted on 22 October 2018 was based on the three year performance period to 30 June 2021. The award is subject
to three performance conditions, 40% TSR (half of which is measured against a 50+/50- comparator group and the other half against a
housebuilder index), 20% EPS and 40% ROCE. The resulting vesting levels are as follows:
Table 12 – Vesting of 2018 LTPP (audited)
Metric
EPS
Underlying ROCE
TSR
(FTSE)
TSR
(Housebuilder)2
Total level of
award vesting
Performance condition
EPS growth for the financial year ended
30 June 2021.
To increase underlying ROCE
TSR against the 50 companies above and below
the Company in the FTSE index measured
over three financial years with a three-month
average at the start and end of the performance
period. 25% of this element vests for median
performance and 100% of this element vests for
upper quartile performance or above.
TSR of at least the Index average of a
housebuilder Index measured over three
financial years with a three-month average at
the start and end of the performance period.
25% of this element vests for Index average of
peer group and 100% of this element vests for
Index average +8% per annum or above.
Threshold
(25% vesting)
75p
Maximum
(100% vesting)
84p
Actual
65.1p1
Portion of
award vesting
0%
19%
Median
ranking of 44.5
(TSR of 17.7%)
22%
Upper
quartile
ranking of 22.8
(TSR of 54.4%)
23.5%
Rank of 19.9
(TSR of 59.8%)
Unweighted
Index average
(TSR of 27.1%)
Unweighted
Index
average + 8%
(TSR of 53.1%)
Above
unweighted
index average
(TSR of 59.8%)
40%
20%
20%
80%
1.
2.
The basic EPS of 64.9 pence has been re-based using the same number of shares in issue as was used in setting the 2018 LTPP targets. The re-based EPS used for
the purpose of determining vesting, which is directly comparable to the 2018 LTPP targets, was 65.1 pence.
The housebuilder Index comprises: Bellway, Berkeley Homes, Countryside Properties, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
The Committee considered the underlying financial performance of the Group and was satisfied that given the continued improvement
in the Group’s financial results, the level of vesting was justified. No Committee discretion was exercised in relation to the LTPP vesting
outcome. The 2018 LTPP accrued dividend equivalents in accordance with the rules of the scheme. The amount of dividend equivalent to be
paid, in cash, on vesting will be pro-rated in line with the number of shares that vest. The gross number of shares to be released to each of
the Executive Directors and the value of the dividend equivalents are as follows:
Table 13 – 2018 LTPP vesting outcomes (audited)
Executive Director
David Thomas
Steven Boyes
Jessica White
Number of
shares at grant
272,426
215,602
151,945
Number of
shares to lapse
54,486
43,121
30,389
Total number of
shares to vest1
217,940
172,481
121,556
Estimated value
of vested shares2
(£000)
1,646
1,302
918
Value of dividend
equivalents
earned on vested
shares2 (£000)
147
117
82
Total Estimated
value2
(£000)
1,793
1,419
1,000
1.
2.
The relevant number of shares will be released to each participant as soon as is practicable following the vesting date. The awards are subject to a two-year post
vesting holding period commencing 1 July 2021.
The estimated values of the vested shares and the dividend equivalents are based on the average share price during the three months to 30 June 2021 (£7.55 per
share). The estimated values include a total of £463,560, £366,870 and £258,550, for each of David, Steven and Jessica respectively, which relate to share price
increases from the date the shares were awarded.
LTPP granted during the year (2020 LTPP)
On 30 November 2020, the following 2020 LTPP awards were granted to Executive Directors as set out in Table 14 below, and are subject
to three performance conditions, 40% TSR (half of which is measured against a 50+/50- comparator group and the other half against a
housebuilder index), 20% EPS and 40% ROCE. The levels of vesting against TSR are measured over a three-year period commencing 1
July 2020, and against EPS and ROCE for the financial year ending 30 June 2023. On completion of the performance period, assuming that
shares vest, they will be subject to a further two-year holding period. No discretion was used by the Committee in determining the basis of
the award granted, which is in line with previous years, however the outcome will be reviewed at vesting to ensure no windfall gains have
occurred as a result of changes in the share price between the grant and vesting.
104
105
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance
Remuneration report CONTINUED
Annual report on remuneration
Table 14 – LTPP granted during FY21 (audited)
Executive Director
David Thomas
Steven Boyes
Jessica White2
Type of
award
Conditional
award
Conditional
award
Conditional
award
Basis of award
granted
200% of salary
£757,155
200% of salary
£599,225
200% of salary
£422,300
Share price at
date
of grant1
(pence)
537
Number of
shares over
which award
was granted
282,004
Face value of
award
(£000)
1,514
% of face value
that would vest
at threshold
performance
25
537
537
223,183
157,287
1,198
845
25
25
Vesting
determined by
performance
over
Three
financial
years to
30 June
2023
1.
2.
Based on the average of the closing prices, as derived from the London Stock Exchange daily official list, for each of the dealing days in the period of three months
ending on 29 November 2020, being the day before the date of grant.
The number of shares to which Jessica White is entitled has been pro-rated to 56,462, following her stepping down as CFO of the Company on 30 June 2021. Further
details can be found on page 108.
At the time of the grant given the uncertainties caused by COVID-19 and the economic outlook, it was difficult to set meaningful targets for
the 2020 LTPP. The Committee therefore agreed to set the targets applicable to the 2020 LTPP award within six months of the grant when
there would be more clarity over the Group’s medium term outlook. On 1 April 2020, the Company announced that the targets applicable to
the 2020 LTPP were as set out in Table 16 below.
Performance of 2019 and 2020 LTPP awards
The following tables show the targets set on grant for each of the current LTPP awards together with performance to date.
The potential level of vesting if performance were measured over two years to 30 June 2021:
Table 15 – 2019 LTPP award performance against targets
Performance target
TSR FTSE1
TSR Housebuilder2
EPS
Underlying ROCE
Total
Below threshold
(0 % vesting)
Below median
Below unweighted
index average
<76 pence
<19.0%
Threshold
(25% vesting)
Median
Unweighted
index average
76 pence
19.0%
Maximum
(100% vesting)
Upper quartile
Unweighted
index average +8% p.a
85 pence
22.0%
Performance as
at 30 June 2021
Upper quartile
Below unweighted
index average
65.1 pence
23.5%
The potential level of vesting if performance were measured over one year to 30 June 2021:
Table 16 – 2020 LTPP award performance against targets
Performance target
TSR FTSE1
TSR Housebuilder2
EPS
Underlying ROCE
Total
Below threshold
(0 % vesting)
Below median
Below unweighted
index average
<76 pence
<19.0%
Threshold
(25% vesting)
Median
Unweighted
index average
76 pence
19.0%
Maximum
(100% vesting)
Upper quartile
Unweighted
index average +8% p.a.
88 pence
22.0%
Performance as
at 30 June 2021
Upper quartile
Above unweighted
index average
65.1 pence
23.5%
Level of vesting had
the award vested as
at 30 June 2021
89.7%
0%
0%
100%
58%
Level of vesting had
the award vested as
at 30 June 2021
72.4%
100%
0%
100%
74%
1.
2.
The comparator group for TSR FTSE is each of the members ranking 50 above and 50 below the Company in the FTSE Index.
The housebuilder Index comprises: Bellway, Berkeley Homes, Countryside Properties, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
Vesting is on a straight line basis between threshold and maximum and the LTPP awards will accrue dividend equivalents in accordance
with the rules of the scheme. The amount of dividend equivalent to be paid, in cash, on vesting will be pro-rated according to the number of
shares that vest.
The Committee has the discretion to adjust the number of shares vesting from each LTPP award if it considers that the vesting outcome
is not sufficiently reflective of the underlying performance of the Company and to mitigate against any potential windfall gains for the
Executive Directors.
Statement of Directors’
shareholding and share interests
For the financial year ended 30 June 2021,
Executive Directors were required to hold
shares in the Company equivalent in value
to 200% of salary. The Executive Directors
are expected to meet this requirement no
later than the fifth anniversary of joining the
Board, with progress being made towards
its achievement throughout the period.
The share price used for the purposes of
determining the value of the shares is by
reference to the higher of the share price
paid on acquisition or vesting and the
share price at the close of business of the
London Stock Exchange on 30 June or the
date of leaving, as applicable. Participants
who have not built up the required level
of shareholding by the fifth anniversary of
joining the Board, will not be eligible for
inclusion in future share-based incentive
schemes. In addition, they will not be
allowed to sell any of the net of tax shares
released from incentive schemes until
they reach the levels specified, unless
exceptional circumstances exist in the
opinion of the Committee. The Committee
retains discretion to adjust the length
of time in which the required amount of
shareholding needs to be accrued in order
to adjust for events out of the Director’s
control. The Committee reserves the
right to amend the percentage holding
required by the Executive Directors
depending on market conditions and
best practice guidance. At 30 June 2021,
David Thomas and Steven Boyes had met
their shareholding requirements. Jessica
White had until 21 June 2022 to meet her
shareholding requirement, but has now
stepped down from the Board.
Taking into consideration recent changes to
market practice and investor guidelines, the
post cessation shareholding requirement
for the Executive Directors is the lower of
their shareholding requirement (currently
200% of salary) or their actual shareholding
on the date of leaving. The Committee
has agreed that to ensure continued
enforcement of the post-employment
shareholding requirement, a contractual
agreement that they will not dispose of
the shares will be concluded with the
Director, and such an agreement has been
concluded with Jessica White.
The interests of the Directors serving
during the financial year (or for Richard
Akers, his interests on 4 May 2021, the
date he ceased to be a Director) and their
connected persons in the ordinary share
capital of the Company at the beginning and
end of the year are shown in Table 17 below.
On 19 July and 26 July 2021, David Thomas
and Steven Boyes exercised their Sharesave
options, and full details are given in the
footnotes to Table 17 below. No other
notification has been received of any
change in the interests shown during the
period 30 June 2021 to 31 August 2021
inclusive.
Table 17 – Directors’ interests in shares as at 30 June 2021 (audited)
Interests
subject to
performance
conditions
(LTPP)
Other shares held
Interests not
subject to
performance
conditions
(DBP)
Beneficially
owned
Options
Shareholding requirements
Interests in
Sharesave
options1
Shareholding
requirement
% salary
Current
shareholding
% salary4
Shareholding
requirement
met?
Executive Directors
David Thomas
Steven Boyes
Jessica White5
Non-Executive Directors
John Allan
Richard Akers
Katie Bickerstaffe
Nina Bibby
Jock Lennox
Chris Weston
Sharon White
1,052,261
500,583
81,149
792,454
627,161
441,988
103,122
93,944
66,206
8,4852,3
5,4672,3
6,465
200%
200%
200%
1,016%
638%
191%
Yes
Yes
No
76,705
60,000
6,000
8,500
10,000
–
363
The Chair and Non-Executive Directors are not awarded incentive shares and
are not subject to a shareholding requirement.
1.
2.
3.
4.
5.
All of these options were unvested at 30 June 2021.
On 1 July 2021, 3,112 of David Thomas’ and 2,004 of Steven Boyes’ Sharesave options matured. On 19 July and 26 July 2021 respectively, David and Steven exercised
their options to purchase their Sharesave shares, all of which they retained. The exercise price for David’s options was £4.82 and the share price on the date of
exercise was £6.70, giving an aggregate gain of £5,857.The exercise price for Steven’s options was £4.49 and the share price on the date of exercise was £7.11, giving
an aggregate gain of £5,254.
During the year, David Thomas and Steven Boyes were granted 2,483 and 1,490 Sharesave options respectively. David’s options are exercisable for six months from
1 July 2026 and Steven’s for six months from 1 July 2024. The option price of both awards was £6.04, representing a 20% discount on the average share price for
the five business days immediately before the invitation to participate in the award (£7.54). The number of shares granted was based on the option price and the
total savings amount forecast at the end of the respective savings periods. The face values of the options based on the average share price above were £18,722 and
£11,235 respectively. There are no performance targets associated with this award.
The share price used for the purposes of determining the value of the shares is £6.95, being the mid market closing price on 30 June 2021. The value of DBP shares
used is net of income tax and national insurance contributions which the Directors would have to pay on exercise.
Jessica White stood down from the Board on 30 June 2021. Details of her post cessation shareholding requirement are given on page 108.
All conditional awards and share options are subject to an overriding Committee discretion, in that the Committee must be satisfied that
the underlying financial performance of the Group over the performance period warrants the level of vesting as determined by applying
the relevant targets. If the Committee is not of this view, it has the authority to reduce the level of vesting, including to nil, as it deems
appropriate.
106
107
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Remuneration report CONTINUED
Annual report on remuneration
Executive Directors’
pension arrangements
The Company’s pension policy for Executive
Directors is that on joining the Group they
will be auto-enrolled unless they choose
to opt out. On opting out, the Executive
Director may choose to receive a cash
supplement (which does not count for
incentive purposes) and/or participate in
the Company’s defined contribution money
purchase pension plan. Each Executive
Director has opted to receive a cash
supplement in lieu of pension. For FY21,
David Thomas and Steven Boyes received
an amount equal to 25% of base salary in
line with market practice at the time of
their appointment. Jessica White received
an amount equal to 15% of base salary
in line with the Policy for new Executive
Directors at the date of her appointment.
Only the base salary element of a Director’s
remuneration is pensionable.
The Executive Directors’ cash supplement
in lieu of pension will reduce to be in line
with that of the wider workforce, which is
currently at 10% of base salary, with effect
from 1 January 2023.
Defined benefit section
Steven Boyes was a deferred member of the
defined benefit section of the Barratt Group
Pension and Life Assurance Scheme (the
‘Scheme’) during the year ended 30 June 2021.
The Scheme was closed to new entrants
in 2001 and on 30 June 2009, the Company
exercised its consent under the rules of the
Scheme and agreed to cease offering future
accrual of defined benefits for current
members. Members of the Scheme became
eligible to join the defined contribution
money purchase section of the Scheme
with effect from 1 July 2009.
Until 30 June 2009, Steven Boyes was
an active member of the defined benefit
section of the Scheme. His entitlement was
based on a 1/60 accrual rate and a normal
retirement age of 65. This benefit became
deferred on 30 June 2009 and it will be
revalued over the period from that date to
retirement in line with the Scheme Rules.
Steven Boyes’ accrued pension as at 30 June
2021 was £64,321 per annum. Steven Boyes
may take early retirement, subject to him
meeting certain legislative restrictions, but
the accrued pension will be reduced to take
account of its early repayment.
Since 1 July 2009, Steven Boyes has been
entitled to receive a cash supplement
details of which can be found on page 100.
The actuarial valuation of the Scheme as
at 30 November 2019 showed a deficit of
£14.0m calculated on the basis of
the Scheme’s technical provisions.
108
On 16 June 2020, the Trustees of the
Scheme purchased a bulk annuity policy.
Under the policy, the insurer paid to the
Scheme an amount equal to the benefit
payments due to be paid by the Scheme
to the members. The Company paid
contributions totalling £8.5m for FY20
under the previous contribution plan,
however there were no contributions paid
for FY21. All the conditions of a buyout
were met by 30 June 2021, the liabilities
that were previously covered by the buy-in
policy were transferred to the insurer and
were no longer liabilities of the Scheme
and the final balancing premium has been
settled. The valuation for the Financial
Statements was updated as at 30 June 2021
by a qualified independent actuary. Further
information on the defined benefit scheme
is provided in note 6.2.2 to the Financial
Statements on pages 158 to 161.
Members of the Scheme are also eligible
for an insured lump sum on death in
service in accordance with their terms of
employment. Current employees who were
members of the defined benefit section
of the Scheme at closure also retain their
dependants’ pension entitlements.
No excess retirement benefits have been
paid to or are receivable by current and/or
past Directors in respect of their qualifying
services during the financial year and there
are no arrangements in place that guarantee
pensions with limited or no abatement on
severance or early retirement.
Payments to former Directors
(audited)
No payments were made to any former
Directors during the year ended 30 June
2021 (30 June 2020: £nil).
Payments for loss of office (audited)
Jessica White stepped down as a Director
and Chief Financial Officer on 30 June
2021 and left the business on 31 July
2021. Details of Jessica’s remuneration
for FY21, including her 2018 LTPP vesting,
are provided in the section on Directors’
remuneration outcomes for FY21, on
pages 103 to 106 above. In accordance
with the Company’s Policy, legal expenses
of £12,000 relating to Jessica’s departure
were paid by the Company during FY21.
Jessica received her basic salary, pension
allowance, car allowance, taxable
benefits, and pay in lieu of untaken holiday
entitlement, in accordance with her service
agreement, up to and including 31 July
2021. In line with the Company’s Policy,
Jessica also received a leaving gift when
she left the Company in July 2021.The value
of these payments will be disclosed in
accordance with the regulations in the
FY22 Remuneration report.
The Committee determined that, in
line with the Policy and the rules of the
relevant plans, Jessica would be treated
as a good leaver and agreed the following
remuneration for the unexpired period of
her notice, 1 August 2021 to 4 March 2022:
Salary and benefits: A payment in respect
of Jessica’s salary pension allowance,
car allowance and taxable benefits for the
unexpired period of her notice will be paid
in equal monthly instalments from August
2021 to February 2022. The payment of such
instalments will be subject to mitigation
and will be reduced in the event that Jessica
takes up an alternative remunerated position
prior to 4 March 2022. In accordance with
the regulations, the amounts paid will be
disclosed in the FY22 remuneration report.
Jessica will continue to receive insurance-
based benefits (private medical, death in
service and group income protection) until
the date on which her notice would otherwise
have expired or, if earlier, the date on which
she takes up alternative employment.
Annual Bonus: Jessica will not be eligible
to receive any bonus in respect of the
financial year ending 30 June 2022.
LTPP: Jessica will not be granted an LTPP
award during FY22. In accordance with the
rules of the LTPP, Jessica’s outstanding
untested LTPP share awards will vest
on the normal vesting dates, subject to
satisfaction of the relevant performance
conditions and on a time pro-rated basis as
detailed below:
Table 18 – Jessica White’s outstanding LTPP time pro-rated
Number
of shares
subject to
award
132,756
Maximum number
of shares which
could vest (subject
to performance
conditions)
91,908
Award
2019 LTPP
Vesting date
24 October 2022
2020 LTPP
157,287
56,462
30 November 2023
Holding Period
1 July 2022 –
30 June 2024
1 July 2023 –
30 June 2025
Sharesave: Jessica’s Sharesave options will
remain exercisable for 6 months after her
leaving date.
Post-cessation shareholding: Jessica
is contractually bound to hold Barratt
shares in accordance with the transitional
arrangements in place for incumbent
Executive Directors under the Company’s
Shareholding Retention Policy which are
equivalent to 75% of salary as at
31 July 2021 plus the value of share awards
received that vested in 2020 onwards,
up to a maximum of her actual level of
shareholding as at 31 July 2021 for a period
of two years commencing 1 July 2021.
All payments to Jessica, including those
made post-employment, have been made
in accordance with the Remuneration
Policy, including the application of malus
and clawback provisions. Other than the
payments disclosed above, Jessica will
not be eligible for any remuneration or
payments for loss of office.
Chief Executive’s relative pay
Table 19 sets out: (i) the total pay,
calculated in line with the single figure
methodology; (ii) the annual bonus payout
as a percentage of maximum; and (iii) long
term incentive vesting level for the Chief
Executive over a ten-year period.
Any dividend equivalents accrued in
respect of these awards will be paid in cash
following vesting and will be prorated in
line with the level of vesting of the relevant
LTPP award. In accordance with the rules
of the LTPP, Jessica will be required to
retain and will not be permitted to transfer
or otherwise dispose of any shares that
have vested under the LTPP for a period of
two years after the relevant performance
period, as shown in the table above.
DBP: Jessica’s outstanding unvested 2018
DBP award over 32,973 shares and the
2019 DBP award over 33,233 shares will
vest in full on the normal vesting dates,
22 October 2021 and 24 October 2022
respectively, subject to the rules of the DBP.
Any dividend equivalents accrued in respect
of these awards would be paid in cash
following vesting.
Table 19 – Chief Executive’s pay
Chief Executive’s total pay (£000)
Bonus outturn (as a percentage of
maximum opportunity)
LTI vesting (as a percentage of
maximum award)
2012
2,099
Mark Clare
2013
4,310
2014
6,430
Ten years to 30 June 2021
David Thomas
2015
7,363
2016
3,155
2017
3,331
2018
2,720
2019
3,727
2020
1,251
2021
3,888
99.2
100.0
100.0
93.2
97.4
97.5
92.2
96.2
0
32.8
73.9
95.8
100.0
100.0
100.0
76.4
92.8
19.4
99
80
TSR performance graph
The graph below, prepared in accordance with the regulations, shows the TSR performance over the last ten years against the FTSE 100 and
against an unweighted index of listed housebuilders. The Board has chosen these comparative indices as the Group and its major competitors
are constituents of one or both of these indices. The TSR has been calculated using a fair method in accordance with the regulations.
£1000
£900
£800
£700
£600
£500
£400
£300
£200
£100
0
June 2011
June 2012
June 2013
June 2014
June 2015
June 2016
June 2017
June 2018
June 2019
June 2020
June 2021
Index of currently listed housebuilders
FTSE 100
Barratt Developments PLC
Source: Datastream by Refinitiv
109
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance
Remuneration report CONTINUED
Annual report on remuneration
Annual percentage change in remuneration of Directors compared to employees
Table 20 shows the percentage change in salary, taxable benefits and annual bonus set out in the relevant single figure of remuneration
tables paid to each Director compared to that of the average pay of all employees of the Group in respect of the financial years ended
30 June 2020 and 30 June 2021 compared with their prior years.
Table 20 – Percentage change in remuneration
FY21
FY20
Salary/fees
% change1
Benefits
% change
Annual bonus
% change
Salary/fees
% change
Benefits
% change
Annual bonus
% change
Executive Directors
David Thomas
Steven Boyes
Jessica White
Non-Executive Directors
John Allan
Richard Akers2
Nina Bibby
Katie Bickerstaffe3
Jock Lennox
Sharon White
Chris Weston3
Average pay of all employees
in Barratt Developments PLC
Average pay of all employees
in the Group4
2.2
2.2
2.2
2.5
-13.8
1.6
N/A
4.1
3.2
N/A
7.7
0.4
-10.3
11.1
6.3
0.0
0.0
0.0
N/A
0.0
0.0
N/A
-3.5
2.1
100.0
100.0
100.0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100.0
100.0
0.3
0.2
0.2
0
-1.1
0
N/A
0
0
N/A
4.0
0.8
16.0
-12.2
0
-50.0
0
0
N/A
0
0
N/A
6.4
-1.5
-100.0
-100.0
-100.0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
-100.0
-100.0
1.
2.
3.
4.
The percentage changes in salary and fees of the Directors for FY21 takes into account a temporary 20% voluntary reduction in base salary in April and May 2020
covering the period our construction sites were temporarily closed as a consequence of COVID-19.
Richard Akers stepped down from the Board on 4 May 2021.
Katie Bickerstaffe and Chris Weston were appointed as Non-Executive Directors effective 1 March 2021, therefore no percentage change in remuneration is
displayed.
Average pay using all employees in the Group is also provided, as a more meaningful figure, as the parent company employs only a very few senior employees.
The figure represents the mean employee pay.
Chief Executive pay ratio
The table below compares the single total figure of remuneration for the Chief Executive with that of the Group employees who are paid at
the 25th percentile (lower quartile), 50th percentile (median) and 75th percentile (upper quartile) of its UK employee population.
Table 21
FY21
FY20
FY19
Method
Option B
Option B
Option B
25th percentile
pay ratio
115:1
40:1
123:1
The remuneration figures for the employee
at each quartile were determined with
reference to the financial year ending
30 June 2021.
Under Option B of The Companies
(Miscellaneous Reporting) Regulations
2018, the latest available gender pay
gap data (i.e. from April 2021) was used
to identify the best equivalent for three
Group UK employees whose hourly rates
of pay are at the 25th, 50th and 75th
percentiles for the Group. The Committee
is comfortable that this approach provides
a fair representation of the Chief Executive
to employee pay ratios and is appropriate
in comparison with alternative methods,
balancing the need for statistical accuracy
with internal operational resource
constraints.
A full-time equivalent total pay and benefits
figure for FY21 was then calculated for each
of those employees. This was also sense
checked against a sample of employees
with hourly pay rates either side of the
identified individuals to ensure that the
appropriate representative employee was
Median
pay ratio
94:1
32:1
88:1
75th percentile
pay ratio
60:1
21:1
59:1
selected. The pay ratios outlined above were
then calculated as the ratio of the Chief
Executive’s single figure to the total pay and
benefits of each of these employees.
Each employee’s pay and benefits were
calculated using each element of employee
remuneration on a full-time basis,
consistent with the Chief Executive. No
adjustments (other than the approximate
up-rating of pay elements to achieve full-
time equivalent rates) were made and no
components of pay have been omitted.
The table below sets out the salary and total pay and benefits for the three identified quartile point employees:
Table 22
Salary
Total pay and benefits
25th percentile (P25)
£31,675
£33,863
Median (P50)
£25,000
£41,210
75th percentile (P75)
£60,000
£64,425
The FY21 pay ratios are significantly
higher than last year due to an
increase in the Chief Executive’s single
figure of remuneration compared to
FY20. This increase is a result of the
recommencement of the annual bonus
scheme, following its cancellation in FY20
as a result of the impact of COVID-19; the
voluntary reduction in Directors’ salaries
in FY20 of 20% during the period for which
the construction sites were closed due
to COVID-19; and a higher LTPP vesting
outcome this year. The pay ratios for FY21
are therefore more directly comparable
to those for FY19 than FY20. As a result
of the impact of the COVID-19 pandemic
on remuneration, our pay ratios have
fluctuated between each reported year to
date, and no trend in the median pay ratio is
observed at this time.
The median individual received a material
commission based incentive payment in
the year, resulting in a relatively large
differential between base salary and total
pay for this individual.
The Committee considers that the median
pay ratio is consistent with the relative roles
and responsibilities of the Chief Executive
and the identified employee. Base salaries
of all employees, including our Executive
Directors, are set with reference to a
range of factors including market practice,
experience and performance in role.
The Chief Executive’s remuneration
package is weighted towards variable pay
(including the annual bonus and LTPP) due
to the nature of the role. This also means
that the ratio is likely to fluctuate depending
on the outcomes of incentive plans in each
year (as illustrated by the ratios to date).
The Committee also recognises that, due to
the nature of the Company’s business and
the ways in which we employ our staff, the
flexibility permitted within the regulations for
identifying and calculating the total pay and
benefits for employees, as well as differences
in employment and remuneration models
between companies, the ratios reported
above may not be comparable to those
reported by other companies.
Relative importance of spend on pay
The following table shows the Group’s actual spend on pay (for all employees) relative to dividends and profit from operations:
Table 23 – Relative importance of spend on pay
Employee costs (including Executive Directors)1
Profit from operations2
Total capital return3
FY21 £m
445.1
811.1
299.4
FY20 £m
374.7
493.4
0
% change
19
64
100.0
1.
2.
3.
During FY20 the Group utilised the CJRS. The Group recognised £26.0m of income under this scheme in the Income Statement in the FY20 financial year. In FY21,
this amount was returned and accordingly this income is not reflected in the FY20 employee costs figure above. Further details are provided in note 2.3.3 to the
Financial Statements.
Profit from operations has been chosen as a metric to compare against as it shows how spend on pay is linked to the Group’s operating performance. The figure
used is from the Consolidated Income Statement on page 123.
For FY21, this includes the interim dividend paid in May 2021, and the proposed final dividend for payment in November 2021, the value of which has been calculated
based on the number of shares in issue as at 30 June 2021. In respect of FY20, no dividends were paid due to uncertainties arising from the COVID-19 pandemic.
There have been no share buybacks during the year ended 30 June 2021.
Non-executive directorships
Details of the Group’s policy on non-executive directorships held by Executive Directors is given in the Directors’ Remuneration Policy table
on page 134 of the 2020 Annual Report and Accounts. Neither Steven Boyes nor Jessica White held any non-executive directorships with
other companies during the year. David Thomas is a member of the board of the HBF as a non-executive director for which he does not
receive a fee.
Statement of shareholding vote at AGM
The latest resolution to approve the Directors’ remuneration policy (binding vote to remain in place for three years following its approval by
shareholders) and the resolution to approve last year’s Annual report on remuneration (advisory vote) were proposed to shareholders at the
2020 AGM, and the following votes were received:
Table 24 – Shareholder votes on Remuneration
Votes cast in favour
Votes cast against
Total votes cast
Votes withheld
Vote on Remuneration Policy – 2020 AGM
Number of votes
% votes cast
669,565,590
10,994,399
680,559,989
121,686
98.38
1.62
100.00
–
Vote on Remuneration report – 2020 AGM
Number of votes
% votes cast
671,378,366
9,153,481
680,531,847
149,828
98.65
1.35
100.00
–
This Remuneration report was approved by the Board on 1 September 2021 and signed on its behalf by:
Katie Bickerstaffe
Non-Executive Director
1 September 2021
110
111
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Other statutory disclosures
Directors’ Report
For the financial year ended 30 June 2021, the Strategic Report is set out on pages 2 to
67 and the Directors’ Report on pages 68 to 114. The table below sets out the location of
information required to be disclosed in the Directors’ Report, which can be found in other
sections of this Annual Report and Accounts and is incorporated by reference.
Information Required
Page numbers
Arrangements under which a shareholder has waived or
agreed to waive a dividend and details of the waiver1
157
Likely future developments in the business of the Group
2 to 43
Financial instruments
Post-balance sheet important events
A description of the Company’s policies on employment of
people with disabilities
A description of the Company’s employee engagement
and involvement practices
Stakeholder engagement
Greenhouse gas emissions
152 to 156
165
32
31 to 32
46 and 47
45 to 55
21, 173 and 174
Research and development activities
29
1.
This item is a requirement of Listing Rule 9.8.4R. All other items are requirements of Schedule 7 of the
Large and Medium Sized Companies and Groups Regulations.
Dividends
An interim dividend of 7.5 pence per share was paid on 10 May 2021 to those shareholders
on the register on 16 April 2021 (2020: no interim dividend). The Directors recommend
payment of a final dividend of 21.9 pence per share (2020: no final dividend) in respect of
FY21. The final dividend will be paid, subject to shareholder approval at the 2021 AGM, on
9 November 2021 to shareholders on the register on 1 October 2021. If approved, the total
dividend for FY21 will be 29.4 pence per share (2020: no dividends).
Annual General Meeting
The 2021 AGM will be held at Ironmongers’ Hall, Off Shaftesbury Place, Aldersgate
Street, Barbican, London EC2Y 8AA on Wednesday 13 October 2021 at 12 noon. The notice
convening the AGM is set out in a separate letter to shareholders.
Significant Shareholdings
In accordance with the DTRs, all notifications received by the Company are published on
the Company’s website, www.barrattdevelopments.co.uk, and via a Regulatory Information
Service. As at 30 June 2021, the persons set out in the table below have notified the
Company, pursuant to DTR 5.1, of their interests in the voting rights in the Company’s
issued share capital:
Notifiable interests
FMR LLC
BlackRock, Inc.
The Capital Group Companies, Inc
Royal Bank of Canada
Number
of voting
rights1
34,579,199
56,413,704
53,001,760
30,554,688
% of total
issued share
capital2
8.24
5.60
5.20
3.00
Nature of
holding
Indirect
Indirect
Indirect
Direct
1.
2.
Represents the number of voting rights last notified to the Company by the respective shareholder in
accordance with DTR 5.1.
Based on the Total Voting Rights as at the relevant notification dates.
At 1 September 2021, no change in
these holdings had been notified and no
further notifications had been received.
The Total Voting Rights of the Company,
as announced on 31 August 2021, are
1,019,565,328.
Appointment and removal
of Directors
The appointment and removal of Directors
is governed by the Articles, the Act and
related legislation. There shall be (unless
otherwise determined by an ordinary
resolution) no fewer than two and no more
than 15 Directors appointed to the Board at
any one time. Directors may be appointed
by the Company by ordinary resolution or
by the Board. In accordance with the Code
and the Articles, at each AGM, all of the
Directors shall retire from office at the
date of the Notice of AGM and may offer
themselves for reappointment by members.
Directors may be removed before the
expiration of their term of office by means
set out in the Act and the Articles, including
by special resolution.
Powers of the Directors including in
relation to the allotment of shares
Subject to the Articles, the Act and any
directions given by special resolution, the
business of the Company is ultimately
managed by the Board who may exercise
all the powers of the Company, whether
relating to the management of the business
of the Company or otherwise. In particular,
the Board may exercise all the powers
of the Company to borrow money and to
mortgage or charge any of its undertakings,
property, assets and uncalled capital and
to issue debentures and other securities
and to give security for any debt, liability
or obligation of the Company to any third
party. At the AGM held on 14 October 2020,
the Directors were given authority to allot
shares up to a nominal value of £33,943,607
(representing one-third of the nominal
value of the Company’s issued share capital
as at 4 September 2020), such authority to
remain valid until the end of the 2021 AGM
or, if earlier, until the close of business on
14 January 2022. A resolution to renew this
authority will be proposed at the 2021 AGM.
Change of control
The following significant agreements as at
30 June 2021 contained provisions entitling
the counterparties to exercise termination
and/or other rights in the event of a change
of control of the Company:
• an RCF agreement containing change
of control provisions which provide that,
on a change of control of the Company,
the relevant counterparties may require
the Company to immediately repay all
amounts outstanding and would not be
obliged to fund any further drawdown of
the facility (other than rollover loans);
and
• a note purchase agreement in respect
of the Group’s £200m privately placed
notes containing change of control
provisions which provide that, on a
change of control of the Company, the
noteholders may require the Company
to prepay at par all outstanding
amounts under the notes.
In addition, the Company’s share plans
contain provisions relating to a change
of control. Outstanding awards and
options would normally vest and become
exercisable on a change of control subject
to the satisfaction of any performance
conditions at that time.
The Company is not aware of any other
significant agreements to which it is a party
that take effect, alter or terminate upon a
change of control of the Company.
The Company does not have any
agreements with any Director or employee
that would provide compensation for loss of
office or employment resulting from change
of control following a takeover bid.
On behalf of the Board
Tina Bains
Company Secretary
1 September 2021
Directors’ indemnities
and insurance
Qualifying third-party indemnity provisions
are in place for the Directors, former
Directors and the Company Secretary,
together with those who hold or have held
these positions as officers of other Group
companies or of associate or affiliated
companies and members of the Executive
Committee, to the extent permitted by law
and the Articles, in respect of liabilities
incurred in the course of performing their
duties. In addition, the Company maintains
directors’ and officers’ liability insurance
for each Director of the Group and its
associated companies.
Political donations and expenditure
The Company made no political donations
during the year in accordance with its
policy. In keeping with the Company’s
approach in prior years, shareholder
approval is being sought at the 2021 AGM,
as a precautionary measure, for donations
and/or expenditure that may be construed
as political by the wide definition of such
terms provided under the Act.
Branches
The Group has a representative office in
Beijing, China. A full list of the Group’s
offices and their locations can be obtained
from the Company Secretary at the
Company’s registered office, or from its
website www.barrattdevelopments.co.uk.
Capital structure
The Company has a single class of share
capital, which is divided into ordinary
shares of 10 pence each. All issued shares
are in registered form and are fully paid.
Details of the Company’s issued share
capital and of the movements in the share
capital during the year can be found note
5.5 on page 156.
Shareholder voting rights and
restrictions on transfer of shares
All the issued and outstanding ordinary
shares of the Company have equal voting
rights with one vote per share. There are
no special control rights attaching to them,
save that the Trustees of the EBT may vote
or abstain from voting on shares held in
the EBT in any way they think fit and in
doing so may consider both financial and
non-financial interests of the beneficiaries
of the EBT or their dependants. The
Company is not aware of any agreements
between holders of securities that may
result in restrictions on the transfer of
securities. The rights, including full details
relating to voting of shareholders and
any restrictions on transfer relating to
the Company’s ordinary shares, are set
out in the Articles and in the explanatory
notes that accompany the Notice of the
2021 AGM. These documents are available
on the Company’s website at www.
barrattdevelopments.co.uk.
Shareholder authority for
purchase of own shares
At the Company’s AGM held on 14 October
2020, shareholders authorised the
Company to buy back up to an aggregate of
101,830,821 ordinary shares (representing
10% of the Company’s issued share capital).
This authority is valid until the end of the
2021 AGM (at which a renewal of that
authority will be sought) or, if earlier, until
the close of business on 14 January 2022.
Under the authority, there is a minimum
and maximum price to be paid for such
shares. Any shares that are bought back
may be held as treasury shares or, if not
so held, will be cancelled immediately
upon completion of the purchase, thereby
reducing the Company’s issued share
capital. No purchases had been made
under this authority as at the date of this
Annual Report and Accounts.
Articles of Association
The Articles may only be amended by
a special resolution of shareholders.
The Articles were last amended at the
Company’s AGM held on 14 October 2020.
Approach to tax and tax governance
For all taxes, it is the Group’s aim to
ensure it accurately calculates and pays
the tax that is due at the correct time.
Whilst the Group does seek to minimise
its tax liabilities through legitimate routine
tax planning, it does not participate in
aggressive tax planning schemes. The
Group also seeks to be transparent in
its dealings with HMRC and has regular
dialogue with its representatives to discuss
both developments in the business and the
ongoing tax position. In accordance with UK
legislation, we have published details of our
tax strategy, and this can be found at
www.barrattdevelopments.co.uk.
The Chief Financial Officer retains overall
responsibility for oversight of the tax affairs
of the Group. Jessica White, Chief Financial
Officer, was Senior Accounting Officer
throughout the year ended 30 June 2021.
From 1 July 2021 David Thomas, Chief
Executive became Senior Accounting Officer
at least until the new Chief Financial Officer
joins the Board. The Senior Accounting
Officer receives regular updates on tax
matters. In addition, tax management and
strategy are reviewed at least annually
by the Audit Committee, with no changes
proposed for the year ended 30 June 2021.
112
113
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukGovernance Statement of Directors’ responsibilities
The Directors are responsible for keeping
adequate accounting records that
are sufficient to show and explain the
Company’s and the Group’s transactions
on an individual and consolidated basis and
disclose with reasonable accuracy at any
time the financial position of the Company
and the Group and enable them to ensure
that the Financial Statements comply
with the Act. They are also responsible for
safeguarding the assets of the Company
and the Group and hence for taking
reasonable steps for the prevention and
detection of fraud and other irregularities.
The Directors are responsible for the
maintenance and integrity of the corporate
and financial information included on
the Company’s website. Legislation in
the UK governing the preparation and
dissemination of financial statements may
differ from legislation in other jurisdictions.
Fair, balanced and understandable
The Board considers, on the advice of the
Audit Committee, that the Annual Report
and Accounts, taken as a whole, is fair,
balanced and understandable, and provides
the information necessary for shareholders
to assess the Company and the Group’s
position, performance, business model
and strategy.
Disclosure of information to auditor
In accordance with section 418 of the Act,
the Directors confirm that, so far as they
are each aware, there is no relevant audit
information that has not been brought to
the attention of the Company’s auditor. Each
Director has taken all reasonable steps that
they ought to have taken in accordance with
their duty as a Director to make themselves
aware of any relevant audit information and
to ensure that the Company’s auditor is
aware of that information.
Directors’ responsibility statement
The Directors confirm that, to the best of
each person’s knowledge:
a. the Group Financial Statements in the
Annual Report and Accounts, which
have been prepared in accordance with
IAS in conformity with the requirements
of the Companies Act 2006 and IFRS
adopted pursuant to Regulation (EC)
No. 1606/2002 as it applies in the EU,
and those of the Parent Company, which
have been prepared in accordance with
IAS in conformity with the requirements
of the Companies Act 2006, give a true
and fair view of the assets, liabilities,
financial position and profit or loss of
the Company and Group taken as a
whole; and
b. the Annual Report and Accounts
includes a fair review of the
development and performance of
the business and the position of the
Company and the Group taken as a
whole, together with a description of
the principal risks and uncertainties
they face.
The Directors of the Company and their
functions are listed on pages 68 and 69.
By order of the Board.
David Thomas
Chief Executive
1 September 2021
The Directors’ Report from pages 68 to 114
inclusive was approved by the Board on
1 September 2021 and is signed on its
behalf by
Tina Bains
Company Secretary
Financial Statements and
accounting records
The Directors are responsible for preparing
the Annual Report and Accounts including
the Directors’ Remuneration report and the
Financial Statements in accordance with
applicable law and regulations.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
are required to prepare the Group Financial
Statements in accordance with IAS in
conformity with the requirements of the
Companies Act 2006 and IFRS adopted
pursuant to Regulation (EC) No. 1606/2002
as it applies in the EU. The Financial
Statements also comply with IFRS as
issued by the IASB. The Directors have also
elected to prepare the Parent Company
Financial Statements in accordance with
IAS in conformity with the requirements of
the Companies Act 2006.
Under company law, the Directors must not
approve the Financial Statements unless
they are satisfied that they give a true
and fair view of the state of affairs of the
Company and the Group and of the profit
or loss of the Company and the Group for
that period.
IAS 1 requires that financial statements
present fairly for each financial year the
relevant entity’s financial position, financial
performance and cash flows. This requires
the faithful representation of the effects of
transactions, other events and conditions
in accordance with the definitions and
recognition criteria for assets, liabilities,
income and expenses set out in the
IASB’s ‘Framework for the preparation
and presentation of financial statements’.
In virtually all circumstances, a fair
presentation will be achieved by compliance
with all applicable IFRS.
Directors are also required to:
• properly select and apply accounting
policies;
• present information, including
accounting policies, in a manner that
provides relevant, reliable, comparable
and understandable information;
• provide additional disclosures
when compliance with the specific
requirements in IFRS are insufficient to
enable users to understand the impact
of particular transactions, other events
and conditions on the entity’s financial
position and financial performance; and
• make an assessment of the Company’s
and the Group’s (as the case may be)
ability to continue as a going concern.
114
Barratt Developments PLC Annual Report and Accounts 2021 Financial Statements
Independent Auditor’s Report
Primary Statements
Consolidated Income Statement
Consolidated Statement of Comprehensive Income
Statement of Changes in Shareholders’ Equity – Group
Statement of Changes in Shareholders’ Equity – Company
Balance Sheets
Cash Flow Statements
Notes to the Financial Statements
1 Basis of preparation
5 Capital structure and financing
1.1 Introduction
1.2 Basis of consolidation
1.3 Going concern
1.4 Application of accounting standards
1.5 Impact of standards and interpretations in issue but
not yet effective
2 Results for the year and utilisation of profits
2.1 Revenue
2.2 Adjusted items
2.3 Profit from operations
2.4 Earnings per share
2.5 Dividends
2.6 Tax
3 Working capital and provisions
3.1 Inventories
3.2 Trade and other receivables
3.3 Trade and other payables
3.4 Contract assets and liabilities
3.5 Leases
3.6 Provisions
4 Business combinations and other
investing activities
4.1 Business combinations
4.2 Goodwill and other intangible assets
4.3 Investments in jointly controlled entities and
associated entities
4.4 Jointly controlled operations
4.5 Property, plant and equipment
130
130
130
131
131
131
132
133
135
135
136
138
139
140
141
142
143
144
144
146
149
149
5.1 Net cash
5.2 Net finance costs
5.3 Financial instruments
5.4 Financial risk management
5.5 Share capital
6 Directors and employees
6.1 Key management and employees
6.2 Retirement benefit obligations
6.3 Share-based payments
7 Contingencies, related parties, post
balance sheet events and subsidiaries
7.1 Contingent liabilities
7.2 Related party transactions
7.3 Post balance sheet events
7.4 Group subsidiary undertakings
Key to financial icons
Throughout the Financial Statements you will see
these icons used; they represent the following:
Group accounting policies:
Critical accounting judgements and key sources of
estimation uncertainty:
116
123
124
125
126
127
128
150
152
152
154
156
157
158
161
164
165
165
166
115
www.barrattdevelopments.co.ukFinancial Statements
Independent Auditor’s Report
to the members of Barratt Developments PLC
Report on the audit of the Financial Statements
1. Opinion
In our opinion:
4. Conclusions relating to going concern
In auditing the Financial Statements, we have concluded that the Directors’ use of the going concern basis of accounting in the preparation
of the Financial Statements is appropriate.
the Financial Statements of Barratt Developments PLC (the ‘Company’) and its subsidiaries (the ‘Group’) give a true and fair view of the
state of the Group’s and of the Company’s affairs as at 30 June 2021 and of the Group’s profit for the year then ended;
Our evaluation of the Directors’ assessment of the Group’s and Company’s ability to continue to adopt the going concern basis of
accounting included:
•
•
•
the Group Financial Statements have been properly prepared in accordance with International Accounting Standards (IAS) in conformity
with the requirements of the Companies Act 2006 and International Financial Reporting Standards (IFRS) as adopted by the European
Union and IFRS as issued by the International Accounting Standards Board (IASB);
the Company Financial Statements have been properly prepared in accordance with IAS in conformity with the requirements of the
Companies Act 2006; and
•
the Financial Statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the Financial Statements which comprise:
•
•
•
•
•
•
the Consolidated Income Statement;
the Consolidated Statement of Comprehensive Income;
the Consolidated and Company Statements of Changes in Shareholders’ Equity;
the Consolidated and Company Balance Sheets;
the Consolidated and Company Cash Flow Statement; and
the related notes 1 to 7.4.
The financial reporting framework that has been applied in the preparation of the Group Financial Statements is applicable law and IAS in
conformity with the requirements of the Companies Act 2006 and IFRS as adopted by the European Union and as issued by the IASB.
The financial reporting framework that has been applied in the preparation of the Company Financial Statements is applicable law and IAS
in conformity with the requirements of the Companies Act 2006.
2. Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the Financial Statements section of our report.
We are independent of the Group and the Company in accordance with the ethical requirements that are relevant to our audit of the
Financial Statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit services provided
to the Group and Company for the year are disclosed in note 2.3.5 to the Financial Statements. We confirm that the non-audit services
prohibited by the FRC’s Ethical Standard were not provided to the Group or the Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
3. Summary of our audit approach
Key audit matters
The key audit matters that we identified in the current year were:
• Margin recognition; and
• Costs associated with legacy properties
Within this report, key audit matters are identified as follows:
Newly identified
Similar level of risk
Increased level of risk
Decreased level of risk
Materiality
The materiality that we used for the Group Financial Statements was £40m which was determined on the basis
of considering a number of different metrics used by investors and other readers of the Financial Statements.
These included:
• Profit before tax;
• Revenue; and
• Net assets.
Scoping
Our scoping focused on the audit work of the two components, being housebuilding and joint ventures (JVs).
All audit work was completed directly by the Group audit engagement team.
Significant changes
in our approach
There have not been any significant changes in our audit approach for the current year. The key audit matters
identified in the prior year remain relevant for the current year.
• assessing financing facilities including nature of facilities, repayment terms and covenants;
• assessing management assumptions used in the going concern model;
•
testing the clerical accuracy and appropriateness of the model used to prepare the forecasts;
• assessing management’s identified potential mitigating actions and the appropriateness of the inclusion of these in the going concern
assessment;
• assessing the historical accuracy of forecasts prepared by management; and
• evaluating whether the Group’s disclosures in respect of going concern within the Financial Statements, meet the requirements of IAS 1.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually
or collectively, may cast significant doubt on the Group's and Company’s ability to continue as a going concern for a period of at least twelve
months from when the Financial Statements are authorised for issue.
In relation to the reporting on how the Group has applied the UK Corporate Governance Code, we have nothing material to add or draw
attention to in relation to the Directors’ statement in the Financial Statements about whether the Directors considered it appropriate to
adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections
of this report.
5. Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the Financial Statements
of the current year and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we
identified. These matters included those which had the greatest effect on: the overall audit strategy; the allocation of resources in the audit;
and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the Financial Statements as a whole, and in forming our opinion thereon, and
we do not provide a separate opinion on these matters.
5.1. Margin recognition
Key audit
matter
description
The Group’s valuation and cost allocation framework determines the total profit forecast for each site. This allows the land and
build costs of a development to be allocated to each individual unit, ensuring the forecast margin per unit is equalised across a
development. This cost allocation framework drives the recognition of costs, and hence profit, as each unit is sold, which is the key
judgement in the Income Statement and is where fraud could potentially occur. Accordingly, we consider the recognition of cost per
unit and therefore the appropriate margin to be a key audit matter.
For each development there is judgement in:
• estimating the inputs included within a site budget, including future revenues and costs to complete, in order to determine the
level of profit that each unit of the development will deliver;
• determination of future house price inflation and build cost inflation;
• appropriately allocating costs such as shared infrastructure relating to a development so that the gross profit margin (in
•
•
percentage terms) achieved on each individual unit is equal;
recognising site contingencies and their impact on margin; and
recording the variation when a deviation from the initial budget occurs and ensuring such variations are appropriately
recognised to those units impacted by the deviation.
These judgements impact the profit recognised on each unit sold and reported margin is a key metric for the Group.
Refer to page 85 (Audit Committee Report) and note 2.3 (Financial Statement disclosures including the related critical accounting
judgements and key sources of estimation uncertainty).
116
117
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements
Independent Auditor’s Report CONTINUED
to the members of Barratt Developments PLC
How the scope
of our audit
responded to
the key audit
matter
Our work included the following:
•
•
tested the relevant controls covering site valuations and margin review;
virtually visited a sample of sites and verified work completed to date. On a sample basis, agreed the cost incurred to source
documentation to verify work in progress;
• on a sample of sites, made enquiries with management to support their cost to complete estimates and obtained external
supporting evidence regarding costs to complete;
• evaluated key estimates in the margin calculation, including future sales volume assumptions and house price and
construction cost inflation;
• analysed margins on a site-by-site basis to identify material movements in the site margins compared to prior year. We evaluated
and assessed the material variances through enquiries with management and obtaining corroborative evidence; and
• used bespoke analytics to analyse costs to complete. This enabled us to analyse cost category composition for each site
and compare to budgeted positions and Group averages. We performed enquiries and obtained corroborative evidence for
exceptions identified.
Key
observations
Based on the procedures performed, we concluded that margin was recognised appropriately in the year.
5.2. Costs associated with legacy properties
Key audit
matter
description
The Group has recognised a number of provisions in relation to changing building regulations and remediation of structural defects
identified at legacy properties. There is an ongoing challenge and public scrutiny in relation to cladding related issues, including in
relation to the mortgage market for properties impacted by these issues.
As a result of the evolving regulatory environment and government policy, including in relation to the £5 billion building safety fund
announced in February 2021 and associated RICS guidance for External Wall System (“EWS”) 1 certification, we identified an increased
level of risk in relation to legal obligations for the remediation of legacy multi-storey buildings the Group has developed. We identified a
key audit matter in relation to costs associated with legacy properties as the amount provided by the Group could be incomplete or not
valued accurately for the remediation required on the developments where the Group has a legal obligation to do so.
The accounting for these provisions involves a number of assumptions when estimating the future costs. The key judgements related
to this key audit matter are:
• determining which buildings the Group has an obligation to remediate at the balance sheet date; and
•
the cost of the future works.
EWS and firestopping regulations continue to evolve and the Group’s internal investigations in relation to their legacy buildings and
potential liabilities is ongoing. At 30 June 2021, the provisions estimated by management to remediate these buildings involves a high
level of estimation uncertainty.
At the end of the financial year the Group holds a provision of £67.6m (2020: £28.2m) in relation to legacy properties. During the year,
the Group incurred a charge of £81.9m (2020: £39.9m) and utilisation of £46.3m (2020: £11.7m) in relation to remediation of legacy
developments. The charge of £81.9m has been presented as an adjusted item.
6. Our application of materiality
6.1. Materiality
We define materiality as the magnitude of misstatement in the Financial Statements that makes it probable that the economic decisions of
a reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the Financial Statements as a whole as follows:
Group Financial Statements
Company Financial Statements
Materiality
£40m (2020: £35m)
£36m (2020: £31.5m)
Basis for determining
materiality
Rationale for the
benchmark applied
We considered the following metrics:
• Profit before tax;
• Revenue; and
• Net assets.
Using professional judgement we determined
materiality to be £40m.
In determining our benchmark for materiality we
considered a number of different metrics used
by investors and other readers of the Financial
Statements.
This approach is consistent with the prior year.
Materiality for the current year represents 4.9%
of profit before tax (2020: 7.1%), 0.8% of revenue
(2020: 1.0%) and 0.7% of net assets (2020: 0.7%).
Our basis for materiality was determined based
upon 3% (2020: 3%) of the Company's net assets
capped at 90% (2020: 90%) of Group materiality.
Net assets was used as the benchmark because
it provides a stable basis and there are volatile
earnings between periods.
6.2. Performance materiality
We set performance materiality at a level lower than materiality to reduce the probability that, in aggregate, uncorrected and undetected
misstatements exceed the materiality for the Financial Statements as a whole.
Group Financial Statements
Company Financial Statements
Performance materiality
70% (2020: 70%) of Group materiality
70% (2020: 70%) of Company materiality
Basis and rationale for
determining performance
materiality
In determining performance materiality, we considered the following factors:
• our risk assessment, including our assessment of the Group’s overall control environment and that
we consider it appropriate to rely on controls over a number of business processes; and
• our past experience of the audit, which has indicated a low number of corrected and uncorrected
Further details are included in Note 3.6 to the Financial Statements and under the Audit Committee report on page 87.
misstatements identified in prior periods.
Our work included the following:
• obtained an understanding of controls relevant to the recognition and estimation of costs associated with legacy properties;
• assessed how the value of the provision has been determined, whether a present obligation to rectify the properties existed at
the balance sheet date and that the associated costs have been recorded in the appropriate accounting period;
•
validated a sample of cost estimates to underlying support such as third-party quotations and agreements in order to
challenge management’s estimates; and
• assessed the associated disclosures, including consideration of costs classified as adjusted items.
Specifically, in relation to the EWS, we performed the following:
• performed an assessment of the Group’s legal liability in relation to the EWS 1 requirements through discussions with
external and internal legal counsel and applying UK laws in relation to responsibilities of freeholders and statute of limitations
for developers;
• analysed buildings with potential legal liability by considering the Group’s portfolio of buildings against the legal requirements
in relation to EWS 1;
• assessed the estimated liability by understanding and challenging management’s estimates regarding the probability of
liability and remediation as well as the cost of remediation per unit with reference to current EWS 1 compliance rules; and
• assessed the disclosure included within the Financial Statements in relation to the critical accounting judgements, provisions
and contingent liabilities.
Based on the procedures performed we concluded the provision recorded to be appropriate.
How the scope
of our audit
responded to
the key audit
matter
Key
observations
118
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £2.0m (2020: £1.8m), as well
as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the Audit Committee on
disclosure matters that we identified when assessing the overall presentation of the Financial Statements.
119
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Independent Auditor’s Report CONTINUED
to the members of Barratt Developments PLC
7. An overview of the scope of our audit
7.1. Scoping
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including Group-wide controls, and assessing
the risks of material misstatement at the Group level. The entire Group is audited by one audit engagement team, led by the Senior
Statutory Auditor. Controls are common across the Group and there are two identified components, housebuilding and joint ventures, which
take into consideration all of the Group’s divisions, as well as the head office consolidation.
Each component was set a specific component performance materiality, considering its relevant size and any component-specific risk
factors such as internal control findings and history of error. The component performance materialities applied were in the range £14m to
£26.6m. Both components have been subject to a full scope audit.
7.2. Our consideration of the control environment
We obtained an understanding of the relevant internal controls over key audit matters, relating to margin recognition and legacy properties.
We obtained an understanding of other relevant controls which we would expect in a housebuilder, namely those over land and work in
progress and those over subcontractor and other expenses. In the current year, we have tested controls relating to margin recognition,
subcontractors, expenditure, land and work in progress. Based on our work performed we adopted a controls reliance approach to our
testing in these areas.
The Group IT landscape contains a number of IT systems, applications and tools used to support business processes and reporting.
We performed testing of General IT Controls (“GITCs”) of three key financial reporting systems, which included controls surrounding user
access management and change management.
As noted on page 85 in the Audit Committee Report, the Group has commenced a key controls programme to focus and further strengthen
the Group’s capabilities around risk and internal controls in light of the increased public interest in internal control systems following the
Kingman and Brydon reviews.
8. Other information
The other information comprises the information included in the Annual Report, other than the Financial Statements and our auditor’s
report thereon. The Directors are responsible for the other information contained within the Annual Report.
Our opinion on the Financial Statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with
the Financial Statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to
a material misstatement in the Financial Statements themselves. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
9. Responsibilities of Directors
As explained more fully in the Statement of Directors' Responsibilities, the Directors are responsible for the preparation of the Financial
Statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary
to enable the preparation of Financial Statements that are free from material misstatement, whether due to fraud or error.
In preparing the Financial Statements, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as
a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.
10. Auditor’s responsibilities for the audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the Financial Statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high
level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement
when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these Financial Statements.
A further description of our responsibilities for the audit of the Financial Statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s Report.
11. Extent to which the audit was considered capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our
responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our
procedures are capable of detecting irregularities, including fraud is detailed below.
11.1 Identifying and assessing potential risks related to irregularities
In identifying and assessing risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and
regulations, we considered the following:
•
•
•
the nature of the housing market, control environment and business performance including the design of the Group’s remuneration
policies, key drivers for Directors’ remuneration, bonus levels and performance targets;
the Group’s own assessment of the risks that irregularities may occur either as a result of fraud or error;
results of our enquiries of management, internal audit, the Group’s internal legal counsel and the Audit Committee about their own
identification and assessment of the risks of irregularities;
• any matters we identified having obtained and reviewed the Group’s documentation of their policies and procedures relating to:
− identifying, evaluating and complying with laws and regulations and whether they were aware of any instances of non-compliance;
− detecting and responding to the risks of fraud and whether they have knowledge of any actual, suspected or alleged fraud;
− the internal controls established to mitigate risks of fraud or non-compliance with laws and regulations;
•
the matters discussed among the audit engagement team involving relevant internal specialists, including tax, valuations and IT
specialists regarding how and where fraud might occur in the Financial Statements and any potential indicators of fraud.
As a result of these procedures, we considered the opportunities and incentives that may exist within the organisation for fraud and
identified the greatest potential for fraud in the following areas: margin recognition and costs associated with legacy properties. In common
with all audits under ISAs (UK), we are also required to perform specific procedures to respond to the risk of management override.
We also obtained an understanding of the legal and regulatory framework that the Group operates in, focusing on provisions of those laws
and regulations that had a direct effect on the determination of material amounts and disclosures in the Financial Statements. The key
laws and regulations we considered in this context included the UK Companies Act, Listing Rules, Building Safety Regulations, pensions
and tax legislation.
In addition, we considered provisions of other laws and regulations that do not have a direct effect on the Financial Statements
but compliance with which may be fundamental to the Group’s ability to operate or to avoid a material penalty. These included the
environmental regulations and health and safety law.
11.2. Audit response to risks identified
As a result of performing the above, we identified margin recognition and costs associated with legacy properties as key audit matters. The
key audit matters section of our report explains the matters in more detail and also describes the specific procedures we performed in
response to those key audit matters. We did not identify any key audit matters related to the potential risk of fraud or non-compliance with
laws and regulations.
In addition to the above, our procedures to respond to risks identified included the following:
•
reviewing the Financial Statement disclosures and testing to supporting documentation to assess compliance with provisions of
relevant laws and regulations described as having a direct effect on the Financial Statements;
• enquiring of management, the Audit Committee, in-house and external legal counsel concerning actual and potential litigation and
claims;
• performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of material misstatement
due to fraud;
•
•
reading minutes of meetings of those charged with governance, reviewing internal audit reports; and
in addressing the risk of fraud through management override of controls, testing the appropriateness of journal entries and other
adjustments; assessing whether the judgements made in making accounting estimates are indicative of a potential bias; and evaluating
the business rationale of any significant transactions that are unusual or outside the normal course of business.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team members including
internal specialists, and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.
Report on other legal and regulatory requirements
12. Opinions on other matters prescribed by the Companies Act 2006
In our opinion the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
•
the information given in the Strategic Report and the Directors’ Report for the financial year for which the Financial Statements are
prepared is consistent with the Financial Statements; and
•
the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements
In light of the knowledge and understanding of the Group and the Company and their environment obtained in the course of the audit, we
have not identified any material misstatements in the Strategic Report or the Directors’ Report.
120
121
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Independent Auditor’s Report CONTINUED
to the members of Barratt Developments PLC
Consolidated Income Statement
Year ended 30 June 2021
13. Corporate Governance Statement
The Listing Rules require us to review the Directors' statement in relation to going concern, longer-term viability and that part of the
Corporate Governance Statement relating to the Group’s compliance with the provisions of the UK Corporate Governance Code specified
for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance
Statement is materially consistent with the Financial Statements and our knowledge obtained during the audit:
•
•
•
•
•
the Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material
uncertainties identified set out on page 114;
the Directors’ explanation as to its assessment of the group’s prospects, the period this assessment covers and why the period is
appropriate set out on page 67;
the Directors' statement on fair, balanced and understandable set out on page 114;
the Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on page 114;
the section of the Annual Report that describes the review of effectiveness of risk management and internal control systems set out on
page 56; and
•
the section describing the work of the Audit Committee set out on page 85 to 90.
14. Matters on which we are required to report by exception
14.1. Adequacy of explanations received and accounting records
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
Continuing operations
Revenue
Cost of sales
Gross profit
Administrative expenses
Part-exchange income
Part-exchange expenses
Profit from operations
Finance income
Finance costs
Net finance costs
Share of post-tax profit from joint ventures
Profit before tax
Tax
Profit for the year
Profit for the year attributable to the owners of the Company
Profit for the year attributable to non-controlling interests
• adequate accounting records have not been kept by the Company, or returns adequate for our audit have not been received from
branches not visited by us; or
•
the Company Financial Statements are not in agreement with the accounting records and returns.
Earnings per share from continuing operations
Basic
Diluted
We have nothing to report in respect of these matters.
The notes on pages 130 to 172 form an integral part of these Financial Statements.
14.2. Directors’ remuneration
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of Directors’ remuneration have not been
made or the part of the Directors’ remuneration report to be audited is not in agreement with the accounting records and returns.
Adjusted items:
Notes
2.1
2.3
2.3
5.2
5.2
5.2
4.3
2.6
4.1.2
2.4
2.4
2021
£m
4,811.7
(3,801.7)
1,010.0
(204.4)
220.4
(214.9)
811.1
1.4
(28.0)
(26.6)
27.7
812.2
(152.1)
660.1
659.8
0.3
2020
£m
3,419.2
(2,804.9)
614.3
(124.5)
327.5
(323.9)
493.4
5.1
(35.0)
(29.9)
28.3
491.8
(89.1)
402.7
399.7
3.0
64.9p
64.0p
39.4p
38.9p
We have nothing to report in respect of these matters.
15. Other matters which we are required to address
15.1. Auditor tenure
Following the recommendation of the Audit Committee, we were appointed at the AGM in 2007 to audit the Financial Statements for the
year ending 30 June 2008 and subsequent financial periods. Following a competitive tender process, we were re-appointed as auditor for
the year ending 30 June 2018 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals
and re-appointments of the firm is fourteen years, covering the years ending 30 June 2008 to 30 June 2021.
15.2. Consistency of the audit report with the additional report to the Audit Committee
Our audit opinion is consistent with the additional report to the Audit Committee we are required to provide in accordance with ISAs (UK).
16. Use of our report
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them in
an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Claire Faulkner (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London
United Kingdom
1 September 2021
Profit per Income Statement above
Cost associated with legacy properties
CJRS grant repaid/(income)
Adjusted profit
Notes
2.2
2.2
Gross profit
2021
£m
1,010.0
81.9
22.8
1,114.7
2020
£m
614.3
39.9
(22.8)
631.4
Profit from
operations
2021
£m
811.1
81.9
26.0
919.0
2020
£m
493.4
39.9
(26.0)
507.3
Share of post-tax
profit from joint
ventures
2021
£m
27.7
(0.4)
–
27.3
2020
£m
28.3
–
–
28.3
Profit before tax
2020
£m
491.8
39.9
(26.0)
505.7
2021
£m
812.2
81.5
26.0
919.7
122
123
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Consolidated Statement of Comprehensive Income
Year ended 30 June 2021
Statement of Changes in Shareholders’ Equity –
Group
Profit for the year
Other comprehensive income/(expense):
Items that will not be reclassified to profit or loss
Actuarial loss on defined benefit pension scheme
Tax credit relating to items not reclassified
Total items that will not be reclassified to profit or loss
Total comprehensive income recognised for the year
Total comprehensive income recognised for the year attributable to the owners of the
Company
Total comprehensive income recognised for the year attributable to non-controlling
interests
The notes on pages 130 to 172 form an integral part of these Financial Statements.
Notes
6.2.2
2021
£m
660.1
(2.2)
0.4
(1.8)
658.3
2020
£m
402.7
(69.2)
13.1
(56.1)
346.6
658.0
343.6
4.1.2
0.3
3.0
Share
capital
(note 5.5.1)
£m
101.7
–
Share
premium
£m
239.3
–
Merger
reserve
(note 4.1.1)
£m
1,109.0
–
Own
shares
(note 5.5.2)
£m
(15.1)
–
Share-
based
payments
(note 6.3)
£m
20.9
–
–
–
–
–
–
0.1
–
–
–
–
–
–
–
5.9
–
–
–
–
–
–
–
–
–
–
–
–
101.8
–
–
–
245.2
–
–
–
1,109.0
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(5.9)
0.9
–
(20.1)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
6.8
–
(9.7)
(1.4)
16.6
–
–
–
–
–
–
–
20.4
At 1 July 20191
Profit for the year
Actuarial loss on pension
scheme
Tax on items above taken
directly to equity
Total comprehensive income
recognised for the year ended
30 June 2020
Dividend payments (note 2.5)
Distributions to non-controlling
interests
Issue of shares
Share-based payments
Purchase of own shares
Transfers in respect of
share options
Tax on share-based payments
At 30 June 2020
Profit for the year
Actuarial loss on pension
scheme
Tax on items above taken
directly to equity
Total comprehensive income
recognised for the year ended
30 June 2021
Dividend payments (note 2.5)
Distributions to non-controlling
interests
Issue of shares
Share-based payments
Transfers in respect of
share options
Tax on share-based
payments
At 30 June 2021
Group
retained
earnings
due to
share-
holders
of the
Company
£m
3,406.3
399.7
Total
Group
retained
earnings
due to
share-
holders
of the
Company
£m
3,412.1
399.7
(69.2)
(69.2)
13.1
13.1
343.6
(373.2)
343.6
(373.2)
–
–
–
–
–
–
6.8
(5.9)
8.1
1.6
3,386.4
659.8
(0.7)
0.2
3,382.9
659.8
(2.2)
(2.2)
0.4
0.4
658.0
(76.3)
658.0
(76.3)
–
–
–
–
–
20.4
Non-
controlling
interests
(note 4.1.2)
£m
6.9
3.0
–
–
3.0
–
(8.5)
–
–
–
–
–
1.4
0.3
–
–
0.3
–
(0.6)
–
–
–
–
1.1
Total
equity
£m
4,869.0
402.7
(69.2)
13.1
346.6
(373.2)
(8.5)
6.0
6.8
(5.9)
(0.7)
0.2
4,840.3
660.1
(2.2)
0.4
658.3
(76.3)
(0.6)
0.1
20.4
7.0
2.9
5,452.1
15.4
(12.2)
3.8
7.0
–
101.8
–
245.3
–
1,109.0
–
(4.7)
2.8
27.6
0.1
3,972.0
2.9
3,994.9
1
In the prior year, the Group applied IFRS 16 using the modified retrospective approach and, therefore, comparatives were not restated. The adoption of IFRS 16 had no
effect on the opening reserves at 1 July 2019.
The notes on pages 130 to 172 form an integral part of these Financial Statements.
124
125
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Statement of Changes in Shareholders’ Equity –
Company
Balance Sheets
At 30 June 2021
Share
capital
(note 5.5.1)
£m
101.7
–
–
Share
premium
£m
239.3
–
–
Merger
reserve
(note 4.1.1)
£m
1,109.0
–
–
Own
shares
(note 5.5.2)
£m
(15.1)
–
–
Share-
based
payments
(note 6.3)
£m
20.4
–
–
Retained
earnings
£m
2,052.8
504.4
(69.2)
Total
retained
earnings
£m
2,058.1
504.4
(69.2)
Total
equity
£m
3,508.1
504.4
(69.2)
–
–
–
0.1
–
–
–
–
101.8
–
–
–
–
–
–
–
–
–
–
–
5.9
–
–
–
–
245.2
–
–
–
–
–
0.1
–
–
–
–
–
–
–
–
–
–
1,109.0
–
–
–
–
–
–
–
–
–
101.8
–
245.3
–
1,109.0
–
–
13.1
13.1
13.1
–
–
–
–
(5.9)
0.9
–
(20.1)
–
–
–
–
–
–
–
15.4
–
(4.7)
–
–
–
6.8
–
(9.7)
(0.9)
16.6
–
–
448.3
(373.2)
–
–
–
3.6
1.0
2,132.5
(8.8)
(2.2)
448.3
(373.2)
–
6.8
(5.9)
(5.2)
0.1
2,129.0
(8.8)
(2.2)
448.3
(373.2)
6.0
6.8
(5.9)
(5.2)
0.1
3,585.0
(8.8)
(2.2)
–
0.4
0.4
0.4
–
–
–
20.4
(12.2)
1.1
25.9
(10.6)
(76.3)
–
–
(10.6)
(76.3)
–
20.4
(10.6)
(76.3)
0.1
20.4
0.8
–
2,046.4
4.0
1.1
2,067.6
4.0
1.1
3,523.7
At 1 July 20191
Profit for the year
Actuarial loss on pension scheme
Tax on items above taken directly
to equity
Total comprehensive income
recognised for the year ended
30 June 2020
Dividend payments (note 2.5)
Issue of shares
Share-based payments
Purchase of own shares
Transfers in respect of share
options
Tax on share-based payments
At 30 June 2020
Loss for the year
Actuarial loss on pension scheme
Tax on items above taken directly
to equity
Total comprehensive expense
recognised for the year ended
30 June 2021
Dividend payments (note 2.5)
Issue of shares
Share-based payments
Transfers in respect of share
options
Tax on share-based payments
At 30 June 2021
1
In the prior year, the Company applied IFRS 16 using the modified retrospective approach and, therefore, comparatives were not restated. The adoption of IFRS 16 had
no effect on the opening reserves at 1 July 2019.
The notes on pages 130 to 172 form an integral part of these Financial Statements.
Assets
Non-current assets
Other intangible assets
Goodwill
Property, plant and equipment
Right-of-use assets
Investments in subsidiary undertakings
Investments in joint ventures and associates
Retirement benefit assets1
Deferred tax assets
Trade and other receivables2
Current assets
Inventories
Trade and other receivables2
Current tax assets
Cash and cash equivalents
Total assets
Liabilities
Non-current liabilities
Loans and borrowings
Trade and other payables
Lease liabilities
Deferred tax liabilities
Current liabilities
Loans and borrowings
Trade and other payables
Lease liabilities
Current tax liabilities
Provisions
Total liabilities
Net assets
Equity
Share capital
Share premium
Merger reserve
Total retained earnings
Equity attributable to the owners of the Company
Non-controlling interests
Total equity
Notes
4.2.2
4.2.1
4.5
3.5.1
4.1.3
4.3
6.2.2
2.6.3
3.2
3.1
3.2
5.1
5.1
3.3
3.5.1
2.6.3
5.1
3.3
3.5.1
3.6
5.5.1
4.1.1
4.1.2
2021
£m
100.0
805.9
20.4
39.3
–
163.1
–
–
1.2
1,129.9
4,645.5
179.6
–
1,518.6
6,343.7
7,473.6
(200.0)
(296.8)
(29.8)
(8.9)
(535.5)
(5.3)
(1,401.2)
(10.9)
(1.0)
(67.6)
(1,486.0)
(2,021.5)
5,452.1
101.8
245.3
1,109.0
3,994.9
5,451.0
1.1
5,452.1
Group
2020
£m
2021
£m
Company
2020
£m
101.1
805.9
19.0
46.7
–
152.1
3.5
–
2.3
1,130.6
5,027.9
86.0
–
619.8
5,733.7
6,864.3
(200.0)
(319.7)
(36.1)
(2.4)
(558.2)
(117.7)
(1,305.4)
(11.7)
(2.8)
(28.2)
(1,465.8)
(2,024.0)
4,840.3
101.8
245.2
1,109.0
3,382.9
4,838.9
1.4
4,840.3
–
–
12.5
4.5
3,088.0
–
–
4.7
75.8
3,185.5
–
19.2
2.0
1,319.0
1,340.2
4,525.7
(200.0)
–
(3.6)
–
(203.6)
–
(797.5)
(0.9)
–
–
(798.4)
(1,002.0)
3,523.7
101.8
245.3
1,109.0
2,067.6
3,523.7
–
3,523.7
–
–
9.5
4.8
3,086.2
–
3.5
1.0
–
3,105.0
–
405.4
–
424.0
829.4
3,934.4
(200.0)
–
(3.9)
–
(203.9)
(111.0)
(33.6)
(0.9)
–
–
(145.5)
(349.4)
3,585.0
101.8
245.2
1,109.0
2,129.0
3,585.0
–
3,585.0
1 Following the buy-out of the Group defined benefit pension scheme, the remaining assets and liabilities at 30 June 2021 have been included within trade and other
payables and trade and other receivables. See note 6.2 for further details.
2 Secured loans, previously presented separately, have been included within trade and other receivables.
The notes on pages 130 to 172 form an integral part of these Financial Statements.
The Financial Statements of Barratt Developments PLC (registered number 00604574) were approved by the Board and authorised for issue
on 1 September 2021.
Signed on behalf of the Board:
David Thomas
Chief Executive
Parent Company Income Statement
In accordance with the provisions of section 408 of the Companies Act 2006, a separate Income Statement for the Company has not been
presented. The Company’s loss for the year was £8.8m (2020: £504.4m profit).
126
127
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements
Cash Flow Statements
Year ended 30 June 2021
Net cash inflow/(outflow) from operating activities (page 129)
Investing activities:
Purchase of property, plant and equipment
Increase in amounts invested in entities accounted for using
the equity method
Repayment of amounts invested in entities accounted for using
the equity method
Dividends received from investments accounted for using the
equity method
Proceeds from the disposal of investments accounted for using
the equity method
Dividends received from subsidiaries
Interest received
Net cash inflow from investing activities
Financing activities:
Dividends paid to equity holders of the Company
Distribution made to non-controlling partner
Purchase of own shares
Proceeds from the exercise of share options
Proceeds from issue of share capital
Payment of dividend equivalents
Loans and borrowings drawdowns
Loans and borrowings repayments
Repayment of lease liabilities
Net cash outflow from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
Notes
2021
£m
1,082.3
4.5
4.3
4.3
4.3
2.5
4.1.2
3.5
5.1
(7.2)
(7.9)
3.4
21.2
2.0
–
2.0
13.5
(76.3)
(0.6)
–
8.0
0.1
(1.0)
–
(112.4)
(14.8)
(197.0)
898.8
619.8
1,518.6
Group
2020
£m
(121.0)
(7.5)
(31.2)
72.2
24.2
–
–
3.5
61.2
(373.2)
(8.5)
(5.9)
–
6.0
(0.7)
–
(60.0)
(14.1)
(456.4)
(516.2)
1,136.0
619.8
2021
£m
1,071.4
Company
2020
£m
(667.0)
(6.1)
(4.9)
–
–
–
–
8.7
1.2
3.8
(76.3)
–
–
8.0
0.1
–
–
(111.0)
(1.0)
(180.2)
895.0
424.0
1,319.0
–
–
–
–
519.3
3.0
517.4
(373.2)
–
(5.9)
–
6.0
–
58.4
–
(1.0)
(315.7)
(465.3)
889.3
424.0
The notes on pages 130 to 172 form an integral part of these Financial Statements.
Reconciliation of profit/(loss) from operations to cash flow
from operating activities
Profit/(loss) from operations
Depreciation of property, plant and equipment
Loss on disposal of property, plant and equipment
Depreciation of right-of-use assets
Amortisation of intangible assets
Profit on disposal of joint venture
(Reversal of impairment)/impairment of inventories
Share-based payments charge
Imputed interest on deferred term payables1
Imputed interest on lease arrangements
Amortisation of facility fees
Finance income related to employee benefits
Total non-cash items2
Decrease/(increase) in inventories
(Increase)/decrease in receivables2
Increase/(decrease) in payables
Increase in provisions
Total movements in working capital and provisions2
Interest paid
Tax paid
Net cash inflow/(outflow) from operating activities
Notes
4.5
3.5
4.2.2
4.3.1
3.1
6.3
5.2
5.2
5.2
5.2
3.6
2021
£m
811.1
5.8
–
13.8
1.1
(2.0)
(3.5)
20.4
(13.7)
(1.3)
(2.0)
0.1
18.7
385.9
(93.1)
74.8
39.4
407.0
(11.0)
(143.5)
1,082.3
Group
2020
£m
493.4
5.5
0.4
13.6
1.2
–
8.2
6.8
(19.9)
(2.0)
(2.3)
1.6
13.1
(211.8)
128.9
(373.8)
28.2
(428.5)
(11.7)
(187.3)
(121.0)
2021
£m
3.7
3.1
–
1.0
–
–
–
9.6
–
–
(2.0)
0.1
11.8
–
304.1
776.8
–
1,080.9
(25.0)
–
1,071.4
Company
2020
£m
(5.7)
2.7
0.4
0.9
–
–
–
1.4
–
(0.1)
(2.3)
1.6
4.6
–
(322.1)
(328.8)
–
(650.9)
(15.0)
–
(667.0)
1 The Balance Sheet movements in land payables include non-cash movements due to imputed interest. Imputed interest is therefore included within non-cash items in
the statements above.
2 Profit on the redemption of secured loans, previously presented separately, has been included within movements in receivables.
The notes on pages 130 to 172 form an integral part of these Financial Statements.
128
129
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements
Year ended 30 June 2021
1 Basis of preparation
1.1 Introduction
The Financial Statements for the Group and Company have been prepared in accordance with IAS in conformity with the requirements of
the Companies Act 2006. The Group Financial Statements have also been prepared in accordance with IFRS adopted pursuant to Regulation
(EC) No 1606/2002 as it applies in the European Union and IFRS as issued by the IASB. The Financial Statements have been prepared under
the historical cost convention as modified by the revaluation of share-based payments.
Group accounting policies
The significant Group accounting policies are included within the relevant notes to the Financial Statements on pages 130 to 172.
Critical accounting judgements and key sources of estimation uncertainty
The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported
amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on the Directors’ best knowledge of the amounts, actual results may ultimately
differ from those estimates. The Directors have made no individual critical accounting judgements that have a significant impact upon the
Financial Statements, apart from those involving estimations.
The most significant estimates made by the Directors in these Financial Statements are:
• Margin recognition – see note 2.3; and
• Costs associated with legacy properties – see note 3.6.
1.2 Basis of consolidation
The Group Financial Statements include the results of Barratt Developments PLC (the 'Company'), a public company limited by shares and
incorporated in the United Kingdom, and all of its subsidiary undertakings, made up to 30 June. The Financial Statements of subsidiary
undertakings are consolidated from the date that control passes to the Group using the acquisition method of accounting and up to the date
control ceases. All transactions with subsidiaries and intercompany profits or losses are eliminated on consolidation.
1.3 Going concern
In determining the appropriate basis of preparation of the Financial Statements, the Directors are required to consider whether the Group
and Company can continue in operational existence for the foreseeable future.
The Group’s business activities, together with factors which the Directors consider are likely to affect its development, financial
performance and financial position are set out in the Strategic Report on pages 2 to 67. The material financial and operational risks and
uncertainties that may have an impact on the Group’s performance and their mitigation are outlined on pages 58 to 64 and financial risks
including liquidity risk, market risk, credit risk and capital risk are outlined in note 5.4 to the Financial Statements.
At 30 June 2021, the Group held cash of £1,518.6m and total loans and borrowings of £205.3m, consisting of £5.3m of overdrafts repayable
on demand and £200.0m Sterling USPP notes maturing in August 2027. These balances, set against pre-paid facility fees, comprise the
Group’s net cash of £1,317.4m presented in note 5.1.
Should further funding be required, the Group has a committed £700m RCF, subject to compliance with certain financial covenants, that
matures in November 2024.
As such, in consideration of its net current assets of £4,857.7m, the Directors are satisfied that the Group has sufficient liquidity to meet its
current liabilities and working capital requirements.
Despite the ongoing economic uncertainties, the housing market fundamentals remain attractive. There is strong demand for new homes
across the country and years of undersupply underpins the Government’s ongoing target of 300,000 new homes each year. The future
financial performance of the Group is dependent upon the wider economic environment in which it operates. The factors that particularly
affect the performance of the Group include flat or negative economic growth, buyer confidence, mortgage availability and affordability,
competitor pricing, new housing supply, falls in house prices or land values and the cost and availability of raw materials, sub-contractors
and suppliers.
The Group’s financial forecasts reflect the outcomes that the Directors consider most likely, based on the information available at the date
of signing of these Financial Statements.
To assess the Group’s resilience to more adverse outcomes, its forecast performance was sensitised to reflect a series of scenarios based
on the Group’s principal risks and the downside prospects for the UK economy and housing market presented in the latest available
external economic forecasts.
This exercise included a reasonable worst-case scenario in which the Group’s principal risks manifest in aggregate to a severe but
plausible level. This assumed that average selling prices fall by 5%, sales volumes fall by between 7% and 9%, and construction costs
increase by 5%.
1.3 Going concern CONTINUED
The effects were modelled over the three-year period covered by the Directors’ viability review, alongside reasonable mitigation that the
Group would expect to undertake in such circumstances, primarily a reduction in investment in inventories in line with the fall in expected
sales. In all scenarios, including the reasonable worst case, the Group is able to comply with its financial covenants, operate within its
current facilities and meet its liabilities as they fall due.
Furthermore, a reverse stress test was performed to determine the market conditions in which the Group, without mitigating action, would
cease to be able to operate under its current facilities. Based on past experience and current economic forecasts, the Directors consider
the possibility of this outcome to be remote and have identified mitigation that would be adopted in such circumstances.
Accordingly, the Directors consider there to be no material uncertainties that may cast significant doubt on the Group’s ability to continue to
operate as a going concern. They have formed a judgement that there is a reasonable expectation that the Group and Company have adequate
resources to continue in operational existence for the foreseeable future, being at least 12 months from the date of signing of these Financial
Statements. For this reason, they continue to adopt the going concern basis in the preparation of these Financial Statements.
1.4 Application of accounting standards
During the year ended 30 June 2021, the Group has applied accounting policies and methods of computation consistent with those applied
in the prior year except as amended by the adoption of new and revised standards.
Secured loans with a value of £nil (2020: £2.1m), presented separately in previous years, have been included within trade and other receivables.
Disclosures pertaining to secured loans are not presented in the notes to the Financial Statements as they are immaterial to the Group.
During the year, the Group has adopted the following new and revised standards and interpretations that have had no impact on the
Financial Statements:
• Amendment to References to the Conceptual Framework in IFRS Standards;
• Amendment to IFRS 3: ‘Business Combinations’;
• Amendments to IAS 1 and IAS 8: 'Definition of Material';
• Amendments to IFRS 9, IAS 39, and IFRS 7: 'Interest Rate Benchmark Reform'; and
• Amendment to IFRS 16: 'COVID-19 Related Rent Concessions'.
1.5 Impact of standards and interpretations in issue but not yet effective
At the date of approval of these Financial Statements, there were a number of standards, amendments and interpretations that have been
published and are, therefore, mandatory for the Group’s accounting periods beginning on or after 1 July 2021 and later periods. None of
these are expected to have a material impact on the Group. The Group has not early adopted any standard, amendment or interpretation.
2 Results for the year and utilisation of profits
2.1 Revenue
The Group’s revenue derives principally from the sale of the homes we build and from the sale of commercial property.
Revenue from the sale of residential and commercial properties
Revenue is recognised at legal completion in respect of the total proceeds of building and development. Revenue is measured at the fair
value of consideration received or receivable and represents the amounts receivable for the property, net of discounts and VAT.
Revenue on contracts recognised over time
The Group considers all contracts with commercial customers and registered providers for affordable housing on a contract by contract
basis and determines the appropriate revenue recognition based on the particular terms of that contract. For the majority of such
contracts, there is a single performance obligation for which revenue is recognised at a point in time, when construction has been
completed and control is transferred to the customer. The Group recognises revenue over time in relation to certain contracts with
registered providers only in circumstances in which control of the associated land is transferred to the customer before or during
construction. Revenue is only recognised from the point at which control of the associated land is transferred. Revenue is recognised
because the construction activity enhances an asset that is controlled by the customer.
Where the outcome of a contract on which revenue is recognised over time can be estimated reliably, revenue is recognised by reference
to the stage of completion of contract activity at the balance sheet date. This is normally measured by surveys of work performed to date.
The Group is satisfied that it is appropriate to measure performance by reference to surveys of work performed to date, because these
surveys identify the extent to which benefits have been transferred to the customer. Variations to, and claims arising in respect of such
contracts are included in revenue to the extent that they have been agreed with the customer. Where the outcome of a contract on which
revenue is recognised over time cannot be estimated reliably, revenue is recognised to the extent of contract costs incurred. When it is
probable that the total costs on a contract will exceed total contract revenue, the expected loss is immediately recognised as an expense
in the Income Statement.
130
131
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
2.1 Revenue CONTINUED
Other revenue
Revenue from separate contracts related to the development of homes is recognised on completion of the performance obligation to
which it relates and included in other revenue. Revenue from warranties is recognised on a straight-line basis over the warranty period.
Revenue from commercial contract management fees is recognised in the period in which it becomes receivable and included within
other revenue.
An analysis of the Group’s continuing revenue is as follows:
Revenue from private residential sales
Revenue from affordable residential sales
Other revenue including commercial sales
Residential completions1
2020
number
9,568
2,466
–
12,034
2021
number
13,134
3,383
–
16,517
2021
£m
4,274.6
495.5
41.6
4,811.7
Revenue
2020
£m
2,971.5
402.0
45.7
3,419.2
1 Residential completions exclude JV completions of 726 homes (2020: 570) in which the Group has an interest.
Included within Group revenue is £69.1m (2020: £140.9m) of revenue from construction contracts on which revenue is recognised over time
by reference to the stage of completion of the contracts (note 3.4). Of this amount, £10.1m (2020: £19.2m) was included in the contract
liability balance at the beginning of the year.
Revenue includes £324.8m (2020: £464.5m) of revenue generated where the sale has been achieved using part-exchange incentives.
Proceeds received on the disposal of part-exchange properties are not included in revenue on the basis that they are incidental to the main
revenue-generating activities of the Group.
2.2 Adjusted items
Adjusted items
Items that are material to the Group in aggregate and have arisen from one-off or unusual circumstances that could not reasonably have
been expected to arise from normal trading are presented as adjusted items in the table below the Income Statement. The Directors
are of the opinion that the separate presentation of adjusted items provides helpful information about the Group’s underlying business
performance. Examples of events that may give rise to the classification of items as adjusted are charges or credits in respect of legacy
properties, the restructuring of existing and newly acquired businesses, and certain government grants.
Cost associated with legacy properties:
During the year, charges of £81.9m (2020: £39.9m) were recognised as adjusted items in respect of costs associated with legacy properties
and separately disclosed in the table below the Income Statement. The adjusted costs in the year, associated with legacy properties,
comprise additions to provisions of £90.3m, provisions releases of £4.6m and the release of accruals previously analysed as adjusted of
£3.8m. Further details of provisions movements are provided in note 3.6.
In addition, a net credit of £0.4m (2020: £nil) was recognised as an adjusted item in respect of a reassessment of costs associated with JV
legacy properties, resulting in a net increase in the Group's share of net assets.
CJRS grant income/repayment:
During the year ended 30 June 2020, the Group recognised grant income of £26.0m in respect of the UK Government’s CJRS. No CJRS
grant income was recognised in the year to 30 June 2021. This was a temporary scheme from which the income was voluntarily refunded
by the Group during the current year (see note 2.3.3 for further details). Both the income in the prior year and the repayment of the grant in
the current year have been presented as adjusted items.
2.3 Profit from operations
Profit from operations includes all of the revenue and costs derived from the Group’s operating businesses. Profit from operations excludes
finance costs, finance income, the Group’s share of profits or losses from JVs and associates and tax.
Margin recognition
In order to determine the profit that the Group is able to recognise on its developments in a specific period, the Group allocates site-
wide development costs between homes built in the current year and in future years. It also has to estimate costs to complete on
such developments and make estimates relating to future sales price margins on those developments and homes. In making these
assessments there is a degree of inherent uncertainty.
The Group’s site valuation process determines the forecast profit margin for each site. The valuation process acts as a method of
allocating land costs and construction work in progress costs of a development to each individual plot and drives the recognition of costs
in the Income Statement as each plot is sold. Any changes in the forecast profit margin of a site from changes in sales prices or costs to
complete are recognised across all homes sold in both the current period and future periods. This ensures that the forecast site margin
achieved on each individual home is equal for all current year completions and future plots across the development.
Management have performed a sensitivity analysis to assess the impact of a change in estimated costs for developments on which
sales were recognised in the year. A 3% increase in estimated costs recognised in the year, which is considered to be reasonably
possible, would impact cost of sales and work in progress and would reduce the Group’s gross profit by £91.6m, a reduction in gross
margin of 190 bps.
Depreciation of right-of-use assets
Right-of-use assets are depreciated in the Income Statement in equal instalments to the earlier of the end of the lease term or the end
of the useful life of the asset.
Lease income
The Group enters into leasing arrangements with third parties following the completion of constructed developments until the date of the
sale of the development. Rental income from these operating leases is recognised in the Income Statement on a straight-line basis over
the term of the lease.
Government grants
Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to
them and that the grants will be received.
Government grants are recognised in the Income Statement so as to match with the related costs they are intended to compensate for.
Grants related to assets are deducted from the carrying amount of the asset. Grants related to income are included in the appropriate
line within the Income Statement.
Part-exchange income and expenses
Income on the sale of a part-exchange property is recognised at legal completion at the fair value of consideration received or receivable
for the property.
Part-exchange properties are recognised in inventories at the lower of cost, being their fair value at acquisition, and their net realisable
value. The amount of any write-down of inventories to net realisable value, or reversal of a previous write-down, is recognised in the
Income Statement in the period in which it occurs.
The carrying amount of a part exchange property is recognised as an expense in the period in which the related income is recognised.
Maintenance costs are recognised in the Income Statement in the period in which they are incurred.
132
133
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
2.3 Profit from operations CONTINUED
2.3.1 Profit from operations is stated after charging/(crediting):
Cost of inventories recognised as an expense in cost of sales
Employee costs (including Directors)1
Adjusted items:
Government grants repaid/(receivable)
Costs associated with legacy properties
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Lease income
Notes
6.1
2.3.3
2.2
4.5
3.5.1
3.5.2
2021
£m
3,537.9
445.1
26.0
81.9
5.8
13.8
(1.2)
2020
£m
2,511.9
374.7
(26.0)
39.9
5.5
13.6
(1.2)
1 The employee costs reported above are before adjustment for government grants repaid in respect of these costs of £26.0m (2020: £26.0m receivable). Further details
are provided in notes 2.3.3 and 6.1.
Profit from operations is stated after charging the Directors’ emoluments disclosed in the Remuneration Report on pages 103 and 109 and
in note 6.1.
The Group does not recognise income from supplier rebates until it can be calculated reliably and it is certain that it will be received from
suppliers. During the year, £22.2m (2020: £30.8m) of supplier rebate income was included within profit from operations.
2.3.2 Cost of sales
During the year ended 30 June 2020, in response to the COVID-19 pandemic, the Group took the decision to temporarily close its sales
centres, construction sites and offices and implemented extensive working practices and protocols to enable a safe return to operations. As
a result, in the prior year £45.2m of non-productive site overheads and safety costs were included within cost of sales that would ordinarily
be capitalised as work in progress including £25.4m of employee costs.
In the current year, cost of sales includes the repayment of £22.8m of government grants in respect of the CJRS (2020: £22.8m received).
2.3.3 Government grants and assistance
During the year, the Group repaid CJRS grant income received from the Government in the prior year. Amounts repaid/receivable are
disclosed below.
Grant income/(repayment) in respect of the CJRS included in cost of sales
Grant income/(repayment) in respect of the CJRS included in administrative expenses
2021
Amounts
repaid
£m
(22.8)
(3.2)
(26.0)
2020
Amounts
receivable
and received
£m
22.8
3.2
26.0
At 30 June 2021, receivables in respect of the CJRS of £nil (2020: £4.4m) were included in other receivables.
During the prior year, the Group benefited from the COVID-19 Retail, Hospitality and Leisure Fund in respect of some of its sales and
marketing properties. In the year to 30 June 2021, the Group repaid these amounts in full, amounting to £0.7m (2020: £nil), to the relevant
authorities. Also during the prior year, the Group benefited from government assistance in the form of COVID-19 business rate relief. In the
year to 30 June 2021, the Group announced its intention to pay amounts equal to the relief received to the relevant local authorities.
2.3.4 Administrative expenses
Administrative expenses of £204.4m (2020: £124.5m) include sundry income of £24.5m (2020: £29.0m) which principally comprises
management fees receivable from JVs, profit on the sale of a joint venture (note 4.3.1), the sale of freehold reversions, ground rent
receivable and, in the prior year, government grant income.
2.3.5 Auditor’s remuneration
The remuneration paid to Deloitte LLP, the Group’s principal auditor, is disclosed below:
Fees payable to the Company’s auditor for the audit of the Company and Consolidated Financial Statements
Fees payable to the Company’s auditor for the audit of the Company’s subsidiaries
Total audit fees
Audit-related assurance services¹
Other services²
Total fees for other services
Total fees related to the Company and its subsidiaries
1 Audit-related assurance services comprise the review of the interim report.
2 Other services in the previous year were in relation to a short-term, limited scope, piece of advisory support.
134
2021
£000
411
305
716
35
–
35
751
2020
£000
275
290
565
32
20
52
617
2.3 Profit from operations CONTINUED
2.3.5 Auditor’s remuneration continued
Details of the Group’s policy on the use of the Company’s principal auditor for non-audit services and auditor independence are set out in
the Audit Committee Report on page 89. No services were provided under contingent fee arrangements.
In addition to the remuneration paid to the Company’s auditor for services related to the Company and its subsidiaries, the auditor received
the following remuneration from JVs in which the Group participates:
The audit of the Group’s JVs pursuant to legislation
Audit-related assurance services¹
Total fees related to joint ventures
1 Audit-related assurance services comprise reporting to the auditors of our JV partners.
2.4 Earnings per share
The earnings per share from continuing operations were as follows:
Basic earnings per share
Diluted earnings per share
Adjusted basic earnings per share
Adjusted diluted earnings per share
2021
£000
162
10
172
2021
pence
64.9
64.0
73.5
72.5
2020
£000
163
10
173
2020
pence
39.4
38.9
40.5
40.0
Basic earnings per share is calculated by dividing the profit for the year attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares in issue during the year, excluding those held by the EBT that do not attract dividend
equivalents which are treated as cancelled.
Diluted earnings per share is calculated by dividing the profit for the year attributable to ordinary shareholders of the Company by the
weighted average number of ordinary shares in issue adjusted to assume conversion of all potentially dilutive share options from the start
of the year.
Adjusted basic and adjusted diluted earnings per share exclude the impact of adjusted items and any associated net tax amounts.
Profit attributable to ordinary shareholders of the Company (£m)
Adjusted items (£m)
Tax on adjusted items (£m)
Adjusted profit attributable to ordinary shareholders of the Company (£m)
Weighted average number of shares in issue (million)
Weighted average number of shares in EBT (million)
Weighted average number of shares for basic earnings per share (million)
Weighted average number of shares in issue (million)
Adjustment to assume conversion of all potentially dilutive shares (million)
Weighted average number of shares for diluted earnings per share (million)
2.5 Dividends
Amounts recognised as distributions to equity shareholders in the year:
Final dividend for the year ended 30 June 2020 of 0.0p (2019: 19.5p) per share
Special dividend for the year ended 30 June 2020 of 0.0p (2019: 17.3p) per share
Interim dividend for the year ended 30 June 2021 of 7.5p (2020: 0.0p) per share
Total dividends distributed to equity shareholders in the year
Proposed final dividend for the year ended 30 June 2021 of 21.9p (2020: 0.0p) per share
2021
659.8
107.5
(20.4)
746.9
1,018.3
(1.9)
1,016.4
1,018.3
12.5
1,030.8
2021
£m
–
–
76.3
76.3
2021
£m
222.7
2020
399.7
13.9
(2.6)
411.0
1,018.2
(4.3)
1,013.9
1,018.2
10.0
1,028.2
2020
£m
197.8
175.4
–
373.2
2020
£m
–
The final dividend of 21.9 pence per share was approved by the Board on 1 September 2021 and has not been included as a liability as
at 30 June 2021.
135
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements
Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
2.6 Tax
All profits of the Group are subject to UK corporation tax.
The current year tax charge has been provided for, by the Group and Company, at a standard effective rate of 19.0% (2020: 19.0%) and the
closing deferred tax assets and liabilities have been provided in these Financial Statements at a rate of 19.0% – 25.0% (2020: 19.0%) of the
temporary differences giving rise to these assets and liabilities.
Tax
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Income
Statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that
are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively
enacted at the balance sheet date.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in
the Financial Statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the
balance sheet liability method. Deferred tax is measured on a non-discounted basis using the tax rates and laws that have then been
enacted or substantively enacted by the balance sheet date, and is charged or credited to the Income Statement, except when it relates
to items charged or credited directly to other comprehensive income or equity, in which case the deferred tax is also dealt with in other
comprehensive income or equity.
Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent
that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business
combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax
liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and interests in JVs, except where the
Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the
foreseeable future.
The carrying amount of deferred tax assets are reviewed at each balance sheet date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax assets and liabilities
are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to taxes
levied by the same tax authority and the Group intends to settle its current tax assets and liabilities on a net basis.
2.6.1 Tax recognised in the Income Statement
The tax expense represents the sum of the tax currently payable and deferred tax.
Analysis of the tax charge for the year
Current tax:
UK corporation tax for the year
Adjustment in respect of previous years
Deferred tax:
Origination and reversal of temporary differences
Adjustment in respect of previous years
Impact of change in corporation tax rate
Tax charge for the year
Notes
2.6.3
2021
£m
155.1
(12.7)
142.4
(3.5)
7.8
5.4
9.7
152.1
2020
£m
100.0
(7.4)
92.6
(3.1)
(1.5)
1.1
(3.5)
89.1
2.6 Tax CONTINUED
2.6.1 Tax recognised in the Income Statement continued
Factors affecting the tax charge for the year
The tax rate assessed for the year is lower (2020: lower) than the standard effective rate of corporation tax in the UK of 19.0% (2020: 19.0%).
The differences are explained below:
Profit before tax
Profit before tax multiplied by the standard rate of corporation tax of 19.0% (2020: 19.0%)
Effects of:
Other items including non-deductible expenses and non-taxable income
Additional tax relief for land remediation costs
Adjustment in respect of previous years
Impact of change in tax rate
Tax charge for the year
2021
£m
812.2
154.3
(0.9)
(1.8)
(4.9)
5.4
152.1
2020
£m
491.8
93.4
4.8
(1.3)
(8.9)
1.1
89.1
During the year, legislation was substantially enacted to increase the UK corporation tax rate from 19.0% to 25.0% from 1 April 2023.
Accordingly, the rate change includes the remeasurement of opening temporary differences to between 19% and 25% depending on the
timing of the expected reversal.
HM Treasury has consulted on the policy design of a Residential Property Developer Tax on certain profits from residential development
activity. The consultation closed on 22 July 2021 and the subsequent release of draft legislation is anticipated later this year. Residential
Property Developer Tax will be effective from 1 April 2022 but, at present, the rate of tax and the basis on which it will apply have neither
been announced nor substantively enacted.
2.6.2 Tax recognised in equity
In addition to the amount charged to the Consolidated Income Statement, a net current and deferred tax credit of £3.3m (2020: £13.3m) was
recognised directly in equity.
2.6.3 Deferred tax
All deferred tax relates to the United Kingdom and is stated on a net basis as the Group has a legally enforceable right to set off the
recognised amounts and intends to settle on a net basis.
The Group recognised a net deferred tax liability with the following movements in the year:
Pension
scheme
£m
(11.6)
Share
options
£m
5.3
Indefinite
life brands
£m
(17.0)
Accelerated
capital
allowances
£m
1.1
Losses
£m
–
Other (net)
£m
4.6
(2.2)
13.1
(0.7)
–
(0.7)
0.4
0.4
0.1
0.1
–
(1.3)
(1.4)
2.6
2.6
–
3.2
2.8
8.6
8.6
–
0.1
–
0.1
0.1
–
(0.1)
–
–
–
–
(2.0)
–
(19.0)
–
(19.0)
(6.0)
–
(25.0)
–
(25.0)
(0.4)
–
0.7
0.7
–
0.2
–
0.9
0.9
–
9.3
–
13.9
14.1
(0.2)
(7.4)
–
6.5
6.5
–
Group
Total
£m
(17.6)
3.5
11.7
(2.4)
17.5
(19.9)
(9.7)
3.2
(8.9)
16.1
(25.0)
At 1 July 2019
Year ended 30 June 2020:
Income Statement (charge)/credit
Amounts taken directly to equity
At 30 June 2020
Comprising:
Deferred tax assets
Deferred tax liabilities
Year ended 30 June 2021:
Income Statement (charge)/credit
Amounts taken directly to equity
At 30 June 2021
Comprising:
Deferred tax assets
Deferred tax liabilities
The deferred tax liability in respect of indefinite life brands represents the amount of tax that would become due if the brands were sold at their
book value. There is no intention to sell the indefinite life brands in the foreseeable future and, therefore, it is not anticipated that any of the
deferred tax liability in respect of brands will reverse in the 12 months following the balance sheet date. The deferred tax asset in respect of
share schemes represents an estimate of the future tax deduction available on the exercise or vesting of awards under those schemes.
136
137
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
2.6 Tax CONTINUED
2.6.3 Deferred tax continued
While it is anticipated that an element of the remaining deferred tax assets and liabilities will reverse during the 12 months following the
balance sheet date, at present it is not possible to accurately quantify the value of all of these reversals.
In addition to the deferred tax liability shown above, the Group has not recognised a deferred tax asset of £2.6m (2020: £2.1m) in respect of
capital and other losses amounting to £13.9m (2020: £10.9m) because these are not considered recoverable in the foreseeable future.
The Company recognised a net deferred tax asset with the following movements in the year:
Pension
scheme
£m
(11.6)
Share
options
£m
2.7
Accelerated
capital
allowances
£m
0.6
Other (net)
£m
0.5
(2.2)
13.1
(0.7)
–
(0.7)
0.4
0.4
0.1
0.1
–
(1.2)
(0.9)
0.6
0.6
–
1.9
1.1
3.6
3.6
–
0.1
–
0.7
0.7
–
0.1
–
0.8
0.8
–
(0.1)
–
0.4
0.4
–
(0.2)
–
0.2
0.2
–
Company
Total
£m
(7.8)
(3.4)
12.2
1.0
1.7
(0.7)
2.2
1.5
4.7
4.7
–
At 1 July 2019
Year ended June 2020:
Income Statement (charge)/credit
Amounts taken directly to equity
At 30 June 2020
Comprising:
Deferred tax assets
Deferred tax liabilities
Year ended 30 June 2021:
Income Statement (charge)/credit
Amounts taken directly to equity
At 30 June 2021
Comprising:
Deferred tax assets
Deferred tax liabilities
3 Working capital and provisions
3.1 Inventories
Inventories
Inventories are valued at the lower of cost and net realisable value. Cost of work in progress comprises direct materials, direct labour
costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Overhead costs
include, but are not limited to, roads and other infrastructure costs required for a site and local contributions and physical works
contributions required under planning permissions granted for our developments.
Land held for development, including land in the course of development, is initially recorded at discounted cost. Where, through deferred
purchase credit terms, the carrying value differs from the amount that will ultimately be paid in settling the liability, this difference is
charged as a finance cost in the Income Statement over the period of settlement.
Due to the scale of the Group’s developments, the Group has to allocate site-wide development costs between homes built in the current
year and in future years. It also has to estimate costs to complete on such developments. In making these assessments, there is a
degree of inherent uncertainty. The Group has developed internal controls to assess and review carrying values and the appropriateness
of estimates made. Further information is included in the margin recognition section of note 2.3.
Land held for development
Construction work in progress
Part-exchange properties and other inventories
The Company has no inventories.
2021
£m
2,946.3
1,675.9
23.3
4,645.5
Group
2020
£m
3,112.3
1,852.4
63.2
5,027.9
3.1 Inventories CONTINUED
Nature and carrying value of inventories
The Group’s principal activities are housebuilding and commercial development. The majority of the development activity is not contracted
prior to the development commencing. Accordingly, the Group has in its Balance Sheet at 30 June 2021 current assets that are not covered
by a forward sale. The Group’s internal controls are designed to identify any developments where the balance sheet value of land and work
in progress is more than the projected lower of cost or net realisable value. During the year, the Group has conducted six-monthly reviews
of the net realisable value of specific sites identified as at high risk of impairment, based upon a number of criteria including low site profit
margins and sites with no forecast completions. Where the estimated net realisable value of a site was less than its current carrying value
the Group has impaired the land and work in progress value.
During the year, due to performance variations, changes in assumptions and changes to viability on individual sites, there were gross
impairment charges of £3.6m (2020: £18.8m) and gross impairment reversals of £7.1m (2020: £10.6m), resulting in a net reversal of
impairment of £3.5m (2020: £8.2m charge) included within profit from operations.
The key estimates in these reviews are those used to estimate the realisable value of a site, which is determined by forecast sales rates,
expected sales prices and estimated costs to complete.
The Directors consider all inventories to be essentially current in nature, although the Group’s operational cycle is such that a proportion of
inventories will not be realised within 12 months. It is not possible to determine with accuracy when specific inventory will be realised, as
this will be subject to a number of variables such as consumer demand and planning permission delays.
3.2 Trade and other receivables
Trade and other receivables
Trade and other receivables are financial assets with fixed or determinable payments that are not quoted in an active market. They are
included in current assets, except for those with maturities greater than 12 months after the balance sheet date, which are classified as
non-current assets. Amounts recoverable on certain construction contracts where revenue is recognised over time are included in trade
receivables and stated at cost plus attributable profit less any foreseeable losses. Payments received on account for these construction
contracts are deducted from amounts recoverable on these contracts.
Trade and other receivables are initially recognised at their transaction price and subsequently measured at amortised cost, being their
nominal value less a loss allowance for expected credit losses which are assessed on the basis of an average weighting of the risk of
default. Any impairment is recognised immediately in the Income Statement.
For this purpose, a default is determined to have occurred if the Group becomes aware of evidence that it will not receive all contractual
cash flows that are due or if payment has not been received within 60 days of the due date. After this time, it is probable that contractual
cash flows will not be fully recovered.
The Group does not hold any collateral over these balances.
Trade receivables are receivables and contract assets arising from the Group’s contracts with customers. The loss allowance is equal to
the lifetime expected credit loss, assessed on an individual basis.
The loss allowances for other receivables and amounts due from subsidiary undertakings are equal to 12 month expected credit losses
unless there has been a significant increase in credit risk since the date of initial recognition, in which case the loss allowance is equal
to the lifetime expected credit loss. A significant increase in credit risk is judged to have occurred if a review of available information
indicates an increased probability of default, or if contractual payments are more than 30 days past due.
Where amounts due from subsidiary undertakings can be satisfied by the subsidiaries through the recovery of a debt from fellow
subsidiaries with strong capacity to meet that debt, the amount is considered to have low credit risk at the reporting date and it is,
therefore, assumed that the credit risk has not significantly increased.
Trade and other receivables that are more than two years overdue are deemed to have no reasonable expectation of recovery and
are, therefore, written off in the Financial Statements, but are still subject to enforcement activity. Subsequent recoveries of amounts
previously written off are credited to the Income Statement.
138
139
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
3.2 Trade and other receivables CONTINUED
3.3 Trade and other payables CONTINUED
Non-current assets
Amounts due from subsidiary undertakings
Other receivables1
Current assets
Trade receivables
Contract assets
Amounts due from subsidiary undertakings
Other receivables1,2
Prepayments and accrued income
Notes
3.4
2021
£m
–
1.2
1.2
71.4
0.9
–
92.9
14.4
179.6
Group
2020
£m
–
2.3
2.3
34.6
0.9
–
34.8
15.7
86.0
2021
£m
75.8
–
75.8
–
–
0.2
11.1
7.9
19.2
Company
2020
£m
–
–
–
–
–
395.5
1.3
8.6
405.4
1 Secured loans, previously presented separately, have been included within other receivables.
2 Following the buy-out of the Group defined benefit pension scheme, £0.8m of assets, previously presented within retirement benefit assets, have been included in
other receivables at 30 June 2021. See note 6.2 for further details.
Other receivables include £26.9m (2020: £15.7m) receivable from joint ventures.
The carrying values of trade and other receivables are stated after allowance for doubtful receivables. The movements in the loss allowances
for the year were as follows:
Trade receivables and
contract balances
Lifetime expected
credit losses
(individually assessed)
Group
£m
7.6
3.4
(0.5)
(4.4)
6.1
Company
£m
–
–
–
–
–
Amounts
due from
subsidiary
undertakings
12 month
expected
credit losses
Company
£m
–
–
–
–
–
Other receivables
12 month
expected credit
losses
Group
£m
0.9
–
–
(0.7)
0.2
Company
£m
–
–
–
–
–
Allowance for doubtful receivables
Loss allowance at 1 July 2020
Charge for the year
Amounts written off
Recoveries of amounts previously written off
Loss allowance at 30 June 2021
Notes
5.3.3
5.3.3
Movements in loss allowances are principally a result of the derecognition and origination of financial assets in the year. The loss
allowances written off are equal to the gross carrying amounts of the assets written off in the year. The Directors consider that the carrying
amount of trade receivables approximates to their fair value.
Further disclosures relating to financial assets are set out in note 5.3.
3.3 Trade and other payables
Trade and other payables
Trade and other payables on normal terms are not interest bearing and are stated at amortised cost.
Trade and other payables on extended terms, particularly in respect of land, are recorded at their fair value at the date of acquisition of
the asset to which they relate by discounting at prevailing market interest rates at the date of recognition. The discount to nominal value,
which will be paid in settling the deferred purchase terms liability, is amortised over the period of the credit term and charged to finance
costs using the ‘effective interest rate’ method.
Non-current liabilities
Land payables
Other payables
Current liabilities
Trade payables
Land payables
Contract liabilities
Amounts due to subsidiary undertakings
Accruals
Other tax and social security
Other payables¹
Notes
3.4
2021
£m
294.9
1.9
296.8
289.6
363.4
137.5
–
582.2
13.0
15.5
1,401.2
Group
2020
£m
299.0
20.7
319.7
186.8
492.9
136.6
–
463.0
11.3
14.8
1,305.4
2021
£m
–
–
–
4.0
–
–
764.3
24.4
–
4.8
797.5
Company
2020
£m
–
–
–
2.0
–
–
19.3
11.5
–
0.8
33.6
1 Following the buy-out of the Group defined benefit pension scheme, £1.3m of liabilities, previously presented net within retirement benefit assets, have been included
in other payables at 30 June 2021. See note 6.2 for further details.
The carrying amount of trade payables approximates to their fair value.
Accruals include costs required to complete developments on which all sales have been completed and a social security accrual relating to
share-based payments (note 6.3). Other payables classified as non-current liabilities at 30 June 2021 include amounts accrued for payment
of the CITB levy and other sundry accruals.
The Group has £290.9m (2020: £377.7m) of payables secured by legal charges on land and buildings included within inventories and £8.5m
(2020: £20.2m) supported by promissory notes. Other non-current payables are unsecured and non-interest bearing.
Further disclosures relating to financial liabilities are set out in note 5.3.
3.4 Contract assets and liabilities
Contract assets relate to amounts due from customers primarily for construction work completed but not invoiced at the balance sheet
date in relation to contracts where revenue is recognised over time. These amounts are included in trade and other receivables. The Group
has taken advantage of the practical expedient in paragraph 94 of IFRS 15 to immediately expense the incremental costs of obtaining
contracts where the amortisation period of the assets would have been one year or less.
Contract liabilities relate to payments received from the customer on the contract, and/or amounts invoiced to the customer in advance of
the Group performing its obligations on contracts where revenue is recognised either over time or at a point in time. These amounts are
included within trade and other payables.
Significant changes in contract assets and liabilities are as follows:
At 1 July:
Amounts included within trade and other payables
Amounts included within trade and other receivables
Movements in the year:
Performance obligations satisfied in the year
Amounts invoiced in the year
Cash received for performance obligations not yet satisfied
Movements in retentions
At 30 June
Analysed as:
Amounts included within trade and other payables
Amounts included within trade and other receivables
Contracts on which
revenue is recognised
over time
2020
£m
2021
£m
Contracts on which
revenue is recognised
at a point in time
2020
£m
2021
£m
(13.0)
0.9
(12.1)
69.1
(62.7)
–
–
(5.7)
(6.6)
0.9
(22.8)
1.1
(21.7)
140.9
(131.3)
–
–
(12.1)
(13.0)
0.9
(123.6)
–
(123.6)
4,742.6
(4,619.0)
(130.9)
–
(130.9)
(130.9)
–
(78.4)
–
(78.4)
3,278.2
(3,199.8)
(123.6)
–
(123.6)
(123.6)
–
Further revenue of £148.7m (2020: £217.5m) is expected to be recognised in future years in respect of contracts on which revenue is
recognised over time, of which 20.0% (2020: 22.6%) is expected to be recognised within 12 months of the balance sheet date.
The Company has no contract assets or liabilities.
140
141
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
3.5 Leases
3.5.1 The Group as lessee
Leases
A right-of-use asset and a lease liability are recognised at the commencement date of a lease. The right-of-use asset is initially
measured at cost comprising the initial amount of the lease liability plus payments made before the lease commenced and any
direct costs less any incentives received. The right-of-use asset is subsequently depreciated using the straight-line method from the
commencement of the lease to the earlier of the end of the lease term or the end of the useful life of the asset. The right-of-use asset is
also reduced for impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments at the commencement date discounted using the
Group’s incremental borrowing rate of between 1% and 6%, and is subsequently measured at amortised cost using the effective interest
method. The lease liability is remeasured when there is a change in the future lease payments, and a corresponding adjustment is made
to the right-of-use asset.
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of plant and machinery that have a
lease term of 12 months or less and leases of low value including leases of office equipment. The lease payments associated with these
leases are recognised as an expense on a straight-line basis over the lease term.
The Group and Company lease assets including land and buildings, vehicles, plant and machinery and office equipment. Information about
leases for which the Group or Company is a lessee is presented below.
3.5 Leases CONTINUED
3.5.2 The Group as lessor continued
Property rental income
Carrying value of leased assets
Rent receivable during remaining lease period:
Within one year
More than one year and no later than five years
In five years or more
Average lease term
3.6 Provisions
Notes
2.3.1
2021
£m
1.2
1.0
1.1
3.7
4.4
9.2
2021
Years
9.7
Group
2020
£m
1.2
1.2
1.1
3.4
4.0
8.5
2020
Years
9.5
Company
Provisions
Right-of-use assets
Balance at 1 July 2020
Balance at 30 June 2021
Net additions during the year including
remeasurements
Land and
buildings
£m
38.6
30.6
Other
£m
8.1
8.7
1.2
5.2
Lease liabilities included in the Balance Sheet
Current
Non-current
Group
Total
£m
46.7
39.3
6.4
2021
£m
10.9
29.8
40.7
Land and
buildings
£m
4.3
3.7
Other
£m
0.5
0.8
–
0.7
Total
£m
4.8
4.5
0.7
Group
2020
£m
11.7
36.1
47.8
2021
£m
0.9
3.6
4.5
Company
2020
£m
0.9
3.9
4.8
A maturity analysis of the contractual undiscounted cash flows associated with these lease liabilities is presented in note 5.4.1.
Amounts recognised in the Income Statement
Interest on lease liabilities
Depreciation of right-of-use land and buildings
Depreciation of other right-of-use assets
Expenses relating to short-term and low value leases
2021
£m
1.3
9.2
4.6
27.1
Group
2020
£m
2.0
9.4
4.2
33.9
The total Group cash outflow for leases in the current year was £41.9m (Company: £1.0m) (2020: £47.7m (Company £1.1m)), of which
£14.8m (Company: £1.0m) (2020: £14.1m (Company: £1.0m)) related to the repayment of lease liabilities recognised in the Balance Sheet.
3.5.2 The Group as lessor
The Group has lease agreements with third parties for certain residential and commercial properties, either in the process of development
or which have been developed by the Group, and units on land to be subsequently developed for residential use. The Group retains the right
to sell these properties, with their future rental income, and it is intended that they will be sold to third parties in the normal course of
business. Therefore, they are classified as work in progress until the date of sale.
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will
be required to settle that obligation. Provisions are measured at the Directors’ best estimate of the expenditure required to settle the
obligation at the balance sheet date and are discounted to present value where the effect is material.
Legacy properties
– EWS and associated review
£m
11.4
32.6
(0.2)
(2.2)
41.6
Legacy properties
– Citiscape and associated review
£m
16.8
57.7
(4.4)
(44.1)
26.0
Group
Total
£m
28.2
90.3
(4.6)
(46.3)
67.6
At 1 July 2020
Additions to provisions in the year
Releases
Utilisation in the year
At 30 June 2021
The Company has no provisions.
Costs associated with legacy properties
External wall systems and associated review
The Group is undertaking a review of all of its current and legacy buildings where it has used EWS or cladding solutions and continues
to assess the action required in line with the latest updates to Government guidance, as it applies, to multi-storey and multi-occupied
residential buildings. All of our buildings, including those incorporating EWS or cladding solutions, were signed off by approved
inspectors as compliant with the relevant Building Regulations at the time of completion. We have provided for the cost of assisting with
remedial work identified at a limited number of legacy properties where we have a legal liability to do so, where relevant build issues
have been identified, or it is considered that such build issues are likely to exist.
The amounts provided reflect the current best estimate of the extent and future costs of work required; however, these estimates may be
updated as work progresses or if Government legislation and regulation further evolves.
Citiscape and associated review
As announced in July 2020, we took the decision to pay for required remedial action on the reinforced concrete frame at the Citiscape
development in Croydon and undertook an associated review of 26 other developments where reinforced concrete frames were designed
for us by either the same original engineering firm or by other companies within the group of companies which has since acquired it.
This review is substantially complete and has not identified any other buildings with issues as severe as those present at Citiscape.
Detailed reviews are ongoing and, in line with our commitment to put our customers first we will ensure that the costs associated with
any remedial works from these reviews are not borne by leaseholders.
Management have made estimates as to the future costs, to the extent of the remedial works required and the costs of providing
alternative accommodation to those affected. The Financial Statements have been prepared based on currently available information,
including known costs and quotations where possible. However, the extent, cost and timing of remedial work may change as work
progresses.
Management have performed a sensitivity analysis to assess the impact of a change in their estimate of total costs. A 20% increase in
estimated costs recognised in the year would affect cost of sales and would reduce the Group’s gross margin by 40 bps. Whilst provisions
are expected to be utilised within one year, there is uncertainty over this timing.
142
143
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
4 Business combinations and other investing activities
4.2 Goodwill and other intangible assets CONTINUED
4.2.1 Goodwill continued
4.1 Business combinations
Consolidation
The financial statements of subsidiary undertakings are consolidated from the date when control passes to the Group, as defined in
IFRS 3, using the acquisition method of accounting up to the date control ceases. All of the subsidiaries’ identifiable assets and liabilities,
including contingent liabilities, existing at the date of acquisition are recorded at their fair values. All changes to those assets and
liabilities and the resulting gains and losses that arise after the Group has gained control of the subsidiary are included in the Income
Statement. All intra-Group transactions and intercompany profits or losses are eliminated on consolidation.
A full list of the subsidiary undertakings of the Group and Company is included in note 7.4.
4.1.1 Merger reserve
The merger reserve comprises the non-statutory premium arising on shares issued as consideration for the acquisition of subsidiaries
where merger relief under section 612 of the Companies Act 2006 applies.
4.1.2 Non-controlling interests
Movement in non-controlling interest share of net assets recognised in the Consolidated Balance Sheet
At 1 July
Distribution of profits to non-controlling partner
Share of profit for the year recognised in the Consolidated Income Statement
At 30 June
2021
£m
1.4
(0.6)
0.3
1.1
Group
2020
£m
6.9
(8.5)
3.0
1.4
There are no significant restrictions on the ability of the Group to access or use assets and settle liabilities. Detailed arrangements for each
subsidiary are laid out in the relevant shareholder and partnership agreements.
4.1.3 Company investments in subsidiary undertakings
Company investments
The Company’s interests in subsidiary undertakings are accounted for at cost less accumulated provision for impairment.
Where share-based payments are granted to the employees of subsidiary undertakings by the Company, they are treated as a capital
contribution to the subsidiary and the Company’s investment in the subsidiary is increased accordingly.
Cost
At 1 July
Increase in investment in subsidiaries related to share-based payments
At 30 June
Impairment
At 1 July and 30 June
Net book value
At 1 July
At 30 June
4.2 Goodwill and other intangible assets
4.2.1 Goodwill
2021
£m
3,173.8
1.8
3,175.6
Company
2020
£m
3,173.5
0.3
3,173.8
87.6
87.6
3,086.2
3,088.0
3,085.9
3,086.2
Goodwill
Goodwill arising on consolidation represents the excess of the fair value of the consideration over the fair value of the separately
identifiable net assets and liabilities acquired.
Goodwill arising on the acquisition of subsidiary undertakings and businesses is capitalised as an asset but reviewed for impairment at
least annually (see note 4.2.3).
For the purpose of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the
synergies of the combination at acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment.
If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated
first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis
of the carrying amount of each asset in the unit. Any impairment loss is recognised immediately in the Income Statement and is not
subsequently reversed.
Cost
At 30 June
Accumulated impairment losses
At 30 June
Carrying amount
At 30 June
2021
£m
Group
2020
£m
830.4
830.4
24.5
24.5
805.9
805.9
The Group’s goodwill relating to the acquisition of Wilson Bowden Limited in 2007 has a carrying value of £792.2m, and goodwill relating to
the 2019 acquisition of Oregon Timber Frame Limited has a carrying value of £13.7m, both relating to the housebuilding business.
4.2.2 Other intangible assets – Brands
Brands
The Group has capitalised, as intangible assets, brands that have been acquired. Acquired brand values are calculated using discounted
cash flows. Where a brand is considered to have a finite life, it is amortised over its useful life on a straight-line basis. Where a brand
is capitalised with an indefinite life, it is not amortised. The factors that contribute to the durability of brands capitalised are that there
are no material legal, regulatory, contractual, competitive, economic or other factors that limit the useful life of these intangible assets.
Internally generated brands are not capitalised.
The Group carries out an annual impairment review of indefinite life brands as part of the review of the carrying value of goodwill, by
performing a value-in-use calculation, using a discount factor based upon the Group’s pre-tax weighted average cost of capital
(note 4.2.3).
Customer contract relationships
The Group has capitalised, as intangible assets, acquired customer contract relationships. Customer contract relationships are valued
at the present value of future cash flows and are amortised on a straight-line basis in line with contract relationships at the acquisition
date. Internally generated customer contract relationships are not capitalised.
Cost
At 1 July and 30 June
Amortisation
At 1 July
Amortisation in the year
At 30 June
Carrying amount
At 30 June
2021
£m
Brands
2020
£m
107.9
107.9
7.5
0.4
7.9
7.0
0.5
7.5
100.0
100.4
Customer
contract relationships
2020
£m
2021
£m
2021
£m
Group
Total
2020
£m
1.4
0.7
0.7
1.4
–
1.4
–
0.7
0.7
0.7
109.3
109.3
8.2
1.1
9.3
7.0
1.2
8.2
100.0
101.1
The Group does not amortise the housebuilding brand acquired with Wilson Bowden, being David Wilson Homes, valued at £100.0m, as
the Directors consider that this brand has an indefinite useful economic life due to the fact that the Group intends to hold and support the
brand for an indefinite period and there are no factors that would prevent it from doing so.
In 2019, the Group acquired brands valued at £0.9m and customer contract relationships valued at £1.4m. These assets are amortised on a
straight-line basis in line with the contract relationships at the acquisition date.
144
145
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
4.2 Goodwill and other intangible assets CONTINUED
4.2.3 Impairment of goodwill and indefinite life brands
The Group conducts an annual impairment review of goodwill and its indefinite life brand, David Wilson Homes, together for the cash-
generating unit to which it is allocated, being the housebuilding business.
4.3 Investments in jointly controlled entities and associated entities CONTINUED
4.3.1 Joint ventures continued
Impairment of goodwill and indefinite life brands
The impairment review for the goodwill of the housebuilding business and the Group’s indefinite life brand requires an estimation of the
value-in-use of the housebuilding business. The value-in-use calculation requires an estimate of the expected future cash flows from the
housebuilding business, including the anticipated growth rate of revenue and costs, and requires the determination of a suitable discount
rate to calculate the present value of the cash flows.
An impairment review was performed at 30 April 2021 by comparing the value-in-use of the housebuilding business to the carrying value of
its tangible and intangible assets and allocated goodwill.
The value-in-use was determined by discounting the risk-adjusted expected future cash flows of the housebuilding segment. The first
three years of cash flows were determined using the Group’s approved detailed business plan. The cash flows for the fourth and fifth years
were determined using Group level internal forecast cash flows based upon expected volumes, selling prices and margins, taking into
account available land purchases and work-in-progress levels. The cash flows for year six onwards were extrapolated in perpetuity using an
estimated growth rate of 1%, based upon the historical long-term growth rate of the UK economy.
The Group’s financial forecasts reflect the outcomes that Management consider most likely, based on the information available at the date
of signing of these Financial Statements. The key assumptions underlying the forecasts are:
• expected changes in selling prices for completed houses and the related impact on operating margin: these are determined on a site-
by-site basis in the Group's approved business plan dependent upon local market conditions and product type. For subsequent years,
these have been estimated at a Group level based upon past experience and expectations of future changes in the market, taking into
account external market forecasts;
• sales volumes: these are determined on a site-by-site basis in the Group's approved business plan dependent upon local market
conditions, land availability and planning permissions. For subsequent years, these have been estimated at a Group level based on past
experience and expectations of future changes in the market, taking into account external market forecasts; and
• expected changes in site costs to complete: these are determined on a site-by-site basis in the Group's approved business plan
dependent upon the expected costs of completing all aspects of each individual development. For subsequent years, these have been
estimated at a Group level based on past experience and expectations of future changes in the market, taking into account external
market forecasts.
The forecasts have been sensitised to reflect scenarios based on the Group’s principal risks and the downside prospects for the UK
economy through adjustments to the key assumptions. The adverse scenarios modelled are the Directors’ assessment of a reasonable
worst-case scenario, being that used to assess the Group’s ability to continue as a going concern in note 1.3, and a scenario in which the
Group’s risks manifest to an intermediate level. The risk-adjusted expected future cash flows are the weighted average of these possible
economic outcomes. The value-in-use constitutes the present value of these cash flows through the application of an appropriate discount
rate.
The key variables for the value-in-use calculations were:
• discount rate: this is a pre-tax rate reflecting the Group’s target capital structure and current market assessments of the time value of
money. A rate of 11.8% (2020: 10.0%) is considered by the Directors to be the appropriate pre-tax discount rate; and
• probability of variance in assumptions: Management consider the assumptions applied in the Group’s forecast to represent the most
likely outcomes.
The result of the value-in-use exercise concluded that the recoverable value of goodwill and intangible assets exceeded its carrying value
by £1,861.2m (2020: £1,182.5m) and there has been no impairment. The increase in headroom is a result of an improved forecast outlook
following the recovery of the business and wider economy from COVID-19.
4.3 Investments in jointly controlled entities and associated entities
4.3.1 Joint ventures
A jointly controlled entity 'JV' is an entity, including an unincorporated entity such as a partnership, in which the Group holds an interest
with one or more other parties where a contractual arrangement has established joint control over the entity. An associated entity is an
entity, including an unincorporated entity such as a partnership, in which the Group holds a significant influence and that is neither a
subsidiary nor an interest in a JV.
Jointly controlled and associated entities
2021
£m
152.1
7.9
(3.4)
(21.2)
27.7
163.1
Group
2020
£m
189.0
31.2
(72.2)
(24.2)
28.3
152.1
JVs and associates
At 1 July
Increase in amounts invested in JVs
Repayment of investments in JVs
Dividends received from JVs
Share of post-tax profit for the year from JVs
At 30 June
There are no losses in any of the Group’s JVs or associates which have not been recognised by the Group.
In December 2020, the Group disposed of its interest in BK Scotswood LLP, for total consideration, received in cash, of £2.0m, recognising a
£2.0m profit on disposal which is included within sundry income. Through this transaction, the Group has disposed of its significant interest
in New Tyne West Development Company LLP.
At 30 June 2021, the Group had interests in the following jointly controlled entities:
Percentage
owned
JV
50.0%
51 College Road LLP
Alie Street LLP2
50.0%
Barratt Metropolitan LLP1
75.0%
Barratt Wates (East Grinstead) Limited 50.0%
Barratt Wates (East Grinstead No.2)
50.0%
Limited2
Barratt Wates (Horley) Limited1
Barratt Wates (Lindfield) Limited
Barratt Wates (Worthing) Limited
BDWZest Developments LLP2
BDWZest LLP
Blackhorse Road Properties LLP1
Brooklands Milton Keynes LLP
DWH/Wates (Thame) Limited
Enderby Wharf LLP
Fulham Wharf LLP2
Fulham Wharf One Limited2
Fulham Wharf Two Limited2
Harrow View LLP
Infinity Park Derby LLP
Nine Elms LLP²
Nine Elms One Limited2
Nine Elms Two Limited2
Old Sarum Park Properties Limited
Queensland Road LLP2
Ravenscraig Limited¹
Ravenscraig Town Centre LLP
Rose Shared Equity LLP
Sovereign BDW (Hutton Close) LLP
Sovereign BDW (Newbury) LLP
Wichelstowe LLP
ZestBDW LLP
78.5%
50.0%
50.0%
50.0%
50.0%
51.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
33.3%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
Voting rights
controlled
50.0%
50.0%
50.0%
50.0%
50.0%
Country of registration
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Principal
place of
business Principal activity
UK
UK
UK
UK
UK
Housebuilding
Housebuilding
Housebuilding
Holding company
Housebuilding
Financial
year end date
31 March*
31 March*
30 June
30 June
30 June
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
33.3%
50.0%
50.0%
50.0%
50.0%
50.0%
50.0%
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
Scotland
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
England and Wales
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
UK
30 June
30 June
30 June
31 March*
31 March*
30 June
30 June
30 June
30 June
31 March*
31 March*
31 March*
31 March*
Housebuilding
Housebuilding
Housebuilding
Holding company
Holding company
Housebuilding
Housebuilding
Housebuilding
Housebuilding
Housebuilding
Dormant
Dormant
Housebuilding
Commercial development 30 June
Housebuilding
Dormant
Dormant
Dormant
Housebuilding
Commercial development 31 December*
Dormant
Investment entity
Dormant
Housebuilding
Housebuilding
Holding company
30 June
30 June
30 June
30 June
31 March*
31 March*
31 March*
31 March*
31 March*
30 June
31 March*
*JV prepares financial statements which are non-coterminous with the Group in order to comply with the terms of their JV agreements and to align with the year-ends
and requirements of our JV partners.
Judgements applied in determining the classification of joint arrangements
1 The Group holds three JV investments (Barratt Wates (Horley) Limited, Barratt Metropolitan LLP and Blackhorse Road Properties LLP) not in equal share, and one
(Ravenscraig Limited) with more than one other party. However, in each case, the Group has equal voting rights and control over the activities of the companies with
the other parties. In addition, the Group and the other parties to the agreements only have rights to the net assets of these companies through the terms of the
contractual arrangements. These entities are therefore classified as JVs.
Investments in JVs and associated entities are accounted for using the equity method of accounting.
2 The Group’s interests in a number of the entities classified as JVs are held indirectly.
The Group’s share of the profit or loss of JVs and associated entities increase or decrease the carrying amount of the investment and
long-term interests.
• Barratt Wates (East Grinstead) No. 2 Limited is a wholly owned subsidiary of the Group’s JV, Barratt Wates (East Grinstead) Limited, and is, therefore, classified as
a JV of the Group.
• BDWZest Developments LLP, Alie Street LLP, Queensland Road LLP, Fulham Wharf LLP and Nine Elms LLP form a group of limited liability partnerships jointly
owned (directly or indirectly) by BDWZest LLP and ZestBDW LLP, both of which are JVs of the Group. Nine Elms One Limited and Nine Elms Two Limited are wholly
owned subsidiaries of Nine Elms LLP, and Fulham Wharf One Limited and Fulham Wharf Two Limited are wholly owned subsidiaries of Fulham Wharf LLP. All of
these entities are, therefore, classified as JVs of the Group.
146
147
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
4.3 Investments in jointly controlled entities and associated entities CONTINUED
4.3.1 Joint ventures continued
Registered offices
The registered office of all of the entities in the preceding table, with the exception of those listed below is: Barratt House, Barratt House,
Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire LE67 1UF.
Enderby Wharf LLP: Here East 13 East Bay Lane, 3rd Floor Press Centre, Queen Elizabeth Park, London, E15 2GW.
Sovereign BDW (Hutton Close) LLP and Sovereign BDW (Newbury) LLP: Sovereign House, Basing View, Basingstoke, RG21 4FA.
Ravenscraig Limited: 15 Atholl Crescent, Edinburgh EH3 8HA.
Summarised financial information relating to these JVs is as follows:
Income
Adjusted expenditure
Credit associated with legacy properties
Interest payable
Tax
Profit for the year, being total comprehensive
income
Group share of profit for the year recognised in the
Consolidated Income Statement
Dividends received from JVs in the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net assets of JVs
Cash and cash equivalents included in the above
net assets
Group share of net assets recognised in the
Consolidated Balance Sheet at 30 June
Harrow View LLP
2020
£m
58.8
(48.3)
–
–
10.5
2021
£m
58.1
(46.6)
–
–
11.5
–
–
11.5
10.5
5.8
6.5
90.2
–
(11.6)
–
78.6
5.3
2.5
92.7
–
(12.7)
–
80.0
Blackhorse Road
Developments LLP
2020
£m
18.9
(15.2)
–
–
3.7
2021
£m
32.7
(25.2)
–
–
7.5
Other JVs
2020
£m
201.1
(159.1)
-
(1.8)
40.2
2021
£m
178.1
(141.7)
3.6
(2.0)
38.0
Group Total
2020
£m
278.8
(222.6)
–
(1.8)
54.4
2021
£m
268.9
(213.5)
3.6
(2.0)
57.0
–
7.5
3.8
–
44.9
–
(10.7)
–
34.2
–
0.1
0.2
0.1
0.2
3.7
38.1
40.4
57.1
54.6
1.9
–
31.9
–
(5.2)
–
26.7
18.1
14.7
261.3
10.8
(190.3)
(40.2)
41.6
21.1
21.7
250.5
13.9
(188.9)
(43.2)
32.3
27.7
21.2
396.4
10.8
(212.6)
(40.2)
154.4
28.3
24.2
375.1
13.9
(206.8)
(43.2)
139.0
20.8
11.4
15.1
13.7
55.4
38.9
91.3
64.0
39.3
40.0
17.4
13.6
20.4
16.6
77.1
70.2
A reconciliation of the Group’s share of net assets to the carrying value of investments included in the Balance Sheet is presented below:
Group share of the net assets of its JVs
Group loans to JVs
At 30 June
2021
£m
77.1
86.0
163.1
Group
2020
£m
70.2
81.9
152.1
4.3 Investments in jointly controlled entities and associated entities CONTINUED
4.3.1 Joint ventures continued
The Group has made loans, net of loss allowances, of £86.0m (2020: £81.9m) to its JVs, which are presented within Group investments.
The loss allowances for Group loans to JVs are equal to 12-month expected credit losses unless there has been a significant increase in
credit risk since the date of initial recognition, in which case, the loss allowance is equal to the lifetime expected credit loss. A significant
increase in credit risk is judged to have occurred if a review of available information indicates an increased probability of default. At 30 June
2021, the loss allowance is immaterial (2020: immaterial).
Included within the Group’s share of net assets of JVs is a proportion of the loans to the JVs (net of fair value adjustments made in one JV),
calculated using the Group’s ownership share, of £82.7m (2020: £75.1m).
During the year, the Group entered into a number of transactions with its JVs in respect of funding and development management services
(with charges made based on the utilisation of these services) in addition to the provision of construction services. Further details on these
transactions are provided in note 7.2.3. The Group and Company have a number of contingent liabilities relating to their JVs. Further details
on these are provided in note 7.1.2.
The transfer of funds from the Group’s JVs to the Group is determined by the terms of the JV agreements, which specify how available
funds should be applied in repaying loans and capital, and distributing profits to the partners.
4.4 Jointly controlled operations
Jointly controlled operations
The Group’s share of profits and losses from its investments in jointly controlled operations is accounted for on a direct basis and is
included in the Income Statement. The Group’s share of its investments, assets and liabilities is accounted for on a directly proportional
basis in the Group’s Balance Sheet.
The Group enters into jointly controlled operations as part of its housebuilding and property development activities. The Company has no
jointly controlled operations (2020: none).
The Group has significant interests in the following jointly controlled operation:
Joint operation
Chapel Hill
Share of profits and assets consolidated
50.0%¹
Principal place of business
UK
Principal activity
Housebuilding
1 Subject to achieving forecast profitability, 50% of profits are attributable to the Group. 50% of assets are consolidated excluding land, land creditors and any part-
exchange properties.
The Group’s share of the joint operations’ income and expenses included in the Consolidated Income Statement during the year, and the
assets and liabilities of the joint operations which are included in the Group Balance Sheet, are shown below:
Group share:
Income
Expenses
Share of profit from joint operations
Current assets
Current liabilities
Share of net assets of joint operations
4.5 Property, plant and equipment
Property, plant and equipment
2021
£m
15.4
(11.8)
3.6
27.5
(12.8)
14.7
Group
2020
£m
12.2
(11.1)
1.1
13.0
(1.9)
11.1
Property, plant and equipment is carried at cost less accumulated depreciation and accumulated impairment losses. Depreciation is
provided to write off the cost of the assets on a straight-line basis to their residual value over their estimated useful lives. Residual
values and asset lives are reviewed annually.
Freehold properties are depreciated on a straight-line basis over 25 years. Freehold land is not depreciated. Plant is depreciated on a
straight-line basis over its expected useful life, which ranges from one to seven years.
148
149
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
4.5 Property, plant and equipment CONTINUED
Cost
At 1 July 2019
Additions
Disposals
At 30 June 2020
Additions
Disposals
At 30 June 2021
Depreciation
At 1 July 2019
Charge for the year
Disposals
At 30 June 2020
Charge for the year
Disposals
At 30 June 2021
Net book value
At 30 June 2020
At 30 June 2021
Group
Property
£m
Plant and
equipment
£m
Total
£m
Property
£m
Plant and
equipment
£m
Company
Total
£m
6.3
–
(0.8)
5.5
0.1
–
5.6
3.3
0.3
(0.8)
2.8
0.3
–
3.1
2.7
2.5
43.7
7.5
(3.3)
47.9
7.1
(1.7)
53.3
29.3
5.2
(2.9)
31.6
5.5
(1.7)
35.4
16.3
17.9
50.0
7.5
(4.1)
53.4
7.2
(1.7)
58.9
32.6
5.5
(3.7)
34.4
5.8
(1.7)
38.5
19.0
20.4
0.2
–
–
0.2
–
–
0.2
0.2
–
–
0.2
–
–
0.2
–
–
22.2
4.9
(2.1)
25.0
6.1
(1.6)
29.5
14.5
2.7
(1.7)
15.5
3.1
(1.6)
17.0
9.5
12.5
22.4
4.9
(2.1)
25.2
6.1
(1.6)
29.7
14.7
2.7
(1.7)
15.7
3.1
(1.6)
17.2
9.5
12.5
Authorised future capital expenditure that was contracted but not provided for in these Financial Statements amounted to £0.7m
(2020: £0.3m).
5 Capital structure and financing
5.1 Net cash
Net cash is defined as cash and cash equivalents, bank overdrafts, interest bearing borrowings and prepaid fees. Net cash at 30 June is
shown below:
Cash and cash equivalents
Drawn debt
Borrowings:
Sterling US private placement notes
Bank overdrafts
Total borrowings being total drawn debt
Prepaid fees
Net cash
Total borrowings at 30 June are analysed as:
Non-current borrowings
Current borrowings
Total borrowings being total drawn debt
Notes
5.1.1
2021
£m
1,518.6
(200.0)
(5.3)
(205.3)
4.1
1,317.4
(200.0)
(5.3)
(205.3)
Group
2020
£m
619.8
(200.0)
(117.7)
(317.7)
6.1
308.2
(200.0)
(117.7)
(317.7)
2021
£m
1,319.0
(200.0)
–
(200.0)
4.1
1,123.1
(200.0)
–
(200.0)
Company
2020
£m
424.0
(200.0)
(111.0)
(311.0)
6.1
119.1
(200.0)
(111.0)
(311.0)
5.1 Net cash CONTINUED
Movement in net cash is analysed as follows:
Net increase/(decrease) in cash and cash equivalents
Repayment/(drawdown) of borrowings:
Loans and borrowings drawdowns
Loans and borrowings repayments
Other movements in borrowings:
Movement in prepaid fees
Movement in net cash in the year
Opening net cash
Closing net cash
Changes in liabilities arising from financing activities are shown below:
Liabilities from financing activities at
1 July 2019
Financing cash flows
Other movements
Liabilities arising from financing activities at
30 June 2020
Financing cash flows
Other movements
Liabilities arising from financing activities at
30 June 2021
Total
borrowings
£m
Lease
liabilities
£m
(377.7)
60.0
–
(317.7)
112.4
–
(55.0)
14.1
(6.9)
(47.8)
14.8
(7.7)
2021
£m
898.8
–
112.4
(2.0)
1,009.2
308.2
1,317.4
Group
Total
£m
(432.7)
74.1
(6.9)
(365.5)
127.2
(7.7)
Group
2020
£m
(516.2)
–
60.0
(1.3)
(457.5)
765.7
308.2
2021
£m
895.0
–
111.0
(2.0)
1,004.0
119.1
1,123.1
Total
borrowings
£m
Lease
liabilities
£m
(252.6)
(58.4)
–
(311.0)
111.0
–
(5.6)
1.0
(0.3)
(4.9)
1.0
(0.6)
(4.5)
Company
2020
£m
(465.3)
(58.4)
–
(1.3)
(525.0)
644.1
119.1
Company
Total
£m
(258.2)
(57.4)
(0.3)
(315.9)
112.0
(0.6)
(204.5)
(205.3)
(40.7)
(246.0)
(200.0)
5.1.1 Cash and cash equivalents
Cash and cash equivalents are held at floating interest rates linked to the UK bank rate and money market rates as applicable. Cash and
cash equivalents comprise cash held by the Group and short-term bank deposits with an original maturity of three months or less from
inception and are subject to an insignificant risk of changes in value.
Further disclosures relating to financial assets are set out in note 5.3.1.
5.1.2 Borrowings and facilities
Loans and borrowings
Interest bearing loans and overdrafts are initially recognised at fair value less directly attributable transaction costs and subsequently
measured at amortised cost, being the amount recorded at recognition plus accrued interest applied to the account less any
repayments made.
All debt facilities at 30 June 2021 are unsecured.
The principal features of the Group’s committed debt facilities at 30 June 2021 and 30 June 2020 were as follows:
Committed facilities:
RCF
Fixed rate Sterling USPP notes
Amount drawn
Facility
30 June 2021
30 June 2020
Maturity
£700.0m
£200.0m
–
£200.0m
–
£200.0m
22 November 2024
22 August 2027
The Group also uses various bank overdrafts and uncommitted borrowing facilities that are subject to floating interest rates linked to UK
rates, LIBOR until 31 May 2021, and SONIA from 1 June 2021 and money market rates as applicable.
Weighted average interest rates are disclosed in note 5.2.
150
151
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
5.2 Net finance costs
Finance costs and income
The Group recognises finance costs and income on bank borrowings, deposits and other borrowings in the Income Statement in the
period to which they relate.
Recognised in the Consolidated Income Statement:
Finance income
Finance income on short-term bank deposits
Finance income related to employee benefits
Other interest receivable
Finance costs
Interest on loans and borrowings
Imputed interest on deferred term payables
Finance charge on leased assets
Amortisation of facility fees
Other interest payable
Net finance costs
The weighted average interest rates (excluding fees) paid in the year were as follows:
USPP notes
5.3 Financial instruments
Recognition
Notes
6.2.2
2021
%
2.8
Group
2020
%
2.8
2021
£m
(0.5)
(0.1)
(0.8)
(1.4)
9.8
13.7
1.3
2.0
1.2
28.0
26.6
2021
%
2.8
2020
£m
(3.0)
(1.6)
(0.5)
(5.1)
9.5
19.9
2.0
2.3
1.3
35.0
29.9
Company
2020
%
2.8
Financial assets and financial liabilities are recognised on the Balance Sheet in accordance with IFRS 9 when the Group becomes a
party to the contractual provisions of the instrument.
The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire or it transfers the
financial asset and substantially all the risks and rewards of ownership of the asset to another entity.
The Group derecognises a financial liability only when the Group’s obligations are discharged, cancelled or they expire.
Classification and measurement
Non-derivative financial assets are classified in accordance with IFRS 9 as either ‘fair value through profit and loss’ or ‘subsequently
measured at amortised cost’. The classification depends on the business model for managing the financial assets and the contractual
cash flow characteristics of the financial asset.
All non-derivative financial liabilities are classified as ‘subsequently measured at amortised cost’.
Financial assets and liabilities subsequently measured at amortised cost are initially recognised at fair value determined based on
discounted cash flow analysis using current market rates for similar instruments. They are subsequently measured at amortised cost
using the ‘effective interest rate’ method. Financial assets are also measured after recognition of any impairment.
Financial assets classified as ‘fair value through profit and loss’ are measured at fair value at the end of each reporting period. Gains
and losses arising from changes in fair value are charged directly to the Income Statement to the extent that they are not part of a
designated hedging relationship.
Financial liabilities are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for
at least 12 months after the balance sheet date.
Impairment
A loss allowance is recognised for expected credit losses on financial assets as described in note 3.2. Any impairment is recognised
immediately in the Income Statement.
5.3 Financial instruments CONTINUED
5.3.1 Financial assets
The carrying values and fair values of the Group and Company financial assets are as follows:
Fair
value
£m
2021
Carrying
value
£m
Notes
Group
2020
Carrying
value
£m
Fair
value
£m
Fair
value
£m
2021
Carrying
value
£m
Company
2020
Carrying
value
£m
Fair
value
£m
5.1
1,518.6
1,518.6
619.8
619.8
1,319.0
1,319.0
424.0
424.0
119.8
119.8
58.1
58.1
9.6
9.6
0.5
0.5
3.2
–
1,638.4
–
1,638.4
–
677.9
–
677.9
76.0
1,404.6
76.0
1,404.6
395.5
820.0
395.5
820.0
Cash and cash
equivalents
Measured at
amortised cost:
Trade and other
receivables¹
Intercompany
receivables
Total financial assets
1 Excludes amounts recoverable on contracts, prepayments and accrued income, and tax and social security.
5.3.2 Financial liabilities
The carrying values and fair values of the Group and Company financial liabilities are as follows:
Fair
value
£m
2021
Carrying
value
£m
Group
2020
Carrying
value
£m
Fair
value
£m
Fair
value
£m
2021
Carrying
value
£m
Company
2020
Carrying
value
£m
Fair
value
£m
5.3
5.3
117.7
117.7
–
–
111.0
111.0
202.8
200.0
184.5
200.0
202.8
200.0
184.5
200.0
1,296.1
1,293.8
1,252.7
1,245.1
16.9
16.9
–
40.7
–
40.7
–
47.8
–
47.8
764.3
4.5
764.3
4.5
11.8
19.3
4.8
11.8
19.3
4.8
1,544.9
1,539.8
1,602.7
1,610.6
988.5
985.7
331.4
346.9
Notes
5.1
5.1
3.3
3.5
Measured at
amortised cost:
Bank overdrafts
Loans and
borrowings
Trade and other
payables¹
Intercompany
payables
Lease liabilities
Total financial
liabilities
1 Excludes deferred income, payments received in excess of amounts recoverable on contracts, tax and social security and other non-financial liabilities.
The fair values of liabilities in the above table have been determined using discounted cash flows based on observable market data other
than quoted prices in active markets for identical liabilities.
Trade and other payables include items secured by legal charges as disclosed in note 3.3.
5.3.3 Financial instruments gains and losses
The net (gains)/losses recorded in the Consolidated Income Statement, in respect of financial instruments (excluding interest shown in
note 5.2), were as follows:
Financial assets measured at amortised cost
Trade receivables – loss allowance charge
Recoveries of doubtful receivables
Notes
3.2
3.2
2021
£m
3.4
(5.1)
2020
£m
5.8
(4.8)
152
153
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
5.4 Financial risk management
The Group’s approach to risk management and the principal operational risks of the business are detailed on pages 56 to 64. The Group’s
financial assets and financial liabilities are detailed in note 5.3.
The Group’s operations and financing arrangements expose it to a variety of financial risks, of which the most material are: liquidity risk,
the availability of funding at reasonable margins, credit risk and interest rates. There is a regular, detailed system for the reporting and
forecasting of cash flows from operations to Senior Management including Executive Directors to ensure that liquidity risks are promptly
identified and appropriate mitigating actions are taken by the Treasury department. These forecasts are further stress-tested at a Group
level on a regular basis to ensure that adequate headroom within facilities and banking covenants is maintained. In addition, the Group has
in place a risk management programme that seeks to limit the adverse effects of the other risks on its financial performance.
The Board approves treasury policies and certain day-to-day treasury activities have been delegated to a centralised Treasury Operating
Committee, which in turn regularly reports to the Board. The Treasury department implements guidelines that are established by the Board
and the Treasury Operating Committee.
5.4.1 Liquidity risk
Liquidity risk is the risk that the Group will be unable to meet its liabilities as they fall due. The Group actively maintains a mixture of long-
term and medium-term committed facilities that are designed to ensure that the Group has sufficient available funds for operations.
The Group’s borrowings are typically cyclical throughout the financial year and peak in April to May, and October to November of each year,
due to seasonal trends in income. Accordingly, the Group maintains sufficient facility headroom to cover these requirements. On a normal
operating basis, the Group has a policy of maintaining a minimum headroom of £150.0m. The Group identifies and takes appropriate
actions based on its regular, detailed system for the reporting and forecasting of cash flows from its operations. The Group’s drawn debt,
excluding fees, represented 22.8% (2020: 35.3%) of available committed facilities at 30 June 2021. In addition, the Group had £1,518.6m
(2020: £619.8m) of cash and cash equivalents.
The Group was in compliance with its financial covenants at 30 June 2021. The Group’s resilience to its principal risks has been modelled,
together with possible mitigating actions, over a three-year period. At the date of approval of the Financial Statements, the Group’s
internal forecasts indicate that it will be able to operate within its current facilities and remain in compliance with these covenants for the
foreseeable future, being at least 12 months from the date of signing these Financial Statements.
One of the Group’s objectives is to minimise refinancing risk. The Group, therefore, has a policy that the average maturity of its committed
bank facilities and private placement notes is a minimum of two years with a target of two to three years. At 30 June 2021, the average
maturity of the Group’s committed facilities was 4.0 years (2020: 5.0 years).
The Group maintains certain committed floating rate facilities with banks to ensure sufficient liquidity for its operations. The undrawn
committed facilities available to the Group, in respect of which all conditions precedent had been met, were as follows:
Expiry date
In more than two years but not more than five years
2021
£m
700.0
Group
2020
£m
700.0
2021
£m
700.0
Company
2020
£m
700.0
In addition, the Group had undrawn, uncommitted overdraft facilities available at 30 June 2021 of £17.0m (2020: £55.0m).
The expected undiscounted cash flows of the Group and Company financial liabilities, by remaining contractual maturity at the balance
sheet date were, as follows:
Group
2021
Loans and borrowings
(including bank overdrafts)1
Trade and other payables2
Lease liabilities
2020
Loans and borrowings
(including bank overdrafts)1
Trade and other payables2
Lease liabilities
Notes
5.3.2
5.3.2
3.5
5.3.2
5.3.2
3.5
Carrying
amount
£m
Contractual
cash flow
£m
Less than
1 year
£m
1–2 years
£m
2–5 years
£m
Over 5 years
£m
205.3
1,293.8
40.7
1,539.8
317.7
1,245.1
47.8
1,610.6
235.9
1,320.1
48.6
1,604.6
239.6
1,276.7
56.7
1,573.0
5.5
1,003.2
12.1
1,020.8
5.5
953.4
13.2
972.1
5.5
173.0
8.6
187.1
5.5
171.0
10.4
186.9
16.6
129.8
15.6
162.0
16.6
136.6
17.9
171.1
208.3
14.1
12.3
234.7
212.0
15.7
15.2
242.9
1 The Group is party to banking agreements that include a legal right of offset which enables the overdraft balances of £5.3m (2020: £117.7m) to be settled net with cash
balances. These balances have been excluded from contractual cash flows.
2 Excludes deferred income, payments received in excess of amounts recoverable on contracts, tax and social security and other non-financial liabilities.
The Group had no derivative financial instruments at 30 June 2021 or 30 June 2020.
5.4 Financial risk management CONTINUED
5.4.1 Liquidity risk continued
Company
2021
Loans and borrowings (including
bank overdrafts)
Trade and other payables1
Intercompany payables
Lease liabilities
2020
Loans and borrowings (including
bank overdrafts)
Trade and other payables¹
Intercompany payables
Lease liabilities
Carrying
amount
£m
Contractual
cash flow
£m
Less than
1 year
£m
Notes
1–2 years
£m
2–5 years
£m
Over 5 years
£m
5.3.2
5.3.2
5.3.2
3.5
5.3.2
5.3.2
5.3.2
3.5
200.0
16.9
764.3
4.5
985.7
311.0
11.8
19.3
4.8
346.9
235.9
16.9
764.3
4.7
1,021.8
350.6
11.8
19.3
5.0
386.7
5.5
16.9
764.3
1.0
787.7
116.5
11.8
19.3
0.9
148.5
5.5
–
–
0.9
6.4
5.5
–
–
0.8
6.3
16.6
–
–
2.2
18.8
16.6
–
–
2.1
18.7
208.3
–
–
0.6
208.9
212.0
–
–
1.2
213.2
1 Excludes tax and social security and other non-financial liabilities.
The Company had no derivative financial instruments at 30 June 2021 or 30 June 2020.
5.4.2 Market risk (price risk)
Interest rate risk
The Group has both interest bearing assets and interest bearing liabilities. Floating rate borrowings expose the Group to cash flow interest
rate risk, and fixed rate borrowings expose the Group to fair value interest rate risk.
The Group has a conservative treasury risk management strategy and the Group’s interest rates are set using fixed rate debt instruments.
Due to the level of the Group’s interest cover ratio and in accordance with the Group’s policy to hedge a proportion of the forecast RCF
drawings based on the Group’s three-year plan, no interest rate hedges are currently required.
The exposure of the Group’s financial liabilities to interest rate risk is as follows:
Group
2021
Financial liability exposure to interest rate risk
2020
Financial liability exposure to interest rate risk
Floating rate
financial
liabilities
£m
Fixed rate
financial
liabilities
£m
Non-interest
bearing
financial
liabilities
£m
Total
£m
–
–
200.0
1,339.8
1,539.8
200.0
1,410.6
1,610.6
The exposure of the Company’s financial liabilities to interest rate risk is as follows:
Company
2021
Financial liability exposure to interest rate risk
2020
Financial liability exposure to interest rate risk
Floating rate
financial
liabilities
£m
Fixed rate
financial
liabilities
£m
Non-interest
bearing
financial
liabilities
£m
Total
£m
–
200.0
785.7
985.7
130.0
200.0
16.9
346.9
Floating interest rates on Sterling borrowings are linked to UK rates, LIBOR until 31 May 2021 and SONIA from 1 June 2021, and money
market rates. The floating rates are fixed in advance for periods generally ranging from one to six months. Short-term flexibility is achieved
through the use of overdraft, committed and uncommitted bank facilities. The Group retained a strong cash position throughout the year
and, therefore, the Group did not draw on its RCF during the year and the use of other facilities was minimal. No interest was paid on
floating rate borrowings in 2021 (2020 rate of interest on minimal floating rate borrowings: 1.7%).
Sterling USPP notes of £200.0m were issued on 22 August 2017 with a fixed coupon of 2.77% and a ten-year maturity. These fixed rate notes
expose the Group to fair value interest rate risk.
154
155
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
5.4 Financial risk management CONTINUED
5.4.2 Market risk (price risk) continued
Sensitivity analysis
In the year ended 30 June 2021, if UK interest rates had been 0.5% higher (considered to be a reasonably possible change) and all other
variables were held constant, the Group’s pre-tax profit would increase by £4.9m (2020: £2.6m), the Group’s post-tax profit would increase
by £4.0m (2020: £2.1m) and, as such, the Group’s equity would increase by £4.0m (2020: £2.1m). Had interest rates reduced to zero, the
Group’s pre-tax profit would decrease by £0.5m and the Group’s post-tax profit and equity would decrease by £0.4m.
5.4.3 Credit risk
In the majority of cases, the Group receives cash on legal completion for private sales and receives advance stage payments from
registered providers for affordable housing. Included within trade and other receivables is £29.9m (2020: £12.0m) due from Homes England
in respect of the Help to Buy scheme. Since this receivable is due from a UK Government agency, the Group considers that it has an
insignificant risk of default. In addition, the Group has £1,518.6m (2020: £619.8m) on deposit with nine financial institutions. Other than
this, neither the Group nor the Company has a significant concentration of credit risk, as their exposure is spread over a large number of
counterparties and customers.
The Group manages credit risk through its credit policy. This limits its exposure to financial institutions with high credit ratings, as set by
international credit rating agencies, and determines the maximum permissible exposure to any single counterparty.
The maximum exposure to any counterparty at 30 June 2021 was £244.0m (2020: £100.7m) of cash on deposit with a financial institution.
The carrying amount of financial assets recorded in the Financial Statements, net of any allowance for losses, represents the Group’s
maximum exposure to credit risk.
As at 30 June 2021, the Company was exposed to £76.0m (2020: £389.4m) of credit risk in relation to intercompany loans, which are
considered to be of low credit risk and fully recoverable, as well as financial guarantees, performance bonds and the bank borrowings of
subsidiary undertakings. Further details are provided in notes 7.1 and 7.2.
5.4.4 Capital risk management (cash flow risk)
The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for
shareholders and meet its liabilities as they fall due while maintaining an appropriate capital structure.
The Group manages its share capital as equity, as set out in the Statement of Changes in Shareholders’ Equity, and its bank borrowings
(being overdrafts and bank loans) and its private placement notes as other financial liabilities, as set out in note 5.3.2. The Group is subject
to the prevailing conditions of the UK economy and the quantum of the Group’s earnings is dependent upon the level of UK house prices.
UK house prices are determined by the UK economy and economic conditions, employment levels, interest rates, consumer confidence,
mortgage availability and competitor pricing. The Group’s approach to the management of the principal operational risks of the business
are detailed on pages 56 to 64.
Following the lockdown introduced by the UK Government in response to COVID-19, in order to manage its cash flows and capital structure,
the Company paid no final dividend or special cash payment in respect of the year ended 30 June 2020. Strong cash generation since
30 June 2020 has enabled the Group to resume dividend payments. An interim dividend of 7.5 pence per share has been paid in respect of
the year ending 30 June 2021, and a final dividend of 21.9 pence per share is proposed. The Group also temporarily suspended land buying
activity and carefully managed its operational cash flows.
Other methods by which the Group can manage its short-term and long-term capital structure include: further adjusting the level of
dividend payments to shareholders (assuming the Company is paying a dividend); issuing new share capital; arranging debt to meet liability
payments; and selling assets to reduce debt.
5.5 Share capital
Equity instruments
Ordinary share capital is recorded at the proceeds received, net of direct issue costs and is classified as equity.
5.5.1 Ordinary share capital
Allotted and issued ordinary shares
10p each fully paid: 1,018,331,741 (2020: 1,018,302,400) ordinary shares
Options over the Company’s shares granted during the year
LTPP
Sharesave
DBP
ELTIP
2021
£m
101.8
2021
Number
3,204,477
1,913,489
-
1,249,000
6,366,966
2020
£m
101.8
2020
Number
2,629,027
3,142,874
583,505
1,254,200
7,609,606
5.5 Share capital CONTINUED
5.5.1 Ordinary share capital continued
Allotment of shares during the year
At 1 July
Issued to satisfy early exercises under Sharesave schemes
Issued to satisfy exercises under matured Sharesave schemes
At 30 June
2021
Number
1,018,302,400
10,251
19,090
1,018,331,741
2020
Number
1,016,985,862
39,215
1,277,323
1,018,302,400
5.5.2 Own shares reserve
The own shares reserve represents the cost of shares in Barratt Developments PLC purchased in the market or issued by the Company and
held by the EBT on behalf of the Company in order to satisfy options and awards that have been granted by the Company.
The EBT has agreed to waive all, or any future right to dividend payments on shares held within the EBT and these shares do not count in the
calculation of the weighted average number of shares used to calculate EPS until such time as they are vested to the relevant employee.
Ordinary shares in the Company held in the EBT (number)
Cost of shares held in the EBT
Market value of shares held in the EBT at 695.2p (2020: 495.9p) per share
2021
1,300,125
£4.7m
£9.0m
2020
4,708,806
£20.1m
£23.4m
During the year, the EBT purchased no (2020: 1,174,900) shares in the market and disposed of 1,719,011 shares in settlement of exercises
under the Sharesave 2015 5-year plan and the Sharesave 2017 3-year plan (2020: 111,851 shares in settlement of exercises under the
SMSOP 2009/10 and the SMIS). A further 1,689,670 (2020: 2,526,498) shares were used to satisfy the vesting of the ELTIP 60th Anniversary
Award, the LTPP and the DBP.
6 Directors and employees
6.1 Key management and employees
Key management personnel, as defined under IAS 24 ‘Related Party Disclosures’, have been identified as the Board of Directors, as the
controls operated by the Group ensure that all key decisions are reserved for the Board. Detailed disclosures of Directors’ individual
remuneration, pension entitlements and share options, for those Directors who served during the year, are given in the audited sections
within the Remuneration Report on pages 103 to 109.
A summary of key management remuneration is as follows:
Salaries and fees (including pension compensation)
Social security costs1
Performance bonus
Benefits
Share-based payments2
Total
2021
£m
2.8
1.6
2.6
0.1
3.6
10.7
2020
£m
2.8
1.2
–
0.1
0.4
4.5
1 Excluded from the Executive Directors’ and Non-Executive Directors’ single figure of remuneration tables on page 103.
2
IFRS 2 ‘Share-Based Payment’ charge attributable to key management.
Total employee numbers and costs are as follows:
Average employee numbers (excluding sub-contractors,
including Directors)
2021
Number
Group
2020
Number
2021
Number
Company
2020
Number
6,422
6,632
365
370
156
157
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
6.1 Key management and employees CONTINUED
Employee costs (including Directors):
Wages and salaries including bonuses
Redundancy costs
Social security costs
Other pension costs
Share-based payments
Employee costs before grant repayment/(income)
CJRS grant repayment/(income)
Employee costs for the year
Notes
6.2
6.3
2.3
2.3.3
2021
£m
362.0
0.9
45.6
16.2
20.4
445.1
26.0
471.1
Group
2020
£m
318.8
1.0
34.5
13.6
6.8
374.7
(26.0)
348.7
2021
£m
41.4
0.4
8.0
3.7
9.6
63.1
0.6
63.7
Company
2020
£m
27.4
0.2
3.3
1.3
1.4
33.6
(0.6)
33.0
The majority of the costs of the Company’s employees are charged to other Group companies.
6.2 Retirement benefit obligations
The Group operates defined contribution and defined benefit pension schemes.
Defined contribution schemes
The Group’s contributions to the schemes are charged in the Income Statement in the year in which the contributions fall due.
Defined benefit scheme
The cost of providing benefits is determined using the Projected Unit Credit Method, with actuarial valuations being carried out at each
balance sheet date. Actuarial gains and losses are recognised in full in the period in which they occur. They are recognised outside the
Income Statement and presented in the Statement of Comprehensive Income. Net interest is calculated by applying a discount rate to
the net defined benefit liability or asset.
6.2 Retirement benefit obligations CONTINUED
6.2.2 Defined benefit scheme continued
On 16 June 2020, the Trustees entered into a bulk annuity insurance contract with an insurer in respect of the liabilities of the Scheme (a
‘buy-in’). As the buy-in policy is a qualifying insurance asset, the fair value of the insurance policy is deemed to be the present value of the
obligations that have been insured. The policy secured exactly matches the benefits due to Scheme members under the Scheme’s Trust
Deed and Rules, and the asset was, therefore, set equal to the liabilities covered. An additional liability was recognised in respect of GMP
equalisation.
During the year to 30 June 2021, the insurer has, in return for a premium from the Trustees, assumed responsibility for each of the
previously bought-in benefits of Scheme members (a ‘buy-out’). This has resulted in the discharge of all Scheme liabilities from the Group
and the disposal of all Scheme assets. A loss on settlement of £1.1m has been recognised in the Income Statement, comprising £0.7m paid
from Scheme assets and £0.4m of payments made by the Group in connection with the settlement.
The Group has retained a £1.3m liability for GMP equalisation (including £0.1m in respect of another Group scheme) and ownership of
£0.8m of Scheme assets. All other risks pertaining to the Scheme have been removed at the balance sheet date.
For the purposes of calculating the accounting costs and obligations of the Scheme, the assets of the Scheme were assumed to match
the value of the obligations insured. The liabilities of the Scheme have been calculated at each balance sheet date using the following
assumptions:
Principal actuarial assumptions
Weighted average assumptions to determine benefit obligations
Discount rate
Pensions-in-payment increase rate
Rate of price inflation
Weighted average assumptions to determine net cost
Discount rate
Pensions-in-payment increase rate
Rate of price inflation
2021
2020
1.89%
3.22%
3.43%
1.58%
2.94%
3.08%
1.58%
2.94%
3.08%
2.31%
3.17%
3.38%
Members are assumed to exchange 15% (2020: 19%) of their pension for cash on retirement. The assumptions have been chosen by the
Group following advice from Mercer Limited, the Group’s actuarial advisers.
The retirement benefit asset recognised in the Balance Sheet represents the excess of the fair value of the scheme assets over the
present value of the defined benefit obligation.
The following table illustrates the life expectancy for an average member on reaching age 65, according to the mortality assumptions used
to calculate the Scheme liabilities:
The Directors engage a qualified independent actuary to calculate the Group’s liability in respect of its defined benefit pension scheme.
In calculating this liability, it is necessary for actuarial assumptions to be made, which include estimations of discount rates, salary and
pension increases, price inflation and mortality. As actual rates of increase and mortality may differ from those assumed, the gross
pension liability may differ from that included in these Financial Statements. As a result of the buy-out, no defined benefit liabilities
remained in the Scheme at 30 June 2021. In the prior year these liabilities were matched by an insurance asset.
A gain or loss on settlement of a defined benefit scheme is recognised through the Income Statement at the point at which the Group
has no further legal or constructive obligation for part or all of the benefits.
6.2.1 Defined contribution schemes
The Group operates defined contribution retirement benefit schemes for all qualifying employees, under which it pays contributions to
independently administered funds. Contributions are based upon a fixed percentage of the employee’s pay and once these have been paid,
the Group has no further obligations under these schemes.
Contributions during the year
Group defined contribution schemes’ Consolidated Income Statement charge
2021
£m
13.9
2020
£m
13.6
At the balance sheet date, there were outstanding contributions of £1.9m (2020: £2.0m), which were paid on or before the due date.
6.2.2 Defined benefit scheme
The Group sponsored a funded defined benefit pension scheme in Great Britain (the 'Scheme') which, with effect from 30 June 2009, ceased to
offer future accrual of defined benefit pensions. Alternative defined contribution pension arrangements are in place for current employees.
The Scheme provides benefits to members based on their length of service and their salary in the final years leading up to retirement or
date of ceasing active accrual if earlier. The Scheme is operated under the UK regulatory framework, with a legally separate fund that is
Trustee administered. The Trustees are responsible for ensuring that the Scheme is sufficiently funded to meet current and future benefit
payments and for the investment policy with regard to Scheme assets.
158
Assumptions
Retired member born in 1956 (life expectancy at age 65)
Non-retired member born in 1976 (life expectancy at age 65)
Male
22.8 years
23.9 years
Female
24.4 years
25.5 years
The base mortality assumptions are based on the SAPS SP3MA/S2PFA_M (2020: SP3MA/S2PFA_M) mortality tables with an adjustment
to allow for the Scheme members being treated as if they are 1.5 years younger than the population of the mortality tables. Allowance for
future increases in life expectancy is made in line with the CMI 2020 projections with a long-term trend of 1.25% per annum (2020: CMI
2019 projections with a long term trend of 1.25% per annum).
The amounts recognised in the Consolidated Income Statement were as follows:
Past service cost
Administrative expenses
Pension costs recognised in operating expenses in the Consolidated Income Statement
Interest cost
Interest income
Pension income recognised in net finance costs in the Consolidated Income Statement
Total pension (expense)/income recognised in the Consolidated Income Statement
Notes
5.2
The amounts recognised in the Group and Company Statements of Comprehensive Income were as follows:
Expected return less actual return on Scheme assets
Gain/(loss) arising from changes in the assumptions underlying the present value of benefit obligations
Total pension remeasurements recognised in the Group and Company Statements of Comprehensive
Income
2021
£m
(1.2)
(0.7)
(1.9)
(6.6)
6.7
0.1
(1.8)
2021
£m
(15.6)
13.4
(2.2)
2020
£m
–
–
–
(8.9)
10.5
1.6
1.6
2020
£m
(29.6)
(39.6)
(69.2)
159
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
6.2 Retirement benefit obligations CONTINUED
6.2.2 Defined benefit scheme continued
The amount included in the Group and Company Balance Sheets arising from obligations in respect of the Scheme is as follows:
6.2 Retirement benefit obligations CONTINUED
6.2.2 Defined benefit scheme continued
The actual return on Scheme assets was as follows:
Net asset for defined benefit obligations at 1 July
Contributions paid to the Scheme
Amounts recognised in the Consolidated Income Statement
Amounts recognised in the Statement of Comprehensive Income
Amount transferred to other receivables and other payables (see tables below)
Surplus for funded Scheme/net asset recognised in the Group and Company Balance Sheets at 30 June
Analysed as:
Present value of funded obligations
Fair value of Scheme assets
2021
£m
3.5
–
(1.8)
(2.2)
0.5
–
–
–
2020
£m
62.6
8.5
1.6
(69.2)
–
3.5
(425.8)
429.3
A deferred tax asset of £0.1m (2020: £0.7m liability) has been recognised in the Group and Company Balance Sheets in relation to the
Scheme (note 2.6.3).
Movements in the present value of defined benefit obligations were as follows:
Present value of defined benefit obligations at 1 July
Past service cost
Settlement of obligations on disposal
Interest cost
Actuarial (gain)/loss
Benefits paid from Scheme
Amounts transferred to other payables¹
Present value of defined benefit obligations at 30 June
2021
£m
425.8
1.2
(406.5)
6.6
(13.4)
(12.4)
(1.3)
–
1 Following the buy-out of the Scheme, the past service cost obligation retained by the Group has been included within other payables at 30 June 2021.
Movements in the fair value of Scheme assets were as follows:
Fair value of Scheme assets at 1 July
Settlement payments from Scheme assets
Interest income
Actuarial loss on Scheme assets
Administrative expenses paid from Scheme assets
Employer contributions
Benefits paid from Scheme
Amounts transferred to other receivables¹
Fair value of Scheme assets at 30 June
1 Following the buy-out of the Scheme, the assets retained by the Group have been included within other receivables at 30 June 2021.
The analysis of Scheme assets was as follows:
Assets held by insurance company
Cash
Total
£m
–
–
–
2021
%
–
–
–
2021
£m
429.3
(406.5)
6.7
(15.6)
(0.7)
–
(12.4)
(0.8)
–
£m
425.8
3.5
429.3
2020
£m
393.9
–
–
8.9
39.6
(16.6)
–
425.8
2020
£m
456.5
–
10.5
(29.6)
–
8.5
(16.6)
–
429.3
2020
%
99.2
0.8
100.0
Actual return on Scheme assets
The expected employer contribution to the Scheme in the year ending 30 June 2022 is £nil.
6.3 Share-based payments
The Group issues equity-settled share-based payments to certain employees.
2021
£m
(8.9)
2020
£m
(19.1)
Share-based payments
In accordance with the transitional provisions, IFRS 2 ‘Share-based Payments’ has been applied to all grants of equity instruments after
7 November 2002 that had not vested at 1 January 2005.
Equity-settled share-based payments are measured at the fair value of the equity instrument at the date of grant. Fair value is measured
either using Black–Scholes, Present-Economic Value or Monte Carlo models depending on the characteristics of the scheme. The fair
value is expensed in the Income Statement on a straight-line basis over the vesting period, based on the Group’s estimate of shares that
will eventually vest where non-market vesting conditions apply. Non-vesting conditions are taken into account in the estimate of the fair
value of the equity instruments.
Analysis of the Consolidated Income Statement charge:
Equity-settled share-based payments:
LTPP
Sharesave
SMIS
DBP
ELTIP
2021
£m
12.3
1.7
–
2.3
4.1
20.4
2020
£m
(3.1)
2.0
(0.2)
3.5
4.6
6.8
As at 30 June 2021, an accrual of £5.3m (2020: £2.3m) was recognised in respect of social security liabilities on share-based payments.
6.3.1 Share-based payments reserve
The share-based payments reserve represents the obligation of the Group in relation to equity-settled share-based payment transactions.
Details of movements in the share-based payments reserve are shown on the Statement of Changes in Shareholders’ Equity.
160
161
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
6.3 Share-based payments CONTINUED
6.3.2 Outstanding equity-settled share-based payments
At 30 June 2021, the following options were outstanding:
6.3 Share-based payments CONTINUED
6.3.4 Number and weighted average exercise price of outstanding share-based payments
The number and weighted average exercise prices of options and awards made under the Group’s share option schemes were as follows:
Date of grant
Sharesave
27 April 2016 – 5-year plan
24 April 2017 – 3-year plan
24 April 2017 – 5-year plan
20 April 2018 – 3-year plan
20 April 2018 – 5-year plan
9 April 2019 – 3-year plan
9 April 2019 – 5-year plan
7 April 2020 – 3-year plan
7 April 2020 – 5-year plan
7 April 2021 – 3-year plan
7 April 2021 – 5-year plan
Total Sharesave options
LTPP
22 October 2018 – Executive
24 October 2019 – Executive
30 November 2020 – Executive
18 February 2021 and 21 April 2021 – Executive
22 October 2018 – Senior Management
24 October 2019 – Senior Management
30 November 2020 – Senior Management
Total LTPP awards
DBP
22 October 2018
24 October 2019
Total DBP awards
ELTIP
15 July 2019 – HBF 5 Star Award
30 November 2020 – 500,000th House Award
Total ELTIP awards
Total
Option price
pence
2021
number
Not exercisable after
482
464
464
449
449
519
519
456
456
604
604
–
–
–
–
–
–
–
–
–
–
–
83,121
1,550
187,627
1,754,741
182,542
1,135,651
150,681
2,384,792
440,010
1,682,926
213,431
8,217,072
1,524,595
1,281,179
1,477,919
118,020
1,096,500
1,064,813
1,524,637
8,087,663
617,199
551,589
1,168,788
1,010,467
1,139,117
2,149,584
19,623,107
31 December 2021
31 December 2021
31 December 2022
31 December 2021
31 December 2023
31 December 2022
31 December 2024
31 December 2023
31 December 2025
31 December 2024
31 December 2026
–
–
–
–
–
–
–
–
–
–
–
6.3.3 Further information relating to the share-based payment schemes
LTPP
The grant of awards under the LTPP is at the discretion of the Remuneration Committee taking into account individual performance and
overall performance of the Group. Vesting under this scheme is dependent upon performance conditions including TSR, EPS and ROCE.
Further details can be found in the Remuneration Report on page 101.
DBP
Deferred shares are held in accordance with the DBP as approved by the shareholders at the 2015 AGM. The DBP is currently utilised to
hold shares awarded in respect of any bonus earned in excess of 100% of base salary. Further details can be found on page 104.
Sharesave
Under the Sharesave, participants are required to make monthly contributions to an HMRC approved savings contract with a bank or
building society for a period of three or five years. On entering into the savings contract, participants are granted an option to acquire
ordinary shares in the Company at an exercise price determined under the rules of the Sharesave. The Sharesave is open to all eligible
employees as determined by the Board and is not subject to the satisfaction of any performance conditions.
ELTIP
The Board approved the 500,000th House Award in November 2020 and the HBF 5 Star Award in July 2019 under the ELTIP. The Awards
were made to all eligible employees employed as at 30 November 2020 and 15 July 2019 respectively. Participants were entitled to receive
shares in the Company when the HBF 5 Star Award vested on 15 July 2021, and participants of the 500,000th House Award will be entitled to
receive shares in the Company when the Award vests on 30 November 2022. Senior Management are not eligible to participate in the ELTIP.
The Awards are not subject to the satisfaction of any performance condition other than that participants remain employed by the Group and
have not resigned before the end of the vesting period.
LTPP
Outstanding at 1 July
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at 30 June
Exercisable at 30 June
Sharesave
Outstanding at 1 July
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at 30 June
Exercisable at 30 June
DBP
Outstanding at 1 July
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at 30 June
Exercisable at 30 June
ELTIP
Outstanding at 1 July
Forfeited during the year
Exercised during the year
Granted during the year
Outstanding at 30 June
Exercisable at 30 June
Weighted
average exercise
price in pence
–
–
–
–
–
–
Weighted
average exercise
price in pence
467
467
463
604
499
–
Weighted
average exercise
price in pence
–
–
–
–
–
–
Weighted
average exercise
price in pence
–
–
–
–
–
–
2021
Number of
award units
6,454,344
(1,332,401)
(238,757)
3,204,477
8,087,663
–
2021
Number of
award units
8,706,565
(654,630)
(1,748,352)
1,913,489
8,217,072
–
2021
Number of
award units
1,723,791
(17,553)
(537,450)
–
1,168,788
–
2021
Number of
award units
2,047,011
(232,964)
(913,463)
1,249,000
2,149,584
–
Weighted
average exercise
price in pence
–
–
–
–
–
–
Weighted
average exercise
price in pence
470
477
454
456
467
–
Weighted
average exercise
price in pence
–
–
–
–
–
–
Weighted
average exercise
price in pence
–
–
–
–
–
–
2020
Number of
award units
7,110,634
(1,222,060)
(2,063,257)
2,629,027
6,454,344
–
2020
Number of
award units
7,545,862
(665,633)
(1,316,538)
3,142,874
8,706,565
–
2020
Number of
award units
1,639,741
(36,214)
(463,241)
583,505
1,723,791
–
2020
Number of
award units
1,024,259
(231,448)
–
1,254,200
2,047,011
–
The weighted average share price, at the date of exercise, of share options exercised during the year was 544.2p (2020: 637.9p). The
weighted average life for all schemes outstanding at the end of the year was 1.7 years (2020: 1.8 years).
6.3.5 Fair value of options and awards granted in the year
Weighted average fair value of options granted
Sharesave
LTPP
DBP
ELTIP
Weighted average fair value of options granted
2020
pence
73.5
645.0
645.0
536.0
Valuation model
Black–Scholes model
Black–Scholes model
Black–Scholes model
Black–Scholes model
2021
pence
221.8
619.0
–
576.0
162
163
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
6.3 Share-based payments CONTINUED
6.3.5 Fair value of options and awards granted in the year continued
Inputs used to determine fair value of options
The weighted average inputs to the Black–Scholes models were as follows:
Average share price
Average exercise price
Expected volatility
Expected life
Risk free interest rate
Expected dividends
ELTIP
620p
–
34.8%
2.0 years
0.05%
3.70%
Sharesave
790p
604p
36.3%
3.2 years
0.21%
3.63%
Grants 2021
LTPP
620p
–
34.8%
3.0 years
(0.04)%
–
ELTIP
625p
–
29.1%
2.0 years
0.54%
7.51%
Sharesave
471p
456p
26.8%
3.3 years
0.16%
2.71%
LTPP
646p
–
24.6%
3.0 years
0.41%
–
Grants 2020
DBP
646p
–
24.6%
3.0 years
0.41%
–
Expected volatility was determined by reference to the historical volatility of the Group’s share price over a period consistent with the
expected life of the options. The expected life used in the models has been adjusted, based on the Directors’ best estimate, for the effects of
non-transferability, exercise restrictions and behavioural considerations.
7 Contingencies, related parties, post balance sheet events and subsidiaries
7.1 Contingent liabilities
7.1.1 Contingent liabilities related to subsidiaries
The Company has guaranteed certain bank borrowings of its subsidiary undertakings.
Certain subsidiary undertakings have commitments for the purchase of trading stock entered into in the normal course of business.
In the normal course of business, the Group has given counter-indemnities in respect of performance bonds and financial guarantees.
Management estimate that the bonds and guarantees amount to £423.8m (2020: £399.1m), and confirm that at the date of these Financial
Statements the possibility of cash outflow is considered minimal and no provision is required.
External wall systems and associated review
As disclosed in note 3.6, the Group is undertaking a review of all of its current and legacy buildings where it has used EWS or cladding
solutions and continues to assess the action required in line with the latest updates to Government guidance, as it applies, to multi-storey
and multi-occupied residential buildings. Approved Inspectors signed off all of our buildings, including the EWS or cladding used, as
compliant with the relevant Building Regulations at the time of completion.
We recognise that the retrospective review of building materials continues to evolve. The Financial Statements have been prepared based
on currently available information and the current best estimate of the extent and future costs of work required, based on the reviews and
physical inspections undertaken. However, these estimates may be updated as further inspections are completed and as work progresses
or if Government legislation and regulation further evolves.
Citiscape and associated review
As disclosed in note 3.6, following the issues identified at Citiscape, the Group is conducting a review of developments where reinforced
concrete frames have been designed by either the same original engineering firm which designed Citiscape, or by other companies
within the group of companies which has since acquired it. The Financial Statements have been prepared based on currently available
information; however, the detailed review is ongoing and therefore the extent and cost of any remedial work may change as this work
progresses. While in most cases we have no legal liability, in line with our commitment to put our customers first we will ensure that the
costs associated with remedial works from these reviews are not borne by leaseholders.
We are actively seeking to recover costs from third parties; however, there is no certainty regarding the extent of any financial recovery.
7.1.2 Contingent liabilities related to JVs
The Group has given counter-indemnities in respect of performance bonds and financial guarantees to its JVs totalling £1.8m at
30 June 2021 (2020: £10.4m).
The Group has also given a number of performance guarantees in respect of the obligations of its JVs, requiring the Group to complete
development agreement contractual obligations in the event that the JVs do not perform as required under the terms of the related
contracts. At 30 June 2021, the probability of any loss to the Group resulting from these guarantees is considered to be remote.
7.1.3 Contingent liabilities related to legal claims
On 4 September 2020, the UK Competition and Markets Authority ('CMA') announced that it was opening an enforcement case involving
the Group (alongside certain other leading housing developers) as part of its ongoing investigation in relation to the sale of leasehold
homes. As noted in its announcement, the CMA cannot levy administrative fines but it can enforce relevant consumer protection legislation
through the courts and, where appropriate, obtain additional measures to (among other things) obtain redress for consumers. The Group is
committed to putting its customers first and continues to engage with the CMA whilst it completes its investigation.
Provision is made for the Directors’ best estimate of all known material legal claims and all legal actions in progress. The Group takes
legal advice as to the likelihood of success of claims and actions and no provision is made (other than for legal costs) where the Directors
consider, based on such advice, that claims or actions are unlikely to succeed, or a sufficiently reliable estimate of the potential obligations
cannot be made.
7.2 Related party transactions
7.2.1 Directors of Barratt Developments PLC and remuneration of key personnel
The Board and certain members of Senior Management are related parties within the definition of IAS 24 (Revised) ‘Related Party
Disclosures’ (‘IAS 24’) and the Board are related parties within the definition of Chapter 11 of the UK Listing Rules. There is no difference
between transactions with key personnel of the Company and transactions with key personnel of the Group.
Disclosures related to the remuneration of key personnel as defined in IAS 24 are given in note 6.1.
There have been no related party transactions as defined in Listing Rule 11.1.5R for the year ended 30 June 2021.
7.2.2 Transactions between the Company and its subsidiaries
The Company has entered into transactions with its subsidiary undertakings in respect of funding and Group services (which include
management accounting and audit, sales and marketing, IT, company secretarial, architects and purchasing). Recharges are made to the
subsidiaries based on their utilisation of these services.
Transactions between the Company and its subsidiaries during the year:
Charges in respect of management and other services provided to subsidiaries
Net interest paid by the Company on net loans from subsidiaries
Dividends received from subsidiary undertakings
Balances at 30 June:
Amounts due by the Company to subsidiary undertakings
Amounts due to the Company from subsidiary undertakings
2021
£m
111.7
15.8
8.7
764.3
76.0
Company
2020
£m
67.2
5.0
519.3
19.3
395.5
The Company and its subsidiaries have entered into counter-indemnities in the normal course of business in respect of performance bonds.
7.2.3 Transactions between the Group and its JVs
The Group has entered into transactions with its JVs as follows:
Transactions between the Group and its JVs during the year:
Charges in respect of development management and other services provided to JVs
Interest charges in respect of funding provided to JVs
Dividends received from JVs
Balances at 30 June:
Funding loans and interest due from JVs net of impairment
Other amounts due from JVs
Loans and other amounts due to JVs
2021
£m
4.5
0.7
21.2
86.0
26.9
(0.8)
Group
2020
£m
5.6
0.5
24.2
81.9
15.7
(0.9)
In addition, one of the Group’s subsidiaries, BDW Trading Limited, contracts with a number of the Group’s JVs to provide construction
services. The Group’s contingent liabilities relating to its JVs are disclosed in note 7.1.2.
7.3 Post balance sheet events
In July 2021 the Government announced that the Building Safety Bill will extend the current six-year limitation period to a 15-year limitation
period during which legal claims can be brought against developers and that this will be applied retrospectively when the Bill becomes law
which is expected in 2022. This may result in additional legal liabilities for the Group which currently cannot be quantified.
In July 2021 the Government announced that EWS certificates should not be required by mortgagors on buildings below 18 metres. If this is
accepted by the relevant stakeholders, being banks, leaseholders and surveyors, it would potentially reduce the scope of remediation works
that are required to the EWS on lower-rise buildings.
164
165
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
7.4 Group subsidiary undertakings
The entities listed below, and on the following pages, are subsidiaries of the Company or Group. All are registered in England and Wales or
Scotland with the exception of SQ Holdings Limited which is registered in Guernsey. Unless otherwise stated, the results of these entities
are consolidated within these Financial Statements.
The Group owns 100% of the ordinary share capital of the following subsidiaries:
Registered
Registered
Registered
office Notes
A
A
A
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
58
1
2
1
2
1
1
1
1
1
1
Subsidiary
Barratt Northern Limited
Barratt Norwich Limited
Barratt Pension Trustee Limited
Barratt Poppleton Limited
Barratt Preston Limited
Barratt Properties Limited
Barratt Scottish Holdings
Limited
Barratt South London Limited
Barratt South Wales Limited
Barratt South West Limited
Barratt Southern Counties
Limited
Barratt Southern Limited
Barratt Southern Properties
Limited
Barratt Special Projects Limited
Barratt St Mary’s Limited
Barratt St Paul’s Limited
Barratt Sutton Coldfield Limited
Barratt Trade And Property
Company Limited
Barratt Urban Construction
(East London) Limited
Barratt Urban Construction
(Northern) Limited
Barratt Urban Construction
(Scotland) Limited
Barratt West Midlands Limited
Barratt West Scotland Limited
Barratt Woking Limited
Barratt York Limited
Bart 225 Limited
Basildon Regeneration (Barratt
Wilson Bowden) Limited
BDW (F.R.) Limited
BDW (F.R. Commercial) Limited
BDW North Scotland Limited
BDW Trading Limited
Bradgate Development Services
Limited
Broad Oak Homes Limited
C V (Ward) Limited
Cameoplot Limited
CHOQS 429 Limited
Crossbourne Construction
Limited
David Wilson Estates Limited
David Wilson Homes (Anglia)
Limited
David Wilson Homes (East
Midlands) Limited
David Wilson Homes (Home
Counties) Limited
David Wilson Homes (North
Midlands) Limited
David Wilson Homes (Northern)
Limited
David Wilson Homes (South
Midlands) Limited
David Wilson Homes (Southern)
Limited
office Notes
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
2
1
1
2
1
2
1
1
1
1
1
1
51
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
Subsidiary
David Wilson Homes (Western)
Limited
David Wilson Homes Land
(No 10) Limited
David Wilson Homes Land
(No 11) Limited
David Wilson Homes Land
(No 12) Limited
David Wilson Homes Land
(No 13) Limited
David Wilson Homes Land
(No 14) Limited
David Wilson Homes Land
(No 15) Limited
David Wilson Homes Limited
David Wilson Homes Services
Limited
David Wilson Homes Yorkshire
Limited
Decorfresh Projects Limited
Dicconson Holdings Limited
E. Barker Limited
E. Geary & Son Limited
English Oak Homes Limited
Francis (Springmeadows)
Limited
Frenchay Developments Limited
G.D. Thorner (Construction)
Limited
G.D. Thorner (Holdings) Limited
Glasgow Trust Limited
Hartswood House Limited
Hawkstone (South West) Limited
Heartland Development
Company Limited
Idle Works Limited
J. G. Parker Limited
James Harrison (Contracts)
Limited
Janellis (No.2) Limited
Kealoha 11 Limited
Kealoha Limited
Kingsoak Homes Limited
Knightsdale Homes Limited
Lindmere Construction Limited
Marple Development Company
Limited
Meridian Press Limited
Milton Park Homes Limited
Mountdale Homes Limited
Norfolk Garden Estates Limited
North West Land Developments
Limited
Oregon Contract Management
Limited
Oregon Timber Frame Limited
Oregon Timber Frame (England)
Limited
Redbourne Builders Limited
Roland Bardsley Homes Limited
Scothomes Limited
Scottish Homes Investment
Company, Limited
office Notes
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
51
51
1
1
1
2
2
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
Subsidiary
Acre Developments Limited
Advance Housing Limited
Ambrose Builders Limited
Barratt Bristol Limited
Barratt Central Limited
Barratt Chester Limited
Barratt Commercial Limited
Barratt Construction (Southern)
Limited
Barratt Corporate Secretarial
Services Limited
Barratt Developments
(International) Limited
Barratt Dormant (Atlantic Quay)
Limited
Barratt Dormant (Blackpool)
Limited
Barratt Dormant (Capella)
Limited
Barratt Dormant (Cheadle
Hulme) Limited
Barratt Dormant (Harlow)
Limited
Barratt Dormant (Riverside
Exchange Sheffield C2) Limited
Barratt Dormant (Riverside
Exchange Sheffield L/M) Limited
Barratt Dormant (Riverside
Quarter) Limited
Barratt Dormant (Riverside
Sheffield Building C1) Limited
Barratt Dormant (Rugby)
Limited
Barratt Dormant (Southampton)
Limited
Barratt Dormant (Thetford)
Limited
Barratt Dormant (Tyers Bros.
Oakham) Limited
Barratt Dormant (Walton)
Limited
Barratt Dormant (WB
Construction) Limited
Barratt Dormant (WB
Developments) Limited
Barratt Dormant (WB
Properties Developments)
Limited
Barratt Dormant (WB
Properties Northern) Limited
Barratt East Anglia Limited
Barratt East Midlands Limited
Barratt East Scotland Limited
Barratt Eastern Counties
Limited
Barratt Edinburgh Limited
Barratt Evolution Limited
Barratt Falkirk Limited
Barratt Leeds Limited
Barratt London Limited
Barratt Manchester Limited
Barratt Newcastle Limited
Barratt North London Limited
Barratt Northampton Limited
166
7.4 Group subsidiary undertakings CONTINUED
Subsidiary
Skydream Property Co. Limited
Squires Bridge Homes Limited
Squires Bridge Limited
Swift Properties Limited
The French House Limited
Tomnik Limited
Trencherwood Commercial
Limited
Trencherwood Construction
Limited
Trencherwood Developments
Limited
Trencherwood Estates Limited
Trencherwood Group Services
Limited
Trencherwood Homes
(Holdings) Limited
Trencherwood Homes
(Midlands) Limited
Trencherwood Homes (South
Western) Limited
Trencherwood Homes
(Southern) Limited
Trencherwood Homes Limited
Trencherwood Housing
Developments Limited
Registered
office Notes
A
A
A
A
A
A
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
A
A
A
A
A
A
A
A
A
A
A
Subsidiary
Trencherwood Investments
Limited
Trencherwood Land Holdings
Limited
Trencherwood Land Limited
Trencherwood Retirement
Homes Limited
Vizion (Milton Keynes) Limited
VSM (Bentley Priory 1) Limited
VSM (Bentley Priory 2) Limited
VSM (Bentley Priory 3) Limited
VSM (Bentley Priory 4) Limited
VSM (Bentley Priory 5) Limited
VSM (Bentley Priory 6) Limited
Ward (Showhomes) Limited
Ward Brothers (Gillingham)
Limited
Ward Holdings Limited
Ward Homes (London) Limited
Ward Homes (North Thames)
Limited
Ward Homes (South Eastern)
Limited
Ward Homes Group Limited
Ward Homes Limited
Registered
office Notes
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
Subsidiaries of the Group which are management companies limited by guarantee:
Registered
office Notes
Subsidiary
28-23 Imperial Park
Management Company Limited
Abbey Gate Residents
Management Company Limited
Abbotts Green (Woolpit)
Management Company Limited
Abbotts Meadow (Steventon)
Management Company Limited
Adderbury Fields Management
Company Limited
Aldhelm Court Management
Company Limited
Alexander Gate Management
Company Limited
Amberswood Rise Mangement
Company Limited
Ambler's Meadow (East Ardsley)
Management Company Limited
Applegarth Manor (Oulton)
Management Company Limited
Autumn Brook (Yate)
Management Company Limited
Aylesham Village (Barratt)
Residents Management Company
Limited
B5 Central Residents
Management Company Limited
Baggeridge Village Management
Company Limited
Barley Fields Management
Company Limited
Beaufort Park (Wotton Bassett)
Management Limited
Beavans House Management
Company Limited
Registered
Subsidiary
Beeston Quarter Apartments
(Beeston) Management Company
Limited
Belle Vue (Doncaster)
Management Company Limited
Bentley Fields Residents
Management Company Limited
Berry Acres (Paignton)
Management Company Limited
Biddenham Vale Management
Company Limited
Bilberry Chase Residents
Management Company Limited
Birds Marsh View Chippenham
Apartment Resident
Management Company Limited
Bishop Fields (Hereford)
Management Company Limited
Bishop Park (Henfield)
Management Company Limited
Bishops Green (Wells)
Management Company Limited
Bishop’s Hill Residents
Management Company Limited
Blackberry Park Residents
Management Company Limited
Blackdown Heights (Crimchard)
Management Company Limited
Blackhorse View Energy Centre
Management Company
Blackhorse View Residents
Management Company
Blackwater Reach (Southminster)
Management Company Limited
Blossomfields Residents
Management Company Limited
office Notes
8
6
23
40
54
5
32
20
17
30
23
13
31
1
1
52
5
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
26
5
14
12
5
30
23
57
10
10
13
49
23
5
10
50
1
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
Subsidiary
Ward Insurance Services
Limited
Wards Construction (Industrial)
Limited
Wards Construction
(Investments) Limited
Wards Country Houses Limited
Waterton Tennis Centre Limited
WBD (Wokingham) Limited
Westcountry Land (Union
Corner) Limited
William Corah & Son Limited
William Corah Joinery Limited
Wilson Bowden (Atlantic Quay
Number 2) Limited
Wilson Bowden (Ravenscraig)
Limited
Wilson Bowden City Homes
Limited
Wilson Bowden Developments
Limited
Wilson Bowden Group Services
Limited
Wilson Bowden Limited
Yeovil Developments Limited
Subsidiary
Bluebell Woods (Wyke)
Management Company Limited
Bodington Manor (Adel)
Management Company Limited
Bowds House Management
Company Limited
Braid Park (Tiverton)
Management Company Limited
Broadstone Mead Management
Company Ltd
Brook Gardens Barnham
Management Company Limited
Brooklands (Milton Keynes)
Management Company Limited
Bruneval Gardens (Wellesley)
Management Company Limited
Bure Meadows (Aylsham)
Management Company Limited
Canal Quarter Resident
Management Company Limited
Cane Hill Park (Coulsdon)
Management Company Limited
Cane Hill Park (Gateway)
Management Company Limited
Canes Meadow (Brixton)
Management Company Limited
Canford Paddock (Poole)
Management Company Limited
Carlton Green (Carlton)
Management Company Limited
Castle Hill (DWH1) Residents
Management Company Limited
Castlegate & Mowbray Park
Management Company Limited
Cedar Ridge Management
Company Limited
Registered
office Notes
1
1
1
1
29
1
1
1
1
1
1
1
1
1
1
1
A
A
A
A
A
A
A
A
A
A
A
A
A
A
Registered
office Notes
10
A, B
9
1
40
13
9
54
10
10
16
17
17
40
46
9
8
6
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
10
A, B
167
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
7.4 Group subsidiary undertakings CONTINUED
7.4 Group subsidiary undertakings CONTINUED
Subsidiary
Central Area Heat Company
Limited
Centurion Fields (Adel)
Management Company Limited
Chalkers Rise (Peacehaven)
Management Company Limited
Chapel Gate (Launceston)
Management Company Limited
Charfield Gardens Management
Company Limited
Cherry Blossom Meadow
(Newbury) Management
Company Limited
City Heights Apartments
(Leicester) Management
Company Limited
Clements Gate (Poringland 2)
Management Company Limited
Clipstone Park (Leighton
Buzzard) Management Company
Limited
Coat Grove (Martock)
Management Company Limited
Colliers Court (Speedwell)
Management Company Limited
Compass Point (Swanage)
Management Company Limited
Coppice Green Lane
Management Company Limited
Corinthian Place Management
Company Limited
Cricket Field Grove (Crowthorne)
Management Company Limited
Cringleford Heights Management
Company Limited
Croft Gardens (Phase 2)
Management Company Limited
Cygnet Mews (Phase 2)
Management Company Limited
Daracombe Gardens
Management Company Limited
Darwin Green Management
Company Limited
De Cheney Gardens Management
Company Limited
De Havilland Place (Hatfield)
Limited
De Lacy Fields KM8 Management
Company Limited
De Lacy Fields KM12
Management Company Limited
Deddington Grange Management
Company Limited
Delamere Park (Nunney)
Management Company Limited
Dickens Gate (Staplehurst)
Management Company Limited
Dida Gardens (Didcot)
Management Company Limited
Doseley Park Residents
Management Company Limited
Drayton Meadows Management
Company Limited
Drovers Court (Micklefield)
Management Company Limited
Dunmore Road (Abingdon)
Management Company Limited
Dunstall Park (Tamworth)
Residents Management Company
Limited
168
Registered
office Notes
12
6
10
40
32
A, B
A, B
A, B
A, B
A, B
12
A, B
8
A, B
54
A, B
54
40
13
46
20
47
10
14
12
54
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
33
A, B
54
30
22
5
5
5
50
8
12
5
23
9
12
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
20
A, B
Registered
Registered
Registered
Registered
Registered
Subsidiary
Earls Park Management
Company Limited
East Ham Market Energy Centre
Management Company
East Ham Market Residents
Management Company
Eastman Village Energy Centre
Management Company Limited
Eastman Village Residents
Management Company Limited
Edwalton (Sharp Hill)
Management Company Limited
Eldebury Place (Chertsey)
Management Company Limited
Elderwood (Bannerdale)
Management Company Limited
Elworthy Place (Wiveliscombe)
Management Company Limited
Embden Grange (Tavistock)
Management Company Limited
Emmet's Reach (Birkenshaw)
Management Company Limited
Fairfield Croft Management
Company Limited
Fairfield (Stony Stratford)
Management Company Limited
Filwood Park Management
Company Limited
Fradley Manor Management
Company Limited
Freemen’s Meadow Residents
Management Company Limited
Garnett Wharf (Otley)
Management Company Limited
Gerway Management Limited
Gilden Park (Old Harlow)
Residents Management Company
Limited
Gillies Meadow (Basingstoke)
Management Company Limited
Glenvale Park Management
Company Limited
Grange Park (Hampsthwaite)
Management Company Limited
Great Denham Park (Phase 11)
Management Company Limited
Greenkeepers Mews (Phase 3)
Management Company Limited
H2363 Limited
Hallam Park Residents
Management Company Limited
Hampton Water Management
Company Limited
Harlow Gateway Limited
Hartley Brook (Netherton)
Management Company Limited
Haskins House Management
Company Limited
Hawley Gardens Management
Company Limited
Hayes Village Energy Centre
Management Company Limited
Hayes Village Resident
Management Company Limited
Heather Croft (Pickering)
Management Company Limited
Heathwood Park (Lindfield)
Management Company Limited
Helme Ridge (Meltham)
Management Company Limited
office Notes
30
A, B
1
1
1
1
48
17
9
31
40
42
6
54
13
20
26
9
40
8
12
43
10
54
54
50
23
15
25
9
1
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
36
A, B
1
1
9
17
28
A, B
A, B
A, B
A, B
A, B
Subsidiary
Henbrook Gardens Management
Company Limited
Hendon Waterside Energy Centre
Management Company Limited
Hendon Waterside Residents
Management Company Limited
Heron House (Wichelstowe)
Management Company Limited
Hesslewood Park Management
Company Limited
Hewenden Ridge (Cullingworth)
Management Company Limited
High Elms Park (Hullbridge)
Management Company Limited
High Street Quarter Energy
Centre Management Company
Limited
High Street Quarter Residents
Management Company Limited
Highgrove Gardens (Romsey)
Management Company Limited
Hillside Gardens (Orchard RW)
Residents Management Company
Limited
Hollygate Park (Cotgrave)
Management Company Limited
Holmesgate Place (Hayes)
Management Company Limited
Infinity Park Derby Management
Limited
Jenkins House Management
Company Limited
Keeper's Meadow Residents
Management Company Limited
Kennett Heath Management
Limited
Kilners Grange (Tongham)
Management Company Limited
Kingfisher Meadow (Horsford)
Management Company Limited
Kingfisher Meadows Residents
Management Company Limited
Kingley Gate (Littlehampton)
Management Company Limited
Kingsbourne (Nantwich)
Community Management
Company Limited
Kingsbrook Estate Management
Company Limited
Kings Chase Residents
Management Company Limited
Kingsdown Gate (Swindon)
Management Company Limited
Kingsley Meadows (Harrogate)
Management Company Limited
Kings Lodge (Hatfield)
Management Company Limited
Kipling Road (Ledbury) Residents
Management Company Limited
Knights Park (Watton)
Management Company Limited
Knights Rise (Temple Cloud)
Management Company Limited
KW (Site B) Management
Company Limited
Ladden Garden Village
Apartment Blocks BCD
Management Company Limited
Ladden Garden Village
Management Company Limited
office Notes
20
A, B
1
1
1
10
9
47
1
1
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
46
A, B
40
16
21
1
1
23
8
17
14
23
17
8
16
25
13
6
25
20
54
30
12
30
30
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
Subsidiary
Ladywell Park Management
Company Limited
Lakeside Walk (Hamworthy)
Management Company Limited
Lancaster Gardens Management
Company Limited
Landmark Square Wokingham
Management Limited
Langham Mews Management
Company Limited
Lavender Grange (Stondon)
Resident Management Company
Limited
Lavendon Fields (Olney)
Residents Management Company
Limited
Lay Wood (Devizes) Management
Company Limited
Letcombe Gardens (Grove)
Management Company Limited
Linmere (Houghton Regis)
residents Managemet Company
Limited
Lock Keeper's Gate (Low Barugh)
Management Company Limited
Locksbridge Park (Andover)
Management Company Limited
Lordswood Gardens Residents
Management Company Limited
Lucerne Fields (Ivybridge)
Management Company Limited
Luneside Mills Management
Company Limited
Lyde View Residents
Management Company Limited
Madden Gardens Residents
Management Company Limited
Madgwick Park Management
Company Limited
Marham Park Management
Company Limited
Marlborough Grove Estate
Management Company Limited
Marston Park (Marston
Moretaine) Management
Company Limited
Martello Lakes (Barratt) Resident
Management Company Limited
Martingale Chase (Newbury)
Management Company Limited
Meadowburne Place (Willingdon)
Management Company Limited
Meadowfields (Boroughbridge)
Management Company Limited
Meadow View Watchfield
Management Company Limited
Merlin Gate (Newent)
Management Company Limited
Midshires Meadow Management
Company Limited
Mill Brook (Westbury)
Management Company Limited
Millbrook Park (Phase 9) Energy
Centre Management Company
Limited
Millbrook Park (Phase 9)
Residents' Management
Company Limited
Mill Springs (Whitchurch)
Management Company Limited
office Notes
54
35
6
12
44
A, B
A, B
A, B
A, B
A, B
54
A, B
57
13
41
15
10
12
5
40
8
32
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
11
A, B
46
18
16
A, B
A, B
A, B
54
A, B
8
8
54
9
13
50
39
A, B
A, B
A, B
A, B
A, B
A, B
A, B
50
A, B
1
1
A, B
A, B
34
A, B
Subsidiary
Minerva (Apartments)
Management Company Limited
Monarchs Keep (Bursledon)
Management Company Limited
Montague Park (Buckhurst Farm)
Management Company Limited
Montague Park No2 (Buckhurst
Farm) Management Company
Limited
Monument House Management
Company Limited
Moorland Gate (Bishops Lydeard)
Management Company Limited
Mortimer Park (Driffield)
Management Company Limited
Morton Meadows (Thornbury)
Management Company Limited
Mulberry Park (Poringland)
Management Company Limited
N.E. Horley Resident
Management Company Limited
Nant Y Castell (Caldicot)
Management Company Limited
Needham's Grange Residents
Management Company Limited
Needingworth Park Residents
Management Company Limited
Newbery Corner Management
Company Ltd
New Heritage (Bordon)
Management Company Limited
New Mill Quarter (BL) Residents
Management Company Limited
New Mill Quarter Estate Resident
Management Company Limited
Nerrols Grange (Taunton)
Management Company Limited
Northfield Park (Patchway)
Management Company Limited
Northstowe Residents
Management Company Limited
Northwalls Grange (Taunton)
Management Company Limited
Norton Farm Management
Company Limited
Notton Wood View (Royston)
Management Company Limited
Oak Hill Mews Management
Company Limited
Oakfield Village Estate
Management Company Limited
Oakfields Residential
Management Company Limited
Oakhill Gardens (Swanmore)
Management Company Limited
Oaklands (Pontefract)
Management Company Limited
Oatley Park Management
Company Limited
Orchard Gate (Kingston
Bagpuize) Management Company
Limited
Orchard Green Estate
Management Company Limited
Orchard Meadows (Appleton)
Management Company Limited
Oughtibridge Valley
(Oughtibridge) Management
Company Limited
Overstone Gate Residents
Management Company Limited
Subsidiary
Park Farm (Thornbury)
Community Interest Company
Patch Meadows (Somerton)
Management Company Limited
Pavilion Square (Phase 2)
Management Company Limited
Pavilion Square (Pocklington)
Management Company Limited
Peasedown Meadows
Management Company Limited
Pembridge Park (Phase 2)
Management Company Limited
Pembroke Park (Cirencester)
Management Company Limited
Penndrumm (Looe) Management
Company Limited
Perry Court (Faversham)
Management Company Limited
Phase 3 Clark Drive LGV
Management Company Limited
Phase 3 Clark Drive 2 LGV
Management Company Limited
Phoenix And Scorseby Park
Management Company Limited
Phoenix Quarter – Apt –
Management Company Limited
Phoenix Quarter Estate
Management Company Limited
Pinewood Park (Formby)
Management Company Limited
Pinn Brook Park (Monkerton)
Management Company Limited
PL2 Plymouth (2016) Limited
Poppy Fields (Cottingham)
Management Company Limited
Portman Square West Village
Reading Management Company
Limited
Preston Grange Residents
Management Company Limited
Priestley House Management
Company Limited
Priory Fields (Pontefract)
Management Company Limited
Prospect Rise (Whitby)
Management Company Limited
Quarter Jack Park (Wimborne)
Management Company Limited
Raleigh Holt (Barnstaple)
Management Company Limited
Ramsey Park Residents
Management Company Limited
Ravenhill Park Management
Company Limited
Redhayes Management Company
Limited
Redlodge (Suffolk) Management
Company Limited
Redwood Heights (Plymouth)
Management Company Limited
Richmond Park (Whitfield)
Residents Management Company
Limited
Ridgeway Residential
Management Company Limited
Ridgeway Views Energy Centre
Management Company
Ridgeway Views Residents
Management Company
office Notes
40
46
12
12
54
50
9
50
10
25
33
20
56
13
46
8
8
13
32
54
30
20
42
20
16
5
7
9
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
50
A, B
12
16
45
9
56
A, B
A, B
A, B
A, B
A, B
office Notes
30
30
6
6
30
26
30
40
54
32
32
6
49
49
57
40
40
6
12
3
54
10
6
46
40
56
20
40
14
40
8
11
1
1
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
169
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Registered
Other subsidiary entities:
7.4 Group subsidiary undertakings CONTINUED
Registered
office Notes
Class of
share held
% of
shares
owned
Registered
office Notes
Class of
share held
% of
shares
owned
1
1
1
1
1
1
53
1
1
27
1
8
1
A
A
A
A
A
A
A
A
N/A
N/A
N/A
N/A
N/A
N/A
Ordinary
N/A
A, D
Ordinary
A
A
A
A
Ordinary
Ordinary
Ordinary
Ordinary
Ordinary
24
A, C
1
1
1
A, D
Ordinary
A, D
Ordinary
A, C
Ordinary
N/A
N/A
N/A
N/A
N/A
N/A
90%
N/A
0%
50%
87%
50%
100%
0%
0%
0%
2%
Subsidiary
Newbury Racecourse
Management Limited
Nexus Point Management
Company Limited
Nottingham Business Park
Management Company Limited
Nottingham Business Park
(Orchard Place) Management
Company Limited
Optimus Point Management
Company Limited
Pye Green Management
Company Limited
Riverside Exchange
Management Company Limited
Romulus Management
Company Limited
Runshaw Management
Company Limited
Springfield Village Estate
Limited
Stoneyfield Management
Limited
WBD Blenheim Management
Company Limited
West Village Reading
Management Limited
Willow Farm Management
Company Limited
Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
7.4 Group subsidiary undertakings CONTINUED
Registered
office Notes
12
10
54
9
54
55
20
8
8
32
42
16
10
10
16
46
10
40
10
6
17
9
5
10
4
42
29
9
20
16
6
42
28
25
9
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
Subsidiary
Stansted Road (Kingswood
Place Elsenham) Management
Company Limited
Stotfold Park Management
Company Limited
Summersfield (Papworth)
Management Company Limited
Swallows Field (Hemel
Hempstead) Management
Company Ltd
Swan Mill (Newbury)
Management Company Limited
Swinbrook Park (Carterton)
Management Company Limited
Tarka Ridge (Yelland)
Management Company Limited
Templar's Chase (Wetherby)
Management Company Limited
The Acorns and Hunters Wood
Management Company Limited
The Belt Open Space
Management Co Limited
The Bridleways (Eccleshill)
Management Company Limited
The Causeway Park (Petersfield)
Management Company Limited
The Chase (Newbury)
Management Company Limited
The Chocolate Works
Management Company Limited
The Courtyard (Darwin Green)
Management Company Limited
The Furlongs (Westergate)
Management Company Limited
The Glassworks (Catcliffe)
Management Company Limited
The Grange (Lightcliffe)
Management Company Limited
The Hedgerows (Thurcroft)
Management Company Limited
The Meads (Frampton Cotterell)
Management Company Limited
The Mounts Residents
Management Company Limited
The Old Meadow Management
Company Limited
The Paddocks (Skelmanthorpe)
Management Company Limited
The Paddocks (Southmoor)
Management Company Limited
The Pastures (Knaresborough)
Management Company Limited
The Pavilions Management
Company (Southampton) Limited
The Pavilions Resident
Management Company Limited
The Spires (Chesterfield)
Management Company Limited
The Spires (St Ives) Management
Company Limited
The Vineyards Management
Company Limited
Tranby Fields Management
Company Limited
Trumpington (Phase 8 – 11)
Management Company Limited
Trumpington Vista Management
Company Limited
Union Park (Falmouth)
Management Company Limited
Upton Gardens Energy Centre
Management Company
Subsidiary
River Meadow (Stanford in the
Vale) Management Company
Limited
River Whitewater Management
Company (Hook) Limited
Riverdown Park (Salisbury)
Management Company Limited
Riverside Grange (Farmbridge)
Management Company Limited
Romans Edge Godmanchester
Management Company Limited
Romans' Quarter (Bingham)
Residential Management
Company Limited
Ronkswood Residents
Management Company Limited
Rosewood Park Bexhill Residents
Management Company Limited
Rosewood Park LH Residents
Management Company Limited
RV North Petherton Residents
Management Company Limited
Salters Brook (Cudworth)
Management Company Limited
Sandbrook Park Management
Company Limited
Sandridge Place (Melksham)
Management Company Limited
Saunderson Gardens
Management Co Limited
Sawbridge Park
(Sawbridgeworth) Management
Company Limited
Saxon Corner (Emsworth)
Management Company Limited
Saxon Dean (Silsden)
Management Company Limited
Saxon Fields (Cullompton)
Management Company Limited
Saxon Gate (Leonard Stanley)
Management Company Limited
Saxon Gate (Stamford Bridge)
Management Company Limited
Saxon Mills (Hassocks)
Management Company Limited
Silkwood Gate (Wakefield)
Management Company Limited
Spinney Fields Residents
Management Company Limited
Spring Valley View (Clayton)
Management Company Limited
Springfield Place Resident
Management Company Limited
St Andrews View (Morley)
Management Co. Limited
St James Gardens (Wick)
Management Company Limited
St James Management Company
Limited
St Laurence Meadows
Management Company Limited
St Rumbolds Fields Management
Company Limited
St Wilfrids Walk Management
Company Limited
St. Andrews Place (Morley)
Management Co. Limited
St. John's Walk (Hoylandswaine)
Management Company Limited
St. Mary's Park (Hartley Wintney)
Management Company Limited
St. Oswald's View (Methley)
Management Company Limited
170
Registered
office Notes
18
10
54
22
12
12
40
9
54
6
28
34
12
37
16
46
10
10
9
13
5
41
10
12
6
46
23
26
54
30
10
10
16
40
1
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
Subsidiary
Base East Central Rochdale
LLP
Base Hattersley LLP
Base Regeneration LLP
Base Werneth Oldham LLP
BLLQ LLP
BLLQ2 LLP
SQ Holdings Limited
Vizion (MK) Properties LLP
Ash Tree Court Management
Co. Ltd
Aspects Management Company
Limited
Broomhill Park Estates
Residents Association Limited
Buckshaw Village Management
Company Limited
Foxcote Mead Management
Company Limited
GWQ Management Limited
Hazelmere Management
Company Limited
Interlink Park Management
Company Limited
Meridian Business Park
Extension Management
Company Limited
Subsidiary
Upton Gardens Residents
Management Company
Victoria Heights (Alphington)
Management Company Limited
Waite House Management
Company Limited
Waldmers Wood Management
Company Limited
Walton Gate (Felixstowe)
Management Company Limited
Warboys Management Company
Limited
Warren Grove (Storrington)
Management Company Limited
Waters Edge (Mossley)
Management Company Limited
Waterside (The Quays Barry)
Management Company Number
1 Limited
Waterside (The Quays Barry)
Management Company Number
2 Limited
Waterside (The Quays Barry)
Management Company Number
3 Limited
Watkin Road Energy Centre
Management Company
Watkin Road Residents
Management Company
Wayland Fields Residents
managemet Company Limited
WBD (Kingsway Management)
Limited
Weavers Chase (Golcar)
Management Company Limited
Webheath (Redditch)
Management Company Limited
Wedgwood Residents
Management Company Limited
Westbridge Park (Auckley)
Management Company Limited
Weston Meadows, Calne
Management Company Limited
Whalley Road (Barrow)
Management Company Limited
Wichelstowe Estate Management
CIC
Willow Grove (Stopsley)
Management Company Limited
Willow Grove (Wixams)
Management Company Limited
Willow Lane (Beverley)
Management Company Limited
Willowmead (Wiveliscombe)
Management Company Limited
Winnington Village Community
Management Company Limited
Withies Bridge Management
Company Ltd
Woodhall Grange Management
Company Limited
Woodland Heath Residential
Management Company Limited
Wychwood Park (Haywards
Heath) Management Company
Limited
office Notes
1
40
1
57
14
38
49
8
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
29
A, B
29
A, B
29
A, B
1
1
A, B
A, B
14
A, B
1
9
33
5
26
50
8
1
8
54
6
50
26
30
6
14
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
17
A, B
19
A, D
Ordinary
1
1
1
1
A, C
Ordinary
A, C
Ordinary
A, C
Ordinary
A, C
Ordinary
20
A, C
Ordinary
Ordinary/
Preference
A, C
A, D
Ordinary
1
1
8
0%
0%
2%
2%
0%
17%
22%
4%
A
Ordinary
100%
16
A, C
Ordinary
16%
1
1
12
1
A
Ordinary
100%
A, C
Ordinary
A, D
Ordinary
A, C
Ordinary
2%
0%
2%
171
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Notes to the Financial Statements CONTINUED
Year ended 30 June 2021
7.4 Group subsidiary undertakings CONTINUED
20. 60 Whitehall Road, Halesowen, B63 3JS
41. Unit 7, Astra Centre, Edinburgh Way, Harlow,
Registered Office
1. Barratt House, Cartwright Way, Forest Business
Park, Bardon Hill, Coalville, Leicestershire,
LE67 1UF
21. The Dutch Barn Manor Farm Courtyard, Manor
Road, Rowsham, HP22 4QP
22. Wellstones House, Wellstones, Watford,
2. 7 Buchanan Gate, Cumbernauld Road, Stepps,
Hertfordshire, WD17 2AF
Glasgow, G33 6FB
3. 111 West Street, Faversham, Kent. ME13 7JB
4. Barratt East London, 3rd Floor Press Centre,
Here East, 13 East Bay Lane, Stratford, London
E15 2GW
5. One Eleven, Edmund Street, Birmingham, West
Midlands, B3 2HJ
6. Unit 11, Omega Business Park, Omega Business
Village, Thurston Road, Northallerton, North
Yorkshire, DL6 2NJ
7. Tollbar House, Tollbar Way, Hedge End,
Southampton, Hampshire, SO30 2UH
8. RMG House, Essex Road, Hoddesdon,
Hertfordshire, EN11 0DR
9. Gateway House, 10 Coopers Way, Southend-on-
Sea, Essex, SS2 5TE
10. Vantage Point, 23 Mark Road, Hemel Hempstead,
Hertfordshire, HP2 7DN
11. 167 Turners Hill, Cheshunt, Waltham Cross,
Hertfordshire, EN8 9BH
12. Norgate House, Tealgate, Charnham Park,
Hungerford, Berkshire, RG17 0YT
13. Units 1, 2 & 3 Beech Court, Wokingham Road,
Hurst, Reading, RG10 0RU
14. Barratt House, 7 Springfield Lyons Approach,
Chelmsford, Essex, CM2 5EY
15. The Maltings, Hyde Hall Farm, Sandon,
Hertfordshire, SG9 0RU
16. 2 Hills Road, Cambridge, Cambridgeshire,
CB2 1JP
17. Barratt House, Walnut Tree Close, Guildford,
Surrey, GU1 4SW
18. Fisher House, 84 Fisherton Street, Salisbury,
SP2 7QY
19. Newbury Racecourse Plc, The Racecourse,
Newbury, Berkshire, RG14 7NZ
23. Remus 2, 2 Cranbook Way, Solihull Business
Park, Solihull, West Midlands, B90 4GT
24. Wallis House, Great West Road, Brentford,
Middlesex, TW8 9BS
25. Firstport Property Services Limited, Marlborough
House, Wigmore Place, Wigmore Lane, Luton,
LU2 9EX
26. Chiltern House, 72–74 King Edward Street,
Macclesfield, Cheshire, SK10 1AT
27. 100 Avebury Boulevard, Milton Keynes, England,
MK9 1FH
28. Raynham House, 2 Capitol Close, Morley, Leeds,
West Yorkshire, LS27 0WH
29. Oak House, Village Way, Cardiff, CF15 7NE
30. Unit 2 Beech Court, Wokingham Road, Hurst,
Twyford, Berkshire, RG10 0RQ
31. Vanguard House, Yeoford Way, Marsh Barton,
Exeter EX2 8HL
32. Barratt House, 710 Waterside Drive, Aztec West,
Almondsbury, Bristol, BS32 4UD
33. Whittington Hall, Whittington Road, Worcester,
WR5 2ZX
34. Building 4, Dares Farm Business Park, Farnham
Road, Ewshot, Farnham, Surrey, GU10 5BB
35. Ground Floor, Cromwell House, 15 Andover
Road, Winchester, Hampshire, SO23 7BT
36. 4 Brindley Road, City Park, Manchester, M16 9HQ
37. Watson, Glendevon House, 4 Hawthorn Park,
Coal Road, Leeds, West Yorkshire, LS14 1PQ
38. Cumberland Court, 80 Mount Street,
Nottingham, Nottinghamshire, United Kingdom,
NG1 6HH
39. Whitehead Restoration Site, Lower Green Lane,
Astley, Manchester, M29 7JZ
40. Woodwater House, Pynes Hill, Exeter, Devon,
EX2 5WR
Essex, England, CM20 2BN
42. Freemont Property Managers Ltd, 3 The Old
School, The Square, Pennington, Lymington,
Hampshire, SO41 8GN
43. Barratt House, Sandy Way, Grange Park,
Northampton NN4 5EJ
44. Unit 7, Hockliffe Business Park, Watling Street,
Hockliffe, Leighton Buzzard, Bedfordshire,
LU7 9NB
45. 377-379 Hoylake Road, Moreton, Wirral,
Merseyside, CH46 0RW
46. 128 Pyle Street, Granary Court, Newport,
Isle of Wight, PO30 1JW
47. Woodland Place Wickford Business Park,
Hurricane Way, Wickford, SS11 8YB
48. 154–155 Great Charles Street, Queensway,
Birmingham, B3 3LP
49. Thamesbourne Lodge, Station Road, Bourne
End, Buckinghamshire, SL8 5QH
50. 1 West Point Court, Great Park Road, Bradley
Stoke, Bristol, BS32 4PY
51. Blairton House Old Aberdeen Road, Balmedie,
Aberdeen, Scotland, AB23 8SH
52. C/O East Block Group, The Colchester Centre,
Hawkins Road, Colchester, Essex, CO2 8JX
53. Cashs Business Centre, Widdrington Road,
Coventry, CV1 4PB
54. Queensway House, 11 Queensway, New Milton,
Hampshire, BH25 5NR
55. Bingham Industrial Estate, Moorbridge Road,
Bingham, Nottingham, United Kingdom,
NG13 8GG
56. 1a Fortune Close, Riverside Business Park,
Northampton, NN3 9HT
57. Unit 7, Portal Business Park, Eaton Lane,
Tarporley, Cheshire, CW6 9DL
58. Telford House, 3 Mid New Cultins, Edinburgh,
Midlothian, EH11 4DH
Notes
A Owned through another Group company.
B Entity is limited by guarantee and is a temporary member of the Group. Assets are not held for the benefit of the Group and the entity has no profit or loss in the year.
C
D
The Group is a minority shareholder but has voting control.
The Group does not own any shares but has control via directors who are employees of the Group.
172
Greenhouse Gas Emissions Restatement
The Group seeks to provide comprehensive and useful reporting of emissions to the readers of its Annual Report and Accounts, and to
evolve its reporting practices as necessary. The Group’s approach was reviewed during the year and the comparative year and base year
were restated for the following:
1 Adoption of operational control
Previously, the Group has reported its emissions under financial control, whereby emissions from subsidiaries were reported in full and
emissions from joint operations were stated at the Group’s share of profits.
From FY21, to better represent the emissions that are a consequence of the Group direct operations, the Group is reporting its emissions
under operational control. Emissions from company cars have been reclassified to scope 1, and emissions and completed floor area from
joint operations are now recognised in full on sites on which we act as principal contractor.
2 Removal of customer gas usage in sold homes
The Group has a small number of large sites on which shared energy solutions are employed. On some of these sites, the reported figures
in prior years included customer consumption that was recharged to the energy provider. The Group is restating its natural gas emissions
in prior years to show the net emissions, i.e. only those not ultimately controlled by (or recharged to) our customers.
The effect of these changes on the total greenhouse gas emissions for the comparative years was as follows:
Greenhouse gas emissions (2020)
Scope 1
Scope 2
Total gross scope 1 & scope 2 emissions
Scope 1 and 2 energy consumption
Location based
Market based
Location based
Market based
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
MWh
Carbon intensity (scope 1 and 2 emissions per 100m2 of
legally completed build area)
Location based
Market based
tCO2e/100m²
tCO2e/100m²
Category 1: Purchased goods & services
Category 11: Use of sold products
Other scope 3 emissions
Total gross scope 3 emissions
Total gross scope 1, 2 & 3 emissions
Greenhouse gas emissions (2019)
Scope 1
Scope 2
Total gross scope 1 & scope 2 emissions
Scope 1 and 2 energy consumption
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
MWh
Location based
Market based
Location based
Market based
Location based
Market based
Carbon intensity (scope 1 and 2 emissions per 100m2 of
legally completed build area)
Location based
Market based
tCO2e/100m²
tCO2e/100m²
Category 1: Purchased goods & services
Category 11: Use of sold products
Other scope 3 emissions
Total gross scope 3 emissions
Total gross scope 1, 2 & 3 emissions
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
Location based
Market based
Removal of
customer
gas usage
in sold
homes
(143)
(491)
(491)
2020
(as
published)
18,374
4,700
2,089
Adoption of
operational
control
2,092
51
42
2020
(restated)
20,323
4,260
1,640
23,074
20,463
(634)
(634)
2,143
2,134
24,583
21,963
97,686
(3,566)
8,846
102,966
1.92
1.70
2,020,341
930,797
179,579
3,130,717
3,153,791
3,151,180
(0.05)
(0.05)
–
–
(118)
(118)
(752)
(752)
0.15
0.15
2.02
1.80
–
–
(1,542)
2,020,341
930,797
177,919
(1,542)
3,129,057
601
592
3,153,640
3,151,020
Removal of
customer
gas usage
in sold
homes
(186)
–
–
2019
(as
published)
24,832
5,016
3,411
Adoption of
operational
control
2,523
146
2
2019
(restated)
27,169
5,162
3,413
29,848
28,243
(186)
(186)
2,669
2,525
32,331
30,582
117,551
(1,010)
10,893
127,434
1.75
1.66
2,305,017
1,311,087
219,621
3,835,725
3,865,573
3,863,968
(0.01)
(0.01)
–
–
(26)
(26)
(212)
(212)
0.15
0.13
1.89
1.78
–
–
(1,688)
2,305,017
1,311,087
217,907
(1,688)
3,834,011
981
837
3,866,342
3,864,593
173
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements
Greenhouse Gas Emissions Restatement CONTINUED
Five year record (unaudited)
Greenhouse gas emissions (2018)
Scope 1
Scope 2
Total gross scope 1 & scope 2 emissions
Scope 1 and 2 energy consumption
Location based
Market based
Location based
Market based
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
MWh
Carbon intensity (scope 1 and 2 emissions per 100m2 of
legally completed build area)
Location based
Market based
tCO2e/100m²
tCO2e/100m²
Category 1: Purchased goods & services
Category 11: Use of sold products
Other scope 3 emissions
Total gross scope 3 emissions
Total gross scope 1, 2 & 3 emissions
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
tCO2e
Location based
Market based
Removal of
customer
gas usage
in sold
homes
(9)
–
–
2018
(as
published)
24,966
6,594
4,992
Adoption of
operational
control
2,620
122
88
2018
(restated)
27,577
6,716
5,080
31,560
29,958
116,998
1.82
1.73
2,421,559
1,273,346
162,523
3,857,428
3,888,988
3,887,386
(9)
(9)
(50)
–
–
–
–
(1)
(1)
(10)
(10)
2,742
2,708
34,293
32,657
10,548
127,496
0.17
0.17
1.99
1.90
–
–
(1,737)
2,421,559
1,273,346
160,785
(1,737)
3,855,690
1,005
971
3,889,983
3,888,347
174
Financial 5 year record
Private wholly owned home completions
Affordable wholly owned home completions
Wholly owned completions (homes)
Joint venture completions (homes)
Total home completions including JVs
Wholly owned completions average selling price (£'000)
Revenue (£m)
Gross profit (£m)
Gross profit margin (%)
Adjusted gross profit (£m)
Adjusted gross profit margin (%)
Profit from operations (£m)
Operating profit margin (%)
Adjusted profit from operations (£m)
Adjusted operating margin (%)
Net finance costs (£m)
Share of post-tax income from joint ventures
Profit before tax
Adjusted profit before tax
Basic earnings per share (pence)
Adjusted earnings per share (pence)
Dividend (interim paid and final proposed) (pence)
Special cash payment proposed per share (pence)
Total shareholder return (TSR) over three financial years (%)
Tangible shareholders funds (£m)
Tangible net assets per share at year end (pence)
Total shareholders funds (£m)
Total net assets per share at year end (pence)
Year end net (debt) / cash (£m)
Year end total land payables (£m)
Year end total net (indebtedness) / surplus (£m)
Average net cash across the financial year (£m)
Three point average capital employed (£m)
Return on capital employed (ROCE) (%)
Total land investment (£m)
Proportion of total land investment funded by land creditors (%)
Weighted average shares in issue during the year (m)
Weighted average shares in issue during the year less EBT (m)
Number of ordinary shares in issue at year end (m)
2017
13,303
3,342
16,645
750
17,395
275.2
4,650.2
932.0
20.0%
940.8
20.2%
799.2
17.2%
808.0
17.4%
(59.7)
25.4
765.1
773.9
61.3
62.0
24.4
17.3
81.3%
3,420.9
339.4
4,322.2
428.8
723.7
1,064.0
(340.3)
46.1
2,793.5
29.8%
2,895.6
36.7%
1,006.0
1,004.3
1,007.9
2018
13,439
3,241
16,680
899
17,579
288.9
4,874.8
1,008.9
20.7%
1,015.9
20.8%
862.6
17.7%
869.6
17.8%
(45.1)
18.6
835.5
842.5
66.5
67.0
26.5
17.3
15.6%
3,698.0
365.2
4,597.7
454.0
791.3
996.7
(205.4)
127.4
3,000.3
29.6%
2,963.4
33.6%
1,011.7
1,010.7
1,012.7
2019
13,533
3,578
17,111
745
17,856
274.4
4,763.1
1,084.2
22.8%
1,087.4
22.8%
901.1
18.9%
904.3
19.0%
(28.8)
39.2
909.8
920.0
73.2
74.1
29.1
17.3
36.8%
3,953.9
388.8
4,869.0
478.8
765.7
960.7
(195.0)
298.3
3,180.2
29.7%
3,071.6
31.3%
1,014.2
1,010.4
1,017.0
2020
9,568
2,466
12,034
570
12,604
280.3
3,419.2
614.3
18.0%
631.4
18.5%
493.4
14.4%
507.3
14.8%
(29.9)
28.3
491.8
505.7
39.4
40.5
–
–
6.1%
3,931.9
386.1
4,840.3
475.3
308.2
791.9
(483.7)
348.3
3,443.8
15.6%
3,112.3
25.4%
1,018.2
1,013.9
1,018.3
2021
13,134
3,383
16,517
726
17,243
288.8
4,811.7
1,010.0
21.0%
1,114.7
23.2%
811.1
16.9%
919.0
19.1%
(26.6)
27.7
812.2
919.7
64.9
73.5
29.4
–
59.8%
4,545.1
446.3
5,452.1
535.4
1,317.4
658.3
659.1
821.0
3,355.3
28.3%
2,946.3
22.3%
1,018.3
1,016.4
1,018.3
175
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements
Five year record (unaudited) CONTINUED
Non financial 5 year record
SHE audit compliance
Injury Incidence Rate
Average training days per employee (days / employee)
Employee turnover (%)
Employee engagement index (%)
Number of employees at 30 June
Proportion female (%)
Graduates, apprentices and trainees on programmes
Number of senior managers
Proportion female (%)
Number of PLC directors
Proportion female (%)
Carbon intensity (tonnes per 100m2 build)
Waste intensity (tonnes per 100m2 build)
Diversion of construction waste from landfill (%)
Scope 2 electricity on renewable tariffs (%)
Average active sales outlets (inc. JVs)
Customer service (HBF Customer Satisfaction Survey)
NHBC Pride in the Job Awards (number awarded)
Owned and unconditional land bank (plots)
Conditional land bank (plots)
Owned and controlled land bank (plots)
JV owned and controlled land bank (plots)
Total owned and controlled land bank including JVs (plots)
Land bank years owned (years)
Land bank years controlled (years)
Land bank total years (owned and controlled) (years)
Average selling price of homes in land bank at year end (£'000)
Land approvals (plots)
Land approvals (£m)
Planning consents secured in the year (plots)
Strategic land plots converted to owned and controlled land bank
(plots)
Strategic land bank (acres)
Expenditure on physical improvement works benefitting local
communities (£m)
School places provided (number)
Homes completions from strategically sourced land (homes)
Proportion of home completions from strategically sourced land
(%)
Home completions using MMC (homes)
Proportion of home completions using MMC (%)
Proportion of home completions using 2016 and later house type
range (%)
Proportion of home completions EPC rated "B" or above (%)
Average SAP rating of home completions
2017
96%
379
4.5
18%
78.0%
6,193
31%
428
281
13%
8
38%
2.03
6.18
95%
0.0%
377
5 star
74
58,965
16,078
75,043
5,709
80,752
3.5
1.0
4.5
265
18,497
957.2
19,861
6,757
11,737
**
3,087
4,131
24.8%
2,957
17.0%
0.5%
**
84
2018
96%
462
4.0
17%
79.0%
6,330
31%
429
287
13%
9
44%
1.90
6.06
97%
0.0%
380
5 star
83
61,504
17,928
79,432
5,137
84,569
3.7
1.1
4.8
270
20,951
933.9
16,997
2,788
12,435
437
1,839
4,413
26.5%
3,252
18.5%
9.4%
97%
84
2019
96%
297
4.7
16%
84.5%
6,504
31%
470
290
15%
8
38%
1.78
6.53
97%
46.0%
379
5 star
84
66,423
13,599
80,022
5,207
85,229
3.9
0.8
4.7
275
18,448
859.8
18,280
7,915
11,995
506
3,894
4,374
25.6%
3,609
20.2%
36.4%
99%
84
2020
96%
256
4.1
10%
84.2%
6,655
31%
492
286
14%
8
38%
1.80
7.70
96%
68.0%
366
5 star
92
68,393
11,931
80,324
5,400
85,724
5.7
1.0
6.7
276
9,441
368.1
14,768
3,137
13,271
477
2,211
2,929
24.3%
2,652
21.0%
60.2%
99%
84
2021
97%
416
3.9
12%
*
6,329
31%
426
283
16%
9
44%
1.78
5.89
95%
72.0%
343
5 star
93
66,601
11,041
77,642
4,661
82,303
4.0
0.7
4.7
289
18,067
876.8
14,280
3,507
13,754
572
3,591
4,172
25.3%
4,393
25.5%
65.3%
99%
85
Note: additional granularity and more detailed sustainability metrics are available on our website at:
https://www.barrattdevelopments.co.uk/sustainability/performance-data/data
* Employee engagement survey being carried out in October 2021
** Data was not collected at the time
176
Definitions of alternative performance measures
and reconciliation to IFRS (unaudited)
The Group uses a number of APMs which are not defined within IFRS. The Directors use these APMs, along with IFRS measures, to assess
the operational performance of the Group as detailed in the Key performance indicators section of the Strategic Report on pages 41 to 43.
These APMs may not be directly comparable with similarly titled measures reported by other companies and they are not intended to be
a substitute for, or superior to, IFRS measures. Definitions and reconciliations of the financial APMs used to IFRS measures, are included
below:
Gross margin is defined as gross profit divided by revenue:
Revenue per Consolidated Income Statement (£m)
Gross profit per Consolidated Income Statement (£m)
Gross margin
Adjusted gross margin is defined as adjusted gross profit divided by revenue:
Revenue per Consolidated Income Statement (£m)
Adjusted gross profit per Consolidated Income Statement (£m)
Adjusted gross margin
Operating margin is defined as profit from operations divided by revenue:
Revenue per Consolidated Income Statement (£m)
Profit from operations per Consolidated Income Statement (£m)
Operating margin
Adjusted operating margin is defined as adjusted profit from operations divided by revenue:
Revenue per Consolidated Income Statement (£m)
Adjusted profit from operations per Consolidated Income Statement (£m)
Adjusted operating margin
2021
4,811.7
1,010.0
21.0%
2021
4,811.7
1,114.7
23.2%
2021
4,811.7
811.1
16.9%
2021
4,811.7
919.0
19.1%
2020
3,419.2
614.3
18.0%
2020
3,419.2
631.4
18.5%
2020
3,419.2
493.4
14.4%
2020
3,419.2
507.3
14.8%
Adjusted earnings for adjusted basic earnings per share and adjusted diluted earnings per share are calculated by excluding adjusted
items and any associated net tax amounts from profit attributable to ordinary shareholders of the Company:
Profit attributable to ordinary shareholders of the Company
Government grants repaid/(receivable) per note 2.3
Costs associated with legacy properties per note 2.2
Net credit associated with JV legacy properties per note 2.2
Tax impact of adjusted items
Adjusted earnings
Net cash is defined in note 5.1.
2021
£m
659.8
26.0
81.9
(0.4)
(20.4)
746.9
2020
£m
399.7
(26.0)
39.9
–
(2.6)
411.0
ROCE is calculated as earnings before amortisation, interest, tax, operating charges relating to the defined benefit pension scheme and
operating adjusting items for the year, divided by average net assets adjusted for goodwill and intangibles, tax, net cash, retirement benefit
assets/obligations and derivative financial instruments:
Profit from operations
Amortisation of intangible assets
Cost associated with legacy properties
CJRS grant repayment/(income)
Operating charges relating to the defined benefit scheme
Share of post-tax profit from JVs and associates
Adjusted credit related to JV legacy properties
Earnings before amortisation, interest, tax, adjusted items and defined benefit scheme charges
2021
£m
811.1
1.1
81.9
26.0
2.3
27.7
(0.4)
949.7
2020
£m
493.4
1.2
39.9
(26.0)
–
28.3
–
536.8
177
Barratt Developments PLC Annual Report and Accounts 2021www.barrattdevelopments.co.ukFinancial Statements Definitions of alternative performance measures
and reconciliation to IFRS (unaudited) CONTINUED
Glossary
30 June
2021
£m
5,452.1
31 December
2020
£m
5,204.7
30 June
2020
£m
4,840.3
31 December
2019
£m
4,849.1
ACM
Act
Aluminium Composite Material
The Companies Act 2006
Active outlet
A site with at least one plot for sale
Connected
Persons
COP26
(101.7)
(805.9)
(0.4)
16.2
(68.6)
(826.0)
399.3
(7.1)
3,454.9
2021
949.7
3,355.3
28.3%
30 June
2019
£m
4,869.0
(102.3)
(805.9)
99.5
17.6
(62.6)
(1,136.0)
377.7
(7.4)
3,249.6
2020
536.8
3,443.8
15.6%
30 June
2019
£m
3,249.6
960.7
4,210.3
2020
536.8
4,304.9
12.5%
Group net assets per Consolidated Balance Sheet
Less:
Other intangible assets per Consolidated Balance Sheet
Goodwill per Consolidated Balance Sheet
Current tax liabilities/(assets)
Deferred tax liabilities/(assets)
Retirement benefit assets
Cash and cash equivalents
Loans and borrowings
Prepaid fees
Capital employed
Three point average capital employed
(100.0)
(805.9)
1.0
8.9
–
(1,518.6)
205.3
(4.1)
3,238.7
3,355.3
(100.6)
(805.9)
16.0
(4.9)
(2.1)
(1,302.7)
201.1
(5.1)
3,200.5
(101.1)
(805.9)
2.8
2.4
(3.5)
(619.8)
317.7
(6.1)
3,626.8
3,443.8
Earnings before interest, tax, adjusted items and defined benefit scheme charges (from table above) (£m)
Three point average capital employed (from table above) (£m)
ROCE
Underlying ROCE is calculated as ROCE (above) with net assets also adjusted for land payables:
30 June
2021
£m
31 December
2020
£m
30 June
2020
£m
31 December
2019
£m
Capital employed (from ROCE table above)
Adjust for land payables
Capital employed adjusted for land payables
Three point average capital employed adjusted for land
payables
3,200.5
601.1
3,801.6
3,238.7
658.3
3,897.0
4,039.1
3,626.8
791.9
4,418.7
4,304.9
Earnings before interest, tax, adjusted items and defined benefit scheme charges (from table above) (£m)
Three point average capital employed adjusted for land payables (from table above) (£m)
Underlying ROCE
3,454.9
830.8
4,285.7
2021
949.7
4,039.1
23.5%
For the purpose of determining the Executive Directors' annual bonus (page 104), capital employed is adjusted for land, land payables and
trade payables:
Capital employed (from ROCE table above)
Adjust for land
Adjust for land payables
Adjust for trade payables
Capital employed adjusted for land,
land payables and trade payables
Three point average capital employed adjusted for land,
land payables and trade payables
Total indebtedness is defined as net (cash)/debt and land payables:
Net cash (£m)
Land payables (£m)
Total indebtedness
30 June
2021
£m
3,238.7
(2,946.3)
658.3
289.6
31 December
2020
£m
3,200.5
(2,836.7)
601.1
223.3
30 June
2020
£m
3,626.8
(3,112.3)
791.9
186.8
31 December
2019
£m
3,454.9
(3,036.3)
830.8
294.3
30 June
2019
£m
3,249.6
(3,071.6)
960.7
385.6
1,240.3
1,188.2
1,493.2
1,543.7
1,524.3
1,307.2
1,520.4
2021
(1,317.4)
658.3
(659.1)
2020
(308.2)
791.9
483.7
TSR is a measure of the performance of the Group’s share price over a period of three financial years. It combines share price appreciation
and dividends paid to show the total return to the shareholders expressed as a percentage.
AGM
AIMCH
APM
APPG
Articles
ASP
Barratt
BEIS
BNG
Brexit
BRICK
BSC
Building for
Life 12
Annual General Meeting
Advanced Industrialised Methods for the
Construction of Homes
Alternative performance measure
All-Party Parliamentary Groups
The Company’s Articles of Association
Average selling price
Barratt Developments PLC and its subsidiary
undertakings
Department for Business, Energy and Industrial
Strategy
Biodiversity Net Gain
The withdrawal of the United Kingdom from the
European Union
Barratt Risk and Internal Control Framework
British Safety Council
This is the industry standard, endorsed by the
Government, for well-designed homes and
neighbourhoods that local communities, local
authorities and developers are invited to use to
stimulate conversations about creating good
places to live
Building
Regulations
The requirements relating to the erection and
extension of buildings under UK Law
Capital employed Average net assets adjusted for goodwill and
intangibles, tax, cash, loans and borrowings,
prepaid fees, retirement benefit assets/
obligations and derivative financial instruments
CBI
CDP
CEO
CFO
CITB
CJRS
CMA
CMI
CO2e
Code
COINS
Confederation of British Industry
Charity that runs the global system for
disclosure of environmental impacts for
investors, companies, cities, states and regions
Chief Executive Officer
Chief Financial Officer
Construction Industry Training Board
Coronavirus Job Retention Scheme
Competition and Markets Authority
The actuarial profession’s Continuous Mortality
Investigation
Carbon dioxide equivalent
UK Corporate Governance Code issued in July
2018 (copy available from www.frc.org.uk)
Construction Industry Solutions (software used
by the Group)
Company
Barratt Developments PLC
As defined in the EU Market Abuse
Regulation
The 26th session of the Conference of the
Parties of the UN Framework Convention on
Climate Change
COVID-19
Coronavirus Disease 2019
CRM
DBP
DEFRA
DER
DTRs
EBT
ELTIP
EPC
EPS
ESG
EU
EWS
FCA
Foundation
FRC
FSC
FTSE4Good
FY
GDP
GDPR
Group
GHG
GMP
HBF
HMRC
HR
IA
IAS
IASB
IFRIC
IFRS
IIR
IIRC
Continue reading text version or see original annual report in PDF format above