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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 energy efficient and sustainable 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 3.
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.
Environmental matters
Taskforce for
Climate-related
Financial Disclosures
Waste
Safeguarding the
environment
Greenhouse gas
emissions disclosure
Policy, due diligence
and outcomes
Risk management
Principal risks
Long-term viability
statement
Audit Committee
Report
58
22
20
69
52
54
72
90
Our policies
All of our public policies,
codes and standards are
available on
barrattdevelopments.co.uk
Description of the
business model
Our business summary 02
Our business model
Social matters
Market review
Our sustainability
focus areas
Affordability
Employees
Development and
training
Diversity
Wellbeing
Employee engagement
Gender pay gap
Board diversity
Human rights
Human rights
Third parties
12
10
20
11
30
32
31
31
32
84
32
46
Anti-bribery and corruption
32
Group policy
Working with suppliers
32
Our fourth 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 202.
Notice regarding limitations on Directors’ liability
under English law
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 2 to 73 and the Directors’ Report
contained on pages 74 to 127. 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 2 to 73 inclusive, and the Non-financial information statement
here, comprise the Strategic Report, and pages 74 to 127 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.
Cautionary statement regarding forward-looking statements
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 195 to 197. The
definition of net cash is included in Note 19 of the Financial Statements.
Our highlights
Our operational and sustainability highlights
5 star
97%
HBF 5 STAR CUSTOMER
SATISFACTION (FY21: 5 star)
HEALTH & SAFETY
(SHE AUDIT COMPLIANCE) (FY21: 97%)
17,908
332
TOTAL HOME COMPLETIONS1
(FY21: 17,243)
AVERAGE ACTIVE
SALES OUTLETS2 (FY21: 343)
1.53
CARBON INTENSITY3
(FY21: 1.78)
79.4%
EMPLOYEE ENGAGEMENT
SCORE (FY21: 84.2%)
4.97
WASTE INTENSITY3
(FY21: 5.89)
4.7
LAND BANK YEARS
(FY21: 4.7)
Our financial highlights
24.8%
ADJUSTED GROSS MARGIN
(FY21: 23.2%)
17.1%
GROSS MARGIN
(FY21: 21.0%)
£1,054.8M
ADJUSTED PROFIT BEFORE TAX
(FY21: £919.7m)
£642.3M
PROFIT BEFORE TAX
(FY21: £812.2m)
83.0P
ADJUSTED BASIC EPS
(FY21: 73.5p)
£1,138.6M
YEAR END NET CASH
(FY21: £1,317.4m)
50.6P
BASIC EPS
(FY21: 64.9p)
30.0%
ROCE4
(FY21: 27.8%)
1 Total home completions, including JVs, were
2
Including JV active sales outlets.
17,908 (FY21: 17,243) for the year. Private wholly
owned home completions were 13,327 (FY21:
13,134), affordable home completions were 3,835
(FY21: 3,383) and JV home completions, in which
the Group has an interest, were 746 (FY21: 726).
3 Carbon and waste intensity are measured in
tonnes relative to 100m2 of legally completed
build area in the financial year.
4 The definition of capital employed has been
updated. See page 198.
CONTENTS
Strategic Report
Our highlights
Our business in summary
Our purpose and ambitions
Our Investment proposition
Key performance indicators
Chairman’s statement
Marketplace
Our Business model
The Zed House case study
Chief Executive’s statement
Building Sustainably
Strategic priorities: Customer first
Strategic priorities: Great places
Strategic priorities:
Leading Construction
Strategic priorities:
Investing in our people
Chief Financial Officer’s review
Section 172 statement
Stakeholder engagement
Risk management
Principal risks
Climate related risks and
opportunities (TCFD)
Viability statement
Governance
Board of Directors and Company
Secretary
Executive Committee and Regional
Managing Directors
Corporate governance report
Nomination Committee report
Audit Committee report
Safety, Health and Environment
Committee report
Sustainability Committee report
Remuneration report
Other statutory disclosures
Statement of Directors’ responsibilities
Financials
Financial Statements
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
Definitions of alternative performance
measures and reconciliation to IFRS
(unaudited)
Five-year record (unaudited)
Glossary
Integrated reporting approach
Group advisers and Company
information
01
02
03
04
05
08
10
12
14
16
20
24
26
28
30
34
39
41
52
54
58
72
74
76
78
84
90
97
99
105
125
127
128
129
135
136
137
138
139
140
142
195
198
200
202
203
Front cover: Saviours Place
Our Barratt product at Saviours
Place, Warrington
01
www.barrattdevelopments.co.ukSTRATEGIC REPORT
Our business in summary
Our purpose and ambitions
OUR HOMES
Our home completions (including JVs)
Our purpose
Developing high quality homes across Britain where people want to live.
To lead the future of housebuilding by putting customers at the heart of everything we do
We are committed to building
high-quality energy-efficient homes
and have been awarded 98 NHBC
Pride in the Job Awards – more
than any other housebuilder – for
18 consecutive years.
OUR CUSTOMERS
We put our customers first, at
the heart of everything we do,
throughout their home-buying
journey, with a long-standing
commitment to service.
OUR BRANDS
Housebuilding
Commercial developments
Land promotion
SCOTLAND
1,938
(2021: 1,852)
NORTHERN
2,751
(2021: 2,859)
EAST
3,868
(2021: 3,645)
LONDON AND
SOUTHERN
3,979
(2021: 3,678)
CENTRAL
3,561
(2021: 3,437)
WEST
1,811
(2021: 1,772)
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
2022 2021
13% 13%
38% 34%
30% 33%
2%
6%
3%
5%
Flats Non-London
11% 12%
Help to Buy
Part-exchange
Traditional private
Investor
Affordable
2022
2021
19% 38%
3%
5%
51% 34%
5%
3%
22% 20%
We will achieve our purpose by continually innovating and applying
best practice across our four strategic priorities
Our Strategic Priorities
Strategic priorities
Customer first
We put customers at the heart of
everything we do.
We deliver customer satisfaction
through building high
quality, energy efficient and
sustainable homes.
Read more on pages 24 to 25
Great places
We build long-term relationships
to secure attractive land
opportunities where people
aspire to live.
Leading construction
We seek to deliver the highest
quality homes by focusing on
excellence across each stage
of construction.
Investing in our people
People are at the heart of our
business and we aim to attract
and retain the best by investing
in their development and success.
Through great design and
planning expertise, we aim to
create sustainable developments
for communities, delivering
positive legacies for the
economy, environment, and
mental health and wellbeing.
Read more on pages 26 to 27
We work to ensure security of
supply, minimise waste and
reduce emissions by working
with our supply chain partners,
increasing the use of MMC and
adopting new technologies.
Read more on pages 28 to 29
We have established
apprenticeship and degree
apprenticeship schemes to
attract the next generation to
our industry.
We seek to encourage an open
and honest culture, where
diversity and inclusion are
embraced and valued.
Read more on pages 30 to 33
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
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.
Being a trusted
partner
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
service and build quality.
We uphold these principles through our culture (see page 80) and the
sustainability commitments we make to our stakeholders (see page 20)
02
03
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Our investment proposition
Key performance indicators
Shorter
owned
land bank
Strong
balance sheet
and cash
generation
Highly
experienced
build and
sales teams
Quality and
service
Nationally
diversified
Leading in
sustainability
Growing volumes
Delivering sustainable margins
Attractive returns
Disciplined growth in
total home completions towards
expanded capacity of 21,500
homes over the medium term
Land acquisition at a minimum
23% gross margin and continued build
optimisation and performance
Phased reduction in ordinary
dividend cover from 2.25× in FY22, to
2.0× in FY23 and 1.75× from FY24
Maintaining a minimum ROCE of 25%
We have clear differentiators, which underpin our investment proposition:
• We operate an efficient ‘build and
sell’ model and aim to run one of the
shortest land banks in the industry.
• We maintain a resilient balance
sheet with a clearly defined operating
framework and a strong focus on
cash generation.
• We have an experienced workforce
and a long established and committed
sub-contractor base who deliver our
quality homes.
• 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
13 consecutive years.
• We operate throughout Britain,
geographically diversifying our
business activities and helping to
manage risk.
• We are the leading national sustainable
housebuilder, and our ambitious
targets will help us to transition to
a low carbon economy and support
associated employment growth.
• During the year, our investment
proposition has been augmented by:
• The acquisition of Gladman
Developments, enhancing our land
supply channels; the opening of two
new divisions in Sheffield and Anglia;
and the development of an additional
timber frame manufacturing facility
near Derby, which will become
operational in FY24;
OUR AWARDS
• The Board’s decision to revise the
Group’s ordinary dividend policy,
implementing a phased reduction in
dividend cover of 0.25x per annum,
from 2.5x in FY21 to 1.75x in FY24; and
• The commencement of a £200m share
buyback programme to return surplus
net cash to shareholders.
5 Star award for
13 consecutive years
Only major national
housebuilder to
achieve this record
Sustainable Housebuilder
of the Year 2021
NextGeneration 2021
2021 Gold award and the
highest scoring national
housebuilder 2021 Crystal
award for transparency in
sustainability disclosure
98 awards in 2022 More
than any other housebuilder
for 18 consecutive years
04
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.
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.
Tonnes of greenhouse gas emissions
associated with our scope 1 and
market based scope 2 emissions,
which includes energy and fuel use
on our sites, in our offices and in our
company vehicles, for every 100m2 of
legally completed build area.
To minimise the environmental impact
of our business activities and reduce
our exposure to climate risk.
TARGET MET
Health and safety (SHE audit compliance)
Over 94% SHE audit
compliance.
97%
(2021: 97%)
TARGET MET
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
1.90
1.78
1.80
1.78
1.53
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
ON TRACK
Reduce construction waste
intensity (tonnes per 100m2 of
legally completed build area)
to 5.67 by 2025.
Tonnes per 100m2
7.70
6.53
6.06
5.89
4.97
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.
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
ON TRACK
Employee engagement score
Upper quartile engagement. 79.4%
Land approvals (plots)
18,000–20,000 plots approved
for purchase.
(2020: 84.2%)
BEING MONITORED
19,089
(2021: 18,067)
TARGET MET
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.
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.
05
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC 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
21,500 in the
medium term.
17,908
ON TRACK
homes
17,579 17,856
17,908
17,243
12,604
Legally completed
homes during the year
including
JV homes legally
completed in which the
Group has an interest.
Reflects activity and
growth. Method by which
business capacity is
monitored.
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Delivering margin improvement
Gross margin Achieve
minimum 23%
gross margin.
17.1%
%
8
.
2
7 2
.
0
2
8
.
0
2
8
.
2
2
2
.
3
2
0
.
1
0 2
.
8
1
5
.
8
1
8
.
4
2
1
.
7
1
Gross profit divided by
total revenue, expressed
as a percentage.
Key internal metric
for assessing site
profitability.
Enables consistent
comparison of land
acquisitions.
Adjusted
gross
margin
24.8%
TARGET MET AT
ADJUSTED LEVEL
Profit from
operations
Driving further
improvements. £646.6m
Adjusted
profit from
operations
£1,054.8m
TARGET MET AT
ADJUSTED LEVEL
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Gross margin
Adjusted gross margin
millions
6
.
2
6
8
6
.
9
6
8
1
.
1
0
9
3
.
4
0
9
8
.
4
5
0
,
1
0
.
9
1
9
1
.
1
1
8
6
.
6
4
6
4
.
3
9
4
3
.
7
0
5
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Profit from operations
Adjusted profit from operations
Profit from operations.
Demonstrates profitability
before finance costs,
share of profits from JVs
and associates and tax.
Assesses the efficiency of
our operations.
Operating
margin
Driving further
improvements. 12.3%
%
7
.
7
1
8
.
7
1
9
.
8
1
0
.
9
1
1
.
9
9 1
.
6
1
4
.
4
1
8
.
4
1
3
.
2
1
.
0
2
0 Profit from operations
divided by total
revenue, expressed as a
percentage.
20.0%
TARGET MET AT
ADJUSTED LEVEL
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Operating margin
Adjusted operating margin
£642.3m
In line with
consensus at
the start of the
financial year.
millions
8
.
9
0
9
0
.
0
2
9
5
.
5
3
8
5
.
2
4
8
8
.
1
9
4
7
.
5
0
5
7
.
9
1
9
2
.
2
1
8
8
.
4
5
0
,
1
3
.
2
4
6
Profit before tax
including the applicable
share of profits from JVs
and associates.
£1,054.8m
TARGET MET AT
ADJUSTED LEVEL
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Profit before tax
Adjusted profit before tax
Adjusted
operating
margin
Profit
before tax
Adjusted
profit
before tax
06
Demonstrates profitability
before finance costs,
share of profits from JVs
and associates and tax.
Assesses the efficiency of
our operations.
Shows the profitability
of the Group relative to
market expectations.
Key metric for assessing
performance for
Executive Directors’
remuneration.
ROCE
Minimum 25%. 30.0%
TARGET MET
%
29.6
29.9
30.0
27.8
15.5
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
pence
1
2
.
4
.
0 7
3
.
7
7
6
5
.
6
6
0
.
3
5 8
.
3
7
9
.
4
6
6
.
0
5
4
.
9
3
5
.
0
4
8
1
0
2
9
1
0
2
0
2
0
2
1
2
0
2
2
2
0
2
Basic EPS
Adjusted basic EPS
Attractive shareholder returns
Basic EPS
Adjusted
basic EPS
Total
shareholder
return
50.6p
In line with
consensus at
the start of the
financial year.
83.0p
TARGET MET AT
ADJUSTED LEVEL
To grow total
shareholder
return
against FTSE
(50+/-)
companies
and the
Housebuilding
sector.
(4.9 %)
for the three
years ended
30 June 2022.
(2021: 59.8% for
the years ended 30
June 2021).
TARGET NOT MET
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.
Shows profit attributable
to each share.
Key metric for assessing
performance for
Executive Directors’
remuneration.
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.
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.
For progress against our medium term targets, go to page 17 in the Chief Executive’s statement
07
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chairman’s statement
We are conscious of the challenges that
many of our employees will be facing as
a result of the cost of living crisis and we
are doing all we can to support them. We
accelerated our annual pay review by three
months to 1 April 2022 and introduced a
temporary cost of living supplement for
the six months from 1 July 2022, to all
employees below the senior management
team. In January 2022 we extended our
private medical insurance cover to all
employees, a first for the sector. We also
introduced an additional paid volunteering
day and gave an extra special day’s holiday
to all our employees. We will continue
to monitor the economic backdrop and
take any further steps that are deemed
appropriate to ensure our employees are
supported and we remain an employer of
choice in the industry.
During the year, we appointed a new Head
of Diversity and Inclusion to enhance our
strategy and to deliver more rapid progress
in the creation of a diverse and inclusive
workplace. For more information see
pages 32 and 84.
Our culture
Our business has a well-embedded culture
and belief in operating to the highest
standards, 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 underlying strength of our culture has
been shown through the way the Group
has continued to drive growth in the past
year whilst, at the same time, improving
our build quality and customer service. The
Board continues to seek ways of further
developing and advancing the positive
culture of our business and recognises
that the Group’s culture is driven by its
leadership. For further information, see
page 80.
Building sustainably
Our Building Sustainably framework is the
blueprint for identifying and driving the
positive changes we aspire to deliver. We
are determined to maintain our position
as the leading national sustainable
housebuilder and recognise that
sustainability presents clear opportunities
for business growth, encourages
innovation and improves our products for
customers.
The Group’s Sustainability Committee,
chaired by our Chief Executive David
Thomas and attended by three
additional members of the Board,
became operational in the year. This
Committee is responsible for scrutinising
the sustainability strategy, ensuring
the Building Sustainably framework
is embedded across the Group’s
operations and that we are mitigating
our sustainability risks and leveraging
opportunities in the short, medium and
longer term. For further information, see
pages 20 to 23.
We are committed to continuously
enhancing our reporting disclosures to
meet changing stakeholder requirements
and enable better analysis and
comparability. I am pleased to report that
we have undertaken a thorough review
of Group wide climate related risks and
opportunities and this year’s Annual
Report includes full disclosure and
compliance with the recommendations
of the TCFD. For further information, see
pages 58 to 71.
In addition, we have again reported against
the SASB disclosure criteria. This is
available on our website.
The 2021 CDP annual results provided
valuable external benchmarking of our
performance against key sustainability
measures. Our leadership level in the
“Climate” category was maintained in
the year; we improved to the leadership
level in the “Forests” category, and we
also improved our score in the “Water”
category. The CDP results reflect our
leading position in the UK housebuilding
sector and are a credit to the hard work
and dedication of our teams throughout
the Group.
Finally, in December 2021, we were named
“Sustainable Housebuilder of the Year”
at The Housebuilder Awards 2021. This is
the first time we have won this award and
reaffirms both our progress to date and
our commitment to be the leading national
sustainable housebuilder.
More information on our sustainability
strategy is included in the Chief Executive’s
statement on pages 16 to 33.
Building safety
We have always been clear that we do not
believe leaseholders should have to pay
for necessary remediation to fix building
safety issues caused by the design,
construction or refurbishment of their
buildings. On 6 April 2022 we announced
that a proportionate and sensible approach
to fire safety in historical buildings had
been agreed with the UK Government and
we have pledged to support leaseholders
by funding remediation of buildings that
we developed over the past 30 years.
Accordingly, we have recognised an
additional provision of £396m during the
year. The Group is now also subject to the
Residential Property Developer Tax (RPDT),
which came into effect on 1 April 2022.
“Our business has a
well-embedded culture and belief
in operating to the highest
standards, taking pride in the
work that we do.”
John Allan
Chairman
In FY22, we have delivered excellent
operational and financial results.
Notwithstanding the challenges faced by
the industry, most notably around building
materials supplies, we have successfully
grown both our home completions and
our adjusted financial results to levels
that exceeded our pre-pandemic full year
performance in FY19.
We delivered 17,908 high quality, energy
efficient new homes (including JVs) across
Britain in FY22. This performance is 3.9%
ahead of last year and also ahead of the
17,856 homes we completed pre-pandemic
in FY19. We achieved adjusted profit
before tax of £1,054.8m, a new record for
the Group.
I would like to express my thanks to all our
employees, sub-contractors and suppliers
for their continuing commitment and
dedication to Barratt.
Our employees
Our employees are key to our success.
The Board is always keen to understand
and respond to their views, concerns and
challenges. Communication and feedback
is achieved through a variety of channels
including the Workforce Forum, town hall
meetings and employee surveys. More
details around how we have engaged with
our employees throughout the year can be
found on pages 42 and 43.
08
We have, however, urged Government to
reconsider additional plans to expand the
scope of the Building Safety Levy, which
would create a further tax burden on the
industry in addition to the existing RPDT
and the six percentage point increase in
corporation tax, currently planned for 1
April 2023. In our view, the plan to expand
the scope of the Building Safety Levy
risks further punishing UK housebuilders
who were not responsible for most of
the historical buildings or building safety
issues being addressed.
Board changes and
succession planning
On 6 December 2021, we welcomed Mike
Scott to the Board as an Executive Director
and Chief Financial Officer. Mike has
brought a wealth of financial experience
from his previous roles. His detailed
biography can be found on page 74.
Nina Bibby has completed nine years’
service and will not stand for re-election
at the AGM in October. During the year,
we commenced a search for a new Non-
Executive Director. This process is ongoing
and an announcement will be made once
the appointment has been finalised.
We welcome the new targets introduced
by the FCA to increase diversity on
listed company boards and executive
committees. Whilst the requirements are
not applicable to us until the FY23 Annual
Report and Accounts, we have set out our
current position on page 84 together with
the steps that we are taking to comply
with the requirements. Considering the
need to continuously refresh the Board
and our succession plans, Jock Lennox,
Senior Independent Director, is leading
the process to find a suitable candidate
to replace me as Chair by the 2023 AGM.
Full details will be announced once the
appointment of the new Chair has been
concluded.
Stakeholder engagement
Stakeholder engagement is a key part of
the Board’s agenda. Full details around
engagement during the year can be found
in pages 41 to 51.
Shareholder returns
The Board remains focused on the
continued investment in the business
to deliver disciplined growth in our
completion volumes. The Group’s financial
position and inherent cash generation has
allowed the Board to review capital returns
to shareholders during the year.
At the half year, we considered the
significant ongoing cash generation of
the Group’s operations, as well as the
importance of a long-term predictable
dividend income stream for our
shareholders. Accordingly, the Board
revised the Group’s ordinary dividend
policy, implementing a phased reduction in
dividend cover of 0.25x per year from 2.5x
in FY21 to 1.75x in FY24.
The Board declared an interim dividend
for FY22 of 11.2 pence per share (interim
FY21 dividend: 7.5 pence per share) and
is pleased to recommend a final FY22
dividend of 25.7 pence per share (final
FY21 dividend: 21.9 pence per share).
Subject to shareholder approval, the final
dividend will be paid on 4 November 2022
to shareholders on the register at the
close of business on 30 September 2022.
Shareholders who wish to elect for the
Dividend Reinvestment Plan should do so
by 14 October 2022.
The total proposed ordinary dividend for
FY22, including the interim dividend of 11.2
pence per share paid in May, is 36.9 pence
per share (FY21: 29.4 pence per share)
reflecting the revised ordinary dividend
cover of 2.25x adjusted earnings per share.
Additional capital returns
At the half year results, the Board
confirmed that, where we have capital
beyond our requirements for investment
in the growth of the business, it would
be the Board’s intention to return this to
shareholders. We committed to provide
an update on the method and timing of
any such return when appropriate to do
so, considering opportunities for further
investment and prevailing equity market
conditions.
Following the excellent performance of the
business throughout FY22 and our strong
and resilient balance sheet, the Board has
approved a return of surplus capital of
£200m in FY23 through the implementation
of a share buyback programme which will
start shortly with an initial tranche of £50m
to be completed by the end of the calendar
year and the total programme completed
no later than 30 June 2023.
AGM
Our 2022 AGM will be held at the offices of
Linklaters LLP in London on Monday
17 October 2022 at 2pm. Similar to last year
there will also 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 separate Notice of AGM.
Looking to the future
We have a diverse and experienced Board
that is committed to promoting the success
and long term sustainable value of the
Group. We 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.
Our business is also in a very good position
with substantial net cash, a strong forward
sales position, and an excellent land bank.
Our employees are focused on delivering
operational improvements across our
business, with an unwavering commitment
to deliver high-quality, energy-efficient
and sustainable homes and developments
across the country.
Macroeconomic uncertainties remain,
most notably around household energy
costs and elevated inflationary pressures,
changes in interest rates and the
consequent impacts on employment,
wage growth, house prices and consumer
spending and confidence. As a business,
we also face the prospect of higher
taxation, the ongoing challenges around
build cost inflation and the withdrawal
of Help to Buy, which will close for new
reservations at the end of October 2022.
The Board will continue to monitor and
respond to changes in the market and
the wider economy but believes that our
operating performance, forward order
book and strong balance sheet position
us well, with the resilience and flexibility
to react to changes in the operating
environment for FY23 and beyond.
On behalf of the Board, I would like to
thank you for the confidence you have
shown in the Group during the past year
and for your continued support.
John Allan
Chairman
6 September 2022
09
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Marketplace
UK economy
UK economic output grew by 3.5%1 during
the 12 months to 31 May 2022, but growth
slowed in the last quarter to just 0.4%,
after an estimated 0.2% decline in GDP in
April 2022. The UK economy was, at the
end of May, 1.7% ahead of that prior to the
onset of the pandemic in February 2020.
The outlook for the UK economy in the
remainder of 2022 and 2023 is, however,
far less certain. Inflationary pressures
being experienced across the whole
economy reflecting energy, commodities
and food costs, much of which derived
from exogenous factors beyond the UK’s
influence, are being compounded by
limited labour availability and supply chain
challenges. Government economic policies
and the Bank of England’s decisions
around interest rates to control inflation
will be critical in the months ahead. The
latest HM Treasury collated consensus
economic forecasts project GDP growth of
3.7% in 2022 and 0.8% in 20232.
Housing supply and demand
There remains a fundamental shortage
of homes in the UK. In the 12 months
to 30 June 2022, the average UK house
price increased by 10.7% according to
the Nationwide Building Society3 and by
13.0% according to Halifax4. In the same
period, the average household rent has
increased by 10.5%5, affecting every region
of the UK according to the HomeLet Rental
Index. The housing shortage is evident
across all tenures and is a critical issue
for the health of the UK economy and
the economic health and wellbeing of its
population. New build housing additions
were 194,060 in the last reported 12-month
period to 31 March 20216 – a decline of
11.4% on the 219,120 new build additions
in the year to 31 March 2020. This decline
reflected the impact of the pandemic, and
new build additions in the year to 31 March
2022 are anticipated to recover towards
those achieved pre-pandemic.
There is a significant opportunity for
growth in housebuilding over the coming
years to meet housing demand. However,
this growth will require a sustainable
mortgage with strong availability of high
loan-to-value mortgages at competitive
and affordable rates coupled with
consumer confidence in employment and
the wider economy. It will also require
a greater level of coordination and
consistency in Government policy – both
national and local – in a highly regulated,
long-term capital-intensive industry, which
operates with significant cyclical risk.
Our strategy remains focused on
responding to this growth opportunity. We
maintained our capacity throughout the
pandemic, have achieved pre-pandemic
total home completions in FY22, and have
invested in additional capacity for growth in
the future.
Land supply and the
planning system
The supply of land with planning consent is
critical to the housebuilding industry. After
significant pandemic-related disruption,
the number of planning permissions
approved recovered through to June
2021 when annual permissions peaked
at 335,599. However, this level of activity
Read more on the Zed House and Leading Construction case studies on pages 14 to 15 and 27.
has not been maintained and in the 12
months to 31 March 2022, 306,436 new
build planning permissions were approved
in England – 8.7% down from the mid-
2021 peak. This period was impacted by
the removal, on 6 May 2021, of temporary
regulations under the Coronavirus Act
2020, which had allowed local authorities
to hold virtual planning committee
meetings. This created delays for many
local authorities during the second
half of 2021. Local authority planning
departments have also seen significant
budget cuts and staff turnover, stretching
already limited resources.
English Planning Consents and Net New Build
Home Additions and Savills UK Greenfield
Land Price Index
333.8 334.2
335.6
360
100.0
158.7
237.1
306.4
300
99.0
240
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Savills UK Greenfield Development Land Price
Index (LHS)
England-Planning consents (‘000’s) - revised
series (RHS)
England - Net New Build Home Additions (RHS)
In addition, planning departments have
been further constrained by sudden
changes in advice from external non-
elected bodies, most notably Natural
England. In March 2022, Natural
England advised 74 local authorities
that developments should not proceed
if they increased the level of nutrients
and failed to deliver nutrient neutrality,
despite the fact that excess nutrient levels
reflect the failures of the wastewater
treatment industry and intensive
agricultural use of fertilisers. This issue,
unless rapidly addressed at its source,
could have a material impact on future
planning consents and the ability of
the housebuilding industry to deliver
housing growth.
Building materials and labour
We experienced an increasing rate in build
cost inflation throughout FY22, which
reflected the:
• continued rebound in housebuilding
activity;
•
impact of growing global demand for
commodities including steel, timber
and plastics, which began in early
calendar 2021; and
• dramatic increase in energy costs,
which began in the autumn of 2021 and
was then compounded by the conflict
in the Ukraine.
In July 2022, we highlighted that total build
cost inflation was between 9% and 10%
and, whilst the future is difficult to predict,
there remains some upward risk to build
cost inflation, particularly as our supply
chain partners roll off hedged energy
supply terms in the coming months.
Through our centralised procurement
team, comprehensive scheduling of our
building materials demands and the
support of our long-standing supply chain
partners, we are focused on ensuring
security of supply and sustainable but
competitive pricing.
Housing market support
FY22 saw significantly less Government
involvement in the housing market. The
SDLT holiday, introduced in July 2020,
began to taper in July 2021 and ended on
30 September 2021. The revised Help to
Buy scheme operated throughout FY22,
but will not be available for reservations
beyond 31 October 2022.
The mortgage market and
housing affordability
The mortgage market has seen an
improved range of mortgage products
and increased competition for customers
during the year to 30 June 2022. Mortgage
approvals have reduced after the impacts
of the SDLT holiday, but remain at levels
ahead of those in the five-year period
pre-pandemic. Mortgage lenders are
also increasingly recognising the benefits
of new build lending given the energy
efficiency, lower running costs and the
absence of future retrofit spending on
insulation and other energy efficiency
measures on new homes.
We continue to work with banks, building
societies and other financial institutions to
grow lender understanding and introduce
additional lenders to the new build sector.
The development of green mortgages
remains an important initiative and we
are actively developing mortgage products
that reflect the energy efficiency and
environmental credentials of our homes.
Housing affordability is becoming a more
challenging dimension across the UK
housing market, reflecting house price
appreciation since the pandemic and,
more recently, the increase in mortgage
interest rates. According to the Halifax
Mortgage Affordability Index, the purchase
of a new home now equates to 35% of
after-tax income, ahead of the long-term
average at 32.7%. In the coming months,
this affordability measure will be positively
impacted by the growing rate of nominal
wages, but will ultimately be dependent
on the movements in mortgage rates and
house prices.
Halifax Mortgage Affordability Index
i
s
g
n
n
r
a
e
f
o
n
o
i
t
r
o
p
o
r
p
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t
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o
M
60%
55%
50%
45%
40%
35%
30%
25%
20%
35.0%
32.7%
1985 1990 1995
2000
2005
2010
2015
2020
Halifax Affordablility Index
Average (1985-Q2 2022)
Upcoming changes impacting
the housebuilding industry
In the coming years, there are several
changes that will impact the housebuilding
industry and for which we are preparing.
The following table provides a summary of
the key changes ahead.
Upcoming regulations
How we are preparing
31 March 2023
Help to Buy
The Government scheme will close on 31 March 2023 with reservations under the scheme closing in October 2022.
Along with a number of housebuilders, mortgage lenders and the HBF, we have launched the “Deposit Unlock”
scheme which, through an insurance payment funded by ourselves, will allow home buyers to purchase with a
5% deposit, replicating the deposit requirements of Help to Buy.
15 June 2022
for transition sites,
14 June 2023
New Building Regulations
Parts L, F, O and S came into effect on all new developments from 15 June 2022 and will be required on all
developments from 14 June 2023. These new building regulations, as part of the Future Homes Standard, cover
carbon emission reductions of 31% from previous standards, involving insulation and ventilation, design changes to
address overheating and the provision of electric vehicle charging points.
We have evolved our housetype designs to meet these standards to ensure our homes deliver a 31% reduction
in carbon emissions required by Parts L and F, and the changes to address overheating and site layouts to allow
the provision of electric vehicle charging points.
Mid-November 2023
Biodiversity net gain (BNG)
The legislation will require all national developments to deliver a biodiversity net gain of 10%. This means our
developments will need to create a 10% measurable improvement in the biodiversity of the site developed relative to
the site had development not occurred.
We have rolled out a biodiversity best practice programme across all divisions and have committed to minimum
BNG of 10% across all development designs submitted for planning from February 2023, well ahead of the
legislation timetable.
Mid 2025
Future Homes Standard (FHS)
From 2025, the FHS will require new homes to produce 75–80% less carbon emissions than standards applicable
during FY22.
Our Technical & Innovation team has a programme of work, which is well underway, to prepare us not just for
the Future Homes Standard but to meet our target of zero carbon in use, for our house types, from 2030. We
have showcased a case study on page 14 highlighting our Zed House, a zero carbon concept house.
10
1 GDP monthly estimate, UK: May
2022 www.ons.gov.uk/economy/
grossdomesticproductgdp/bulletins/
gdpmonthlyestimateuk/may2022
2 HM Treasury: forecasts for the
UK economy July 2022 https://
assets.publishing.service.gov.uk/
government/uploads/system/uploads/
attachment_data/file/1092359/
Forecomp_July_2022.pdf
3 Nationwide House Price Index – June
2022 www.nationwidehousepriceindex.
co.uk/reports/annual-house-price-
growth-slows-in-june-but-remains-
in-double-digits
4 Halifax House Price Index – June 2022
www.halifax.co.uk/assets/pdf/june-
2022-halifax-price-index.pdf
5 HomeLet Rental Index June 2022
https://homelet.co.uk/homelet-
rental-index
6 HBF Pipeline Report 1Q 2022 –
Published July 2022 www.hbf.
co.uk/documents/11892/HPL_
REPORT_2022_Q1_final.pdf
11
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Our Business model
Key resources
Investment in the housebuilding value chain
Value for stakeholders
We manage the following resources
to create value for our stakeholders:
Our people
• Experienced and engaged employees.
• Long-standing and committed
sub-contractor relationships.
• Strong and enduring relationships with
land market participants.
• Ongoing training and development.
Safety, health and environment
• Dedicated safety, health and
environment team.
• Continuous improvement culture.
• Regular compliance audits.
• Dedicated resource deployment to key
risk areas.
Land
• Current land bank with planning.
• Optimised site size.
• Strategic land bank portfolio.
• Promotional land bank portfolio.
Design and innovation
capabilities
•
•
In-house technical and innovation team.
In-house biodiversity and climate
expertise.
Investing in research and development.
•
• Academic research partnerships.
Industry-leading build quality.
Construction and
development expertise
•
• Experienced site management teams.
In-house construction expertise.
•
Timber frame manufacturing capacity.
•
Sales and marketing expertise
Industry-leading customer service.
•
• Dual-brand marketing capabilities.
• Highly trained sales team.
• Digitally led customer journey.
Financial
• Strong and resilient balance sheet.
• Disciplined investment criteria
• Robust cash generation.
• Access to debt facilities.
Strong relationships
with stakeholders
• Ongoing landowner relationships.
• Local government engagement.
• Committed to community engagement.
• Mortgage lender relationships.
• Product innovation alliances.
• Supply chain partnerships.
•
Joint venture arrangements.
12
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 created
by climate change. We
design “Great Places”
that create a positive
impact on ecology,
biodiversity and the
health and wellbeing of
residents and the local
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.
Targeted land
buying and effective
planning
We acquire land through
various sourcing
routes in targeted
locations throughout
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 planning
and development skills,
we seek to gain planning
consents that enable the
creation of great homes
and sustainable places
where our customers
aspire to live.
COMPETITIVE
ADVANTAGES
• Against the backdrop of increasing
regulation in both the planning process
and the requirements of the homes
we build, our in-house resources
create capabilities, which smaller
competitors increasingly struggle to
replicate.
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 fundamental
to our reputation with customers,
investors, landowners and suppliers,
supporting our ability to operate in
communities throughout the country.
Scale and technical resources
• We have clear advantages of scale
through our financial strength, land
bank diversification and operating
capacity across the country.
• We can invest in in-house
technical expertise in land buying,
planning, design and development,
biodiversity, procurement,
construction, marketing and
sustainability.
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 that target
different 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
an embedded culture,
ongoing investment
in technology, the
commitment of our
people, the quality of
our homes and the
places we create.
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 approach to sustainability emphasises the
creation and retention of value, driving cost
reduction, risk mitigation, sustainable growth,
transparency and trust in the business. This drives
margin improvement and increased competitiveness,
as well as an improved reputation among our
stakeholders.
Our stakeholder engagement enables us to align
our activities to our stakeholders’ expectations on
environmental, social and governance-related matters.
The integration of sustainability throughout our business
allows us to create value for all stakeholders, mitigating
risk whilst actively seeking opportunities to differentiate
and unlock improvement in margins and returns.
Customers
Through a positive home buying journey, we deliver high-quality,
energy-efficient, 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, 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 and generate growth in
profitability and attractive returns on capital. Our operating framework
creates financial discipline to support the resilience of our operating
business model, balance growth and cash returns to shareholders.
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, the
forward visibility of the building materials, products and future
workload we can offer, and timely supplier payment.
Communities
We seek to create a positive legacy where our developments
encourage local communities to thrive. This is achieved through
working with local planning departments to deliver developments that
satisfy the needs of local communities, supported by our development
and place-making expertise, as well as planning gain contributions
to improve community infrastructure. This results in enhanced
environments that benefit the communities in which we develop.
Wider society
We are building the energy-efficient, sustainable homes the
country needs, creating jobs and supporting economic growth, whilst
also making substantial taxation contributions, both direct and indirect,
to support wider society. We also recognise, as the largest and leading
national sustainable housebuilder, we have a responsibility to support
the housebuilding industry, as well as our supply chain partners, on
our shared journey to net zero carbon emissions.
Read more on our stakeholder engagement
on pages 41 to 51.
13
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
The Zed House case study
SUSTAINABILITY
IN ACTION
Zed House
The Zed House is a unique zero carbon concept
home that showcases the future of sustainable
living in the UK.
COLLABORATION
BETWEEN
40
LEADING PARTNERS
125%
REDUCTION IN CARBON
EMISSIONS
Oliver Novakovic,
Technical &
Innovation Director
Welcome to the home
of the future
“ We wanted to showcase what can
be done to deliver zero carbon
living using the latest technologies
and working with the best industry
partners. Ultimately, our aim is
to find solutions to enable the
industry to build high-quality, zero
carbon and nature-friendly homes
that customers aspire to own, at
the scale which the country will
need over the coming decades.”
David Thomas, Group Chief Executive,
Barratt Developments PLC
The Zed House is our first step in a
three-year research and development
programme, supported by AIMCH and
Innovate UK, working with our partners
and stakeholders to identify the right
technologies and processes to build healthy,
sustainable and well-designed homes that
our customers will want to live in.
The brief
In early 2020, the Group announced its
commitment to build zero carbon homes in
use from 2030. An important step on this
journey was to build a concept home of the
future. The result, the Zed House, is the
first home built by a national housebuilder
that goes significantly beyond the UK
Government’s Future Homes Standard,
delivering more than a 125% reduction
in carbon emissions relative to current
standards.
Integrated design and build
Working in partnership with the University
of Salford and more than 40 leading
organisations, the Group’s Technical and
Innovation team began detailed design in
early 2021, using a popular housetype, the
“Alderney”, as the basis for the Zed House
design. The design incorporated Nationally
Described Space Standards (NDSS),
Category M4 (2) accessibility standards, as
well as increased thermal performance.
Intrinsic to the design process was
an increased level of standardisation,
taking ‘design for manufacture’ or DFMA
principles on board.
To optimise build, the design uses
integrated Advanced Modern Methods
of Construction (MMC). We worked with
our supply chain partners and Oregon,
our in-house timber frame division, to
develop a coordinated super structure
design that ensured the manufacture and
site assembly of the MMC elements was
seamless.
Relative to brick and block construction
materials and the traditional construction
process onsite, the Zed House benefits
from both lower embodied carbon in the
offsite construction products used, as well
as significantly reduced carbon emissions
during the construction process itself.
The result is a fabric-first zero carbon
home, which combines the latest offsite
construction products, including insulated
pre-cast concrete floors, offsite masonry
panelised walls, closed panel timber frame
and factory-applied external façade and
windows.
Meanwhile, a specialist team established
a detailed specification for the energy
and heating of the Zed House. The
project partners worked collaboratively
to integrate the latest technologies into
a coherent, smart heating system using
the latest technologies. This includes 25
photovoltaic panels, an air source heat
pump, infrared heating technologies,
underfloor heating and batteries, as well
as wastewater heat recovery systems.
A partnership to
accelerate progress
“ The Zed House is the culmination
of a partnership involving more
than 40 leading supply chain
partners, consultants and
designers. Working together, we
have gained an understanding of
how we can integrate such a wide
range of technologies, measure
the benefits and the home’s
performance, as well as appreciate
the future challenges of integrating
so many technologies into a single
zero carbon home.”
Oliver Novakovic, Technical and
Innovation Director, Barratt
Developments PLC
Monitoring and living in
the Zed House
Two key objectives of the Zed House project
are to understand the consequential
impacts of integrating so many new
technologies in one home, as well as
gaining an appreciation of what it would be
like to live in a house of the future.
To collect data and interrogate the Zed
House performance, the University of
Salford team designed and installed an
advanced monitoring system into the
fabric of the Zed House. More than 1km of
cabling and 95 sensors collect real-world
data on key performance parameters,
including hot water and heating
performance, indoor air quality, thermal
comfort and renewable energy generation.
Members of the University of Salford team
have spent time living in the Zed House to
ensure we better appreciate zero carbon
living, as well as the mix of technologies
and features that will deliver the low
carbon homes that future homebuyers will
aspire to.
“ The big target is getting to net
zero. Houses of the future are
not going to be just consuming
energy, they will be generating and
storing energy, and they may well
be trading energy, so the learnings
from projects like the Zed House
can actually help inform what the
direction of travel needs to be.”
Professor Will Swan, Director Energy
House Laboratories, University of Salford
The future
The next few years will see unprecedented
change as the UK and the world take action
to address climate change and reduce
our impact on the environment. This will
affect the materials we use to build new
homes, how we heat them and the smart
technologies that will help reduce energy
use and carbon emissions.
The adoption of advanced MMC, coupled
with the next generation of low and zero
carbon technologies, mean that the Zed
House has set a new benchmark on the
way to building zero carbon homes at scale.
The project has delivered a significant
step forward in our understanding, and
lessons learnt are already being integrated
into existing schemes like Delamare Park
(see page 29) and our future research and
development projects.
14
15
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Executive’s statement
We continue to lead the industry on
sustainability, with a particular focus on
reducing our environmental impact, and
we have clear targets and plans for the
years ahead.
Housing market fundamentals
Despite the continued macroeconomic
uncertainties, the housing market
fundamentals remain attractive. Strong
demand for high-quality, energy-efficient
homes has been evident across the UK
since it emerged from the initial national
lockdown in summer 2020.
The strength of new housing demand, as
well as years of under supply, underpin
the Government’s ongoing target to
build 300,000 new homes each year. We
are well positioned to deliver the high-
quality, energy-efficient and sustainable
developments needed across the UK.
The land market remains attractive with
a steady supply of opportunities. Despite
some planning delays during the year,
planning consents have remained ahead of
home building activity at a national level.
Planning delays are however becoming
more commonplace, reflecting constrained
planning resources, the delayed impacts
of the pandemic and emerging land use
issues, notably the challenges created
by nutrient neutrality. We are currently
engaging with the consultation around
future planning reform. We would urge the
Government to ensure any changes deliver
a planning system that is responsive to
housing need, predictable and timely, and
well-resourced at local authority level, to
ensure a flow of consented land, which will
allow the housebuilding industry to deliver
the homes the country needs.
For the industry to grow new homes
supply, it is vital that homebuyers can
continue to access affordable and
competitive mortgage finance. Whilst
the revised Help to Buy scheme draws
to a close on 31 March 2023, a more
competitive mortgage market backdrop
has increased the availability of 95%
loan-to-value (LTV) lending. In addition,
“Deposit Unlock”– a scheme developed
by the housebuilding industry, insurers
and lenders – is also now available across
our developments through a number of
mainstream mortgage lenders, and offers
a 95% LTV mortgage.
Committed to building more homes
Reflecting our position as Britain’s largest
housebuilder, and our commitment to
play a key role in addressing the housing
shortage, this year we have put in place
additional building blocks for future growth
beyond our previous target of 20,000
annual home completions.
At the end of January 2022, we acquired
Gladman Developments Limited. Gladman
is the country’s largest land promoter,
which brought into the Group an industry-
leading team of experts in land sourcing,
promotion and planning. Gladman, at the
time of its acquisition, held a portfolio of
406 land promotion sites encompassing
more than 98,000 plots, which will provide
an additional route to both grow the
Group’s strategic land bank and accelerate
the strategic land bank conversion.
Gladman will also benefit from the Group’s
development resources and financial
strength, allowing it to offer a broader
range of land promotion options to its
current and future land partners. Gladman
will, we believe, enable us to deliver
incremental completions of 500 homes per
annum from FY25.
We have also opened two new divisions
– Sheffield and Anglia, in our Northern
and East regions respectively – to support
our future growth. Both divisions are dual
branded, offering both Barratt and David
Wilson homes and, following a period
of land bank assembly, offer attractive
opportunities for additional growth over
the coming years. Once operating at scale,
over the next five to seven years, we believe
these two divisions combined will have the
capacity to deliver more than 1,000 home
completions per year.
To support our site-based construction
activity, address the longer-term challenge
of labour availability in the industry
and build the most energy-efficient and
sustainable homes for the future, Oregon,
our in-house timber frame manufacturing
business, is building a new timber frame
facility near Derby. This facility will add
significant capacity to Oregon’s output
from FY24.
Through these investments in enhanced
land supply, geographic infill and
additional off-site construction capability,
we are creating the capacity to grow to
21,500 total completions (including JVs)
per annum in the medium term, ensuring
we can deliver growth in the high-quality,
energy-efficient and sustainable homes
the country needs.
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 is a testament to the
disciplines 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 partners.
“We remain committed to
playing a key role in addressing the
housing shortage and delivering
high-quality, energy efficient and
sustainable developments.”
David Thomas
Chief Executive
Introduction
We have made excellent progress in a year
of strong housing demand. I would, once
again, like to thank our employees, sub-
contractors and supply chain partners for
their hard work and commitment, which
enabled us to successfully grow our site-
based construction activity, notwithstanding
the significant supply chain challenges,
and deliver high-quality homes and great
service to our customers. Our focus
remains on achieving our medium-term
targets, growing completion volumes and
further developing our industry leadership
around sustainability, to deliver long-term
value for all our stakeholders.
Our purpose is to lead the future of
housebuilding by putting customers at the
heart of everything we do.
We remain committed to playing a key
role in addressing the housing shortage
and delivering the high-quality, energy-
efficient and sustainable developments
needed across England, Scotland and
Wales. In doing so, we will continue to
contribute to growing Britain’s economy
as we navigate the economic challenges
emerging post-pandemic, as well as the
macroeconomic impacts developing from
the war in the Ukraine, most notably
around energy costs, inflation and
interest rates.
16
We increased our total home completions
by 3.9% to 17,908 (FY21: 17,243) and
delivered on our target to grow total home
completions back above the pre-pandemic
level of 17,856 achieved in FY19.
Wholly owned completions also grew
by 3.9% to 17,162 homes (FY21: 16,517
homes). In addition, we delivered 746
homes through our JVs (FY21: 726 homes).
We achieved our medium-term gross
margin target, delivering a 24.8%
adjusted gross margin (FY21: 23.2%), with
adjusted gross profit of £1,308.1m (FY21:
£1,114.7m), reflecting strong customer
demand, house price inflation ahead of
build cost inflation and improved site
based productivity.
The impact of adjusting items, which
reflected legacy property costs associated
with building safety related remediation
activities, as well as the estimated future
costs of such works as part of the Building
Safety Pledge, resulted in reported gross
profit of £899.9m (FY21: £1,010.0m) and
a reported gross margin of 17.1% (FY21:
21.0%).
After deducting administrative costs, we
delivered an adjusted operating profit of
£1,054.8m (FY21: £919.0m) and an adjusted
operating margin of 20.0% (FY21: 19.1%).
Profit from operations, after the deduction
of adjusting items, was £646.6m (FY21:
£811.1m).
With the deduction of finance costs and
including JV income, we delivered strong
growth in adjusted profit before tax for
the year to £1,054.8m (FY21: £919.7m).
Reported profit before tax, after deducting
adjusting items, was £642.3m (FY21:
£812.2m).
Our Balance Sheet has remained strong
with year-end net cash of £1,138.6m
(FY21: £1,317.4m). We have increased our
land creditors at the year end to £733.6m
(FY21: £658.3m) and, as a result, we have
reported a year-end net indebtedness
surplus of £405.0m (FY21: £659.1m net
surplus). We have also improved our ROCE,
which has increased by 220 bps to 30.0%
(FY21: restated 27.8%) and, as a result,
has moved ahead of the returns achieved
in the three years prior to the onset of the
pandemic.
Our targets for the coming year
and the medium term
In FY22, our focus on rebuilding both our
total home completions and financial
performance has delivered an excellent
improvement on adjusted gross margin
and ROCE. Building on this performance,
whilst recognising the UK economy
continues to face macro uncertainties, we
have a clear strategy and targets for both
the year ahead and the medium term of
three to five years.
Our business now has capacity to
deliver 21,500 home completions
• We intend to grow total home
completions in FY23 to between 18,400
and 18,800 homes, with wholly owned
completions between 17,650 and
18,050 homes, along with an additional
c. 750 JV completions.
• Completions are expected to reflect
the phasing out and timing of legal
completions under the Help to Buy
scheme, which must be completed by
31 March 2023.
• Beyond FY23, we will continue to target
disciplined volume growth at between
3% and 5% annually towards our new
target of 21,500 total home completions.
Our gross margin target remains
at a minimum 23%
• We continue to buy land at a minimum
23% gross margin hurdle rate.
•
In FY23, on the assumption that
house price growth moderates over
the coming months, and build cost
inflation continues at between 9% and
10%, we would anticipate that our
gross margin will move towards our
minimum medium-term gross margin
hurdle rate of 23%.
Our ROCE target remains at
a minimum 25%
•
In FY23 and beyond, we aim to continue
to deliver a minimum ROCE of 25%, in
line with our medium-term target.
Long-term value creation
We are focused on creating long-term
value for our stakeholders. We recognise
that the resources used in our operations
are finite, from the land that we develop, to
the materials we consume. Our impact on
climate change makes it imperative that
we constantly scrutinise and challenge
the way we operate, as well as the
environmental impact of our business.
Set out below are the progress and activities in FY22, as well as our objectives for the year ahead and the medium term:
Progress in FY22
Areas of focus for FY23
Medium-term targets
Home completions
• 3.9% growth in total home
completions to 17,908 (FY21:
17,243) including 746 JV
completions (FY21: 726).
• Managing the phase out of
Help to Buy by the end of
March 2023.
• Delivering total home
completions of between
18,400 and 18,800 including
c. 750 JV completions.
• Disciplined growth in home
completions to our new
target of 21,500 homes.
Gross margin
• 160 bps increase in adjusted
gross margin to 24.8% (FY21:
23.2%).
• Ongoing build optimisation
and focus on build cost
inflation control.
• 390 bps decrease in gross
margin to 17.1% (FY21:
21.0%).
• Delivering continued
operational improvements
across our business.
• Land acquisition at a
minimum 23% gross
margin and ongoing
build optimisation and
performance.
ROCE
• 220 bps increase in ROCE to
30.0% (FY21: restated 27.8%).
• Disciplined and controlled
land and work in progress
investment to support growth.
• Minimum of 25% delivered
through continued operating
framework discipline.
17
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Chief Executive’s statement CONTINUED
Keeping people safe
Our fundamental priority is always to
provide a safe environment for all our
employees, sub-contractors and customers,
and we are committed to achieving the
highest health and safety standards. We
are continually developing our processes
and procedures, challenging unsafe
behaviours and looking at ways we can
further improve.
As highlighted in last year’s Annual
Report, reflecting increased activity across
housebuilding following the initial national
lockdown, we experienced a significant
increase in our Injury Incidence Rate (IIR)
in FY21 to 416 (FY20: 256) per 100,000
workers. Following the introduction of
action plans to address the IIR, and with
close monitoring from the Safety, Health
and Environment (SHE) Committee, we are
able to report a significant improvement
has been achieved, with our IIR reducing
by 37% to 262 per 100,000 workers, and
our SHE audit compliance has been
maintained at 97% (FY21: 97%).
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 and repetitive strain
injuries. We are also working with our key
contractors to encourage them to
implement health surveillance
programmes for their workforces.
As part of our enduring response to
COVID-19, we have continued to refine and
update our working practices and policies
in line with the latest guidance from
Government, Public Health Authorities
and the Construction Leadership Council.
We also continue to operate enhanced
induction, training and support for
our site-based employees and sub-
contractors, and employees operating
under hybrid working arrangements.
Building safety pledge
As stated in the Chairman’s statement,
we have always been clear that we do
not believe leaseholders should pay for
necessary remediation to fix building safety
issues caused by the design, construction
or refurbishment of their buildings.
We announced on 6 April 2022 that a
proportionate and sensible approach to
fire safety in historical buildings had been
agreed with the Government, and we have
pledged to support leaseholders by funding
remediation of buildings we developed over
the past 30 years.
We are working with the HBF and the
Department for Levelling Up, Housing
and Communities (DLUHC) to agree
the necessary legal documentation and
arrangements for a fair approach to the
remediation process, including a robust
and independent arbitration process to
ensure clarity for all parties where there
are areas of uncertainty.
We have provided £396m with respect to our
Building Safety Pledge in FY22. Our
dedicated Building Safety Unit is
managing our building safety remediation
programme, which should be delivered
over the next three to five years, with
building safety considerations paramount
in the prioritisation and scheduling of
works. The charges reflect the current
best estimate of the extent and future
costs of work required, but adjustments
to the expected costs to complete may be
required as work progresses.
We are also now subject to the Residential
Property Developer Tax, which came into
effect on 1 April 2022. This was introduced
to fund the remediation of all residential
buildings above 18 metres and applies to
the majority of our profits above a £25m
annual allowance at a rate of 4%.
Competitions and
Markets Authority
After the end of the financial year, on
16 August 2022, the Competition and
Markets Authority (CMA) announced
that, after more than three years of
investigation, during which we have worked
constructively with the CMA, it had now
closed its investigation into the Group in
relation to the sale of leasehold homes.
Charitable giving
We recognise our responsibility to
support the communities we operate in,
and we aim to be industry leading in our
approach to charitable giving and social
responsibility. We believe it is important to
support charitable causes – both locally
and nationally – and we actively promote
charitable giving and volunteering amongst
our employees. In FY22, we raised and
donated £5.1m (FY21: £4.3m) for charitable
causes through the Barratt Foundation
and Group donations.
To ensure that the Barratt Foundation can
continue to donate to worthy causes, we
have agreed a £12m rolling three-year
funding agreement (£4m per financial
year). In addition, we donated an additional
c. £900k to the Barratt Foundation, which
represents the unclaimed proceeds from
the Shareholder Tracing and Reunification
exercise completed in June 2021.
18
The Barratt Foundation
Now in its second year of operation, the
Barratt Foundation was particularly active
in FY22 – supporting over 500 charities and
launching two new multi-year partnerships
focused on social mobility and education.
A £1.3m three-year partnership with
national youth charity, The Outward
Bound Trust, will fund 15,000 days of
outdoor learning and adventure for
3,000 disadvantaged young people. The
Foundation also matched £300,000 raised
by readers of The Times and Sunday Times
who picked The Outward Bound Trust as
one of their Christmas charities in 2021.
The total – £1.6m – is the largest charity
contribution ever made by the Group or
the Foundation.
Continuing our longstanding support for
Whizz-Kidz, the Barratt Foundation also
made a £1.2m three-year commitment to
provide life-changing mobility equipment
and training opportunities for disabled
children and young people.
During the year, the Foundation also made
notable grants including:
• £111,000 to Sheffield Hallam
University, where a three-year
commitment is providing nine
scholarships and 60 bursaries to
support students facing financial
hardship during their studies;
• £100,000 to Magic Breakfast, the
2022 employee charity vote winner, to
provide 300,000 healthy breakfasts to
children at risk of hunger in schools
across the UK;
• £50,000 to the British Red
Cross, to support the Ukraine
Humanitarian Appeal;
• £50,000 to The Fire Fighters Charity,
to support their ongoing work with the
UK’s fire services community;
• £40,000 to Emmaus UK, to provide
rooms and support for homeless
people at Emmaus communities
across the UK; and
• £30,000 to Missing People, to help
reconnect missing people with their
loved ones by supporting a vital
helpline and online chat service.
Barratt and David Wilson
Community Fund
The Barratt Foundation also continued
to support the Barratt and David Wilson
Community Fund throughout the year. This
enables each of our divisions and Group
offices to support local charities that really
matter to them by donating £1,000 to a
different local charity each month. Building
on this, and reflecting the challenges
faced by many over the Christmas period,
the Barratt Foundation also provided an
additional £5,000 to each of the Group’s
divisions and offices to further support
local charities such as hospices, foodbanks
and homelessness charities. In FY23,
the Barratt Foundation is increasing the
funding available to the Community Fund
by 50%, enabling each of our divisions to
donate £1,500 to a different local charity
each month.
Employee engagement in our
charitable activities
To encourage our employees to raise funds
for local causes, the Barratt Foundation
matches funds up to £15,000 per division
and to £1,000 per employee for employee
fundraising. In addition, the Group doubled
the number of volunteering days to two
per year from the start of calendar year
2022. The Group also partners with Payroll
Giving in Action to enable employees
to make regular, tax-free donations to
their chosen charities. In FY22, Barratt
employees and divisions raised £705,589
(FY21: £303,190) for charities and good
causes, with an additional £260,055
(FY21: £363,500) provided by the Barratt
Foundation in matched funding.
Looking to FY23, the Group has decided
to double the available match funding
for employee fundraising from £1,000 to
£2,000, reflecting the Barratt Foundation’s
aspirations to further harness employee
fundraising efforts and donate more to
good causes across the UK.
For more information on the
Barratt Foundation, visit
www.barrattfoundation.org.uk.
Current trading and outlook
Private
Affordable
Wholly owned
JVs
Total
28 August 2022
£m
2,421.5
1,079.6
3,501.1
307.8
3,808.9
Homes
6,467
6,658
13,125
933
14,058
29 August 2021
Homes
£m
6,851
2,331.1
7,835
1,250.9
14,686
3,582.0
716
261.4
15,402
3,843.4
Variance %
Homes
(5.6)
(15.0)
(10.6)
30.3
(8.7)
£m
3.9
(13.7)
(2.3)
17.8
(0.9)
Our strategy, provided the economic
backdrop remains supportive, centres on
growing our completion volumes to our
new medium-term target of 21,500 homes.
In recent years, we have acquired land at
a minimum 23% gross margin. Through
our ongoing focus on operating efficiencies
and growth in home completions, we
continue to target a minimum 25% ROCE
in the medium term.
Market fundamentals remain strong,
reflecting the continued imbalance
between housing supply and demand, as
well as good mortgage availability.
We entered FY23 with a strong forward
sales position and at 28 August 2022 we
are 55% forward sold with respect to
private wholly owned home completions
for FY23 (29 August 2021 for FY22: 59%)
with 59% of the private order book
exchanged (29 August 2021: 56%). As at 28
August 2022 forward sales were at 14,058
homes (29 August 2021: 15,402 homes)
and a value of £3,808.9m (29 August 2021:
£3,843.4m).
Net private reservations per active outlet
per average week for the 8 weeks ended
28 August 2022 were lower than last year
at 0.60 (FY22: 0.82) and below the 0.70 for
the equivalent period in FY21. In part this
reflects limited availability of homes for
early occupation given our strong forward
order book, as well as heightened macro-
economic uncertainty.
As the land market has become
increasingly competitive, our land
approvals in the new financial year to
date are lower than in FY22, reflecting our
strong land bank position and disciplined
application of our minimum hurdle rates of
23% gross margin and 25% ROCE.
Construction activity is on track to deliver
planned output growth in FY23 with 366
equivalent homes per average week built
to date in the new financial year (FY22: 335
homes).
Based on current market conditions, we
expect to grow total home completions to
between 18,400 and 18,800 homes in FY23,
including c. 750 home completions from
our JVs, whilst ensuring we maintain our
industry-leading standards of build quality
and customer service.
The completion profile in FY23 will
reflect the phasing out and timing of
legal completions under the Help to Buy
scheme, which must be completed by 31
March 2023. We currently estimate that c.
45% of our full year completion guidance
will be delivered in the first half of the new
financial year, with c. 55% scheduled for
completion in the second half.
On the assumption that house price growth
moderates over the coming months, whilst
build cost inflation continues at between
9% and 10%, we would anticipate that
our gross margin will move towards our
minimum medium-term gross margin
hurdle rate of 23%.
We have substantial net cash balances, a
well-capitalised balance sheet, a strong
forward sales position and clear plans to
secure both incremental home completion
growth and further operating efficiencies
in the year ahead. We also have the
continued ambition to accelerate our
actions to deliver leading sustainability
progress, further enhancing business
resilience and our customer proposition.
Looking ahead, we recognise that
significant macroeconomic uncertainties
remain, most notably around inflation,
energy costs and interest rates, and
their impacts on UK economic growth,
employment, and consumer confidence
and spending. International incidents,
notably the ongoing conflict in Ukraine,
could also disrupt global supply chains and
further affect confidence at home.
The Board will continue to monitor and
respond to changes in the market and
the wider economy, but believes that our
operating performance, forward order
book and very strong financial position
provide us with both the resilience and
flexibility to react to changes in the
operating environment in FY23 and as the
market evolves thereafter.
David Thomas
Chief Executive
6 September 2022
19
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Executive’s statement CONTINUED
Building Sustainably
We are determined to continue to be the leading national sustainable housebuilder. To enable
our business to grow and prosper against the backdrop of climate change, biodiversity loss and
growing inequality, we need to constantly evolve and adapt our approach. We do this through
a strong understanding of our customers’ and wider stakeholders’ needs, high standards of
governance and a culture of responsibility.
nd Natu r e , N a t u ral Resource
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Nature
We preserve and enhance the
natural world by using resources
responsibly, building resilient,
low-carbon homes, and by creating
places where people
and nature can thrive.
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esilience
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,
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Places
We design and build great
places that meet the highest
standards, and that promote
sustainable, healthy and happy
living for our customers.
n Finance
Our Building Sustainably
framework
Our Building Sustainably framework brings
together our sustainability ambitions,
targets, activities and metrics to ensure
that important issues and solutions are
embedded in our everyday business
decisions and the actions we take. During
the year, we have further invested in the
tools and programmes to support our
business, measure our performance and
ensure we are making progress towards
our targets. Our framework is built around
three pillars: Nature, Places and People.
These pillars cover the material issues for
our business and are informed by industry
understanding, as well as the opinions and
challenges offered by our stakeholders.
20
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People
We believe everyone has the
right to be respected and treated
fairly at work. We do the right
thing, nurturing diverse talent
and prioritising the health
and safety and wellbeing of our
people and partners.
H
u
man rights , K e
e
How we manage sustainability
We have a clear process – from issue
identification to operational delivery
of action plans – across each of our
framework pillars and their corresponding
priorities. This allows us to create
supporting work streams that drive
our implementation plans and create
accountability around each issue.
A governance structure, embedded across
the business, underpins the framework.
The Board delegates day-to-day delivery
of our framework to the Executive
Committee, which is supported by
operational cross-business working
groups. Regular monitoring of targets
enables us to continually identify and re-
prioritise areas for improvement.
Our Sustainability Committee is required
to meet at least four times a year
to debate, review and scrutinise the
sustainability strategy and monitor the
delivery of implementation plans. More
details are available on pages 99 to 104.
Our performance –
delivering on our commitments
We have made good progress on reducing
waste across our business – see page 28
for more details.
We have a strategy and transition pathway
in place to achieve our net zero carbon
goal by 2040 – see pages 58 to 71 for more
details.
In FY22 our market-based carbon emission
intensity for scopes 1 and 2 reduced by
14% to 1.53 tCO2e/100m2 (2021: 1.78
tCO2e/100m2). Scope 1 and 2 absolute
emissions have reduced by 23% compared
to 2018 levels, driven by progress in our
reduction initiatives:
• Electric or plug-in hybrid vehicles now
comprise 41% of our company car
fleet;
• Offices where we are responsible
for the electricity supply are now on
renewable tariffs;
• We continue to reduce the use of diesel
generators on sites by securing grid
connections as early as possible;
• For those generators and telehandlers
in operation, we are trialling the use
of alternative fuels (hydrotreated
vegetable oil) on just over 10% of our
development sites; and
• We are ensuring that all plant on sites
are the most fuel efficient available to
us in the market.
We have recently completed a programme
embedding biodiversity best practice
across all our regions, as part of our work
to achieve biodiversity net gain ahead of
legislation.
During the year, we appointed a new Head
of Diversity and Inclusion, and we are in
the process of developing a new strategy
and action plan to help us achieve our
ethnic minority and gender ambitions, as
well as broaden the scope and reach of our
diversity targets.
We are making good progress on our work
on human rights to address the breadth
and depth of issues that extend across
our value chain – see pages 32 for more
details.
Our full performance table is included
on page 102, and additional in-depth
data detailing our performance
across our framework is available at
https://www.barrattdevelopments.co.uk/
building-sustainably/performance-data/data.
On pages 22 to 33, you can read more
about our issue-specific approaches and
performance outcomes within the strategic
priority section.
Supporting global goals
at a local level
Nationally, our framework aligns
with the UK Government’s 2050 net
zero greenhouse gas emissions
commitment and its 2025 Future
Homes Standard. At a global
level, our framework aligns with
nine of the UN’s 2030 Sustainable
Development Goals (UN SDGs),
shown below.
Our Building Sustainably framework
has been created as a ‘living
framework’, one that will evolve
to pre-empt, meet and exceed the
evolving sustainability risks and
opportunities faced by our business
and identified by our stakeholders.
On our website, we detail how the
UN SDGs inform our framework
and decision making, and how we
are driving change against these
priorities.
https://www.barrattdevelopments.
co.uk/building-sustainably/
stakeholder-engagement/
un-sustainable-development-goals
We became a signatory to the
UN Global Compact in July 2021
– a voluntary initiative based on
CEO commitments to implement
universal sustainability principles
and to take steps to support
UN goals.
Transparency
Our disclosures are critical for meaningful
industry-wide improvement around
sustainability. We are committed to
continuously enhancing our disclosures
to meet evolving stakeholder needs. As
a result, we make information on our
strategy, targets and performance publicly
available through our website and other
publications. We also complete a variety
of benchmarks and indices throughout
the year. These disclosures enhance
transparency in key areas that are relevant
to us and important to our stakeholders.
They help us to align with global and local
priorities and identify performance gaps,
and therefore gives us a clear indication of
where our efforts need to be directed.
In the year, we made improvements to our
CDP score. CDP is a comprehensive and
widely recognised global benchmark for
many stakeholders, including investors.
In 2021 we secured A- and B respectively
for Forests and Water, and retained our A-
score for Climate, making us a top-scoring
company in the housebuilding sector.
The Sustainability Accounting Standards
Board (SASB) is an independent not-for-
profit organisation that sets standards to
guide the disclosure of financially material
sustainability information of companies.
Our disclosures are based on criteria
specific to the housebuilding sector. We
have also maintained our Low Risk and
Prime Status in both the Sustainalytics and
ISS indices respectively, and scored in the
upper quartile for FTSE4Good.
More information on our inputs to
benchmarks and indices is on our website:
https://www.barrattdevelopments.co.uk/
building-sustainably/performance-data/
sustainability-indices-benchmarks.
Awards and recognition
We continue to be recognised for our work
through awards and commendations, both
within the housebuilding industry and
beyond.
• For the NextGeneration sustainability
benchmark, we were the highest
scoring national housebuilder and we
received both the Gold Award and the
Crystal Award. The latter recognises
the transparency and quality of
our sustainability reporting for the
second time.
• We received the Sustainable
Housebuilder of the Year Award at the
Housebuilder Awards 2021.
• We received the Highly Commended
Award for the Zed House at the
Business Green Leaders Awards in
June 2022.
Collaboration through partnerships
Through collaboration and long-term
partnerships, we can deliver greater social,
environmental and economic benefits for
our partners, communities, business and
the wider industry.
As part of our determination to maintain
our position as the leading national
sustainable housebuilder, we recognise
that we cannot achieve our ambitions
alone. As a result, we commit to and invest
resources in long-term partnerships,
which include our:
• unique national partnership with
the RSPB;
• collaboration and research with the
University of Salford; and
• position as the first national partner
to join the Supply Chain Sustainability
School and chairing of the Homes
Leadership Group.
We continue our engagement with the UK
Green Building Council to respond to the
most pressing environmental challenges,
and we work closely with Government
departments to support the low carbon
and skills agenda and ensure regulations
drive sustainable growth.
1.53
tCO2e/100m2 MARKET-BASED
CARBON EMISSIONS INTENSITY
(2021: 1.78)
David Wilson Homes at Canalside,
Wichelstowe
21
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Chief Executive’s statement CONTINUED
Building Sustainably
During the year, people inside and outside our business have played a vital role in delivering
against our commitments and supporting our ambitions. We are proud to see the influence
we have across the industry, and the positive and lasting impact of our work on our customers
and communities. These examples also demonstrate how the outputs of our work contribute
positively to the UN SDGs.
Making greener cheaper
In order for the UK to meet its net zero targets, the
public needs affordable and sustainable homes.
A home with an A or B rated EPC (Energy
Performance Certificate) can unlock energy
savings of 65% when compared with existing
homes rated D or below, which account for
around two-thirds of existing homes in the UK.
Of all Barratt homes, 99% are EPC A or B
rated, and we are working with lenders,
Government and industry experts to promote
green mortgages. These recognise the energy
efficiency advantages of new homes to make
them a mainstream option for homebuyers,
helping to change consumer behaviour.
Andy Mason, Head of Strategic Partnerships
and Housing at Lloyds Banking Group,
believes that innovation in green mortgages,
including the incorporation of the energy
efficiency and energy cost savings in
affordability assessments, is the stimulus
needed to create demand for sustainable,
efficient housing:
“ As we should expect with such a high
profile and important topic, there’s a
huge amount of activity on sustainability
in housing right across the market.
Lenders are thinking about how to
improve EPC ratings of properties in
their mortgage books, builders about
how to meet new efficiency standards
and homeowners facing massive
increases in energy bills.”
Waste is everyone’s business
The construction industry is one of the UK’s largest users of
natural resources and produces significant amounts of waste.
Andy Mason
Head of Strategic
Partnerships and Housing
at Lloyds Banking Group.
In FY22 our waste management policy has
encouraged on-site waste segregation, reuse
of materials and efficient use of materials
to reduce wastage. In FY23 we are again
incorporating a construction waste target in
the annual bonus scheme.
Adam Breakspear, Senior Site Manager at
David Wilson Homes, Kingfisher Meadows,
Witney, has implemented all aspects of the
Group on-site waste reduction strategy.
This has been significant in reducing the
development’s waste intensity by 45% in FY22.
The business is also pursuing additional
initiatives, such as those identified by
graduates from our ASPIRE programme,
including the use of reusable and flexible
flooring cassette systems.
“ Our focus on implementing the waste
policy has been pivotal, together with
introducing a culture that understands
the opportunities to reduce our waste
intensity, improve segregation and
overall management of our waste that
arises on site. We deliver regular toolbox
talks to sub-contractors and undertake
frequent reviews of our waste.”
Adam Breakspear
Senior Site Manager at
David Wilson Homes
Every job has the potential
to be low carbon
The housebuilding industry needs to support the necessary supply
chains to develop the skills and construction practices to consistently
deliver high-quality homes that incorporate low carbon heating and
high levels of energy efficiency.
The UK needs more skilled workers to
manufacture and install heat pumps, hydrogen
boilers, wind turbines and solar panels, as well
as insulate homes and buildings.
Andy George, Group Head of Talent, is
a member of the Green Jobs Taskforce,
convened by ministers from the Department
for Business, Energy and Industrial Strategy
(BEIS) and Department for Education (DfE).
Our Chief Executive has joined the Green Jobs
Delivery Group – the country’s first dedicated
group for creating UK green job opportunities
and supporting the delivery of up to 480,000
skilled green jobs by 2030.
Andy George
Group Head of Talent
“ The Green Jobs Taskforce brought together government,
industry and education providers at a timely moment, to help
develop clear recommendations and tangible actions that will
ensure we have the skills and capability to build a low carbon
economy at the scale and pace required.”
Bringing sustainable construction
to life in schools
There is an ongoing shortage of people entering or considering
a career in construction and the built environment, particularly
women and those from ethnic minority backgrounds.
Our ‘Insight House’ on our Heritage
Grange development in Warwickshire is
designed to make the concept of sustainable
housebuilding accessible to young children.
The house features information about the
different roles involved in housebuilding as
well as extensive wall displays explaining the
construction process and the principles and
practices we follow to minimise the impact of
development, and provide homeowners with
more energy-efficient homes. There are also
videos, games and cutaways that show inside
the workings of the house. The Insight House
is now available for other schools, clubs and
societies to tour.
The positive feedback on the Insight House
has led us to consider other opportunities to
recreate this across other regions.
Insight House
“ The children loved their visit to the Insight House. They’ve
been learning about sustainability in their geography and
science lessons, so it was great to actually go out and see
how some of the topics are present in a real-life setting. They
all have a much greater awareness now of how important the
environment is and what they can do to help protect it.”
Cassie Cox,
a teacher at Lighthorne
Heath Primary School.
22
23
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Executive’s statement CONTINUED
Strategic priorities: Customer first
Progress
Customer service
We have an absolute commitment to
quality and customer service. Throughout
the year, we have continued to identify
and drive improvements to the customer
journey.
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 13 consecutive
years, where more than 90% of our
customers said they would recommend
Barratt to a friend.
Sustainability is a growing consideration
for potential homebuyers, who are
increasingly interested in the energy
efficiency and running cost of the
homes we build, the enhancements
to the environment in and around the
developments we create, and the lifestyle
and wellbeing benefits – both mental and
physical – that our homes can create for
our customers.
Customer surveys during the year
highlighted that 70% of buyers said it was
important to know about their developer’s
environmental credentials, and we
have further extended our programme
of customer research to cover the
specification of future homes so that we
can capture potential customers’ views
and ensure we fulfil our commitment of
putting the customer first.
The New Homes Quality Code
During FY22, the following have been
launched: the New Homes Quality Code
(NHQC; the “Code”) and the New Homes
Ombudsman Service (NHOS), as well as
the introduction of the process to register
with the New Homes Quality Board
(NHQB). We welcome the Code, which
covers the period from initial enquiry
through to completion, and then two years
post-occupation. The Code aims to build
upon existing protections for homebuyers.
The most significant changes include a
requirement to deliver a complete new
home, which the customer will have
the opportunity to visit and appoint a
suitably qualified inspector to carry out
a pre-completion inspection on their
behalf, before they take ownership. Post-
completion, there are new obligations
on the housebuilder to meet rigorous
complaint resolution timescales. We intend
to activate the Code in the first half of
FY23. The Code is centred on the principle
of fairness, not simply achieving technical
standards.
Reflecting our absolute commitment to
put the customer at the heart of everything
we do, and our leading position around
build quality and customer service, we
have been active throughout the year
in delivering additional training and
investment across all functions to ensure
that, with these changes, we continue to
lead the industry and deliver exceptional
customer service.
Energy and water efficiency reduce
new home costs and improve
sustainability
We are continually striving to improve
the energy efficiency and sustainability
of our homes, and are adapting our
home designs in response to Building
Regulations and the subsequent changes
within the Future Homes Standard, whilst
keeping the customer experience at the
forefront of all design decisions. Our aim is
to build high-quality homes that optimise
internal space and deliver excellent energy
efficiency, resulting in lower lifetime costs
for our customers.
In FY22, 99% of our home completions
were EPC rated A or B (FY21: 99%), a level
of energy efficiency shared by just 11.6%1
of all housing stock. Many customers are
recognising that owning a new energy
efficient home can deliver dramatic annual
energy cost savings.
Mortgage accessibility
Through their own sustainability initiatives,
UK mortgage lenders are increasingly
engaging with the housebuilding industry
regarding green mortgages. During
the year, we supported a Halifax green
mortgage pilot to help homebuyers
seeking to purchase our energy efficient
new homes. The pilot provides an
increased mortgage loan size based on
improved affordability, through reduced
home running costs. We will continue
to engage with mortgage lenders in the
year to see how we can help create more
competitive and attractive mortgage
products for our customers, reflecting the
energy efficiency advantages created by
our new homes.
With the phase out of the Help to Buy
scheme in March 2023, “Deposit Unlock”,
an industry-sponsored scheme piloted
with the Newcastle Building Society, was
launched during the year. This scheme
provides homebuyers with access to 95%
LTV (loan to value) lending with help from
an insurance premium funded by us. The
Nationwide Building Society joined the
Deposit Unlock scheme in November 2021,
and we currently anticipate more lenders
will join the scheme as Help to Buy draws
to a close. We are continuing to explore
alternative ways to improve mortgage
availability for our customers.
Supporting our Armed Forces
We are proud to remain a signatory to
the Armed Forces Covenant and have
a Deposit Contribution Scheme to help
Armed Forces personnel onto the housing
ladder. This scheme is available to
qualifying UK Armed Forces personnel
and offers a 5% deposit contribution, up to
£15,000, toward our homes throughout the
country.
1 https://www.gov.uk/government/statistical-data-
sets/live-tables-on-energy-performance-of-
buildings-certificates Table D1
Risk key:
A Economic environment, including housing
E Availability of raw materials, sub-contractors
I
IT
demand and mortgage availability
and suppliers
B Land availability
F Safety, health and environment
J Climate change
K Significant nationwide unexpected event
C Government regulation and planning policy
G Attracting and retaining high-calibre employees
affecting multiple locations
D Construction
H Availability of finance and working capital
Key material issues
KPIs
Customer communication and service ensuring we meet and
exceed the requirements of the New Homes Quality Code.
Affordability and mortgage access for our customers.
The lifetime performance of the homes we build.
HBF Customer satisfaction survey
HBF 5 Star
(FY21: HBF 5 Star)
Risks
J
A
K
I
L
Objectives
0
1 year
2 years
3 years
4 years
5 years
Short term – 1 year
Medium term – up to 3 years
Long term – 3+ years
We will ensure a successful activation to
become a Registered Developer with the
New Homes Quality Board.
We will continue to roll out our improved
CRM system and deliver an online portal
for our customers.
We will continue to work with mortgage
lenders and Government to develop
green mortgages that recognise the
environmental and energy cost savings of
our homes.
CASE STUDY
In search of family space, energy savings and green open spaces
“ Fitness is really important to
us as a family, and moving
to Eldebury Place will allow
us to pursue this more, both
personally and professionally,
thanks to the green open
spaces.”
Vanessa Wilcox, a Chartered Company
Secretary, and her husband Lawrence,
a personal trainer, recently purchased a
new home at Eldebury Place, Chertsey.
After enduring a lengthy lockdown in
a flat with a newborn baby and their
three-year-old dog, Vanessa and
Lawrence decided something had to
change.
“We put our flat on the market and it
took four months to sell, which was a
real worry. By the time we had the cash,
we were keen to make a quick move and
knew that we wanted to purchase a new
build home. At the time, Barratt was also
offering a deposit contribution, which
meant we were able to get a slightly
smaller mortgage than expected too. The
thought of moving into a brand new home
with a baby was very appealing, as we
knew we didn’t want the stress of having
to paint or decorate an older property.
We were also drawn to the energy
efficiency credentials that go hand-in-
hand with a new home – much lower
energy bills and a warmer house. Since
moving in, we have especially enjoyed
having our own outdoor space. To go
from nothing to such a lovely garden is
a huge bonus, and it’s made the world of
difference to our quality of life.”
An added bonus for the couple is that
Lawrence is planning to expand his
personal training business in Chertsey.
24
25
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Executive’s statement CONTINUED
Strategic priorities: Great places
Progress
Securing land supply through
planning expertise
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 land teams possess deep 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.
We continue to develop our strategic land
bank portfolio, which encompasses some
15,537 acres, equating to 91,440 plots, for
longer-term development. Our strategic
land bank and strategic land team have
been complemented by the acquisition of
Gladman Developments in January 2022.
Gladman has brought an excellent team of
planning and land promotion specialists
into the Group, as well as a promotional
land portfolio of 406 sites, equating to an
estimated 98,078 plots. Further details can
be found on page 37.
Bringing land through the planning system
and into production is the foundation of
our future performance. The NPPF, first
published in 2012 and amended in 2018,
sets out the planning policies for England.
This system, and the separate planning
rules applied in Scotland and Wales,
provide the basis for the delivery of a
sustainable supply of consented sites.
Despite the continuing challenges posed to
planning, notably by periods of lockdown-
induced delays and resource constraints
on many local planning departments,
we have maintained solid momentum in
securing planning consents. During the
year, we achieved planning on 14,988 plots
(FY21: 14,280 plots). We have detailed or
outline planning permission on all FY23
expected home completions and 93% of
expected home completions for FY24.
Built For Life
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 and
the updated ‘Building for a Healthy Life’
standard, which incorporates additional
health and wellbeing criteria. As a result,
26
Great Places now 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.
Biodiversity
Biodiversity Net Gain (BNG) is an approach
to development whereby the location’s
biodiversity is left in a measurably
better state than if the development had
not taken place. Our national rollout
programme to embed biodiversity
best practice across our regions was
completed in the year. We are committed
to demonstrating a minimum BNG of 10%
for all development designs submitted for
planning from January 2023, ahead of the
legislation making BNG of 10% mandatory
from mid-November 2023.
Since 2014, we have worked in partnership
with the RSPB, Europe’s largest nature
conservation charity, to inform best
practice in designing wildlife-friendly
developments and increase awareness of
the importance of biodiversity. Together
we have produced wildlife-friendly
landscaping and guides for our design
teams and customers, and launched
Nature on your Doorstep, a national
campaign full of hints and tips on how to
help wildlife thrive.
Continually evolving
housetype design
Both our Barratt and David Wilson Homes
brands have a range of standard house
types, with the most popular and build-
efficient housetypes making up our core
ranges. We continually review, evolve and
optimise our housetypes in response to
feedback from our customers, sales and
construction teams, as well as reflecting
future legislative changes and our own
targets. All changes are also informed by
our target that all our housetypes will be
net zero carbon in use from 2030.
Our Group Design and Technical team
continue to develop plans to ensure
our housetypes are adapted for interim
changes to building regulations from
June 2022, and then to meet the full
Future Homes Standard from 2025. These
changes require us to deliver initially
31% and subsequently 75–80% emission
reductions relative to current standards.
We are also ensuring we meet or exceed
the different legislative requirements
in Scotland and Wales. On page 29, we
detail a case study at Delamare Park in
Somerset, where we are developing our
first off-grid development, installing air
source heat pumps, which will be required
from 2025.
Our housetype evolution also seeks to
ensure revised designs can be constructed
in either traditional or timber frame
format, recognising the advantages of
MMC and our commitment to incorporate
offsite-based products and systems in 30%
of our home completions by 2025.
Our standard housetypes comprised 77%
of homes completed in the year (FY21: 65%
of homes completed) and feedback from
both our customers and our build teams
continues to be positive.
Water efficiency
Water efficiency is becoming increasingly
important, and we recognise we have a
responsibility to mitigate against future
risk of geographical water scarcity and
flooding, by increasing water efficiency in
our homes and across our developments.
Since summer 2021, all of our new homes
have been built to a water use standard of
105 litres per person per day, creating the
potential to reduce consumption by 26%
compared to the national average.
In FY22, 72% (FY21: 68%) of our
developments used above-ground,
landscape-led Sustainable Urban Drainage
Systems (SUDS), which manage surface
water volumes and flow rates, reducing the
impact of urbanisation on flooding.
Operationally, we are committed to reduce
water use in our sites and throughout our
estate. Currently, 58% of our operational
sites have metered water supplies, so a
critical first step in our operational water
strategy is to improve our measurement
of our baseline water use across our
site-based activities. As a result, we
have agreed a metering rollout plan
commencing in FY23 to ensure we have an
accurate measurement of baseline water
consumption.
Key material issues
KPIs
Securing sufficient land with planning consent to support
future activity and growth.
The lifetime environmental performance and biodiversity of
our developments.
Housetype evolution to meet changing customer demands.
Net land approvals (plots)
19,089 (FY21: 18,067 plots).
Owned and controlled land bank
4.7 years (FY21: 4.7 years)
Risks
B
J
C
K
I
L
Objectives
0
1 year
2 years
3 years
4 years
5 years
Short term – 1 year
Medium term – up to 3 years
Long term – 3+ years
We aim to approve high-quality
land plots across the country on
a replacement basis through our
disciplined approval process whilst also
delivering our 10% BNG commitment
on all new planning submissions from
February 2023.
We will refine and evolve our housetypes
to meet the demands of the FHS and
continue to invest in developing our
house types to deliver zero carbon in use
from 2030.
We will maintain our focus on leading
the development of sustainable places
that satisfy the country’s need for
more housing whilst creating a positive
economic, social and environmental
legacy.
CASE STUDY
Hollygate Park, Cotgrave, Nottinghamshire
The Cotgrave Colliery opened in
the 1960s and employed more than
2,000 miners at its peak. But with
the demise of coal production in the
East Midlands, the colliery closed in
the 1990s. The 34-hectare pithead
site then lay derelict for more than
20 years. In 2012, we were selected
by the Homes and Communities
Agency (HCA) as preferred bidder for
Cotgrave Colliery’s redevelopment.
Construction work then began in
December 2014.
Extensive green spaces
One of the main objectives of the
development was to use the existing
adjacent Cotgrave Country Park to
influence the look and feel of the main
spaces for the community. Homes
were positioned to benefit from views
of several central green spaces
including the central green core,
village green, play area, orchard and
community gardens, as well as access
to the country park.
Supporting nature
and local habitats
The plentiful public green spaces knitted
throughout the development were designed
to be rich in biodiversity and involved saving
and relocating existing habitats prior to work
commencing on site, as well as the creation
of new habitats:
• butterfly bunds were created using
materials from the former colliery for
the rare species that had settled in the
derelict site;
• several grassland species and
other flora were relocated into the
country park;
•
rich, biodiverse grasslands and native
shrubs were planted around the
development;
• bat boxes and swift bricks were
installed directly into homes; and
• an artificial otter holt was created
within one of the woodland blocks.
Sustainable drainage
We also took a sustainable approach to
drainage at Hollygate Park, which made
use of the existing ‘Heron Lake’ in the
country park, along with introducing new,
landscape-led sustainable drainage
systems to ensure that the quality, rate
and quantity of water discharged from
the site are all carefully controlled. In
addition, to help protect and preserve
water, filter strips, filter trenches,
permeable paving, trapped gullies and
rain water butts were also installed
throughout the development.
Community planning
Another key feature at Hollygate is the
inclusion of community allotments,
placed directly in the street space to
encourage community interaction.
A designated composting area was
installed in the allotment area to reduce
waste and encourage environmentally
friendly behaviours. There are also
two play areas in the development,
accessible to new and existing residents.
To reduce the volume of cars around
the development and to encourage
alternate travel, we have installed
three ‘pedestrian only’ areas, and
clearly defined cycle links between the
development, the country park and the
Grantham Canal. We have also installed
more traffic calming features to roads.
27
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Executive’s statement CONTINUED
Strategic priorities: Leading Construction
Progress
Construction activity
It is a testament to the strength,
experience and commitment of our
construction teams, sub-contractors
(many of whom have worked with us for
a number of years) and supply chain
partners, that we have successfully
grown our construction activity in the
year. Despite supply chain challenges and
constraints around materials availability
for many parts of the construction
sector, our site teams delivered a 13.2%
improvement, constructing 352 equivalent
homes, including JVs, each week in FY22
(FY21: 311 equivalent homes each week).
Build quality
This year, we have – once again –
demonstrated our absolute commitment to
build quality. Not only did our construction
teams successfully deliver growth in
construction output, despite the supply
chain challenges, they also delivered
construction quality scores, measured
by the NHBC, that continue to lead the
industry. The Group achieved an average
0.13 reportable items (RIs) per NHBC
inspection (FY21: 0.12 RIs), the lowest of
all major housebuilders (those who build
more than 1,000 homes annually).
Site management excellence
recognised for a record 18th year
Our commitment to build quality and
site management was, once 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.
At the 2021 Regional NHBC Pride in the Job
Awards, in the Autumn, 31 site managers
won “Seals of Excellence” and our site
managers secured five of the ten 2021
Regional Awards where we operate in the
“Large Builder” category. At the subsequent
NHBC Pride in the Job Supreme Awards in
January 2022, Henry Patecki, Site Manager
at Wigston Meadows in our East Midlands
division, was runner up in the Large
Builder Category. Barratt David Wilson site
managers have won the supreme award five
times and been runner up two times in the
past seven years.
Finally, in June, at the 2022 National NHBC
Pride in the Job Awards, 98 site managers
secured awards, more than any other
housebuilder for the 18th consecutive year.
No other major housebuilder has achieved
28
this level of success and recognition for
build quality on safe and efficient sites
across the country. All our sites operate
under the Group’s certification to the
Environmental Management System
standard, ISO 14001, and Health and Safety
standard, OHSAS 18001.
Innovation
We delivered 4,846 homes using MMC
equating to 27% of our total home
completions (FY21: 4,393 homes and 25%
of total home completions). MMC provides
opportunities to build with greater speed
and efficiency, mitigate the impact of the
skills shortage facing the industry and
diversify the types of materials we use.
This table details the various MMC used
across our total home completions.
MMC
Timber frame
Roof cassettes
Offsite ground floors
Large format block
Light gauge steel frame
Total*
Percentage of
completions*
FY22
3,736
194
614
226
76
4,846
FY21
3,003
696
360
334
–
4,393
27%
25%
* Total and percentage of completions includes JVs
and has been adjusted for homes where more
than one technology has been used.
Timber frame growth
A key dimension to both our MMC and
carbon reduction strategy is the delivery
of an increased share of timber frame
homes. Timber frame provides an efficient
method of construction with lower levels
of embodied carbon. Our core English
housetypes have been designed so they
can be built using either traditional brick
and block or timber frame construction,
and we delivered 3,006 (FY21: 1,638) timber
frames from Oregon, our timber frame
manufacturer, to our sites this year.
We are targeting the use of offsite-based
products and systems in 30% of our home
completions by 2025. The continued
adoption of timber frame construction in
England will be a significant contributor to
meeting this target. The Group’s additional
investment in a new timber frame facility
near Derby, scheduled to begin production
in FY24, will be important in further
expanding MMC and specifically our timber
frame capacity looking to 2030.
Reducing waste
The housebuilding industry is continuing
to experience high levels of demand
for materials, many of which cause
environmental and social impacts in their
extraction, manufacture and transport, so
it is critical that resource efficiency and
waste reduction remain clear priorities.
As a result, waste intensity reduction was,
for the first time, included in annual bonus
arrangements across the Group at the start
of the year. Through the combination of a
dedicated Group Waste Project Manager,
enhanced waste monitoring through
monthly reporting, detailed action plans
and incentives, we have delivered a further
improvement in our waste intensity with a
15.6% reduction to 4.97 tonnes per 100m2
of legally completed build area (FY21:
5.89 tonnes per 100m2 legally completed
build area). In the year, our absolute
waste tonnage decreased by 15.5% (FY21:
increased by 2.7%).
In FY23, management annual bonus
incentives will continue to include waste
intensity reduction targets to ensure the
Group continues to effectively manage
waste and resources in the long term.
We continue to promote the efficient use
of skips and segregation of waste across
our business; our diversion of waste from
landfill increased during the year to 96%
(FY21: 95%). In FY22, more than 30,000
paint tins across our sites were recycled
(FY21: more than 10,000), and 366,408
pallets, used in the supply of building
materials to site, were recycled (FY21:
243,057 pallets).
Lightweight compactible materials remain
the largest portion of our remaining
waste, particularly plastic and packaging
materials. To help identify further waste
reduction opportunities, we undertook
supplier engagement workshops
during FY22 with 17 suppliers. These
workshops highlighted the potential to
reduce packaging waste through specific
approaches in conjunction with site best
practice and procedures to minimise
damage to building materials in transit.
Several initiatives were suggested and are
being investigated and trialled during both
FY22 and FY23, to identify which will be best
suited for implementation in the future.
Key material issues
KPIs
Delivering best in class health and safety across our
operations.
Ensuring availability of building materials.
Total home completions
17,908 homes
(FY21: 17,243 homes)
Risks
I
D
J
E
K
F
L
Build quality monitoring throughout the build process.
Reducing waste and carbon emissions.
Waste intensity per 100 sq.m. of legally
completed build area
4.97 tonnes (FY21: 5.89 tonnes)
SHE Score
97% (FY21: 97%)
Objectives
0
1 year
2 years
3 years
4 years
5 years
Short term – 1 year
Medium term – up to 3 years
Long term – 3+ years
We will target a further increase in
our construction activity to deliver
incremental output in line with our
targeted growth in completions for FY23.
We will seek a further reduction in
waste intensity.
We will accelerate the roll out of MMC to
deliver 30% of total home completions
from MMC by 2025.
Our additional timber frame capacity,
currently under construction, is scheduled
to become operational in FY24.
We are continuing to invest in research
and development to ensure our homes will
be zero carbon homes in use from 2030
and all our direct operations will be net
zero by 2040.
CASE STUDY
Delamare Park, Frome, Somerset
Our first off-grid development
using air source heat pumps
As the leading national sustainable
housebuilder and independent of
regulatory changes, we have committed
to building homes that are zero carbon in
use from 2030.
Our Delamare Park development near
Frome in Somerset is an important step
on our journey towards building our
homes and developments to meet this
commitment. It is our first development
with no gas supply or gas connection
on site.
All properties at Delamare Park are fitted
with Mitsubishi Electric’s ultra-quiet
Ecodan air source heat pumps, which
can operate at temperatures as low as
-20ºC, have an ErP rating of A++ (under
the Energy-related Products Directive)
and can be controlled remotely via
smartphone, tablet or computer.
Enhancing our understanding
Delamare Park has involved new
learning and understanding – most
notably around procurement,
construction, quality control and sales.
This has involved new suppliers, changes
to build programming and building
quality controls, as well as education
and feedback from our sales team and
potential homebuyers.
Using cloud-based technology, the air
source heat pumps can also access
remote maintenance and technical
support. In contrast to traditional gas
boilers, which are the largest contributor
to household carbon emissions, air
source heat pumps require only water
and electric connection, and deliver
a clean, highly efficient and, with
a renewable electricity supply, an
emissions-free way of meeting a home’s
heating and hot water requirements.
We also want to understand the
performance and impact of this new
technology once our customers are
living in these homes. As a result, we
are monitoring the performance of
several homes at Delamare Park over
the coming 12–18 months to provide
us with in-depth technical data on
how the air source heat pumps are
performing through the different
seasons. This will be complemented by
regular homeowner questionnaires and
feedback to understand how homeowner
behaviour affects air source heat pump
performance.
“ The number of properties which
have already been reserved
is testament to how keen
consumers are to reduce their
carbon footprint. We are proud to
lead the way, not just within our
business, but across the wider
new-build industry.”
Cherelle Greenaway,
Technical Manager,
Barratt David Wilson Homes
South West
The David Wilson team at Delamare Park
29
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Chief Executive’s statement CONTINUED
Strategic priorities: Investing in our people
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 for our customers, and
make us a more attractive employer.
The development and
training of employees
We are playing our part to address the
industry’s skills shortage. We have a
number of award-winning and well-
established development programmes,
which have been expanded in the year, with
further developments planned in FY23.
In total, we have developed, or are
developing, 136 delegates through our
Armed Forces transition programme.
Skills developed in the Armed Forces
transfer well to site management, and the
programme has brought a large number of
high-calibre individuals into our business.
Our flagship ASPIRE graduate
development programme takes around
30 graduates annually. The programme
goes from strength to strength, seeking
candidates from all degree backgrounds.
ASPIRE is designed to provide a
broad understanding of our business,
coupled with personal and professional
development opportunities through a two-
year programme, with the aim of creating
leaders of the future.
This year, we launched our third degree
apprenticeship with Sheffield Hallam
University (SHU), in technical design
and management. Sitting alongside
existing programmes in construction
and quantity surveying, this makes us
the first housebuilder to deliver degree
apprenticeships across the three main
build functions. We are also recruiting
for candidates to join a fourth degree
apprenticeship with SHU in real estate to
commence in 2023 – another first for the
housebuilding industry.
30
As highlighted earlier on page 18, the
Barratt Foundation also provided SHU
students with £111,000 in FY22, in the form
of scholarships and bursaries, to support
students facing financial hardship during
their studies.
Apprenticeships remain a
vital route to develop skilled
tradespeople for our industry
Our programmes for bricklaying and
carpentry apprentices enable participants
to achieve apprenticeship level within a
reduced timeframe while maintaining
the same high standards as before. We
also continue to deliver development
opportunities for those within our sales
and marketing teams. Our schemes focus
on bringing new talent to the industry
and on retaining it for the future. To date,
within the bricklaying and carpentry
apprenticeship programmes, 256
apprentices (FY21: 184) have attended,
and 102 apprentices (FY21: 174) are due to
complete the course in FY23, with a further
160 (FY21: 124) recruited in FY22 for our
FY23 intake.
We currently employ 391 apprentices,
graduates and trainees (FY21: 426), around
6% (FY21: 7%) of our workforce, reflecting
our ongoing commitment to developing
future talent.
We continue to actively participate in the
Home Building Skills Partnership, which
seeks to attract new entrants to our
industry, provide skills for the future, and
support the supply chain in developing the
skills they need to develop and grow with
our industry.
We also seek to address skills shortages
and prepare for the future by developing
our people through access to continuous
learning. Our MyLearning mobile app
provides colleagues with even more
flexibility and choice in how they access
and consume learning content. Digital
training has increased resulting in this
slight drop although supporting our
strategic intent of retaining a blended
learning approach (programmes delivered
through classroom, webinar and digital
learning). In the year, we moved training
to an 80:20 online: classroom model to
provide enhanced training access for
our employees.
Identifying and supporting our leaders of
the future, along with effective succession
planning, are important elements in our
long-term success. In FY22, 269 (FY21:
270) high-potential employees have
attended or are attending our Rising
Stars programme.
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. During the year,
we also engaged with more than 1,200
schools and colleges that correlated
geographically with our divisional offices
across the country.
For our FY22 recruitment, 29% (FY21: 23%)
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.
As part of our 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.
• doubling the number of volunteering
days from one to two per year, to
enhance the opportunities for our
employees to support their local
charities and good causes.
The Group was also ranked 30th in the
“Glassdoor Best Places to Work in the
UK” survey this year. This survey is based
entirely on unprompted feedback from
our employees and we were the only UK
housebuilder listed in the top 50 “Best
Places to Work in the UK”.
Growing employee equity
participation in our business
In April 2022, we invited all eligible
employees to participate in the 14th grant
under the Group’s Sharesave scheme,
which allows eligible employees to
contribute a maximum of £500 per month
in one or more Sharesave schemes. As at
30 June 2022, approximately 51% of our
employees participated in one or more of
the active schemes, compared to 50% as at
30 June 2021.
In recognition of the continued dedication,
commitment and loyalty of our employees,
in 2021 the Board agreed that an annual
share award would be made to all
employees below Managing Director
level. Accordingly, in July 2022, an award
of shares equating to £1,250 (July 2021:
£1,250) was made to all qualifying
employees. This award will vest in
July 2024.
In line with the rest of the sector, our total
Group employee turnover increased to
17% for the year to 30 June 2022 (FY21:
12%). Our target over the medium term
is 15% and the Group’s turnover, prior to
the pandemic, ranged from 16% to 18%
between FY17 to FY19.
Promoting the physical and
mental wellbeing of employees
A key objective for the Group has remained
the health and safety of our employees,
especially their physical and mental
wellbeing. 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 first
aid and awareness training to encourage
openness and appropriate responses
between line managers and colleagues.
In FY22, we continued to extend our
network of mental health first aiders and
we are embedding focused support for
these valued volunteers. We extended our
partnership with our benefits providers to
offer specific financial wellbeing services,
as well as high-quality training to support
physical and mental wellbeing. Our talent
team also continues to provide and further
develop regular mental wellbeing webinars.
Employee engagement
We aim to create a great place to
work, founded on an open and honest
culture. To achieve this, we engage
with our employees to understand and
address their issues and concerns. Our
2021 employee engagement survey
was completed in October 2021. This
survey delivered an engagement score
of 79.4% (2020 survey: 84.2%). Whilst
we experienced a small decline in the
engagement score, this followed a
more general pattern observed across
employers as a whole through the
pandemic.
A full analysis of the employee survey
ratings and more than 2,500 narrative
comments, informed both regional,
divisional and functional action plans,
as well as supporting resources
encompassing training and development,
health and wellbeing, and increased
internal communication. Our Workforce
Forum, which comprises employees
representing all regions and levels of our
business, also provides insights to inform
our actions. Interim pulse surveys were
undertaken on an ad-hoc basis, to follow
up on action plans and their impacts. Our
next full Group-wide survey will take place
in September 2022.
Following on from the engagement survey,
a number of new initiatives were agreed in
the year, which included:
•
•
increasing the scope of our private
medical insurance so it now covers the
whole workforce;
introducing an additional special day’s
holiday allowance for all employees, to
allow them to celebrate a birthday or
anniversary; and
Male and female employees
PLC Directors
Senior Managers
Employees
Executive Committee
Reports to
Executive Committee
Male
Total
2022
2021
67% 56%
6
5
Male
Total
2021
2022
83% 84%
Male
2022
68%
2021
69%
271
239
Total
4,401 4,168
Male
Total
2022
83%
2021
67%
5
4
Male
Total
2022
66%
21
Female
33% 44%
Female
17% 16%
Female
32%
31%
Female
17%
33%
Female
34%
Total
3
4
Total
57
44
Total
2,099 1,869
Total
1
2
Total
11
2021
66%
23
34%
12
31
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Executive’s statement CONTINUED
Diversity and inclusion
We aim to create a working environment
that provides equal opportunities for all
and we are a signatory to the Business in
the Community Race at Work Charter.
Selection for employment and promotion
within Barratt is based on merit, following
an objective assessment of ability and
experience, and after giving full and fair
consideration to all applicants. 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 training,
career development and promotion
for existing and 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 also remain signatories to 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 during
their time working within the Group and we
continue to remove physical barriers for
disabled colleagues or applicants.
All new employees receive mandatory
diversity and inclusion training as part
of their induction process. However, we
recognise that we need to do more to
develop greater diversity and inclusion
within the Group. A new Head of Diversity
and Inclusion joined the Group in FY22
and we intend to accelerate initiatives
to further develop the diversity of our
workplaces and ensure everyone who
works within the Group feels they belong
and are comfortable to be themselves.
We have made progress in female
leadership representation. We continue to
focus on this area through “Catalyst”, our
development and support programme,
to help high-potential female employees
develop their careers within the Group.
As at 30 June 2022, women held 17%
(FY21: 16%) of senior manager roles within
the Group. We continue to work towards
improving ethnic minority representation.
As at 30 June 2022, 7% (FY21: 7%) of
employees were from ethnic minority
backgrounds and 2.1% (FY21: 1.5%) of
senior leadership positions were held by
ethnic minority employees.
32
Our employee networks have also become
an increasingly important way for us to
create a more open and inclusive business,
and enables us to listen directly to the
needs of our people. Our networks include
groups to connect parents, LGBTQ+
colleagues and allies, and “Barratt
Connect”, a group for anyone who has felt
isolated or missed the social interaction
created by reduced office-based working
during the pandemic. We are delighted
to have added a group for our colleagues
from Ethnic Minority Communities (EMC)
this year, and implemented the foundations
for a Disabled network who will meet for
the first time in July 2022.
A real Living Wage employer
During the year, we maintained our Living
Wage Foundation accreditation, reflecting
the Group’s commitment to paying our
employees and supply chain employees
an independently calculated rate of pay,
which 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+, as well as
incorporating a London weighting. Holding
this accreditation demonstrates our clear
commitment to our employees, suppliers
and sub-contractors.
Our standard sub-contractor terms and
conditions mandate the payment of the
real Living Wage within our supply chain.
To support this, we have implemented
spot checks by divisions on higher
risk trades and implemented internal
remediation feedback systems. Where
we find instances of non-compliance – as
we did for one sub-contractor during the
year – we require this to be rectified, with
follow-up audits conducted to ensure
full compliance. For those working in
jurisdictions other than the UK, our
expectation, included within our contract
requirements, is that local statutory
minimum wages are paid.
Gender pay gap
In November 2021, we published our
annual Gender Pay Gap report. Our mean
gender pay gap declined from 6.5% to
6.2%, and the median pay gap declined
from 0.2% to (0.4%). The decrease in
both measures during the period is
largely due to commissions paid to our
predominantly female sales teams in
the comparator period, whereas most
bonuses were cancelled due to the impact
and uncertainty caused by COVID-19. This
is also reflected in our mean bonus gap
which also decreased more significantly
from 33.4% to 2.8%, with our median
gender bonus gap also falling from (1.4%)
to (14.9%).
By early 2023 we will publish both our 2022
Gender Pay Gap Report and, for the first
time, our Ethnicity Pay Gap Report, which
will be available on our website.
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 UN Universal
Declaration of Human Rights and the
UN Guiding Principles of Business and
Human Rights, and we act in accordance
with our principles regarding diversity and
the Modern Slavery Act 2015. Concerns
can also be raised anonymously via our
whistleblowing process.
This year, we began working on the
development of our first human rights
policy, undertaking engagement
workshops with key Group functions to
ascertain internal perceptions of risks and
opportunities. We are undertaking a review
of the salient issues for the Group in order
to finalise the policy and publish in FY23.
Our non-financial KPIs regarding 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 continuing the roll-out of 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
regular training on our anti-bribery and
corruption policy.
We work closely with our partners to
ensure our standards are applied to our
extended workforce. We are signatories
to the Gangmaster and Labour Abuse
Authority Construction Protocol, helping
us share and receive information and
training materials to identify and 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 corruption policy. These
are available on our website.
David Thomas
Chief Executive
6 September 2022
Key material issues
Promoting the health and wellbeing of our employees.
Recruitment, retention and ongoing development of our
employees.
Creating opportunities for careers for young people.
Engagement with our employees and adapting to hybrid working.
KPIs
Employee
engagement
79.4%
(FY20: 84.2%)
Objectives
Risks
G
J
H
K
I
L
0
1 year
2 years
3 years
4 years
5 years
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 improved
benefits packages, hybrid working
arrangements, enhanced training and
development initiatives, and an increased
focus on employee wellbeing.
We will launch an enhanced diversity and
inclusion strategy to accelerate change
in this area.
We will broaden our talent pipelines
through recruitment programmes and
deliver ongoing support to drive greater
diversity and inclusion across our
workforce.
We will focus on the internal development
and promotion of our employees,
implementing mentoring programmes to
deliver equal opportunities.
We are committed to 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, will be continually appraised
to ensure we can attract and retain
employees with the current and evolving
skills we will need over the longer term.
CASE STUDY
Abigail Stevens, Level 2 Carpentry Apprentice,
Barratt David Wilson Yorkshire East
Have you always wanted to work in
construction? What led you to a Barratt
apprenticeship?
Has the apprenticeship programme
with Barratt prepared you for where you
want to go?
Ultimately, my dream is to start my own
female joinery company.
I would love to train other female
apprentices and give them a start in
the industry. Loads of elderly or single
female customers are wary about having
men on their property, so I think a
female-only company would fill a big gap
in the market!
I’ve wanted to go into joinery since
playing with Lego as a little girl. It’s quite
an artistic job, and very hands on, which
suits me. At college, I spent two years
studying art, design and technology
– including woodwork. After that, I
searched online for apprenticeships in
my area and found Barratt. I applied and
got an interview a week later.
Do you feel like your apprenticeship is
preparing you for the world of work?
Definitely! There’s tonnes of support, but
you are also given responsibility straight
away, which makes it easier to learn.
The apprenticeship is also really well
paid. I am managing to put 50% of my
wages away and plan to buy a house a
few years after I qualify.
33
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Financial Officer’s review
We have made good progress on new site openings, despite the planning delays
experienced, launching a total of 118 new outlets (including JVs) in the year in line
with our expectations (FY21: 144), with 72 new outlets opened in H2 (H2 FY21: 81).
Site numbers, as a result, recovered towards the end of the year and, at 30 June 2022,
we were operating from 352 active sales outlets (30 June 2021: 358), including 9 JV outlets
(30 June 2021: 8).
Net Private reservation rate
FY22
FY21
FY22 vs FY21 (%)
H1
0.79
0.77
2.6%
H2
0.84
0.78
7.7%
FY
0.81
0.78
3.8%
In FY23, we expect to see average active sales outlet growth of around 3%, reflecting both
planned outlet growth and the impact of sales outlets that experienced delays in H2 FY22.
Home completions
Total home completions grew by 3.9% in FY22. The continued strength of demand for
our new homes, as well as the further improvement in construction activity in H2, drove
the growth in home completions in FY22. Total home completions were impacted by
the deferral into FY23 of a London apartment block, comprising 221 homes, reflecting
external resource-related delays in the third-party building control process. As
anticipated, the affordable housing share of wholly owned home completions increased to
22.3% (FY21: 20.5%).
We expect the affordable housing share of our wholly owned home completions to reduce
to around 21% in FY23.
Home Completions
Private completions
Affordable completions
Wholly owned completions
JV completions
Total (including JVs)
FY22
13,327
3,835
17,162
746
17,908
FY21
13,134
3,383
16,517
726
17,243
Change
1.5%
13.4%
3.9%
2.8%
3.9%
We experienced a continuous improvement in selling prices through the year, reflecting
house price inflation across the country. As a result, our total average selling price (ASP)
was £300.2k (FY21: £288.8k), with the private ASP up 4.7% at £340.8k (FY21: £325.5k).
The affordable ASP increased by 8.8% to £159.4k (FY21: £146.5k), reflecting an increased
proportion of completions from our outer London operations. We anticipate that the
affordable ASP will return to a level similar to that reported in the second half of FY22, at
approximately £161k in FY23.
Profitability
Adjusted gross profit improved by 17.3% to £1,308.1m (FY21: £1,114.7m), with the adjusted
gross margin advancing 160 bps to 24.8% (FY21: 23.2%). The adjusted gross margin
improvement reflected house price inflation ahead of build cost inflation during the
financial year and the benefit of completion volume growth, which drove incremental fixed
cost efficiency, particularly in H2. In FY22, each home completion delivered a contribution
of c. 34% (FY21: c. 32%) after land and direct build costs.
After adjusted items, totalling £408.2m (FY21: £104.7m) relating to legacy property costs
and including the £396.4m charge regarding the industry pledge on building safety, gross
profit was £899.9m (FY21: £1,010.0m), and gross margin was 17.1% (FY21: 21.0%).
Adjusted administrative expenses in the year were £256.4m (FY21: £201.2m). This
increase included:
•
increased headcount and acceleration of the annual salary review from 1 July to 1
April 2022;
•
the return to normal business activity post pandemic;
• a one-off charge for certain IT assets, previously capitalised, following a review of
latest accounting guidelines;
•
•
incremental costs for establishment and operation of the Group’s Building Safety
Unit (BSU);
the impact of administrative and integration costs for the Gladman Developments
acquisition; and
• a reduction in sundry income.
“The Group is in a very strong
position with substantial net cash,
and an excellent forward
sales position and land bank.”
Mike Scott
Chief Financial Officer
Our financial results have shown continued
improvement, moving ahead of our pre-
pandemic performance in FY19 across
all key financial performance indicators
on an adjusted basis. The resilience of
our operating model, financial strength,
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 year’s excellent performance.
Results for the year ended
30 June 2022
Sales activity
We delivered a strong reservation
performance in the year with a net private
reservation rate per week of 0.81 (FY21:
0.78). In FY22, our sales centres across
the country operated on an appointment-
only basis.
During the year, we operated from an
average of 332 active outlets (FY21: 343),
including 7 active JV outlets (FY21: 8).
The reduction in average active outlets
reflected both the strength of the private
sales rate throughout the year, as well
as some planning delays on new site
openings.
34
After deducting adjusted administrative
expenses and a modest net gain of £3.1m
on part exchange activities (FY21: £5.5m),
the Group delivered an adjusted operating
profit of £1,054.8m (FY21: £919.0m), with
an adjusted operating margin of 20.0%
(FY21: 19.1%). The 90 bps improvement in
the adjusted operating margin reflected:
• Completion volumes: the continued
growth in our wholly owned completion
volumes, with 3.9% or 645 home
increase, created a 10 bps positive
impact (FY21: 310 bps positive impact).
• Net impact of selling prices relative
to build costs: sales price inflation
relative to underlying build cost
inflation produced a 140 bps positive
impact (FY21: 90 bps positive impact).
• New sites: the benefit of the Group’s
minimum 23% gross margin hurdle
rate on new land acquisitions and
improved build cost performance of
our range generated a 50 bps positive
impact (FY21: 60 bps positive impact).
• Mix and other items: changes in sales
mix and other smaller items created a
30 bps negative impact (FY21: 20 bps
negative impact).
• Site extension costs: these costs
arose from the expected extension in
site durations due to COVID-19. The
improvement in site efficiency through
the year and the completion of sites
carrying these additional costs created
a 20 bps positive margin impact (FY21:
30 bps positive impact).
Non-recurring items
40 bps
• Net administrative expenses: as
detailed above, along with a small
decrease in part-exchange income,
increased net administrative
Movements in Operating Margin in FY22
expenses deducted 100 bps (FY21:
deducted 150 bps) from the adjusted
operating margin. In FY23, we expect
administrative expenses to increase to
c. £300m, reflecting pay increases, a
c. £10m cost for the expansion of the
Building Safety Unit and investment in
our people and IT systems.
Adjusted items recognised during the
year were costs associated with legacy
properties. The Group incurred an
additional £408.2m (FY21: £81.9m) of
net adjusted operating costs in the year
after recovering £25m from our supply
chain partners due to building safety
related claims. Of this, £401.7m (FY21:
£32.5m) related to fire safety and external
wall systems, including a £396.4m
charge for the agreement reached with
the Government to undertake or fund
remediation and/or mitigation works on
fire safety issues on all our buildings of 11
metres and above that we have developed
or refurbished over the last 30 years.
A further £30.5m (FY21: £49.4m) related
to remedial works on reinforced concrete
frames at some developments where
reviews were completed in FY21 but have
been updated for our latest estimate of
remediation costs. On a reported basis,
we delivered a profit from operations of
£646.6m (FY21: £811.1m) and an operating
margin of 12.3% (FY21: 16.9%).
Net finance charges were £27.6m (FY21:
£26.6m). This £1.0m increase reflected
imputed interest on land creditors. The
cash component of the interest charge
was £8.3m (FY21: £9.7m) with non-cash
charges of £19.3m (FY21: £16.9m). In FY23,
finance costs are expected to increase to c.
0.5%
1.4%
0.2%
2.2% 19.1% 0.1%
(0.3%)
20.0%
(1.0%)
16.9%
22.0%
20.0%
18.0%
16.0%
14.0%
12.0%
10.0%
FY21
Remove
adjusted
items
FY21
Adjusted
Volume
impact
Net
inflation
Site
transition
Mix /
other
Site
extention
Admin
Expenses
FY22
Adjusted
Adjusted
itemss
FY22
Increase
Decrease
Total
12.3%
•
(7.7%)
£38m, of which c. £10m is expected to be
cash and c. £28m non-cash.
Our JVs delivered profit for the year of
£23.3m (FY21: £27.7m). The JV result in
FY22 also included an adjusted charge for
JV legacy properties of £4.3m (FY21: £0.4m
release). Consequently, profit before tax
for the year declined to £642.3m (FY21:
£812.2m).
The Group’s tax charge for the year
reduced to £127.1m (FY21: £152.1m), which
reflected:
• corporation tax charges for adjusted
profit before tax of £200.7m (FY21:
£172.5m charge);
• corporation tax credits with respect
to adjusted items of £82.5m (FY21:
£20.4m credit); and
• Residential Property Developer Tax
(RPDT) of £8.8m (FY21: £nil).
The growth in adjusted profit before tax
resulted in an adjusted total tax charge of
£209.6m (FY21: £172.5m) and was at an
effective rate of 19.9% (FY21: 18.7%).
Adjusted earnings per share increased by
12.9% to 83.0 pence per share (FY21: 73.5
pence per share). Basic earnings per share
decreased to 50.6 pence per share (FY21:
64.9 pence per share).
Reflecting growth in adjusted profitability
and disciplined management of capital
employed throughout the year, meant our
ROCE improved to 30.0% (FY21: restated
27.8%).
Cash flow
Net cash decreased to £1,138.6m at 30
June 2022 (30 June 2021: £1,317.4m), with
the main components being a £417.6m
net cash inflow from operating activities
(FY21: £1,082.3m cash inflow); a £222.4m
net cash outflow from investing activities
(FY21: inflow of £13.5m), principally
reflecting the £205.6m cash impact of the
Gladman acquisition; and a net financing
cash outflow of £378.4m (FY21: outflow of
£197.0m), principally reflecting dividends
paid in the year of £337.0m (FY21: £76.3m).
The major drivers of the net cash inflow
from operating activities in the year were:
• profit from operations, which reduced
to £646.6m (FY21: £811.1m);
• a net cash outflow from working
capital and provisions of £118.2m
(FY21: £407.0m cash inflow); and
interest and tax payments, which
totalled £140.2m (FY21: £154.5m),
including a c. £80m cash tax benefit
from the tax relief immediately
recognised on the adjusted item
provision to the Building Safety Pledge.
35
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Financial Officer’s review CONTINUED
The net £118.2m outflow (FY21: £407.0m
inflow) for working capital and provisions
consisted of:
• a £543.4m increase (FY21: £385.9m
decrease) in inventories from growth in
land investment and construction work
in progress.
• a £20.8m decrease (FY21: £93.1m
increase) in receivables, excluding the
increase resulting from the acquisition
of Gladman;
• a £10.7m decrease (FY21: £62.7m
increase) in payables, excluding the
increase resulting from the acquisition
of Gladman, which consisted of a
£75.3m increase (FY21: £133.6m
decrease) in land creditors and a
£86.0m decrease (FY21: £196.3m
increase) in trade and other
payables; and
• a £415.1m increase (FY21: £51.5m
increase) in provisions, principally
following the charge associated with
the Building Safety Pledge.
Balance sheet
The Group’s net assets at 30 June
2022 totalled £5,631.3m (30 June 2021:
£5,452.1m) after the payment of dividends
totalling £337.0m (30 June 2021: £76.3m),
reflecting the final dividend payment
for FY21 and enhanced interim dividend
for FY22.
Net tangible assets were £4,573.0m (447
pence per share) at 30 June 2022 (30 June
2021: £4,546.2m; 446 pence per share).
Land, net of land creditors, and work in
progress totalled £4,444.1m (435 pence
per share) at 30 June 2022 (30 June 2021:
£3,963.9m; 389 pence per share).
Goodwill and intangible assets increased
to £1,058.3m (30 June 2021: £905.9m)
following the acquisition of Gladman
Developments in January 2022 for
consideration of £218.4m.
At 30 June 2022, the Group held net cash
balances of £1,138.6m (30 June 2021:
£1,317.4m). At 30 June 2022, land creditors
increased to £733.6m (30 June 2021:
£658.3m) and equated to 22.0% (30 June
2021: 22.3%) of the owned land bank, in
line with our operating framework.
Our minimal year-end total net
indebtedness target was achieved with a
net surplus of £405.0m at 30 June 2022
(30 June 2021: £659.1m net surplus).
A reduction in net cash and total net
surplus is expected at the end of H1 FY23,
reflecting investment in land and work
in progress to support growth in home
completions; the final enhanced ordinary
dividend payment at 2.25x dividend cover
(subject to shareholder approval); and the
36
initial reimbursement of costs incurred
by the Government’s Building Safety
Fund and Private Sector ACM Cladding
Remediation Fund.
In FY23, we expect year-end net cash
balances, including the announced share
buy-back impact of £200m, will be c.
£0.8bn. During FY23, £498.2m of land
creditors will fall due for payment (30 June
2021, during FY22: £363.4m). Land creditors
due beyond 30 June 2023 totalled £235.4m
at 30 June 2022 (30 June 2021: £294.9m due
beyond 30 June 2022).
Capital returns
The Board believes it is an appropriate
time to consider the return of capital which
is beyond the requirements for investment
and growth in the business. After Board
consideration of the medium-term capital
requirements, we are announcing our
intention to return capital of £200m in FY23
through the implementation of a share
buyback programme. It is the Board’s
intention that the buyback will proceed in
tranches, with an initial tranche of £50m
to be completed by the end of the calendar
year and the total programme completed
no later than 30 June 2023.
The key dimensions underpinning
delivery of our strategy
Land and planning
We secured land approvals in line with our
expectations, whilst maintaining discipline
and selectivity in our land purchasing. In
the year, we approved 19,089 net plots
(FY21: 18,067) of operational land for
purchase, equating to £1,396.1m (FY21:
£876.8m) on 102 new sites (FY21: 97).
The increase in the average cost per plot
reflected several factors. These included;
firstly the underlying increase in house
prices over the last year; secondly a shift in
the mix of plots approved to more primary
locations with a land value premium ;
thirdly, an increase in the average size
of homes planned for these plots which
increases the land plot’s value; and, finally
a larger proportion of the plots approved
were “serviced” plots requiring reduced
site development cost which, is as a result,
reflected in a higher land value.
Our competitive position in the land market
continues to be enhanced through our
ability to acquire larger sites, which can
develop Barratt and David Wilson homes
on dual-branded developments. This
combination brings greater housetype
variety and choice for customers, and
enhances the speed that these sites can be
developed, resulting in an improved ROCE.
We continue to see an attractive range of
land buying opportunities and we have
a solid pipeline of developments moving
through our land approval process. During
FY22, we spent £1,036m on land (FY21: c.
£745m), encompassing land purchases
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 for a shorter
than sector average land bank recognises
our focus on ROCE, and our fast build and
sale model. Reflecting our focus on future
growth, we remain above this target with 4.7
years’ land supply at 30 June 2022 (30 June
2021: 4.7 years). Our land bank comprised
of 3.9 years of owned land and 0.8 years of
controlled land at 30 June 2022.
More than 75% (30 June 2021: 79%) of
our owned and unconditional land bank
plots have detailed planning consent,
with the move into development 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 and the distribution of
plots within attractive development outlets
remain important determinants of the
commercial strength and quality of our
land bank.
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
JVs owned and controlled land bank (plots)
Strategic land bank (acres)
Strategic land bank (plots)
Promotional land bank (plots)
Land bank carrying value (£m)
30 June 2022
51,009
15,957
721
67,687
13,239
80,926
4.7
4,548
15,537
91,440
93,696
3,339.9
30 June 2021
52,775
13,452
374
66,601
11,041
77,642
4.7
4,661
13,754
78,964
-
2,946.3
At 30 June 2022, the ASP of plots in our
owned land bank was £322k (30 June 2021:
£289k).
Strategic land activity
During the year, we delivered 4,530
(FY21: 4,172) or 26% (FY21: 25%) of
our wholly owned home completions
from strategically sourced land. With
several planning successes in the year,
we converted 1,663 plots (FY21: 3,507)
of strategic land into our owned and
controlled land bank. At 30 June 2022,
around 25% (30 June 2021: around 28%) of
our strategic land is allocated or included
in draft local plans. We are also benefiting
from the additional expertise brought by
Gladman Developments’ planning teams to
our strategic portfolio across the country
to help analyse and prioritise our strategic
land purchasing.
Land promotion activity
Following the acquisition of Gladman, the
Group now holds a significant promotional
land portfolio, encompassing some 93,696
promotional plots.
Gladman uses its extensive land and
planning expertise to identify land suitable
for development; agree contractual
partnerships with landowners; fund all
costs associated with obtaining planning
permission; and, through targeted
marketing and competitive tender, secures
optimum value for the land sale with
Gladman receiving a share of the sale
proceeds. Gladman’s back-office functions
have been integrated into the Group since
acquisition, but Gladman continue to
operate as a standalone business within
the Group.
During the five months of ownership,
Gladman secured an estimated 1,882 plots,
through new promotional agreements with
landowners. Following several planning
successes, the business received planning
consents on 807 plots and, reflecting
strong demand for land with planning
consent, Gladman secured land sale
transactions equating to 1,332 plots.
Through its share of land transaction
proceeds, Gladman generated sales of
£23.3m and an adjusted operating profit,
before amortisation of intangible assets,
of £12.4m during the five-month post-
acquisition period.
Gladman, with access to the Group’s
financial resources, has been engaging
with its existing land promotion partners
around alternative routes to unlocking
value from their respective land positions.
Reflecting the changing needs and
aspirations of land promotion partners,
Gladman now offers the ability to convert
promotional agreements into option,
hybrid or freehold sale arrangements
for all, or part, of their land promotion
partners’ holdings.
Strategic land conversion
We continue to target around 30% of
wholly owned completions from strategic
and promotional land in the medium
term. We believe this is an appropriate
level for our business, and reflects the
development and planning prospects held
within our strategic land portfolio, the
likely conversion of promotional land bank
plots through Gladman Developments, our
operating model, our targeted land bank
length and focus on ROCE.
Whilst we have experienced planning
delays over the past year, we are well
positioned, with all expected FY23
completions (FY21: all of our FY22
completions) having outline or detailed
planning consent.
Improving efficiency and
controlling costs
Driving the efficiency of our operations and
controlling costs remain key focus areas
for the Group.
We have a robust and carefully managed
supply chain, with approximately 95% of
our building materials sourced by our
centralised procurement function, and
90% of our building material needs are
manufactured or assembled in the UK.
With the increased volatility in energy
costs and commodities, and the rising
inflationary backdrop across the UK
economy, our supply chain partners
have moved away from fixed-term
pricing arrangements for a more
dynamic pricing. We are committed to
working collaboratively with our supply
chain partners to secure sustainable,
competitive pricing, while maintaining
security of supply to support our site-
based operations.
Reflecting the supply chain shift to
more dynamic pricing, we have seen a
reduction in pricing agreements, with
several suppliers introducing surcharge
arrangements around changes in their key
input and transportation costs. We have
pricing agreements in place for 73% of our
material requirements to 31 December
2022 (FY22: 96% to 31 December 2021),
and 12% of our requirements until
30 June 2023 (FY22: 71% to 30 June 2022).
We are currently seeing continued
inflationary pressure on skilled labour
supply, reflecting the inflationary
pressure on labour in the economy and
the continued strength of housebuilding
construction activity balanced, to a degree,
by a desire of sub-contractors and skilled
trades to secure future workload visibility.
We are improving construction efficiency
and reducing demand on labour through
the continued evolution of our housetype
ranges, which are easier and quicker to
build and are more suitable for MMC,
helping us to reduce build cost and waste.
During FY22, total build cost inflation
(including infrastructure, materials and
labour) was around 6%, with the rate
of inflation increasing throughout the
financial year. Reflecting the continued
strength of the market, and assuming no
further material changes in the costs of
energy or key commodities, we expect total
build cost inflation of between 9% and 10%
for FY23.
Operating framework and
capital structure
Our operating framework and appropriate
capital structure have served us well over
the unprecedented period following the
pandemic. The resilience of our operating
framework and financing structure has
been demonstrated over the last two
years, and has provided the financial
platform for our operations to deliver the
recovery speed and scale in the last two
years, along with the capacity to commit to
investment to support future growth.
We continue to maintain an appropriate
capital structure as part of our disciplined
operating framework. Shareholders’
funds and land creditors fund the longer-
term land requirements of our business,
and term loans and bank debt fund the
shorter-term requirements for working
capital.
37
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Chief Financial Officer’s review CONTINUED
Section 172 statement
Our operating framework, with the exception of our future dividend cover policy, remains unchanged, and our performance against
targets at 30 June 2022 and 2021 are summarised below:
Priorities
Operating framework
Positions at 30 June 2022 and (30 June 2021)
Land bank
c. 3.5 years owned and c. 1.0 year controlled
30 June 2022: 3.9 year owned and 0.8 years controlled
(30 June 2021: 4.0 years owned and 0.7 years controlled)
Land creditors Maintain usage to 15–25% of the land bank over
medium term
30 June 2022: 22.0%
(30 June 2021: 22.3%)
Net cash
Modest average net cash over the financial year
Year-end net cash
FY22: average net cash of £957.4m
(FY21: average net cash of £821.0m)
30 June 2022: £1,138.6m
(30 June 2021: £1,317.4m)
Total
indebtedness
Minimal year-end total indebtedness in the
medium term
30 June 2022: total net surplus of £405.0m
(30 June 2021: total net surplus of £659.1m)
Treasury
Appropriate financing facilities
Dividend
policy
Phased reduction in dividend cover to 2.25x
in FY22, 2.0x in FY23 and 1.75x in FY24 and
thereafter
£700m RCF extended to 22 November 2025
£200m USPP maturing 22 August 2027
FY22: total ordinary dividend of 36.9p
(FY21: total ordinary dividend of 29.4p)
Treasury
Cash management and relationships with
our banking partners are coordinated
centrally. During the year, the Group
successfully extended the £700m revolving
credit facility (RCF) for one additional year,
with the RCF now maturing
22 November 2025.
The Board sets and approves the Treasury
Policy and senior management control
day-to-day operations. The Group’s
Treasury Policy seeks to maintain an
appropriate capital structure and provide
the right platform for the business to
manage its operating risks.
Tax
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
the Group’s tax liabilities.
All Group profits are subject to full UK
corporation tax, and the total tax charge for
the year ended 30 June 2022 was £127.1m
(FY21: £152.1m).
The rate of corporation tax for the year ended
30 June 2022 was 19.8% (FY21: 18.7%),
which is marginally below the standard
effective rate of tax of 20.0% (inclusive of
RPDT) (FY21: 19.0%).
The Group was subject to the Residential
Property Developer Tax (RPDT) in FY22,
with the new tax applicable from 1 April
2022. As a result, the Group was subject to
an RPDT charge of £8.8m. RPDT, which is
applied to the majority of our profits above a
£25m annual allowance at a rate of 4%, will
apply annually from FY23 for a HM Treasury
specified period of ten years.
38
Looking ahead, the Group’s tax charge and effective rate of tax is expected to increase
broadly in line with changes in the future rate of corporation tax, which is expected to
increase from 20% to 25% from 1 April 2023. Reflecting a Q4 FY23 impact of the increase
in corporation tax, and the full year impact of RPDT, the Group’s effective tax rate is
expected to increase to approximately 24.5% in FY23.
Pensions
Defined contribution pension arrangements are in place for current employees. Defined
contribution scheme charges with respect to qualifying employees totalled £14.9m (FY21:
£13.9m). Pension contributions are based upon a fixed percentage of each qualifying
employee’s pay and, once paid, the Group has no further obligations under these schemes.
During the prior year, the Group discharged its liabilities in respect of its former defined
benefit pension schemes through an insurer buy-out.
Guidance for FY23
Looking to FY23, our guidance is summarised below:
Completions
c. 18,400–18,800 total home completions including
c. 750 from JVs
c. 21% affordable; c. 79% private mix
Average sales outlet growth (inc. JVs) c. 3%
Build cost inflation range
Administrative expenses
Interest cost
Land approvals
Land cash spend
Year-end net cash
Taxation
Ordinary dividend cover
c. 9–10%
c. £300m (including amortisation of intangibles
charges of c.£10m).
c. £38m (c. £10m cash; c. £28m non-cash)
Replacement basis
c. £1.2bn
c. £0.8bn
Effective tax rate of 24.5% reflecting full year
impact of RPDT and scheduled CT rate changes
2.0x ordinary dividend cover based on adjusted EPS
A strong financial position entering FY23
The Group is in a very strong position, entering FY23 with substantial net cash, a strong
forward sales position and an excellent land bank. Our operating framework and strong
financial position provide us with the flexibility to focus on delivering high-quality, energy-
efficient, sustainable homes and developments across the country, supporting planned
completion growth in FY23 towards our new medium-term target of 21,500 homes.
Mike Scott
Chief Financial Officer
6 September 2022
In accordance with the requirements of
the Companies (Miscellaneous Reporting)
Regulations 2018, we have set out, on the
following pages, how the Board has acted
in a way that promotes the success of the
Company for the benefit of its members
as a whole, 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;
Our Stakeholders
The following pages set out the
engagement that has taken place with
those stakeholders considered as
being key to the business. The Board
has identified each of them as a key
stakeholder due to their influence on
the success of our business model and
our strategy and because they represent
the key resources and relationships that
support the generation and preservation
of value in the Group. For each key
stakeholder we have set out:
• Why we engage;
• How we engage;
the impact of the Group’s operations on
the community and the environment;
• Metrics – how we measure
effectiveness;
•
•
•
•
•
•
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. Such
engagement helps us to 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.
Engagement with our 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 12 to 13, Key activities of
the Board on page 79, Building sustainably
on pages 20 to 23 and throughout our
Strategic priorities on pages 24 to 33.
•
Interests and concerns;
• Outcomes of engagement; and
• The impact on Board decisions.
How the Board makes decisions
Throughout the year, the Board remained
mindful of the implications that its
decisions have on our stakeholders as
well as potential reputational risk for the
Group. This has 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. Regular
updates on the engagement undertaken
and the outcomes are provided to the
Board by the Executive Directors and
there is an annual agenda that includes
deep dive discussions on topics such as
Diversity and Inclusion, ESG, Customers,
and Investor Relations. Whenever possible,
the Board will engage directly with our
stakeholder groups.
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 is illustrated in the significant
decisions set out on page 40. Such actions
and decisions by the Board represent
the Group’s culture of customer focus,
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, members of the
local communities in which we operate,
and other stakeholders.
Barratt homes at Cane Hill Park in
Greater London
39
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Section 172 statement CONTINUED
Stakeholder engagement
Significant decisions
The main activities and decisions of the Board are set out on page 79. The following are examples of some of the
more significant decisions made by the Board, how they were made and, where applicable, how conflicts between
different stakeholders were managed:
Acquisition of Gladman Developments Limited
Committed to Growth
As Britain’s largest housebuilder we are committed to playing a
key role in addressing the UK’s housing shortage. During the year
the Board has put in place additional building blocks to support
disciplined growth to build 21,500 homes over the medium term.
The Group opened two new offices in Sheffield and Anglia, expanding
our Northern and East regions, with effect from 1 July 2022. In
addition, as a continuation of our strategy to migrate more of our
production to timber frame, we will open a new factory in England to
complement our existing factory in Scotland. The new timber frame
manufacturing facility, near Derby, will add significant capacity to our
timber frame output from FY24.
Stakeholders considered:
• Customers;
• Employees;
• Shareholders;
• Sub-contractors and supply chain;
• Local communities; and
• Government, opposition parties and regulators.
How the Board made its decision:
Management presented detailed reports to the Board setting out
their recommendations and supporting information in respect
of each proposed new division as well as the new timber frame
manufacturing facility. These enabled the Board to understand
the rationale for each. For the two new divisions the Board
considered, amongst other factors, current developments and
demand for housing in the area and the current capacity of
existing divisions to expand and land opportunities. For the new
factory, the Board took into account the current timber frame
capacity from Oregon in Scotland, the cost of taking over an
existing factory, warehouse or other building and converting
it to meet our needs against building our own factory to the
specification and size required to meet current and potential
future demand. The Board was also mindful of the employment
opportunities that each of these recommendations would
bring for existing employees looking for a promotion or a new
challenge and those residing in the local communities in which
each would operate. That said, the Board was aware that each
opportunity would require capital investment which could impact
the level of any potential returns to shareholders in the short
term. The Board, however, was comfortable that the increased
capacity and potentially higher levels of sales will in the longer
term prove to be beneficial not only for the Group but also for its
shareholders and employees. Accordingly, the Board approved
the opening of the new offices in Sheffield and Anglia and also
the development of a new timber frame manufacturing facility
near Derby.
On 27 January 2022, the Group approved the purchase of the entire
issued share capital of Gladman Developments Limited, a strategic
land promotion business, for a consideration of £250m on a debt
free and cash free basis. The acquisition was seen as a good
opportunity to support the Group’s volume growth aspirations and
reduce pressures on its own site acquisitions.
Stakeholders considered:
• Customers;
• Shareholders;
• Employees; and
• Local communities.
How the Board made its decision:
Management undertook extensive due diligence to assess
the viability of acquiring Gladman Developments Limited
(Gladman), including the synergies that could be achieved from
the transaction. A detailed report was submitted to the Board
providing background information on Gladman and the rationale
for the acquisition. This included key financial information
on Gladman such as the consideration payable, the scale of
their strategic land portfolio, their planning success rate and
revenue, the potential to recover the Group’s investment through
enhanced housebuilding activities, the valuation of their assets
and any premium attributable to their brand. Planning risks
and the retention of key employees, including the Chair, CEO
and management team of Gladman were also considered. The
Board appreciated the benefits of the transaction to the Group
and to landowners, in particular that it would bring together
specialist planning expertise, with a stronger balance sheet,
and an enhanced ability to target larger sites with more complex
requirements.
The Board was mindful of the additional work that the transaction
would place on existing employees but was confident that
Management would monitor the level of resource throughout
the transaction and adjust as required. In addition, it was noted
that the acquisition would utilise cash that could potentially be
used to increase the returns to shareholders. The Board was
however satisfied that the transaction would promote the long-
term success of the Company as it will help drive volume growth
and that the distributable reserves position would fully support
the dividend policy for FY22, being a dividend cover of 2.25 times
earnings. Accordingly, the Board approved the transaction and the
terms on which Gladman would be acquired.
40
Stakeholder engagement is an important part of our operations. The Board is appraised of
the feedback received and takes this into account when making decisions that may impact
our stakeholders either collectively or individually.
Customers
Link to Strategic Priorities
Customer first
Great places
Why we engage
Customers are at the heart of everything
we do. Without them there is no business
for us to operate. It is imperative that we
understand their needs and adapt our
product accordingly.
How we engage
We utilise different methods of
engagement with our customers
depending on the information that we are
trying to gain or provide.
Company Engagement:
We ask for regular feedback from our
customers both directly and through
Trustpilot and the 8 week HBF National
New Homes Customer Satisfaction survey
to help us make improvements to our
service and their home buying journey. We
have, throughout the year, engaged with our
customers on cladding and fire-safety to
address any of their issues and concerns.
We continuously update our website with
up-to-date information about Barratt and
the sites they may be interested in, as well
as any messages around COVID measures
that may be in place. We regularly provide
customers with guidance on home and
garden maintenance.
We continue to enhance our customer
research and insight programme to
further deliver action led insights. We
involve our customers in virtual research
to understand their perceptions and
preferences on matters such as the cost
of living crisis, how they search for their
new home, our brand positioning, our
product, post-pandemic living preferences
and the development of a new range
of apartments. We also now cover the
specification of future homes to aid
decision making and future business
planning. We are keen to understand
customer awareness of sustainability
within housebuilding, specifically around
energy efficiency and changing legislation,
and how this impacts their buying
decisions, which is done through the
use of quantitative surveys.
Board Level Engagement:
The Group Customer and Change Director, Jeremy Hipkiss, updates the Board annually
on actions taken to engage with customers and the outcomes of such engagement. They
also seek to get insight on what else could or should be done. During the year, Katie
Bickerstaffe and Nina Bibby, two of our Non-Executive Directors, supported the review
and enhancement of the ‘Customer Journey’ by bringing insight from their respective
executive role.
Metrics – How we measure effectiveness
The following metrics are reported to the Board by the Chief Executive and/or the Group
Customer and Change Director to enable it to consider and agree what, if any, changes to make in
how and when we engage with our customers.
•
•
8-week HBF National New Homes Customer Satisfaction rating – 5 star rating for the 13th
consecutive year.
9-month NHBC National New Homes Survey rating – included as a metric in the FY23 bonus
scheme.
• Defect resolution – number of open defects and time taken to resolve.
•
Trustpilot scores – for FY22 both our Barratt and David Wilson Homes brands scored 4.3
(FY21: 4.1 and 4.3 respectively).
• Click through rate for seasonal newsletters – this was 11.4% and broadly stable over the year.
Interests and concerns
During FY22, the key interests and concerns of our customers related to home working, after-
sales care, energy efficiency of our homes, green spaces, cladding and fire-safety of multi-storey
buildings and mortgage availability and affordability.
Outcomes from engagement
We constantly look to improve in response to any feedback or information from our customers.
During FY22 we adapted our marketing plans to more effectively communicate with our customers
about gardens, public open spaces, cost savings associated with our energy efficient homes, how we
are designing homes to support flexible living and the changes being made due to the requirements
of the Future Homes Standard. We provided ultrafast broadband to our homes to facilitate
home working, and engaged with lenders to encourage mortgage product innovation to support
affordability challenges and improve mortgage products, process and criteria for our customers.
Effect of engagement with customers on Board decisions
The Board continued to drive defect and complaint resolution across the divisions and issued
revised policies and procedures to ensure compliance with the future requirements of the New
Homes Quality Code and New Homes Ombudsman Service. The Board, through the Executive
Committee, closely monitors build stage movements to ensure customers receive handover
of their new home within agreed timescales and agreed action plans to support those sites
struggling to make a sale. The Board is fully focused on ensuring that the homes for those
customers who are looking to benefit from Help to Buy before it ceases in March 2023, are build
complete by no later than December 2022.
The Board agreed to launch Deposit Unlock, facilitating 95% lending on New Build houses and
flats, and continues to support the promotion of Green Mortgages, which link the savings from
energy efficiency to affordability assessments.
41
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Stakeholder engagement CONTINUED
Employees
Link to Strategic Priorities
Investing in our people
Why we engage
It is due to the hard work and commitment
of our engaged employees that we are
strong, both operationally and financially.
It is of paramount importance that we are
able to attract, recruit and retain the best
people. We therefore need to understand
what matters most to them and ensure
that we have the right policies, processes
and procedures, remuneration, as well
as progression, training and development
opportunities in place to support them.
Engagement with our employees enables
the Board to better understand the issues
that are important to them and helps
nurture a mutual understanding between
senior management and their teams.
How we engage
We use a variety of methods of engagement
which enable two-way interaction with
employees and allow them to voice their
concerns or thoughts anonymously.
Company Engagement:
Our Workforce Forum is developing into an
important tool for providing insight to the
thoughts and opinions of our employees
and what matters most to them. In FY22
the Workforce Forum met three times,
twice virtually and once in-person. This
will increase to four meetings in FY23.
Topics discussed included hybrid working,
sustainability (renewable energy and
waste), cost of living, training, development
and progression, health and wellbeing
and Executive Director and employee
remuneration strategies. Consideration
was also given to how, as a business, we
can better support our colleagues with
disabilities.
Employees can directly contact
the Designated NED for Workforce
Engagement on any matters relating to the
workplace, on a confidential basis through
a dedicated email address.
We regularly send out emails (to Barratt
or personal email addresses), newsletters,
webinars and video messages to update
our employees on issues that may be
of interest to them, such as benefits,
training, health and safety, hybrid working,
sustainability and charitable giving. We
have also returned to holding events in-
person. Face-to-face training sessions
have also re-commenced although we
42
have retained some virtual activities
such as yoga, to support our employees’
physical and mental wellbeing.
Our annual engagement survey provided
great insight into the issues that matter
most to our employees, including diversity
and inclusion. Local action plans were
put in place with individual functions and
teams to either improve or enhance the
engagement that they undertake with their
teams. The Executive Committee received
an analysis of the verbatim comments
received to consider and make changes
as they saw fit. Interim pulse surveys have
taken place to monitor improvements,
trends and further development in key
focus areas identified.
Board Level Engagement:
The Board receives regular updates from
Sharon White, the Designated NED of
Workforce Engagement on the activities
and discussions of the Workforce Forum,
the Chief Executive on the topics discussed
and decisions made by the Sustainability
Committee, the SHE and Construction
Director on health and safety matters,
the HR Director on people strategy and
diversity and inclusion, and from the
Trustees of the Barratt Foundation. These
updates include what engagement has
taken place, the outcomes and the actions
to be taken.
The Board has this year reinstated its
physical site visits. Its first visit was to the
West region, where it received a regional
update from the senior management team
and met site and sales employees.
The Chief Executive, David Thomas, and
Chief Operating Officer, Steven Boyes, held
our first employee town hall event in May
2022, giving colleagues’ across the Group
the opportunity to hear directly from them
and on behalf of the Board. Employees
were able to suggest, in advance, any
topics they wanted to hear about. A full
Q&A document was issued post-event and
the event was recorded for those who were
not able to join on the day.
Health and safety remains a fundamental
priority for the business. The Chair of
the SHE Committee, Chris Weston, now
attends all SHE Operations Committee
meetings and can make suggestions for
improvement and hear first-hand the
issues and challenges being faced by
the teams. The membership of the SHE
Operations Committee has been extended
to include representatives from site.
The Board has approved a three-year
funding agreement with the Barratt
Foundation to further engage employees
with charitable giving and enable the
Foundation to enter into multi-year
partnerships, which employees can
support.
The members of the Workforce Forum on a visit to
Barratt London’s Hendon Waterside development.
Metrics – How we measure effectiveness
The following information is reported to the Board by the Chief Executive
to enable it to consider and agree what, if any changes to make in how
and when we engage with our employees:
• Employee engagement scores – provides a quantified measurement
of engagement.
•
•
The amount of fundraising by employees – provides an insight into
the level of engagement with Barratt Foundation initiatives.
Turnover rates – more engaged employees are less likely to leave the
business.
Interests and concerns
•
IIR – the lower the rate, the safer our employees.
• Diversity - helps us monitor the diversity and inclusivity of our
working environment.
• Gender and ethnicity pay gap – helps us ensure equality in
remuneration across the organisation.
• Reports to the Whistleblowing line – helps us ensure that we
continue to do the right thing and tackle any issues in a timely and
efficient manner.
Throughout FY22, the key interests and concerns of our employees related to remuneration, resource, training, development and progression, health
and wellbeing, flexible working, cost of living, and their own and the Group’s carbon footprint and impact on the environment.
Outcomes from engagement
The engagement with our employees has enabled management to
better understand their concerns in respect of the increase in living
costs and how they felt the business could support them. It also
reaffirmed that our employees would prefer to continue working in a
hybrid manner after COVID restrictions were lifted. It has also helped
us to evolve the way in which we deliver information on key topics to our
employees. For example, we have introduced HR bitesize sessions on
issues such as health and wellbeing, recognition and our Special Leave
policy. We have launched a new My Barratt Benefits platform, provided
recordings of training / webinars, introduced a new MyLearning mobile
app, and deployed laptops to divisions for colleagues who do not have a
Barratt email account.
As part of our Diversity and Inclusion strategy and following feedback
from the Workforce Forum, we have established a network to seek the
views of our people with disabilities, enabling us to establish the most
effective ways to share best practice and better support them.
Effect of engagement with employees on Board decisions
The cost of living crisis has had a significant impact on our employees.
Accordingly, the Board agreed to bring forward the FY23 pay review to
1 April 2022 from 1 July 2022 for all employees below Senior
Management level (see page 106). In addition, the Board agreed to
pay a salary supplement of £1,000 in equal amounts over a period of
six months to 31 December 2022 to each employee below our senior
leadership team (95% of our employees) (see page 106).
We have continued to roll out our Electric Car strategy and
accompanying Green Salary Sacrifice Car Scheme, offering all
employees the opportunity to lease new ultra low emission or electric
vehicles out of their pre-tax pay, whilst helping them to reduce their
carbon footprint (ensuring the national minimum wage was not
breached).
Following the Town Hall event, we have created an ‘ideas mailbox’
where colleagues can make suggestions for improving the business. All
suggestions are shared with the Executive Committee.
Other benefit improvements included the extension of private medical
insurance to all employees (not just those in senior positions), the
granting of an additional day of holiday to all employees and the
doubling of the number of paid volunteer days from one to two per
financial year per employee.
To further charitable giving, the Board agreed the Barratt Foundations’
proposals to reduce the minimum individual match funding threshold
from £1,000 to £100 and double the amount of match funding that
individuals can apply for to a maximum of £2,000 (previously £1,000)
for FY23.
43
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Stakeholder engagement CONTINUED
Shareholders
Link to Strategic Priorities
Customer first
Leading construction
Great places
Investing in our people
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 value growth
and sustainable returns. The Company’s
reputation could be damaged and it
could be prevented from attracting new
investments without the full understanding
and support of its shareholders.
How we engage
Investors and retail shareholders
appreciate contact, and whilst virtual
meetings dominated during the year,
we resumed in-person meetings with a
number of shareholders. Subject to any
further restrictions, we intend to offer
both virtual and in-person meetings in the
future. We also improved our web-based
video meeting technology to facilitate
meetings with investors.
Company Engagement:
The Executive Directors and the Group
Investor Relations Director follow a
comprehensive programme of investor
meetings and calls to discuss investors’
questions and areas of concern,
particularly following the release of annual
and half year results and trading updates.
These included virtual investor roadshows
with shareholders in the UK, Europe and
North America, following the Group’s final
FY21 and interim FY22 results and ad-hoc
one-to-one meetings (including in-person
and virtual conferences and fireside chat
events) and group investor meetings.
The use of technology has again helped
to improve our engagement with smaller
institutions, regional pension funds and
private wealth managers on results and
non-results cycle roadshows, which
previously have proved more difficult due
to their spread across the country.
We continue to engage strongly on
our sustainability strategy. The Group
Investor Relations Director and the
Group Sustainability Director attended
various ESG conferences and meetings
and responded to incoming queries from
analysts to provide insight into the Group’s
activities. Key areas of focus included the
Future Homes Standard and the changes
this will require in the homes we build;
value chain carbon footprint and our
response to the impacts of climate change;
our approach to timber frame construction
and modern methods of construction; and
modern slavery benchmarking studies.
Throughout the year, the Chief Executive,
the Head of our Building Safety Unit and
the Group Investor Relations Director have
engaged with several major shareholders
to discuss the Group’s policies in respect
of building safety.
We issue regular trading updates via the
London Stock Exchange Regulatory News
Service. These are normally published in
May, July and October with our half and
full year announcements in February and
September respectively. During the year
we also issued specific announcements
on the acquisition of Gladman (see page
37) and the signing of the Building Safety
Pledge to address necessary fire-safety
issues on all our buildings of 11 metres
and above, built in the last 30 years (see
page 169).
Our website is a valuable engagement
tool and is continuously updated to reflect
current information on matters such as
sustainability, governance and building
safety.
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 continue to encourage retail
shareholders to request digital
communications, in support of our work
to enhance our sustainability credentials
and reduce our carbon footprint as well as
setting up dividend mandates, to enable
them to receive their dividends faster and
more securely.
Board Level Engagement:
The Chief Financial Officer, the Company’s
brokers and the Group Investor Relations
Director update the Board on a regular
basis on the Company’s investor relations
activities and shareholder and analyst
feedback, to ensure that all Directors are
aware of, and have a clear understanding
of, the views of our major shareholders.
All Board members are available at the
AGM to answer questions submitted
prior to (by post or via email to
agmquestions@barrattplc.co.uk) or on the
day, of the AGM. Shareholders can attend
in person or via a live webcast. The Chief
Executive will update shareholders on
the Group’s performance and activities
during the year. 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.
In July 2022, the Remuneration Committee
Chair consulted with major shareholders
and proxy voting agencies on the Group’s
FY22 remuneration outcomes and plans
for FY23 (see page 124) and the Chairman,
the Senior Independent Director and other
Non-Executive Directors are available to
attend meetings with major shareholders
to gain an understanding of any issues and
concerns.
Metrics – How we measure effectiveness
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 to make in how and when we engage with our
shareholders:
• Share register movements.
• Results of qualitative investor feedback to improve engagement and
understanding of key interests and concerns.
Interests and concerns
The key areas of interest and concern for our shareholders included
the impact of challenges around availability of materials and build cost
inflation on our build activity, government announcements and changes
in their approach to building safety and building safety remediation
costs and the impact on Executive Directors’ remuneration (see page
105). Sustainability matters, notably, the potential impact of the Future
Homes Standard, the Zed House project and details around our value
chain emissions and our strategy to mitigate the impacts of climate
change were also key topics of discussion. Other areas explored by our
shareholders were our approach to Modern Slavery, our diversity and
Outcomes from engagement
•
The number of meetings attended – In FY22 the Executive Directors,
supported by Senior Management, attended 155 investor meetings
(FY21: 145), 137 one-to-one meetings (FY21: 116) and 18 group
meetings (FY21: 30) engaging with around 45.6% (FY21: 48.5%) of
shareholders (by shareholding value).
inclusion performance, our commitment to paying the real Living Wage,
the Group’s dividend policy and the Group’s potential, over the short
to medium term, to return surplus capital. There was also interest
in understanding the speed with which we can deliver new product
innovation into the homes we build; the propensity for customers to pay
a premium for such improvements; and the lessons being learnt on the
incremental costs looking to Part L and Part F (in 2022 and 2023) as well
as the Future Homes Standard changes (in 2025).
Shareholders have been kept informed through timely disclosure of the
performance of the Group, including the impact on trading of material
availability challenges and build cost inflation. On signing the Building
Safety Pledge we disclosed our best estimate with respect to the future
costs of remediation, along with the increase in the annual costs required
to support our dedicated Building Safety Unit, to help shareholders
understand the future financial impacts of the pledge
and the change in Government policy. Investors gained enhanced
understanding of the ESG issues relating to both the Company and
the wider housebuilding industry. Our engagement also gave investors
the opportunity to share their views on the relative merits of ordinary
dividends and potential returns of surplus capital either by way of
special dividends or through buybacks (see page 36).
Effect of engagement with shareholders on Board decisions
During the year, the Board has gained an enhanced understanding of
shareholder expectations in respect of ESG matters, particularly
climate change risks and opportunities. We have included detailed
TCFD disclosures in this Annual Report and Accounts (see pages 58 to
71 inclusive) as well as information on our commitment to develop future
investor communications, which increasingly integrate ESG related
issues with financial and operational performance. To boost the
implementation and delivery of the Group’s Diversity and Inclusion
strategy, a new Head of Diversity and Inclusion was appointed during
the year (see page 104). The Board has also revised the Group’s ordinary
dividend policy, implementing a phased reduction in dividend cover
of 0.25 times per year from 2.5 times in FY21 to 1.75 times in FY24,
reflecting both the Group’s financial performance and the feedback
received through shareholder engagement.
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Stakeholder engagement CONTINUED
Sub-contractors and supply chain
Link to Strategic Priorities
Great places
Leading construction
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 them to secure
continuity of supply of materials, support
our productivity levels, avoid increased
costs of sourcing alternative suppliers and
avoid undue delays in construction. We
must 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
give us the opportunity to speak to sub-
contractors and our supply chain as a
group which ensures consistency in the
messaging and opportunity for networking
and sharing ideas and best practice.
Individual meetings allow us to focus on
specific areas or issues relevant to that
stakeholder.
Company Engagement:
We held our annual Supply Chain
conference in person in March 2022. It was
attended by 125 of our key group suppliers.
We shared our immediate and medium
term plans and thoughts on the role our
suppliers can play in helping us to achieve
our objectives, including the reduction
of Scope 3 emissions, and gained an
understanding of the issues they were
facing and how we could support them.
We shared relevant demand forecasting
information with all key material suppliers
to enable them to ensure appropriate
manufacturing capacity is available to
meet our requirements.
We asked our suppliers to assess
themselves against our Supplier
Sustainability Maturity Matrix to drive
progress in the priority areas of carbon,
waste, modern slavery, and governance. In
support of this, we held a waste reduction
workshop with a cross section of suppliers
and had one-to-one meetings to discuss
the use of alternative fuels such as
electricity and hydrogen.
A key area of focus is working with our
highest emitting suppliers and sub-
contractors to better understand our
Scope 3 emissions and how we might
be able to help to reduce them. More
granular information was requested from
46
an expanded pool of suppliers. Further
information can be found on page 28.
leading to significant improvements in
waste generated.
Our divisions held sub-contractor and
supplier days to discuss local business
plans and ‘Thank you’ events to show our
appreciation for their continued support.
We have also continued to promote the
Supply Chain Sustainability School to
provide targeted learning and training
resources.
We have conducted trials to eliminate or
reduce single use plastics and have been
involved in collaborative projects with Zero
Waste Scotland to research packaging
waste and its manufacturing and supply
source. We have also had some success
in engaging with our brick suppliers to
reduce plastic packaging, with initiatives
Board Level Engagement:
Members of the Board attend the supplier
conference. The Chief Operating Officer
provided an update on the supply chain and
sub-contractor performance at each Board
meeting The Group Procurement Director
is invited to attend the Board or the Audit
Committee to directly answer any queries
members may have.
Metrics – How we measure effectiveness
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 with our sub-
contractors and supply chain:
• Feedback received from a survey following the annual conference to help improve the
conference in the following year.
• Availability of materials and services to support our build delivery programme despite
shortages and/or challenges in the industry.
Interests and concerns
The key interests and concerns of our sub-contractors and supply chain related to the health and
safety of their employees whilst working on our sites, modern slavery, living wage and our actions
and progress in respect of our sustainability and carbon reduction strategies and initiatives. Given
the current cost of living crisis, it is not surprising that our sub-contractors and supply chain
are concerned with being paid in a timely manner. Details of our prompt payment practices can
be found on our website. In addition, our sub-contractors are concerned with the availability of
materials given the rise in build cost inflation. No materials will mean no work for them on our
sites.
Outcomes from engagement
We have received positive feedback regarding our leadership on sustainability issues ranging
from carbon and waste to our commitments on modern slavery and the real Living Wage. We
closely monitor our prompt payment performance to ensure we are supporting our partners.
We have established long term relationships with our sub-contractors and suppliers which
have helped to ensure delivery and performance standards are mutually understood and have
also enabled us to secure materials to support build requirements during a period of shortage
of certain components. It has also helped us gain a better understanding on the availability of
carbon emission data, and the challenges associated with reporting this data. The majority of
our suppliers have now completed the Supplier Sustainability Maturity matrix with 51% of target
badges having been met.
Effect of engagement with the supply chain on Board decisions
To further enhance the relationships with our sub-contractors and supply chain the Board agreed
to hold an additional conference during the year. Due to the challenges with the availability of
certain materials the Board asked the Chief Operating Officer to update it at each meeting.
To improve the accuracy of the baseline and yearly emissions performance the Board agreed
to refine the GHG emissions factors used for specific products and services. The Board also
supported a successful trial using hydro-treated vegetable oil in telehandlers as an alternative
lower emission fuel, which will now be rolled out more widely.
Banks
Link to Strategic Priorities
Customer first
Why we engage
We need 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
The following methods of engagement
are effective in ensuring continued
mutual understanding of our respective
businesses and of the services the banks
can provide to us and to our customers.
Company Engagement:
The Chief Executive, Chief Financial Officer,
Head of Treasury and Head of Mortgage
Lender Relations held regular update
meetings and calls after the annual results
with each of the banks in the RCF and
with the USPP investors. Additional calls
and meetings were held as appropriate
throughout the year. We also provided
updates on the progress being made in
terms of sustainability whilst the banks
informed us of relevant initiatives, such as
sustainability linked RCFs, and how these
may benefit the business. A virtual call
was also hosted for the RCF banks and
mortgage lenders to provide information
and provide a tour of the Zed House. The
Head of Treasury has a schedule of regular
diarised calls on a one to one basis with
the Relationship Director of each of the
banks who participate in the RCF. We also
held an informal event in March 2022 for
the banks to meet our new Chief Financial
Officer in person.
Structured regular meetings are held with
lenders by the Head of Mortgage Lender
Relations to promote improvements
to New Build criteria, products and
processes. A key objective is to promote
products that, in a post Help to Buy
market, will allow as many different
customer types as possible to buy
our homes. We are also reviewing our
recommended broker panel to ensure that
customers have access to high quality
specialist mortgage advice as early as
possible.
Board Level Engagement:
During the year, key lender meetings were
supported by the Executive Directors and
members of the Executive Committee
and have included site visits and other
face to face meetings as lockdown
restrictions were withdrawn. The Chief
Financial Officer and the Chief Executive
provide regular updates to the Board on
engagement activities with the RCF banks
and mortgage lenders and on any actions
being taken as a result of the information
received. In addition, the Chair of the Audit
Committee also attends the Treasury
Operating Committee meetings.
We have been instrumental in the launch
of and support for Deposit Unlock which
facilitates 95% lending on New Build
homes. We engage regularly with third
party providers to assess whether new
schemes for home ownership are scalable
and work in the interests of both us and
our customers. We also 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. To support this, the main
lenders and key surveying firms have all
now visited the Zed House to see what an
energy efficient, low carbon home could
look like in the future.
We have also convened an industry forum
for the top five surveying firms, supported
by the HBF and the Future Homes Hub, to
collaborate regarding changes required by
the Future Homes Standard.
Metrics – How we measure effectiveness
The banks’ willingness to engage with us and discuss new opportunities to support us and our
customers is the key metric that is reported to the Board by the Chief Financial Officer to enable it
to consider and agree what, if any, changes to make in how and when we engage with our banks.
Interests and concerns
The key interests and concerns of our banks identified related to our progress with our
sustainability strategy in particular energy efficient homes, the potential for a sustainability linked
RCF, and the viability for green mortgage products and new high loan to value lending products
for our customers.
Outcomes from engagement
Engagement with our banks has given us the opportunity to discuss the market environment
and recent trends as well as our latest results. It has also enabled the banks to broaden
their understanding of our business and how we operate, as well as the sustainability and
environmental challenges, particularly around climate risk and carbon mitigation, facing the
business, what we are doing to address these and what they can do to support us and our
customers. We have engaged with a broader range of mortgage lenders, allowing customers
to access mortgage products that are most suitable for their needs. Both parties have 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.
Effect of engagement with banks on Board decisions
The Board was mindful that with the impending end of Help to Buy, large numbers of our
customers may struggle to gain the financial support that they need to purchase their new home.
The Board therefore agreed to support the launch of Deposit Unlock (see page 24) and explore
alternatives to Help to Buy.
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Stakeholder engagement CONTINUED
Local communities and the environment
Link to Strategic Priorities
Customer first
Leading construction
Great places
Investing in our people
reduced impact they have on the natural
environment at a local and a global level.
We expanded our charitable activity
this year with the growth of the Barratt
Foundation having entered into two new
three year partnerships with the Outward
Bound Trust and Whizz-Kidz. We are
currently in the process of identifying
other partnerships with charities that will
support each of our four focus areas. Our
30 offices and divisions donated £1,000 per
month to good causes in their local area.
Board Level Engagement:
The Chief Executive and the Chief
Operating Officer keep the Board
appraised of any local issues that have
been identified and have the potential
to escalate into a wider matter that may
impact the business as a whole. There are
also two updates a year from the Group
Construction and SHE Director as well as
regular updates from the Sustainability
Committee. The Board also receives an
update from the Barratt Foundation twice
a year including the impact our donations
are having on our local communities and
the protection of the environment.
Why we engage
It is important for us to engage with the
local communities in which we build to
ensure that we are responding to local
needs and are able to create value whilst
considering the impact that our business
has on the local environment and the use
of natural resources in our build process.
We need to protect habitats and resources
as we focus on creating sustainable
homes. 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
how we will protect the local environment
around them.
Company Engagement:
To ensure that community needs and
considerations, including impact on
the local environment, are taken into
account at the earliest stage of the
development process, we hold meetings
and site specific consultations which all
local residents are welcome to attend.
We also hold in-person and virtual
public exhibitions as well as regular
meetings with other national and local
organisations who are key to enhancing
our environmental impact. These include
parish/town councils, local planning
authorities, environmental regulators,
Local Water Authorities and Natural
England. At these meetings we consult
and seek views on our plans and look
to incorporate the feedback we receive.
We pay particular attention to residents’
concerns about how our activities might
impact the natural environment.
We frequently share the contact details
of site managers with relevant figures at
the local parish council, to allow them to
be contacted quickly and any issues with
construction to be rectified.
We work closely with local schools, to
emphasise the importance of site safety
and to keep everyone safe. This also
teaches children about the construction
process, the careers available, and the
initiatives that we have implemented to
create sustainable homes and places
to live, such as through the interactive
Insight House on our Heritage Grange
development in Warwickshire (see
page 23).
We are active members of the Supply
Chain Sustainability School and require key
members of our supply chain to also be
registered. This is a key platform to engage
with others in the industry to consider
environmental improvement opportunities
and ensure our policies reflect the best in
the industry. Our supply chain plays a key
part in our strategy and our teams carry
out reviews with them to understand their
environmental credentials and the impact
of the materials supplied to us.
Those that we engaged with can provide
feedback through a multitude of channels
both online and offline. A dedicated
project website is often set up to provide
information and updates for local residents
and interested parties.
We write to inform the local community of
upcoming works that have the potential
to cause disruption, such as highway and
infrastructure works. On many sites we
distribute a quarterly newsletter update
on development progress so the local
community can see what is happening in
more detail and have forewarning about
any disruptions.
We use signage in and around our sites
to demonstrate our credentials and the
value that our activities bring to local
communities. We highlight the number
of jobs and businesses supported,
amount of green space created and
retained, and section 106 contributions
to local infrastructure and services. New
developments are publicised in the local
press, as are positive news stories about
our beneficial activities and impacts of
our developments. We have a network
of seven PR agencies promoting the
business to national, regional and local
media. We promote the resilience and
sustainability credentials of our homes to
the wider community to demonstrate the
Metrics – How we measure effectiveness
The following information is reported to the Board by the Chief Executive
and/or Chief Operating Officer to enable it to consider and agree what,
if any, changes to make in how and when we engage with our local
communities:
•
•
•
The extent of local opposition to our developments.
The level of planning appeals - 95% of the units we build are
approved at a local level and do not require a planning appeal.
The amount donated to, and the feedback from, charities that we
have supported and the impact we had.
Interests and concerns
The key interests and concerns of our communities relate to our local,
regional and national socio-economic footprints, our impact on the
environment and the availability of green spaces, disruption during
construction of our developments including noise and air pollution, the
safety and protection of members of the community
around our developments, the impact of development on the local
population, and the potential for knock-on pressures on the supporting
infrastructure and the impact of the development on the environmental
resilience of the landscape, including on biodiversity, public green space
and flood resistance.
Outcomes from engagement
Our engagement with the local communities in which we operate has
enabled us to better understand their needs and to develop a positive
legacy from building great places to live, with the facilities that will
help the local community thrive. It has allowed us to connect with local
schools and families to share key messages such as how we keep people
safe and how they can protect themselves. We evaluated the actions
that our supply chain undertakes on environmental matters and how
we can positively partner with them to drive improvements. We have set
internal targets to reduce waste from our construction process and are
considering alternative fuels to diesel for plant and other equipment with
our supply chain.
The protection of the environment is a key area of concern for the local
communities in which we operate. We therefore aim to be mindful of our
impact on the environment in everything that we do and have put in place
steps to support this. We are accredited to ISO 14001 which demonstrates
that we have robust policies and procedures for environmental
management. We are also externally audited across all our business
units. Our comprehensive Impacts and Aspects Register enables us to
consider any areas where improvements can be made. All our Safety,
Health and Environmental team are individual members of the Institution
of Environmental Management and Assessment and provide support and
guidance to our Divisional teams in managing site based environmental
aspects and impacts. We have a team of sustainability practitioners who
assist with considering our wider business environmental and carbon
impacts and drive improvements across our business.
We have put in place environmental and surface water management
plans for all our developments which are monitored by our Divisional
Management teams and SHE Managers. We expect our construction
teams to continually assess the controls and ensure that we focus
on these and the use of resource. Our SHE Managers record levels of
compliance as part of their regular reviews. We have a specific monthly
monitoring process which focuses on the environmental impacts on
site and, in particular, controls to prevent contamination of any adjacent
watercourse.
We have set stringent, science-based targets for carbon emissions
reduction and are committed to enhancing biodiversity on every site.
We are aiming to achieve an overall environmental net gain on our
developments by 2030.
We have increased the Barratt and David Wilson Community Fund from
£1,000 per month to £1,500 per month with effect from 1 July 2022.
Effect of engagement with local communities and the environment on Board decisions
We monitor and report our impact publicly across a range of
environmental indicators, including carbon emissions, water usage,
waste generation, environmental incidents and prosecutions.
The Board are keen to ensure that the Group continues to support
and enhance the local communities in which it operates (and that we
support them as much as we can). Accordingly, the Board entered into
a three-year funding agreement with the Barratt Foundation enabling it
to engage in multi-year charitable partnerships and have a real positive
impact on the communities in which we operate.
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Stakeholder engagement CONTINUED
Government, opposition parties and regulators
Link to Strategic Priorities
Customer first
Leading construction
Great places
Investing in our people
Why we engage
The Government, opposition parties and
regulators are responsible for setting the
legal and regulatory environment in which
we operate, while opposition MPs can also
influence the Government’s legislative
programme. We engage with these groups
so that we fully understand any potential
changes to our operating environment, and
so that policy decision-makers are aware of
the industry’s perspective, and the potential
impact of any proposed changes on the
sector, on the wider business environment,
and on our customers.
How we engage
We engage with ministers, MPs and
regulators through a number of channels.
Company Engagement:
We write letters to ministers, MPs and
other key stakeholders to inform them
about challenges the sector faces and the
potential or actual impact of any proposed
regulatory changes, and to showcase the
good work we do and our commitment
to being a responsible business. In FY22
we wrote to 73 MPs to inform them about
Pride in the Job-winning site managers
in their constituencies; to new ministers
to introduce them to Barratt and help
improve their understanding of the sector;
to affected MPs about our having signed
the Building Safety Pledge. We have also
contacted stakeholders about specific
policy issues on net zero, building safety
and regulations, the environment and the
impacts of inflation.
We also respond, in writing, to any
complaints, feedback or comments
we receive from MPs on behalf of their
constituents. We look to investigate any
issues or concerns raised and provide
detailed and robust replies which set
out clearly the actions we will be taking
to address the points raised. Where
appropriate we will arrange in-person
meetings and site visits to arrive at a
resolution. All such enquiries are logged
and monitored at Group level, with this
information used to inform and influence
our ongoing stakeholder engagement
strategy. During FY22 we also continued
to co-operate with the CMA in respect
of their investigation into our selling
practices around leasehold properties. As
a result of the engagement with the CMA
and the information provided to them, they
announced on 16th August 2022 that they
had closed their investigation against us.
This is a positive outcome not only for the
Company but also its stakeholders.
We have held or attended meetings with
a number of senior ministers and shadow
ministers throughout the year and senior
leaders, function heads and members
of the corporate communications team
have also attended forums and roundtable
events with policymakers concerning a
range of subject areas. We met senior
figures through our membership of
the Government-sponsored Net Zero
Buildings Council and the Green Jobs
Delivery Group. We attended a number of
discussions with the Government about
building safety. Many events have returned
to in-person meetings however there
remains a significant element of online
engagement.
We are members of a number of business
forums through which we engage with
policymakers as well as other industry
leaders to share knowledge and advocate
for our sector. Following on from our
membership of the Green Jobs Taskforce,
David Thomas is now a member of the
Green Jobs Delivery Group, which is
tasked with implementing the taskforce’s
recommendations on how to grow the
skills required to reach net zero. We
are also members of the Building Back
Britain Commission, a group of industry
leaders pushing for measures to support
the Government in achieving its aims to
‘level up’, address regional disparities, and
deliver the transition to low carbon homes.
We sponsor the All Party Parliamentary
Groups on Housing Delivery, Net Zero, the
West Midlands, and Women and Work.
These enable us to increase understanding
among policymakers in key areas that
align to our strategic priorities. The APPGs
on Net Zero, Women in Work and the West
Midlands produced policy reports during
the year which supported the strategic
aims of the business and to which
we contributed. We are also founding
members of the Government’s Early
Adopters Group, which led to the creation
of an industry wide Building Safety Charter.
We regularly offer Government, opposition
parties 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. We
hosted a large number of key stakeholders
at the Zed House this year, showcasing
how we are leading the industry in
developing the innovations needed to
achieve net zero. We also hosted visits
to the Insight House on our Heritage
Grange development in Warwickshire (See
page 23).
We responded to a number of
consultations on legislation throughout
the year, including those regarding
sustainability and biodiversity, building
regulations and building safety.
During the year, we helped produce
two pieces of research through our
membership of the Building Back Britain
Commission. The first examined how
housing can help the Government to
achieve its goal of ‘levelling up’ left-behind
parts of the United Kingdom, while the
second considered the role of housing in
achieving net zero. We also contributed to
Policy Exchange’s report on Street Votes
and Richard Bacon MP’s report into self-
build, both of which have since directly
informed government policy.
Board Level Engagement:
The Chief Executive provides an update
on the engagement with, knowledge
gained and impact on the business (if
any), Government and regulators at
each meeting. In addition, the Group
Communications Team provide email
updates on information received from
government or regulators and the impact
(if any) on the business.
Metrics – How we measure effectiveness
The following information is reported to the Board by the Chief Executive
to enable it to consider and agree what, if any, changes to make in how
and when we engage with the Government or regulators:
• Our political engagement plan – to ensure we meet with the right
people and that messages shared align with the broader strategic
aims of the business.
• Record of all engagement with key political stakeholders, including
correspondence, meetings, site visits and mutual attendance at
events, allowing us to track our relationships with policy-makers and
make sure we continue to engage constructively on issues that affect
our customers, communities and our business.
Interests and concerns
• Our responses to Government consultations and emerging
legislation on relevant policy areas, such as the Residential
Property Developer Tax, the Future Homes Standard and Buildings
Regulations and the Levelling Up and Regeneration Bill. We assess
the extent to which policy and legislative outcomes accord with our
representations to policymakers.
The key interests and concerns of the Government and the regulators
relate to matters such as sustainability – challenges and opportunities
for achieving a net zero carbon economy and being a responsible
business that does the right thing; planning reform – how to build
300,000 high quality homes in the right places per year while aligning
with the Government’s broader levelling up agenda; building safety
– addressing historic defects on mid and high-rise buildings and
making sure the burden is shared fairly across the sector; quality –
ensuring the sector continues to deliver high quality homes, while
giving consumers greater rights of redress when things go wrong; and
inflation – increases in the cost of living and the impact of inflation on
the housebuilding sector and wider economy.
Outcomes from engagement
Engagement with Government, opposition parties and regulators has
enabled us to forge relationships with established and new ministers
and key policymakers. It has helped us to understand the organisation
of the new Department of Levelling Up, Housing and Communities, and
to contact new ministers and shadow ministers after reshuffles to raise
awareness of the business. Engagement has improved Government’s,
opposition parties’ and regulators’ understanding of the sector, the
challenges it faces and its importance to the wider economy. It has
helped to continue to grow the business’s reputation as a leader in the
sector, especially in key areas of sustainability and responsible business.
It has improved our understanding of potential changes to the operating
environment, allowing the business to prepare in advance such as
workforce and skills planning, early investment in requisite change
programmes, and actions to mitigate impacts on operations and supply
chains. We were also one of the first major UK businesses to sign up to
the Race to Zero, a global campaign rallying organisations to help halve
global carbon emissions by 2030.
Effect of engagement with Government, opposition parties and regulators on Board decisions
Engagement with key political stakeholders assists the Board in
understanding the risks and opportunities presented to the business by
changes to the operating environment, allowing them to make decisions
in line with the strategic interests of the business.
The Board established the Sustainability Committee to help drive
the Group’s sustainability agenda taking into account the feedback
from engagement with Government and policymakers on the future
direction of sustainability policy, such as around low carbon homes and
biodiversity net gain.
The Board agreed to sign the Building Safety pledge following extensive
engagement with Government on the issue. The Board has also gained
knowledge of how evolving housing policy can impact the housing
market at a local and national level, and therefore affect land bids
which enables it to consider if the process and policies in place remain
appropriate.
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Risk management
In pursuing our strategic priorities
to create value for stakeholders, we
experience risk. The Board is responsible
for risk management and ensuring the
Group maintains the appropriate level of
risk to achieve its objectives.
The risks facing the Group 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 create new risks. In FY22, we have
continued to evolve and enhance our risk
management policies and processes.
Risk management controls are integrated
into all levels of our business and across
all operations, including at site, divisional,
regional and Group level. The roles
and responsibilities of the Board, its
Committees and levels of management in
the identification and management of risk
are summarised below.
As part of the evolution of the Group’s
risk management framework, there have
been several regional and function risk
workshops to review and identify any
potential emerging risks. These workshops
presented a robust challenge to the
principal risks identified at an executive
level. During this process, we have
reviewed the policies and methodologies
behind our risk management to ensure we
are continuing to identify key risks and can
focus on mitigating these areas.
Board and sub committees
(see page 82)
• Responsible for corporate strategy, governance, performance, internal controls
and risk management.
• Monitors the effectiveness of the Group’s risk management and internal controls
systems.
• Ensures there is an appropriate culture in place to support effective risk
management throughout the Group.
• Sets risk appetite, considering the expectations of stakeholders, and macroeconomic
context.
• Monitors principal and emerging risks with input from independent experts.
• Assesses risks against the Group’s strategy and the interests of stakeholders,
and gains assurance on their management.
Executive Committee
and sub committees
(see page 82)
• Monitors business and operational performance and changes in key risks.
• Through the Risk Committee, assesses identified risks using a scoring system
based on the likelihood of the risk materialising and potential impact on the
business.
•
Implements mitigation strategies to effectively manage key risks within the
Group’s risk appetite.
• Responsible for ensuring that risk management is embedded within the business
and appropriate actions are taken to manage risk.
• Delegates risk oversight to appropriate management committees.
Group, Regional and
Divisional Management
• Applies specialist knowledge and research to identify new and monitor changes to
existing operational and strategic risks at a divisional, regional and functional level.
• Responsible for risk management and control within the relevant division, region
or group discipline.
Site management,
assessments and valuations
•
Identifies and assesses operational risks affecting housebuilding activity at a site
level, including construction, sub-contractor and SHE risk.
• Maintains an effective system of site-level risk management and internal control.
In April 2022, we signed the Industry
Building Safety Pledge to commit to
supporting leaseholders by funding or
remediating life-critical fire safety works
in buildings over 11 metres tall, which
we have played a role in developing over
the last 30 years. The amounts provided
in the financial statements reflect the
current best estimate of the extent and
future costs of work required; however,
these estimates may be updated as work
progresses or as government legislation
or regulations develop. Therefore, this
has been highlighted as a principal risk
this year.
The Group continues to assess the
potential impact of both the physical
impact of climate change and the
regulatory and social measures that may
be adopted to mitigate against it. Climate
change remains a principal risk and,
in line with amendments to the listing
rules to require compliance with the
recommendations of the Task Force for
Climate-related Financial Disclosures, the
Group has disclosed its response on pages
58 to 71.
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.
Following the executive review of principal
risks, we determined that social trends
no longer present an emerging risk to
the Group.
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 where these
risks could have a moderate adverse
impact on the Group – either financially
or operationally. To ensure 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
pages 72 and 73.
The Group has identified 12 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 Legacy properties
G Safety, health and environment
H Attracting and retaining high-calibre employees
I
Availability of finance and working capital
J IT, including cyber security
K Climate change
L Significant nationwide unexpected event
affecting multiple locations
Heat map of principal risks net of mitigation
D
E
H
K
F
G
J
A
C
t
c
a
p
m
I
B
L
I
These risks are detailed on pages 54 to 57, categorised by the strategic priorities to which they relate. Risk levels are presented net of
mitigation that is in place and the risk appetite defines the level of risk that the Board is comfortable with. A new risk has been detailed
on page 55 for legacy properties. The illustration of the probability does not consider the relative size of any associated financial or
reputational impact of each item.
Likelihood
52
53
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Principal risks
Customer first
A Economic environment, including housing demand and mortgage availability
Risk level H ↑
Risk description
Risk appetite M —
Response/mitigation
Changes in the UK macroeconomic
environment may lead to falling demand
or tightened mortgage availability, on
which most of our customers are reliant,
reducing the affordability of our homes.
This could result in reduced sales volumes
and affect our ability to provide profitable
growth.
• Continual monitoring of the market at Board,
Executive Committee, regional and operating
divisional levels, leading to amendments in the
Group’s forecasts and planning as necessary.
• Comprehensive sales policies, regular reviews of
pricing in local markets and development of good
relationships with mortgage lenders.
• Disciplined operating framework with an appropriate
capital structure and strong balance sheet.
Responsibility:
Executive Committee
Key risk indicators
Internal:
Gross and operating margins,
PBT, ROCE, EPS, TSR, total
home completions.
External:
GDP growth, CPI inflation,
mortgage approvals,
mortgage affordability, new
housebuilding site starts
Great places
B Land availability
Risk level M —
Risk appetite M —
Risk description
Response/mitigation
Responsibility:
Land Committee
Key risk indicators
An inability to secure sufficient consented
land and strategic land options at
appropriate cost and quality in the right
locations to enhance communities, could
affect our ability to grow sales volumes
and/or meet our margin and site ROCE
hurdle rates.
• All land acquisitions are subject to formal appraisal
Land approvals (plots).
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.
• Purchase of Gladman Developments Limited.
C Government regulation and planning policy
Risk level M —
Risk appetite L —
Risk description
Response/mitigation
Responsibility:
Operations Committee
Key risk indicators
Changes in the regulatory environment
may affect the conditions and time taken
to obtain planning approval and technical
requirements including changes to
Building Regulations or environmental
regulations, such as nutrient neutrality,
increasing the challenge of providing
quality homes where they are most
needed. Such changes may also impact
our ability to meet our margin or site ROCE
hurdle rates.
•
In-house technical and planning expertise focused
on regulations and achieving implementable
planning consents that meet local requirements.
Gross and operating margin,
PBT, ROCE, EPS, TSR, total
home completions.
• Robust and rigorous design standards for the homes
and places we develop that exceed current and
expected statutory requirements.
• Policies and technical guidance 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.
Risk level/appetite H High risk M Medium risk L Low risk
Change from previous year ↑ Increase ↓ Decrease — No change N New
54
Leading construction
D Construction
Risk level H —
Risk description
Failure to achieve excellence in
construction, such as design and
construction defects, deviation from
environmental standards, or through an
inability to develop and implement new
and innovative construction methods. This
could increase costs, expose the Group to
future remediation liabilities, and result in
poor product quality, reduced selling prices
and sales volumes.
Responsibility:
Operations Committee
Key risk indicators
Customer service, total home
completions, gross margin,
operating margin, PBT, ROCE
EPS, construction waste
intensity and carbon intensity.
Risk appetite L —
Response/mitigation
• Continuous review of design and materials, which
are evaluated by technical experts including the
NHBC, to ensure compliance with all regulations.
• Monitoring and improving the environmental and
sustainability impact of construction methods and
materials.
•
Implementation of MMC by design and
technical teams.
• Detailed build programmes supported by a robust
quality assurance.
• Use of competent engineers through an
approved panel.
E Availability of raw materials, sub-contractors and suppliers
Risk level M —
Risk description
Risk appetite L —
Response/mitigation
Not adequately responding to shortages
or increased costs of materials and skilled
labour or the failure of a key supplier,
may lead to increased costs and delays in
construction.
It may also impact our ability to achieve
disciplined growth in the provision of high-
quality homes.
• Centralised team procures most materials from
within the UK including sub-contractor 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.
• Development of multiple supplier relationships for
labour and material supplies, with contingency plans
should any key supplier fail.
• Control of build and material costs throughout build
programmes.
• Adhere to the Prompt Payment Code to support our
partners.
Responsibility:
Operations Committee
Key risk indicators
Customer service, gross
and operating margin, PBT,
ROCE, EPS, TSR, total home
completions.
Risk appetite L N
Response/mitigation
Responsibility:
Operations Committee
Key risk indicators
• Dedicated Building Safety Unit has been set up to
manage the remediation work.
Gross and operating margin,
PBT, ROCE, EPS.
• Assumptions on the estimated financial costs have
been tested and challenged robustly.
F Legacy properties
Risk level M N
Risk description
In April 2022, we signed the Industry
Building Safety Pledge, to support
leaseholders by funding or remediating
life-critical fire safety works in buildings
of over 11 metres which we have played a
role in developing over the last 30 years.
The amounts provided in the Financial
Statements reflect the best estimate of the
extent and costs of work required; however,
these will be updated as work progresses
or as government legislation or regulations
develop.
55
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Principal risks CONTINUED
Investing in our people
G Safety, health and environment
Risk level M —
Risk appetite L —
Underlying all priorities
J IT
Responsibility: Safety, Health
and Environment Operating
Committee
Risk level M —
Risk appetite L —
Risk description
Response/mitigation
Risk description
Response/mitigation
Key risk indicators
Health and safety or environmental
breaches can impact employees,
sub-contractors and site visitors, and
undermine the creation of a great place
to work.
They can also affect the wellbeing of our
employees and result in reputational
damage, criminal prosecution and civil
litigation, and delays in construction or
increased costs.
• Dedicated internal health and safety team.
• Regular health and safety monitoring, internal and
external audits of all operational units, and regular
senior management reviews of developments.
• SHE management system that continually reinforces
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 in all operating units.
•
Independent reviews of our SHE processes.
Health and safety (SHE audit
compliance).
A successful cyber attack on, or failure of,
any of the Group’s key systems, particularly
those for customer information, surveying
and valuation, could restrict operations and
disrupt progress in strategic priorities.
Any breaches that lead to non-
compliance with data regulations could
incur significant financial penalties and
reputational damage.
• Technology Risk Sub-Committee provides oversight
of technology risk.
• Regular external reviews to reduce the risk of
successful cyber attacks, including vulnerability and
penetration tests by third parties.
• Group-wide compliance and policies on passwords
and transferring data to third parties.
• Mandatory information security training programme
for all new employees.
• Adoption of the recognised NIST control framework.
• Entered into an information security risk insurance
policy.
• Continued investment in IT infrastructure.
Responsibility: Technology
Risk Sub-committee
Key risk indicators
Customer service gross
and operating margin, PBT,
ROCE, EPS.
H Attracting and retaining high-calibre employees
Risk level H —
Risk appetite M —
Risk description
Response/mitigation
Responsibility:
Executive Committee
Key risk indicators
K Climate change
Risk level M —
Risk appetite L ↓
Risk description
Response/mitigation
Responsibility:
Executive Committee
Key risk indicators
Increasing competition for skills may mean
we are unable to recruit and/or retain
the best people. Having sufficient skilled
employees is critical to delivery of the
Group’s strategy of volume growth whilst
maintaining excellence in all of our other
strategic priorities.
• Comprehensive HR programmes covering
Employee engagement score.
apprenticeships, graduate development, succession
planning and training academies.
• Personal development plans for all employees.
• Development of a hybrid working model.
• Monitoring of employee turnover, absence statistics
and feedback from exit interviews.
• Annual employee engagement survey to measure
employee satisfaction.
• Remuneration benchmarking against competitors.
Underlying all priorities
I
Availability of finance and working capital
Risk level L —
Risk description
Risk appetite L —
Response/mitigation
Responsibility:
Treasury Committee
Key risk indicators
Lack of sufficient borrowing and surety
facilities to settle liabilities and/or an ability
to manage working capital, may mean we
are unable to respond to changes in the
economic environment, and take advantage
of appropriate land buying and operational
opportunities to deliver strategic priorities.
• Disciplined operating framework with an appropriate
capital structure.
Average net cash, minimal
year end indebtedness.
• Management have stress tested the Group’s
resilience and consider the funding available
to be sufficient.
Risk level/appetite H High risk M Medium risk L Low risk
Change from previous year ↑ Increase ↓ Decrease — No change N New
56
In the short to medium term, if the Group
does not further enhance its sustainable
business practices to meet government
regulations and customer and investor
expectations, it may build homes that
are not seen as fit for purpose or incur
significant extra costs.
• New Board Sustainability Committee to oversee the
Carbon intensity.
business’ response to climate risks.
• Committed to reduce the Group’s carbon emissions,
including those from its completed homes and
supply chain.
• 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.
• Progressed scenario analysis to determine the
resilience of the Group’s business model under
different climate-related scenarios.
• Developed a net zero transition pathway for our
whole value chain
L Significant nationwide unexpected event affecting multiple locations
Risk level M —
Risk appetite M —
Risk description
Response/mitigation
Responsibility:
Executive Committee
Key risk indicators
A significant unexpected event, such as
the COVID-19 pandemic or the failure of
national infrastructure.
• Reviewed business continuity plans in place
Total indebtedness / surplus.
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.
57
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Climate related risks and opportunities
Taskforce for Climate-related Financial Disclosures (TCFD)
Climate related risks and opportunities CONTINUED
Governance of climate risk
We recognise the immediacy and severity
of climate change and the associated
financial risks. Our stakeholders need
clear and consistent information on
the climate resilience of organisations,
the management of climate risk and
opportunities and the potential financial
implications.
Resilience is a key focus area within our
Building Sustainably framework. For us
this means building long-term resilience
for our homes and communities against
climate change risks through innovation,
planning and education, whilst also playing
a leadership role in our net zero journey
by supporting our value chain and wider
industry.
The Group is determined to be the leading
national sustainable housebuilder, with
our TCFD programme an integral part
of this strategy. The Board therefore has
a duty to the Group’s stakeholders to
assess the climate related impacts on its
business model.
In last year’s Annual Report, we recognised
climate change as a principal risk to the
Group, signalling its significance. The
Group has used the TCFD framework, as
set out below, to enhance our governance
over sustainability matters.
Our strategies and risk management,
including scenario analyses assessing
the potential financial impacts, have
been holistically reviewed, whilst also
considering the opportunities the transition
to a low carbon economy represents to our
business and stakeholders. We have set
out our established targets and metrics,
though it is expected that these will
expand in future with our strategies. Our
disclosure concludes with our whole value
net zero transition pathway.
Both our understanding of the impact of
climate change and our response continue
to evolve, and as such we will refine
our assessment of climate-related risk
and pursue further initiatives within our
ongoing strategy.
TCFD Framework
During the programme the Group
has worked collaboratively and cross
functionally, bringing in experts where
required such as PwC, ensuring that our
analysis is robust and thorough.
The Company can state that in accordance
with Listing Rule 9.8.6 R, these Annual
Report and Accounts include climate-
related financial disclosures consistent
with the TCFD recommendations and
recommended disclosures.
Assurance
Deloitte have provided independent third-
party limited assurance in accordance with
the International Standard for Assurance
Engagements 3000 (‘ISAE 3000’) and
Assurance Engagements on Greenhouse
Gas Statements (‘ISAE 3410’) issued by
the International Auditing and Assurance
Standards Board (‘IAASB’) over the TCFD
on pages 58 to 72 and selected metrics
on page 69. Deloitte’s full unqualified
assurance opinion, which includes details
of the selected metrics assured, can be
found at www.barrattdevelopments.co.uk/
building-sustainably/our-publications-and-
policies/publications.
TCFD area
Our response
Focus for FY23
Further information
Governance
Set up the new Sustainability Committee in June 2021,
with the first meeting in November 2021, to assist the
Board’s scrutiny and oversight of climate risks and
opportunities.
Undertook Board training to ensure members had the
expertise to meet their responsibilities.
Strategy
Identified and financially quantified the climate-related
risks and opportunities most material to the Group.
Identified four plausible outcomes of climate change
based on IEA and NGFS scenarios, and modelled the
potential impact on the Group’s business model. The
Sustainability Committee reviewed these results and
assessed the appropriateness of the Group’s strategy.
Incorporated the results of scenario modelling into the
assessment of valuation of assets and liabilities in the
Financial Statements.
Undertook a climate-related risk and opportunities
identification process, forming a climate risk register
documenting the most material risks and opportunities.
This was integrated into the Group’s wider risk register
and senior management were assigned responsibility
for mitigating action.
Adopted science-based targets for scopes 1, 2 and 3
greenhouse gas emissions.
Regular monitoring of these emissions against
approved science-based targets.
Set out a transition pathway to achieve net zero
emissions, both reducing the Group’s climate impact
and protecting it from increased transition risk.
Included reduction of scope 1 and 2 emissions as a
performance condition for the vesting of the 2021 and
2022 LTPP share award.
Risk
management
Metrics and
targets
58
Continued monitoring of
the projected impact of
climate change and the
Group’s implementation of
its strategy.
See the Sustainability Committee
Report on page 102.
The Group’s governance processes for
climate risk are described overleaf.
Material climate risks and
opportunities, with our responses, are
shown on pages 62 and 63.
Scenario analysis and results shown
on pages 64 and 65.
Impact on financial reporting and
planning shown on page 66.
Implement ongoing review
of climate risks and
opportunities to ensure
impact assessments are
updated with the latest
climate science and
business understanding.
Integration of climate risk
and opportunity modelling
into the Group’s three-year
planning cycle.
Monitoring of risk
mitigation and opportunity
implementation through
the Risk Committee.
See the description of the Group’s risk
governance on page 59.
Specific information on climate risk
management is included on page 60.
Incorporate climate
risks, including carbon
price developments, into
financial forecasting.
Integration of further
metrics reporting to
monitor impact of specific
climate risks.
Our greenhouse gas emissions and
information on our science-based
targets are on pages 68 and 69.
The Group’s KPIs, including carbon
reduction, are on page 05.
Details of the LTPP performance
conditions are included on page 114.
The Group’s transition pathway to net
zero is detailed on pages 70 to 71.
Governance of climate
risk and opportunities
Ultimate responsibility for the long-term
sustainable success of the Company
lies with the Board, who determine
the purpose, values, culture, strategy,
governance and risk management
framework. During the year, the Board
established the Sustainability Committee,
a sub-committee of the Board responsible
for debating, reviewing and scrutinising
our sustainability and climate change
strategy, monitoring its implementation
and approval of plans to mitigate risks
and leverage opportunities. Its terms
of reference (available here: www.
barrattdevelopments.co.uk/investors/
corporate-governance) specify a particular
focus on climate-related risks and
opportunities, including the identification
of such risks and opportunities and the
scrutiny of the business response. The
Sustainability Committee Report on pages
99 to 104 details its responsibilities and
climate-related decisions taken in the year,
as well as its interaction with other Board
committees.
Climate-related issues are a standing
agenda item for Sustainability Committee
meetings. During the year, climate risk
was discussed by the Sustainability
Committee at three meetings. The
competencies of the Board are set out
on page 74 and 75. Given the specialised
knowledge required to understand and
respond to climate risk, Board undertook
training on climate change during the year,
covering the following:
Some climate-related decisions and
matters are reserved for other Committees
with delegated authority from the Board,
which are highlighted below. The Risk
Committee is a management committee
that reports to the Audit Committee.
• An overview of climate science: what is
driving climate change, what it might
lead to, and efforts being taken to
limit it;
• Key physical and transition climate
risks and opportunities;
• The TCFD recommendations and best
practice;
• An introduction to the World Economic
Forum principles of climate change
governance;
• Updates on emerging industry best
practice around climate and potential
implications for the Group, for example
the Better Building Partnership’s Net
Zero Carbon Pathway Framework; and
• Carbon pricing.
Board members have also undertaken a
visit of the Zed House (see page 14) during
the year to better understand the Group’s
research into potential mitigations and
opportunities in house design.
The Sustainability Committee meetings are
also attended by an independent adviser to
provide further challenge and scrutiny.
Risk Committee
Audit Committee
Evaluates the Group’s internal control policies
and procedures over the identification, assessment and
reporting of climate-related risks.
Reviews the Group’s overall risk profile, examining
climate-related risks in the context of the Group’s other
principal risks and its significance to strategy.
Monitors the integrity of climate-related
disclosures and the Group’s compliance with climate-
related reporting requirements.
Oversees internal and external assurance of the
reporting of climate-related metrics.
Remuneration Committee
SHE Committee
Designs and implements the Group’s remuneration
policy, ensuring alignment with climate-related targets.
Monitors performance against targets and approves
remuneration accordingly.
Mitigates SHE risk through risk assessments
and the monitoring of compliance with the SHE
management system. This includes monitoring
climate-related SHE risks, such as the impact of
weather patterns on our workforce.
In order to achieve its climate-related objectives, the Board and its sub-committees assign responsibility to working groups of senior
management. These management groups are set out in the Sustainability Governance structure on page 101.
59
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Climate related risks and opportunities CONTINUED
Approach to climate risk
Climate risk identification
and assessment
In the prior year, to fully understand the
implications of climate change, the Board
instigated a detailed review of the key
risks to and opportunities for the Group’s
business model, identifying the timeframes
over which they are expected to materialise
and their potential financial impact. This
considered 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, and resulted in the
creation of a climate risk and opportunities
register. In FY22, the Group has assessed
the potential financial impact of each of its
climate-related risks and opportunities, as
summarised below.
The Group recognises that the
understanding of the potential impact of
climate change requires management to
assess the latest policy announcements
and available scientific and socio-
economic predictions. Management
reviews this information on an annual
basis, with assistance from external
experts, considering updates to the
Group’s business plan and financial
forecasts, and will update the climate risk
and opportunities register accordingly,
reporting to the Sustainability Committee.
In FY22, management engaged a third
party expert to assess emerging climate-
related risks. The results of this review will
be reflected in climate modelling for FY23,
as detailed on page 64.
Climate-related risk, alongside the other
risks to the Group, is also assessed on
an ongoing basis through the risk review
process, governed by the Risk Committee
as described on page 57. This includes
a bottom-up assessment of the risks
affecting the business at a site and
divisional level, and a review by senior
management and subject matter experts
from across the business. The identified
risks are consolidated and presented to
the Risk Committee for review.
Climate risk assessment process
Identification of potential climate outcomes through varying levels of
global response and resultant change in weather patterns, based on latest
available IEA and NGFS models.
Climate outcomes shared with business leaders and local management to
identify a list of potential risks and opportunities to the Group arising from
these circumstances.
Workshops of internal subject matter experts, local and Group senior
management and external climate experts held to qualitatively assess each
risk/opportunity to determine the possible operational and financial impacts,
based on the criteria outlined below. The transition risks, physical risks and
opportunities determined to have the highest potential impact were selected
for detailed modelling.
HIGHEST POTENTIAL IMPACT
RISKS AND OPPORTUNITIES
OTHER RISKS AND
OPPORTUNITIES
Identification and collection of
underlying data and assumptions
required to estimate the
financial impact of the risks and
opportunities.
High-level assessment of
potential annual financial impact
under the timeframe and climate
outcome in which it would be
most severe, based on available
climate and business data.
Review of proposed assumptions
and calculation methodology with
internal subject matter experts.
Review of impact calculations
to determine whether any risks
should be subject to detailed
modelling next year.
Estimation of the unmitigated
financial impact of under
each climate scenario in the
short, medium and long term
(determined to be 2025, 2030 and
2040 respectively).
Review of estimated financial
impacts by Senior Management.
Risk assessment criteria
The likelihood and potential impact of each
risk were rated in line with the Group’s risk
assessment process, shown in the Risk
assessment criteria table.
The likelihood assessment reflects the
probability of the issue having a significant
impact on the Group at any point over the
period to 2040, considering the likelihood
of the climate outcomes, economic
conditions and business events required
for a significant impact to occur. In this
context, a significant impact refers to an
operational or financial effect that would
require an active response or strategic
planning by senior management.
The impact assessment reflects the
estimated profit impact of that risk within
the financial year and climate scenario in
which the financial impact is likely to be
most severe, based on the financial impact
assessment described above. Where the
profit impact of a long-term obligation
would be recognised up-front, for instance
in the recognition of a non-current
provision, the financial impact is spread
over the period that it will be realised for
this purpose.
The Group’s definition of a substantial
financial impact of over £50m aligns with
the materiality set by the Group’s statutory
auditor, as set out on page 132.
Climate risks are categorised into 'physical
risks', being risks arising from the physical
effects of climate change, and 'transition
risks', being the risks related to the
transition of a lower carbon economy.
led by the Group Sustainability Director.
This meets monthly and comprises of
operational function leaders, ensuring that
the Group’s climate risk and opportunities
strategy is communicated, implemented
and monitored throughout the business.
The Group’s general risk management
structure and processes are detailed
on page 52. Climate-related risks
and opportunities and the assigned
actions are reviewed and approved by
the Sustainability Committee before
submission to the Risk Committee for
inclusion in the Group’s overall risk
management framework, including its
combined risk register.
The Group’s climate-related transition
risks, physical risks and opportunities
with the highest risk ratings are shown
on pages 62 to 63. The time frames
presented are the periods over which the
risks and opportunities could manifest to a
significant impact, in which short, medium
and long term are defined as on page 66.
Risk management and response
The Sustainability Committee and Audit
Committee reviews the climate risk
register as part of the annual cycle to
ensure that the assigned mitigating
actions remain appropriate and are being
implemented. Priority is given to those
risks with a high rating that may manifest
over the short to medium term.
Ongoing oversight of the implementation
and effectiveness of these actions is
delegated to the Sustainability Operations
Group, a senior management committee
Risk assessment criteria
IMPACT
< £1m
£1m > £5m
£5m > £10m £10m > £50m
> £50m
Low
Minor
Moderate
Major
Substantial
HIGH
MEDIUM
Almost
Certain
Likely
Possible
Unlikely
L
I
K
E
L
I
H
O
O
D
David Wilson homes at Fairfield Croft, York
Rare
LOW
60
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Climate related risks and opportunities CONTINUED
Our risks and opportunities
Risk
Description
Impact time frame Our response
Risk
Description
Impact time frame Our response
Highest rated transition risks
Carbon
pricing
Risk rating
HIGH
Housing
regulations
Risk rating
HIGH
New
technologies
Risk rating
HIGH
Government legislation
designed to reduce
emissions increase
material costs,
amplified by an
increased demand for
low-carbon materials
Changes to house
specifications due to
government legislation
to reduce home
emissions, for example
the Future Homes
Standard, including
varying standards
across the UK
Implementation of
new technologies in
homes and methods of
construction, requiring
high capital investment
and upskilling of labour
Planning
requirements
Risk rating
HIGH
Increasing planning
or site infrastructure
requirements from
government and local
authorities result in
reduced viability of land
in certain regions
Highest rated physical risks
Supply
availability
Risk rating
MEDIUM
Weather
disruption
Risk rating
MEDIUM
Reduced supply
availability (such
as timber) due to
changes in climate
patterns and extreme
weather events where
the supply is sourced
Disruption due to
increased frequency
of severe weather
including heat, cold
or precipitation,
or damage to
construction sites
from extreme weather
events
Short to long term
We were the first national housebuilder to implement science-
based targets for our scope 1 & 2 and scope 3 emissions,
allowing us to take a leadership role in driving down emissions.
We have developed a transition pathway to reduce emissions
across all of our value chain. See page 70.
Short to long term
We regularly engage with government to enhance
understanding of the challenges of meeting the UK’s net zero
targets (see page 50). We are also members of the Home
Builders Federation Future Homes Task Force, formalised
into the Future Homes Hub, and a business partner for the
Construction Leadership Council’s Construct Zero initiative.
Medium term
Medium to long term
We review low carbon products, systems and processes for our
housetypes through market research, product testing, university
and research collaborations, prototype test houses and grant
funded trials. In 2021, we built our zero carbon home prototype
– The Zed House (see page 14). In May, we commenced building
our Energy House 2.0, a unique research laboratory at the
University of Salford testing products to deliver viable net zero
carbon housing at scale.
We work with landowners to ensure developments will comply
with requirements and meet margin thresholds. We undertake
detailed assessments of construction and operational
requirements like costs of electric vehicle charging points and
our ability to mitigate build costs.
Our central Land and Development Leadership Group
scrutinises land acquisitions for viability and compliance,
including reviewing specific planning requirements, water
scarcity risk, integration of green and blue infrastructure and
renewable energy generation opportunities.
Short to long term
We regularly engage with our suppliers on availability of
materials and sustainable sourcing both directly and through
our Supply Chain Sustainability School. We purchase 99% of our
timber from FSC or PEFC certified sources and consider supply
sustainability at tender and contract renewal stage.
Short to long term
We closely monitor weather forecasts to ensure worker
safety, and make preparations or adjust build schedules as
appropriate. A crisis management plan is in place for extreme
weather events.
MMC, such as timber frame, allow for parts of the construction
process to occur off-site, increasing build speed, reducing
exposure to the elements before it is sealed. See page 28.
Highest rated physical risks
Overheating
in homes
Risk rating
MEDIUM
Changes to house
specifications required
to mitigate long-
term shift in climate
patterns, such as
prolonged increased
temperatures
in summer
Flood
mitigation
Risk rating
LOW
New site
infrastructure required
to mitigate extreme
weather events, such
as flood barriers and
balancing ponds
Highest rated opportunities
Demand
for and
affordability
of green
homes
Eligibility for green
mortgages and cost
savings from energy
efficiency allow for
increased affordability
of new homes
Long term
Medium to long term
We have analysed the unmitigated impact of temperature rises
in our housetypes across the UK, and assessed mitigating
overheating through altering home designs. These measures
reduce the temperatures to acceptable levels in all locations,
time periods (up to 2040) and climate scenarios. These
measures are expected to be cost neutral, though in some of the
worst-affected areas, additional cost may be required. We are
participating in industry research on overheating and indoor air
quality with Birmingham City University and other housebuilders.
Flood risk assessments are a key part of our land appraisals.
Relevant flood risk authorities specify that new developments
must survive a one in 100-year storm plus 30%. Our
developments exceed this specification.
Short to long term
We promote green mortgages so that savings from energy
efficient homes can be linked to affordability. We are working
with banks and building societies to offer green mortgages to
our customers with lower interest rates in recognition of these
potential energy savings. See page 22.
Opportunity
rating
HIGH
Green
developments
Opportunity
rating
HIGH
Medium term
Increased land buying
and local partnership
opportunities through
strong low carbon
credentials and
developments, such
as partnering with
councils to deliver low
carbon homes
We promote our sustainability activities through delivery on
commitments, and participation in sustainability benchmarks
and indices to demonstrate our industry-leading performance.
(See page 21).
We have increased engagement with landowners on
sustainability, including attendance by the Group Sustainability
Director and focusing on sustainability initiatives in our
landowner publications.
Through the delivery of our low carbon roadmap, we can work
with local authorities to identify opportunities to deliver low
carbon developments like our first ‘all electric’ development –
Delamere Park, Frome (see page 29).
Green finance
Opportunity
rating
MEDIUM
Our sustainability
performance opens
green financing
opportunities
Sustainable
practices
Opportunity
rating
LOW
Proactive adoption
of low-emission
materials and
processes provides a
cost advantage and
improves reputation
Short to medium term We are working with lenders to introduce green covenants to
our banking facilities, through Sustainability Linked Financing.
Short to medium term Our transition to net zero (see pages 70 to 71) will reduce
emissions across our value chain. We are reducing emissions
from our homes in keeping with regulations, and beyond
that we are working with our partners to explore innovative
materials and products (see page 14).
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Climate related risks and opportunities CONTINUED
Scenario Analysis
With the assistance of PwC, and in
consultation with internal subject matter
experts, for each scenario we modelled
specific transition pathways, considering
potential legislative, policy or behavioural
changes and the impact these may have on
the Group.
The Group’s business model allows for
industry-wide development costs to be
passed on to the land vendor to some
extent. To reflect this, it has been assumed
that the land price paid for a site could be
reduced up to the extent that the cost does
not fall beneath the price that a landowner
could achieve for an alternative use (taken
to be the industrial use price per acre
estimated by the Valuation Office Agency).
A summary of the results of the scenario
analysis in shown on page 65, including
the approximate financial impact of the
highest transition risks, physical risks
and opportunities, as well as the regional
impact on margin (before mitigation).
Land Viability
Each of the variance maps on page 65
demonstrate our expected ability to pass
climate-related costs onto land vendors
through the cost of land. Due to the limited
exposure to transition risk and action we
are already taking to minimise exposure
to physical risk, we would not expect a
significant adverse impact to land viability
under the ‘Adaptation’ scenario, in the
timeframes modelled.
However, the maps for ‘Sustainable
Transition’ and ‘Disorderly Transition’
highlight areas of the UK where residential
land prices are less resilient, such as the
North East. In these regions, we would
be limited in our ability to pass through
land costs, which could require accepting
a margin decrease without taking action
to reduce exposure to transition risk. This
is before mitigating action and does not
consider the UK Government’s ‘levelling
up’ agenda.
Relative exposure to transition and physical risks
under each of the Group’s climate scenarios
Physical Risks
HIGH
DISORDERLY
TRANSITION
SUSTAINABLE
TRANSITION
i
s
k
s
R
n
o
i
t
i
s
n
a
r
T
STATED
POLICIES
ADAPTATION
LOW
HIGH
Physical Risks
Climate scenario analysis
The Group’s extended forecasts (as
considered in its viability review and
impairment assessments) are based
on the IEA’s ‘Stated Policies’ model,
whereby global climate commitments
are met in full and on time, leading to a
global temperature rise of 2.7°C by 2100,
giving rise to both physical and transition
risks. For the UK, this includes the Ten
Point Plan, the 2020 Energy White Paper
and achievement of the 2021 net zero
transition targets. This forms the basis of
our financial planning, as discussed on
page 66.
To stress test the Group’s performance,
we have defined three climate scenarios
for analysis in order to understand the
resilience of the business under a range of
different climate outcomes. The scenarios
range from a sustainable transition that
limits global warming to 1.5°C, to an
adaptation scenario where emissions
continue on the current pathway, which
leads to around 4°C warming, such that
they cover both high physical and high
transition risks. The balance of transition
and physical risk in each scenario is shown
in the adjacent graph, alongside the risk
levels arising should current climate
policies and targets be achieved (‘Stated
Policies’).
Climate-related risk and opportunities
impacts will be assessed over the short
(2025), medium (2030) and long terms
(2040). This range of time horizons
considers a longer period than the Group’s
usual operational cycle and have been
selected to align to the Group’s existing
emissions reduction targets, whilst
considering a timeframe over which both
transitional and physical risks manifest
to a material level. The short-term
timeframe aligns with the Group’s owned
land bank and the Group’s strategic land
options and land promotion agreements
will be realised over the medium-to-long
term. While the Paris Agreement target
is 2050, we have determined 2040 to be
more suitable given that is when we aim to
achieve our own net zero target.
Modelling methodology
For a sample of existing land bank and
supply chain sites, we obtained localised
climate data to a 90m2 resolution based
on the latest IPCC CMIP6 global climate
models, providing projections for each of
our scenarios and time horizons across
several indicators, including flood, heat,
precipitation and wind. We used these
projections to determine the potential
unmitigated impact in each of our divisions
and across our supply chain under each
climate scenario.
64
Scenario
Sustainable transition
1.5°C
We have used the IEA’s ‘Net Zero Emissions by
2050’ (NZE2050) to model a long-term orderly
transition to a low carbon economy occurring
over the long term as sufficient regulatory
action is taken to limit the global temperature
rise to the Paris goal of 1.5°C by 2100, resulting
in significant transition risks. This includes
the early implementation of the Future Homes
Standard, stricter planning requirements and
sustained increases in carbon pricing from
2025, whilst customer and lending sentiment
will be higher, providing greater opportunities.
Disorderly transition
2.0°C
We have developed a bespoke scenario,
adjusting IEA’s ‘Net Zero Emissions by 2050’
model such that it reflects a disorderly
transition, whereby limited regulation is in
place until 2030, requiring extreme policies to
be introduced from this date in order to limit
warming to 2°C by 2100. The Future Homes
Standard is introduced as planned, but carbon
pricing and planning regulations steeply
increase from 2030. This sudden, disorderly
transition to a low carbon economy occurring
over the medium term results in maximum
transition risk.
Adaptation
4.0°C
Global policy shifts away from prevention and
towards adapting to a new climate, leading
to a global temperature rise of 4°C by 2100,
giving rise to maximum physical risk. As
such, carbon pricing reduces, but Barratt
contributes to additional cooling solutions
in homes at risk of overheating in the worst
affected areas. It is likely that the physical
risks will be greater beyond 2040.
Potential annual impact on profit before tax
of most significant risks and opportunities
(unmitigated)
% impact on gross
margin in
2040 by region
Transition risk cost (T)
£0m
Physical risk cost (P)
£0m
Opportunity gain (O)
£0m
£400m
£20m
£80m
0% fall
in margin
5% fall
in margin
2025
2030
2040
(T) Carbon pricing
(T)
(T)
Housing
regulations
Planning
requirements
(P) Supply availability
(O) Green mortgages
(T) Carbon pricing
(T)
(T)
Housing
regulations
Planning
requirements
(P) Supply availability
(O) Green mortgages
(T)
Housing
regulations
(T) Carbon pricing
(P) Overheating
(P) Supply availability
2025
2030
2040
2025
2030
2040
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Climate related risks and opportunities CONTINUED
Scenario Analysis
Overall financial impact
Under all scenarios, there are significant transition risks that are emerging such as the direct and indirect exposure to carbon pricing
and the introduction of the higher requirements of the Future Homes Standard from 2025.
Therefore, to illustrate a directional picture of how the risks translate through our business plan, we have compared the potential
unmitigated variance to profit before tax under each climate scenario against our ‘Stated Policies’ baseline, as presented in the graph below.
Variance in profit before tax between climate scenarios and Stated Policies
Sustainable transition
Disorderly transition
Stated policies
Adaptation
£90m
(£90m)
Short term (to 2025)
Medium term (2025 to 2030)
Long term (2030 to 2040)
All homes built to meet the
Future Homes Standard, as
well as our commitment that
homes are net zero carbon in
use by 2030.
Early implementation of
such policies within the
Sustainable transition
scenario, noting that there
would be some sites for
which land has already been
purchased would not allow
these costs to be absorbed by
the supply chain.
Green mortgages increase affordability and
desirability of energy efficient homes.
Carbon pricing increases to between $65/tCO2e
and $130/tCO2e, reflecting emissions targets,
with more pronounced increases in the disorderly
scenario but falls in the Adaptation scenario.
New land is increasingly conditional on enhanced
sustainability credentials.
Industry-wide costs start to be reflected in the
land bidding process.
Further significant increases in carbon pricing in
the sustainable transition and disorderly transition
scenarios lead to increased costs from subcontractors
and suppliers, with carbon prices reaching up to $225/
tCO2e.
In high temperature outcomes, overheating in homes
becomes an issue in certain regions. Increased
frequency of severe weather leads to disruption of
construction activity resulting in delays. However, the
increase in physical risk is offset by reduced carbon
pricing and regulatory requirements in the adaptation
scenario.
Costs associated with physical risks are likely to be
greater beyond 2040.
Strategic Impact
Based on the modelling and scope
of analysis, under all scenarios and
timeframes the Group’s business model
remains profitable. The modelling
adopts a prudent view of a reduction in
land prices that does not consider that
alternative uses, principally for industrial
activity, would also see increased costs. It
also assumes that no mitigating action is
taken beyond initiatives already built into
our business plan.
The Group is most exposed to the
transitional risks of climate change,
such as increases in carbon pricing or
acceleration of Building Regulations. As
shown in our GHG emissions reporting,
our value chain accounts for 99% of our
emissions. We therefore recognise the
critical importance of monitoring and
reducing GHG emissions across the
value chain by understanding the impact
of individual suppliers and contractors,
their plans to reduce their emissions,
and in time preferring to work with those
companies who align with our net zero
transition pathway. The pathway is set
out on pages 70 to 71, with our further
responses, emerging and established
strategies set out on page 71.
The Group will also update its home
designs and construction techniques
to mitigate against these risks, with
examples of this already underway at
our concept Zed House on pages 14
and our first site with no gas supply or
gas connection at Delamare Park on
pages 29.
In the period reviewed to 2040, the
physical impact of climate change
is expected to be limited due to the
mitigations already being undertaken by
the Group. This includes design changes
to homes to avoid overheating in affected
regions and flood risk assessments
completed on all developments before a
bid is made.
Through our response, our homes will
lead the industry and the Group will
be well placed, particularly in light of
current energy costs, to meet increasing
demand for energy efficient homes.
The results of scenario analysis have
been reviewed by the Executive Directors
and presented to the Sustainability
and Audit Committees, alongside the
proposed strategy for mitigating risks
and capitalising on opportunities. Our
targets and metrics to monitor and
assess progress are set out on page 68.
Reflecting climate risk in the
financial statements
In performing its scenario analysis, the
Group has assessed the likely financial
impact of announced climate-related
policies and legislation, as well as the
physical effects of the change in climate
that is expected to result from such action.
The Group operates under a three-year
forecasting cycle, into which known
material climate-related impacts will
be factored. In preparing the Financial
Statements for the year, the results of this
analysis have been considered as follows.
The expected costs of compliance with Part
L of the Building Regulations, applicable
from 15 June 2022, and design changes
required to mitigate overheating in homes
have been factored into the estimated
costs to complete of developments in line
with the accounting policy described in
note 3 to the Financial Statements on page
145. The costs are reflected in the carrying
values of inventories and the margins
recognised for developments for which
future completions will be affected.
To assess goodwill and intangible
assets with an indefinite useful life for
impairment, the Group determined the
value in use of the housebuilding business
through the present value of its forecast
future cash flows, as described in note
11 to the Financial Statements on page
154. The cash flows forecast for years
three to five reflect the likely outcome of
announced policies, as modelled in the
Group’s climate scenario analysis for FY25
and extrapolated to perpetuity, thereby
reflecting the short to medium-term effect
of climate change.
In preparing its Annual Report and
Accounts, the Group is required to
determine whether there are any material
uncertainties over its ability to continue
to operate as a going concern (see note 1
to the Financial Statements on page 142)
and to assess its prospects and financial
liability over the longer term for disclosure
in its Viability Statement (see page 72). To
meet these requirements, the Group has
sensitised its financial forecasts to the
manifestation of its principal risks to a
severe but plausible level over the three-
year period to 30 June 2025. This assumed
that the Group would experience climate-
FY23 areas for further analysis
The Group will continue to refine
its understanding of the risks and
opportunities arising from climate
change as the UK’s response develops,
scientific understanding improves and
relevant localised data becomes available.
Following consultation with third-party
experts and business leaders, four key
areas of focus have been identified for
further analysis in FY23, which will inform
the Group’s risk management. These are
detailed in the table below.
related transition risk in line with the
Sustainable Transition scenario, including
an acceleration of the introduction of the
Future Homes Standard and the increase
in carbon pricing required to restrict the
global temperature rise to 1.5ºC. It was
determined that, even when climate risk
manifests concurrently with other principal
risks, the Group remains able to meet its
commitments and continue trading over
the review period.
The Group uses the latest flood risk
assessments when reviewing potential
land acquisitions or options for strategic
sites. In the scenario analysis, none of
the Group’s developments were identified
as being at increased risk of flooding
during their expected life, so no additional
impairment was required.
Area
Focus for FY23
Physical
risk in the
longer term
New build
energy-
efficiency
premium
Water
scarcity
Standing
water
flooding
In FY22, the Group focused its risk assessment on the period to 2040,
to align with its current long-term strategic planning. The outcomes
of scenario modelling have shown that physical risk is not likely to
manifest to a significant level by this date (notwithstanding future
analysis of standing water flooding data). The Group will extend its
time horizon to consider scenarios in which physical risk manifests
to a higher level in to inform strategy in the longer term.
Our current assessment of opportunities applies prudent
assumptions based on market trends at the time of modelling.
Recent increases in gas and electricity costs could have a significant
impact on the desirability and affordability of new build homes, as
well as the viability of future heating systems. Future modelling will
assess likely medium and long-term movements in energy costs on
house designs and future revenues. The Group continues to work
with mortgage providers to unlock the potential of affordable energy
efficient new homes.
Whilst projections for changes in precipitation in the UK under the
chosen climate scenarios do not suggest that water scarcity will
represent a high physical risk to the Group, inconsistent planning for
population growth across the country has led to increased difficulties
in obtaining planning permissions in certain regions. Localised
projections for changes to water scarcity will be incorporated into
our scenario modelling by the Group to inform its land acquisition
strategy in the medium to long term.
The Group’s current assessment of physical risk considers potential
increases in both river and coastal flooding at a development level.
At the time of modelling, projections for standing water flooding,
independent of existing water bodies, to the required granularity
were not available. These projections are expected to be available
for FY23, allowing the Group to update its viability assessment. This
will allow the Group to ensure its current flood risk assessment
procedures will remain appropriate in the medium and long term.
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Climate related risks and opportunities CONTINUED
Metrics and targets
Climate related risks and opportunities CONTINUED
Greenhouse gas emissions
Risk/
Opportunity
Carbon pricing
Metric
Target
Scope 1 and 2
(market based)
greenhouse gas
emissions (tCO2e)
Reduce absolute
scope 1 and 2
greenhouse gas
emissions by 29%
by 2025 from 2018
levels and to net
zero by 2040.
FY22
Performance
25,074 tCO2e
ON TRACK
Scope 3 greenhouse
gas emissions
(tCO2e)
Reduce scope 3
emissions intensity
by 24% by 2030 from
2018 levels.
219.27
tCO2e/100m2
ON TRACK
Demand
for and
affordability of
green homes
New
technologies
Percentage of home
completions in year
achieving an A or B
EPC rating
Use of offsite
based products and
systems in homes
constructed
99% of home
completions in year
99%
TARGET MET
Use in 30% of homes
by 2025
27%
ON TRACK
As our assessment and understanding
of climate risk evolves, the Group will
update its metrics and targets in line with
its response. This will include operational
metrics monitoring the implementation
of the emissions reduction initiatives
set out in our scope 1 and 2, and scope
3 transition pathways on pages 70 to
71. Management are also investigating
the implementation of internal carbon
pricing to allow future emissions to inform
decision making. The Group has set out
a roadmap for further ESG reporting
improvements, overseen by the ESG Data
Committee.
To drive the implementation of
our climate-related targets, the
Remuneration Committee included scope
1 and 2 greenhouse gas reduction as
a performance measure for the LTPP
awarded to Executive Directors and senior
managers in October 2021, maximum
vesting for which requires the Group to
achieve a 30% reduction in emissions from
their level in 2018 by 2025. Full details
of the 2021 award to Executive Directors
are presented in the Remuneration
Committee report on pages 119. It is
proposed that scope 1 and 2 greenhouse
gas emissions reduction is also included
as a performance measure for the 2022
award. The Group is currently working on
the inclusion of scope 3 greenhouse gas
reduction as a performance measure.
Greenhouse gas emissions
Our greenhouse gas emissions in FY22 are
shown on page 69.
As discussed on page 20, the Group’s
scope 1 and 2 (market based) intensity has
reduced from 1.78 to 1.53 tCO₂e/100m2.
Our business grew our completions
beyond FY19 pre-pandemic levels, with
completions at the highest level since
the global financial crisis. This increased
activity, coupled with rising build cost
inflation has meant Scope 3 carbon
intensity has increased from 211.95
to 219.27, however this is below FY19
(the comparative year unaffected by the
pandemic). Our calculation uses a spend-
based method that is particularly affected
by high price inflation in some carbon-
intensive sectors of the supply chain. The
increase in supply chain emissions is
partially offset by a decrease in emissions
from sold products due to improved energy
efficiency in our homes.
We are engaging with key suppliers and
subcontractors to obtain quantity-based
emissions data to improve supply chain
emissions reporting.
To monitor progress of the Group’s
response to climate-related risks and
opportunities, management monitor
several indicative performance metrics.
As disclosed on page 66, scenario analysis
demonstrates that the most significant
climate-related risk to the business is
increases in carbon pricing. The Group
monitors its exposure to carbon pricing
through its direct and indirect greenhouse
gas emissions, as its energy usage and
emissions of suppliers act as indicators of
the activity that may be subject to future
increases in regulatory costs.
The Group’s direct greenhouse gas
emissions are a small proportion of its
total emissions, but it is important that, in
its role as the leading national sustainable
housebuilder, the Group leads the industry
through its own emissions reductions,
setting an example for its value chain to
follow. Therefore, both direct (scope 1 and
2) and indirect (scope 3) emissions metrics
are considered to be material to the Group.
Our carbon intensity KPI is presented in
line with industry practice. Emissions
principally occur as a direct consequence
of build activity, hence the Group monitors
them as a ratio to legally completed build
area. To ensure that the Group achieves a
reduction in emissions in line with a 1.5ºC
transition, we have committed to SBTi
approved targets across our value chain,
measuring direct and indirect emissions
against the baseline year of 2018. Details
of how we will achieve these targets are
presented in the transition pathway on
pages 70 to 71. During the year, the Group
implemented regular site-level emissions
reporting to local management.
In addition, the Group monitors the energy
efficiency of its homes and its use of
modern methods of construction to ensure
it can benefit from the opportunities
available for energy-efficient homes and
construction processes.
The bases of reporting for sustainability-
related metrics are presented on our
website and include the metrics related
to the risk of ‘carbon pricing’ in the table
above. Their scope will be expanded to
further climate risk related metrics as our
reporting matures.
Performance against the Group’s
climate-related targets is reported to
the Sustainability Committee, a sub-
committee of the Board. Following the
completion of scenario analysis during
FY22, the Group is currently developing
further metrics and reporting systems to
monitor the other identified risks.
Further industry-wide metrics are included
within our SASB disclosure on our website.
68
Greenhouse gas emissions
cc
cc
2022
Scope 1
Scope 2
Total gross scope 1 & 2 emissions
Scope 1 & 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
23,234*
1,840*
4,802*
25,074
28,036
128,189*
141,945
102,966
127,434
127,496
Carbon intensity (scope 1 & 2 emissions per
100m2 of legally completed build area)
Market Based
Location based
tCO2e/100m2
tCO2e/100m2
1.53*
1.71*
1.78
1.99
1.80
2.02
1.78
1.89
1.90
1.99
Scope 3 Category 1:Purchased goods & services
Scope 3 Category 11: Use of sold products
Other scope 3 emissions
Total gross scope 3 emissions
Total gross scope 3 carbon intensity (scope 3
emissions per 100m2 of legally completed build
area)
Total gross scope 1, 2 & 3 emissions
tCO2e
tCO2e
tCO2e
tCO2e
2,131,408
1,244,317*
220,814
3,596,538
1,983,082
1,352,982
148,189
3,484,253
2,020,341
930,797
177,919
3,129,057
2,305,017
1,311,087
217,907
3,834,011
2,421,559
1,273,346
160,785
3,855,690
tCO2e/100m2
219.27
211.95
256.54
222.96
222.83
Market Based
Location based
tCO2e
tCO2e
3,621,612
3,624,574
3,513,518
3,516,995
3,151,020
3,153,640
3,864,593
3,866,342
3,888,347
3,889,983
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 2021’.
Scope 1 & 2 energy consumption comprises of scope 1 energy consumption of 105,493 MWh* and scope 2 energy consumption of 22,696 MWh*.
Other scope 3 emissions is comprised of category 2: capital goods; category 3: fuel & energy related activities (5,748 tCO2e)*; category 4: upstream transportation &
distribution; category 6: business travel (3,511 tCO2e)*; category 7: employee commuting; and category 12: end of life treatment of sold products.
Deloitte have provided independent third-party limited assurance in accordance with the International Standard for Assurance Engagements 3000 (‘ISAE 3000’) and
Assurance Engagements on Greenhouse Gas Statements (‘ISAE 3410’) issued by the International Auditing and Assurance Standards Board (‘IAASB’) over selected
metrics in the table and footnotes above identified with an *, as well as waste intensity and SHE audit compliance on page 5, Reportable Injury Incidence Rate on page 18
and diversion of construction waste from landfill on page 28. For Deloitte’s full unqualified assurance opinion, which includes details of the selected metrics assured, our
full Carbon Reporting Methodology Statement and a full breakdown of scope 3 GHG emissions, see our website www.barrattdevelopments.co.uk/building-sustainably/
our-publications-and-policies/publications.
Our value chain
The above emissions arise across the Group’s value chain as follows:
Raw materials 17%
Ground preparation 28%
The build 15%
Homes in use 39%
Other 1%
3
e
p
o
c
S
2
&
1
e
p
o
c
S
3
e
p
o
c
S
Raw Materials
This includes all the emissions associated with extracting, processing, transporting and manufacturing the
materials used in our buildings. Achieving net zero will require the wholesale decarbonisation of all aspects of
raw material production – timber, plasterboard, clay, bricks and tiles, concrete and cement are the most carbon
intensive materials used in building our homes.
Ground preparation
The majority of emissions associated with ground preparation arise from the use of fuel for machinery, therefore
we are highly reliant on the development and supplier adoption of alternatives to diesel to operate machinery, such
as biofuels and electrification.
The build
Within this, only a small proportion is associated with our direct activities – 1% of the value chain total. Fossil fuels
are used to power site mobile plant and generators for space heating for homes fitted with gas boilers. We have
a programme to reduce these emissions (see page 20). In addition, as a considerable amount of emissions arises
from subcontractor activities, we are engaging with them to find reduction opportunities.
Homes in use
We have a target for all new housetypes to be zero carbon in use (regulated energy) from 2030. We are already
seeing reductions through fabric efficiency, energy efficient equipment and the use of renewables and alternative
heating technologies.
69
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT
Climate related risks and opportunities CONTINUED
Transition pathway
Reducing the emissions in our direct activities
While only 1% of the Group’s total value chain emissions are scope 1 and 2, we are striving to lead the industry by example through our
target to meet net zero carbon emissions across our direct operations by 2040. The figure below presents how we will achieve this.
Emission reduction potential in our build (scope 1 & 2)
FY25
TARGET
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
FY40
TARGET
100%
Priority energy reduction initiatives
• Switching electricity to renewable
• Switching off plot heating
• Early grid connection
• Efficient use of technologies
• Greater employee engagement
HVO
• Potential to reduce Group emissions by a further
47% when used in telehandlers. Rollout to further
sites in FY23.
Emission reduction initiatives to be identified
•
Including the electrification of customer care vans
• using hybrid generators that draw
energy from an internal storage battery
when load is low, where this is difficult
or the using alternative fuels such as
Hydrotreated Vegetable Oil (HVO) in
generators. We are trialling the use of
HVO at 39 sites.
The use of diesel in plant and generators
contributes the major share of the direct
Barratt footprint. The key actions to reduce
this are:
• ensuring all plant on Barratt sites is
the most fuel efficient we can obtain;
•
reducing the use of diesel generators
by securing grid connections as early
as possible and ensuring these are on
metered renewable supplies;
• driving reductions through applying
best practice maximum temperatures
of plots and monitoring. We will
continue to build plots with gas boilers
until this is phased out through the
implementation of the Future Homes
Standard. Gas is used during the
commissioning of boilers, to keep
the air temperature at an optimum
level for fittings such as flooring and
for plastering to dry and for sales
visits; and
70
Our pathway to reduce emissions across our value chain
The Group also has an ambition to reduce its full value chain emissions to net zero by 2040. Achievement of this will greatly reduce the
Group’s exposure to its climate-related risks and maximise its potential to take advantage of climate-related opportunities. In particular,
reduction of both direct and indirect emissions will reduce our exposure to the carbon pricing increases that would be required to limit
global temperature rises to sustainable levels.
The graph below outlines our transition pathway to achieve this.
Reduction of carbon activities
Reductions
Grid decarbonisation
5%
Future building standards
28%
5.0
4.0
Lower carbon timber frame
4%
Supply chain reductions identified
30%
Alternative fuels for on-site operations
17%
Supply chain reductions under investigation 17%
3.0
e
2
O
C
t
n
o
i
l
l
i
i
i
m
s
n
o
s
s
m
e
s
a
g
e
s
u
o
h
n
e
e
r
G
2.0
1.0
0.0
2018
2022
2025
2030
2040
Short term (to 2025)
Medium term (2025 to 2030)
Long term (2030 to 2040)
• Energy efficiency measures
• Behavioural campaigns
• Renewable tariffs
• Efficient equipment
• Use of hybrid generators
• Trials for diesel alternatives
• Fleet to zero
emissions vehicles
• Low carbon heating
and materials
for homes
• Wider adoption of
alternatives to diesel
• Drive supply chain
reductions
• Wider adoption of low impact energy sources on site e.g.
electrification and green hydrogen for plant
• Uptake of low impact energy by manufacturers e.g.
curing of bricks and blocks powered by renewables or
green hydrogen, or utilising industrial heat pumps
• Further emerging supply chain innovations
Achieving full value chain
net zero to 2040
Our transition pathway to 2040 covers
our full value chain emissions, including
downstream and upstream of our
operations, as well as from our direct
consumption of fossil fuels and electricity.
We estimate that meeting the Future
Homes Standard will contribute a 28%
reduction in emissions as a result of the
stringent energy efficiency requirements.
Additionally, we will reduce embodied
carbon through wider use of timber frames
in the homes we build.
The Group will need to collaborate with its
suppliers and sub-contractors to achieve
its net zero ambitions. We are working with
our partners to improve the visibility of our
downstream emissions.
A key focus for FY23 will be ongoing
engagement with, and understanding of,
specific supply chain partner emissions.
In time we may choose to favour working
with partners whose plans most closely
resemble our commitments. It will be
important, for example, given increased
uptake of alternative fuels, and potentially
green hydrogen, that by 2040 our
groundworker activity is significantly
decarbonised.
Finally, we anticipate emissions reductions
in our sold products through grid
decarbonisation. This in part relies on
wider policy decisions and delivery, such as
the UK Government’s plan to decarbonise
the grid by 2035. We will continue to
monitor progress on grid decarbonisation
and investigate its impact on supply chain
emissions as new data emerges and push
for progress.
Both our understanding of the impact
climate change and our strategy in
response continue to evolve, and as such
we will refine our assessment of climate
related risk and pursue further initiatives
to ensure our resilience and leadership
position within the housebuilding sector.
71
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORTBarratt operations and travel 1%Timber 3%Plasterboard 3%Other materials 4%Transport to site 3%Clay, bricks & tiles 2%Concrete & cement 2%Raw materials 17%Ground preparation 28%Homes in use 39%Other 1%The build 15%Sub-contractor activities 14%Barratt operations and travel 1%Timber 3%Plasterboard 3%Other materials 4%Transport to site 3%Clay, bricks & tiles 2%Concrete & cement 2%Raw materials 17%Ground preparation 28%Homes in use 39%Other 1%The build 15%Sub-contractor activities 14%Barratt operations and travel 1%Timber 3%Plasterboard 3%Other materials 4%Transport to site 3%Clay, bricks & tiles 2%Concrete & cement 2%Raw materials 17%Ground preparation 28%Homes in use 39%Other 1%The build 15%Sub-contractor activities 14%Barratt operations and travel 1%Timber 3%Plasterboard 3%Other materials 4%Transport to site 3%Clay, bricks & tiles 2%Concrete & cement 2%Raw materials 17%Ground preparation 28%Homes in use 39%Other 1%The build 15%Sub-contractor activities 14%
Viability statement
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 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 12 and 13
and its future prospects are primarily
monitored through the risk management
processes detailed on page 52.
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
the anticipated effect of the current
inflationary environment and incorporates
the likely market impact of the end of the
Help to Buy scheme in 2023. The Group
is forecast to remain profitable and in
compliance with its financial covenants
throughout the forecast period.
The Group continues to be subject to its
principal risks, which are detailed on
pages 54 to 57. This Viability Statement
considers the impact that these risks
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 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 current economic environment
presents significant macroeconomic
uncertainties, most notably around rising
inflation and interest rates and their
consequent impacts on UK economic
growth, employment, as well as consumer
confidence and spending. Therefore, the
downside scenario used in the assessment
is more stretching than in previous years.
The assessed risks, for which the impacts
were applied in aggregate, were as follows:
g Principal risk
Impact modelled
Group resilience to risk
impact modelled
Mitigating actions to risk
impact modelled
Economic environment,
including housing demand and
mortgage availability
A decline in demand, leading to
a 10% reduction in private and
affordable average selling prices
and a fall in sales volumes of
15% across the viability review
period.
Geographic and product diversity
allows for flexibility in response
to market conditions whilst the
diverse land bank allows for
selective development of future
sites.
In response to lower volumes, a
reduction in uncommitted land
investment combined with a reduction
in the level of production and therefore
work in progress as well as a reduction
in overhead base.
Availability of raw materials,
sub-contractors and suppliers
A further increase in material
and labour costs of between 5%
and 9% arising from shortfalls
in supply and inflationary
pressures.
Key supplier audit programme,
centralised procurement and
long standing relationships
ensure continuity of supply.
Good cost control through well
monitored build programmes.
Redesign of developments to emphasise
cost savings. Central procurement
review of supply agreements with
significant agreements fixed in advance.
Government regulation and
planning policy;
Legacy properties
A Building Safety Levy of £1,000
per plot for potential additional
safety costs that could be
imposed by the UK Government.
Strong balance sheet and
net cash position along with
good cost control through well
monitored build programmes.
As an industry-wide cost, any such levy
will likely be factored in to future land
bids over the medium term.
A
E
C
F
I
Availability of finance and
working capital
An increase in the Bank of
England base rate, leading to
a rise in the Group’s borrowing
costs of 2.0%.
K
Climate change
Early introduction of the
remaining requirements of
the Future Homes Standard,
resulting in increased build
costs per plot, and increased
carbon pricing costs.
72
Policy requiring minimum
headroom of £150m and
disciplined operating framework
with an appropriate capital
structure, resulting in a strong
balance sheet and net cash
position.
Continuous investment in new
technologies and engagement
with the wider supply chain,
ensuring responsibly sourced
materials.
Whilst the Group’s strong net cash
position allows for resilience against
rising finance costs, further mitigating
actions are available to the Group are
set out overleaf.
For further details regarding climate
change risks, please refer to the TCFD
disclosures on pages 58 to 63. For the
transition pathway to achieve net zero by
2040 and mitigating exposure to carbon
pricing, see page 70.
Under the described scenario, 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 Group has a policy of maintaining a
£150m headroom on its available facilities
and would remain in compliance with
this policy throughout the viability review
period.
Under the scenario, the Group would
undertake mitigating actions in response
to the challenging circumstances
modelled. This would primarily involve a
reduction in investment in land and work
in progress in line with the fall in expected
sales, and would not prevent the Group’s
ability to grow over the long term.
The Directors have also considered a
reverse stress test to determine the
market conditions in which the Group
would cease to be able to operate under
its current facilities within the three-year
review period. The Group’s base forecast
was sensitised to an immediate reduction
in average selling prices from 1 September
2022 by a set percentage up to the point at
which the Group breached its covenants
or headroom policy. No mitigating actions
were modelled. It was determined that a
reduction in average selling price of 22.4%
would result in a breach. The Directors
consider that a sustained 22.4% fall in
average selling price to be extremely
unlikely.
Furthermore, in such challenging
economic circumstances, additional
options would be available to ensure that
the Group would retain the flexibility to
react to further risks or opportunities,
including:
i. Suspension of uncommitted
land spend;
ii. Redesign of developments to
emphasise cost savings;
iii. Suspension of discretionary bonus
payments;
iv. Reduction or suspension of dividend
payments;
v. Disposal of interests in joint ventures
to partners; and
vi. Sell land or unsold stock at
discounted value.
As these actions could affect the long-
term solvency and growth prospects of the
Group, they would only be used to meet
immediate requirements. Nevertheless,
their availability in addition to the actions
modelled demonstrates that the Group has
further flexibility to respond to challenges
should they arise.
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.
Over the longer term, climate change will
present an increasing risk to the Group.
In response to this, and in line with the
recommendations of the Taskforce for
Climate-related Financial Disclosures,
the Board has undertaken a review of the
climate-related risks and opportunities
that may affect the business out to 2040,
including the modelling of the Group’s
resilience under several climate-related
scenarios. The results of this review, as
well as the action being undertaken to
ensure the business is well positioned to
thrive in the new physical, socio-economic
and regulatory environment, are set out on
pages 58 to 71. Under all scenarios, before
mitigating action, the business model
remains profitable.
Looking forward, 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 new medium term target
of 21,500 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 01 to 73 was
approved by the Board and is signed on its
behalf by
David Thomas
Chief Executive
6 September 2022
73
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukSTRATEGIC REPORTSTRATEGIC REPORT Board of Directors and Company Secretary
Key:
We have an experienced and committed Board, which is focused
on promoting the success and long term sustainable value of the Group.
A Audit Committee
D Disclosure Committee
W Workforce Forum
N Nomination Committee
H Safety, Health and Environment Committee
Chair of Committee
R Remuneration Committee
S Sustainability Committee
Co-Chair of Committee
John Allan
Non-Executive Chairman
David Thomas
Chief Executive
Steven Boyes
Chief Operating Officer and
Deputy Chief Executive
Mike Scott
Chief Financial Officer
Nina Bibby
Non-Executive Director
Katie Bickerstaffe
Non-Executive Director
Jock Lennox
Senior Independent
Director
Chris Weston
Non-Executive Director
Sharon White
Non-Executive Director
Tina Bains
Company Secretary
N
R
D
S
W
H S W
D
A N R
A
N R S
A
N R
S
A N
HR
A N R W
D S
Appointed:
Mike joined the Board as
an Executive Director and
Chief Financial Officer in
December 2021.
Skills and
qualifications:
Mike has extensive
experience in the
housebuilding sector
and is a Fellow of the
Institute of Chartered
Accountants in England
and Wales. Mike was
previously Chief Financial
Officer of Countryside
Properties PLC, having
joined Countryside
as Group Financial
Controller in 2014. Prior
to joining Countryside,
Mike held a number of
senior finance roles at J.
Sainsbury Plc, including
latterly as Head of
Investor Relations, and
spent 11 years at PwC.
External
appointments:
Mike holds no external
appointments.
Appointed:
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
Senior Vice President
of Consumer Segment
Marketing at Verizon.
Appointed:
Steven joined the
Board as an Executive
Director in July 2001 and
subsequently became
Chief Operating Officer
in July 2012. He became
Deputy Chief Executive
in February 2016 and
is responsible for the
Group’s housebuilding
operations and the newly
acquired land promoter
business, Gladman
Developments Limited.
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.
Appointed:
David joined the Board as
an Executive Director and
Group Finance Director
in July 2009, and was
appointed Chief Executive
in July 2015. David was
also Chief Financial
Officer on an interim
basis, after Jessica White
stepped down, from July
until December 2021,
when Mike Scott, the new
CFO, joined 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, a
representative on the
Green Jobs Delivery
Group, a member
of the Net Zero
Buildings Council and
a Senior Advisor to the
Construction Leadership
Council. He is also a
Trustee of the Barratt
Developments PLC
Charitable Foundation.
Appointed:
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 senior advisor at PJT
Partners.
74
Appointed:
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
former 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 a Non-Executive
Director on the board of
the Royal Navy.
Appointed:
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 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.
Appointed:
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
digital 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.
Prior to this, she worked
in a variety of general
management roles in
retail and manufacturing
businesses.
External
appointments:
Katie was appointed
as Co-Chief Executive
of Marks and Spencer
Group PLC in May 2022
and is a Non-Executive
Director of the England
and Wales Cricket Board.
Appointed:
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 Chairman 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 Chairman
of the John Lewis
Partnership, Sharon is
Deputy Chair of Sadlers
Wells, a contemporary
dance company.
Appointed:
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.
75
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Executive Committee and Regional Managing Directors
Executive Committee
Regional Managing Directors
Corporate governance report
Introduction and overview
The Executive Committee
consists of:
David Thomas
Chief Executive
Steven Boyes
Chief Operating Officer and
Deputy Chief Executive
Mike Scott
Chief Financial Officer
(from 6 December 2021)
Tina Bains
Company Secretary
Jeremy Hipkiss
Group Customer and Change Director
Nick Worrall
Group HR Director
Biographies for David, Steven, Mike and
Tina can be found on page 74.
The biographies for Jeremy and
Nick are as follows:
Jeremy Hipkiss
Group Customer and
Change 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 from the University of Leeds.
Nick Worrall
Group HR Director
Nick has responsibility for the Group’s
human resources strategy, including talent,
recruitment, remuneration and benefits,
diversity and training and development. He is
also Co-Chair of the Workforce Forum.
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 British Gas, and UK HR
Director at National Grid plc, having begun his
career in a variety of different roles at Barclays
plc. Nick is also a Chartered Fellow of the CIPD
and is a Board member of Real Estate Balance.
76
The Group operates through six geographic housebuilding regions, along with a commercial
division, Wilson Bowden Developments. The Regional Managing Directors and Managing
Director of Wilson Bowden Developments are as follows:
Mike Roberts
Regional Managing
Director – Northern
Doug McLeod
Regional Managing
Director – Scotland
Mike is responsible for the Group’s operations in the
Northern Region, which consists of five 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.
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.
Richard Brooke
Regional Managing
Director – East
David Hesson
Regional Managing
Director – Central
Richard is responsible for the Group’s operations in the
East Region, which consists of six divisions.
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.
David is responsible for the Group’s operations in
the Central Region, which consists of five divisions.
From July 2022, he has taken over responsibility for
Barratt Partnerships from Bernard Rooney and is
also responsible for Group Major Projects.
Career and experience:
David joined the Group in March 2020 as Regional
Director, and was appointed to his current position
in April 2021.
Gary Ennis
Regional Managing
Director – London and
Southern
Gary is currently responsible for the Group’s
operations in the London and Southern Region,
which consists of six divisions.
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 and of London in October 2016.
Russell Glimstead
Regional Managing
Director - West (from
1 July 2022)
Russell has assumed responsibility for the Group’s
West Region, following Bernard Rooney’s retirement
on 30 June 2022. This region consists of four
divisions.
Career and experience:
Russell joined the Group in 2007 following the
acquisition of Wilson Bowden plc, where he worked
as Commercial Director. Russell held a series of
senior appointments in Bristol, South Wales and
Exeter before being appointed Managing Director of
Barratt Bristol in March 2015 and Regional Director
for the West Region in July 2021. He was appointed to
his current role of Regional Managing Director for the
West Region in July 2022.
Nick Richardson
Managing Director
– Wilson Bowden
Developments
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
2022, and as at the date of this report, the
Company has applied all of the principles
and 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 106, the
Company will comply by 1 January 2023.
This report, together with the reports from
the Nomination, Audit, SHE, Sustainability
and Remuneration Committees and the
other statutory disclosures, provides
details of how the Company has applied
the principles of the Code (pages 74 to
127). 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
During the year, the Board:
• agreed routes to growth, including new
Sheffield and Anglia divisions;
• agreed to sign the Building Safety
Pledge on remediation of high rise
buildings;
•
•
•
reviewed capital structure and dividend
policy;
reviewed the actions taken to further
improve the customer journey and our
brand positioning;
reviewed diversity and inclusion
and agreed to update the detailed
action plan;
• approved the acquisition of Gladman
and oversaw its integration into the
Group; and
• addressed the cost of living increase by
bringing forward the annual pay review
and agreeing a lump sum additional;
payment to colleagues.
Board and Committee attendance
Set out below is the number of scheduled Board and Committee meetings attended by
each Director during FY22 while they were a member.
Nomination
Committee
Audit
Committee
SHE
Committee
Sustainability
Committee
Remuneration
Committee
Board
John Allan –
Chairman
David Thomas –
Chief Executive
Steven Boyes –
Chief Operating Officer
and Deputy Chief
Executive
Mike Scott2 –
Chief Financial Officer
Nina Bibby –
Non-Executive Director
Katie Bickerstaffe –
Non-Executive Director
Jock Lennox –
Senior Independent
Non-Executive Director
Chris Weston –
Non-Executive Director
Sharon White –
Non-Executive Director
7/7
7/7
7/7
5/5
7/7
7/7
7/7
7/7
7/7
2/31
–
–
–
2/33
3/3
3/3
2/33
3/3
–
–
–
–
4/4
4/4
4/4
4/4
4/4
–
–
2/2
–
–
–
–
2/2
–
–
3/3
3/3
–
–
3/3
3/3
–
–
4/4
–
–
–
4/4
4/4
4/4
4/4
4/4
1 John Allan did not attend the meeting where his succession was being discussed.
2 Mike Scott was appointed on 6 December 2021.
3 Chris Weston did not attend a meeting as he had a prior commitment at Aggreko, where he was Chief
Executive Officer at the time. Nina Bibby did not attend a meeting for personal reasons. Each of them
provided feedback on the papers to the Chairman prior to the meeting and the Chairman updated each of
them afterwards.
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 regularly. In particular, the Board
is working towards meeting the requirements of the new listing rule regarding gender
and ethnic diversity at the Board, in senior leadership positions and also at the Executive
Committee, to the extent we do not already do so. Further information can be found in the
Nomination Committee report on page 84.
Gender diversity
Independence
Board tenure
33%
67%
11%
56%
33%
33%
56%
33%
11%
Female
Male
Chair
Executive Directors
Independent Non-Executive Directors
0–3 years
6+ years
3–6 years
Board Skills and experience
All Directors are expected to devote the necessary time 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 we 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 74 and 75.
0
Number of Directors
Skill
Housebuilding
Property Industry
Retail
Public Policy
Marketing
Governance
Finance/Accounting
Employment/HR
Sustainability
Digital
4
4
4
4
4
5
6
6
7
9
9
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Corporate governance report CONTINUED
Introduction and overview
Implementation of the Code
Section of the Code
How we have applied the Code
Further information
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.
Composition, succession and evaluation
The Board regularly reviews its composition to ensure
it remains balanced.
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.
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 details the main activities and outcomes of the Board in
FY22 and how governance contributes to strategy.
See pages 79 to 80
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 and employees) are set out in the
Strategic Report.
See pages 2 to 73
This section outlines:
• Board balance, the division of responsibilities and
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.
This section details:
•
•
the main activities of the Nomination Committee and their
outcomes;
the process for Board appointments, succession planning and
promotion of diversity and inclusion; and
• Board and committee evaluation actions and outcomes.
Information on the composition of the Board can be found in
Governance at a glance and the Board of Directors.
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.
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.
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 81 to 82
See page 83
See pages 77
See pages 85
See pages 85 to 87
See pages 88 to 89
See pages 75 to 77
See page 91
See pages 92 to 93
See pages 94 to 95
See pages 95 to 96
See page 127
See pages 54 to 73
This section sets out:
•
•
information on the Group’s remuneration policy;
how it was operated during FY22, including performance-based
remuneration outcomes, and how independent judgement and
discretion was applied; and
See pages 109 to 110
See pages 115 to 120
•
how the remuneration policy will be applied in FY23.
See pages 112 to 115
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:
Key activities and discussions in FY22
Link to strategic priorities and principles
Purpose, strategy, values and culture
Continued to monitor the market and the resulting long term risks and opportunities, discussed
and agreed future routes to growth, as set out on page 16.
Visited two sites in West Region, meeting with Senior Management and site and sales office
employees who provided an overview of the regional, divisional and site operations respectively.
This enabled the Board to gain a better understanding of how culture is being embedded in the
business.
Arising from its annual review of Group policies, the Board strengthened the sustainability policies,
and requested an external review of its Modern Slavery Statement. These policies can be found on
the Barratt website at www.barrattdevelopments.co.uk/investors/corporate-governance.
Business performance and resourcing
Approved multiple investments in land. Further information can be found on pages 36 to 37
Monitored the progress of the Sustainability Committee in embedding sustainability in the Group’s
culture and strategy.
Approved a three-year funding agreement with the Barratt Foundation.
Reviewed the SHE plan of work, enforcement agency interventions, site monitoring, and IIR.
Key areas of future focus were agreed and are set out on pages 97.
Discussed Board succession, approved extension of Jock Lennox’s appointment for a further three-
year period.
Discussed capital structure and dividend policy.
Approved a gradual reduction in dividend cover.
Risk management and internal controls
Reviewed the Company’s appetite for risk, identified emerging risks and reassessed the impact and
likelihood of principal risks and uncertainties affecting the business.
Continued to work with the CMA on its investigation into the sale of leasehold homes. The CMA
closed its case against us in August 2022, as there was no evidence to support the alleged
mis-selling of leasehold properties.
Reviewed and agreed the level of assurance to be provided over the Group’s financial and non
financial information.
Agreed to sign the Building Safety Pledge to address fire-safety issues on buildings 11 metres
and above. Further details are given in the Chairman’s Statement on pages 8 and 9 and the Chief
Executive’s Statement on page 18.
Discussed cybersecurity and agreed to use the National Institute of Standards and Technology
(NIST) cybersecurity framework.
Stakeholder engagement
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 41 to 51.
Key:
Strategic priorities
Strategic principles
Customer first
Great places
Keeping people safe
Being a trusted partner
Safeguarding the environment
Ensuring the financial health of
the business
Leading construction
Building strong community relationships
Investing in our people
78
79
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE
• Customer satisfaction – this is
assessed using customer care survey
responses and recommendation
scores, (KPIs can be found on page 5),
which form part of the annual bonus
performance measures for Executive
Directors, and awards such as the
HBF 5 star rating and NHBC Pride in
the Job awards (details of which can
be found on page 28), 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 Committee and Senior
Management team, with key findings
reported to the Board. The outcome
of our latest employee engagement
survey is detailed on page 33.
• Employee retention – our employees
are our greatest asset. It is important
that we do everything that we can to
retain them, and this is one of the
pillars of our people strategy. The
Board monitors employee leaver
numbers and reasons, 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 regularly complete a variety
of e-learning modules. 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 94).
Corporate governance report CONTINUED
Board leadership and company purpose
Culture in the workplace
The Board sets the culture and tone from
the top. It 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.
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.
Culture in action: We have always believed
leaseholders should not have to pay for
necessary remediation to fix building
safety issues, caused by the design,
construction or refurbishment of their
buildings. Accordingly, the Board agreed
to sign the Building Safety Pledge, and set
up a Building Safety Unit, further details of
which can be found on page 18. Through
these mechanisms, customers will be
supported. The Board has agreed a £12m
three-year funding agreement with the
Barratt Foundation. Further information
on how we look after the interests of
our stakeholders can be found on pages
39 to 51.
Customer focus
Strive to meet the expectations and needs of
our customers, both internal and external.
Culture in action: During FY22, we have
reviewed the customer journey with a
view to implementing improvements
in technology, particularly to enhance
sustainability.
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 and those set by legislation
or regulation.
Culture in action: Customer demand for
houses during FY22 has been high, and
we have continued to focus on increasing
build levels and scaling up the number of
colleagues and sub-contractors on site as
COVID-19 safety measures were eased.
We continued to rely on our strong supplier
relationships to help with the supply of
key materials in light of global material
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.
Culture in action: We have won multiple
awards throughout FY22 for quality and
service, including an HBF 5 star rating
for the 13th consecutive year, and 98
NHBC Pride in the Job awards. These are
detailed on page 28. We are particularly
proud to be leading the industry in seeking
new and innovative ways to further reduce
our carbon footprint and that of our
suppliers and customers, for example
through the Zed House project detailed on
pages 14 and 15.
How the Board measures and
assesses culture
During the year, an advisory review was
carried out by the internal audit team and
presented to the Board to provide it with
insight into the culture of the business. The
review found that the culture described
above remains embedded in the business.
It made a number of observations on
potential areas for improvement, and
on the overall opportunity to improve
consistency of culture by better promoting
it across the business. The Board has
asked management to progress these
areas for improvement.
In addition, 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
using both internal and external KPIs, and
as follows:
• Safety, health and the environment
– there is zero tolerance towards
breaches relating to the health and
safety of our 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, which underpins the quality and
service annual bonus performance
measure, is set out on page 5, and
other environmental and safety targets
are detailed on pages 4 and 5.
80
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
74 to 75. 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 groupthink.
The responsibilities and roles of Board members are clearly defined and set out below.
Board roles and their responsibilities
Chairman
John Allan
Chief Executive
David Thomas
• Leads the Board in the achievement of its
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.
• Develops the Group’s strategy for the
enhancement of long term shareholder
return taking into account the needs of the
Group’s stakeholders.
• Leads the implementation of the Group’s
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.
• Co-chairs the Workforce Forum.
Chief Operating Officer and
Deputy Chief Executive
Steven Boyes
• Responsible for the Group’s operations.
• Day-to-day responsibility for safety, health
and environment issues, promoting the
well-being of employees.
• Responsible for our procurement function
and our land promoter business
• Responsible for ensuring stakeholder
requirements are appropriately addressed.
• Chairs the Operations Committee meetings,
the other members of which include the
Regional Managing Directors.
• Co-chairs the Workforce Forum.
Chief Financial Officer
David Thomas (until 6 December 2021)
Mike Scott (from 6 December 2021)
• 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.
• Supports the Chief Executive with his corporate relations
responsibilities with shareholders and other stakeholders.
• Manages the Group’s relationship with the external auditor.
• Manages the Group’s relationships with its lending banks.
• Chairs the Risk Committee.
Senior Independent Director
Jock Lennox
The following are in addition to his role and responsibilities as an
Independent Non-Executive Director.
• Available to shareholders, when required, to address any material
issues or concerns which the Chairman and/or Chief Executive have
failed to resolve.
• Available to shareholders, when required, to listen to their views to
gain a balanced understanding of their issues and concerns.
• Evaluates the performance of the Chairman, at least annually, with
the Non-Executive Directors, and leads the process for the Chair’s
succession.
• Acts as a sounding board for the Chairman and, if necessary, an
intermediary for the other Directors.
Independent Non-Executive Directors
Nina Bibby, Katie Bickerstaffe, Jock Lennox
Chris Weston and Sharon White
Company Secretary
Tina Bains
• Provide an appropriate level of scrutiny, and constructively challenge
• Supports the Chairman 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,
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.
• Available to all Directors for advice and support.
• 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.
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Corporate governance report CONTINUED
Division of responsibilities
Decisions, matters reserved to the Board and delegated authorities
The Board makes decisions on strategy and on items set out in the matters reserved for the Board. It also delegates 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. The newly formed Sustainability Committee reports to the Board on ESG strategy and associated matters, and is presenting
its first report to shareholders on pages 99 to 104.
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.
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
Board committees
Audit Committee
• Monitors the integrity of the Group’s
Financial Statements and formal
announcements on its financial
performance, including reviewing
financial reporting judgements contained
within them.
•
Advises the Board on whether the
Group’s Annual Report and Accounts
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 90 to 96 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.
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.
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
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 105 to 124 for full report
Promotes diversity of Board Directors and
Senior Management.
Ensures annual effectiveness evaluations
of the Board, its committees and individual
Directors are carried out.
See pages 84 to 89 for full report
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.
Sustainability Committee
•
Reviews and scrutinises sustainability
strategy and its implementation by the
business.
•
Reviews and approves plans by the
business to mitigate risks and leverage
opportunities relating to sustainability and
climate changes.
•
Develops ESG policies.
See pages 97 to 98 for full report
•
•
•
Scrutinises sustainability performance
incentives for consideration by the
Remuneration Committee.
Advises the Board on the appetite and
tolerance with respect to climate risks.
Oversees carbon emission science based
targets and recommends changes where
necessary.
See pages 99 to 104 for full report
82
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 90 to 96).
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 operating division. Material issues
identified during internal audits and
follow-up action plans are reviewed by the
Executive Directors and by the Board. 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 pages 94 and 95.
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 52 to 73).
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.
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. The Board is aware that
Nina Bibby, who reached nine years as
a Non-Executive Director with Barratt in
December 2021, is no longer considered
independent in accordance with the
criteria stipulated in the Code. Nina
has remained on the Board during the
recruitment process for her successor
so as to provide stability and balance
of skills. The Company considers Nina
to be independent as she has no other
connections with the Company and has
continued to constructively challenge
the Executive Directors and hold them
accountable since December as she did
before. Nina will not be standing for re-
election at the forthcoming AGM. None
of the other Non-Executive Directors has
served on the Board for more than nine
years. John Allan was considered to be
independent on appointment to the Board
and on taking the role of Chairman.
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
Chairman, has been an employee of
any Group companies or had a material
business relationship with them. None of
them has 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.
The Board meets the Code requirement
for at least half the Board (excluding the
chair), to be independent (as defined
by the Code) non-executive directors. A
breakdown of the independence of the
Board members is shown on page 77.
The Chairman and each of the Non-
Executive Directors have demonstrated
their commitment to the business 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
Chairman and the Non-Executive Directors
meet regularly without the Executive
Directors being present, usually prior
to or immediately following Committee
meetings, and have held nine of these
meetings during the financial year.
Fair, balanced and understandable
The Board has considered and reflected on
whether the Annual Report and Accounts
are fair, balanced and understandable. As
part of its considerations, the Board has:
•
reflected on the feedback shareholders
provided on our 2021 Annual Report
and Accounts;
• set aside adequate time to review
and discuss significant areas of the
2022 Annual Report and Accounts,
assessing its tone, balance and
language, while 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;
• considered 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 process
undertaken by the Audit Committee
in assisting the Board in their
assessment can be found on page ••;
• expanded the remit of the Audit
Committee to consider the reporting
and assurance of all financial and
non-financial information in the Annual
Report and Accounts; and
• agreed to develop an Audit and
Assurance Policy.
The Board has endorsed the
recommendation of the Audit Committee
that the FY22 Annual Report and Accounts
are fair, balanced and understandable, and
its formal statement on this is contained
within the Statement of Directors’
Responsibilities on page 127.
On behalf of the Board
John Allan
Chairman
6 September 2022
83
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE During the year, the Nomination
Committee also ensured that the Board
considered whether diversity and inclusion
across the wider business was being
progressed satisfactorily. This review
included talent succession and attraction,
and the business’ credentials as a
diverse and inclusive employer. Further
information on the Company’s progress
on diversity and inclusion initiatives can
be found on page 87 and in the Strategic
Report on page 32.
FY23 priorities
Our key priorities for FY23 are the
continued focus on succession planning
and on diversity and inclusion at Board
level and throughout the business.
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
6 September 2022
Nomination Committee report
Board composition, succession and evaluation
Led by Jock Lennox, the Committee has
also commenced the search for a new
Chair of the Board to take over from me
by the 2023 AGM. We will provide details
of the recruitment process followed and
announce the details of the successful
candidate in due course. In accordance
with the Code requirements, Jock chaired
the meetings during the Committee’s
discussion of my succession. I did not
attend any meetings whilst my succession
was being discussed.
Following the announcement in June
2021, Mike Scott joined the Board on
6 December 2021 as Chief Financial
Officer, and information on his induction is
provided on page 86.
The Committee undertook detailed work
on succession planning at Board, Senior
Management and junior levels to ensure we
have a sufficiently diverse pipeline.
Skills and experience of the Board
As part of the recruitment process for
Nina Bibby’s replacement, the Nomination
Committee reviewed the composition, skills,
experience and diversity of the Board and
its Committees. This highlighted the need
to identify candidates with skills in land/
construction, sustainability and financial
experience to support the Chair of the Audit
Committee.
Diversity and inclusion
Diversity and inclusion continues to be
an important part of the Nomination
Committee’s agenda. The Nomination
Committee has reviewed its Board
Diversity policy, which applies to the Board
and its committees, to ensure it remains
fit for purpose. 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, including age, sexual orientation,
disability and educational, professional
and socioeconomic backgrounds, as
well as gender and ethnicity. The Board
is mindful of the FTSE Women Leaders
Review targets and the forthcoming
changes to the FCA’s Listing Rules, and
has considered the composition of the
Board and the Executive Committee in
this context. The succession planning and
Board recruitment already under way take
into consideration the aims of the new
FCA Listing Rules and the views of our
shareholders.
“The Nomination Committee
plays a vital role in ensuring
that our Board and Senior
Management comprise the
right individuals to deliver our
strategy.”
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 2022. The Nomination
Committee is given its authority by the
Board, with responsibilities summarised
on page 82, and acts in accordance
with its Terms of Reference (see page
85). The Nomination Committee plays a
vital role in ensuring that our Board and
Senior Management comprise the right
individuals to deliver our strategy.
Board changes and
succession planning
Nina Bibby completed nine years’ service
on the Board in December 2021. In line
with our policy, Nina will not stand for re-
election at the forthcoming AGM in October
2022. The Committee has commenced the
search for a new Non-Executive Director
to succeed Nina. Details of the recruitment
process undertaken will be included in the
FY23 Nomination Committee report and we
will announce the details of the successful
candidate once the recruitment process
has been completed.
Nomination Committee role and
activity FY22
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
77. 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 74 and 75.
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 its
annual tasks, 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
Reviewed new potential situational and transactional conflicts of interest notified by one of the Non-Executive Directors and
two of the Executive Directors, and authorised them on the basis of specific restrictions.
Identified the need for the Board to further consider how to improve diversity and inclusion throughout the organisation.
Further details are given on page 87.
Composition and
Succession
Considered succession plans for Non-Executive Directors, the Chairman and CEO, taking into account the need for
diversity. Further information can be found on pages 85 and 86.
Considered the recruitment specification, and commenced the search for a new Non-Executive Director and a replacement
Chair of the Board. Further details are provided below and on page 86.
Re-appointed Jock Lennox for a third three-year term, having considered his 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 FY22,
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 86. 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
our work on developing our employees
is set out in the Strategic Report on
page 30. 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 87.
During the year, following identification
of the skills required to ensure a
continued balance of skills on the
Board, Russell Reynolds Associates
were engaged to assist with the search
for a new Non-Executive Director and a
new Chair. Russell Reynolds Associates
are occasionally requested to assist
the Company with searches for senior
management positions. They have no other
connection with the individual Directors
or the Company. Russell Reynolds
Associates is accredited by the Enhanced
Voluntary Code of Conduct for Executive
Firms for its support to FTSE 350 Boards
in increasing gender diversity. It is also a
Founding Member of the CBI’s Change The
Race Ratio initiative, supporting greater
racial and ethnic diversity in leadership,
and a Co-Founder of The 30% Club, an
advocate for improved gender balance
on boards. Specific guidance has been
given to Russell Reynolds Associates
that consideration be given to diversity on
the Board and the FCA’s revisions to the
Listing Rules relating to diversity targets.
The key focus was to find candidates who
had the relevant skills and experience
required whilst enhancing the diversity of
Board members.
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Nomination Committee report CONTINUED
Board composition, succession and evaluation
Board appointment process
Stage 1
Stage 2
The Nomination Committee determines the gaps in experience and
considers the existing balance of gender, ethnicity and social backgrounds
on the Board to help inform a candidate profile.
The Committee reviews and approves an outline brief and role specification,
and appoints an external executive search consultancy, to identify suitable
candidates from a diverse pool of individuals. The Committee delegated
authority to John Allan (for the Non-Executive Director) and Jock Lennox (for
the Chair) to select candidates for a shortlist.
Stage 3
Stage 4
The selected candidates meet with the relevant Committee nominees,
with the preferred candidates going on to meet the other members of the
Committee and the Executive Directors, following which the preferred
candidates are selected.
The Committee agrees who should be offered the position based on the
range of skills, experience and knowledge that complements those of
the existing Board members. The selected candidate’s appointment is
recommended to the Board, on the same terms as the incumbent Non-
Executive Directors.
Stage 5
The Board considers and, if agreed, approves the appointment of the
recommended candidate.
Mike Scott
Chief Financial
Officer
Q A&
Mike joined the Company
in December 2021 from
Countryside Properties,
where he was previously
Chief Financial Officer.
We asked Mike about
his experience of joining
Barratt.
Q What were your first
impressions of the business
when you were approached?
A My first impressions were very
positive. Barratt has a strong reputation
in the industry for the quality of homes it
builds and places it creates. Its record in
winning so many Pride in the Job awards
shows the commitment of site teams
to delivering the highest standards of
construction, safety on site and customer
satisfaction. Barratt is also a clear thought
leader on sustainability in housebuilding
and is helping to drive the industry
forward, so I already had a strong sense of
the business when I was approached.
Q What made you decide to
A There were so many reasons! The
join the business
business is in great financial shape, with a
strong balance sheet and clear, deliverable
growth plans. From a people perspective,
as I anonymously visited sites whilst going
through the interview process, everyone
I met was very welcoming and seemed
really engaged. And finally, I felt like I was
joining a strong leadership team with
Induction
To ensure that new Directors gain a good
understanding of the business and how
it operates, an induction programme is
prepared. During the year, Mike Scott,
received a comprehensive induction pack,
which included meetings with each of:
•
•
the other Board members;
the Company Secretary;
• members of the Executive Committee;
• his direct reports;
•
the Regional Managing Directors and
teams (at the Regional offices);
• heads of key Group functions;
• key external corporate advisers; and
•
the external auditor.
It also included site visits, and details
of other opportunities available as part
of the induction process. A feedback
meeting took place between Mike and the
Chairman on completion of the induction
programme. The process was seen to be
comprehensive and well structured.
a clear vision to lead the industry and
continue to deliver excellent product for
our customers.
Q What skills and experience do
A The various roles I’ve had since I left
you bring to the role?
practice have each taught me something
different that I can bring to the role at
Barratt, including my understanding of
the housebuilding sector. I’ll be using my
experience to ensure our finance function
continues to bring actionable insight to the
business whilst maintaining our strong
level of financial control. I also have a
strong belief in developing our people, so
that they can better serve our customers,
and become leaders of the future, which is
certainly shared at Barratt.
Q How did you find the induction
A It was well structured and allowed
process?
me to get around the business to meet our
senior leaders and also spend time on sites
around the country. Having the acquisition
of Gladman and our half-year results in my
first few weeks also helped me to quickly
integrate myself into the team.
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 77. Nina
Bibby has now completed nine years of
service and will not stand for re-election
at the forthcoming AGM. The Board
considers that Nina has continued to be
independent throughout the year, holding
management to account and constructively
challenging the Executive Directors. Each of
the Directors has been subject to a formal
performance evaluation process during the
year, as set out on page 89. The Nomination
Committee and the Board are satisfied that
each Director continues to be effective in,
and demonstrates commitment to, their
respective roles. All Directors, besides Nina,
will be standing for election or re-election
at the forthcoming AGM. Biographical
details of each of the Directors are set out
on pages 74 and 75 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 2022 AGM.
Diversity and Inclusion
Board Diversity
Board composition statistics are provided
on page 77.
During the year, the Nomination
Committee, and subsequently the Board,
reviewed the Board’s policy on diversity
and inclusion. The objective of the policy
is to ensure that diversity is reflected
within the composition of the Board and
throughout the business in its broadest
sense, including gender, ethnicity,
age, sexuality, social class, education
experience and ways of thinking. The policy
aims for continuous improvement at Board
and Senior Management level on all these
elements of diversity and 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 any senior
appointment and in succession planning
more broadly, 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 Board Diversity
Policy can be found at:
www.barrattdevelopments.co.uk/
sustainability/our-policies.
Diversity and inclusion throughout
the business
The gender balance of the Executive
Committee and their direct reports is
shown on page 77.
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
Hold leaders
accountable for
diversity and
inclusion goals.
Improve the
representation of all
groups across the
business by ensuring
our talent programmes
look to create diversity
in attraction, retention
and promotion.
Implementation
Progress
Data tracking and distribution.
Catalyst programme – our female
leadership development programme.
Rising Stars programme – open
to all employees and aimed at
supporting development for those
with potential and a desire to
progress.
The Operations Director programme,
preparing our future leaders.
Participation in the first Race Equity
programme and the 30% Club.
Diversity data down to divisional level is produced and distributed monthly to enable progress to
be tracked.
Education and development continues to take place at Board level. We continue to cascade and
promote the diversity and inclusion message throughout the organisation.
Analysis of employee engagement results between different groupings helps to identify issues
specific to them.
The self-nomination process for Catalyst and Rising Stars programmes is continuing.
The fourth Catalyst programme launch is being planned for September 2022 for over 60
delegates.
Female representation on the Rising Stars programme is 50%, EMC representation is 9%, with
delegates selected from all areas and levels of the business, including apprentices.
The Operations Director programme includes a full day workshop on inclusive leadership.
Female representation on the 2022 programme has tripled since 2021 and is more than double
the proportion of our current female leadership.
We are participating in the inaugural Race Equity programme run by The 30% Club which
commenced in May 2022. The programme pairs high potential ethnically diverse talent with CEO
mentors across participating organisations, and offers an ongoing series of listening sessions on
key topics for Diversity and Inclusion professionals in the participating organisations.
Development of an Ethnic Minority
Communities (EMC) support
programme.
The EMC programme is in development, providing our people with the chance to network with
each other, receive external support in navigating their careers and provide feedback on internal
barriers so they can be addressed.
Hear the employee
voice directly to ensure
we are providing an
inclusive environment.
Employee network groups.
Reciprocal mentoring.
Workforce Forum
Create strong
relationships with our
diverse customer base.
Our gender equality, LGBT+ and parent ‘Connect’ groups provide support for employees, run
networking and education events and work with the HR team to feed back our colleagues’
experiences.
This year we have extended the ‘Connect’ groups, establishing an EMC network and a disability
network.
Every Catalyst programme participant has a leadership mentor with whom they
share experiences.
Please refer to page 42 for more information on the Workforce Forum.
We have continued to review our marketing and recruitment material to ensure it is fully
reflective of our diverse customer base, including imagery in our show houses.
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Nomination Committee report CONTINUED
Board composition, succession and evaluation
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. Every three years, the Board undertakes an externally facilitated evaluation. The last one was carried out in 2019, so
this year, Christopher Saul Associates were appointed to undertake the evaluation. Christopher Saul Associates has no other connection
with the individual Directors or the Company. The next external evaluation will be carried out for FY25.
Progress on FY21 evaluation
Progress made against the outcomes of the internal Board evaluation undertaken in FY21 is set out below:
The Board
FY21
outcomes
Progress
made in FY22
Culture
Sustainability
Risk
Obtain greater oversight of the business’
culture.
Build on last year’s progress and further
develop strategy and understanding in
this area.
Further enhance risk management.
The internal audit team undertook an
advisory review of culture. The outcomes
were shared with the Board who have
asked management to implement the
areas of improvement identified.
Board members were invited to attend
guest speaker sections of Sustainability
Committee meetings in order to extend
their understanding of Sustainability
and associated matters. The Board also
considered insights received from the
Institute for Human Rights and Business to
help inform a Human Rights Policy, along
with the Building Sustainably framework
and business strategy and carbon
reduction strategy.
A review of the risk management
process was undertaken, led by the Chief
Financial Officer. With assistance from
PwC, a number of risk workshops were
run across the Group. This resulted
in a change to the composition of the
Risk Committee and refinement of the
principal risk definitions.
Key areas of improvement for the Committees
Nomination Committee
Audit Committee
Remuneration Committee
FY21
outcomes
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.
Progress made
in FY22
The Committee had a private meeting to
discuss succession planning for the Chief
Executive, the Chief Operating Officer
and the RMDs in January 2022, followed
by a further meeting in August 2022.
More detailed succession planning was
discussed and steps agreed on how to
further strengthen succession at senior
management level.
Additional training has been undertaken by
Audit Committee members around upcoming
governance and reporting changes,
including TCFD.
Risk assurance now mapped against both
principal risks and non-financial published
information, as a basis for the emerging
Audit and Assurance Policy. Fraud risk
assessment also completed.
Continue to enhance Committee
members’ knowledge of matters such
as developments in remuneration
practice, changing reward models, and
investor sentiment.
Training was provided for Committee
members with PwC covering
developments in remuneration practice,
investor sentiment, executive retention
and ESG targets.
FY22 Board effectiveness evaluation outcomes
Board and Committee external evaluation process for FY22
Christopher Saul Associates attended a hybrid Board meeting.
One-to-one interviews took place between Christopher Saul associates and each Board and Committee member, and also the
regular attendees of Board and the relevant Committee meetings.
Christopher Saul Associates attended a physical meeting of each of the Board and Remuneration, Nomination and Audit
Committees.
A report on the outcomes was prepared by Christopher Saul Associates and presented to the Chairman, the Chair of each
Committee as appropriate, and the Company Secretary.
The content of the report was presented at the next Board and appropriate Committee meeting for discussion, and actions were
discussed and agreed.
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
88
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 Chairman, 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
Strategy
Diversity and inclusion
Board papers
FY22
outcomes
To hold a strategy day for directors.
To further embed Diversity and Inclusion
throughout the organisation.
To further shorten and standardise papers
for Board and Committee meetings.
Actions for
FY23
To agree the format of a strategy day,
location, agenda and timing and to hold
annually thereafter.
To help the new Head of Diversity and
Inclusion with developing an action plan
to achieve this and its implementation
across the business.
Company Secretary, with support
from the Chief Executive and the
Chairman, to work with paper authors
on how to streamline content to make
papers shorter whilst maintaining the
key messages.
The Committees
Nomination Committee
Audit Committee
Remuneration Committee
FY22
outcomes
Succession for all directors, but in
particular the Executive Directors, and
members of Senior Management remains
a key priority.
Actions for
FY23
Review the agenda for the Committee
and seek to allocate more time to
succession planning.
Consider increasing the number of Audit
Committee meetings held during the year.
Consider increasing the number of private
meetings with the Chief Financial Officer
(who is relatively new to the business
and whose agenda is evolving), and with
the Head of Internal Audit due to the
increased level work being undertaken
around internal controls and assurance in
readiness for the implementation of the
audit reform recommendations.
Keep under review the time allocated
to agenda items to ensure that the
Committee has adequate time to consider
and discuss each appropriately.
Increase the number of private meetings
with each of the Chief Financial Officer
and the Head of Internal Audit to two per
financial year.
Consider if there are any ways in which
the Committee could change their overall
approach to remuneration to better
support the long term sustainability of
the business.
Allocate an appropriate length of time at
a meeting for the Committee to consider
its approach to remuneration and whether
any changes are required. This discussion
to be facilitated by PwC, our remuneration
consultants.
Evaluation of individual Directors
The evaluation of the effectiveness of the Chairman was conducted by the Senior Independent Director with assistance from the Company
Secretary. There continues to be positive support for the Chairman. 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 Chairman 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 Director 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
6 September 2022
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Audit, risk and internal control
TCFD reporting and compliance
We have continued to monitor the Group’s
progress in reaching full compliance
with TCFD requirements, providing
guidance where necessary. During
the year, management, guided by the
Sustainability Committee, have completed
a comprehensive and robust financial
analysis of the impact of climate change
on the business model. This was in
relation to both the physical effects of a
warming world and the transition to a low
carbon society. This scenario analysis was
completed over three time horizons and
four climate pathways. The Committee has
reviewed and challenged the outputs, both
within the formal Committee meetings and
in separate sessions with management.
The outputs have helped the Sustainability
Committee and management review,
refine and adapt its climate strategies
as necessary. The Committee has also
reviewed the TCFD disclosures, which
forms part of the wider risk management
disclosures and is included on pages 58 to
71. This is the first time we have reported
under the TCFD recommendations. As
climate science develops and we refine our
risk assessment methodology, our analysis
will evolve and inform the Group’s strategy
accordingly. Deloitte LLP have been
appointed to provide limited assurance
over our year end TCFD disclosures and
have confirmed our compliance. Deloitte
LLP have also completed a gap analysis of
our climate scenario modelling.
Legacy Properties
During the year, the Group signed the
Building Safety Pledge, details of which
can be found on page 18. This significantly
broadened the scope of the Group’s
liabilities to cover all buildings of 11 metres
and above which had been developed by
the Group over the last 30 years. The Group
has therefore expanded its provision to
reflect this commitment. Calculating the
cost was complex, requiring judgements
with respect to the individual remediation
requirements of each building. The
Committee has monitored the estimation
and accounting of the incremental costs
resulting from this, and at the year-end has
reviewed the recognition and presentation
in the Financial Statements, including the
key assumptions and sensitivity analysis.
In addition, the Committee was updated on
the impact of RPDT on the business and the
Financial Statements.
Risk management and assurance
mapping
During the year, the Committee has
supported the Chief Financial Officer,
Mike Scott, in the review and evolution of
the Group’s risk management strategy,
including a reassessment of the Group’s
principal risks, details of which can be
found on pages 52 to 57. I was pleased
to attend the Group Finance Leadership
Conference this year to update the
divisional finance directors on relevant
internal control and risk management
matters.
We have monitored the roll out of the
Group’s Risk & Internal Control framework
(BRICk), as well as further projects to
improve the internal control environment
and business continuity planning.
Audit and Assurance Policy
creation
The Committee broadly supports the
Government’s response to the BEIS
consultation on Restoring Trust in Audit
and Corporate Governance, and has begun
the process of developing an Audit and
Assurance Policy. In anticipation of this,
we have reviewed the progress made by
the internal audit team’s risk assurance
mapping, setting out the assurance
provided by each of the three lines of
defence on the operation of our internal
controls to mitigate our principal risks,
and the output from the completion
of a detailed fraud risk assessment.
Management has strengthened the
Viability Statement and begun to formally
document key internal controls over
financial reporting. The Committee will
continue to monitor these developments.
Key areas of focus for FY23
The potential impact of the provisions of
the draft Audit Reform Bill on the Company
and its external auditor will remain a
priority for the Committee throughout
FY23. We will look to comment on detailed
proposals as they are issued, especially
where we disagree, such as the idea for a
managed shared audit.
We will continue to monitor the ongoing
work to document key internal controls
over financial reporting and plan to
formally adopt and publish our Audit
and Assurance Policy during FY23. We
will also continue to review the rigour of
management’s TCFD analysis and all other
non-financial disclosures, including the
internal and external assurance thereof.
Oversight of the utilisation of the
provisions for legacy properties will be
a feature. In particular, gaining comfort
that assumptions are applied consistently
as detailed costs emerge and that any
unutilised provisions remain appropriate.
Jock Lennox
Chair of the Audit Committee
6 September 2022
“The Committee has reviewed and
challenged the outputs
of the comprehensive and robust
financial analysis of the impact
of climate change on
the business model, both within
the formal Committee meetings
and in separate sessions
with management.”
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 2022. This sets out our work 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.
I would like to take this opportunity to
thank our Group Financial Controller,
Jonathan Rumble, who supported me and
David Thomas during the period in which
David held the roles of both Chief Executive
and Chief Financial Officer. I would also
like to welcome Mike Scott following his
appointment as Chief Financial Officer.
Areas of focus FY22
In last year’s report, I set out our priorities
for this year and I am pleased to update
these as follows:
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Role and activity FY22
Membership and attendance
at meetings
Details of the members and attendance
at each of the Committee’s scheduled
meetings is shown on page 77, and the
biographies and qualifications of the
members are shown on pages 74 and 75. 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
Chairman 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
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 89, 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, Chairman of the Board, Chief
Executive, Chief Operating Officer, Chief
Financial Officer and representatives from
our external auditor attended each of the
Committee meetings. Other executives
attended when appropriate for specific
agenda items.
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 and the
Chairman of the Board met the Chief
Financial Officer, the Head of Internal Audit
and the external auditor separately and
independently of management. In addition,
the Chair of the Committee separately
meets with the external auditor and key
management and 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
and non-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
Considered the accounting and presentation of the acquisition of Gladman Developments Limited, and concluded that the
transaction was appropriately disclosed.
Reviewed the level of assurance over the Group’s non-financial published information, including TCFD and climate related
information.
Considered the costs associated with legacy properties and their presentation in the financial statements, concluding that they
are appropriately disclosed.
Reviewed new guidance and regulatory requirements in respect of corporate reporting, climate change and ESG reporting, and
in particular the Group’s TCFD disclosures.
Considered proposals, tenders and the interview process leading to the ultimate appointment of Deloitte LLP in respect of
external assurance of certain ESG information and the FY22 TCFD disclosures.
As part of its review of the Financial Statements, considered the use of APMs and whether on pages 195 to 197 they are
appropriately explained.
Considered the Group’s material non-financial information and external assurance of it.
Internal control
and risk
management
systems
Considered proposals for a new Risk Management Framework to strengthen the Risk Committee and the concurrent roll out
of BRICk.
Considered tactical control enhancement projects associated with strengthening the Balance Sheet and Valuation review
process.
Continued to review the implementation of the new site valuation module of the COINS system, which has been deployed across all
divisions and on the majority of sites.
Reviewed the efficacy of the response to an attempted ransomware attack and the lessons arising from it.
Internal audit
Appointed the IIA to undertake an external quality assessment of the internal audit function. Further details of the outcomes are
provided on page 95.
Reviewed and approved updates to the Internal Audit Charter to take into account not only the internal audit effectiveness review,
but also the requirements of the IIA Code of Practice and International Standards.
Reviewed and approved the output from an exercise to map the assurance provided by each of the three lines of defence over the
effective management of the Group’s principal risks.
Discussed and agreed the steps required to produce an Audit and Assurance Policy setting out the mechanisms in place to provide
assurance to the Board, and reviewed the scope of this policy.
Reviewed the output of a groupwide fraud risk assessment and agreed the format of the annual fraud risk report which will be
used to identify areas for further review.
External audit
Reviewed the outcome of the Group’s external audit quality indicator assessment.
Led the process to appoint new Deloitte lead audit partner.
Governance
Updated the Committee’s Terms of Reference to expand its remit to include responsibility for the review and consideration of
non-financial information and reporting, and the assurance around this.
Assisted with the induction of Mike Scott as the new Chief Financial Officer, helping ensure a smooth transition.
Reviewed the Future of Finance strategy presented by the Chief Financial Officer, including the people strategy, plans for the
development of data insight whilst improving the control environment, underpinned by further use of technology.
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Audit, risk and internal control
FY22 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 below and on
the following 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 reflected.
The Committee also reviewed
management’s viability assessment of the
Group and agreed that it was appropriate.
Further details on the Group’s going
concern and viability assessments can be
found in note 1 on pages 142 and 143, and
the Group’s Going Concern and Viability
statements can be found on pages 71
and 72.
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 our external
auditor.
Significant issues considered by the Committee relating to the Financial Statements for FY22 comprise:
External auditor
challenge
Management
response
The external auditor
attended valuation
meetings, performed
Group-level analytical
reviews, and undertook
other audit procedures
to challenge the
margin recognised for
the year.
The external auditor
challenged the basis
for the scope of
buildings, estimated
costs, assumptions
relating to cost
inflation, estimated
timing of spend and
discount rate.
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, in particular, sales prices and build
cost, given the higher inflationary environment;
• enhancements made to the valuation internal
control process;
•
the results of the Group’s internal audit reviews
across the business.
The Committee reviewed, challenged and agreed
the basis on which the costs associated with legacy
properties have been included within the Financial
Statements. This included Management’s assessment
of the scope of buildings covered by the Building Safety
Pledge and the assumptions applied to determine
remediation costs.
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.
The Committee will review the provision in FY23, to
assess its utilisation and continued adequacy.
Audit Committee
comments
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 the margin
recognised.
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.
Issue
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 3 on page 145.
Costs associated with
legacy properties
Estimations of cost
provisions relating to
remedial work associated
with the Building Safety
Pledge, EWS and concrete
frames on legacy buildings
have been provided for.
Government guidance and
industry regulation continue
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 21 on paged
168 to 170.
92
Issue
External auditor
challenge
Management
response
Completed developments
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.
The external auditor
challenged costs
charged to the
provision during
the year and the
extent to which they
represented under-
provision in previous
years or changes in
estimates.
The external
auditor challenged
the fair value of
assets acquired,
the allocation and
valuation of intangible
assets and the
appropriateness
of the acquisition
disclosures.
Acquisition of Gladman
Developments Limited
The Group acquired the
land promoter, Gladman
Developments Limited,
during the year, for £250m.
As required under IFRS 3,
management reviewed and
aligned accounting policies,
completed a purchase price
allocation and goodwill
assessment, and ensured
appropriate disclosure of
the transaction within the
Financial Statements.
Liabilities for completed developments 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 liabilities, 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 liabilities. The Committee also
considered the work performed by the external
auditor. Following consideration of the uncertain
nature and timing of these costs, management re-
presented the accrual as a provision.
Prior to the acquisition, the Committee was kept
informed as to how the target was being valued,
and provided appropriate challenge over the key
sensitivities affecting value, such as future planning
prospects.
Post acquisition, the Committee reviewed the
accounting policy alignment, purchase price
allocation and goodwill assessment, including the
identified intangible assets and the key assumptions
that fed in to the valuation of the intangible
assets. The Committee reviewed and challenged
management on the key assumptions used in the
assessment.
In addition, the Committee reviewed the
appropriateness of the disclosure of the acquisition
within the Financial Statements.
Audit Committee
comments
The Committee
agreed with
management’s
recommendation
that the liabilities
held in respect
of completed
developments be
re-classified as
provisions.
Based on the above,
the Committee was
comfortable with the
process adopted by
management around
the valuation and
disclosure of the
transaction.
Fair, balanced and understandable
considerations and conclusions
The Committee received a draft of the
Annual Report and Accounts prior to
its August 2022 meeting, together with
supporting material from management
and the external auditor. At the meeting,
it considered and assessed the process
undertaken in drafting the 2022 Annual
Report and Accounts to determine whether
it was fair, balanced and understandable.
Considerations
• Feedback provided by shareholders on
the FY21 Annual Report and Accounts.
• Assurances provided in respect
of the financial and non-financial
management information.
• The balance between statutory and
adjusted performance measures.
• 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 2022:
• clearly, comprehensively and
accurately reflects the Group and
Company’s performance in the year
under review;
• 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 Annual Report and
Accounts; and
includes KPIs, which are consistent
with the business plan and
remuneration strategy.
Accordingly, the Committee recommended
to the Board that the FY22 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 172.
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Audit Committee report CONTINUED
Audit, risk and internal control
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 52 to 57;
• 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 a risk-
assessed 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 mitigating controls are
sufficiently robust; and
• consideration and approval of the
Group’s tax position and strategy.
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
94
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.
Development of an Audit and
Assurance Policy
The Committee supports, as does the
Board, the publication of an Audit and
Assurance Policy in order to bring greater
transparency to the assurance it receives
in order to gain comfort over the Group’s
management of risks, and over its
accurate reporting of both financial and
non-financial information.
During the year, the Committee reviewed
a number of items which will support the
adoption and publication of an Audit and
Assurance Policy. These included:
• a risk assurance map setting out
assurance already in place, using
the three lines of defence model,
to identify any gaps or areas where
improvement was required. The
Committee reviewed further updates
after improved monitoring activities
were implemented by the first and
second lines, and the internal audit
universe was updated to enhance the
level of third line assurance provided
by internal audit;
• assurance mapping over the Group’s
published financial and non-financial
information. This resulted in the
appointment of Deloitte LLP to provide
additional independent assurance
over certain aspects of the Group’s
climate related disclosures, including
TCFD and certain other non-financial
information. It is likely that this type of
formal assurance over non financial
information will be extended in future
years; and
•
the completion of a detailed fraud
risk assessment exercise to identify,
consider, and assess fraud risks
in place across the Group and the
associated controls and assurance in
place to mitigate and manage these.
The Committee will continue to monitor
the development and formalisation of the
assurance in place across the Group’s
risks, key internal controls over financial
reporting and financial and non-financial
published information, with the view to
publishing its Audit and Assurance policy
during FY23.
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 abuse 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 internal audit
matters considered by the Committee are
set out in the table of work carried out on
page 91.
The Head of Internal Audit continued
to make changes as part of on-going
improvement plans as follows:
• Creation of an internal audit universe
and rolling audit plan to ensure
coverage of key audit topics and areas
as set out in the risk assurance map
for the third line of defence;
• Creation and implementation of a
divisional risk dashboard to monitor
and track emerging divisional risks and
inform the frequency and prioritisation
of divisional audits;
• Review and formalisation of the
approach and plan for providing
assurance over business change via
Independent Project/Programme
Assurance and the approval of
additional headcount to provide this
assurance; and
• Review and improvement of internal
audit outputs, including the audit
report format, scoring and tracking
of agreed management actions
to continue to ensure value from
internal audit.
During the year, the IIA was asked to
undertake an EQA. The IIA concluded that
the internal audit function conformed to 54
of its 64 fundamental principles, with six
partial conformances and four which were
not applicable. There were no areas where
the function did not conform. The IIA also
made suggestions for further improvement
and enhancement of internal audit activity.
An action plan has been established and is
being implemented to address the areas
of future improvements. This has been
shared with the Committee.
Following the EQA, the Committee
considered the reporting line of the
Head of Internal Audit, following the
recommendation by the IIA that this
should be directly into the Chief Executive.
The Committee confirmed that it was
comfortable with the existing reporting
line to the Chief Financial Officer given
that any issues are reported to the Chief
Executive in a timely manner. They were
also comfortable with the independent
relationship between the Head of Internal
Audit, the Chair of the Committee and
the wider Committee. The Committee
confirmed that they would keep this
reporting line under review.
Following the completion of the EQA, the
Committee considered and confirmed
that, in its opinion, the internal audit team
had operated effectively and provided an
appropriate level of independent scrutiny
of the operations of the Group.
External audit
Audit performance and
effectiveness
The Committee annually reviews the
external audit plan and process. This
year it approved the continued key risk
elements of the audit continuing to be
brought forward to reduce pressure on
the busy financial reporting period after
year-end.
Deloitte LLP were appointed, after a
thorough tender and interview process,
to provide assurance over our TCFD and
certain non-financial disclosures. The
appointment and fees associated with this
work are in accordance with our Auditor
Independence and Non Audit Fees Policy.
In forming its conclusion on performance
and effectiveness, the Committee reviewed
amongst other matters:
•
feedback from all stakeholders on the
external audit;
• our external auditor’s fulfilment of the
agreed audit plan for FY22;
•
•
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 Chair of the Committee met with
the leaders of the external audit team to
assess their experience and understanding
of Barratt, which were considered
appropriate. He also met with the partner
responsible for engagement quality control
reviews, to better understand how that role
enhances the delivery of audit quality.
The assessment of the effectiveness
and performance of the external
auditor also included reviewing and
approving the Group’s approach to
its external audit quality indicator
assessment. The assessment included a
questionnaire covering the five key audit
areas highlighted by the FRC, which
was completed by a broad spectrum
of stakeholders from the Board to
Divisional Finance Directors. Generally
the respondents scores were good, with
project management identified as the area
of focus for FY23. The Deloitte LLP team
worked to rectify this over the course of
the audit and offered in-person visits to
divisions to close out queries.
During the audit, the external auditor
challenged management’s judgements
and assertions on the following matters in
particular:
• margin recognition;
•
•
valuation of provisions related to legacy
developments;
liabilities in respect of completed
developments; and
• accounting and reporting of the
acquisition of Gladman Developments
Limited.
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 92 and 93.
The FY21 audit was subject to an Audit
Quality Review, the progress of which
was regularly reported to the Chair of the
Committee, and is yet to be completed.
The Committee concluded that the
external 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 the audit. Deloitte
LLP’s performance as external auditor
to the Group during FY22 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 FY22,
non-audit fees (including audit-related
assurance services) for the Company
and its subsidiaries and JV’s were £210k,
representing 22% of the total audit fee.
Non-audit fees based on the average of the
previous three years’ audit fees were 28%.
Further details of the audit and non-audit
fees incurred by the Group can be found
in Note 3 on page 146. The non-audit
fees were for work undertaken by our
external auditor for the review of the half
year report and also assurance provided
over TCFD and certain non-financial
disclosures included in our FY22 results.
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 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.
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Audit, risk and internal control
Safety, Health and Environment Committee report
The Committee requires written
confirmation annually from the external
auditor that it remains independent. For
FY22, our 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.
Accordingly, the Committee was satisfied
that both the work performed by our
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 our external
auditor’s independence.
External audit tender
Deloitte LLP was 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, in accordance with the FRC ethical
standards, has completed her maximum
tenure. Jacqueline Holden will replace
Claire Faulkner as lead audit partner with
effect from the FY23 audit and a period
of transition has taken place during the
second half of FY22. Jacqueline was
selected after an interview process involving
the Chair of the Committee, supported by
the then acting Chief Financial Officer. The
external audit team’s second audit partner
was rotated for the FY20 audit and will
therefore remain in place..
auditor, the Committee currently believes
it is in the best interests of shareholders
for Deloitte LLP to remain in role and
for a competitive tender process to be
completed in 2027. The Committee will,
however, continue to monitor Deloitte
LLP’s performance as external auditor and
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 to
re-appoint Deloitte LLP 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:
Under current regulations, the Company
is not due to re-tender its audit until
2027. Given the continuing effectiveness
of Deloitte LLP in its role as external
Jock Lennox
Chair of the Audit Committee
6 September 2022
As COVID-19 restrictions were lifted, we
undertook a review of our procedures on
management of non-COVID-19 related
health and safety matters. In particular,
the SHE team worked hard to ensure our
offices remained safe as our employees
returned during the year, providing health
and wellbeing support, and mitigating
any remaining risks associated with
the pandemic.
The SHE team, together with HR, continue
to proactively drive health and wellbeing
support, particularly around mental health,
and we continue to increase the number of
mental health first aiders in the business
and the support provided to employees and
their families.
During FY22, the SHE Committee
supported the newly established
Sustainability Committee in the delivery
of our sustainability framework, including
finding ways to reduce our direct and
indirect carbon emissions across our
operations. There has been particular focus
on the reduction of waste created from
our construction activities, resulting in a
decrease in the amount of waste requiring
removal from our sites. Further information
can be found in the Sustainability
Committee Report on pages 99 and 104.
FY23 key priorities
Injury and ill health prevention remain a
key area of focus for the business, with
the aim of, as a minimum, maintaining, if
not improving, our IIR. We will continue to
review all working practices and consider
enhancements to existing safe systems
of work, especially around working at
height and those activities involving ground
workers. With effect from 1 July 2022, all
dumpers of six tonnes or more operating
on our sites were required to have an
enclosed cab to protect the operator.
We have worked closely with dumper
manufacturers and sub-contractors to
ensure that this new requirement can be
adhered to. We continue to review and
update our induction process. During
the year, we introduced our induction
management app to ensure all individuals
attending our sites are clear on what we
will provide and do, and what is expected
from them. We will also continue with our
positive engagement with key members of
our supply chain in reviewing safe systems
of work and developing enhanced controls
for their work activities.
We have committed to further assess
the SHE culture within our business,
including the possible use of survey tools
to assess the views of our employees and
contractors. Information arising from this
assessment will be used to implement an
appropriate action plan to further enhance
our SHE performance, with progress being
monitored by the Committee.
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
6 September 2022
Role and activities of the
SHE Committee
The SHE Committee’s activities continue
to remain focused on the prevention and
mitigation of the 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 on a day-to-day basis.
The SHE Operations Committee reports
directly to the SHE Committee. The Group
Construction and SHE Director presents
SHE update 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. In addition, the SHE
Committee Chair is now invited to attend
all SHE Operations Committee meetings.
This enables the Committee and its Chair
to gain enhance its 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.
“The health and safety
of our workforce,customers
and the public, and the
protection of the environment
around our developments,
remain a fundamental priority
for the Group.”
Chris Weston
Chair of the Safety, Health and
Environment Committee
Statement from the Chair
of the SHE Committee
I am pleased to present this report after
my first full year as Chair of the SHE
Committee. The health and safety of our
workforce, customers and the public, and
the protection of the environment around
our developments, remain a fundamental
priority for the Group and is embedded
within the day-to-day operations of the
business.
FY22 areas of focus
Accident prevention has remained a
key area of focus throughout the year,
following the increase in the Group IIR in
FY21. As a result of the action plan that we
put in place at the end of the last financial
year, we have reduced our IIR from 416 per
100,000 persons in FY21 to 262 in FY22.
This reduction to below pre-COVID-19
levels has been achieved through the
concerted efforts of management and
the workforce. The Committee has been
provided with a bi-monthly update on the
progress made in the delivery of the action
plan and its impact on our IIR. There has
been particular focus on slip and trip
incidents through a good housekeeping
campaign, and we have worked with our
contractors on ensuring work areas are
kept clean and free of trip hazards. We
have also worked closely with our supply
chain to increase their awareness of
controls required for their work and to
ensure appropriate levels of competent
supervision.
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97
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Sustainability Committee report
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 77.
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 FY22,
The following page sets 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 a review 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
IIR
Continued to monitor SHE performance targets, key performance indicators and
IIR, all of which are available on pages 5 and 18.
SHE
training
and
compliance
Reviewed outcome of the British Assessment Bureau Audit, where no non-
conformances were identified.
Considered the progress of integration of Oregon and Gladman into Barratt SHE
management and noted the appointment of the new Head of SHE at Oregon.
Considered and agreed implementation of the HSE Safety Climate tool, with
additional resourcing from HR as required.
Reviewed and agreed a plan of action for temporary works.
SHE management system
Our Safety, Health and Environmental
management system continues to be
accredited to the international standards
ISO 14001 and 45001. We carried out a
full review of the system in April 2022 and
revised its format in line with other Group
policies and procedures. A comprehensive
audit of the system was undertaken by
the British Assessment Bureau in April
2022 and no non-conformances were
identified. In addition, the SHE team
carried out comprehensive audits of each
of our operating divisions during the year,
including a comprehensive review of the
divisions’ application of our management
system and consideration of the
opportunities for continuous improvement.
Working with our groundworkers
We have worked with our supply chain
on enhancing the controls for excavating
near underground services, such as
the introduction of the use of vacuum
extractors, to reduce the risk of contact
with services by plant. We have also
introduced an e-learning module for our
construction management teams on safe
digging techniques and controls. We are
continuing with our strategy of enhancing
the controls for groundworks operations
and have been working with contractors
to consider additional measures that can
be put in place for areas such as plant
safety. A mandatory policy of cabs on
dumpers (six tonnes and above) came
into force on 1 July 2022 on our sites, and
we consider this an effective measure to
ensure the safe operation of this plant in
98
all weathers. We have also been working
with contractors on considering proximity
warnings that can be applied to plant to
warn others that pedestrians are in close
proximity. This work is ongoing and we
hope to move this forward in FY23.
Mobile technology
Focus continues on enhancing our health
and safety systems and controls. The new
mobile applications introduced last year
are proving highly effective in maintaining
records of inductions linked to competency
cards and enhancing the recording of
accidents, incidents, near misses and non-
conformances. These have also enabled
us to analyse trends and identify areas for
improvement, which we have considered
as part of our overall continuous
improvement plan. We continue to issue
updates to the business following incidents
outlining the event and any learning
outcomes or action to be taken.
Workforce collaboration
We have also reviewed and relaunched
our Five Steps to Safety initiative aimed at
encouraging all to work collaboratively, and
we continue to assess the risks associated
with their work activity. Linked to this
initiative, an updated method of reporting
any observations via a QR code has been
deployed on all sites, providing further
opportunity to highlight good practice or
report issues that may require attention.
This process enables us to quickly address
any issues raised and ensure that they are
effectively dealt with and closed out.
Reviewing risks in the build process
Our SHE team, in conjunction with
our supply chain, have continued to
consider practical measures to improve
work activities on site. We previously
implemented proprietary systems for
stairwell protection and have continued to
develop these, particularly systems that
can be used for timber frame construction.
Not only do these systems reduce the risk
of falls, they also reduce the waste created
from using sacrificial material to protect
the openings. We have also been working
with a supplier to develop a means of
securing roof trusses whilst they are being
erected and will be continuing with these
trials during FY23.
Health and Safety training
We launched a series of additional
e-learning packages to support our
existing training provision, and continue
to develop these so our colleagues have
access to clear and concise information
relating to specific risks associated with
their work. These are subject-specific
sessions, ensuring that colleagues have
access to the training and information
required to assess any risks associated
with their work. This enhances our already
established process of providing regular
and targeted SHE briefings (toolbox talks)
to all those working on sites.
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 given
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 31.
Environmental protection
As detailed above we have a management
system in place that is compliant with
environmental standards. Prior to
commencing on site, we undertake an
assessment of the local environment and
put plans in place to prevent contamination
of any adjacent watercourses. These plans
and controls are reviewed monthly and
action is taken where enhancements or
maintenance of the controls are required.
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
6 September 2022
FY23 key priorities
The Committee will be focusing on
developing a longer-term sustainability
strategy for the Group, undertaking a
refreshed materiality review to ensure
we are prioritising the issues that
matter most. The Committee will look to
further explore the use of non-financial
value measures and how this could be
further embedded in the business model
during FY23.
Another key priority is to develop the
Group’s net zero transition plan to focus
on the Group’s activities, including further
developing and potentially restating
the Group’s science-based targets. The
transition plan will be supported by
working closely with sub-contractors and
the supply chain to better understand their
approach to carbon reduction, particularly
around Scope 3 emissions, data accuracy
and how the Group can support this.
The Committee will also review and make
recommendations for the publication
of a formal Human Rights Policy and
associated implementation programme for
the Group.
I would like to thank the Sustainability
team for their support in establishing
a strong foundation in the Committee’s
first year of operation, from which the
Committee’s activities will no doubt
continue to add value to the business.
David Thomas
Chair of the Sustainability Committee
6 September 2022
climate implications of major business
initiatives and make recommendations
in response. It is also responsible for the
content of the TCFD disclosures (which
can be found on pages 58 to 71).
To facilitate this work, the Committee
has a programme of external experts
attending its meetings in order to advise
and inform its work and to build the
capacity and knowledge of its members
on these important topics. This year, it
received updates from experts in carbon
reduction and the UK’s transition to net
zero, environmental economics and the
potential impact of carbon pricing, and
corporate responsibility for human rights.
In addition, PwC has been appointed
as the independent adviser to the
Committee to challenge its decisions and
to keep it abreast of emerging issues and
opportunities. PwC’s other connections to
the Company are set out on page 111.
The Committee also recognises that
its work depends on having robust
ESG data and it will continue to ensure
the processes to provide appropriate
assurances on this are in place.
FY22 areas of focus
The Committee reviewed and approved
the Sustainability governance framework,
formalising the responsibilities and
objectives of each element of the
sustainability framework and the
interaction between them, and progressed
the integration of our sustainability and
climate change agenda into our business
strategy.
Progress against our objectives around
waste, carbon, biodiversity and water
were monitored, and new risks and
opportunities were identified. Climate-
related issues are a standard agenda item
at meetings – this year, the Committee
considered recent changes to the
requirements and guidance from the SBTi,
and what the implications may be for us in
the short, medium, and long-term. It also
assessed climate risks and opportunities
and financial impact in compliance
with TCFD requirements. Additionally,
the Committee agreed the benefits and
importance of formalising a Human Rights
Policy for the business.
99
“Given the importance of
ESG issues for our business,
the Board established
this Committee to help
drive our sustainability
and climate-related
agenda as we strive to be
the leading sustainable
national housebuilder.”
David Thomas
Chair of the Sustainability Committee
Statement from the Chair
of the Sustainability Committee
I am pleased to present my first
Sustainability Committee report. Over
the last few years, the Board has been
focused on working to embed our Building
Sustainably framework into all areas of
our operations. This framework underpins
our commitment to protect and enhance
the things that matter to us most as a
business: our people, the places we create,
and the natural world in which we operate.
Given the importance of ESG issues for
our business, the Board established this
Committee to help drive our sustainability
and climate-related agenda as we strive
to be the leading sustainable national
housebuilder.
The Committee’s purpose is to debate,
review and approve the sustainability
strategy and framework, and to scrutinise
the business response to climate risks
and opportunities. This includes the
required business model impacts and the
embedding of the appropriate controls and
processes. It will continuously monitor
how we adapt our plan to meet evolving
sustainability challenges in the external
space in which we operate. The Committee
will also evaluate the sustainability and
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Sustainability Committee report CONTINUED
Role and activities of the Sustainability Committee
Membership and attendance at Committee meetings
The Committee meets quarterly. Membership of the Committee and attendance at each of
its scheduled meetings is set out on page 77.
Only members of the 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. At least one member of the Committee must have
sustainable development-related skills. Three Committee meetings took place during
FY22. The following pages set out the work undertaken by the Committee during the year.
Main activities undertaken during the financial year
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 carried out annually, such as reviews of its Terms
of Reference and approval of this report, the Committee carried out the following work
during the year:
Priorities
Work carried out and outcomes
Sustainability
strategy
Provided an initial overview of the approach and scope of the new long-term
sustainable business strategy. Agreed that a review of materiality for the Group
was required. Further details of the outcome are given in FY23 key priorities
on page 99.
Science-
based target
setting/
reporting
Net zero
transition
plan
Risk
management
and TCFD
Considered and agreed the KPIs appropriate to the Building Sustainably
framework and the business’ performance against these.
Reviewed requirements of the SBTi and agreed a plan to revise this in FY23.
Updated and approved the net zero transition plan for Scopes 1, 2 and 3
emissions and updated on progress against the targets.
Discussed our approach to climate risks and opportunities and the strategic
impacts on the business of our climate risks and opportunities, and work
undertaken to comply with the TCFD requirements. Further information on Board
oversight of climate risks and opportunities can be found on pages 58 to 71 of the
Strategic Report.
Review of
policies
Considered the scope and boundaries of the Group’s Human Rights Policy in
order to advise the Board, requesting further validation of salient human rights
risks in order to develop a prioritised, planned programme of work.
Governance
framework
Benchmarks
and indices
Agreed the sustainability governance framework and developed the annual
agenda.
Reviewed and agreed plans for ongoing participation in sustainability
benchmarks and indices.
Waste management
Over the last year, we have made good
progress in our waste strategy. This has
been supported by a business-wide action
plan and the role of the newly recruited
project manager who is focused solely
on driving performance improvement
activities to reduce waste. The provision
of more regular and higher quality data
by sites, with each division reviewing their
performance and developing action plans,
has also supported improved outcomes.
To monitor waste and ensure compliance,
we undertake monthly waste audits and
cost reviews. In addition dedicated waste
champions are driving progress at a
divisional level and on sites.
A programme of toolbox talks, poster
campaigns, ongoing alerts and site
visits in partnership with our waste
management service providers has also
been implemented. We continue to work
collaboratively with our supply base to
implement waste reduction actions.
Net Zero Transition Plan
We have carbon reduction targets in
place across all of our value chain.
For scopes 1 and 2, which account
for 1% of our carbon emissions. We
have a detailed plan against which we
are making progress, with relevant
operational teams responsible for driving
activities as needed. For scope 3, which
accounts for 99% of emissions, we have
developed a transition plan for reducing
emissions. Our net zero transition
pathway is set out on page 71.
Sustainability Governance
We have created a robust governance framework to support the Committee in scrutinising and implementing sustainability and climate-
related matters throughout the organisation and its supply chain.
Board
Group Board
Chief Executive accountable for Sustainability
Scrutiny, oversight and approval of sustainability strategy.
Key
Board Committee
Management Committee
Working Group
Nomination
Committee
Audit
Committee
Sustainability
Committee
SHE
Committee
Remuneration
Committee
Monitors composition of
the Board to ensure the
balance of sustainability
skills, experience and
knowledge.
Monitors integrity
of climate-related
financial disclosures
(TCFD).
Debates, reviews
and scrutinises the
sustainability strategy
and its implementation
and approves plans to
mitigate risks and leverage
opportunities.
Oversees and
monitors significant
environmental risks,
steps to mitigate them,
and compliance with
the environmental
elements of Group
SHE Policy.
Ensures sustainability outcomes
are taken into account in
implementation of remuneration
policy, for example the inclusion
of sustainability targets in
incentive plans. Monitors
performance against these
targets.
Risk Committee
Monitors effectiveness of the Group’s
internal control policies and procedures
for the identification, assessment and
reporting of sustainability risks.
Executive
Land
Committee
SHE Operations
Committee
Considers sustainability risks such as flood
risk and biodiversity before approving land
acquisitions.
Develops SHE strategy for the Group,
including implementation of waste and
energy efficiency strategy.
Management Working Groups
Biodiversity Net Gain
Sustainable Homes
Stakeholder Engagement
Considers risks, issues, planning milestones
and key decisions for the Group’s biodiversity
strategy.
Considers strategic priorities within the
Building Sustainably framework.
Internal and external engagement on
sustainability issues that matter most to
our stakeholders.
Sustainability Operations
Sustainability and
People
ESG Data
Reviews operational priorities within the
Building Sustainably framework.
Reviews strategic people priorities within
Building Sustainably framework.
Develops ESG data strategy and approach
for the Group, including data reporting,
assurance, implementation and compliance
against policies and procedures.
The Board has overall responsibility for
our Building Sustainably Framework and
climate-related matters, with delivery
delegated to the Sustainability Committee
for effective day-to-day management
and to embed the required systems
throughout into the business. The Chair
of the Audit Committee also provides
additional oversight regarding the Group’s
progress on climate-related risks and
opportunities, as well as broader ESG
risks, and the internal control frameworks
operating across the Group to ensure
these are carefully identified, assessed and
appropriately managed.
The Remuneration Committee designs
and implements appropriate remuneration
policy and incentives to drive sustainability
outcomes, including waste intensity
and carbon.
For further details on climate-related
matters with Board delegated authority
see page 59.
To ensure that the Group has formal
governance of sustainability and climate-
related issues, with clearly understood
accountabilities and responsibilities,
we have formalised a number of cross-
functional working groups. These enable
issues to be planned, scrutinised and
developed, implemented and then
monitored and tracked appropriately in
accordance with their priority.
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Target setting
The changes to the requirements and
guidance from the SBTi (effective July
2022) was examined to determine the
implications for the Group in the short,
medium and long term. A plan was agreed
to consider and, if required, restate the
Group’s science-based targets during
FY23. Our detailed greenhouse gas
emissions performance can be found on
page 69.
Our targets and FY22 performance
For each of our sustainability framework
pillars, we have a robust process from
identifying material issues through to
operational delivery. This allows us to
have clear metrics and workstreams
for each of our goals, and well-defined
accountabilities which inform our
implementation plans across each stage.
Performance is monitored throughout
the year and reported to the Committee
biannually, and to the Board annually.
Performance against our sustainability
metrics is set out in the table below. To
accelerate progress against our priorities,
we included a carbon reduction target for
the first time in the 2021 LTPP granted
in October 2021 and introduced a waste
intensity target for the FY22 annual bonus.
Going forward performance against our
ESG targets will continue to be linked to
remuneration in the same way.
Sustainability performance
Focus area
SDG
Target
FY22 Performance
FY23 focus areas
Nature
Carbon
Reduce absolute scope 1 & 2
(operational) carbon emissions by
29% (from 2018 levels).
23%
BY 2025
ON TRACK
NET ZERO BY 2040
A significant proportion of this year’s performance has come from
a reduction in site emissions, driven by earlier grid connections,
decreasing gas usage and reducing electricity usage.
Our continued focus will be on driving emissions reductions through
our operations and facilities. This will include continuing to replace
diesel with low carbon alternatives, use of efficient plant and
generators, transferring our car fleet to hybrid and electric and offices
to renewable electricity tariffs.
For further detail see page 71.
Reduce scope 3 (indirect) emissions
intensity by 24% (from 2018 levels).
1.6% reduction
For further details about our performance and activities in this area,
see pages 68 to 71.
Focus area
SDG
Target
FY22 Performance
FY23 focus areas
BY 2030
BEING MONITORED
Nature
Biodiversity
& nature
Demonstrate a minimum
biodiversity net gain of 10%
across all development designs
submitted for planning.
BY 2023
ON TRACK
140 compliant sites
in FY22 ahead of
legislation
We expect to achieve 10% BNG on all our developments in 2023. Our
approach will continue to ensure high-quality designs and improved
colleague capabilities through:
•
Extensive programme of workshops and roll out of tools and
materials.
• Collaboration with external ecology experts to deliver species
focused outcomes.
For further detail see page 26.
Waste and
circular
economy
Reduce construction waste
intensity by 20% vs. 2015
(to 5.67 tonnes per 100m2 legally
completed build area).
30% reduction
We have made strong progress on waste over the last year and are
therefore reviewing the target to better capture our accelerated ambition.
Our approach going forward will continue to minimise waste through:
BY 2025
ON TRACK
Maintain 95% diversion from
landfill for construction waste.
96%
ANNUALLY
TARGET MET
• Design improvements and resource management aligned with
the waste hierarchy - including collaboration workshops with
suppliers to develop packaging reduction options.
•
Focussing on light weight compactible waste, onsite material
protection, materials reuse and recycling, and segregation of
waste streams.
For further detail see page 28.
Water
100% of new homes to be built to
105 lpppd.
Achieved
Our focus going forward will include driving reduction in homes as well
as during the construction phase through:
FROM FY22
TARGET MET
MMC
To apply offsite-based products
and systems in 30% of homes.
27%
BY 2025
ON TRACK
Deforestation
100% of timber certified for
net zero deforestation (for
all timber procured via Group
agreements, BD Living, Oregon and
sub‑contractor fencing).
99.47%
ANNUALLY
BEING MONITORED
•
•
Increased site metering and adoption of water reduction activities
on site.
Adoption of design improvements for our homes, and participating
in the HBF’s Water Matters Group, which collaborates with water
companies on innovations to reduce consumer consumption.
Last year we achieved our 2025 target to apply offsite- based products
and systems to 25% of homes. We therefore refreshed the target to
better capture our accelerated ambition and have continued to make
good progress in FY22.
Going forward we will continue to incorporate a combination of timber
frame, as well as large format block, roof cassettes and insulated pre-
cast concrete foundation units to ensure we achieve our target.
For further detail on MMC innovations see page 28.
We have improved our performance over the last year, and will continue
to do so by working with our suppliers to drive greater conformance to
FSC or PEFC standards, through:
•
•
Strengthening of procurement processes and validation checks.
Supporting suppliers of the small quantity of non- certified timber
to find alternative supply routes
Zero
carbon
homes
Renewable
energy
Sustainable
travel
Places
Great places
Sales and
marketing
Green lending
and finance
There has been an increase in scope 3 emissions in the last year,
driven by higher completions. We are working with our supply chain to
drive reductions through:
•
•
Improving our understanding of specific supplier emissions
data to enable us to capture performance more accurately, and
engaging with our highest emitting partners to determine their
reduction strategies.
Alignment with the Future Homes Standard and the use of
alternative fuels within our value chain will play an important part
of our transition to net zero.
Our zero carbon homes roadmap is progressing well. The roadmap
includes researching and trialling innovative products and techniques,
and collaborating in industry research projects, such as the Zed House
and Energy House 2.0 respectively.
For further detail see pages 14 and 15 and pages 58 to 71.
The electricity not yet on a renewable tariff is primarily where we use
non-metered supplies, such as street lights and water pumps, which
we are working to switch to renewable tariffs.
All new house types to be zero
carbon (regulated energy) in use.
BY 2030
ON TRACK
Ensure 100% of own electricity is
on renewable tariffs.
76%
BY 2025
ON TRACK
100% of company car fleet free of
diesel and petrol cars.
40.9%
Encouraging and supporting colleagues to choose more sustainable
travel options through:
BY 2030
ON TRACK
• Provision of attractive employee benefits such as My Green Car
which was introduced during the year.
• Optimising the choice process to unlock a wider range of electric
and hybrid vehicles and reviewing upgrade options.
Due to positive progress to date the target has been brought forward to
2028, with no further diesel and petrol cars offered from 2024.
100% of completed developments
designed to Great Places Silver
Standard or better.
90%
ANNUALLY
TARGET NOT MET
Eliminate single use plastics
from sales and marketing
merchandising by December
2021.
Unlock green mortgages for
customers to purchase our
homes and explore the potential
of new green finance products for
our business.
Achieved
TARGET MET
Positive engagement
in FY22
ON TRACK
All our developments meet the required development standards, which
our internal Great Places standards exceed.
We have established an improvement programme to expedite progress
in this area, including delivery of regional consultant placemaking
workshops focusing on landscaping and biodiversity net gain.
Further details can be found on page 26.
Achieved elimination of single use plastic merchandising products
from Group suppliers by replacing with more sustainable alternatives
such as biodegradable pens and FSC bamboo keyrings, and also
repurposing of residual stock.
Working with relevant stakeholders including lenders and Government
to raise awareness of the benefits of green mortgages through
knowledge sharing events and piloting green mortgage products.
For further detail see pages 22, 24 and 47.
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Remuneration report
Annual statement from the Chair of the Remuneration Committee
Focus area
SDG
Target
FY22 Performance
FY23 focus areas
People
Modern
slavery
Attracting,
inspiring and
retaining
people
Diversity and
inclusion
Maintain our status as a Living
Wage Employer.
Status maintained
ANNUALLY
Maintain an average of four
training days per employee.
TARGET MET
3 training days
ANNUALLY
TARGET NOT MET
Maintain 7% of workforce in
a graduate, apprenticeship or
trainee role.
6%
ANNUALLY
BEING MONITORED
Maintain upper quartile UK FTSE
performance in our engagement
survey.
79.4%
ANNUALLY
BEING MONITORED
Carrying out audits to ensure full compliance with Living Wage
Employer status across the business. Further information about
development of our human rights policy can be found on page 99.
An increase in digital training, which takes less time to complete, has
resulted in a drop in total number of training days.
Our intent going forward is to retain a blended approach of in-person
and digital learning. The return to hybrid training will enable us to
better achieve our target figure, and we will keep this under review.
A number of apprentices were deferred and held on our apprenticeship
programme due to COVID restrictions and changes in apprenticeship
standards. We have now resumed the programme at full capacity.
Improvements to be driven through the launch of additional degree
apprenticeships with Sheffield Hallam University and our continued
work with the Green Jobs Taskforce.
For further detail see page 30 to 33.
We saw a small decline last year, which follows a more general pattern
across employers through the pandemic. We have implemented new
employee initiatives during FY22 and will continue to review these
going forward.
Further details can be found on page 31.
Continued support for
disadvantaged groups
(ex-offenders, special needs and
disabled) and for young people.
Continued progress
against Social
Mobility Pledge
Continuing to provide scholarships and bursaries for applicants
to Sheffield Hallam University who would otherwise face financial
barriers (FY22: £111,000).
ON TRACK
The next step is to define what “social mobility” means for our
business, to allow us to track our impact on disadvantaged areas.
Increase ethnic minority
employees to 10% and ethnic
minority senior employees to 5%
by the end of 2021.
Increase female employees to
34% by end of 2021 and increase
percentage of female employees
in management grades to 30% by
end of 2021.
7.3% of employees
2.1% of senior
employees
TARGET NOT MET
31.6% total
female employees
and 25.7% in
management grades
TARGET NOT MET
Fulfil commitment to the FTSE 100
‘30% Club’ for a minimum of 30%
women on our Board.
33%
TARGET MET
Further details can be found on page 30.
The Group recognises that it needs to do more to develop greater
diversity and inclusion within the business.
Following the appointment of a Head of Diversity & Inclusion we
are launching a three-year strategy including updated performance
metrics, to:
• Hold leaders accountable for diversity and inclusion goals.
•
Improve the representation of all groups across the business
by ensuring our talent programmes look to create diversity in
attraction, retention and promotion.
• Hear the employee voice directly to ensure we are providing an
inclusive environment.
We have made good progress in the interim:
•
68 delegates completed our female leadership development
programme Catalyst.
• We established an ethnic minority colleague Barratt Connect
Group and Disability Connect Group.
• We are taking part in the 30% Club Race Equity programme.
For further details see pages 32 and 87.
Continuous Improvement plan in place which includes our five steps
to safety initiative, engagement with high-risk trades and HSC Safety
Culture tool to be issued in FY23.
Details of SHE performance over the year can be found on page 18.
We have implemented various initiatives including extended private
medical cover to all employees in addition to existing employee
healthcare benefits such as health screening, Bupa health and
wellbeing services, gym membership and dental plans.
Health and
Safety
Maintain Injury Incident Rate (IIR)
at the level recorded in 2015 (381
or less per 100,000 employees
including sub-contractors).
262
TARGET MET
Reduce sickness absence below
the industry benchmark as defined
by XpertHR (FY22 target of 6.1)
6.27
BEING MONITORED
Human Rights Policy
A framework for formalising a human
rights policy for the business was
considered by the Committee. This will
form the foundation for the implementation
of a policy that ensures the application of
a consistent, leading practice approach to
managing material human rights risk. The
Committee will be looking to approve a
Human Rights policy during the course of
FY23, the scope and boundaries of which
will ensure that the business is focusing its
efforts in the highest risk areas.
This report forms part of the Corporate
Governance report and is signed on behalf
of the Sustainability Committee by:
David Thomas
Chair of the Sustainability Committee
6 September 2022
104
FY22 performance and reward
The business has continued to make good
progress throughout the year, despite
the challenges posed by the shortage
of materials, issues with labour supply
and cost increases across the industry.
In particular, we are delighted that total
home completions of 17,908 this year are
ahead of pre-pandemic levels and with the
record level of adjusted profit before tax.
The Board is extremely grateful for the
hard work and dedication of our teams and
partners over the past two years to achieve
these important milestones. The outcomes
for the FY22 annual bonus scheme and the
2019 LTPP award are at 98% and 59% of
maximum respectively before taking into
account any impact of adjusted items.
FY22 annual bonus and 2019 LTPP
and impact of adjusted items
As announced in April 2022, we signed
the Building Safety Pledge to address
necessary fire-safety issues on all
buildings of 11 metres and above built
in the last 30 years. We also committed
to withdraw our buildings from, and/
or reimburse, the Building Safety Fund
and ACM Fund. The incremental cost
of remediating buildings or funding
remediation where we agreed to take
responsibility for doing so, is estimated
to be £396m which we have provided
for in FY22. We consider the £396m to
be sufficient to cover all aspects of the
remediation, but will keep this under
review. The cash expenditure is likely to
be incurred over the next five years or
more. The cost has been classified as an
adjusted item in the income statement.
The Committee considered the impact, if
any, of this provision on annual bonus and
LTPP outcomes for all participants within
the business, including, but not limited to,
the Executive Directors. In determining the
appropriate approach, the Committee took
into account several factors, including:
•
the wider social and political context;
• whether a differentiated approach
for the wider workforce and Senior
Management would be appropriate;
•
broad proxy agency voting guidance in
respect of adjusted items;
• historical treatment of adjusted items
by the Committee; and
• practice of other housebuilders in
the market.
The Committee was also mindful that
the Building Safety provision has arisen
as a direct result of the Government’s
retrospective changes in legislation, which
extended the liability for building defects
out to 30 years (from six or 12 depending
on the circumstances), over which current
management had no control.
Underpinning all of this was the fact that
the Group’s adjusted profit before tax was
likely to be in the range of £1,050m and
£1,060m (actual: £1,054.8m, which is a
new record for the Group).
Accordingly, the Committee agreed that it
may need to exercise discretion in respect
of the FY22 annual bonus and 2019 LTPP
outcomes to ensure that they reflect a
fair, reasonable and appropriate level of
reward.
Taking all of this into account, the
Committee has agreed the following
treatment for the Building Safety adjusted
item for the purposes of the FY22 annual
bonus and the 2019 LTPP:
(i) Impact on FY22 annual bonus
For all employees, including Executive
Directors, the profit before tax element of
the annual bonus should be calculated on
a pre-adjusted items basis. In coming to
this decision, the Committee reviewed an
analysis of incremental costs to determine
what proportion, if any, of the c. £400m
was not attributable to the change in
legislation and whether this would impact
the FY22 annual bonus outcome. The
analysis of sites already being assessed
for remediation confirmed that the vast
majority (£396m) of the c. £400m provision
was due to the legislative change. Whilst
this was a theoretical exercise to give the
Committee confidence in the equity of their
proposal, it did confirm that maximum
profit target would still be achieved for
bonus and LTPP purposes. Accordingly, the
actual bonus outcome for FY22 is 98.3%
of maximum (being 150% of salary). As in
previous years, any bonus earned in excess
of 100% of salary will be deferred into
shares for a period of three years, subject
to a ‘continued employment’ condition.
(ii) Impact on 2019 LTPP
The 2019 LTPP is due to vest in October
2022. In determining the potential level
of vesting, the Committee considered: (i)
the financial and operational performance
of the Company throughout FY22; (ii)
that the LTPP recognises the long term
performance of the Company over a three-
year period; and (iii) that there is a strong
alignment with shareholder experience
through the TSR element, which represents
40% of the total award, and will not vest.
Accordingly, the Committee agreed that
EPS should be calculated on a pre-adjusted
items basis (ROCE has always been
calculated on this basis) and accordingly,
59.3% of the total award will vest in October
2022. This outcome also takes into account
any proportion of the adjusted items
105
“The FY22 pay outcomes and
our proposed approach to
remuneration for FY23 are in
the best interests of our
shareholders, align with our
strategy, reflect the wider
business and economic
environment and are fair,
reasonable and appropriate.”
Katie Bickerstaffe
Chair of the Remuneration Committee
Statement from the Chair of the
Remuneration Committee
I am pleased to present my report to you
as Chair of the Remuneration Committee.
When considering the FY22 remuneration
outcomes for the Executive Directors and
in agreeing the targets for FY23 as set
out in this report, the Committee took
into account, amongst other factors,
the performance of the Group in FY22
and the market conditions in which the
Group operated (set out in the Chief
Executive’s Statement on page 16, and the
Marketplace section on pages 10 and 11
respectively).
Remuneration Policy
The Committee believes that the
Remuneration Policy, as adopted by
shareholders at the 2020 AGM, remains
appropriate and fit for purpose and
continues to be in line with market practice.
Our Remuneration Policy is due for renewal
at the 2023 AGM, and therefore over the
course of the next year we will undertake
a review of the Policy. Our intention is 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 IA guidance.
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE
Remuneration report CONTINUED
Annual statement from the Chair of the Remuneration Committee
which was not considered to be directly
attributable to the legislative change. The
net number of shares vesting (following
payment of any tax and national insurance
due on release) will be subject to a two-year
holding period commencing 1 July 2022 and
to the provisions relating to clawback.
The Committee believes that this is a fair,
reasonable and appropriate outcome,
which reflects the overall performance
of the Group over the year as well as
appropriately taking into account any
proportion of the adjusted items which was
not considered to be directly attributable to
the legislative change.
Both the FY22 annual bonus and the 2019
LTPP are subject to Committee discretion,
whereby the Committee must be satisfied
that the underlying financial performance
of the Group, over the performance period,
warrants the bonus outcome and/or level
of vesting as determined by applying the
respective targets formulaically. Subject
to the matters discussed above, the
Committee confirms that this is the case.
Full details of performance against each of
the metrics for the FY22 annual bonus and
the 2019 LTPP can be found on pages 116
and 117 respectively.
FY23 remuneration
Cost of living support
We remain conscious that the current
rise in the cost of living is impacting
our employees and we want to ensure
that we are doing everything we can to
support them. Accordingly, we brought
forward our FY23 salary review for
all eligible employees below Senior
Management from 1 July 2022 to 1 April
2022. A 5% increase was applied for
all these employees. Further, effective
from 1 July 2022, we agreed to pay each
of our employees below our senior
leadership team (in total around 95% of
our employees) a salary supplement of
£1,000 in equal amounts over a period
of six months to 31 December 2022. In
December 2022 we will reassess the
position and take any further steps that are
deemed appropriate at that time.
FY23 Salary
Having regard to the changes implemented
for employees as set out above, and to the
benchmarking data provided by PwC, the
Committee decided to increase the Executive
Directors’ salaries by 3%, which is lower
than the 5% increase awarded to the wider
workforce. The Committee believes that
this increase is justified given our strong
financial performance in FY22, the ongoing
competitive landscape we face across the
sector, and to ensure alignment between the
106
Executive Directors and the wider workforce.
The Committee further believes that this
level of increase is appropriate given the
current economic circumstances in which
we are operating. Executive Directors are
also benchmarked against other FTSE
100 companies and UK housebuilders and
remain in line with them.
Pensions
With effect from 1 January 2023 the cash
supplements for David Thomas and Steven
Boyes will be reduced from 25% of base
salary to a level equivalent to the wider
workforce (currently 10% of base salary),
in line with the guidance from the IA.
Mike Scott’s cash supplement was set at
10% of base salary from the date of his
appointment.
FY23 Annual Bonus
The performance measures for the
FY23 annual bonus scheme are set out
on page 113 together with the rationale
for selecting them. The key change is
implementation of a further stretch to the
Quality and Service metric, to reinforce
our commitment to achieving high levels
of customer satisfaction long after our
customers have moved into their new
homes. With effect from 1 July 2023 our
divisions will need to meet targets relating
to the NHBC’s 9-month National New
Homes Customer Satisfaction Survey
as well as the existing requirement to
achieve five-star status under the HBF’s
8-week Customer Satisfaction Survey. In
addition, we will be re-basing the waste
target to FY22 levels, to ensure that the
target remains challenging and stretching
whilst driving continuous improvement in
this key area of our sustainability strategy.
The Committee is of the view that the
actual targets for the annual bonus are
commercially sensitive and will therefore
disclose these in line with market practice,
with performance against them, in the
FY23 Remuneration report.
2022 LTPP
The 2022 LTPP will be awarded to all
eligible participants, including the
Executive Directors, as usual in October.
Under our Remuneration Policy, the
Committee can make awards of up to
200% of salary to Executive Directors.
The Committee is however mindful of the
view of shareholders and proxy voting
agencies that Remuneration Committees
should seek to reduce the number of
shares granted, where the company’s
share price has fallen substantially
since the last grant, to avoid potential
windfall gains for Executive Directors. The
Company’s current share price is c. 40%
lower than it was in October 2021, when
we last made a grant under the LTPP.
Accordingly, the Committee has agreed
that it will consider reducing the level of
the 2022 LTPP award to reflect any fall in
the share price. The level of any reduction
will be determined closer to the grant date
when the difference in the share price
since October 2021 is apparent. Should
the share price improve to a similar level
as that in October 2021 no reduction will
be made. The Committee continues to
believe that TSR, EPS, Underlying ROCE
and GHG emissions reduction remain the
most appropriate measures to align the
Group’s performance with strategy and
the interests of stakeholders. Details of
the specific targets for each measure are
disclosed on page 114 of this report and
the strategic KPIs for each can be found on
pages 5 to 7.
New Chief Financial Officer
Following our announcement on 29 June
2021, Mike Scott, joined us as our new
Chief Financial Officer on 6 December
2021. The remuneration package agreed
for Mike was in accordance with our Policy,
and was set out on pages 100 to 102 of last
year’s annual report. As permitted for new
joiners under our Policy, the Committee
agreed to replace awards that Mike lost
on resigning from his previous position,
at a value no greater than the value of the
awards that lapsed. These replacement
awards were granted to Mike in February
2022 and details are set out on page 120.
Shareholder engagement
I wrote to our 20 largest institutional
investors and proxy voting agencies in
July 2022 to gain feedback on the above
proposals and outcomes.
We received feedback from shareholders
representing 39% of our issued share
capital. The key topic of discussion was,
as expected, the Committee’s rationale
for the outcome of the 2022 annual bonus
and the potential vesting level for the
2019 LTPP. All were very supportive of the
FY22 outcomes and the FY23 proposals,
including the discretion applied by the
Committee. Following this engagement
they understood our rationale in coming
to our conclusions. We also engaged with
two of the proxy agencies (Glass Lewis
and ISS) at their request to help their
understanding of our proposals, with
feedback being generally positive from ISS
and both emphasising the importance of
full disclosure of the Committee’s position
in this year’s Remuneration report.
Employees and remuneration
Our 2021 Gender Pay Gap report, published
in November last year, showed the pay gap
was broadly the same year on year, with a
•
•
information and surveys from internal
and independent sources; and
the economic environment and
underlying financial performance of
the Group.
reduction in the bonus gap given there was
no bonus paid for FY20. Further details are
given on page 32.
The Committee has had initial discussions
in respect of the 2022 Gender Pay Gap
report, and also the potential to voluntarily
publish an ethnicity pay gap report. We
expect to publish this year’s Gender Pay
Gap Report, along with our first Ethnicity
Pay Gap Report by early 2023.
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 42. We continue to make an annual
award of Barratt shares to employees
below Senior Management to recognise
their dedication, commitment and loyalty.
Further details can be found on page 31.
During the year, the business has reviewed
and enhanced the package of benefits
available to employees, and details can be
found on page 31.
Reporting
Our Remuneration report for the year
ended 30 June 2022 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
Throughout the year, the Remuneration
Policy operated as intended in terms of
Company performance and quantum.
The Committee believes that the decisions
it has taken in respect of FY22 pay
outcomes and our proposed approach
to remuneration for FY23 are in the best
interests of our shareholders, align with
our strategy, reflect the wider business
and economic environment and are fair,
reasonable and appropriate. We therefore
hope that you will support the Annual
report on remuneration, which will be
proposed at the AGM in October 2022. 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
6 September 2022
Our remuneration strategy
It is the motivation and engagement of
our employees which makes 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, and 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;
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Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Remuneration report CONTINUED
Overview for FY22
Remuneration report CONTINUED
Directors’ Remuneration Policy
Overview for FY22
The summary below outlines the remuneration outcomes for Executive Directors for FY22, 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 111 to 124. Details of Executive Directors’ shareholding
requirements and whether they have been met are given in Table 17 on page 121.
Executive Directors’ Remuneration Policy scenarios for FY23, and FY22 single figure outcomes
s
’
0
0
0
£
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
4,587
3,784
3,707
2,903
3,059
2,378
972
1,925
791
2,338
2,284
2,779
1,419
554
LTPP
Annual Bonus
Replacement awards
Other
Benefits
Pension
Salary
944
Minimum
On-target
Maximum
Chief Executive
Maximum
plus 50%
share price growth
Single Figure
FY22
Minimum
On-target
Maximum
Deputy Chief Executive
Maximum
plus 50%
share price growth
Single Figure
FY22
Minimum
On-target
Maximum
Chief Financial Officer
Maximum
plus 50%
share price growth
Single Figure
FY22
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 2022. The value of taxable benefits is the cost
of providing those benefits in the year ended 30 June 2022. 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 FY22 pay is Mike Scott’s pay from his appointment date of 6 December 2021 to the end of FY22.
FY22 performance pay outcomes
Annual bonus outcome
Further details are set out on pages 116 and 117 in the Annual report on remuneration.
Target
Profit before tax and adjusted
items
Target
£919m
Actual £1,055m
Threshold
£889m
Maximum
£949m
Weighting
82.5%
Outcome achieved
82.5%
Capital employed
£1,693m
£1,693m
Actual £1,491m
£1,653
15%
Quality and service (with
health and safety underpin)
Reduction of total waste
generated (waste intensity)
Number of divisions out of 27 to achieve SHE audit rating of 94% or above and
90% customer service target
6.20
Actual 24 divisions
6.14
Actual 4.97
6.07
Trading outlet openings
102 openings
106 openings
110 openings
22.5%
15%
15%
Actual 118 openings
15%
20%
15%
15%
LTPP vesting outcome
Further details, including the share price used to calculate the estimated value, any value of share price increases and the value of
dividend equivalents, are set out in Table 12 on page 118 of the Annual report on remuneration.
David Thomas
Steven Boyes
Mike Scott
Shares awarded
Number
238,024
188,376
22,560
Percentage of award vesting
EPS
96.5%
96.5%
96.5%
ROCE
100.0%
100.0%
100.0%
TSR
0%
0%
0%
Total
59.3%
59.3%
59.3%
Shares vesting
Number
141,148
111,706
13,378
Estimated value
£000
743
588
68
Alignment of FY22 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
✓ Customer service
✓ Sustainability
✓ Sustainability
✓ PBT ✓ Capital Employed
✓ Trading outlets ✓ Sustainability
✓ ROCE ✓ Sustainability
✓ PBT ✓ Capital Employed
✓ Customer service ✓ Sustainability
✓ ROCE ✓ EPS ✓ TSR ✓ Sustainability
✓ PBT ✓ Sustainability
✓ Customer service
✓ EPS ✓ Sustainability
Annual bonus
LTPP
108
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. Details of how the Policy will be applied for FY23 are set out on pages 112 to 115
and a description of how the Company implemented the Policy in FY22 can be found on pages 115 to 120.
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.
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.
Simplicity – remuneration structures should avoid
complexity and their rationale and operation should
be easy to understand.
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.
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.
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.
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.
Minimum, on-target and maximum outcomes for Directors are shown annually in this report (see page
108). 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.
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.
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.
Alignment with culture – incentive schemes should
drive behaviours consistent with company purpose,
values and strategy.
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 108.
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.
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 Executive Directors appointed
before 2020 does not exceed 25% of
base salary. With effect from 1 January
2023, the pension contribution (or
cash supplement) for all 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%;
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Annual report on remuneration
• 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 July 2022, and over the previous
four financial years, employees
below Senior Management have been
awarded a smaller number of shares
under an employee long term incentive
plan. This award was not 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. Specific details of how all employee
pay has been taken into consideration is set
out in the Chair’s statement on page 106,
and in the sections on base pay increases
on page 112 and bonus outcomes on page
116. 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 makes 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, including
on executive remuneration, and examples
of feedback given are provided in the
Stakeholder engagement section of the
Strategic Report on pages 42 and 43.
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 107, and in the
Stakeholder engagement section on pages
44 and 45. 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 124.
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 FY22 is
shown in Table 7 on page 115.
Table 1 – Executive Directors’ service contracts
Executive Director
David Thomas
Steven Boyes
Mike Scott
Service contract date
16 January 2013
21 February 2013
28 June 2021
Date of appointment
21 July 2009
1 July 2001
6 December 2021
Notice period/Unexpired term
12 months
12 months
12 months
The Chairman 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 Chairman and one
month for each of the Non-Executive Directors. The Chairman 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
Nina Bibby
Jock Lennox
Chris Weston
Sharon White
Date elected/
re-elected at AGM
13 October 2021
13 October 2021
13 October 2021
13 October 2021
13 October 2021
13 October 2021
Date first appointed
to the Board
1 August 2014
1 March 2021
3 December 2012
1 July 2016
1 March 2021
1 January 2018
Date last re-appointed
to the Board
1 August 2020
N/A
3 December 2018
1 July 2022
N/A
1 January 2021
Unexpired term
13 months
20 months
expired1
36 months
20 months
18 months
1 Nina Bibby completed nine years’ of service on the Board in December 2021. Nina will not be standing for re-election at the forthcoming AGM.
110
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 FY23 and
how it has been implemented throughout
FY22, together with the resulting
payments to Directors. The Annual Report
on Remuneration will be subject to an
advisory vote at the 2022 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 77. 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,
corporate finance and internal audit
services to the Group. PwC has also been
appointed as the independent adviser to
the Sustainability Committee. PwC has
no current connections with individual
Directors.
During the year, the Committee
has taken advice from PwC on best
practice in executive remuneration
and benchmarking. The Chair of the
Committee also sought advice from PwC,
independent of management,on various
matters to be discussed at Committee
meetings in particular the treatment
of adjusted items on bonus and LTPP
outcomes. 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’s fees for services provided
to the Committee during the year under
review were £130,200 (FY21: £121,000).
The Committee also receives input into its
decision making from the Chief Executive,
the Company Secretary, and the Group
HR Director, 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 of the
Committee’s performance can be found on
page 89.
Priorities
Work carried out and outcomes
Executive Directors’
remuneration
With assistance from its remuneration consultants, the Committee considered the Policy as approved by Shareholders
at the 2020 AGM, and confirmed that it remains fit for purpose and in line with best practice.
Considered salaries of Executive Directors and Senior Management for FY23 in the context of employees’ pay. The
outcome of this review is set out on page 106.
Considered the impact of adjusted items on the FY22 annual bonus and the 2019 LTPP vesting, see pages 105 and 106
for the decision made.
Considered the structure of the bonus scheme for FY23 and updated the Quality and Service and Waste reduction
definitions (see page 113 for further details).
Discussed future performance targets for both the annual bonus and LTPP plans and agreed in principle to introducing
an additional ESG target for FY24. Further work will be carried out during FY23 to identify a suitable target.
Reviewed mechanisms for enforcement of post cessation shareholding policy and determined that these should
be incorporated into Executive Directors’ contracts when they are next reviewed in line with consideration of the
Remuneration Policy.
Considered whether the Group’s current remuneration structures remained appropriate and support the future strategy
of the business, including the possible introduction of a restricted share plan. This was not considered appropriate for
Executive Directors at this time.
Governance
Discussed the level of assurance to be gained on the integrity and accuracy of information used to determine the
performance targets, and requested the Audit Committee to review this information.
Undertook a detailed consideration of the gender pay and bonus gap, including the underlying data, trend analysis and
benchmarking against peers. Recommended that the full Board should undertake a review and determine what further
work can be done in this area.
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, but that going forward they should be reviewed every three years in line with
the updating of the Remuneration Policy.
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Statement of implementation of the Remuneration Policy for FY23
Executive Directors’ remuneration for FY23 will be based on the Policy approved by shareholders at the October 2020 AGM.
The performance measures, their reasons for selection and the maximum bonus payment against each of them expressed as a
percentage of salary for FY23 will be:
Base salary
The Committee reviewed the salaries of the Executive Directors in June 2022, taking into account their individual performance during
the year, the annual salary review for other employees in the Group with increases at 5% (which took effect from April 2022 in light of the
cost of living crisis), 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, the Committee believed that it was justified in awarding a salary increase of
3% for each of the Executive Directors. The Executive Directors’ salaries with effect from 1 July 2022 will therefore be:
Table 3 – Executive Directors’ salaries
Executive Director
David Thomas
Steven Boyes
Mike Scott
Salary with effect
from 1 July 2022
£000
803
648
494
Salary with effect
from 1 July 20211
£000
780
629
480
1 For Mike Scott, this was his annual salary on his appointment on 6 December 2021.
Pension
David Thomas and Steven Boyes will both continue to receive a cash supplement of 25% of salary until 1 January 2023, after which their
pension contributions (or cash supplement) will be reduced to a level equivalent to the workforce, currently 10% of base salary. Mike
Scott, will continue to receive a pension contribution (or cash supplement) of 10% of base salary in line with the wider workforce.
Annual bonus
Executive Directors and Senior Management will participate in the Group’s annual bonus scheme in accordance with the Policy.
The Committee has agreed that for FY23, a longer term component will be added to the quality and service performance measure. The
business measures customer satisfaction using surveys at both eight weeks and nine months following completion of a home purchase.
Whereas previously the eight week survey results (using HBF’s National New Homes Customer Satisfaction Survey) have been used
for the quality and service performance measure, for FY23 onwards, an additional target has been set relating to the NHBC’s 9 month
National New Home survey result. The overall weighting of the quality and service measure will remain the same.
The Committee is of the view that the individual annual bonus performance targets are commercially sensitive. Therefore, in line with
market practice, these will be disclosed, with performance against them, in next year’s Remuneration report.
Reduction of waste
Table 4 – FY23 annual bonus performance measures
Financial Performance measures
Adjusted profit before tax
Capital employed
Definition
Profit after all finance costs/income and the
Group’s share of the profits from its joint
ventures, excluding adjusted items.
Average net assets calculated by a three
point average excluding goodwill and
intangibles, tax, net cash/(debt), retirement
benefit assets/obligations, derivative
financial instruments, land, land creditors,
trade payables and legacy property provisions
associated with the Building Safety Pledge.
Reason for selecting
Rewards outperformance
against stretching targets
and is a key measure of our
performance.
Ensures efficient use of
available capital.
Non-financial performance measures
Quality and service
(with a health & safety underpin)
Trading outlets
To qualify for bonus each division must
achieve or exceed the SHE audit gate and
then achieve or exceed their customer
service target for both the 8 week HBF
National New Homes Customer Satisfaction
survey and the 9 month NHBC National New
Homes survey.
Opening an outlet is defined as an outlet which
during the year has been opened or extended
by positive management action
(e.g. re-planning, or site reallocation to better
distribute the land bank to drive sales and
ROCE), and that had one or more plots for
sale at any given point in time.
Reduction of site waste (tonnes of waste for
every 100m2 of legally completed build area).
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 opening
outlets in order to meet
medium term volume targets
whilst aligning their interests
with those of shareholders.
Focus individuals on reducing
the amount of construction
waste intensity, which is a key
element of our overall carbon
reduction and sustainability
strategy.
Weighting
(% of salary
maximum)
82.5
15.0
22.5
15.0
15.0
Total bonus achievable as a % of salary
150.01
1 Any bonus earned in aggregate in excess of 100% of salary will 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 FY23 will be subject to the malus and clawback provisions summarised on page 109 and set out in detail on page
132 of the FY20 Annual Report and Accounts of the Company’s website at www.barrattdevelopments.co.uk.
112
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LTPP
The Committee intends to grant an LTPP award to Executive Directors in October 2022 (2022 LTPP). Under the Remuneration Policy, the
award can be up to 200% of base salary. Historically, the Committee has always been minded to award at this level. However, given that the
current share price is considerably lower than it was in October 2021, when the last LTPP grant was made, the Committee has informed
management that it will consider reducing the level of the 2022 LTPP award to avoid any windfall gains by Executive Directors. The level of
reduction will be determined closer to the grant date. If the share price improves to a similar level as that at October 2021, no reduction
will be made. The Committee is cognisant that the 2022 LTPP 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 2022 LTPP will continue to be: TSR, EPS, Underlying ROCE
and GHG emissions reduction.
.
Table 5 – 2022 LTPP performance measures
Weighting
(of total
award)
15%
Below
threshold
(0% vesting)
N/A
Threshold
(25%
vesting)
Median
Maximum
(100%
vesting)
Upper
quartile
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.
15%
N/A
Index
average of
peer group
15%
N/A
73p
40%
N/A
20%
23%
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.
Performance condition and definition
TSR against the FTSE: the Company’s
TSR over the Performance Period must be
at least at the median of a ranking of the
Total Shareholder Return of each of the
members ranking 50 above and 50 below the
Company in the FTSE Index at the start of the
Performance Period (1 July 2022 to 30 June
2025) based on market capitalisation as at
the day before the start of the Performance
Period.
TSR against a housebuilder index1: the
Company’s TSR over the Performance Period
must be at least the Index average of the
Housebuilder Index over the same period.
Adjusted EPS for FY252: Calculated by
dividing the adjusted profit after tax for the
year attributable to ordinary shareholders
by the weighted average number of ordinary
shares in issue during FY25, excluding those
held by the Employee Benefit Trust which are
treated as cancelled.
Underlying ROCE for FY25: 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, intangibles and land payables,
tax, cash, loans and borrowings, retirement
benefit assets/obligations, derivative
financial instruments and legacy property
provisions associated with the Building
Safety Pledge.
GHG emissions reduction3: Reduction of our
absolute Scope 1 and 2 (operational) GHG
emissions by 29% by 2025 (from 2018 levels)
and to net zero by 2040.
To ensure focus on reducing
GHG emissions.
15%
25%
reduction
30%
reduction
35%
reduction
1 The housebuilder index will comprise: Bellway, Berkeley Homes, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group. Countryside has this year
been excluded from this index given its strategic shift to the private rental sector and affordable tenures.
2 The steep rise in tax rate over recent years, and the introduction of RPDT (which levies an additional 4% tax on the Group) impacts our reported profit after tax and
results in adjusted basic EPS being lower in FY23 and FY24 than FY22, despite forecast profit before tax being higher in FY23 than FY22. The EPS target set takes
this into account, and is therefore lower than in previous years.
3 Further information on Scope 1 and Scope 2 GHG emissions can be found in the Strategic report, pages 58 to 71.
For the TSR, EPS and Underlying ROCE performance targets, vesting will be on a straight-line basis between threshold and maximum.
For the GHG performance target vesting will be on a straight line basis between 25% and 30% reduction, and on a straight line basis
between 30% and 35% reduction. 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 2022 LTPP will also be
subject to the malus and clawback provisions summarised on page 109 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.
114
Non-Executive Directors’ fees
During the year, a committee of the Board comprising the Company Chairman and the Executive Directors reviewed Non-Executive
Directors’ fees and concluded that an increase of 3% should apply to the Non-Executive Directors’ base fee. The annual fee payable to
the Chairman was reviewed by the Committee and it was agreed that it should be increased by 3%, in line with the annual salary review
for the Executive Directors and below that of the wider workforce. The annual fees payable to the Chairman and Non-Executive Directors
with effect from 1 July 2022 will therefore be:
Table 6 – Non-Executive Directors’ fees
Role
Chairman
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 2022
£000
353
67
3
17
17
17
17
10
Fee as at
1 July 2021
£000
343
66
3
17
17
17
17
10
Index
average
+8%
per annum
81p
Directors’ remuneration outcomes for the year ended 30 June 2022
Single figure of remuneration
The total remuneration for each of the Directors who served during the financial year ended 30 June 2022 is set out in Tables 7 and 8. The
salary for all Directors is the amount received in the year.
Table 7 – Executive Directors’ single figure of remuneration (audited)
Base
Salary
£000
Benefits2
(taxable)
£000
Annual
bonus3
£000
LTPP
£000
Sharesave
£000
Pension
benefits
£000
Replacement
Award8
£000
Total
Remuneration
£000
Total
fixed
Remuneration
£000
Total
variable
Remuneration
£000
2021/22 2020/21 2021/22 2020/21 2021/22 2020/21 2021/224 2020/215 2021/226 2020/217 2021/22 2020/21 2021/22
2020/21
2021/22
2020/21
2021/22
2020/21
2021/22
2020/21
David
Thomas 780
Steven
Boyes
Mike
Scott1
Total
629
277
757
28
26 1,151 1,123
743 1,666
599
31
40 928
889
588 1,318
–
1,686 1,356
9
68
– 402
–
–
66 2,481 2,012 1,399 2,984
68
6
5
–
11
– 195
189
1 157
150
–
–
28
–
1 380
– 160
339 160
– 2,903 3,761 1,003
972 1,900 2,789
– 2,338 2,997
817
789 1,521 2,208
944
–
-
– 6,185 6,758 2,134 1,761 4,051 4,997
630
314
–
-
1 Mike Scott was appointed a Director on 6 December 2021, and his remuneration therefore reflects only a partial year.
2 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.
3 Annual bonus includes amounts deferred for David Thomas, Steven Boyes and Mike Scott (see Table 10 on page 117).
4 Performance conditions for the LTPP were tested after 30 June 2022. 59.3% of the award granted to each of the Executive Directors is due to vest in October 2022
(see Tables 11 and 12 on pages 117 and 118 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 2022 (£4.94 per share). None of the value of the award is attributable to share price growth.
5
In accordance with regulatory requirements, the values in this column have been re-calculated using a share price of £6.83 per share being the market value of the
shares on the vesting date, 14 October 2021, as opposed to the market price of £7.55 per share calculated based on an average market value over the three months
to 30 June 2021 disclosed in last year’s Remuneration report.
6 The Sharesave shares granted in 2016 for David Thomas and 2018 for Steven Boyes, which matured on 1 July 2021, were subject to a continued employment
condition and completion of a savings contract. There are no performance conditions for Sharesave shares. The value is calculated using the difference between the
exercise price and the mid-market closing price of a share on the date of maturity. The relevant prices were £4.82 and £6.792 for David Thomas’ options, and £4.49
and £7.112 for Steven Boyes’ options.
7 The Sharesave shares granted in 2017, which matured on 1 July 2020, were subject to a continued employment condition and completion of a savings contract.
There are no performance conditions for Sharesave shares. 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).
8 Details of Mike Scott’s Replacement Awards are shown on page 120. The value shown in the Replacement Award column relates to the Deferred Bonus shares
vesting in December 2022. The value of the replacement LTPP awards vesting in October 2022 are included in the LTPP column.
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Table 8 – Non-Executive Directors’ single figure of remuneration (audited)
John Allan
Nina Bibby
Katie Bickerstaffe
Jock Lennox
Chris Weston
Sharon White
Total
Fees
£000
Benefits (taxable)
£000
Total
£000
2021/22
343
75
92
109
92
85
796
2020/21
333
63
231
77
221
64
582
2021/222
2
–
–
–
–
–
2
2020/213
1
–
–
–
–
–
1
2021/22
345
75
92
109
92
85
798
2020/21
334
63
23
77
22
64
583
1
Katie Bickerstaffe and Chris Weston were appointed to the Board with effect from 1 March 2021, and their fees for 2020/21 therefore reflect a partial year.
2 Benefits (taxable) for 2021/22 include expenses incurred in attending the Company’s main corporate office and are £1,648 for John Allan.
3 Benefits (taxable) for 2020/21 include expenses incurred in attending the Company’s main corporate office and were £706 for John Allan.
Annual bonus
For FY22, the business was focused on returning volumes to pre-pandemic levels and creating a platform for future growth, with a strong
emphasis on ensuring the safety of its workforce, customers and suppliers whilst maintaining high customer service levels. The bonus
measures were set accordingly, with increased weighting given to the SHE measure. Financial targets were set taking into consideration
internal and external consensus forecasts.
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. Mike Scott’s bonus potential was pro-rated to reflect the
proportion of FY22 during which he was employed by the Company. 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 FY22 are set out in Table 9 below. As set out in the Chair’s statement on page 105, the Committee has exercised
discretion in respect of the FY22 annual bonus outcome and assessed the profit before tax element on a pre-adjusted items basis. The
Committee considers the outcome reflects a fair, reasonable and appropriate level of reward, and the overall performance of the Group
during FY22. It is also aligned to the bonus outcomes for the wider workforce below Senior Management.
Table 9 – Annual bonus (audited)
Bonus target
Adjusted profit
before tax
Strategic objective
To support profitability
Capital
employed2
To incentivise improvement
of capital management
Quality and
Service (with
health and
safety
underpin)3
Construction
Waste
Reduction
Trading
outlets
Total outcome
To ensure a focus on quality
and service to our customers
without compromising
the health and safety of
our employees and other
stakeholders
To reduce construction waste
intensity compared with FY21.
(Measured in tonnes of waste
for every 100m2 of legally
completed build area)
To open the optimum number
of trading outlets to ensure
growth and delivery of our
business plan
Targets
Threshold: £889m
Target: £919m
Maximum: £949m
Above target
Target: £1,693m
Maximum: £1,653m
Divisions to achieve SHE
audit of 94% and 90%
‘recommend’ score for
customer service
Threshold: 6.20 tonnes
Target: 6.14 tonnes
Maximum: 6.07 tonnes
Threshold: 102
Target: 106
Maximum: 110
Potential
bonus
weighting
% of salary
16.5%
41.25%
82.5%
3%
7.5%
15%
22.5%
3%
7.5%
15%
3%
7.5%
15%
Actual
performance
achievement
£1,055m1
Bonus
achieved
% of salary
82.5%
Bonus
outcome %
of maximum
55.0%
£1,491m
15.0%
10.0%
24 /27
divisions
20.0%
13.3%
4.97 tonnes
15.0%
10.0%
Executive Directors’ deferred bonus
Any bonus earned in excess of 100% of base salary will be deferred into shares for each of the Executive Directors as set out in Table 10
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 FY22 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.
Table 10 – Executive Directors’ deferred bonus (audited)
FY22 deferred bonus
FY21 deferred bonus
Salary
payable
%
147.5
147.5
83.7
Annual
bonus
£000
1,151
928
402
Salary
in cash
%
100
100
83.7
Bonus paid
in cash
£000
780
629
402
Salary
deferred in
shares
%
47.5
47.5
0
Bonus
deferred in
shares
£000
371
299
0
Salary
deferred to
shares
%
48.3
48.3
–
Bonus
deferred to
shares
£000
366
290
–
Number of
shares1
52,138
41,263
–
David Thomas
Steven Boyes
Mike Scott2
1 The number of conditional shares awarded during the year was calculated at a share price of £7.019, being the average of the mid-market closing prices of the
shares for the first five dealing days following the date of the final FY21 results announcement for the Company.
2 Mike Scott was appointed a Director of the Company on 6 December 2021. Mike’s percentage bonus outcome was 147.5%. This was applied to his annual base
salary for FY22 and pro-rated to the number of calendar days he was employed in the year, to give the percentages shown in the Table.
Long Term Performance Plans
Vesting of 2019 LTPP (included in FY22 single figure of remuneration)
The 2019 LTPP award granted on 24 October 2019 was based on a three year performance period to 30 June 2022. The award is subject
to three performance conditions, 20% EPS, 40% ROCE and 40% TSR (half of which is measured against a 50+/50- comparator group and
the other half against a housebuilder index). For the reasons stated in the Chair’s statement on pages 105 and 106, the Committee has
agreed to exercise discretion and has assessed the EPS target on a on a pre-adjusted items basis. The resulting vesting levels are as
follows:
Table 11 – Vesting of 2019 LTPP (audited)
Metric
Adjusted EPS
(20%)
Underlying ROCE
(40%)
TSR
(FTSE)
(20%)
TSR
(Housebuilder)2
(20%)
Performance condition
EPS growth for the financial year ended
30 June 2022
To increase underlying ROCE for the
financial year ended 30 June 2022
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
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.
Threshold (25%
vesting)
76p
Maximum
(100% vesting)
85p
19%
22%
Actual
84.6p1
25.2%
Median
ranking of 45.5
(TSR of 5.7%)
Upper
quartile
ranking of 23.3
(TSR of 32.6%)
Rank of 61.8
(TSR of -4.9%)
Unweighted
Index average
(TSR of 18.1%)
Unweighted
Index
average + 8% p.a.
(TSR of 44.1%)
Below
unweighted
index average
(TSR of -4.9%)
Total level of award vesting
Portion of
award vesting
19.3%
40.0%
0%
0%
59.3%
1 As a result of the discretion exercised by the Committee, the adjusted basic EPS (which excludes adjusted items) on which the vesting has been determined is 83.0
pence. As in previous years, this has been re-based using the same rate of corporation tax and number of shares as was used in setting the 2019 LTPP targets. The
re-based adjusted basic EPS used for the purpose of determining vesting, which is directly comparable to the 2019 targets, is 84.6 pence. The equivalent figures
prior to the discretion exercised by the Committee are a basic EPS of 50.6 pence, re-based using the same rate of corporation tax and number of shares as was
used in setting the 2019 LTPP targets, giving a re-based basic EPS of 51.5 pence. The vesting outcome had discretion not been exercised would have been 40%.
118 outlets
15.0%
10.0%
2 The housebuilder Index comprises: Bellway, Berkeley Homes, Countryside Partnerships, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
147.5%
98.3%
1 The profit before tax prior to discretion being exercised by the Committee would have been £642m. The bonus outcome had the Committee not exercised its
discretion would have been 43.3% of maximum.
2 See definition on page 200.
3 The quality and service measure is pro-rated based on the number of divisions achieving both targets.
116
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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. There was no share price appreciation, and no discretion was exercised
in relation to the share price. The Committee believes that the vesting level achieved is fair, reasonable and appropriate. The 2019 LTPP
has 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 12 – 2019 LTPP vesting outcomes (audited)
Executive Director
David Thomas
Steven Boyes
Mike Scott3
Number of
shares at
grant
238,024
188,376
22,560
Number
of shares
to lapse
96,876
76,670
9,182
Total number
of shares
to vest1
141,148
111,706
13,378
Estimated
value of vested
shares2
(£000)
697
552
66
Value of dividend
equivalents earned
on vested shares2
(£000)
46
36
2
Total
Estimated
value2
(£000
743
588
68
1 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 2022.
Performance to date of 2020 and 2021 LTPP awards
The following tables show the targets set on grant for each of the current LTPP awards together with performance to date.
For the 2020 LTPP the potential level of vesting is based on performance measured over two years to 30 June 2022:
Table 14 – 2020 LTPP award performance against targets
Performance target
TSR FTSE1 (20%)
TSR Housebuilder2
(20%)
Below threshold
(0% vesting)
Below median
Below unweighted
index average
Threshold
(25% vesting)
Median
Unweighted
index average
EPS (20%)
Underlying ROCE
(40%)
Total level of award vesting
<76 pence
<19.0%
76 pence
19.0%
Maximum
(100% vesting)
Upper quartile
Unweighted
index average
+8% p.a
88 pence
22.0%
Performance as
at 30 June 2022
Below median
Below median
Level of vesting had
the award vested as
at 30 June 2022
0%
0%
51.5 pence
25.2%
0%
40%
40%
2 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 2022 (£4.94 per
For the 2021 LTPP the potential level of vesting is based on performance measured over one year to 30 June 2022:
share). There was no share price appreciation from the date the shares were awarded.
3 The shares granted to Mike Scott were replacement awards, further details of which can be found on page 120.
LTPP granted during the year (2021 LTPP)
The following 2021 LTPP awards were granted to Executive Directors, and are subject to four performance conditions, 30% TSR (half
of which is measured against a 50+/50- comparator group and the other half against a housebuilder index), 15% EPS, 40% ROCE and
15% reduction of GHG emissions. The levels of vesting against TSR and GHG emissions will be measured over a three-year period
commencing 1 July 2021, and against EPS and ROCE for the financial year ending 30 June 2024. 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. The Committee will, however, consider the outcome at
vesting to ensure no windfall gains have occurred as a result of changes in the share price between the grant and vesting.
Table 13 – 2021 LTPP (audited)
Executive Director
David Thomas
Steven Boyes
Mike Scott2
Type of
award
Conditional
award
Conditional
award
Conditional
award
Basis of
award
granted
200% of salary
£780,000
200% of salary
£629,186
200% of salary
£480,000
Share price
at date
of grant1
(£)
6.95
Number of
shares over
which award
was granted
224,370
Face value
of award
(£000)
1,559
% of face value
that would vest
at threshold
performance
25
6.95
6.95
180,987
1,258
117,716
818
25
25
Vesting
determined by
performance
over
Three
financial
years to
30 June
2024
1 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 13 October 2021, being the day before the date of the award to David Thomas and Steven Boyes.
2 Mike Scott’s award was made on 14 February 2022, after he was appointed, using the same share price as for the other Executive Directors. The number of shares
awarded to Mike Scott was pro-rated to reflect the length of the performance period remaining from his date of appointment.
The targets applicable to the 2021 LTPP are as set out in Table 15.
Table 15 – 2021 LTPP award performance against targets
Performance target
TSR FTSE1 (15%)
TSR Housebuilder2
(15%)
EPS (15%)
Underlying ROCE
(40%)
GHG emissions
reduction (15%)
Total level of award vesting
Below threshold
(0% vesting)
Below median
Below unweighted
index average
<79 pence
<19.0%
Threshold
(25% vesting)
Median
Unweighted
index average
79 pence
19.0%
Maximum
(100% vesting)
Upper quartile
Unweighted
Performance as
at 30 June 2022
Below median
Below median
Level of vesting had
the award vested as
at 30 June 2022
0%
0%
index average +8% p.a
87 pence
22.0%
51.5 pence
25.2%
<20% reduction
25% reduction
30% reduction
23.2%
0%
40%
2.4%
42.4%
1 The comparator group for TSR FTSE is each of the members ranking 50 above and 50 below the Company in the FTSE Index.
2 The housebuilder Index comprises: Bellway, Berkeley Homes, Countryside Partnerships, Crest Nicholson, Persimmon, Redrow, Taylor Wimpey and Vistry Group.
For the TSR, EPS and Underlying ROCE
performance targets, vesting is on a
straight line basis between threshold and
maximum. For the GHG performance
target, vesting is on a straight line basis
between 20% and 25% reduction, and
between 25% and 30% reduction. 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.
Additional payments to Mike Scott
following his recruitment
As set out in last year’s Remuneration
Report, the Committee granted Mike Scott
conditional awards over Barratt shares
on appointment, 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 was no more
than awards forfeited from his previous
employer. The structure and timeframes
of the Replacement Awards reflect the
forfeited awards insofar as possible. The
undertaking to make these Replacement
Awards facilitated the recruitment of Mike
as the Group’s CFO, and was designed to
achieve a balance acceptable to Mike, the
Company and its shareholders.
The details of the Replacement Awards,
which were made in February 2022, are
given in Table 16 as follows:
• Deferred bonus award: to compensate
Mike for the loss of deferred bonus
shares which were due to vest on
12 December 2022 and have no
performance conditions. The Deferred
bonus award will vest on the same
date, subject to Mike’s continued
employment; and
• LTPP awards: to compensate Mike
for the loss of LTIP awards with
his previous employer on the basis
described in Table 16.
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Table 16 – Mike Scott replacement awards
Table 17 – Directors’ interests in shares as at 30 June 2022 (audited)
Award
Deferred bonus shares
LTPP2
LTPP
Performance period
–
1 July 2019 – 30 June 2022
1 July 2020 – 30 June 2023
Vesting date
December 2022
October 2022
October 2023
Replacement
awards1
22,559
22,560
67,681
Value of
replacement
awards
£159,988
£159,996
£479,994
% of Salary
(£480,000)
33%
33%
100%
LTPP total
LTPP total
90,241
£639,990
1 The number of shares was set by reference to the share price on 22 June 2021, being £7.092, and is as set out in last year’s Remuneration Report.
2 The outcome of this award is disclosed in Tables 11 and 12 on pages 117 and 118.
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 2022, David Thomas and
Steven Boyes had met their shareholding
requirements and Mike Scott has until
6 December 2026 to meet his.
Executive Directors are also subject to
a two-year post cessation shareholding
requirement. They must hold 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 will be entered
into by the Company and the relevant
Executive Director at the point of leaving
employment, under which the individual
concerned will agree not to dispose of the
shares prior to the completion of the post
cessation shareholding period.
The interests of the Directors serving
during the financial year 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.
No notification has been received of any
change in the interests shown during the
period 30 June 2022 to 6 September 2022
inclusive.
The value of the 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 were made on the same terms
(including malus and clawback and post-
vesting holding periods) 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, which can be found in
Table 11 and Table 14.
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.
Statement of Directors’
shareholding and share interests
For the financial year ended 30 June 2022,
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
120
Other shares held
Options Shareholding requirements
Interests
subject to
performance
conditions
(LTPP)
Interests not
subject to
performance
conditions
(DBP)
Beneficially
owned
Interests in
Sharesave
options1
Shareholding
requirement
% salary
Current
shareholding
% salary3
Shareholding
requirement
met?
1,196,897
618,644
11,961
744,398
592,546
207,957
105,815
88,420
22,559
5,373
3,463
4,1282
200%
200%
200%
733%
483%
39%
Yes
Yes
No
82,235
6,308
8,500
10,000
–
363
The Chairman and Non-Executive Directors are not awarded incentive shares and
are not subject to a shareholding requirement.
Executive Directors
David Thomas
Steven Boyes
Mike Scott
Non-Executive Directors
John Allan
Katie Bickerstaffe
Nina Bibby
Jock Lennox
Chris Weston
Sharon White
1 All of these options were unvested at 30 June 2022.
2 During the year, Mike Scott was granted 4,128 Sharesave options, exercisable for six months from 1 July 2025 at an option price of £4.36, representing a 20%
discount on the average share price for the five business days immediately before the invitation to participate in the award (£5.44). 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 value of the options based on the average
share price above was £22,456. There are no performance targets associated with this Sharesave option.
3 The share price used for the purposes of determining the value of the shares is £4.57, being the mid-market closing price on 30 June 2022. The value of DBP shares
used is net of income tax and national insurance contributions which the Directors would have to pay on exercise.
The cash supplement paid to David
Thomas and Steven Boyes 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.
Details of cash supplements paid to the
Executive Directors during the year can be
found in Table 7 on page 115.
Defined benefit section
Steven Boyes is a deferred member of
the defined benefit section of the Barratt
Group Pension and Life Assurance Scheme
(the ‘Scheme’), which was bought out by
an insurer during FY21. As a result of the
buyout, no employee (including Steven
Boyes) has any current or prospective
defined benefit pension or related benefit
payable by the Group.
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.
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 FY22, 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.
Mike Scott received an amount equal to
10% of base salary in line with the Policy
for all new Executive Directors at the dates
of their appointment. Only the base salary
element of a Director’s remuneration is
pensionable.
Payments to former Directors
(audited)
Jessica White stepped down as a Director
and Chief Financial Officer on 30 June 2021
and left the business on 31 July 2021. The
Committee determined that, in line with
the Policy and the rules of the relevant
plans, Jessica would be treated as a good
leaver.
As set out in last year’s Remuneration
report, Jessica received 121,556 shares
under the 2018 LTPP. These shares
vested on 14 October 2021. The awards
were valued using a share price of £6.83
per share, being the market price of the
shares on the vesting date. The value
of the shares and dividend equivalents
(paid in cash) was £830,227 and £98,944
respectively, such that the total value of the
award on the vesting date was £929,171.
Jessica’s 6,465 Sharesave shares granted
in 2017 became eligible for early exercise
to the extent Jessica had saved under the
contract within six months of her date
of leaving. There are no performance
conditions for Sharesave shares. Jessica
exercised options over 5,387 shares on 20
September 2021. The remainder of the
shares lapsed. The value of the options
was £11,420 using the difference between
the exercise price of £4.64 and a share
price of £6.76 (the mid-market closing
price of a share on the date of exercise).
121
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Remuneration report CONTINUED
Annual report on remuneration
Payments for loss of office (audited)
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, shown in Table 18 below. As set out in last year’s Remuneration
report, the Committee determined that, in line with the Policy, Jessica would be treated as a good leaver and agreed the remuneration
for the unexpired period of her notice, 1 August 2021 to 4 March 2022. These payments are also shown in the table below.
Table 18 – Jessica White – Payments for loss of office
Period
July 2021
Unexpired notice period (1 August 2021 to 4 March 2022)
Basic Salary
£000
35
253
Pension
allowance
£000
5
38
Taxable
benefits1
£000
4
10
Pay in lieu of
untaken holiday
entitlement £000
15
-
1 Taxable benefits include 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. They also include £3,029 for gifts, including the tax payable on them, presented to
Jessica by the Board on her departure in July 2021.
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.
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)
Ten years to 30 June 2022
Mark Clare
2014
6,430
100.0
2013
4,310
100.0
2015
7,363
93.2
2016
3,155
97.4
2017
3,331
97.5
David Thomas
2019
3,727
96.2
2018
2,720
92.2
2020
1,251
0
2021
3,761
99.0
2022
2,903
98.3
73.9
95.8
100.0
100.0
100.0
76.4
92.8
19.4
80.0
59.3
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.
£800
£700
£600
£500
£400
£300
£200
£100
0
June 2012
June 2013
June 2014
June 2015
June 2016
June 2017
June 2018
June 2019
June 2020
June 2021
June 2022
Index of currently listed housebuilders
FTSE 100
Barratt Developments PLC
Source: Datastream by Refinitiv
122
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 Barratt Developments PLC, the Group parent
company, in respect of the financial years ended 30 June 2020 to 30 June 2022, compared with their prior years.
Table 20 – Percentage change in remuneration
FY22
FY21
FY20
Salary/
fees
% change
Benefits
% change
Annual
bonus
% change
Salary/
fees
% change1
Benefits
% change
Annual
bonus
% change
Salary/
fees
% change
Benefits
% change
Annual
bonus
% change
3.0
5.0
N/A
3.0
19.0
41.5
41.6
32.8
43.8
(1.1)
7.7
(25.0)
N/A
100.0
0.0
0.0
0.0
0.0
0.0
(11.3)
2.5
4.4
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(3.2)
2.2
2.2
N/A
2.5
1.6
N/A
4.1
3.2
N/A
7.7
(10.3)
11.1
N/A
0.0
0.0
N/A
0.0
0.0
N/A
(3.5)
100.0
100.0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
100.0
0.3
0.2
N/A
0
0
N/A
0
0
N/A
4.0
16.0
(12.2)
N/A
(50.0)
0
N/A
0
0
N/A
6.4
(100.0)
(100.0)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
(100.0)
7.8
(2.1)
(3.2)
0.4
2.1
100.0
0.8
(1.5)
(100.0)
Executive Directors
David Thomas
Steven Boyes
Mike Scott2
Non-Executive Directors3
John Allan
Nina Bibby
Katie Bickerstaffe4
Jock Lennox
Sharon White
Chris Weston4
Average pay of all
employees in
Barratt Developments PLC
Average pay of all
employees in the Group5
1 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.
2 Mike Scott was appointed as an Executive Director effective 6 December 2021, therefore no percentage change in remuneration is displayed.
3 The changes in fees of the Non-Executive Directors reflect the introduction of additional fees for committee membership, and increases in fees for Committee
Chairs which took place for FY22, and were set out in detail on page 102 of the FY21 Annual Report and Accounts.
4 Katie Bickerstaffe and Chris Weston were appointed to the Board with effect from 1 March 2021, and therefore the change in fees reflects the annualised fees that
would have been earned for FY21.
5 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
FY22
FY21
FY20
FY19
Method
Option B
Option B
Option B
Option B
25th percentile
pay ratio
81:1
115:1
40:1
123:1
Median
pay ratio
63:1
94:1
32:1
88:1
75th percentile
pay ratio
38:1
60:1
21:1
59:1
The remuneration figures for the employee at each quartile were determined with reference to the financial year ended 30 June 2022.
Under Option B of The Companies (Miscellaneous Reporting) Regulations 2018, the latest available gender pay gap data (i.e. from April
2022) 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 to alternative methods, balancing the need for statistical accuracy with internal
operational resource constraints.
A full-time equivalent total pay and benefits figure for FY22 was then calculated for each of these 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 is 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 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, with the
exception of annual bonuses where the amount paid during the year for the annual bonus and H2 bonus was used (i.e. in respect of FY21) as
the FY22 employee figures had not yet been determined at the time this report was produced. No components of pay have been omitted.
123
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Remuneration report CONTINUED
Annual report on remuneration
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)
£29,073
£35,887
Median (P50)
£45,175
£46,429
75th percentile (P75)
£66,437
£77,134
The FY22 pay ratios are lower than last year due to a decrease in the Chief Executive’s single figure of remuneration compared to FY21
combined with an increase in the total pay and benefits for the P25, P50 and P75 employees. The decrease in Chief Executive pay is
a result of a lower vesting outcome of the 2019 LTPP award in comparison to the 2018 LTPP award that vested last year. The Chief
Executive’s annual bonus payouts were broadly aligned between FY21 and FY22. The median pay ratio has fluctuated since reporting
began. This movement has primarily been driven by both changes in Chief Executive pay outcomes and the impact of the pandemic on
outcomes in recent years.
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)
Profit from operations1
Total capital return2
FY22 £m
492.7
646.6
375.4
FY21 £m
445.1
811.1
299.4
% change
11
(20)
25
1 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 135.
2 For FY21 this includes the interim and final dividends paid in May and November 2021. For FY22, this includes the interim dividend paid in May 2022, and the
proposed final dividend for payment in November 2022, the value of which has been calculated based on the number of shares in issue as at 30 June 2022. There
have been no share buybacks made during FY21 or FY22.
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 Mike Scott held any non-executive directorships
with other companies during the year. David Thomas is a non-executive director of the HBF for which he does not receive a fee. He also
participates in a number of groups connected with the UK construction industry (in particular sustainability), for which no fee is paid.
Statement of shareholding vote at AGM
The latest resolution to approve the Directors’ remuneration policy (a 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 (an advisory vote) were proposed to
shareholders at the 2020 and 2021 AGMs respectively. 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
% votes cast
98.38
1.62
100.00
–
Number of votes
669,565,590
10,994,399
680,559,989
121,686
Vote on Remuneration report – 2021 AGM
% votes cast
98.03
1.97
100.00
–
Number of votes
713,316,429
14,367,687
727,684,116
8,583,304
This Remuneration report was approved by the Board on 6 September 2022 and signed on its behalf by:
Katie Bickerstaffe
Chair of the Remuneration Committee
6 September 2022
124
Other statutory disclosures
Directors’ Report
For the financial year ended 30 June 2022, the Strategic Report is set out on pages 1 to
73 and the Directors’ Report on pages 74 to 127. 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
Likely future developments in the business of the Group
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
Research and development activities
173
1 to 51
171 to 172
184
32
30 to 33 and 41 to 43
39 to 51
69
14 and 15
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 11.2 pence per share was paid on 18 May 2022 to those
shareholders on the register on 8 April 2022 (2021: 7.5 pence per share). The Directors
recommend payment of a final dividend of 25.7 pence per share (2021: 21.9 pence per
share) in respect of FY22. The final dividend will be paid, subject to shareholder approval
at the 2022 AGM, on 4 November 2022 to shareholders on the register at close of business
on 30 September 2022. Shareholders who wish to elect for the Dividend Reinvestment
Plan should do so by 14 October 2022.
If approved, the total dividend for FY22 will be 36.9 pence per share (2021: 29.4 pence per
share).
Annual General Meeting
The 2022 AGM will be held at the offices of Linklaters LLP, One Silk Street, London EC2Y
8HQ on Monday 17 October 2022 at 2 p.m. 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 2022, 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.
Royal Bank of Canada
Number of
voting rights1
34,579,199
56,413,704
30,554,688
% of total
issued share
capital2
8.24
5.60
3.00
Nature of
holding
Indirect
Indirect
Direct
1 Represents the number of voting rights last notified to the Company by the respective shareholder in
accordance with DTR 5.1.
2 Based on the Total Voting Rights as at the relevant notification dates.
At 6 September 2022, 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 2022, are 1,022,563,620.
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 13 October 2021, the Directors
were given authority to allot shares up to a
nominal value of £33,985,510 (representing
one-third of the nominal value of the
Company’s issued share capital as at 3
September 2021), such authority to remain
valid until the end of the 2022 AGM or,
if earlier, until the close of business on
13 January 2023. A resolution to renew
this authority will be proposed at the
2022 AGM.
125
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE Other statutory disclosures CONTINUED
Statement of Directors’ responsibilities
Change of control
The following significant agreements as at
30 June 2022 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
6 September 2022
Shareholder authority for purchase
of own shares
At the Company’s AGM held on 13 October
2021, shareholders authorised the
Company to buy back up to an aggregate of
101,956,532 ordinary shares (representing
10% of the Company’s issued share
capital). This authority is valid until the end
of the 2022 AGM (at which a renewal of that
authority will be sought) or, if earlier, until
the close of business on 13 January 2023.
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. David Thomas, Chief
Executive, was Senior Accounting Officer
until 31 December 2021, after which
Mike Scott, as the newly appointed Chief
Financial Officer, became the Senior
Accounting Officer. 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 2022.
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 2022 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’s representative office in Beijing
was closed in June 2022.
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
24 on page 173.
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 2022
AGM. These documents are available on
the Company’s website at
www.barrattdevelopments.co.uk.
126
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 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
6 September 2022
The Directors’ Report from pages 74 to
126 inclusive was approved by the Board
on 6 September 2022 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. 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.
127
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukGOVERNANCEGOVERNANCE 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
2 Revenue
3 Profit from operations
4 Adjusted items
5
Key management, employees and
retirement benefit obligations
6 Net finance costs
7 Tax
8 Earnings per share
9 Dividends
10 Business combinations
11 Goodwill and other intangible assets
12
Company investments in subsidiary
undertakings
13
Investments in jointly controlled entities
14 Jointly controlled operations
15 Property, plant and equipment
16 Leases
17
Inventories
18 Trade and other receivables
19 Net cash
128
142
144
145
146
147
148
149
152
152
153
154
157
157
160
161
162
163
164
165
129
135
136
137
138
139
140
167
168
170
171
173
173
173
174
178
179
180
181
184
184
20 Trade and other payables
21 Provisions
22 Contract assets and liabilities
23 Financial instruments
24 Share capital
25 Merger reserve
26 Own shares reserve
27 Share-based payments
28 Non-controlling interests
29 Contingent liabilities
30 Related party transactions
31 Financial risk management
32 Post balance sheet events
33 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:
Independent Auditor’s Report
to the members of Barratt Developments PLC
Report on the audit of the Financial Statements
1. Opinion
In our opinion:
•
•
•
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 2022 and of the Group’s profit for the year then ended;
the Group Financial Statements have been properly prepared in
accordance with United Kingdom adopted international accounting
standards and International Financial Reporting Standards (IFRSs)
as issued by the International Accounting Standards Board (IASB);
the Company Financial Statements have been properly prepared in
accordance with United Kingdom adopted international accounting
standards and as applied in accordance with the provisions 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 Balance Sheets;
the Consolidated and Company Statements of Changes in
Shareholders’ Equity;
the Consolidated and Company Cash Flow Statements; and
the related notes 1 to 33.
The financial reporting framework that has been applied in the
preparation of the Group Financial Statements is applicable law,
United Kingdom adopted international accounting standards and
IFRSs 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 United Kingdom adopted
international accounting standards and as applied in accordance with
the provisions 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 3 to the Financial
Statements. We confirm that we have not provided any non-audit
services prohibited by the FRC’s Ethical Standard 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:
Increased level of risk
Similar level of risk
Decreased level of risk
Materiality
Scoping
Significant
changes
in our
approach
The materiality that we used for the Group Financial
Statements was £50 million which represents 4.7% of
adjusted profit before tax. Adjusted profit before tax is
profit before tax and adjusted items as disclosed in the
consolidated income statement.
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.
The only change to our audit approach in the current year
is the benchmark used in determining materiality. Due to
the uncertainty caused by COVID-19 in the prior year, a
blended approach of assessing a number of metrics was
used, as the level of uncertainty has significantly reduced
in the current year, a single benchmark approach has
been adopted. The key audit matters identified in the prior
period remain relevant for the current year.
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.
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:
• assessing the Group’s financing facilities including nature of
facilities, repayment terms and covenants;
• challenged assumptions used in the going concern model;
•
reperforming management’s sensitivity analysis;
• assessing identified potential mitigating actions and the
appropriateness of the inclusion of these in the going concern
assessment;
• assessing the historical accuracy of forecast; and
• evaluating whether the 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.
129
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS
Independent Auditor’s Report CONTINUED
to the members of Barratt Developments PLC
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 period 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
How the scope
of our audit
responded
to the key
audit matter
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 92 (Audit Committee Report) and notes 1 and 3 (Financial Statement disclosures including the related critical accounting
judgements and key sources of estimation uncertainty).
Our work included the following:
•
•
Tested the relevant controls covering site valuations, land acquisition feasibilities and margin review;
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 the current and forecast macro-economic conditions such as future
sales volume assumptions and house price and construction cost inflation;
• Analysed margins on a site-by-site and divisional 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;
• 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; and
• Made enquiries of management regarding their assessment of the impact of climate change on the forecast costs to complete and
house prices and assessed the reasonableness of their assumptions.
5.2. Costs associated with legacy properties
Key audit
matter
description
There is ongoing challenge and public scrutiny in relation to fire safety and cladding related issues at legacy developments. The Group
has recognised a number of provisions in relation to changing building regulations and remediation of structural defects identified. The
provisions also include the expected cost to address necessary fire-safety issues on all buildings of 11 metres and above following the
adoption of the UK Government industry pledge by Barratt in April 2022.
As a result of the evolving regulatory environment and government policy, including the building safety industry pledge, we continue to
identify an increased level of risk in relation to the Group’s obligations. 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.
To date, there is limited actual evidence of the costs of remediation and the accounting for these provisions involves a number of
assumptions when estimating the future costs. The key judgements are:
How the scope
of our audit
responded
to the key
audit matter
•
•
•
•
determining which buildings the Group has an obligation to remediate at the balance sheet date;
the cost of the future works;
the duration over which the costs will be incurred; and
the discount and inflation rates applied.
Fire-safety regulations continue to evolve and the Group’s internal investigations are ongoing in relation to their legacy buildings, required
remediation on a building by building basis and potential liabilities.
At the end of the financial year the Group holds a provision of £479.5m (2021: £67.6m) in relation to legacy properties. During the year, the
Group incurred a charge of £448.0m (2021: £81.9m) and utilisation of £20.3m (2021: £46.3m) in relation to remediation costs. The additional
provisions made have been recognised as an adjusted item and excluded from adjusted profit, as explained in note 4.
Refer to page 92 (Audit Committee Report) and notes 1, 21 and 29 to the Financial Statements, including the disclosures relating to this key
source of estimation uncertainty.
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 estimates, quotations or agreements in order to
challenge management’s estimates.
•
assessed the associated disclosures, including consideration of costs classified as adjusted items.
Specifically, in relation to the building safety industry pledge, we performed the following:
•
•
•
•
•
performed an assessment of the Group’s legal liability through discussions with internal legal counsel, the Group’s internal building
safety unit;
performed an assessment of the application of UK laws in relation to responsibilities of freeholders;
analysed buildings with potential legal liability by considering the Group’s portfolio of buildings against the commitments made
under the building safety industry pledge;
assessed the estimated liability by understanding and challenging management’s assumptions regarding the costs of remediation
per plot, the number of plots to be remediated, the time period for the work to be completed and the discount factor applied to the
overall provision; and
assessed the disclosure included within the Financial Statements in relation to provisions and contingent liabilities, including the
disclosure of the assumptions and associated sensitivities in relation to the key sources of estimation uncertainty.
Key
observations
Based on the procedures performed we concluded that margin was recognised appropriately in the year.
Key
observations
Based on the procedures performed we concluded the provision recorded to be appropriate based on information available at 30 June
2022, however we observed a high level of estimation uncertainty in the assumptions applied. Accordingly, we concur with the disclosure
of this provision as a key source of estimation uncertainity within note 1 of the Financial Statements potentially subject to future change.
130
131
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Independent Auditor’s Report CONTINUED
to the members of Barratt Developments PLC
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
Materiality
£50m (2021: £40m)
Basis for
determining
materiality
Our determined materiality represents 4.7% (2021: 4.3%) of adjusted profit before tax.
Adjusted profit before tax is profit before tax and adjusted items as disclosed in the
consolidated income statement.
In the prior year, due to the volatility in the results of the Group arising from COVID-19,
we considered the following metrics when determining materiality:
Company Financial Statements
£45m (2021: £36m)
Our basis for materiality was determined
based upon 3% (2021: 3%) of the Company’s
net assets capped at 90% (2021: 90%) of
Group materiality.
• Profit before tax;
• Revenue; and
• Net assets.
Rationale for
the benchmark
applied
We consider adjusted profit before tax to be an important benchmark of the
performance of the Group. Whilst not an IFRS measure, adjusted profit before tax is
one of the key metrics for the Group. It excludes some of the volatility arising from
adjusted items and accordingly we consider it the appropriate basis.
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% (2021: 70%) of Group materiality
70% (2021: 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
misstatements identified in prior periods.
6.3. Error reporting threshold
We agreed with the Audit Committee that we would report to the Committee all audit differences in excess of £2.5m (2021: £2.0m), 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.
7. An overview of the scope of our audit
7.1. Identification and scoping of components
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 relative size and any component-specific
risk factors such as internal control findings and history of error. The
component materialities applied were in the range £17.5m to £33.2m.
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
systems, TM1, COINs and Homebuilder, which included controls
surrounding user access management and change management.
132
7.3. Our consideration of climate-related risks
As part of our audit we have made enquiries of management to
understand the process they have adopted to assess the potential
impact of climate change on the Financial Statements. As disclosed
on page 57, the Group considers climate change to be a principal risk
within the business which in the medium term particularly impacts the
Group’s ability to build homes that are considered fit for purpose as
well as potentially incurring significantly increased costs. In the long
term, climate change could cause significant disruption to operations.
These risks are consistent with those identified through our own risk
assessment process. Due to its medium to longer term impact, the
Group has assessed the impact of climate change on the viability of
the business, as disclosed within the Viability Statement on page 72.
As part of our identification of key audit matters, we therefore assessed
there to be an element of risk in relation to climate change as part of
margin recognition. There is a risk that the forecast cost to complete
does not include appropriate assumptions relating to climate change,
for example, additional costs to ensure the homes meet customer and
investor expectations. In addition to our procedures outlined in section
5.1 above, we have read the climate change related disclosures within
the other information included in the annual report for consistency
with the understanding we have obtained during the audit.
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 directors’ responsibilities statement, 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 industry and sector, 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 and
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
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
related to the potential risk of fraud or non-compliance with laws and
regulations.
133
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Independent Auditor’s Report CONTINUED
to the members of Barratt Developments PLC
Consolidated Income Statement
Year ended 30 June 2022
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.
In addition to the above, our procedures to respond to risks identified
included the following:
•
•
the section of the annual report that describes the review of
effectiveness of risk management and internal control systems set
out on pages 52 and 53; and
the section describing the work of the Audit Committee set out on
page 91.
•
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 the 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.
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 72;
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 72;
the directors’ statement on fair, balanced and understandable set
out on page 127;
the board’s confirmation that it has carried out a robust assessment
of the emerging and principal risks set out on page 53;
134
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
• 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.
We have nothing to report in respect of these matters.
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.
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 reappointed as auditor for
the year ending 30 June 2018 and subsequent financial periods. The
period of total uninterrupted engagement including previous renewals
and reappointments of the firm is 15 years, covering the years ending
30 June 2008 to 30 June 2022.
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.
As required by the Financial Conduct Authority (FCA) Disclosure
Guidance and Transparency Rule (DTR) 4.1.14R, these Financial
Statements form part of the European Single Electronic Format
(ESEF) prepared Annual Financial Report filed on the National Storage
Mechanism of the UK FCA in accordance with the ESEF Regulatory
Technical Standard (‘ESEF RTS’). This auditor’s report provides no
assurance over whether the annual financial report has been prepared
using the single electronic format specified in the ESEF RTS.
Claire Faulkner (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
London
United Kingdom
6 September 2022
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
Earnings per share from continuing operations
Basic
Diluted
The notes on pages 142 to 194 form an integral part of these Financial Statements.
Adjusted items:
Notes
2
3
3
6
6
6
13
7
28
8
8
2022
£m
5,267.9
(4,368.0)
899.9
(256.4)
84.4
(81.3)
646.6
2.5
(30.1)
(27.6)
23.3
642.3
(127.1)
515.2
515.1
0.1
50.6p
49.8p
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
64.9p
64.0p
Notes
Gross profit
2021
£m
2022
£m
899.9
1,010.0
4
4
4
433.2
(25.0)
–
81.9
–
22.8
2022
£m
646.6
433.2
(25.0)
–
1,308.1
1,114.7
1,054.8
Profit from
operations
2021
£m
Share of post-tax
profit from joint
ventures
2021
£m
2022
£m
Profit before tax
2022
2021
£m
£m
811.1
23.3
27.7
642.3
812.2
81.9
–
26.0
919.0
4.3
–
–
(0.4)
–
–
437.5
(25.0)
–
27.6
27.3
1,054.8
81.5
–
26.0
919.7
Reported profit
Cost associated with legacy
properties
Legacy property recoveries
CJRS grant repaid
Adjusted profit
135
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Consolidated Statement of Comprehensive Income
Year ended 30 June 2022
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 142 to 194 form an integral part of these Financial Statements.
Notes
2022
£m
515.2
–
–
–
2021
£m
660.1
(2.2)
0.4
(1.8)
515.2
658.3
515.1
658.0
28
0.1
0.3
Share
capital
(note 24)
£m
Share
premium
£m
Merger
reserve
(note 25)
£m
Own
shares
(note 26)
£m
Share-
based
payments
(note 27)
£m
Group
retained
earnings
due to
share-
holders
of the
Company
£m
Total
Group
retained
earnings
due to
share-
holders
of the
Company
£m
Non-
controlling
interests
(note 28)
£m
At 1 July 2020
101.8
245.2
1,109.0
(20.1)
16.6
3,386.4
3,382.9
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 9)
Distributions to non-controlling
interests
Issue of shares
Share-based payments
Transfers in respect of
share options
Tax on share-based payments
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
–
–
–
–
–
–
–
–
–
–
–
–
–
At 30 June 2021
101.8
245.3
1,109.0
Profit for the year being
total comprehensive income
recognised for the year ended
30 June 2022
Dividend payments (note 9)
Distributions to non-controlling
interests
–
–
–
–
–
–
Issue of shares
0.4
8.1
Share-based payments
Purchase of own shares
Transfers in respect of
share options
Tax on share-based payments
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15.4
–
(4.7)
–
–
–
–
–
(28.5)
6.2
–
–
–
–
–
–
–
–
20.4
(12.2)
2.8
27.6
–
–
–
–
24.2
–
(20.1)
(2.7)
Total
equity
£m
4,840.3
660.1
(2.2)
0.4
658.3
(76.3)
(0.6)
0.1
20.4
7.0
2.9
1.4
0.3
–
–
0.3
–
(0.6)
–
–
–
–
659.8
659.8
(2.2)
(2.2)
0.4
0.4
658.0
(76.3)
658.0
(76.3)
–
–
–
3.8
0.1
–
–
20.4
7.0
2.9
3,972.0
3,994.9
1.1
5,452.1
515.1
515.1
(337.0)
(337.0)
–
–
–
–
12.0
1.8
–
–
24.2
(28.5)
(1.9)
(0.9)
0.1
–
(0.4)
–
–
–
–
–
515.2
(337.0)
(0.4)
8.5
24.2
(28.5)
(1.9)
(0.9)
At 30 June 2022
102.2
253.4
1,109.0
(27.0)
29.0
4,163.9
4,165.9
0.8
5,631.3
The notes on pages 142 to 194 form an integral part of these Financial Statements.
136
137
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Statement of Changes in Shareholders’ Equity –
Company
Balance Sheets
At 30 June 2022
Share
capital
(note 24)
£m
Share
premium
£m
Merger
reserve
(note 25)
£m
Own
shares
(note 26)
£m
Share-
based
payments
(note 27)
£m
Retained
earnings
£m
Total
retained
earnings
£m
Total
equity
£m
At 1 July 2020
101.8
245.2
1,109.0
(20.1)
16.6
2,132.5
2,129.0
3,585.0
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 9)
Issue of shares
Share-based payments
Transfers in respect of share
options
Tax on share-based payments
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.1
–
–
–
–
–
–
–
–
–
–
–
–
At 30 June 2021
101.8
245.3
1,109.0
Profit for the year being
total comprehensive income
recognised for the year ended
30 June 2022
Dividend payments (note 9)
Issue of shares
Share-based payments
Purchase of own shares
Transfers in respect of share
options
Tax on share-based payments
–
–
0.4
–
–
–
–
–
–
8.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
15.4
–
(4.7)
–
–
–
–
(28.5)
6.2
–
At 30 June 2022
102.2
253.4
1,109.0
(27.0)
The notes on pages 142 to 194 form an integral part of these Financial Statements.
–
–
–
–
–
–
20.4
(12.2)
1.1
25.9
–
–
–
24.2
–
(20.1)
(1.0)
29.0
(8.8)
(2.2)
0.4
(10.6)
(76.3)
–
–
0.8
–
(8.8)
(2.2)
0.4
(10.6)
(76.3)
–
20.4
4.0
1.1
(8.8)
(2.2)
0.4
(10.6)
(76.3)
0.1
20.4
4.0
1.1
2,046.4
2,067.6
3,523.7
500.2
500.2
500.2
(337.0)
(337.0)
(337.0)
–
–
–
6.4
0.7
–
24.2
(28.5)
(7.5)
(0.3)
8.5
24.2
(28.5)
(7.5)
(0.3)
2,216.7
2,218.7
3,683.3
Assets
Non-current assets
Other intangible assets
Goodwill
Investments in subsidiary undertakings
Investments in joint ventures and associates
Property, plant and equipment
Right-of-use assets
Deferred tax assets
Trade and other receivables
Current assets
Inventories
Trade and other receivables
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
Provisions
Current liabilities
Loans and borrowings
Trade and other payables1
Lease liabilities
Current tax liabilities
Provisions1
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
2022
£m
2021
re-presented1
£m
Group
1 July 2020
re-presented1
£m
Notes
11
11
12
13
15
16
7
18
17
18
19
19
20
16
7
21
19
20
16
21
24
25
28
205.4
852.9
–
177.9
41.2
35.6
–
6.5
1,319.5
5,291.6
237.0
9.9
1,352.7
6,891.2
8,210.7
(200.0)
(240.5)
(26.6)
(45.1)
(359.6)
(871.8)
(17.3)
(1,414.4)
(10.5)
–
(265.4)
(1,707.6)
(2,579.4)
5,631.3
102.2
253.4
1,109.0
4,165.9
5,630.5
0.8
5,631.3
100.0
805.9
–
163.1
20.4
39.3
–
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)
(1,258.9)
(10.9)
(1.0)
(209.9)
(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
101.1
805.9
–
152.1
19.0
46.7
–
5.8
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)
(1,175.2)
(11.7)
(2.8)
(158.4)
(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
2022
£m
–
–
3,092.5
–
6.6
4.2
3.2
76.1
3,182.6
–
13.4
3.1
1,045.4
1,061.9
4,244.5
(200.0)
–
(3.1)
–
–
(203.1)
–
(357.0)
(1.1)
–
–
(358.1)
(561.2)
3,683.3
102.2
253.4
1,109.0
2,218.7
3,683.3
–
3,683.3
Company
2021
£m
–
–
3,088.0
–
12.5
4.5
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
1 Costs in relation to completed developments, previously included within trade and other payables, have been reclassified as provisions as described in note 1 to the
Financial Statements. Prior year balances have been re-presented to ensure comparability.
The Financial Statements of Barratt Developments PLC
(registered number 00604574) were approved by the Board and
authorised for issue on 6 September 2022.
Signed on behalf of the Board:
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 profit for the year was £500.2m
(2021: £8.8m loss).
David Thomas
Chief Executive
Mike Scott
Chief Financial Officer
The notes on pages 142 to 194 form an integral part of these
Financial Statements.
138
139
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Cash Flow Statements
Year ended 30 June 2022
Net cash inflow/(outflow) from operating activities (page 141)
Investing activities:
Purchase of property, plant and equipment
Proceeds from the disposal of fixed assets
Consideration, net of cash acquired, paid on acquisition of
subsidiaries
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
Proceeds from the disposal of other investments
Dividends received from subsidiaries
Interest received
Net cash (outflow)/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 repayments
Repayment of lease liabilities
Notes
15
10
13
13
13
9
28
16
Net cash outflow from financing activities
Net (decrease)/increase in cash, cash equivalents and
bank overdrafts
Cash, cash equivalents and bank overdrafts at the beginning
of the year
Cash, cash equivalents and bank overdrafts at the end of the year
19
Group
2021
£m
2022
£m
Company
2021
£m
1,082.3
(433.1)
1,071.4
(7.2)
(1.4)
(6.1)
2022
£m
417.6
(29.9)
1.0
(205.6)
–
–
(17.9)
(7.9)
9.9
16.5
–
1.4
–
2.2
(222.4)
(337.0)
(0.4)
(28.5)
–
8.5
(1.9)
(5.3)
(13.8)
(378.4)
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)
–
–
–
–
–
–
–
517.4
1.6
517.6
(337.0)
–
(28.5)
–
8.5
–
–
(1.1)
(358.1)
–
–
–
–
–
–
–
8.7
1.2
3.8
(76.3)
–
–
8.0
0.1
–
(111.0)
(1.0)
(180.2)
(183.2)
898.8
(273.6)
895.0
1,518.6
1,335.4
619.8
1,518.6
1,319.0
1,045.4
424.0
1,319.0
Reconciliation of profit from operations to cash flow from
operating activities
Profit 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 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 items
(Increase)/decrease in inventories
Decrease/(increase) in receivables
(Decrease)/increase in payables2
Increase in provisions2
Total movements in working capital and provisions
Interest paid
Tax paid
Net cash inflow/(outflow) from operating activities
Notes
15
16
11
17
27
6
6
6
6
21
2022
£m
646.6
6.2
3.2
13.0
4.3
–
(2.2)
24.2
(14.4)
(0.9)
(4.0)
–
29.4
(543.4)
20.8
(10.7)
415.1
(118.2)
(10.7)
(129.5)
417.6
Group
20212
£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)
62.7
51.5
407.0
(11.0)
(143.5)
1,082.3
2022
£m
12.8
3.5
3.8
1.1
–
–
–
9.0
–
–
(1.9)
–
15.5
–
5.8
(433.6)
–
(427.8)
(33.6)
–
(433.1)
Company
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
1 The Balance Sheet movements in land payables include non-cash movements due to imputed interest. Imputed interest is included within non-cash items in the
statements above.
2 Costs in relation to completed developments, previously included within trade and other payables, have been reclassified as provisions as described in note 1 to the
Financial Statements. Prior year balances have been re-presented to ensure comparability.
The notes on pages 142 to 194 form an integral part of these Financial Statements.
The notes on pages 142 to 194 form an integral part of these Financial Statements.
140
141
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements
Year ended 30 June 2022
1 Basis of preparation
1 Basis of preparation CONTINUED
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. On 31 December 2020, IFRS as adopted by the European Union at that date were brought into UK law and
became UK adopted international accounting standards, with future changes being subject to endorsement by the UK Endorsement
Board. The Group and Company Financial Statements have, therefore, been prepared in accordance with UK adopted 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 142 to 194.
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 3; and
• Costs associated with legacy properties – see note 21.
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.
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 to meet their liabilities and other obligations for the foreseeable future.
The Group’s business activities, together with factors that 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 73. The material financial and operational risks and
uncertainties that may affect the Group’s performance and their mitigation are outlined on pages 54 to 57, and financial risks including
liquidity, market, credit and capital risks are outlined in note 31 to the Financial Statements.
At 30 June 2022, the Group held cash of £1,352.7m and total loans and borrowings of £217.3m, consisting of £17.3m 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 £1,138.6m, presented in note 19.
Should further funding be required, the Group has a committed £700.0m RCF, subject to compliance with certain financial covenants, that
matures in November 2025.
As such, in consideration of its net current assets of £5,183.6m, the Directors are satisfied that the Group has sufficient liquidity to meet
its current liabilities and working capital requirements.
Whilst the underlying fundamentals of the housing market remain attractive, with the Government restating its commitment to address
the historical undersupply of new homes, uncertainty in the current market has increased. This has arisen from the ongoing impact of
inflation on material costs and mortgage affordability, supply chain disruption and industry-specific challenges, such as the potential for
further building safety or greenhouse gas emissions legislation or the withdrawal of Help to Buy from March 2023, which may impact
reservations from Autumn 2022. These, and other economic disruptions, could result in flat or negative economic growth, reduced buyer
confidence, reduced mortgage availability and affordability, falls in house prices or land values and cost increases associated with raw
materials, suppliers, subcontractors and employees.
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 10%, sales volumes fall by 15% and construction costs increase
by between 5% and 9% from the base forecasts, in addition to the implementation of a building safety level and the acceleration of
regulatory changes to reduce indirect greenhouse gas emissions.
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 within 12 months from the date of signing of these Financial Statements.
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.
Application of accounting standards
During the year ended 30 June 2022, the Group has applied accounting policies and methods of computation consistent with those
applied in the prior year with the exception of the following:
•
IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’: The Group holds a liability to cover further costs that are required
to complete a development after all homes have been legally completed. This requires an assessment of the cost to complete and
has historically been presented within trade and other payables. Increasing difficulty in obtaining adoption of infrastructure and
open spaces has increased uncertainty over the timing and amount of these costs. In accordance with IAS 37 ‘Provisions, Contingent
Liabilities and Contingent Assets’, it is now deemed appropriate to present these liabilities as provisions.
To ensure comparability, the relevant prior year balances have also been re-presented as provisions as at 30 June 2021 and 1 July
2020. The impact of this change at 30 June 2021 is to increase provisions by £142.3m and decrease trade and other payables by
£142.3m, and at 1 July 2020 is to increase provisions by £130.2m and decrease trade and other payables by £130.2m, all within
Current Liabilities in the Group’s Balance Sheet. The movements in payables and provisions within the Cash Flow Statement for the
year ended 30 June 2021 have been re-presented accordingly. This has had no impact on net assets or earnings per share.
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 IFRS 4: ‘Extension of the Temporary Exemption from applying IFRS 9’;
• Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16: ‘Interest Rate Benchmark Reform – Phase 2’; and
• Amendment to IFRS 16: ‘COVID-19-Related Rent Concessions beyond June 2021’.
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 mandatory for the Group’s accounting periods beginning on or after 1 July 2022 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.
142
143
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
2 Revenue
The Group’s revenue derives principally from the sale of the homes we build.
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.
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. Revenue from planning promotion agreements is recognised at the point at which contractual obligations are
satisfied.
An analysis of the Group’s continuing revenue is as follows:
Revenue from private residential sales
Revenue from affordable residential sales
Revenue from commercial sales
Revenue from planning promotion agreements
Other revenue
Residential completions1
2021
number
13,134
3,383
–
–
–
16,517
2022
number
13,327
3,835
–
–
–
17,162
2022
£m
4,541.3
611.4
87.6
23.3
4.3
5,267.9
Revenue
2021
£m
4,274.6
495.5
21.7
–
19.9
4,811.7
1 Residential completions exclude JV completions of 746 homes (2021: 726) in which the Group has an interest.
Included within Group revenue is £75.0m (2021: £69.1m) of revenue from construction contracts on which revenue is recognised over
time by reference to the stage of completion of the contracts (note 22). Of this amount, £5.3m (2021: £10.1m) was included in the contract
liability balance at the beginning of the year.
Revenue includes £171.3m (2021: £324.8m) 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.
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 9% 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 adjusted gross profit by £296.0m, a reduction
in adjusted gross margin of 562 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.
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.
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
Costs associated with legacy properties
Amounts associated with legacy properties recovered from third parties
Depreciation of property, plant and equipment
Depreciation of right-of-use assets
Notes
5
4
4
4
15
16
2022
£m
3,761.9
492.7
–
433.2
(25.0)
6.2
13.0
2021
£m
3,537.9
445.1
26.0
81.9
–
5.8
13.8
1 The employee costs reported above are before adjustment for government grants repaid in respect of these costs of £nil (2021: £26.0m) (see note 5).
Profit from operations is stated after charging the Directors’ emoluments disclosed in the Remuneration Report on pages 115 to 121 and
in note 5.
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, £31.5m (2021: £22.2m) of supplier rebate income was included within profit from operations.
144
145
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
3 Profit from operations CONTINUED
4 Adjusted items CONTINUED
2 Other services comprise assurance services over selected ESG metrics and compliance with the recommendations of the TCFD and review procedures over
Salaries and fees (including pension compensation)
Administrative expenses
Administrative expenses of £256.4m (2021: £204.4m) include sundry income of £21.2m (2021: £24.5m), which principally comprises
management fees receivable from JVs, the sale of freehold reversions and ground rent receivable.
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.
2022
£000
680
262
942
37
210
247
1,189
2021
£000
411
305
716
35
–
35
751
selected non-financial disclosures in the Annual Report.
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 pages 95 and 96. 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.
4 Adjusted items
Adjusted items
2022
£000
227
–
227
2021
£000
162
10
172
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.
Costs incurred in respect of legacy properties
Amounts in respect of legacy properties recovered from third parties
CJRS grant income repaid
Adjusted items in cost of sales
CJRS grant income repaid
Adjusted items in administrative expenses
Costs incurred in respect of legacy properties by joint ventures
Adjusted items in share of profit/loss from JVs
Total adjusted items
2022
£000
433.2
(25.0)
–
408.2
–
–
4.3
4.3
412.5
2021
£000
81.9
–
22.8
104.7
3.2
3.2
(0.4)
(0.4)
107.5
Cost associated with legacy properties:
The adjusted costs in the year, associated with legacy properties, comprise additions to provisions of £448.0m, provision releases of
£15.8m, costs expensed directly to the Income Statement of £1.0m and reimbursements recognised directly in the income statement of
£25.0m. Further details of provisions movements are provided in note 21.
146
CJRS grant repayment:
During the year ended 30 June 2020, the Group recognised grant income of £26.0m in respect of the UK Government’s CJRS. This was a
temporary scheme from which the income was voluntarily refunded by the Group during the year ended 30 June 2021. Both the income
and the repayment of the grant were presented as adjusted items in prior years.
5
Key management, employees and retirement benefit obligations
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 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 115 to 121.
A summary of key management remuneration is as follows:
2022
£m
2.9
1.1
2.5
0.1
2.6
9.2
2021
£m
2.8
1.6
2.6
0.1
3.6
10.7
Social security costs1
Performance bonus
Benefits
Share-based payments2
Total
1 Excluded from the Executive Directors’ and Non-Executive Directors’ single figure of remuneration tables on page 115.
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)
2022
Number
Group
2021
Number
2022
Number
Company
2021
Number
6,564
6,422
412
365
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
CJRS grant repayment
Employee costs for the year
Notes
2022
£m
Group
2021
£m
402.7
362.0
0.7
50.2
14.9
24.2
492.7
–
492.7
0.9
45.6
16.2
20.4
445.1
26.0
471.1
27
4
2022
£m
45.2
0.2
8.3
1.6
9.0
64.3
–
64.3
The majority of the costs of the Company’s employees are charged to other Group companies.
Company
2021
£m
41.4
0.4
8.0
3.7
9.6
63.1
0.6
63.7
147
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
5 Key management, employees and retirement benefit obligations CONTINUED
7 Tax
Retirement benefit obligations
The Group operates several defined contribution 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.
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.
2022
£m
2021
£m
Contributions during the year
Group defined contribution schemes’ consolidated Income Statement charge
14.9
13.9
At the balance sheet date, there were outstanding contributions of £2.3m (2021: £1.9m), which were paid on or before the due date.
The Group previously 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. 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’). During the year to 30 June 2021, the insurer 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.
6 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
148
2022
£m
(1.9)
–
(0.6)
(2.5)
9.5
14.4
0.9
4.0
1.3
30.1
27.6
2022
%
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
Company
2021
%
2.8
2022
%
2.8
Group
2021
%
2.8
All profits of the Group are subject to UK corporation tax.
The current year tax charge has been provided for, by the Group at a standard effective rate, inclusive of RPDT, of 20.0% (2021: 19.0%) and
by the Company at a standard effective rate of 19.0% (2021: 19.0%) The closing deferred tax assets and liabilities have been provided in
these Financial Statements at a rate of 19.0% – 29.0% (2021: 19.0% – 25.0%) 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.
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
Residential property developer 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
Impact of introduction of residential property developer tax
2022
£m
122.9
6.3
(8.2)
121.0
2.2
2.6
(1.2)
2.5
6.1
2021
£m
155.1
–
(12.7)
142.4
(3.5)
7.8
5.4
–
9.7
Tax charge for the year
127.1
152.1
149
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
7 Tax CONTINUED
7 Tax CONTINUED
Factors affecting the tax charge for the year
The tax rate assessed for the year is lower (2021: lower) than the standard effective rate of corporation tax in the UK of 20.0% (inclusive of
RPDT) (2021: 19.0%). The differences are explained below:
Profit before tax
Profit before tax multiplied by the standard rate of corporation tax of 20.0% (inclusive of RPDT) (2021:
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 corporation tax rate
Impact of residential property developer tax
Tax charge for the year
2022
£m
642.3
128.5
5.0
(2.1)
(5.6)
(1.2)
2.5
2021
£m
812.2
154.3
(0.9)
(1.8)
(4.9)
5.4
–
127.1
152.1
The UK corporation tax rate will increase from 19% to 25% with effect from 1 April 2023. Legislation to increase the corporation tax rate
was enacted during the 30 June 2021 accounting period and the impact on deferred tax was taken into account at the previous balance
sheet date.
The Finance Act 2022 received Royal Assent on 24 February 2022 introducing a new residential property developer tax (‘RPDT’) which is
effective from 1 April 2022 and is chargeable at 4% of profits generated from residential property development in excess of an annual
threshold. RPDT was introduced by HM Treasury to obtain a contribution from the UK’s largest residential property developers towards
the cost of remediating defective cladding in the UK’s high-rise housing stock and is expected to remain in force for up to ten years. RPDT
will apply to the majority of the Group’s profits.
Tax recognised in equity
In addition to the amount charged to the Consolidated Income Statement, a net current and deferred tax charge of £0.9m (2021: £3.3m
credit) was recognised directly in equity.
Deferred tax
All deferred tax relates to the UK 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
Share
options
£m
(0.7)
0.4
0.4
0.1
0.1
–
2.6
3.2
2.8
8.6
8.6
–
(0.1)
(2.1)
–
–
–
–
–
–
(2.7)
3.8
3.8
–
Losses
£m
Brands
£m
0.1
(19.0)
(0.1)
–
–
–
–
–
–
–
–
–
–
(6.0)
–
(25.0)
–
(25.0)
(4.0)
(2.7)
–
(31.7)
–
(31.7)
Accelerated
capital
allowances
£m
Customer
Contracts
£m
Other (net)
£m
0.7
0.2
–
0.9
0.9
–
(0.4)
–
–
0.5
0.5
–
–
–
–
–
–
–
–
(24.7)
–
(24.7)
–
(24.7)
13.9
(7.4)
–
6.5
6.5
–
0.5
-
–
7.0
5.7
1.3
Group
Total
£m
(2.4)
(9.7)
3.2
(8.9)
16.1
(25.0)
(6.1)
(27.4)
(2.7)
(45.1)
10.0
(55.1)
At 1 July 2020
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
Year ended 30 June 2022:
Income Statement (charge)/credit
Acquired with subsidiary
undertaking
Amounts taken directly to equity
At 30 June 2022
Comprising:
Deferred tax assets
Deferred tax liabilities
150
The deferred tax liability in respect of indefinite life and other 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 it is not anticipated that
any of the deferred tax liability in respect of the indefinite life 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.
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 £2.1m (2021: £2.6m) in respect
of capital and other losses amounting to £10.0m (2021: £13.9m) 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:
At 1 July 2020
Year ended June 2021:
Income Statement (charge)/credit
Amounts taken directly to equity
At 30 June 2021
Comprising:
Deferred tax assets
Year ended 30 June 2022:
Income Statement (charge)/credit
Amounts taken directly to equity
At 30 June 2022
Comprising:
Deferred tax assets
Pension
scheme
£m
(0.7)
0.4
0.4
0.1
0.1
(0.1)
–
–
–
Share
options
£m
Accelerated
capital
allowances
£m
Other (net)
£m
0.6
1.9
1.1
3.6
3.6
(1.3)
(1.0)
1.3
1.3
0.7
0.1
–
0.8
0.8
0.6
–
1.4
1.4
0.4
(0.2)
–
0.2
0.2
0.3
–
0.5
0.5
Company
Total
£m
1.0
2.2
1.5
4.7
4.7
(0.5)
(1.0)
3.2
3.2
151
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
8 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
2022
pence
50.6
49.8
83.0
81.7
2021
pence
64.9
64.0
73.5
72.5
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 and 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)
9 Dividends
Amounts recognised as distributions to equity shareholders in the year:
Final dividend for the year ended 30 June 2021 of 21.9p (2020: 0.0p) per share
Interim dividend for the year ended 30 June 2022 of 11.2p (2021: 7.5p) per share
Total dividends distributed to equity shareholders in the year
Proposed final dividend for the year ended 30 June 2022 of 25.7p (2021: 21.9p) per share
2022
515.1
412.5
(82.5)
845.1
2021
659.8
107.5
(20.4)
746.9
1,021.9
1,018.3
(3.2)
(1.9)
1,018.7
1,016.4
1,021.9
12.4
1,034.3
1,018.3
12.5
1,030.8
2022
£m
223.0
114.0
337.0
2022
£m
261.4
2021
£m
–
76.3
76.3
2021
£m
222.7
The final dividend of 25.7 pence per share was approved by the Board on 6 September 2022 and has not been included as a liability as
at 30 June 2022.
10 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 33.
Group acquisition of subsidiary undertaking
On 31 January 2022, the Group acquired 100% of the share capital of Gladman Developments Limited (‘Gladman’). Gladman is a
land promoter operating in the UK, with particular strength in the south of England. Further details on the strategic rationale for the
acquisition are included in the Strategic Report on page 16.
Details of the purchase consideration, net assets acquired and the resulting goodwill are as follows:
Cash paid
Total purchase consideration
Net assets and liabilities recognised as a result of the acquisition
Intangible assets
Tangible fixed assets
Investments
Inventories
Trade and other receivables
Cash
Trade and other payables
Corporation tax asset
Deferred tax liability
Net identifiable assets acquired
Goodwill
Net assets acquired
2022
£m
218.4
218.4
Fair value
£m
109.7
1.3
1.4
100.5
83.7
12.8
(110.7)
0.1
(27.4)
171.4
47.0
218.4
The assets and liabilities acquired have been recognised at their acquisition date provisional fair values which may be amended during
the 12 months following acquisition. The fair value of trade and other receivables is equal to the gross contractual amounts receivable.
Goodwill represents the value of intangible assets that do not qualify for separate recognition under accounting standards.
Revenue of £23.3m and a profit contribution of £9.5m are recognised in the Consolidated Income Statement in respect of Gladman. If the
acquisition had occurred on 1 July 2021, consolidated pro-forma revenue and profit for the year ended 30 June 2022, based on Gladman’s
results for the year adjusted for intercompany transactions and differences in accounting policies, would have been £5,282.5m and
£510.3m respectively.
Acquisition costs of £4.5m are included in administrative expenses in the Consolidated Income Statement and in operating cash flows
in the Cash Flow Statement. Included within the Group’s Consolidated Income Statement for the year are £4.3m of amortisation of the
intangible assets recognised on acquisition and £1.4m in relation to deferred consideration recognised as employee remuneration.
152
153
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
10 Business combinations CONTINUED
The Group’s cash outflow in respect of the acquisition is as follows:
11 Goodwill and other intangible assets CONTINUED
Other intangible assets – Brands
Cash consideration
Cash balances acquired
Net outflow of cash – investing activities
There were no acquisitions in the year ended 30 June 2021.
11 Goodwill and other intangible assets
Goodwill
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.
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 1 July
Arising on acquisition during the year
At 30 June
Accumulated impairment losses
At 1 July and 30 June
Carrying amount
At 30 June
2022
£m
830.4
47.0
877.4
Group
2021
£m
830.4
–
830.4
24.5
24.5
852.9
805.9
During the year, the Group acquired all of the share capital of Gladman Developments Limited (note 10). Goodwill of £47.0m arising on
the acquisition has been capitalised and allocated to the Group’s acquired land promotion business.
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.
2022
£m
218.4
(12.8)
205.6
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.
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 over ten years. Internally generated customer
contract relationships are not capitalised.
Customer contracts
The Group has capitalised, as intangible assets, acquired customer contracts. Customer contracts are valued at the present value of
future cash flows less contributory asset charges and are amortised on a straight-line basis in line with contract relationships at the
acquisition date.
Brands
2021
£m
Customer contract
relationships
2021
£m
2022
£m
Customer contracts
2021
£m
2022
£m
Cost
At 1 July
Acquired in the year
Amounts written off
At 30 June
Amortisation
At 1 July
Amortisation in the year
Amounts written off
At 30 June
Carrying amount
At 30 June
2022
£m
107.9
10.8
–
118.7
7.9
0.2
–
8.1
107.9
–
–
107.9
7.5
0.4
–
7.9
110.6
100.0
1.4
–
(1.4)
–
1.4
–
(1.4)
–
–
1.4
–
–
1.4
0.7
0.7
–
1.4
–
–
98.9
–
98.9
–
4.1
–
4.1
94.8
–
–
–
–
–
–
–
–
–
Group
Total
2021
£m
109.3
–
–
109.3
8.2
1.1
–
9.3
2022
£m
109.3
109.7
(1.4)
217.6
9.3
4.3
(1.4)
12.2
205.4
100.0
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 Group intending to hold and support the brand for
an indefinite period, and there are no factors that would prevent it from doing so.
During the year, in its acquisition of Gladman Developments Limited, the Group acquired brands valued at £10.8m and customer
contracts valued at £98.9m. The customer contracts are amortised on a straight-line basis over the expected life of the contracts, the
brands acquired in the year are amortised on a straight-line basis over a 20 year period.
154
155
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
11 Goodwill and other intangible assets CONTINUED
12 Company investments in subsidiary undertakings
Impairment of goodwill and indefinite life brands
The Group conducts an annual impairment review of goodwill and its indefinite life brand, David Wilson Homes.
Impairment of goodwill and indefinite life brands
Impairment reviews for goodwill and the Group’s indefinite life brand require an estimation of the value in use of the cash-generating
units to which these assets are allocated. The value-in-use calculations require an estimate of expected future cash flows, including
the anticipated growth rate of revenue and costs, and require the determination of a suitable discount rate to calculate the present
value of the cash flows. The financial forecasts used reflect the outcomes that management consider most likely, based on the
information available at the date of signing of these Financial Statements.
Goodwill and indefinite life brands allocated to housebuilding
An impairment review was performed at 30 April 2022 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 expected future cash flows of the housebuilding business. 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 key assumptions for the value-in-use calculation for the housebuilding business were:
• 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,
considering 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;
• 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; and
• discount rate: this is a pre-tax rate reflecting the Group’s target capital structure, risks appropriate to the housebuilding business
and current market assessments of the time value of money. A rate of 14.9% (2021: 11.8%) is considered by the Directors to be the
appropriate pre-tax discount rate.
The result of the value-in-use exercise concluded that the recoverable value of goodwill and intangible assets allocated to the
housebuilding business exceeded its carrying value by £1,780.4m (2021: £1,861.2m) and there has been no impairment.
Goodwill allocated to land promotion
An impairment review was performed at 30 June 2022 by comparing the value in use of the land promotion business to the carrying value
of its tangible and intangible assets and allocated goodwill.
The value in use was determined by discounting the expected future cash flows of the land promotion business. The first two years
of cash flows were determined using the business’s approved detailed business plan. The cash flows for year three 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 key assumptions for the value-in-use calculation were the expected sales values achieved under land promotion agreements, based
on current market values for similar land, costs required to fulfil customer contracts, and the discount rate of 15.0%, being a pre-tax rate
reflecting the risks appropriate to the land promotion business and current market assessments of the time value of money.
The result of the value-in-use exercise concluded that the recoverable value of goodwill allocated to the land promotion business
exceeded its carrying value by £9.6m and there has been no impairment.
156
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
2022
£m
Company
2021
£m
3,175.6
3,173.8
4.5
1.8
3,180.1
3,175.6
87.6
87.6
3,088.0
3,092.5
3,086.2
3,088.0
13
Investments in jointly controlled entities
A jointly controlled entity (joint venture, or ‘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
Investments in JVs and associated entities are accounted for using the equity method of accounting.
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.
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 that have not been recognised by the Group.
2022
£m
163.1
17.9
(9.9)
(16.5)
23.3
177.9
Group
2021
£m
152.1
7.9
(3.4)
(21.2)
27.7
163.1
157
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
13
Investments in jointly controlled entities CONTINUED
13
Investments in jointly controlled entities CONTINUED
During the year the Group entered into a new JV agreement, Wembley Park Properties LLP. At 30 June 2022, the Group had interests in
the following jointly controlled entities:
JV
51 College Road LLP
Alie Street LLP1
Barratt Metropolitan LLP2
Barratt Wates (East Grinstead)
Limited
Barratt Wates (East Grinstead No.2)
Limited1
Barratt Wates (Horley) Limited2
Barratt Wates (Lindfield) Limited
Barratt Wates (Worthing) Limited
BDWZest Developments LLP1
BDWZest LLP
Blackhorse Road Properties LLP2
Brooklands Milton Keynes LLP
DWH/Wates (Thame) Limited
Enderby Wharf LLP
Fulham Wharf LLP1
Fulham Wharf One Limited1
Fulham Wharf Two Limited1
Harrow View LLP
Infinity Park Derby LLP
Nine Elms LLP¹
Nine Elms One Limited1
Nine Elms Two Limited1
Old Sarum Park Properties Limited
Queensland Road LLP1
Ravenscraig Limited²
Ravenscraig Town Centre LLP
Rose Shared Equity LLP
Sovereign BDW (Hutton Close) LLP
Sovereign BDW (Newbury) LLP
Wembley Park Properties LLP²
Wichelstowe LLP
ZestBDW LLP
Percentage
owned
50.0%
Voting
rights
controlled
50.0%
Country of
registration
England and Wales
Principal
place of
business
UK
50.0%
75.0%
50.0%
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
50.0%
England and Wales
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%
51.0%
50.0%
50.0%
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
33.3%
Scotland
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
England and Wales
50.0%
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
UK
UK
UK
UK
UK
Principal activity
Housebuilding
Financial
year end date
31 March*
Housebuilding
31 March*
Housebuilding
Holding company
30 June
30 June
2 The Group holds four JV investments (Barratt Wates (Horley) Limited, Barratt Metropolitan LLP, Wembley Park Properties 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.
Registered offices
The registered office of all of the entities in the preceding table, with the exception of those listed below is: 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.
Housebuilding
30 June
Summarised financial information relating to these JVs is as follows:
Housebuilding
Housebuilding
Housebuilding
30 June
30 June
30 June
Holding company
31 March*
Holding company
31 March*
Housebuilding
Housebuilding
Housebuilding
Housebuilding
30 June
30 June
30 June
30 June
Housebuilding
31 March*
Dormant
31 March*
Dormant
31 March*
Housebuilding
31 March*
Commercial development
30 June
Housebuilding
31 March*
Holds assets on trust
31 March*
Holds assets on trust
31 March*
Dormant
30 June
Housebuilding
31 March*
Commercial development
31 December*
Dormant
Investment entity
Dormant
Housebuilding
Housebuilding
30 June
30 June
30 June
30 June
30 June
Housebuilding
31 March*
Holding company
31 March*
Harrow View LLP
Blackhorse Road
Developments LLP
Other JVs
Group Total
2022
£m
71.8
(58.5)
–
–
13.3
–
2021
£m
58.1
(46.6)
–
–
11.5
–
2022
£m
41.1
(29.4)
–
–
11.7
–
13.3
11.5
11.7
6.6
6.5
109.6
–
(20.7)
–
88.9
5.8
6.5
90.2
–
(11.6)
–
78.6
6.0
–
42.1
–
(6.2)
–
35.9
2021
£m
32.7
(25.2)
–
–
7.5
–
7.5
3.8
–
44.9
–
2022
£m
161.2
(132.4)
(7.5)
(0.8)
20.5
–
2021
£m
178.1
(141.7)
3.6
(2.0)
38.0
0.1
2022
£m
274.1
(220.3)
(7.5)
(0.8)
45.5
–
2021
£m
268.9
(213.5)
3.6
(2.0)
57.0
0.1
20.5
38.1
45.5
57.1
10.7
18.1
23.3
27.7
10.0
284.4
9.7
14.7
261.3
10.8
16.5
436.1
9.7
21.2
396.4
10.8
(10.7)
(206.8)
(190.3)
(233.7)
(212.6)
–
34.2
(45.0)
42.3
(40.2)
41.6
(45.0)
167.1
(40.2)
154.4
26.9
20.8
15.6
15.1
42.9
55.4
85.4
91.3
44.5
39.3
18.3
17.4
21.1
20.4
83.9
77.1
Income
Adjusted expenditure
(Cost)/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
* 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’s interests in a number of the entities classified as JVs are held indirectly: 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.
158
159
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
13
Investments in jointly controlled entities CONTINUED
15 Property, plant and equipment
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
2022
£m
83.9
94.0
177.9
Group
2021
£m
77.1
86.0
163.1
Property, plant and equipment
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.
Property under construction is carried at cost and no depreciation is charged until the building is complete.
The Group has made loans, net of loss allowances, of £94.0m (2021: £86.0m) 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 2022, the loss allowance is immaterial (2021: 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 £90.3m (2021: £82.7m).
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 30. The Group and Company have a number of contingent liabilities relating to their
JVs. Further details on these are provided in note 29.
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.
14 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 (2021: none).
The Group has significant interests in the following jointly controlled operation:
Joint operation
Share of profits and assets consolidated
Principal place of business
Principal activity
Chapel Hill
50.0%¹
UK
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
Sundry income/(expenses)
Share of profit from joint operations
Share of profits distributed by joint operations
Current assets
Current liabilities
Share of net assets of joint operations
160
2022
£m
–
0.3
0.3
(4.7)
11.1
(0.8)
10.3
Group
2021
£m
15.4
(11.8)
3.6
–
27.5
(12.8)
14.7
Group
Property
£m
Plant and
equipment
£m
Total
£m
Property
£m
Plant and
equipment
£m
Company
Total
£m
Cost
At 1 July 2020
Additions
Disposals
At 30 June 2021
Additions
Acquired on acquisition of subsidiary
Disposals
At 30 June 2022
Depreciation
At 1 July 2020
Charge for the year
Disposals
At 30 June 2021
Charge for the year
Disposals
At 30 June 2022
Net book value
At 30 June 2021
At 30 June 2022
5.5
0.1
–
5.6
22.7
1.2
(0.4)
29.1
2.8
0.3
–
3.1
0.4
(0.1)
3.4
2.5
25.7
47.9
7.1
(1.7)
53.3
7.2
0.1
(6.9)
53.7
31.6
5.5
(1.7)
35.4
5.8
(3.0)
38.2
17.9
15.5
53.4
7.2
(1.7)
58.9
29.9
1.3
(7.3)
82.8
34.4
5.8
(1.7)
38.5
6.2
(3.1)
41.6
20.4
41.2
0.2
–
–
0.2
–
–
–
0.2
0.2
–
–
0.2
–
–
0.2
–
–
25.0
6.1
(1.6)
29.5
1.4
–
(4.9)
26.0
15.5
3.1
(1.6)
17.0
3.5
(1.1)
19.4
12.5
6.6
Property cost includes £21.2m (2021: £nil) in respect of a building under construction.
Authorised future capital expenditure that was contracted but not provided for in these Financial Statements amounted to £10.9m
(2021: £0.7m).
25.2
6.1
(1.6)
29.7
1.4
–
(4.9)
26.2
15.7
3.1
(1.6)
17.2
3.5
(1.1)
19.6
12.5
6.6
161
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
16 Leases
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 0% and 7%, 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 with 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.
Right-of-use assets
Balance at 1 July 2021
Balance at 30 June 2022
Net additions during the year including
remeasurements
Land and
buildings
£m
30.6
25.1
2.3
Other
£m
8.7
10.5
7.0
Lease liabilities included in the Balance Sheet
Current
Non-current
Group
Total
£m
39.3
35.6
9.3
2022
£m
10.5
26.6
37.1
Land and
buildings
£m
3.7
3.1
–
Group
2021
£m
10.9
29.8
40.7
Other
£m
0.8
1.1
0.8
2022
£m
1.1
3.1
4.2
A maturity analysis of the contractual undiscounted cash flows associated with these lease liabilities is presented in note 31.
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
2022
£m
0.9
7.8
5.2
32.6
Company
Total
£m
4.5
4.2
0.8
Company
2021
£m
0.9
3.6
4.5
Group
2021
£m
1.3
9.2
4.6
27.1
The total Group cash outflow for leases in the current year was £45.9m (Company: £1.1m) (2021: £41.9m (Company £1.0m)), of which
£13.8m (Company: £1.1m) (2021: £14.8m (Company: £1.0m)) related to the repayment of lease liabilities recognised in the Balance Sheet.
17
Inventories
Inventories
Inventories are valued at the lower of cost and net realisable value. 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.
Cost of construction 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.
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 3.
Work in progress on promotion agreements comprises direct fees and labour costs incurred in investigating, designing, master
planning, obtaining planning permission and ultimately securing sales agreements for land on behalf of landowners. The satisfaction
of promotion agreements is largely dependent upon the grant of planning consent; therefore, management assess the likelihood of
attaining these consents when assessing their carrying values.
Land held for development
Construction work in progress
Promotion agreements work in progress
Part-exchange properties and other inventories
The Company has no inventories.
2022
£m
3,339.9
1,837.8
91.1
22.8
Group
2021
£m
2,946.3
1,675.9
–
23.3
5,291.6
4,645.5
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 2022 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 £2.0m (2021: £3.6m) and gross impairment reversals of £4.2m (2021: £7.1m), resulting in a net reversal of
impairment of £2.2m (2021: £3.5m) 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.
162
163
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS
Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
18 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 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.
18 Trade and other receivables CONTINUED
The carrying values of trade and other receivables are stated after allowance for expected credit losses. The movements in the loss
allowances for the year were as follows:
Trade receivables and
contract balances
Lifetime expected
credit losses
(individually assessed)
Company
£m
Group
£m
Amounts
due from
subsidiary
undertakings
12 month
expected
credit losses
Company
£m
Other receivables
12 month
expected credit
losses
Company
£m
Group
£m
Allowance for doubtful receivables
Notes
Loss allowance at 1 July 2021
Charge for the year
Amounts written off
Recoveries of amounts previously written off
Loss allowance at 30 June 2022
23
23
6.1
1.8
(0.1)
(2.9)
4.9
–
–
–
–
–
0.2
–
–
–
0.2
–
–
–
–
–
–
–
–
–
–
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 23.
19 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:
Non-current assets
Amounts due from subsidiary undertakings
Contract assets
Other receivables
Current assets
Trade receivables
Contract assets
Amounts due from subsidiary undertakings
Other receivables
Prepayments and accrued income
Notes
22
22
2022
£m
–
0.6
5.9
6.5
107.6
12.7
–
97.2
19.5
237.0
Group
2021
£m
–
–
1.2
1.2
71.4
0.9
–
92.9
14.4
2022
£m
76.1
–
–
76.1
–
–
3.1
1.7
8.6
179.6
13.4
Company
2021
£m
75.8
–
–
75.8
–
–
0.2
11.1
7.9
19.2
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
Other receivables include £39.3m (2021: £26.9m) receivable from joint ventures.
r re
2022
£m
Group
2021
£m
2022
£m
Company
2021
£m
1,352.7
1,518.6
1,045.4
1,319.0
(200.0)
(17.3)
(217.3)
3.2
(200.0)
(5.3)
(205.3)
4.1
1,138.6
1,317.4
(200.0)
(200.0)
–
(200.0)
3.2
848.6
–
(200.0)
4.1
1,123.1
(200.0)
(17.3)
(217.3)
(200.0)
(5.3)
(205.3)
(200.0)
(200.0)
–
–
(200.0)
(200.0)
164
165
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
19 Net cash CONTINUED
Movement in net cash is analysed as follows:
Net (decrease)/increase in cash and cash equivalents
(Drawdown)/repayment 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:
Total
borrowings
£m
Lease
liabilities
£m
(317.7)
112.4
–
(205.3)
(12.0)
–
(47.8)
14.8
(7.7)
(40.7)
13.8
(10.2)
Total
borrowings
£m
Lease
liabilities
£m
(311.0)
111.0
–
(200.0)
–
–
(4.9)
1.0
(0.6)
(4.5)
1.1
(0.8)
Liabilities from financing activities at
1 July 2020
Financing cash flows
Other movements
Liabilities arising from financing activities at
30 June 2021
Financing cash flows
Other movements
Liabilities arising from financing activities
at 30 June 2022
2022
£m
(165.9)
(17.3)
5.3
(0.9)
(178.8)
1,317.4
1,138.6
Group
Total
£m
(365.5)
127.2
(7.7)
(246.0)
1.8
(10.2)
2022
£m
Company
2021
£m
(273.6)
895.0
Group
2021
£m
898.8
–
112.4
(2.0)
1,009.2
308.2
1,317.4
–
–
(0.9)
(274.5)
1,123.1
848.6
–
111.0
(2.0)
1,004.0
119.1
1,123.1
Company
Total
£m
(315.9)
112.0
(0.6)
(204.5)
1.1
(0.8)
19 Net cash CONTINUED
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 2022 are unsecured.
The principal features of the Group’s committed debt facilities at 30 June 2022 and 30 June 2021 were as follows:
Committed facilities:
RCF
Fixed rate Sterling USPP notes
Facility
30 June 2022
30 June 2021
Maturity
Amount drawn
£700.0m
£200.0m
–
£200.0m
–
22 November 2025
£200.0m
22 August 2027
The Group also uses various bank overdrafts and uncommitted borrowing facilities that are subject to floating interest rates linked to
SONIA and money market rates as applicable.
Weighted average interest rates are disclosed in note 6.
20 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.
(217.3)
(37.1)
(254.4)
(200.0)
(4.2)
(204.2)
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.
Cash, cash equivalents and bank overdrafts, as presented in the Cash Flow Statement is analysed as follows:
Cash and cash equivalents
Bank overdrafts included in loans and borrowings
Cash, cash equivalents and bank overdrafts
Further disclosures relating to financial assets are set out in note 23.
2022
£m
1,352.7
(17.3)
1,335.4
Group
2021
£m
1,518.6
–
1,518.6
2022
£m
1,045.4
–
1,045.4
Company
2021
£m
1,319.0
–
1,319.0
Non-current liabilities
Land payables
Other payables
Current liabilities
Trade payables
Land payables
Contract liabilities
Amounts due to subsidiary undertakings
Accruals1
Other tax and social security
Other payables
Notes
22
2022
£m
235.4
5.1
240.5
324.0
498.2
124.3
–
428.8
24.8
14.3
Group
20211
£m
2022
£m
Company
2021
£m
294.9
1.9
296.8
289.6
363.4
137.5
–
439.9
13.0
15.5
–
–
–
4.8
–
–
323.5
28.2
–
0.5
–
–
–
4.0
–
–
764.3
24.4
–
4.8
166
167
1 Costs in relation to completed developments, previously included within accruals, have been reclassified as provisions as described in the ‘Application of accounting
standards’ section of note 1 to the Financial Statements. The prior year balance for accruals (previously £582.2m) has been re-presented to ensure comparability.
1,414.4
1,258.9
357.0
797.5
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
20 Trade and other payables CONTINUED
The carrying amount of trade payables approximates to their fair value.
Accruals include a social security accrual relating to share-based payments (note 27). Other payables classified as non-current liabilities
at 30 June 2022 include amounts accrued for payment of the CITB levy and other sundry accruals.
The Group has £365.2m (2021: £290.9m) of payables secured by legal charges on land and buildings included within inventories and
£3.1m (2021: £8.5m) 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 23.
21 Provisions
Provisions
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.
Costs in relation
to completed
developments1
£m
Legacy properties
– EWS and
associated review
£m
Legacy properties
– Citiscape and
associated review
£m
At 1 July 2021(as previously presented)
Amounts reclassified from accruals1
At 1 July 2021 as re-presented1
Additions to provisions in the year
Sites reclassified to completed developments
Releases
Utilisation in the year
At 30 June 2022
–
142.3
142.3
47.3
26.3
(21.4)
(49.0)
145.5
41.6
–
41.6
414.5
–
(12.8)
(8.7)
434.6
Current1
Non-current
26.0
–
26.0
33.5
–
(3.0)
(11.6)
44.9
2022
£m
265.4
359.6
625.0
Group
Total
£m
67.6
142.3
209.9
495.3
26.3
(37.2)
(69.3)
625.0
Group
20211
£m
209.9
–
209.9
1 Costs in relation to completed developments, previously included within accruals, have been reclassified as provisions as described in the ‘Application of accounting
standards’ section of note 1 to the Financial Statements. The prior year balance for provisions has been re-presented to ensure comparability.
The Company had no provisions in either year.
21 Provisions CONTINUED
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.
On 6 April 2022, the Group signed an industry pledge on building safety (the “Pledge”) aligned to its belief that leaseholders should not
have to pay for necessary remediation work caused by the design, construction or refurbishment of buildings. The Pledge commits the
Group to address life-critical fire safety issues on all our buildings of 11 metres and above that we have developed or refurbished over the
past 30 years. The Group further committed to withdraw our buildings from, and/or reimburse, the Government’s Building Safety Fund
and ACM Fund.
The Group has provided for the cost of fulfilling this pledge, as well as assisting with remedial work identified at a limited number of
other legacy properties where it has a legal liability to do so, where relevant build issues have been identified, or it is considered probable
that such build issues exist.
Under review:
Buildings above 18 metres
Buildings under 18 metres
Total buildings
Developments
Remediation completed:
Building above 18 metres
Buildings under 18 metres
Total buildings
Developments
April 2022
Identified for review
Review confirmed no
remediation, or remediation
completed
128
83
211
66
17
10
27
7
(5)
(10)
(15)
(4)
April 2022
Returned to scope following
Industry Pledge
Review confirmed no
remediation, or remediation
completed
11
8
19
7
(4)
-
(4)
(2)
5
10
15
4
June 2022
140
83
223
69
June 2022
12
18
30
9
This is a complex area requiring significant judgement with respect to both the individual remediation requirements of each building and
the costs associated with that remediation (see also Note 29). Management’s estimate of the remediation cost of the relevant buildings
was based on recent industry experience of the average remediation cost per plot of c. £21,000 plus an estimate of future cost price
inflation over the period until the remediation is completed. An additional contingency was also allowed to reflect further buildings being
identified as within the scope of the Pledge and for unforeseen remediation costs beyond management’s current knowledge. As a result,
£396.4m was provided in relation to the Pledge.
In relation to the timing of remediation spend, it has been assumed that the majority of the work will be completed over the next five
years. The amount provided has been discounted accordingly. This depends on a number of factors, including the completion of legal
documentation with the Government, timely engagement by building owners and remediation work being completed in line with our
estimated timings.
The investigation of the works required at many of the buildings is at an early stage and therefore it is possible that these estimates will
change over time or if government legislation and regulation further evolves.
168
169
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
21 Provisions CONTINUED
The estimates are based on key assumptions that will be updated as work and time progresses. The sensitivity of the provision held at
the balance sheet date to the following possible movements in those assumptions is shown below:
23 Financial instruments
Recognition
Sensitivity
10% increase in estimated cost per plot
100 bps increase in discount rate
10% of all cash flows delayed by one year
Increase/(decrease) in provisions at 30
June 2022
£m
27.7
(12.0)
1.2
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.
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 27 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 that 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.
22 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
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
Contracts on which
revenue is recognised
at a point in time
2022
£m
(6.6)
0.9
(5.7)
75.0
(60.2)
–
9.1
(4.2)
13.3
2021
£m
(13.0)
0.9
(12.1)
69.1
(62.7)
–
(5.7)
(6.6)
0.9
2022
£m
2021
£m
(130.9)
(123.6)
–
–
(130.9)
(123.6)
5,192.9
4,742.6
(5,062.0)
(4,619.0)
(120.1)
(120.1)
(130.9)
(130.9)
(120.1)
(130.9)
–
–
Further revenue of £118.8m (2021: £148.7m) is expected to be recognised in future years in respect of contracts on which revenue is
recognised over time, of which 16.9% (2021: 20.0%) is expected to be recognised within 12 months of the balance sheet date.
The Company had no contract assets or liabilities in either year.
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 18. Any impairment is recognised
immediately in the Income Statement.
Financial assets
The carrying values and fair values of the Group and Company financial assets are as follows:
Fair
value
£m
2022
Carrying
value
£m
Notes
Group
2021
Carrying
value
£m
Fair
value
£m
Fair
value
£m
2022
Carrying
value
£m
Company
2021
Carrying
value
£m
Fair
value
£m
19
1,352.7
1,352.7
1,518.6
1,518.6
1,045.4
1,045.4
1,319.0
1,319.0
Cash and cash equivalents
Measured at amortised
cost:
Trade and other
receivables¹
Intercompany receivables
18
–
–
–
–
168.1
168.1
119.8
119.8
–
79.2
–
79.2
9.6
76.0
9.6
76.0
Total financial assets
1,520.8
1,520.8
1,638.4
1,638.4
1,124.6
1,124.6
1,404.6
1,404.6
1 Excludes amounts recoverable on contracts, prepayments and accrued income, and tax and social security.
170
171
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
23 Financial instruments CONTINUED
Financial liabilities
The carrying values and fair values of the Group and Company financial liabilities are as follows:
Measured at amortised cost:
Bank overdrafts
Loans and borrowings
Trade and other payables¹
Intercompany payables
Lease liabilities
Notes
19
19
20
16
Fair
value
£m
17.3
187.6
2022
Carrying
value
£m
17.3
200.0
Group
2021
Carrying
value
£m
5.3
200.0
Fair
value
£m
5.3
202.8
1,380.4
1,387.9
1,296.1
1,293.8
–
37.1
–
37.1
–
40.7
–
40.7
Total financial liabilities
1,622.4
1,642.3
1,544.9
1,539.8
Fair
value
£m
–
187.6
16.7
323.5
4.2
532.0
2022
Carrying
value
£m
–
200.0
16.7
323.5
4.2
544.4
Company
2021
Carrying
value
£m
–
200.0
16.9
764.3
4.5
985.7
Fair
value
£m
–
202.8
16.9
764.3
4.5
988.5
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 20.
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 6), were as follows:
Financial assets measured at amortised cost
Trade receivables – loss allowance charge
Recoveries of doubtful receivables
Notes
18
18
2022
£m
1.8
(2.9)
2021
£m
3.4
(5.1)
24 Share capital
Equity instruments
Ordinary share capital is recorded at the proceeds received, net of direct issue costs and is classified as equity.
Ordinary share capital
Allotted and issued ordinary shares
10p each fully paid: 1,022,562,819 (2021: 1,018,331,741) ordinary shares
Options over the Company’s shares granted during the year
LTPP
Sharesave
DBP
ELTIP
Allotment of shares during the year
At 1 July
Issued to the EBT to satisfy the vesting of awards
Issued to satisfy early exercises under Sharesave schemes
Issued to satisfy exercises under matured Sharesave schemes
At 30 June
25 Merger reserve
2022
£m
102.2
2021
£m
101.8
2022
Number
2021
Number
2,774,294
3,204,477
4,117,231
1,913,489
674,051
–
1,080,733
1,249,000
8,646,309
6,366,966
2022
Number
2021
Number
1,018,331,741 1,018,302,400
2,386,199
28,023
1,816,856
–
10,251
19,090
1,022,562,819 1,018,331,741
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.
26 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 457.4p (2021: 695.2p) per share
2022
2021
5,320,168
1,300,125
£27.0m
£24.3m
£4.7m
£9.0m
During the year, the EBT purchased 4,989,573 (2021: no) shares in the market and 2,386,199 (2021: no) shares were issued to the EBT.
The EBT disposed of 3,355,729 (2021: 1,689,670) shares which were used to satisfy the vesting of ELTIP, LTPP and DBP awards. No shares
were used in the year in settlement of exercises under Sharesave plans (2021: 1,719,011 shares were used in settlement of exercises
under the Sharesave 2015 5-year plan and the Sharesave 2017 3-year plan).
172
173
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
27 Share-based payments
The Group issues equity-settled share-based payments to certain employees.
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
DBP
ELTIP
2022
£m
13.0
2.4
2.6
6.2
24.2
2021
£m
12.3
1.7
2.3
4.1
20.4
As at 30 June 2022, an accrual of £4.0m (2021: £5.3m) was recognised in respect of social security liabilities on share-based payments.
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.
174
27 Share-based payments CONTINUED
Outstanding equity-settled share-based payments
At 30 June 2022, the following options were outstanding:
Date of grant
Sharesave
24 April 2017 – 5-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
6 April 2022 – 3-year plan
6 April 2022 – 5-year plan
Total Sharesave options
LTPP
24 October 2019 – Executive
30 November 2020 – Executive
18 February 2021 and 21 April 2021 – Executive
14 October 2021 – Executive
14 February 2022 – Executive
14 February 2022 – Executive
14 February 2022 – Executive
14 February 2022 – Executive
24 October 2019 – Senior management
30 November 2020 – Senior management
14 October 2021 – Senior management
Total LTPP awards
DBP
24 October 2019
24 September 2021
Total DBP awards
ELTIP
15 July 2019 – HBF 5 Star Award
30 November 2020 – 500,000th House Award
15 July 2021
Total ELTIP awards
Total
Option price
pence
2022
number
Not exercisable after
464
449
519
519
456
456
604
604
436
436
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
157,439
174,860
960,934
135,653
1,999,627
362,504
1,025,138
121,257
3,355,466
652,503
8,945,381
1,240,331
1,337,942
118,020
1,133,496
117,716
22,559
22,560
67,681
1,021,736
1,453,487
1,287,671
7,823,199
551,589
674,051
1,225,640
182
963,356
916,148
1,879,686
19,873,906
31 December 2022
31 December 2023
31 December 2022
31 December 2024
31 December 2023
31 December 2025
31 December 2024
31 December 2026
31 December 2025
31 December 2027
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
175
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
27 Share-based payments CONTINUED
27 Share-based payments CONTINUED
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 114.
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 117.
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 2021 Award in July 2021 and the 500,000th House Award in November 2020 under the ELTIP. The Awards were
made to all eligible employees employed as at 15 July 2021 and 30 November 2020 respectively. Participants will be entitled to receive
shares in the Company when the 500,000th House Award vests on 30 November 2022, and participants of the 2021 Award will be entitled
to receive shares in the Company when the Award vests on 30 November 2023. 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.
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:
2022
2021
Weighted
average
exercise
price in
pence
–
–
–
–
–
–
Weighted
average
exercise
price in
pence
499
533
451
436
474
–
Number of
award units
8,087,663
(1,277,018)
(1,761,740)
2,774,294
7,823,199
–
2022
Number of
award units
8,217,072
(1,544,043)
(1,844,879)
4,117,231
8,945,381
–
Weighted
average
exercise
price in
pence
–
–
–
–
–
–
Weighted
average
exercise
price in
pence
467
467
463
604
499
–
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
–
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
176
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
2022
2021
Weighted
average
exercise
price in
pence
–
–
–
–
–
–
Weighted
average
exercise
price in
pence
–
–
–
–
–
–
Number of
award units
1,168,788
(12,186)
(605,013)
674,051
1,225,640
–
2022
Number of
award units
2,149,584
(361,655)
(988,976)
1,080,733
1,879,686
182
Weighted
average
exercise
price in
pence
–
–
–
–
–
–
Weighted
average
exercise
price in
pence
–
–
–
–
–
–
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
–
The weighted average share price, at the date of exercise, of share options exercised during the year was 674.4p (2021: 544.2p). The
weighted average life for all schemes outstanding at the end of the year was 1.9 years (2021: 1.7 years).
Fair value of options and awards granted in the year
Weighted average fair value of options granted
Weighted average fair value of options granted
2021
pence
Valuation model
2022
pence
Sharesave
LTPP
DBP
ELTIP
Black–Scholes model
Black–Scholes model
Black–Scholes model
Black–Scholes model
94.7
683.0
681.0
634.0
221.8
619.0
–
576.0
177
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
27 Share-based payments 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
Grants 2022
Grants 2021
ELTIP
Sharesave
690p
–
37.7%
520p
436p
36.6%
LTPP
683p
–
36.2%
DBP
682p
–
37.7%
ELTIP
Sharesave
620p
–
34.8%
790p
604p
36.3%
LTPP
620p
–
34.8%
2.0 years
3.3 years
3.0 years
3.0 years
2.0 years
3.2 years
3.0 years
0.50%
4.2%
1.40%
8.4%
0.58%
0.65%
-
-
0.05%
3.70%
0.21%
3.63%
(0.04)%
–
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.
28 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
2022
£m
1.1
(0.4)
0.1
0.8
Group
2021
£m
1.4
(0.6)
0.3
1.1
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.
29 Contingent liabilities
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 counterindemnities in respect of performance bonds and financial guarantees.
Management estimate that the bonds and guarantees amount to £420.7m (2021: £423.8m) 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 21, the Group has signed an industry pledge (the ‘Pledge’) to undertake or fund remediation or mitigation works on
all buildings of 11 metres or above that it has developed or refurbished in the 30 years from the date of the Pledge, being April 2022, and
to reimburse the Government’s Building Safety fund and ACM fund wherever they have contributed to such activities.
The Group is currently 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.
At 30 June 2022, the Group held provisions of £434.6m (2021: £41.6m) in relation to EWS and associated reviews, including liabilities
arising from commitments made under the Pledge based on management’s best estimate of the cost and timing of remediation of in-
scope buildings. It is possible that as remediation work proceeds, additional remedial works are required which do not relate to EWS or
cladding solutions. Such works may not have been identified from the reviews and physical inspections undertaken to date and may only
be identified when detailed remediation work is in progress. Therefore the nature, timing and extent of any such costs was unknown at
the balance sheet date.
In addition, we recognise that the retrospective review of building materials and fire-safety matters continues to evolve. The Financial
Statements have been prepared based on currently available information and regulatory guidance. However, these estimates may be
updated if government legislation and regulation further evolves.
Citiscape and associated review
As disclosed in note 21, 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 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 in respect of EWS, Citiscape and the associated reviews; however, there is no
certainty regarding the extent of any financial recovery.
Contingent liabilities related to JVs
The Group has given counter-indemnities in respect of performance bonds and financial guarantees to its JVs totalling £2.2m at
30 June 2022 (2021: £1.8m).
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 2022, the probability of any loss to the Group resulting from these guarantees is considered to be remote.
Contingent liabilities related to legal claims
Provision is made for the Directors’ best estimates 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.
178
179
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
30 Related party transactions
31 Financial risk management
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’ 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 5.
There have been no related party transactions as defined in Listing Rule 11.1.5R for the year ended 30 June 2022.
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
2022
£m
146.5
24.5
517.4
323.5
79.2
Company
2021
£m
111.7
15.8
8.7
764.3
76.0
The Company and its subsidiaries have entered into counterindemnities in the normal course of business in respect of performance bonds.
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
2022
£m
9.2
0.5
16.5
94.0
39.3
(1.3)
Group
2021
£m
4.5
0.7
21.2
86.0
26.9
(0.8)
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 29.
The Group’s approach to risk management and the principal operational risks of the business are detailed on pages 52 to 57. The Group’s
financial assets and financial liabilities are detailed in note 23.
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 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.
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 24.1% (2021: 22.8%) of available committed facilities at 30 June 2022. In addition, the Group had
£1,352.7 (2021: £1,518.6m) of cash and cash equivalents.
The Group was in compliance with its financial covenants at 30 June 2022. 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 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 2022, the average
maturity of the Group’s committed facilities was 3.8 years (2021: 4.0 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
2022
£m
700.0
Group
2021
£m
700.0
2022
£m
700.0
Company
2021
£m
700.0
In addition, the Group had undrawn, uncommitted overdraft facilities available at 30 June 2022 of £37.0m (2021: £17.0m).
180
181
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
31 Financial risk management CONTINUED
31 Financial risk management CONTINUED
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
Notes
Carrying
amount
£m
Contractual
cash flow
£m
Less than
1 year
£m
1–2 years
£m
2–5 years
£m
Over 5 years
£m
2022
Loans and borrowings
(including bank overdrafts)1
Trade and other payables2
Lease liabilities
2021
Loans and borrowings
(including bank overdrafts)1
Trade and other payables2
Lease liabilities
23
23
23
23
23
23
217.3
1,387.9
37.1
230.4
1,411.6
39.5
5.5
1,157.6
11.2
1,642.3
1,681.5
1,174.3
205.3
1,293.8
40.7
1,539.8
235.9
1,320.1
48.6
1,604.6
5.5
1,003.2
12.1
1,020.8
5.5
146.7
8.7
160.9
5.5
173.0
8.6
187.1
16.6
98.1
15.8
130.5
16.6
129.8
15.6
162.0
202.8
9.2
3.8
215.8
208.3
14.1
12.3
234.7
1 The Group is party to banking agreements that include a legal right of offset, which enables the overdraft balances of £17.3m (2021: £5.3m) 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 2022 or 30 June 2021.
Company
Notes
Carrying
amount
£m
Contractual
cash flow
£m
Less than
1 year
£m
1–2 years
£m
2–5 years
£m
Over 5 years
£m
2022
Loans and borrowings
(including bank overdrafts)
Trade and other payables1
Intercompany payables
Lease liabilities
2021
Loans and borrowings
(including bank overdrafts)
Trade and other payables¹
Intercompany payables
Lease liabilities
23
23
23
23
23
23
23
23
200.0
16.7
323.5
4.2
544.4
200.0
16.9
764.3
4.5
985.7
230.4
16.7
323.5
4.3
574.9
235.9
16.9
764.3
4.7
1,021.8
5.5
16.7
323.5
1.1
346.8
5.5
16.9
764.3
1.0
787.7
5.5
–
–
1.0
6.5
5.5
–
–
0.9
6.4
1 Excludes tax and social security and other non-financial liabilities.
The Company had no derivative financial instruments at 30 June 2022 or 30 June 2021.
–
–
2.2
18.8
–
–
–
202.8
16.6
208.3
–
–
2.2
18.8
–
–
0.6
208.9
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
2022
Financial liability exposure to interest rate risk
2021
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
1,442.3
1,642.3
200.0
1,339.8
1,539.8
The exposure of the Company’s financial liabilities to interest rate risk is as follows:
16.6
202.8
2021
Company
2022
Financial liability exposure to interest rate risk
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
344.4
544.4
200.0
785.7
985.7
Floating interest rates on Sterling borrowings are linked to SONIA 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 2022 or 2021.
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.
Sensitivity analysis
In the year ended 30 June 2022, 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 (2021: £4.9m), the Group’s post-tax profit would increase
by £3.9m (2021: £4.0m) and, as such, the Group’s equity would increase by £3.9m (2021: £4.0m). Had interest rates reduced to zero, the
Group’s pre-tax profit would decrease by £1.9m (2021: £0.5m) and the Group’s post-tax profit and equity would decrease by £1.5m (2021:
£0.4m).
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 £41.4m (2021: £29.9m) 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 £1,352.7m (2021: £1,518.6m) on deposit with 14 (2021: 9) 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.
182
183
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
31 Financial risk management CONTINUED
The maximum exposure to any counterparty at 30 June 2022 was £190.0m (2021: £244.0m) 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 2022, the Company was exposed to £79.2m (2021: £76.0m) 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 29 and 30.
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 23. 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
is detailed on pages 52 to 57.
Other methods by which the Group can manage its short-term and long-term capital structure include: 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.
32 Post balance sheet events
On 6 September 2022 the Board approved a £200m share buyback programme, with an initial tranche of £50m to be completed the end of
the calendar year and the total programme completed no later than 30 June 2023.
33 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.
Audit exemption
The following UK subsidiaries will take advantage of the audit exemption set out within section 479A of the Companies Act 2006 for the
year ended 30 June 2022. The undertakings listed below are 100% owned, either directly or indirectly, by Barratt Developments PLC.
Subsidiary
Acre Developments Limited
Base East Central Rochdale LLP
Base Hattersley LLP
Base Regeneration LLP
Basildon Regeneration (Barratt Wilson Bowden) Limited
BDW (F.R.) Limited
BDW (F.R. Commercial) Limited
BDW North Scotland Limited
Milton Park Homes Limited
Wilson Bowden Limited
Yeovil Developments Limited
Company number
SC091934
OC318544
OC318541
OC318540
05876010
05876012
05876013
SC027535
03787306
02059194
05285388
In accordance with section 479C of the Companies Act 2006, the Company will guarantee the debts and liabilities of the above UK
subsidiary undertakings. As at 30 June 2022, the total sum of these debts and liabilities is £19.6m.
184
33 Group subsidiary undertakings CONTINUED
The Group owns 100% of the ordinary share capital of the following subsidiaries:
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
Registered
office
Notes
Subsidiary
Registered
office
Notes
Subsidiary
Registered
office
Notes
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
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
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
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
1
58
1
2
1
2
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
2
1
1
2
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
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
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
A
1
2
1
1
1
1
1
1
51
1
1
1
1
1
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
A
A
A
A
A
A
A
A
A
185
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
33 Group subsidiary undertakings CONTINUED
33 Group subsidiary undertakings CONTINUED
Subsidiaries of the Group which are management companies limited by guarantee:
Registered
office
Notes
Subsidiary
Registered
office
Notes
Subsidiary
Registered
office
Notes
Ward Homes (London)
Limited
Ward Homes (North
Thames) Limited
Ward Homes (South
Eastern) Limited
Ward Homes Group
Limited
Ward Homes Limited
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
1
1
1
1
1
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
A
A
A
A
A
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
Scottish Homes
Investment Company,
Limited
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
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
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
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
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
Subsidiary
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
Gladman Developments
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
186
Subsidiary
28-33 Imperial Park
Management Company
Limited
Abbey Gate Residents
Management Company
Limited
Abbey View 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
Management Company
Limited
Ambler’s Meadow (East
Ardsley) Management
Company Limited
Applegarth Manor
(Oulton) Management
Company Limited
Applegate (Sittingbourne)
Management Company
Limited
Ashridge Grange
(Wokingham)
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
Beeston Quarter
Apartments (Beeston)
Management Company
Limited
Belle Vue (Doncaster)
Management Company
Limited
Registered
office
Notes
Subsidiary
Registered
office
Notes
Subsidiary
Registered
office
Notes
26
5
57
14
12
5
30
57
57
10
10
66
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
49
23
5
10
50
1
8
6
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
Bentley Fields Residents
Management Company
Limited
Bermondsey Heights
Residents Energy
Management Company
Limited
Bermondsey Heights
Residents Management
Company Limited
Berry Acres (Paignton)
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
Bluebell Woods (Wyke)
Management Company
Limited
Bodington Manor (Adel)
Management Company
Limited
Bowds House
Management Company
Limited
Braid Park (Tiverton)
Management Company
Limited
Brindsley (Old Mill Farm)
Management Company
Limited
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
Central Area Heat
Company Limited
Centurion Village
Management Company
Limited
Ceres Rise Residents
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
23
A, B
4
4
40
5
13
20
53
30
23
13
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
31
A, B
1
1
52
5
10
9
1
40
60
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
9
54
10
10
16
54
53
40
46
9
8
6
10
12
36
21
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
40
10
12
A, B
A, B
A, B
8
A, B
187
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
33 Group subsidiary undertakings CONTINUED
33 Group subsidiary undertakings CONTINUED
Registered
office
Notes
Subsidiary
Registered
office
Notes
Subsidiary
Registered
office
Notes
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
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
Ecclesden Park
(Angmering)
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
Elysian Fields (Adel)
Management Company
Limited
Embden Grange
(Tavistock) Management
Company Limited
Emmet’s Reach
(Birkenshaw)
Management Company
Limited
Ersham Park (Hailsham)
Management Company
Limited
Fairfield Croft
Management Company
Limited
Fairfield (Stony Stratford)
Management Company
Limited
54
54
40
13
46
46
20
47
10
61
12
A, B
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
A, B
A, B
A, B
A, B
A, B
A, B
50
A, B
8
12
12
A, B
A, B
A, B
5
23
9
12
20
30
1
1
1
1
18
48
53
9
31
10
40
42
10
6
54
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
Farrier Place - Canford
Paddock Phase 2 (Poole)
Management Company
Limited
Ferris House
Management Company
Limited
Filwood Park
Management Company
Limited
Forest Walk, Whiteley
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 Dunmow Grange
Management Company
Limited
Greylees Management
Company Limited
H2363 Limited
Hallam Park Residents
Management Company
Limited
Hampton Water
Management Company
Limited
Hanwood Park
Community Partnership
Limited
Harbour Place
(Bedhampton)
Management Company
Limited
Harbourside (East Quay
Apartments 13-21 &
31-39) Management
Company Limited
Harclay Park
Management Company
Limited
Harlow Gateway Limited
Hartley Brook
(Netherton) Management
Company Limited
46
64
13
48
20
26
9
40
8
12
43
10
18
16
50
23
15
17
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
35
A, B
29
A, B
57
25
A, B
A, B
9
A, B
Subsidiary
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
Grammar School)
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
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
Donnington Heights
(Newbury) Management
Company Limited
188
Subsidiary
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
Henbrook Gardens
Management Company
Limited
Hendon Waterside
Energy Centre
Management Company
Limited
Hendon Waterside
Residents Management
Company Limited
Hengist Field
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
Infinity Park Derby
Management Limited
Registered
office
Notes
Subsidiary
Registered
office
Notes
Subsidiary
Registered
office
Notes
1
A, B
36
A, B
1
1
9
28
54
20
1
1
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
55
A, B
1
10
A, B
A, B
9
A, B
47
A, B
1
1
A, B
A, B
46
A, B
40
16
1
A, B
A, B
A, B
Inglewhite Meadows
Residents Management
Company 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
Kings Lodge (Chilwell)
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
KP (Macclesfield)
Residents Management
Company Limited
KW (Site B) Management
Company Limited
Ladden Garden Village
Apartment Blocks BCD
Management Company
Limited
Ladden Garden Village
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
Management Company
Limited
Lock Keeper’s Gate (Low
Barugh) Management
Company Limited
Locksbridge Park
(Andover) Management
Company Limited
Lockwood Fields
(Chidswell) Management
Company Limited
Lordswood Gardens
Residents Management
Company Limited
Lubbesthorpe R5
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
Market Warsop
(Stonebridge Lane)
Management Company
Limited
Marlborough Grove
Estate Management
Company Limited
Marston Park (Marston
Moretaine) Management
Company Limited
8
1
23
8
53
14
23
A, B
A, B
A, B
A, B
A, B
A, B
A, B
53
A, B
8
8
16
25
13
6
25
20
54
30
26
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
35
A, B
6
12
44
54
57
13
41
15
10
12
10
5
60
40
8
10
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
11
A, B
46
18
16
16
54
A, B
A, B
A, B
A, B
A, B
189
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
33 Group subsidiary undertakings CONTINUED
33 Group subsidiary undertakings CONTINUED
Registered
office
Notes
Subsidiary
Registered
office
Notes
Subsidiary
Registered
office
Notes
8
66
8
A, B
A, B
A, B
54
A, B
9
13
60
50
63
1
1
34
40
46
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
12
A, B
12
54
50
9
14
50
A, B
A, B
A, B
A, B
A, B
A, B
Nant Y Castell (Caldicot)
Management Company
Limited
Needham’s Grange
Residents Management
Company Limited
Needingworth Park
Residents Management
Company Limited
Nerrols Grange (Taunton)
Management Company
Limited
Netherwood (Darfield)
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
Niveus Walk
(Shaftesbury)
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
Okement Park
(Okehampton)
Management Company
Limited
33
20
56
13
42
13
46
8
8
7
32
54
30
20
42
20
16
5
7
9
62
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
31
A, B
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
Parc Fferm Wen
(St Athen) Management
Company Limited
Parish Brook Residents
Management Company
Limited
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
Pebble Walk (Hayling
Island) 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
12
16
45
9
56
33
32
30
30
6
6
30
54
26
30
40
54
32
32
6
49
49
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
Martello Lakes (Barratt)
Resident Management
Company Limited
Martello Lakes (Hythe)
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
Melton Mowbray (Kirby
Lane) Management
Company Limited
Merlin Gate (Newent)
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
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
Mortimer Place (Hatfield
Peverel) Residents
Management Company
Limited
Morton Meadows
(Thornbury) Management
Company Limited
190
Subsidiary
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
Residents Management
Company (Beaconside)
Limited
Richmond Park
(Whitfield) Residents
Management Company
Limited
Ridgeway Residential
Management Company
Limited
Ridgeway Views Energy
Centre Management
Company
Ridgeway Views
Residents Management
Company
River Meadow (Stanford
in the Vale) Management
Company Limited
River Whitewater
Management Company
(Hook) Limited
Registered
office
Notes
Subsidiary
Registered
office
Notes
Subsidiary
Registered
office
Notes
57
A, B
40
40
A, B
A, B
6
A, B
12
3
54
10
6
46
40
56
20
40
14
40
57
8
11
1
1
12
10
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
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
Rose and Lillies
Residents Management
Company Limited
Rosewood Park Bexhill
Residents Management
Company Limited
RV North Petherton
Residents Management
Company Limited
Ryebank Gate (Yapton)
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 Fields
(Thanington)
Management Company
Limited
Saxon Gate (Leonard
Stanley) Management
Company Limited
Saxon Gate (Stamford
Bridge) Management
Company Limited
Saxon Mills (Hassocks)
Management Company
Limited
Scotgate Ridge (Honley)
Management Company
Limited
54
A, B
9
A, B
54
A, B
55
20
23
8
32
28
42
16
10
10
16
46
10
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
40
A, B
66
10
6
53
42
A, B
A, B
A, B
A, B
A, B
Silkwood Gate
(Wakefield) Management
Company Limited
Spinney Fields Residents
Management Company
Limited
Spitfire Green, (Manston)
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 Johns View Residents
Management Company
Limited
St Rumbolds Fields
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
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
9
5
49
10
4
42
29
9
57
16
42
54
25
9
18
10
54
22
12
12
40
9
54
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
191
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
33 Group subsidiary undertakings CONTINUED
33 Group subsidiary undertakings CONTINUED
Registered
office
Notes
Subsidiary
Registered
office
Notes
Subsidiary
Registered
office
Other subsidiary entities:
Subsidiary
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 Meads (Frampton
Cotterell) Management
Company Limited
The Mounts Residents
Management Company
Limited
The Old Meadow
Management Company
Limited
The Orchards (Hildersley)
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 Vineyards
Management Company
Limited
The Woodlands (Sturry)
Management Company
Limited
Townsend Landing
(Henstridge)
Management Company
Limited
192
Tranby Fields
Management Company
Limited
Treledan (Saltash)
Management Company
Limited
Trumpington Meadows
Residents 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
Upton Gardens Residents
Management Company
Victoria Heights
(Alphington)
Management Company
Limited
Wadsworth Gardens
(Cleckheaton)
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
Management Company
Limited
6
54
34
12
37
16
46
10
10
13
5
41
10
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
12
A, B
6
46
23
26
30
66
A, B
A, B
A, B
A, B
A, B
A, B
31
A, B
WBD (Kingsway
Management) Limited
Weavers Chase (Golcar)
Management Company
Limited
Webheath (Redditch)
Management Company
Limited
Wedgwood Residents
Management Company
Limited
Wendel View Residents
Management Company
Limited
Westbridge Park
(Auckley) Management
Company Limited
Westminster View
(Clayton) 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
Willow Lane (Beverley)
Phase 2 Management
Company Limited
Willowmead
(Wiveliscombe)
Management Company
Limited
Winnington View
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
10
31
10
10
16
40
1
1
A, B
A, B
A, B
A, B
A, B
A, B
A, B
A, B
40
A, B
42
1
57
14
38
49
8
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
Notes
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
1
9
33
5
56
26
10
50
8
1
8
54
6
65
50
26
26
30
6
14
53
A, B
GWQ Management Limited
24
A, C
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
1
1
1
A, D
Ordinary
A, D
Ordinary
A, C
Ordinary
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
N/A
N/A
N/A
N/A
N/A
N/A
90%
N/A
0%
50%
87%
50%
100%
0%
0%
0%
2%
0%
0%
2%
2%
0%
17%
22%
4%
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
Hazelmere Management
Company Limited
Interlink Park Management
Company Limited
Meridian Business Park
Extension Management
Company Limited
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
WBD (Riverside Exchange
Sheffield B) Limited
WBD Riverside Sheffield
Building K Limited
West Village Reading
Management Limited
Willow Farm Management
Company Limited
A
Ordinary
100%
16
A, C
Ordinary
16%
1
1
1
1
12
1
A
Ordinary
100%
A, C
Ordinary
2%
A, C
Ordinary
100%
A, C
Ordinary
100%
A, D
Ordinary
A, C
Ordinary
0%
2%
193
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Notes to the Financial Statements CONTINUED
Year ended 30 June 2022
33 Group subsidiary undertakings CONTINUED
Registered Office
1.
Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville,
Leicestershire LE67 1UF
39. Whitehead Restoration Site, Lower Green Lane, Astley, Manchester M29 7JZ
40. Woodwater House, Pynes Hill, Exeter, Devon EX2 5WR
2.
7 Buchanan Gate, Cumbernauld Road, Stepps, Glasgow G33 6FB
41. Unit 7, Astra Centre, Edinburgh Way, Harlow, Essex, England, CM20 2BN
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
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
Definitions of alternative performance measures and
reconciliation to IFRS (unaudited)
The Group uses a number of APMs that 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 5 to
7. 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)
5.
One Eleven, Edmund Street, Birmingham, West Midlands B3 2HJ
44. Unit 7, Hockliffe Business Park, Watling Street, Hockliffe, Leighton Buzzard,
Gross margin
6.
Unit 11, Omega Business Park, Omega Business Village, Thurston Road,
Northallerton, North Yorkshire DL6 2NJ
Bedfordshire LU7 9NB
45. 377–379 Hoylake Road, Moreton, Wirral, Merseyside CH46 0RW
7.
Tollbar House, Tollbar Way, Hedge End, Southampton, Hampshire SO30 2UH
46. 128 Pyle Street, Granary Court, Newport, Isle of Wight PO30 1JW
Adjusted gross margin is defined as adjusted gross profit divided by revenue:
8.
RMG House, Essex Road, Hoddesdon, Hertfordshire EN11 0DR
47. Woodland Place, Wickford Business Park, Hurricane Way, Wickford SS11 8YB
Revenue per Consolidated Income Statement (£m)
9.
Gateway House, 10 Coopers Way, Southend-on-Sea, Essex SS2 5TE
48. 154–155 Great Charles Street, Queensway, Birmingham B3 3LP
10. Vantage Point, 23 Mark Road, Hemel Hempstead, Hertfordshire HP2 7DN
49. Thamesbourne Lodge, Station Road, Bourne End, Buckinghamshire
11. 167 Turners Hill, Cheshunt, Waltham Cross, Hertfordshire EN8 9BH
SL8 5QH
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
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,
15. The Maltings, Hyde Hall Farm, Sandon, Hertfordshire SG9 0RU
Essex CO2 8JX
16. 2 Hills Road, Cambridge, Cambridgeshire CB2 1JP
53. Compton House, The Guildway, Old Portsmouth Road, Guildford, GU3 1LR
17. Unit A5 Optimum Business Park, Optimum Road, Swadlincote, Derbyshire,
54. Queensway House, 11 Queensway, New Milton, Hampshire BH25 5NR
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:
55. 100 High Street, Whitstable, Kent, CT5 1AT
56. 1a Fortune Close, Riverside Business Park, Northampton NN3 9HT
57. Unit 7, Portal Business Park, Eaton Lane, Tarporley, Cheshire CW6 9DL
Revenue per Consolidated Income Statement (£m)
58. Telford House, 3 Mid New Cultins, Edinburgh, Midlothian EH11 4DH
59. 2 Horizon Place, Mellors Way, Nottingham Business Park, Nottingham,
England, NG8 6PY
60. 72-74 King Edward Street, Macclesfield, Cheshire, SK10 1AT
61. Second Floor Lakeside 300, Broadland Business Park, Norwich, Norfolk,
England, NR7 0WG
62. Unit 1, Great Park Road, Bradley Stoke, Bristol, United Kingdom, BS32 4PY
Adjusted profit from operations per Consolidated Income Statement (£m)
Adjusted operating margin
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:
63. Wellington House, Great Park Road, Bradley Stoke, Bristol, BS32 4PY
Profit attributable to ordinary shareholders of the Company
64. Ashford House, Grenadier Road, Exeter, Devon, EX1 3LH
65. 6 Alpha Court, Monks Cross Drive, York, Yorkshire, YO32 9WN
66. Weald House, 88 Main Road, Sundridge, Kent, United Kingdom, TN14 6ER
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.
Government grants repaid per note 3
Net costs associated with legacy properties per note 4
Net cost/(credit) associated with JV legacy properties per note 4
Tax impact of adjusted items
Adjusted earnings
England, DE11 0WT
18. Fisher House, 84 Fisherton Street, Salisbury SP2 7QY
19. Newbury Racecourse Plc, The Racecourse, Newbury, Berkshire RG14 7NZ
20. 60 Whitehall Road, Halesowen B63 3JS
21. Unit 1 Forder Way Cygnet Park, Hampton, Peterborough, United Kingdom,
PE7 8GX
22. Wellstones House, Wellstones, Watford, Hertfordshire WD17 2AF
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. 41a Beach Road, Littlehampton, West Sussex, England, DN17 5JA
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
194
2022
5,267.9
899.9
17.1%
2022
5,267.9
1,308.1
24.8%
2022
5,267.9
646.6
12.3%
2022
5,267.9
1,054.8
20.0%
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%
2022
£m
515.1
–
408.2
4.3
(82.5)
845.1
2021
£m
659.8
26.0
81.9
(0.4)
(20.4)
746.9
195
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Definitions of alternative performance measures and
reconciliation to IFRS (unaudited) CONTINUED
Net cash is defined in note 19.
Underlying ROCE is calculated as ROCE (above) with net assets also adjusted for land payables:
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, derivative financial instruments and provisions in relation to legacy properties.
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 cost/(credit) related to JV legacy properties
2022
£m
646.6
4.3
408.2
–
–
23.3
4.3
Earnings before amortisation, interest, tax, adjusted items and defined benefit scheme charges
1,086.7
Group net assets per Consolidated Balance Sheet
5,631.3
5,589.7
5,452.1
5,204.7
30 June
2022
£m
31 December
2021*
£m
30 June
2021*
£m
31 December
2020*
£m
Less:
Other intangible assets per Consolidated Balance Sheet
Goodwill per Consolidated Balance Sheet
Current tax (assets)/liabilities
Deferred tax liabilities/(assets)
Retirement benefit assets
Cash and cash equivalents
Loans and borrowings
Provisions in relation to legacy properties
Prepaid fees
Capital employed
Three point average capital employed
(205.4)
(852.9)
(9.9)
45.1
–
(100.0)
(805.9)
(13.7)
9.9
–
(100.0)
(805.9)
1.0
8.9
–
(100.6)
(805.9)
16.0
(4.9)
(2.1)
(1,352.7)
(1,336.3)
(1,518.6)
(1,302.7)
217.3
479.5
(3.2)
3,949.1
3,625.8
208.7
73.6
(4.1)
3,621.9
205.3
67.6
(4.1)
3,306.3
3,414.5
2021*
£m
811.1
1.1
81.9
26.0
2.3
27.7
(0.4)
949.7
30 June
2020*
£m
4,840.3
(101.1)
(805.9)
2.8
2.4
(3.5)
(619.8)
317.7
28.2
(6.1)
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
201.1
81.8
(5.1)
3,282.3
3,655.0
2022
1,086.7
3,625.8
30.0%
2021*
949.7
3,414.5
27.8%
30 June
2022
£m
31 December
2021*
£m
30 June
2021*
£m
31 December
2020*
£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
3,621.9
682.3
4,304.2
3,949.1
733.6
4,682.7
4,317.2
3,306.3
658.3
3,964.6
4,098.3
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
3,282.3
601.1
3,883.4
2022
1,086.7
4,317.2
25.2%
30 June
2020*
£m
3,655.0
791.9
4,446.9
2021*
949.7
4,098.3
23.2%
For the purpose of determining the Executive Directors’ annual bonus (page 116), capital employed is adjusted for land, land payables
and trade payables:
Capital employed (from ROCE table above)
3,949.1
3,621.9
3,306.3
3,282.3
30 June
2022
£m
31 December
2021*
£m
30 June
2021*
£m
31 December
2020*
£m
30 June
2020*
£m
3,655.0
Adjust for land
Adjust for land payables
Adjust for trade payables
Capital employed adjusted for land,
land payables and trade payables
(3,339.9)
(3,046.1)
(2,946.3)
(2,836.7)
(3,112.3)
733.6
324.0
682.3
238.9
658.3
289.6
601.1
223.3
791.9
186.8
1,666.8
1,497.0
1,307.9
1,270.0
1,521.4
Three point average capital employed adjusted for land,
land payables and trade payables
1,490.6
1,366.4
Total indebtedness is defined as net (cash)/debt and land payables:
Net cash (£m)
Land payables (£m)
Total indebtedness
2022
2021
(1,138.6)
(1,317.4)
733.6
(405.0)
658.3
(659.1)
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.
*The definitions of ROCE, Underlying ROCE and capital employed have been updated in the year to exclude provisions in relation to legacy
properties from capital employed. To ensure comparability, all comparatives have been restated under the revised definition.
196
197
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Five year record (unaudited)
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)
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
29.9%
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
3,457.6
15.5%
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
3,414.5
27.8%
2,946.3
22.3%
1,018.3
1,016.4
1,018.3
2022
13,327
3,835
17,162
746
17,908
300.2
5,267.9
899.9
17.1%
1,308.1
24.8%
646.6
12.3%
1,054.8
20.0%
(27.6)
23.3
642.3
1,054.8
50.6
83.0
36.9
-
(4.9%)
4,572.2
447.8
5,631.3
550.7
1,138.6
733.6
405.0
957.4
3,625.8
30.0%
3,339.9
22.0%
1,021.9
1,018.7
1,022.6
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 (%)
Legally completed build area (100m2)
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)
Home 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
2018
2019
2020
2021
96%
462
4.0
17%
79.0%
6,330
31%
429
287
13%
9
44%
17,304
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
96%
297
4.7
16%
84.5%
6,504
31%
470
290
15%
8
38%
17,196
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
96%
256
4.1
10%
84.2%
6,655
31%
492
286
14%
8
38%
12,197
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
97%
416
3.9
12%
N/A
6,329
31%
426
283
16%
9
44%
16,439
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
2022
97%*
262*
3.3
17%
79.4%
6,837
32%
391
328
17%
9
33%
16,402
1.53*
4.97*
96%*
76.0%
332
5 star
98
67,687
13,239
80,926
4,548
85,474
3.9
0.8
4.7
322
19,089
1,396.1
14,988
3,507
13,754
1,663
15,537
572
3,591
4,172
25.3%
4,393
25.5%
65.3%
99%
85
699
5,346
4,530
26.4%
4,846
27.1%
77.0%
99%
85
198
199
Note: additional granularity and more detailed sustainability metrics are available on our website at:
https://www.barrattdevelopments.co.uk/sustainability/performance-data/data
Deloitte have provided independent third-party limited assurance in accordance with the International Standard for Assurance Engagements 3000 (‘ISAE 3000’) and
Assurance Engagements on Greenhouse Gas Statements (‘ISAE 3410’) issued by the International Auditing and Assurance Standards Board (‘IAASB’) over selected
metrics in the above table identified with an *. For Deloitte’s full unqualified assurance opinion, which includes details of the selected metrics assured, our full Carbon
Reporting Methodology Statement and a full breakdown of scope 3 GHG emissions, see our website www.barrattdevelopments.co.uk/building-sustainably/our-
publications-and-policies/publications.
Barratt Developments PLC Annual Report and Accounts 2022www.barrattdevelopments.co.ukFINANCIAL STATEMENTSFINANCIAL STATEMENTS Glossary
ACM
Act
Aluminium Composite Material
The Companies Act 2006
Active outlet
A site with at least one plot for sale
AGM
AIMCH
APM
APPG
Annual General Meeting
Advanced Industrialised Methods for the
Construction of Homes
Alternative performance measure
All-Party Parliamentary Groups
Articles
The Company’s Articles of Association
ASP
Barratt
BEIS
BNG
BRICk
Building for
Life 12
Building
regulations
Capital
employed
CBI
CDP
CEO
CFO
CIPD
CITB
CJRS
CMA
Code
COINS
Connected
Persons
COO
Average selling price
Barratt Developments PLC and its subsidiary
undertakings
Department for Business, Energy and Industrial
Strategy
Biodiversity Net Gain
Barratt Risk and Internal Control Framework
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
The requirements relating to the erection and
extension of buildings under UK Law
Average net assets adjusted for goodwill and
intangibles, tax, cash, loans and borrowings,
prepaid fees, retirement benefit assets/obligations
and derivative financial instruments
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
Chartered Institute of Personnel and Development
Construction Industry Training Board
Coronavirus Job Retention Scheme
Competition and Markets Authority
UK Corporate Governance Code issued in July
2018 (copy available from www.frc.org.uk)
Construction Industry Solutions (software used by
the Group)
As defined in the EU Market Abuse Regulation
Chief Operating Officer
COVID-19
Coronavirus Disease 2019
Customer Relationship Management
Deferred Bonus Plan
Design for Manufacture
Disclosure Guidance and Transparency Rules
lpppd
CRM
DBP
DFMA
DTRs
200
EBT
ELTIP
EMC
EPC
EPS
EQA
ESG
EU
EWS
FCA
FHS
Foundation
FRC
FSC
FTSE4Good
FY
GDP
Group
GHG
HBF
HMRC
HR
HVO
IA
IAS
IASB
IEA
IFRS
IIA
IIR
IIRC
IPA
IPCC
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