Annual Report and Accounts 2009 Registered Office Barratt Developments PLC Barratt House Cartwright Way Forest Business Park Bardon Hill Coalville Leicestershire LE67 1UF Tel: 01530 278 278 Fax: 01530 278 279 Barratt Developments PLC www.barrattdevelopments.co.uk Corporate Office Barratt Developments PLC Kent House 1st Floor 14 – 17 Market Place London Annual Report and Accounts 2009 W1W 8AJ Tel: 020 7299 4898 Fax: 020 7299 4851 Designed and produced by Addison www.addison.co.uk Printed by Beacon Press using their and environmental print technology. Beacon Press is a CarbonNeutral® company and is registered to the Environmental Management System, ISO 14001 and the Eco Management and Audit Scheme (EMAS). This report is printed on Satimat Green containing 50% recycled fibres which is manufactured to ISO 14001 and supported by the Forest Stewardship Council. The cover is laminated with bio-degradeable lamination. Cert no. SGS-COC-O620 Dear Shareholder 6 October 2009 At the time of going to press the venue details for the Annual General Meeting contained in the Annual Report and Accounts for the year ended 30 June 2009, were correct. However, that venue has now been changed to: UBS Limited 1 Finsbury Avenue London EC2M 2PP The venue details on the Notice of the Annual General Meeting and Form of Proxy are correct. We trust this change will not cause any confusion and we look forward to seeing you at the Annual General Meeting. Yours faithfully, L Dent Group General Counsel and Company Secretary Barratt Developments PLC Barratt Developments PLC, Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, LE67 1UF Telephone 01530 278278 • Fax 01530 278279 • Web www.barrattdevelopments.co.uk Barratt Developments PLC. Registered in England and Wales. Registered Number 00604574. Registered Office: Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicester, LE67 1UF. Contents Welcome to Barratt Developments PLC Barratt Developments PLC is one of the nation’s largest housebuilders with over 4,000 direct employees and 25 divisions throughout Britain. In the 2009 financial year the Barratt group of companies (the ‘Group’) sold over 13,200 homes and 590,000 square feet of commercial property. The Group operates across all sectors of the market: from apartments to family homes and urban regeneration schemes. Group overview The Group’s aim Group at a glance IFC Summary of Group performance 01 The Group’s aim is to maximise value for Chairman’s statement 02 shareholders by creating outstanding Group Chief Executive’s statement 04 places to live and work that serve the long-term needs of our customers and their communities. Report of the Directors Business review 09 Group Finance Director’s review 20 The Group’s brands Board of Directors 24 Statutory Information 26 The Group’s housebuilding business trades Corporate Governance 32 under the Barratt Homes, David Wilson Homes Additional Information for Shareholders 40 and Ward Homes brands. Barratt Homes is Remuneration report 43 the best known housebuilding brand in Britain Statement of Directors’ responsibilities 53 focusing on traditional housing, apartments and urban regeneration. David Wilson Homes Financial statements has a reputation for producing larger family homes. The Group also has a strong regional Independent auditors’ report 54 brand, Ward Homes, operating in Kent and Consolidated income statement 55 the South East. Commercial and mixed-use Statements of developments are mainly delivered by Wilson recognised income and expense 55 Bowden Developments. Balance sheets 56 Cash flow statements 57 Accounting policies 58 The Group’s awards Impact of standards and interpretations in issue but not yet effective 65 Critical accounting judgements and key During the year, the Group won a series of sources of estimation uncertainty 66 national awards for design, service and the Notes to the financial statements 68 quality of its operations. The Group is the only Five year record, Financial calendar, volume housebuilder to be credited as Four Group advisers, Company information Star in the Home Builders Federation customer and Life President 112 satisfaction survey. In terms of construction Front cover excellence, the Group’s construction teams Main image: David Wilson Homes development at Colsterworth, Lincolnshire. Top left: West 1, Edinburgh. Top middle: Street scene and won 76 National House-Building Council ‘Pride view from Brooke Park, Okehampton. Top right: Five bedroom town house in The Crescent at Meadowbrook, Four Marks, Hampshire. in the Job’ quality awards. Notice regarding limitations on Director 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 Report of the Directors contained on pages 2 to 53. Under English Law the Directors would be liable to the Company (but not to any third party) if the Report of the Directors contains errors as a result of recklessness or knowing misstatement or dishonest concealment of a material fact, but would not otherwise be liable. Report of the Directors Pages 2 to 53 inclusive consist of a Report of the Directors that has been drawn up and presented in accordance with and in reliance upon English company law and liabilities of the Directors in connection with that report 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. Summary of Group performance “This has been an intensely difficult The Board has therefore decided it is year for the Group following the sharp now an appropriate time to substantially decline in the UK housing market. In the strengthen the Company’s balance sheet first half, as prices fell, we drove sales and reduce its debt levels via a Placing and and reduced stock and debt levels. In a Rights Issue. This will also enable the the second half we have been able to Group to develop a number of its existing maintain price levels and increase our sites and to take advantage of land reservation rates, with these encouraging purchasing opportunities as they arise.” trends continuing through the summer into the autumn. Mark Clare, Group Chief Executive 23 September 2009 Performance highlights • Net private reservations per site per • The Group continues to comply with Completions week were up 10.5% compared with the financial covenants in its existing units the 2008 financial year, 6.0% down financing arrangements. for the first half and 28.6% up in the 05 14,351 second half. • As previously announced no dividend 06 14,601 will be payable for the year ended 07 17,168 • Completions for the full year were 30 June 2009 (2008: 12.23 pence 08 18,588 13,202 (2008: 18,588), a decrease of per share). 09 13,202 29.0%, at an average selling price of £157,200 (2008: £183,100). Group • At 30 June 2009 net asset value per share was 672 pence (2008: 827 pence) Revenue revenue decreased by 35.7% to £ millions £2,285.2m (2008: £3,554.7m). and net tangible asset value per share was 415 pence (2008: 570 pence). 05 2,484.7 • Operating profit before exceptional 2,431.4 • Forward sales at 30 June 2009 were 06 items was £34.2m (2008: £550.2m) 3,046.1 £464.3m (2008: £697.6m) representing 07 at a margin of 1.5% (2008: 15.5%). 3,554.7 3,328 plots (2008: 4,586 plots). 08 2,285.2 • Operating exceptional items totalled At 13 September 2009 forward 09 £519.5m (2008: £255.0m) including sales had increased to £733.4m. £499.5m (2008: £208.4m) impairment Profit from operations before of inventories of which £494.9m • Over the eleven weeks since the exceptional items1 £ millions (2008: £nil) was recognised at the financial year end the Group has half year. Exceptional items charged delivered 2,152 net private 05 408.3 after operating profit totalled reservations (2008: 1,857). This 06 416.6 £15.3m (2008: £nil). represents an average of 0.46 net 07 513.3 private reservations per site per 08 550.2 • The Group made a loss before tax week, up 53.3% on the equivalent 09 34.2 and exceptional items of £144.1m period in the last financial year. (2008: £392.3m profit) and a loss * NetLoss debt/(cash)from operations was £485.3m (2008: £295.2m Profit). • The Board has today announced The results for the years ended 30 June 2008 and 2007 before tax of £678.9m (2008: £have millions been resttaed as explained in note 1 £137.3m profit). a fully underwritten Placing and Rights Issue to raise gross proceeds 05 -276.9 • Adjusted basic loss per share before of approximately £720m, together 06 -34.9 exceptional items was 23.8 pence with amended financing arrangements 07 1,301.2 (2008: 79.6 pence earnings). Basic which will come into effect upon 08 1,650.6 loss per share was 135.8 pence (2008: successful completion of the Placing 09 1,276.9 25.0 pence earnings). and the Rights Issue. • Net debt has reduced by £373.7m since 30 June 2008 (£145.9m since 31 December 2008) to £1,276.9m (2008: £1,650.6m). 1 Loss from operations was £485.3m (2008: £295.2m profit). Barratt Developments PLC Annual Report and Accounts 2009 01 Group overview availability of financial credit quickly became a full scale international recession.