Our business model

Our business model

At every step of the journey we aim to add value for all stakeholders

Inputs

People

The business directly supports around 4,000 people daily through a combination of c. 1,200 directly employed staff and c. 2,800 subcontractors. To achieve our strategic objectives, it is fundamental that we have committed and dedicated staff supported by skilled and loyal subcontractors.

Land

The Group has clear targets with respect to the quantum of land which is owned, controlled and strategic. It is necessary to find the balance between security of supply on the one hand, and risk management and capital efficiency on the other. The Group’s strategic landbank benefits from having above average margins due to the ability to acquire at a discount to market value. Strategic land also provides cash and risk management advantages due to purchases being only committed at the point of purchase.

 

Materials

To ensure high standards of build quality, economies of scale and brand consistency, c. 75% of materials for our new homes are procured by our centralised procurement team from c. 90 national suppliers. 

Relationships

We interact with a number of stakeholders, including local communities, local authorities, land owners, suppliers, subcontractors, our staff and ultimately our customers. It is therefore important that we establish, maintain and nurture effective working relationships to ensure that planning consents are delivered, land is acquired and quality new homes are constructed. 

Brand

As buying a home is likely to be the largest single purchase in our customers’ lifetime, the Group’s brand values and ultimately its reputation is based on outstanding levels of build quality and customer service. In addition, we promote how we empower our customers with the ability to personalise their engagement with us and their homes. 

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Land

Land

What we do

We identify opportunities in popular locations suitable for family homes, where affordability levels allow ASP and sales rates to be maintained at or around current levels, and are at or above our gross margin and ROCE hurdle rates.

How we add value

Through innovative layouts and value engineering opportunities, we add value to land both pre and post purchase. Margins are further enhanced by the promotion of our strategic landbank, which enables land to be acquired at a discount to market value. Strategic land provides the Group with security of land supply and allows a more selective approach to be taken to the purchase of land on the open market.

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Planning, design & innovation

Planning, design & innovation

What we do

We work with local communities to design quality homes in sustainable developments resulting in successful planning outcomes. We use standard housetypes across the Group, with vernaculars tailored to suit the needs of a particular location. These housetypes are developed by our in-house design team and accounted for 86% of 2020 private completions.

How we add value

Our developments add value to those communities where we build. This includes direct and indirect job creation, the provision of affordable homes, improvements to local road networks and the creation of new education and community facilities. Our housetype portfolio provides flexible layouts which can be adapted to meet our customers’ needs.

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Procurement

Procurement

What we do

The vast majority of housebuild materials are sourced from national suppliers by our central procurement team, which ensures brand consistency and quality across the Group. Typically, 80% of our national supply agreements have a fixed price period of between 12 and 24 months. In addition, over 90% of agreements have protections in place to cover foreign currency related commodity cost increases.

How we add value

Centralising the purchase of key housebuild components ensures price optimisation from national suppliers and enables supplier performance, in respect of both quality and delivery times, to be more effectively managed.

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Production

Production

What we do

Our construction sites are managed by suitably qualified employees with construction activities typically outsourced to local contracting firms, many of whom have worked with the Group for a number of years. The use of standard housetypes not only provide cost certainty to the Group but importantly increases familiarity of build for our construction team.

How we add value

The Group has a well defined Quality Assurance process which is further supported by reviews undertaken by the NHBC who inspect the key build stages of every home constructed. Our build quality is measured by both the HBF Customer Satisfaction Survey and NHBC Construction Quality Reviews.

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Sales

Sales

What we do

Our in-house Development Sales Managers are based in our sales centres and are focused on securing reservations and exchanging contracts prior to homes being physically build complete. Increased use of digital marketing has allowed a more analytical and targeted approach to lead management and also enables customers to both reserve their home and select optional upgrades online.

How we add value

It is vital that we adapt our sales platforms to ensure that we continue to satisfy the demands of our customers. We were the first major homebuilder to enable customers to reserve online and in 2021, 48% of our customers reserved their home this way.

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Customer service

Customer service

What we do

Our in-house regional customer service teams ensure continued contact with customers once they have moved into their new home. We provide quality new homes and excellent levels of customer service with all key build stages independently inspected by the NHBC, the Group’s sole warranty provider. This helps build trust between our customers and teams.

How we add value

We believe that excellent levels of customer service enhance the brand value of the Group, which assists both sales rates and selling prices. Personalised customer experiences, digitally or in person, are award winning in our sector.

Outputs

Society

 

£44m
investment in local authority and community facilities

975
core and JV affordable homes delivered

£70m
towards government taxes

Customers

 

92%
customer satisfaction score

5 stars
HBF rating for customer satisfaction in ten of the last 11 years

49%
online reservations

People

 

73%
of workforce on structured training programmes

37%
staff with more than 5 years’ service

70:30
ratio of female to male employees

Shareholders

 

£118m
increase in net assets

£84m
of free cash generated

10
years of consecutive profits

Supply chain

 

2,800
subcontractor jobs directly supported

£574m
payments made to supply chain partners during 2021

c. 7,000
further indirect jobs supported