27th Feb 2014 09:57
LONDON (Alliance News) - Housebuilder Barratt Developments PLC Thursday reported a 162% increase in profit in its recent half year, boosted by growth in consumer confidence in 2013.
The residential property development group posted pretax profit of GBP120.4 million for the period ended December 31, 2013, up from GBP45.9 million a year earlier, while revenue rose to GBP1.26 billion from GBP951.1 million in 2012.
Barratt said the 2012 pretax profit figures were restated following the adoption of new accounting rules for the treatment of employees benefits.
Barratt's positive results follow rivals Persimmon and Taylor Wimpey this week who attributed their profit increase to renewed confidence in the UK housing market and the availability of mortgage finance particularly for higher loan to values including government-backed schemes.
All the UK's major housebuilders have reported an accelerating recovery in the UK housing market through 2013 and into this year, particularly in the southeast of England where Barratt has high exposure. The builders virtually halted new construction in the wake of the financial crisis as banks pulled mortgage financing and the ensuing economic crisis put off house buyers. The companies instead focused on paying down debt.
Barratt said it delivered 6,195 completions during the period, up from 5,194 a year earlier, with private completions rising 23% to 5,202 from 4,241 in 2012.
Affordable housing completions totalled 751, down from 844, with the reduction in volume reflecting site phasing. Barratt said it expects affordable housing to account for around 16% of completions in the current financial year, down from 17% the previous year.
Total average selling price of Barratt's homes increased by 14% in the period to GBP211,200 from GBP185,500 a year earlier, while private average selling prices rose to GBP225,300 from GBP201,900 in 2012, driven by changes in sales mix, with fewer flats outside of London, more family homes being built around the country, and an increased proportion of completions in London.
Barratt agreed the purchase of 11,394 plots of land compared with 9,320 plots, an increase of 22% on the prior year equivalent period
In London and the South East where the land market is more competitive, Barratt said it is focused on acquiring land from the public sector and sites that are larger or more technically complex.
Barratt said the acquisition of new land and the completion of older sites has "transformed" its land bank. At the end of December, 79% of the firm's owned and controlled land bank plots were acquired since re-entering the land market in 2009, with less than 5% of plots on impaired old land.
"Underpinning this strong performance is an improved market and a business model that is delivering homes that people want to buy in places they want to live," Chief Executive Mark Clare said in a statement. "Our disciplined approach means that we have been able to increase the number of new homes we are building whilst driving up profitability, return on capital and dividends."
The company declared an interim dividend of 3.2 pence per share after it paid no dividend a year earlier. Barratt said the interim dividend reflected the move to three times dividend cover, two years ahead of target.
The stock was trading at 434.30 pence Thursday morning, up 22.50 pence or 5.5%
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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