8th Jan 2021 08:47
(Alliance News) - Barratt Developments PLC on Friday described its interim performance as "excellent", noting that while its sales rate has moderated since its October update it was still notably higher than in the previous year.
The housebuilder said that for the financial first half ended December 31, its sales rate climbed 12% to 0.77 net private reservation per active outlet per week from 0.69 per week the year prior.
Barratt did, however, point out that the sales rate had moderated since its October update, settling into a "more normalised level" compared to the 21% year-on-year rise from July 1 to October 11 to 0.87 net private reservations per active outlet per average week.
"We have delivered an excellent first half performance. Across the country, we have seen strong customer demand for our high quality new homes," the company said.
Barratt like other UK housebuilders has been boosted by a stamp duty holiday and by the UK government sparing the housing sector from recent Covid-19 restrictions.
The firm's home completions rose 9.2% annually to 9,077, and total forward sales at December 31 were 14% higher year-on-year at 13,588 homes at a value of GBP3.21 billion, which up 19% from 12 months ago.
The total average selling price rose 1.1% to around GBP283,000 from GBP279,800 the prior year.
"The board continues to recognise the importance of dividends to all shareholders. As announced at our full-year results, the board plans to implement a dividend policy based on a full-year dividend cover of 2.5 times. Subject to no material change in the operating environment, the board now expects to agree the resumption of dividends with the interim results on 4 February 2021," Barratt added.
The firm's net cash position rose to around GBP1.11 billion from GBP308.2 million at June 30.
Barratt expects financial 2021 wholly owned completions to be between 15,250 and 15,750 homes, based on present site construction activity and market conditions, with a reduced level of second half completions resulting from a lower level of work in progress carried forward at December 2020 versus June 2020. This means an increased reliance on construction activity in the second half.
"We remain focused on rebuilding our completion volumes to our medium-term target and current capacity of 20,000 homes. This, coupled with our land acquisition in recent years at a minimum 23% gross margin and our ongoing focus on operating efficiencies, support our continued target of a minimum 25% ROCE in the medium term," said Barratt.
Chief Executive David Thomas commented: "Despite the ongoing challenges presented by the pandemic, we are confident that our operating performance and strong financial position provide us with the resilience and flexibility to respond to the operating environment in FY21 and beyond."
Shares in Barratt were up 3.1% at 710.20 pence in London on Friday morning.
By Anna Farley; [email protected]
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