23rd Mar 2005 07:00
Barratt Developments PLC23 March 2005 23 March 2005 BARRATT DEVELOPMENTS PLC Results for the half year ended 31 December 2004 Highlights: • UK turnover £1,148.2m (2003: £1,092.1m) up by 5% • Pre-tax profit £171.1m (2003: £142.6m) up by 20% • Earnings per share 51.1p (2003: 43.6p) up by 17% • Interim dividend 8.99p (2003: 6.9p) up by 30% • Full year dividend expected to be raised by about 25% • ROACE was 34% • UK housebuild operating margin increased to 14.3% (2003: 13.3%) • UK completions rose to 6,866 (2003: 6,705) • Average selling price of £165,600 (2003: £161,700) • 82% of homes on brownfield land • 8,974 plots acquired and land stocks stand at 59,443 plots - 4 years supply • Net cash increased to £149.8m (2003: £25.0m net cash) • Record forward sales of £1 billion (2003: £833m) Charles Toner, Chairman of Barratt Developments commented: "It has been anotherperiod of significant progress for Barratt, with further growth in completions,margins and profits producing another set of record results - for the 13thconsecutive year. In calendar 2004 we again built more homes in total and morehomes on brownfield sites than any other developer. We are confident of anothersuccessful full year and are well placed for the future." David Pretty, Group Chief Executive of Barratt Developments commented: "Whilstthe market has been more demanding, we have successfully adapted to the new,more competitive environment and have increased our forward sales. It is stilltoo early to predict the market throughout 2005 but I can confirm that sales inall our regions have been encouraging since the beginning of the second half.Our forward sales now stand at a record £1bn and, with completions to date, thissecures 90% of our full year projection. On current form, I am confident that wewill achieve another record year." For further information please contact:Barratt Developments PLCDavid Pretty, Group Chief Executive On the day: 020 7067 0700Colin Dearlove, Group Finance Director Thereafter: 0191 286 6811Weber Shandwick Square MileTerry Garrett/Chris Lynch 020 7067 0700 The financial analysts' presentation slides will be available on the Barrattcorporate website: www.barratt-investor-relations.co.uk from 10.30 am today. CHAIRMAN'S STATEMENT The half year was another period of significant progress, with further growth incompletions, margins and profits producing another set of record results for theGroup - for the 13th consecutive year. We are confident of another successfulfull year and are well placed for the future. The main features of the results for the half year ended 31 December 2004, withcomparisons to the same period last year, are as follows:- • Pre-tax profit rose 20% to £171.1m against £142.6m. • Basic earnings per share amounted to 51.1p against 43.6p, up 17%. • An interim dividend of 8.99p per share will be paid, on 20 May 2005, to shareholders on the register on 29 April 2005, against 6.9p the previous year, an increase of 30%, 5.7 times covered. This rate of increase is not indicative of the total dividend for the year, containing as it does a significant element of re-balancing of the dividend between the interim and final payments. In the absence of unforeseen circumstances, we would expect to recommend an increase in the total dividend for the year in the region of 25%. • UK completions rose to 6,866 homes, up 2%, at an overall average selling price of £165,600, up 2%. • Turnover on continuing UK operations rose 5% to £1,148.2m against £1,092.1m last year. • UK housebuild operating margin increased from 13.3% to 14.3%. • Net cash in hand increased from £25.0m to £149.8m. This was achieved notwithstanding an £87.1m increased investment in land stocks and work in progress. • UK land stocks, including plots agreed, increased by over 3,000 plots to 59,443 plots, equating to four years' supply. • Return on average capital employed was 34%, once more amongst the highest in the industry. • Record forward sales, which have now increased to £1 billion. With completions to date secures 90% of our full year projection. We are well positioned in the market place, with a wide product range enablingus to provide homes from around £80,000 to £2.0m, but with an average sellingprice of £165,600. Together with our wide geographic spread throughout Britain,this provides us with a broad appeal and also ensures we are not over dependenton any one market sector or geographic area. We also made further progress toconsolidate our position as Britain's leading urban regenerator with over 80% ofour homes now built on brownfield land. This allows us to benefit from theGovernment's increasing emphasis on regeneration. Total completions rose 2%, although private completions were 8% lower at 5,610homes. However, social housing completions more than doubled to 1,256 homes.This is another growing sector where we have considerable expertise. In this regard, we are pleased to announce that we are one of the three winningconsortia chosen to deliver the Government's London Wide Initiative, which willprovide vitally needed key-worker housing on brownfield land across London. Aspart of the Key London Alliance Consortium, Barratt is working with EnglishPartnerships, the national regeneration agency, to kick-start the initiativewith an initial phase of 1,000 new homes. After the previous over-heated markets, sales activity moderated in the periodas it adjusted to more modest price rises and a normal level of activity. Thisadjustment was not unexpected and was welcome since it will provide a morestable and sustainable market for the future. We anticipated, and prepared for,these more competitive conditions. Whilst it is too early to predict the marketthroughout 2005, sales interest and activity in all our regions has beenencouraging since 1 January and is currently sufficient for us to achieve ourgoals. Forward sales now stand at a record £1 billion and with completions todate this secures 90% of our full year projection. The fundamentals of the housing market remain sound, with historically lowinterest rates, good employment levels and restricted supply due to planningdelays. Furthermore, stable prices, or modest price rises, in the year aheadshould continue to increase buyer confidence and improve affordability. Thiswill benefit house buyers and housebuilders alike. Our geographic spread and brownfield expertise consistently increase ourlandbuying opportunities. As a result, and despite our ongoing prudence in theland market, we continued to secure quality sites in good locations. During thehalf year we acquired 8,974 plots, increasing our land stocks to 51,443 plots. Afurther 8,000 plots are agreed subject to contract giving an overall land bankof 59,443 plots, which currently equates to four years' supply. Although theplanning environment remains very difficult, we now have planning permissions inplace for over 85% of our 2005/06 requirement and have been successful inwinning sufficient approvals to continue our steady increase in selling outlets.Subject to planning progress, we expect these to increase to circa 455 by summer2005. On 30 August 2004, we successfully completed the disposal of our small SouthernCalifornia operation in line with the Group's strategy to focus on our UKoperations. An impairment provision of £7.5m was made in the accounts for theyear to 30 June 2004. The gross disposal proceeds of £90m are being selectivelyinvested in urban renewal projects in key UK growth areas. We remain committed to further improvements in all aspects of the serviceprovided to our customers. We also support the House Builders' Federation in itswork to establish a national survey of the industry's future performance, inresponse to the issues raised in the Barker Report. We are building on theprogress made on customer satisfaction since the introduction of our newCustomer Care programme a year ago. We continue to seek further improvementsand, accordingly, the programme will be regularly reviewed. I am very pleased to confirm that our site construction staff won a recordnumber of NHBC Pride in the Job Awards for quality workmanship, with two of ourSite Managers achieving national recognition. We continue to lead the industry in apprentice training with over 550 youngpeople receiving instruction on our sites in a wide range of skills. OurGraduate Trainee Scheme is also running well, with 55 entrants embarked onfast-track careers. This training will help address the industry's shortage ofskilled labour and is a valuable investment in our future success. To summarise, our teams across the country have, once again, successfullyadjusted to new market conditions and have achieved a record performance. Ourcore strengths and wide expertise continue to benefit us greatly. We have strongfinances, a high quality land bank, record forward sales and we look to thefuture with great confidence. Charles TonerChairman23 March 2005 For further information please contact: Barratt Developments PLCDavid Pretty, Group Chief Executive On the day: 020 7067 0700Colin Dearlove, Group Finance Director Thereafter: 0191 286 6811 Weber Shandwick Square MileTerry Garrett/Chris Lynch 020 7067 0700 The financial analysts' presentation slides will be available on the Barrattcorporate website: www.barratt-investor-relations.co.uk from 10.30 am today,together with photographic images of Charles Toner, David Pretty and a selectionof Barratt developments. Further copies of the announcement can be obtained from the Company Secretary'soffice at: Barratt Developments PLCWingrove HousePonteland RoadNewcastle upon Tyne NE5 3DP The following are the unaudited results of the Group for the half year ended31st December 2004.-------------------------------------------------------------------------------------1. Group Profit and Loss Account Half year ended Half year ended Year ended 31st December 31st December 30th June 2004 2003 2004 £m £m £m-------------------------------------------------------------------------------------Turnover - Continuing operations 1,148.2 1,092.1 2,343.1 - Discontinued operations 28.0 82.4 172.9-------------------------------------------------------------------------------------Group Turnover 1,176.2 1,174.5 2,516.0-------------------------------------------------------------------------------------Operating profit - Before exceptional items 165.8 139.3 364.2 - Exceptional items, profit on disposal of freehold ground rents 6.4 - -------------------------------------------------------------------------------------- - Continuing operations 172.2 139.3 364.2 - Discontinued operations 0.4 8.3 11.4-------------------------------------------------------------------------- ----------Operating profit 172.6 147.6 375.6 Net interest payable (1.5) (5.0) (7.9)-------------------------------------------------------------------------------------Profit on ordinary activities before taxation 171.1 142.6 367.7Taxation (51.3) (40.7) (107.2)-------------------------------------------------------------------------------------Profit on ordinary activities after taxation 119.8 101.9 260.5Dividends (21.1) (16.1) (51.4)-------------------------------------------------------------------------------------Retained profit 98.7 85.8 209.1------------------------------------------------------------------------------------- Earnings per share - basic 51.1p 43.6p 111.4p------------------------------------------------------------------------------------- Earnings per share - diluted 50.5p 43.3p 110.1p------------------------------------------------------------------------------------- Dividend per share 8.99p 6.90p 21.58p------------------------------------------------------------------------------------- Dividend cover 5.7x 6.3x 5.2x------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------2. Statement of Total Recognised Half year ended Half year ended Year ended Gains and Losses 31st December 31st December 30th June 2004 2003 2004 £m £m £m-------------------------------------------------------------------------------------Profit on ordinary activities after taxation 119.8 101.9 260.5Currency translation differences on foreigncurrency net investments - (3.4) (3.9)-------------------------------------------------------------------------------------Total gains and losses recognised in period 119.8 98.5 256.6------------------------------------------------------------------------------------- --------------------------------------------------------------------------------3. Group Balance Sheet At At At 31st December 31st December 30th June 2004 2003 2004 £m £m £m--------------------------------------------------------------------------------Fixed assetsTangible assets 11.8 11.2 11.9--------------------------------------------------------------------------------Current assets Properties held for sale 7.9 8.5 9.7 Stocks 2,156.9 1,824.1 1,977.0 Debtors due within one year 40.7 39.8 41.6 Debtors due after more than one year 2.0 1.2 1.3 Bank and cash 161.6 182.8 230.4-------------------------------------------------------------------------------- 2,369.1 2,056.4 2,260.0--------------------------------------------------------------------------------Current liabilities Creditors due within one year (1,079.8) (968.0) (1,066.0)--------------------------------------------------------------------------------Net current assets 1,289.3 1,088.4 1,194.0--------------------------------------------------------------------------------Total assets less current liabilities 1,301.1 1,099.6 1,205.9 Creditors due after more than one year (88.4) (105.5) (89.8)--------------------------------------------------------------------------------Net assets 1,212.7 994.1 1,116.1-------------------------------------------------------------------------------- Capital and reserves Share capital 24.0 23.9 24.0 Share premium 192.0 189.1 190.7 Profit retained 996.7 781.1 901.4--------------------------------------------------------------------------------Equity shareholders' funds 1,212.7 994.1 1,116.1--------------------------------------------------------------------------------Net assets per share 505p 416p 465p-------------------------------------------------------------------------------- --------------------------------------------------------------------------------4. Group Cash Flow Statement Half year ended Half year ended Year ended 31st December 31st December 30th June 2004 2003 2004 £m £m £m--------------------------------------------------------------------------------Net cash (outflow)/ inflow from operating activities Operating profit 172.6 147.6 375.6 Increase in stocks (282.6) (100.6) (254.4) Increase in debtor (8.1) (2.8) (6.8) Increase/(decrease) in creditors 82.7 (26.6) 147.5 Other non cash movements 2.6 (0.4) 0.8-------------------------------------------------------------------------------- (32.8) 17.2 262.7Returns on investments and servicing of finance (1.4) (5.5) (11.5)Taxation (52.9) (43.8) (98.7)Capital expenditure and financial investment (4.2) 0.2 (5.4)Acquisitions and disposals 84.5 - -Equity dividends paid (34.4) (28.8) (45.0)--------------------------------------------------------------------------------Cash (outflow)/inflow before financing (41.2) (60.7) 102.1Financing (7.6) 2.9 (15.4)--------------------------------------------------------------------------------(Decrease)/increase in cash (48.8) (57.8) 86.7-------------------------------------------------------------------------------- Reconciliation of net cash flow to movement in net funds (Decrease)/increase in net cash, including overdraft (48.8) (57.8) 86.7 Cash flow from decrease/(increase) in funds 8.9 (0.8) 19.1--------------------------------------------------------------------------------Change in net funds resulting from cashflows (39.9) (58.6) 105.8Exchange movements - 2.0 2.3--------------------------------------------------------------------------------Movement in net funds in the period (39.9) (56.6) 108.1Net funds at 1st July 189.7 81.6 81.6--------------------------------------------------------------------------------Net funds at 31st December/30th June 149.8 25.0 189.7-------------------------------------------------------------------------------- The financial information set out above does not constitute statutory accountswithin the meaning of the Companies Act 1985. The figures for the year to 30thJune 2004 are an extract from the full accounts for that year, which have beenfiled with the Registrar of Companies and on which the auditors gave anunqualified opinion. The interim financial information has been prepared on the basis of accountingpolicies adopted for the year ended 30th June 2004. These policies are set outin the company's Annual Report and Accounts. Work on the changes required for the implementation of International FinancialReporting Standards continues to ensure compliance for the interim results forthe six months to 31st December 2005. The major areas of change relate toaccounting for pension costs, share based payments, financial instruments andthe timing of dividend payment recognition. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Barratt Developments