Barratt Developments is gearing its products towards modern methods of construction, as completions hit a record high.
Highlights from the housebuilder’s financial results include:
- Profit before tax up by 9.2% to £835.5m;
- 7% increase in final ordinary dividend per share to 17.9p (2017: 17.1p) together with 17.3p (2017: 17.3p) special dividend per share, resulting in a total dividend for the financial year of 43.8p (2017: 41.7p).
Medium term targets
- 3-5% volume growth per annum;
- Land acquisition hurdle rate of a minimum 23% gross margin;
- Minimum 25% ROCE.
Forward sales (including JVs) up 11.1%, as at 2 September 2018 at £3,054.0m (3 September 2017 at £2,749.9m);
Net private reservations per active outlet per average week from 1 July were in line with the prior year at 0.75 (FY18: 0.74);
“The government continues to emphasise its support of housebuilding and commitment to tackling the country’s housing shortage,” said Chairman John Allan. “We expect that the recently updated National Planning Policy Framework will positively impact housebuilding and Local Authorities have made good progress in preparing and submitting local plans.
“The November 2017 budget included further positive measures to improve the health of the housing market. Notably this included a stamp duty cut for first time buyers, which has now benefited over 120,000 purchasers, and the £5 billion Housing Infrastructure Fund to unlock new sites for development.
“While political uncertainty continues around the country’s departure from the EU and ministerial changes in the Ministry of Housing, Communities and Local Government, the Board remain confident in the strong fundamentals of the housing sector and our business.
“Market conditions remain good with a wide availability of attractive mortgage finance, which, alongside Help to Buy, continues to support robust consumer demand. The Group is well positioned with a substantial year-end net cash balance, healthy forward sales position and an experienced management team.”
David Thomas, Chief Executive, said, “In 2016, the group undertook a review of its housing ranges. The new ranges maintain our high standards of design whilst being faster to build, help us reduce build cost and waste, and are more suitable for modern methods of construction. We continue to roll out our new housing ranges across the business with the new Barratt range now identified for 187 sites (September 2017: 132 sites) across the country and we currently have 101 sites (September 2017: 51 sites) under construction. The planned roll-out of the new product ranges will increasingly benefit margin going forward.
“Our focus on driving further margin improvements through the business, and the operational improvements that we have made, including our new product range and our concentration on standardised product, are enabling us to acquire land at an increased minimum of 23% gross margin.
“Market conditions remain supportive, with attractive mortgage financing and the support of Help to Buy driving strong consumer demand for our homes across the country.”
Barratt is the UK’s largest housebuilder with total completions at 17,579 units including JVs (2017: 17,395), the highest number of completions in a decade.