7 September 2022
Barratt Developments PLC
Annual Results Announcement for the year ended 30 June 2022
Excellent operational and financial performance; completions recovered to pre-pandemic levels
Commenting on the results David Thomas, Chief Executive of Barratt Developments PLC said:
” This has been a year of fantastic progress, with completions recovering to pre-pandemic levels and excellent productivity across our sites. Customers are at the heart of everything we do and we were awarded more NHBC Pride in the Job Awards than any other housebuilder for the 18th year in a row – testament to the high quality we consistently achieve across our sites.
Our financial strength and operational excellence position us well to navigate the macro-economic uncertainties ahead. I'd like to thank our employees, sub-contractors and supply chain partners for helping us to continue to deliver the industry-leading, sustainable homes and developments our customers want and the UK needs”.
|
£m unless otherwise stated1,2,3 |
Year ended 30 June 2022 |
Year ended 30 June 2021 |
Change |
|
Total completions (homes)4 |
17,908 |
17,243 |
3.9% |
|
Revenue |
5,267.9 |
4,811.7 |
9.5% |
|
Alternative performance measures: |
|||
|
Adjusted gross margin (%) |
24.8 |
23.2 |
160bps |
|
Adjusted profit from operations |
1,054.8 |
919.0 |
14.8% |
|
Adjusted operating margin (%) |
20.0 |
19.1 |
90bps |
|
Adjusted profit before tax |
1,054.8 |
919.7 |
14.7% |
|
Adjusted basic earnings per share (pence) |
83.0 |
73.5 |
12.9% |
|
ROCE (%)5 |
30.0 |
27.8 |
220bps |
|
Statutory basis: |
|||
|
Gross margin (%) |
17.1 |
21.0 |
(390bps) |
|
Profit from operations |
646.6 |
811.1 |
(20.3%) |
|
Operating margin (%) |
12.3 |
16.9 |
(460bps) |
|
Profit before tax |
642.3 |
812.2 |
(20.9%) |
|
Basic earnings per share (pence) |
50.6 |
64.9 |
(22.0%) |
|
Total ordinary dividend per share (pence) |
36.9 |
29.4 |
25.5% |
|
Net cash |
1,138.6 |
1,317.4 |
(178.8) |
Highlights
- Excellent operational performance throughout FY22 with total home completions4increasing by 3.9% to 17,908 (FY21: 17,243) homes and returning to pre-pandemic levels. Based on current market conditions, we are targeting total home completion growth of 3% to 5% in FY23, to between 18,400 and 18,800 homes.
- Adjusted gross margin of 24.8% (FY21: 23.2%) reflecting strong customer demand, house price inflation ahead of build cost inflation and improved site based productivity. The reported gross margin, after adjusted item costs of £408.2m (FY21: £104.7m), reduced to 17.1% (FY21: 21.0%).
- Ongoing industry leadership in quality and customer service – 18thconsecutive year of achieving more NHBC Pride in the Job Awards than any other housebuilder and the 13th consecutive year of receiving the maximum HBF 5 Star customer satisfaction rating.
- Strong cash generation with net cash at 30 June 2022 of £1,138.6m (30 June 2021: £1,317.4m) retaining balance sheet strength, investment in capacity for planned growth, as well as enhanced returns to shareholders.
- Significant progress as the leading national sustainable housebuilder with carbon intensity6reduced by 14.0% to 1.53 (FY21: 1.78) tonnes and waste intensity6 reducing by 15.6% to 4.97 (FY21: 5.89) tonnes. Additional investments made in sustainability R&D during the year, further extending our industry leadership.
- Final ordinary dividend per share of 25.7p (FY21: 21.9p) together with the interim dividend of 11.2p (FY21: 7.5p) resulting in a total ordinary dividend for the financial year of 36.9p (FY21: 29.4p), reflecting our policy of reducing dividend cover.
- Return of £200m surplus capital through the implementation of a share buyback programme which will start shortly, with an initial tranche of £50m to be completed by the end of the calendar year and the total programme completed no later than 30 June 2023.
Current trading
- Market fundamentals remain strong, reflecting the continued imbalance between housing supply and demand, as well as good mortgage availability.
- We entered FY23 with a strong forward sales position and at 28 August 2022 we are 55% forward sold with respect to private wholly owned home completions for FY237(29 August 2021 for FY22: 59%8) with 59% of the private order book exchanged (29 August 2021: 56% of the private order book exchanged). As at 28 August 2022 total forward sales were at 14,058 homes (29 August 2021: 15,402 homes) and a value of £3,808.9m (29 August 2021: £3,843.4m).4
- Net private reservations per active outlet per average week for the period to 28 August 2022 were lower than last year at 0.60 (FY22: 0.82) and below the 0.70 for the equivalent period in FY20, prior to the pandemic. In part, this reflects limited availability of homes for early occupation, given our strong forward order book, as well as heightened macro-economic uncertainty.
- As the land market has become increasingly competitive, our land approvals in the new financial year to date are lower than in FY22, reflecting our strong land bank position and disciplined application of our minimum hurdle rates of 23% gross margin and 25% ROCE.
- Construction activity is on track to deliver planned output growth in FY23 with 366 equivalent homes per average week built to date in the new financial year (FY22: 336 homes).