8 February 2023
BARRATT DEVELOPMENTS PLC
Half year results for the six month period ended 31st December 2022
Strong operating performance, well positioned for an uncertain trading backdrop in 2023
Commenting on the interim results David Thomas, Chief Executive of Barratt Developments PLC said:
“We have delivered a strong operating performance for the six months to 31 December 2022. This was possible because of our significant forward order book at 30 June 2022 and the tremendous efforts of our employees, sub-contractors and supply chain partners.
However, the economic backdrop has clearly been challenging and consumer confidence weakened significantly during the half, which meant we saw lower reservation rates for future sales – particularly in the second quarter. Whilst we have seen some early signs of improvement in current trading during January, we will need to see continued momentum over the coming months before we can be confident that these challenging trading conditions are easing.
Our business remains fundamentally strong, both operationally and financially, with an experienced leadership team, a strong net cash position and a resilient and flexible business model. We are well-placed to navigate the challenges ahead and are focused on driving revenue whilst taking a decisive and disciplined approach to costs. As always, our priority is delivering excellent quality and service for our customers.”
| £m unless otherwise stated 1 , 2 | Half year ended31 December 2022 | Half year ended31 December 2021 | Change |
| Total completions (homes)3 | 8,626 | 8,067 | 6.9% |
| Revenue | 2,783.9 | 2,247.1 | 23.9% |
| Alternative performance measures: 4 | |||
| Adjusted gross profit | 647.9 | 562.4 | 15.2% |
| Adjusted gross margin | 23.3% | 25.0% | (170 bps) |
| Adjusted profit from operations | 511.8 | 449.9 | 13.8% |
| Adjusted operating margin | 18.4% | 20.0% | (160 bps) |
| Adjusted profit before tax | 521.5 | 450.0 | 15.9% |
| Adjusted basic earnings per share (pence) | 39.2 | 35.9 | 9.2% |
| ROCE5 | 29.6% | 26.2% | 340 bps |
| Net cash | 969.1 | 1,131.7 | (14.4%) |
| Statutory basis: | |||
| Gross margin | 22.6% | 24.3% | (170 bps) |
| Profit from operations | 494.2 | 434.0 | 13.9% |
| Operating margin | 17.8% | 19.3% | (150 bps) |
| Profit before tax | 501.5 | 432.6 | 15.9% |
| Basic earnings per share (pence) | 37.7 | 34.5 | 9.3% |
| Interim dividend per share (pence) | 10.2 | 11.2 | (8.9%) |
| Tangible net asset value per share (pence) | 462 | 458 | 0.9% |
Highlights
| · | Strong operational performance in the first half, delivering 6.9% growth in total home completions3 to 8,626 with adjusted profit before tax up 15.9% at £521.5m and reported profit before tax also advancing 15.9% to £501.5m. |
| · | Continuing focus on build quality, health and safety and customer service recognised as the Group was named ‘Large Housebuilder of the Year’ for the third time in four years. |
| · | Industry leadership on Sustainability recognised with the Group joining the CDP’s Climate Change ‘A’ List for Leadership, one of just 283 companies worldwide and the top-rated UK housebuilder . |
| · | Strong balance sheet with net cash of £969.1m (HY22: £1,131.7m) after dividend payment of £259.8m and £100.5m of share repurchases. |
| · | Our full year out-turn remains dependent on how the market evolves through the Spring selling season, but assuming we continue to see the improved reservation activity we have experienced since the start of calendar 2023, we expect to deliver total home completions of between 16,500 to 17,000 in FY23 (including c. 750 JV completions). |
| · | Interim ordinary dividend of 10.2p (HY22: 11.2p) reflecting the planned reduction in dividend cover to 2.0 times for the full financial year (2.25 times cover in HY22). |
| · | Buyback programme to recommence following today’s interim results announcement. |
Current trading
| · | Net private reservations per active outlet per average week from 1 January 2023 through to 29 January 2023 were 0.49, 45.6% below the 0.90 in the equivalent period in 2022, reflecting the more tentative demand seen in the calendar year to date, but an uplift on the level of activity seen from our AGM announcement through to 31 December 2022. |
| · | Forward sales3 as at 29 January 2023 were 10,854 homes (30 January 2022: 15,736) at a value of £2,665.0m (30 January 2022: £4,109.7m) with 8,719 homes of these total forward sales either exchanged or contracted (30 January 2022: 11,362 exchanged or contracted). |
1 Refer to Glossary for definition of key financial metrics
2 Unless otherwise stated, all numbers quoted exclude JVs
3 Including JVs in which the Group has an interest
4 In addition to the Group using a variety of statutory performance measures, it also measures performance using alternative performance measures (APMs). Definitions of APMs and reconciliations to the equivalent statutory measures are detailed in the Glossary and Definitions. Net cash definition in Note 11
5 ROCE for the 12 months to 31 December 2021 has been restated to exclude provisions in relation to legacy properties from capital employed
Note on forward looking statements
Certain statements in this announcement may be forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Accordingly undue reliance should not be placed on forward looking statements. Unless otherwise required by applicable law, regulation or accounting standards, the Group does not undertake to update or revise any forward looking statements, whether as a result of new information, future developments or otherwise.
There will be a results meeting at the Chartered Accountants’ Hall, 1 Moorgate Place, London, EC2R 6EA at 8.30am today.
A c onference call and webcast will accompany the meeting starting at 8.30am. Details for the conference call are included below. We would advise calling in to the conference call at 8.15am to ensure you are registered ahead of the start of the meeting.
Standard International: +44 (0) 33 0551 0200
UK Toll Free: 0808 109 0700
USA Local: +1 786 697 3501
USA Toll Free: +1 866 580 3963
The presentation will also be webcast live with the Q&A. Please register and access the webcast using the following link:
https://broadcaster-audience.mediaplatform.com/#/event/63bc003eb389f42c6f386631
An archived version of the webcast will also be available on our website later this afternoon and further copies of this announcement can be downloaded from the Barratt Developments PLC corporate website at www.barrattdevelopments.co.uk or by request from the Company Secretary’s office at: Barratt Developments PLC, Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire, LE67 1UF.
For further information, please contact:
Analyst / investor enquiries
Mike Scott, Chief Financial Officer 07881 327 748
John Messenger, Group Investor Relations Director 07867 201 763
Media enquiries
Tim Collins, Group Corporate Affairs Director 020 7299 4874
Brunswick
Jonathan Glass / Rosie Oddy 020 7404 5959