TIDMBDEV
RNS Number : 5308B
Barratt Developments PLC
11 January 2018
11 January 2018
Barratt Developments PLC
Maintaining momentum with continued strong performance
Barratt Developments PLC (the 'Group') is issuing a trading
update in respect of the six months ended 31 December 2017 (the
'period') ahead of publication of its interim results on 21
February 2018.
Highlights
-- Total completions including joint ventures ('JVs') at 7,324 (2016: 7,180)(1)
-- Sales rate of 0.68 (2016: 0.68) net private reservations per active outlet per week(2)
-- Well positioned for the second half of our financial year
with total plots forward sold (including JVs) as at 31 December
2017 up 3.8% at 10,921 plots (2016: 10,520 plots) at a value of
GBP2,383.8m (2016: GBP2,336.6m)
-- Land market remains attractive with GBP641.2m (2016:
GBP328.2m) of land approved for purchase equating to 51 sites
(2016: 39 sites) and 13,263 plots (2016: 5,262 plots)
-- Net cash(3) as at 31 December 2017 was c.GBP165m (2016:
GBP196.7m) reflecting our success in land purchasing, normal
seasonal trends and the payment of GBP348m (2016: GBP248m) of
dividends in November
David Thomas, Chief Executive commented,
"We have delivered a strong performance in the first half,
underpinned by our focus on quality, design and industry-leading
customer service.
As the UK's largest housebuilder we remain firmly committed to
helping address the housing shortage whilst delivering excellent
operational and financial performance.
In 2018 we are celebrating our 60th anniversary, and we are
proud that we have built more than 450,000 homes across the country
since 1958."
Trading update
The Group has delivered a strong first half performance, with
good customer demand driven by a positive market backdrop. The land
market remains favourable and we have secured attractive land
opportunities which exceed our minimum hurdle rates. The business
performance continues to benefit from good mortgage availability
and a supportive Government policy environment.
Our average net private reservations per week were 246 (2016:
247) for the period. The sales rate for the period was in line with
the prior year at 0.68 (2016: 0.68) net private reservations per
active outlet per week.
We launched 93 new developments in the period (including JVs)
(2016: 83) and operated from an average of 376 outlets (including
JVs) (2016: 374). We continue to expect to see average active
outlet numbers grow modestly for the full year.
Total completions (including JVs) were 7,324 (2016: 7,180)
units.
Total average selling price ('ASP') on completions increased by
6.5% in the period to c.GBP281k (2016: GBP263.8k), with private ASP
up by 5.9% to c.GBP314k (2016: GBP296.4k) benefiting from mix as
well as some underlying house price inflation.
Forward Sales
Our total forward sales (including JVs) as at 31 December 2017
were up 2.0% on the prior year at a value of GBP2,383.8m (2016:
GBP2,336.6m), equating to 10,921 plots (2016: 10,520 plots).
Private forward sales were up 0.4% at a value of GBP1,457.8m (2016:
GBP1,451.8m), equating to 4,209 plots (2016: 4,037 plots),
positioning us well for the second half of our financial year.
Land and Planning
The land market remains attractive and we are securing
operational land opportunities that exceed our minimum hurdle rates
of 20% gross margin and 25% site ROCE(4) .
During the period the purchase of GBP641.2m (2016: GBP328.2m) of
operational land was approved, equating to 51 sites (2016: 39
sites) and 13,263 plots (2016: 5,262 plots). We expect to approve
over 20,000 plots in FY18 as a whole. We continue to target an
owned and controlled land bank of around 4.5 years at our year end
in line with our operating framework.
Net Cash and Capital Returns
Net cash as at 31 December 2017 was c.GBP165m (2016: GBP196.7m)
reflecting our success in land purchasing, normal seasonal trends
and the payment of GBP348m (2016: GBP248m) of dividends in
November. We continue to expect land creditors as a proportion of
the owned land bank to be around 30-35% at 30 June 2018, in line
with our operating framework.
We remain committed to delivering our Capital Return Plan and,
as previously announced, the Board proposes to pay a special
dividend(5) of GBP175m for the current financial year to be paid in
November 2018.
Outlook
Barratt's commitment to quality, design and customer service has
helped us deliver another strong first half for the Group. The
Group continues to focus on driving operational improvements
throughout the business, with a particular focus on margin
improvement over the medium term. Given good demand and our healthy
forward order book we continue to expect to deliver modest growth
in wholly owned completions in FY18.
This trading update contains certain forward-looking statements
about the future outlook for the Group. Although the Directors
believe that these statements are based upon reasonable
assumptions, any such statements should be treated with caution as
future outlook may be influenced by factors that could cause actual
outcomes and results to be materially different.
This announcement contains inside information.
Notes:
(1) All comparatives are to the prior year equivalent six month
period ended 31 December 2016 or as at 31 December 2016 ('2016'),
unless otherwise stated
(2) All figures exclude joint venture completions in which the
Group has an interest unless otherwise stated
(3) Net cash is defined as cash and cash equivalents, less total
borrowings being total drawn debt, plus / minus the value of any
foreign exchange swaps
(4) Site return on capital employed ('ROCE') is calculated as
site operating profit (site trading profit less sales overheads
less allocated administrative overheads) divided by average
investment in site land, work in progress and equity share
(5) All dividends and the special cash payment programme are subject to shareholder approval
Appendices
1. Completions (units) 2017 2016 Variance
------------------------ ------ ------ ---------
Private 5,715 5,561 2.8%
Affordable 1,229 1,221 0.7%
------------------------ ------ ------ ---------
Wholly owned 6,944 6,782 2.4%
------------------------ ------ ------ ---------
JV 380 398 (4.5%)
------------------------ ------ ------ ---------
Total 7,324 7,180 2.0%
------------------------ ------ ------ ---------
2. ASP 2017 2016 Variance
------------ ----------- ----------- ---------
Private c.GBP314k GBP296.4k 5.9%
Affordable c.GBP124k GBP115.3k 7.5%
------------ ----------- ----------- ---------
Total c.GBP281k GBP263.8k 6.5%
------------ ----------- ----------- ---------
31 December 2017 31 December 2016 Variance (GBPm)
3. Forward sales GBPm Plots GBPm Plots %
------------------ ---------- ------- ---------- ------- ----------------
Private 1,457.8 4,209 1,451.8 4,037 0.4%
Affordable 704.7 5,922 715.7 5,802 (1.5%)
------------------- ---------- ------- ---------- ------- ----------------
Wholly owned 2,162.5 10,131 2,167.5 9,839 (0.2%)
JV 221.3 790 169.1 681 30.9%
------------------- ---------- ------- ---------- ------- ----------------
Total 2,383.8 10,921 2,336.6 10,520 2.0%
------------------- ---------- ------- ---------- ------- ----------------
Conference call for analysts and investors
David Thomas, Chief Executive and Jessica White, Chief Financial
Officer will be hosting a conference
call at 08:30am today, Thursday 11 January, to discuss this
Trading Update.
To access the conference call:
Participant dial in: +44 (0)330 336 9105
Passcode: 7936112
24 hr replay dial in: +44 (0) 207 984 7568
Passcode: 7936112
For further information please contact:
Barratt Developments PLC
Jessica White, Chief Financial Officer 01530 278 259
Analyst/investor enquiries
Chloé Barnes, Head of Investor Relations 020 7299 4895
Media enquiries
Tim Collins, Head of Corporate Communications 020 7299 4874
Derek Harris, Head of Public Relations 020 7299 4873
Brunswick
Jonathan Glass/Wendel Verbeek 020 7404 5959
www.barrattdevelopments.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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