TIDMBDEV
RNS Number : 9660B
Barratt Developments PLC
14 October 2020
14 October 2020
Barratt Developments PLC
Continuing strong customer demand
Barratt Developments PLC (the 'Group') is holding its Annual
General Meeting ('AGM') as a closed meeting at 12:00pm today. This
trading update is for the period from 1 July to 11 October 2020
(the 'period'). All comparatives are to the prior year equivalent
period ('2020') unless otherwise stated. Barratt Developments PLC's
year end is 30 June 2021.
David Thomas, Chief Executive commented:
"Health and safety remains our number one priority and we remain
focused on keeping our people safe while we rebuild completion
volumes, bring further operational improvements to our business,
and deliver on our commitment to build the highest quality homes
across the country.
There is continuing strong customer demand for our homes and we
have a healthy forward order book. As we look ahead, whilst
significant economic and political uncertainties persist, we
believe our disciplined approach and strong balance sheet provide
us with the resilience and flexibility to react positively to
future challenges."
Trading update
We are seeing continuing strong customer demand for our high
quality new homes across the country. Our sales rate in the period
was 0.87(1) net private reservations per active outlet per average
week, up 20.8% on last year (2020: 0.72).
We operated from an average of 340 (2020: 374) active outlets
(including 8 JVs (2020: 8)) reflecting the delay to site
commencements created by the impact of the lockdown period on our
operations. In line with our expectations, we have launched 33
(2020: 26) new developments (including JVs), helping underpin the
expected recovery of our completion volumes.
In the period we delivered 4,032 (2020: 3,252) home completions
(including JVs), up 24.0% on last year. Total forward sales
(including JVs) as at 11 October 2020 were 15,135 homes (13 October
2019: 12,963 homes) at a value of GBP3,647.6m (13 October 2019:
GBP3,070.2m).
Our sites continue to operate safely and successfully across the
country, including areas of local lockdown, enabled by our
extensive COVID-19 working practices and protocols. Construction
activity remains in line with FY21 planned output, with an average
of 294 equivalent homes constructed per week in the period.
Housing market fundamentals
The Government is targeting the construction of 300,000 homes a
year by the mid-2020s to meet existing demand. We note the
Government's continued focus on speeding up and simplifying the
planning system and ensuring that local authorities plan positively
for housing growth in their areas.
Whilst mortgage rates remain relatively attractive, since the
pandemic there has been a material change in loan to value (LTV)
lending criteria with no mainstream mortgage lenders providing
mortgages at 95% LTV for new build homebuyers, increasing the
reliance of first time buyers on Help to Buy. In the period 51% of
our private reservations (2020: 45%) used Help to Buy of which 74%
were first time buyers (2020: 70%). Those purchasers who will not
qualify for the new Help to Buy scheme can access other mortgage
products and use our part exchange schemes to assist in buying a
new home.
Land
We continue to be disciplined and selective in our approach to
acquiring new land, where we see attractive opportunities that meet
our hurdle rates. This financial year, following the temporary
suspension of land-buying during the COVID-19 lockdown, we have
recommenced the acquisition of 4,160 plots across 15 sites and
approved the purchase of a further 484 plots on 4 sites.
Balance sheet and liquidity
The Group continues to be financially strong, with a
well-capitalised balance sheet and a robust cash and liquidity
position. As at 9 October 2020 the Group had c. GBP570m of net
cash(2) . The Group also has an undrawn committed revolving credit
facility of GBP700m. We continue to target minimal year end total
indebtedness (net cash and land creditors) in the medium term.
Leadership in quality and customer service
We have an absolute and long term commitment to quality and
customer service. Not only is this the right thing to do for
customers, we believe it is also fundamental to business
resilience. Our quality is recognised through the NHBC Pride in the
Job Awards for site management. In June 2020 our site managers were
awarded 92 awards, more than any other housebuilder for the 16th
consecutive year. We are also the only major housebuilder to be
awarded the maximum 5 Star rating by our customers in the HBF
customer satisfaction survey for 11 years in a row.
Outlook
We are focused on rebuilding our completion volumes to our
medium term target and capacity of 20,000 homes. We have acquired
land in recent years at a minimum 23% gross margin, and through our
continued focus on operating efficiencies and the rebuilding of
completion volumes, we continue to target a minimum 25% ROCE in the
medium term.
Based on current market conditions, construction activity levels
and assuming no further national lockdowns creating disruption to
our construction sites, we continue to expect to grow wholly owned
completions to between 14,500 and 15,000 homes in FY21, and in
addition deliver around 650 completions from our joint ventures,
whilst ensuring we maintain our industry leading standards of
quality and service.
Whilst there continues to be economic and political uncertainty,
the Group is in a strong position. We have a substantial net cash
balance, a well-capitalised balance sheet, a healthy forward sales
position, a continued focus on delivery of operational improvements
across our business and an ongoing commitment to deliver high
quality homes across the country.
The Board will continue to monitor the market and economy and
believes that our strong financial position provides us with the
resilience and flexibility to react to changes in the operating
environment in FY21 and beyond.
Annual General Meeting
Following the Government's announcement of updated national
measures to address the COVID-19 outbreak and the coming into force
of the Corporate Insolvency and Governance Act 2020 (Coronavirus)
(Extension of the Relevant Period) Regulations 2020, the Company's
AGM scheduled for 12 noon today will now be held as a closed
meeting at the Company's office at 1(st) Floor, Kent House, 14-17
Market Place, London W1W 8AJ.
The AGM will be held with the minimum required quorum present,
including the Chairman of the meeting and a limited number of
directors and/or employees, in order to conduct the business of the
meeting. The usual format of the AGM will be condensed and will
include only the formal business of the meeting. We are of course
disappointed that our AGM has been impacted, but the safety and
security of our shareholders and colleagues remains our
priority.
Further information
For further information please contact:
Barratt Developments PLC
Jessica White, Chief Financial Officer 01530 278 259
Analyst / investor enquiries
John Messenger, Group Investor Relations 07867 201 763
Media enquiries
Tim Collins, Head of Corporate Communications 020 7299 4874
Brunswick
Jonathan Glass/ Rosie Oddy 020 7404 5959
Barratt Developments PLC LEI: 2138006R85VEOF5YNK29
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.
Notes:
(1) Unless otherwise stated, all numbers quoted exclude Joint
Ventures (JVs) throughout this statement.
(2) Net cash comprises cash and cash equivalents, bank
overdrafts, interest bearing borrowings, comprising of GBP200m of
private placement notes and prepaid fees.
Appendix
11 October 2020 13 October 2019 Variance (%)
1. Forward sales GBPm Units GBPm Units GBPm Units
------------------ --------- ------- --------- ------- ------- -------
Private 2,129.2 6,424 1,634.4 5,172 30.3% 24.2%
Affordable 1,216.8 7,803 1,102.8 6,869 10.3% 13.6%
Wholly owned 3,346.0 14,227 2,737.2 12,041 22.2% 18.2%
JV 301.6 908 333.0 922 (9.4%) (1.5%)
------------------- --------- ------- --------- ------- ------- -------
Total 3,647.6 15,135 3,070.2 12,963 18.8% 16.8%
------------------- --------- ------- --------- ------- ------- -------
Current Year Prior Year Variance (%)
2. Forward sales Private Total Private Total Private Total
roll
------------------ -------- -------- -------- -------- -------- ------
June 5,320 14,326 3,827 11,419 39.0% 25.5%
Reservations 4,245 4,841 3,922 4,796 8.2% 0.9%
Completions (3,141) (4,032) (2,577) (3,252) 21.9% 24.0%
October 6,424 15,135 5,172 12,963 24.2% 16.8%
------------------- -------- -------- -------- -------- -------- ------
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