TIDMBDEV
RNS Number : 8636O
Barratt Developments PLC
13 October 2021
13 October 2021
Barratt Developments PLC
A strong and sustained start to the new financial year
Barratt Developments PLC (the 'Group') is today holding its
Annual General Meeting ('AGM') at 12:00pm in London and issuing a
trading update for the period from 1 July to 10 October 2021 (the
'period'). All comparatives are to the equivalent trading periods
('FY21' and 'FY20') unless otherwise stated. Barratt Developments
PLC's year end is 30 June 2022.
David Thomas, Chief Executive commented:
"The positive start to the new financial year has continued in
recent weeks with private reservations remaining strong. This is
particularly encouraging given the significant year on year
reduction in Help to Buy reservations and the ending of the stamp
duty holiday. We continue to work closely with our suppliers and
sub-contractors and have not experienced any significant disruption
to our build programme as a result of the challenging supply chain
environment.
We remain on track to deliver both our FY22 and medium term
targets set out in the FY21 results, whilst maintaining our
commitment to leading the industry in the quality and
sustainability of our homes and in customer service, which we
believe is fundamental to our ongoing success."
Trading update
We have seen continued strength in customer demand across the
country for our high quality new homes with net private
reservations(1) per average week of 281 (FY21: 288; FY20: 262),
resulting in net private reservations per active outlet per average
week of 0.85 (FY21: 0.87; FY20: 0.72).
Whilst the net private reservation rate was 2.3% below that
reported in the prior year period, this was a particularly active
period reflecting both pent-up demand following the initial
national lockdown, and increased Help to Buy ('H2B') reservation
activity ahead of the tapering of H2B in December 2020 which
excluded existing homebuyers and introduced regional price caps for
first time buyers. Against a more relevant comparative period in
FY20, the net private reservation rate is ahead by 18.1%.
We have been particularly pleased with the strength of our
private reservation rate given the significantly reduced H2B
support. In the year to date 21% of our private reservations (FY21:
51%; FY20: 45%) are using H2B.
In line with our expectations, we have launched 27 (FY21: 33;
FY20: 26) new developments (including JVs) in the period. We
operated with an average of 338 (FY21: 340; FY20: 374) active
outlets (including 8 JVs (FY21: 8; FY20: 8)). We continue to expect
to deliver average sales outlet growth of around 3% in FY22 driven
by both site acquisition and our land bank optimisation through
additional dual branding of Barratt and David Wilson Homes on our
sites.
In the period we delivered 3,699 (FY21: 4,032; FY20: 3,252) home
completions (including JVs), 8.3% behind the comparable period in
FY21 which benefited from the significant increase in home
completions after the disruption created by the initial national
lockdown.
The completion profile in FY22, as was highlighted in the FY21
results, is expected to revert to the more seasonal pattern with
around 45% of our full year completion guidance anticipated in the
first half of FY22 and around 55% scheduled for completion in the
second half of the financial year.
Reflecting the continued strength in reservations, our total
forward sales (including JVs) as at 10 October 2021 totalled 15,393
homes (11 October 2020: 15,135 homes; 13 October 2019: 12,963
homes) at a value of GBP3,936.6m (11 October 2020: GBP3,647.6m; 13
October 2019: GBP3,070.2m). We are now 71%(2) forward sold with
respect to private wholly owned home completions for FY22 (FY21:
70%(3) ).
The private average selling price ('ASP') in our wholly owned
forward order book as at 10 October 2021 was GBP344.3k (11 October
2020: GBP331.4k; 13 October 2019: GBP316.0k) reflecting underlying
house price inflation, diluted by a modest decrease in the
proportion of larger family homes and a lower ASP with respect to
London reservations through mix changes.
Whilst the challenges around securing sufficient and timely
building materials supplies is an issue across the industry, to
date we have not experienced any significant disruption to our own
build programme with our sites continuing to operate successfully
throughout the country. Construction activity remains in line with
FY22 planned output, with an average of 335 (FY21: 294; FY20: 364)
equivalent homes(4) constructed per average week in the period. We
continue to expect build cost inflation of between 4% and 5% for
FY22.
Land
We remain disciplined and selective in our approach to acquiring
new land, where we continue to see attractive opportunities that
meet our hurdle rates. In the period we have approved the purchase
of 3,735 plots (FY21: 484 plots; FY20: 1,986 plots) across 15
(FY21: 4; FY20: 7) sites and continue to expect to approve between
18,000 and 20,000 plots in FY22.
New Chief Financial Officer
We are also pleased to confirm that Mike Scott will be joining
the Group as an Executive Director and Chief Financial Officer on 6
December 2021. Mike will work closely with our experienced
management team with a continued focus on growth and our medium
term targets.
Outlook
Based on current market conditions and working closely with our
suppliers and sub-contractors to minimise disruption to our build
programme, we continue to expect to grow wholly owned completions
to between 17,000 and 17,250 homes in FY22 and, in addition,
deliver around 750 home completions from our JVs, whilst ensuring
we maintain our industry leading standards of quality and
service.
In line with our commitment to being the leading national
sustainable housebuilder, our business is well placed for the
changes being introduced with the Future Homes Standard in 2022 as
we continue to drive towards ensuring all of our new housetypes are
zero carbon in use from 2030.
We have acquired land in recent years at a minimum 23% gross
margin and a targeted minimum 25% ROCE. We remain focused on
delivering operating efficiencies as we grow home completion
volumes over the medium term towards our current capacity of 20,000
homes.
The Group is in a very good position. We have both a substantial
net cash balance and strong forward sales, as well as an excellent
land bank and a continued focus on delivering operational
improvements across our business, alongside our ongoing commitment
to deliver high quality, sustainable homes across the country.
Whilst there continues to be some macroeconomic uncertainty, the
Board believes that our strong financial position provides us with
the platform and flexibility to react to any changes in FY22 and
beyond.
Annual General Meeting
The Group will be holding its AGM today at 12.00pm at
Ironmongers' Hall, Shaftesbury Place, Aldersgate Street, Barbican,
London, EC2Y 8AA. There will also be a live webcast of the AGM and
the ability to submit questions on the day. Full details on how to
access the webcast can be found in the Notice of AGM.
Further information
For further information, please contact:
Barratt Developments PLC:
Analyst / investor enquiries
John Messenger, Group Investor Relations Director 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) Our forward sold position with respect to FY22 private home
completions is based on the mid-point of wholly owned completions
guidance (17,125 homes) and assuming a 79% : 21% private :
affordable home completion mix.
(3) Our forward sold position with respect to FY21 is based on
actual wholly owned private home completions for the year.
(4) Equivalent homes constructed per average week includes Joint Ventures (JVs).
Appendix:
10 11 October Variance (%) 13 October 2019 Variance (%)
October 2020
2021
1. Forward GBPm Homes GBPm Homes GBPm Homes GBPm Homes GBPm Homes
sales
------------ -------- ------- -------- ------- -------- -------- -------- ------- -------- --------
Private 2,466.5 7,164 2,129.2 6,424 15.8% 11.5% 1,634.4 5,172 50.9% 38.5%
Affordable 1,201.1 7,488 1,216.8 7,803 (1.3%) (4.0%) 1,102.8 6,869 8.9% 9.0%
Wholly owned 3,667.6 14,652 3,346.0 14,227 9.6% 3.0% 2,737.2 12,041 34.0% 21.7%
JV 269.0 741 301.6 908 (10.8%) (18.4%) 333.0 922 (19.2%) (19.6%)
------------- -------- ------- -------- ------- -------- -------- -------- ------- -------- --------
Total 3,936.6 15,393 3,647.6 15,135 7.9% 1.7% 3,070.2 12,963 28.2% 18.7%
------------- -------- ------- -------- ------- -------- -------- -------- ------- -------- --------
Current Year FY21 Variance (%) FY20 Variance
(%)
2. Forward Private Total Private Total Private Total Private Total Private Total
sales roll
-------------- -------- -------- -------- -------- -------- ------- -------- -------- -------- -------
June 5,724 14,334 5,320 14,326 7.6% 0.1% 3,827 11,419 49.6% 25.5%
Reservations 4,089 4,758 4,245 4,841 (3.7%) (1.7%) 3,922 4,796 4.3% (0.8%)
Completions (2,649) (3,699) (3,141) (4,032) (15.7%) (8.3%) (2,577) (3,252) 2.8% 13.7%
October 7,164 15,393 6,424 15,135 11.5% 1.7% 5,172 12,963 38.5% 18.7%
--------------- -------- -------- -------- -------- -------- ------- -------- -------- -------- -------
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