Carl Sobolewski, Managing Director of Barratt Developments North East commented: “We are proud to report another fantastic performance for the North East region this year. We’re extremely grateful for all of the hard work and dedication from our divisional team, and we’re very pleased to report that completions have recovered to pre-pandemic levels.

“Our valued customers remain at the heart of everything that we do, and we are delighted to have achieved our five star rating in the Home Builders Federation Customer Satisfaction Survey for the 13th consecutive year, alongside the recognition of more NHBC Pride in the Job awards than any other housebuilder for the 18th year in a row – both of which are a true reflection of the high quality homes and service that we deliver across the region.

“We’re also extremely proud of the support we’ve offered to local causes over the last year, including raising over £32,000 for our charity of the year, Zoë’s Place Baby Hospice in Middlesbrough. This comes alongside a total donation of £12,000 to local charities as part of our monthly Community Fund initiative, which is designed to support charities that work tirelessly to support multiple communities across the region. We have also continued to work closely with The Beacon of Light in order to develop our close educational partnership and support local young people’s career development.

“The housing market remains strong as a result of continued supply and demand and mortgage rates, as we navigate the economic uncertainties ahead. Our focus continues on delivering green and high quality places to live, whilst striving to be the leading national sustainable housebuilder and drive positive changes within the industry.”

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 completions4 increasing 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 – 18th consecutive 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 intensity6 reduced 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).