Bumper Year for Barratt
Issuing a trading statement earlier this month, Barratt Developments have reported “another outstanding year.”
Key figures (for FY ending June 30th 2018):-
- Achieved a total of 17,579 completions – the highest number of completions for a decade, although this was a modest 1.1% increase on (FY) 2017
- Private completions rose 1% to 13,439
- Total average selling price went up 5% to £288,900 with private ASP also increasing 5% to £328,800
- Profit, before tax, lifted 9.2% to £835.5 million, with revenue improving 4.8% to £4,874.8 million
- Operating margin increased 50 basis points to 17.7%
- Full year sales rate was at 0.72 net private reservations per active outlet per week in the full year, matching 2017, and 0.77 (2017: 0.76) in the second half
- Operated from an average of 380 active outlets, compared to 2017’s 377
- Forward sales totalled £3,054.0 million, up 11.1% against the equivalent period in 2017
- Net private reservations per active outlet per average week from July 1 were in line with the prior year at 0.75
Barratt’s CEO, David Thomas, said: “The group has had another outstanding year delivering a strong operational and financial performance, and our highest volumes in a decade. As the UK’s largest housebuilder we are helping to address the country’s housing shortage – creating jobs and supporting economic growth whilst continuing to lead the industry in quality and customer service.”
Profits Boosted at Bovis
Bovis has reported a significant increase in pre-tax profits for the first half of the year after upgrading its build quality.
Highlights for FY H1:-
- Strong sales position with 96% of 2018 sales secured
- Strong performance with £62m profit before tax, compared with £42.7m last year
- Balance sheet strengthened further with a move to an average net cash position of £6m (2017: average net debt £96m) and a net cash position of £42.8m (2017: net debt £32.4m)
- Increase of 27% on interim dividend to 19 pence per share and first special dividend of 45 pence per share to be paid with the interim in November
- Following excellent summer trading and increased visibility on margin improvement, the Group now expects profits for FY18 to be at the top end of the Board’s expectations
- On course to deliver minimum of £180m total cash proceeds from balance sheet optimisation initiatives by end of 2018
Bovis Chief Executive, Greg Fitzgerald, said: “We delivered a strong performance in the half with a more than 40% increase in profits. This reflects the excellent progress made across all business areas over the past 18 months and a step change in the quality of the homes we are building and level of service we are providing our customers. We are confident in the outlook for the business and are targeting a record year of profits in 2018, at the top end of the Board’s expectations.”
“Improving our build standards and delivering these higher standards consistently across all our developments remains a key priority, and over the past 18 months we have invested in high quality construction directors, site managers and site teams. Our regional management teams have embedded a far greater ‘hands on’ approach and best practice is now promoted and shared across our seven regions.
“We have seen our NHBC reportable items decrease by 66% since December 2016, and they are now slightly lower than the industry average. We are proud to disclose that our recent NHBC Construction Quality Review highlighted a significant step up in our build quality and in ‘getting it right first time’, with the Group now aligned to industry standards.
“The market fundamentals remain strong and we continue to see good levels of demand for new homes across all our regions with underlying pricing firm. Interest rates continue to be at historic lows with good competition in the mortgage lending market. The Government remains committed to increasing the supply of new homes in the UK reflected in its policy on housing and planning and commitment to Help to Buy.”
Looking Bright at Linden
Reporting on the company’s full year results (to year ending 30th June 2018), Galliford Try has announced its housebuilding arm, Linden Homes, had made “excellent progress” against its objectives for the year.
- Improved operating margin of 19.5%, compared to 2017’s 18.2%
- Operating profit rose 8% to £184.4 million
- Revenue grew to £947.3 million, a rise on £937.4 million in 2017
- Achieved 3,442 completions against last year’s 3,296, with private housing accounting for 2,587 of the units (2017: 2,537)
- Private average selling prices increased 4% to £367,000. (However, Linden confirmed that this was mainly due to sales in London “which made up a relatively small proportion of our units but had much higher than average selling prices”. The housebuilder expects average selling prices to reduce over the period to 2021, due in part to their standardisation strategy and anticipated growth in regions outside of the south east.)
- 85 active selling sites on average during the year, up from 77 in 2017.
- Sales rate of 0.59 per outlet per week, down slightly against 2017’s 0.62
- Sales reserved, contracted or completed totalled £510 million (2017: £545 million)
GT’s CEO, Peter Truscott, said: “Linden Homes continued to prioritise margin growth, benefiting from further standardisation and the robust control of overheads. This resulted in increased profitability in a year with modest house price inflation.
“Volumes also grew reflecting the strength of our product offering, and with the sector supported by Help to Buy, good mortgage availability and the cut in stamp duty for first-time buyers. The land market continues to be favourable, allowing us to buy land at robust margins, in the right locations for our new standardised product.”
Truscott added: “We have a landbank of 11,830 plots (2017: 11,250), which we estimate is equivalent to around 3.5 years’ supply and provides a sustainable business platform. The figure represents sites we own and control, including sites under option but excluding our longer-term options on strategic land. 100% of required land for the 2019 financial year is in place and 83% is secured for 2020.”
Record Results at Redrow
A year of strong growth and record results has been reported by Redrow, for the period ending 30th June 2018.
Highlights for the FY include:
- Group revenue rose 16% to a record £1.92bn, driven by higher legal completions
- Record Order Book of £1.1bn (2017: £1.0bn)
- Average Selling Price up to £332,300, an increase of 7%
- Record pre-tax profit of £380m, up 21% (2017: £315m)
- Earnings per share grew 22% to 85.3p
- Positive cash position of £63m (2017: net debt of £73m)
- Proposed final dividend up 65% to 19p per share (28p for the full year)
- Legal completions up 9% to 5,913 (2017: 5,416)
- Total number of employees up 5% to 2,300
- 7,455 plots added to current land holdings, 37% of which were converted from forward land
Redrow Chairman, Steve Morgan, said: “This excellent trading performance enabled us to achieve strong cash generation such that we ended the year with net cash of £63m.
“However, there is no doubt that clarity over Brexit and the future of Help to Buy would improve market sentiment. Given that clarity, we will continue to deliver.”
The Help to Buy scheme continues to create tension, with MPs claiming that it doesn’t benefit enough people, and other reports alleging that one in five who use it are not even first-time buyers.
Redrow Group CEO, John Tutte, said he doesn’t want to even consider that the Help to Buy scheme could be stopped: “It would be a ridiculous thing to do. It’s got its critics, but it’s allowed thousands of new homes to be built and people to buy their own homes who wouldn’t have been able to otherwise. Anyone with any common sense wouldn’t think about scrapping it.
“Help to Buy continues to support home buyers and the housing industry. In the last financial year 1,794 of our private reservations were secured through Help to Buy, a similar level to the previous year.”
He also criticised the planning system, “Sometimes I wonder if the authorities really want us to build more homes. Growing the number of outlets in line with the increased land holdings remains a challenge as the journey from ‘outline planning permission’ to ‘implementable planning permission’ remains as bureaucratic as ever. Some permissions come with as many as 40 conditions attached. It’s madness that, as housebuilders, we can’t get on and build on 40% of our landbank.”
Tutte, does however remain optimistic about the years ahead: “Despite the uncertainty surrounding Brexit, demand for new homes continues to be robust, and overall house price inflation has moderated to a sustainable 2%,” he said. “Mortgage availability is excellent, and with low interest rates by historic levels, the mortgage market remains very competitive.
“We live in challenging political and economic times. We can however draw comfort from knowing there remains a strong demand for new homes supported by both a competitive mortgage market and the highly successful Help to Buy scheme.”