Completions at the UK’s largest housebuilder slid 5.8% in the last six months of 2016, as its London sales continued to drag on its performance.
Total revenue slowed 3.2% to £1,816m. However, profit before tax was up 8.8% to £321m, and the housebuilder said that regional completions were the highest in nine years.
David Thomas, group chief executive, said that gross margin increased by 2.1% to 20.7%.
He said: “With a record forward order book, strong consumer demand and a positive lending backdrop, we remain confident in our outlook for the full year. Our confidence in the business going forward is reflected in the improved and extended capital return plan.”
Completions are expected to increase in the second half of the year. Forward sales in terms of plot numbers were up 7.9% in the year to 19 February, while total plot sales increased by 15.9%.
| Forward sales | 19 February 2017 | 21 February 2016 | ||
|---|---|---|---|---|
| £m | Plots | £m | Plots | |
| Private | 1,946 | 5,579 | 1,564 | 5,169 |
| Affordable | 770 | 6,187 | 523 | 4,448 |
| Wholly owned | 2,716 | 11,766 | 2,087 | 9,617 |
| JV | 303 | 965 | 492 | 1,369 |
| Total | 3,018 | 12,731 | 2,580 | 10,986 |
Barratt completed 6,813 homes outside of London in the second half of the year, compared to 6,784 the year before. Its wholly owned private completions fell by 7.2% to 5,561, while its jv completions declined by 23.3%.
However, it expects London sales to increase and has supplemented higher priced flat sales with “other sales agreements”. It has reached a build and sale agreement for 39 apartments for £47m.
Barratt also completed on the sale of 54 flats at its jv sites in Fulham and Aldgate, and in January exchanged on 118 units at its Nine Elms site. These flats had previously formed part of a portfolio offered to the PRS market, and that was reported to be under offer to Greystar at the end of last year.
Thomas said: “We remain confident in our outlook for the full year as we continue to execute our strategies aimed at ensuring disciplined growth, improving key financial metrics through a focus on efficiency and the continued delivery of attractive cash returns.”
| Full results | Half year ended 31 Dec 2016 | Half year ended 31 Dec 2015 | Change (%) |
|---|---|---|---|
| Total completions (plots) | 7,180 | 7,626 | -5.8 |
| Revenue (£m) | 1,816 | 1,876 | -3.2 |
| Gross margin (%) | 21 | 19 | 2.1 |
| Profit from operations (£m) | 324 | 302 | 7.4 |
| Operating margin (%) | 18 | 16 | 1.7 |
| Profit before tax (£m) | 321 | 295 | 8.8 |
| Interim divident per share (p) | 7 | 6 | 21.7 |
| Return on capital employed | 27 | 26 | 1.5 |
| Net cash | 197 | 24 | 712.8 |
| Total owned and controlled land bank | 77,096 | 71,956 | 7.1 |
