Interim Results - 6 Months to 31 December 1999

Barratt Developments PLC 22 March 2000 BARRATT DEVELOPMENTS PLC INTERIM RESULTS TO 31 DECEMBER 1999 CHAIRMAN'S STATEMENT The Group has again achieved excellent results. We outperformed the market and further increased market share, continuing our track record of consistent growth over the past eight years. All our key financial statistics reached record levels and looking ahead, we are extremely well-positioned to deliver another highly successful financial year. Group results for the half year ended 31st December 1999 with comparisons against the six months ended 31st December 1998 are as follows:- * Record pre-tax profit amounted to £50.5m against £41.2m, an increase of 23%. * Basic earnings per share amounted to 15.1p against 12.2p, an increase of 24%. * The interim dividend declared is 3.85p, an increase of 8%. * Operating profits amounted to £53.4m against £43.2m, an increase of 24%. * Group turnover rose to £516m against £432m, an increase of 19%. In the UK we achieved 4,654 completions, an increase of 11% at an average selling price of £104,800, an increase of 5%. * UK land stocks increased by 1,500 plots over and above usage to 30,700 plots. * Borrowings were £38.0m (8% gearing) against £11.2m (3% gearing), notwithstanding an increased investment in UK land and work in progress of £106m. * Despite this significant investment in our future profit growth our return on capital employed of 27%, is amongst the highest in our industry. These results highlight a further period of considerable progress in which all regions traded successfully, producing increased sales and profit. The Group lifted sales completions by 11% against an industry increase for new homes of only 1%, again demonstrating our ability to increase market share. At the half year end our forward sales order book increased 18% to a record £322m. This solid improvement in our forward sales is ongoing which, coupled with further strengthening of our margin, should maintain the consistency of our profit growth. We have continued to benefit from our policy of controlled organic expansion and in the year we established two new divisions at Exeter and Sheffield. These two divisions should together achieve over 300 sales completions in this current financial year. Over the past seven years our expansion has been extremely successful. In 1993 we announced the first phase of our growth plan to increase legal completions from 5,000 to 8,000. This was successfully completed and in 1996 we announced a further phase of growth to increase legal completions from 8,000 to 11,000 by the year 2000, and this we are fully on course to achieve. During this period of growth we have increased the number of house-building divisions from 12 to 24, outlets from 160 to 312 and volume by an average of 10% each year. Over the same period we have produced an increase in earnings per share averaging 20% per annum. To continue this level of performance further expansion is planned with a strategic emphasis on the South coupled with a focus on further strengthening the operating margin. To facilitate this growth, four new divisions are to be operational for the new financial year and combined are anticipated to contribute over 600 completions in their first financial year. During the half year to 31st December we experienced good market conditions throughout all our operating areas. Demand for home ownership remains strong and the market continues to be buoyant. Recent concerns over interest rates are overdone. Modest movement in interest rates around 6% will help to provide a stable economy and maintain a good housing market, thereby avoiding historical peaks and troughs. Notwithstanding recent small increases in interest rates to 6%, mortgages remain extremely affordable. Consumers continue to benefit from increasing disposable income, unemployment continues to fall and purchaser confidence is high. Overall the economic background augurs well for a stable housing market going forward. The South continues to be our strongest market place and this fully endorses our strategic emphasis on this region in recent years. During the half year over 60% of our investment in land was in the South, where we now have 96 sites with 63 in and around the M25. This reflects our determination to maximise on this more substantial market. The Group benefits enormously from our total geographic spread of outlets and from selling to all market sectors at prices up to £2.5m. We are recognised for our ability to adapt to varying market conditions, offering purchaser assistance to suit local needs. During the period demand for our part-exchange service reduced considerably with around 23% of our buyers utilising this service, down from 35% the previous year. We have made excellent progress in increasing the quality and quantity of our land stocks which should greatly assist in securing future profit growth. In the six months, 6,154 plots were acquired, 32% more than we used. All land buying is stringently controlled. Our consistent financial performance over the past eight years and our assessment of the market has allowed us to be selective in land acquisition, thereby ensuring a full return on investment. Our total market spread allows us to acquire land in all sectors and we increased selling outlets from 292 to 312 over the year. We also have extensive experience in urban development, which makes us less reliant than others on greenfield sites. Over 60% of our land has had a former use. Our USA operation continued to improve, doubling operating profits to £1.2m from turnover of £32m against £23m turnover for the previous period. Legal completions amounted to 123 against 102 and the average selling price increased to £258,000 up from £222,000. We continue to secure quality development sites in sought-after locations and fully expect ongoing profit improvement. Looking ahead, we anticipate a stable UK economy and a buoyant housing market. Our sales reservations in the half year to 31st December were 8% up on the previous year and sales since January have continued at this level. Our forward sales position continues to strengthen and is currently over £400m. We also maintain one of the lowest cost bases in the industry which further assists margin improvement and our control of our investment produces one of the highest returns on capital of 27%. We have a highly successful management team with an enviable track record. Our enlarged divisional network, allied to the size and quality of our land bank and our outstanding product range, position the Group very favourably against our competitors and we look forward with confidence to a strong and exciting future. Frank Eaton Chairman The following are the unaudited results of the Group for the half year ended 31st December 1999. 1. GROUP PROFIT & LOSS ACCOUNT Half year Half year Year ended ended ended 31st December 31st December 30th June 1999 1998 1999 £m £m £m TURNOVER: Group and share of joint venture 519.3 435.2 1,016.3 LESS: Share of joint venture turnover (3.6) (3.3) (7.5) -------- -------- ------- GROUP TURNOVER 515.7 431.9 1,008.8 -------- ------- ------- OPERATING PROFIT 52.6 42.5 115.0 SHARE OF OPERATING PROFITS OF JOINT VENTURE 0.8 0.7 1.1 -------- -------- -------- PROFIT BEFORE INTEREST AND TAXATION 53.4 43.2 116.1 NET INTEREST PAYABLE (2.9) (2.0) (4.1) -------- -------- -------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 50.5 41.2 112.0 TAXATION (15.4) (12.8) (34.7) -------- -------- -------- PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 35.1 28.4 77.3 DIVIDENDS (8.9) (8.3) (25.2) -------- -------- -------- RETAINED PROFIT 26.2 20.1 52.1 -------- -------- -------- -------- -------- -------- pence pence pence BASIC EARNINGS PER SHARE 15.1 12.2 33.1 -------- -------- -------- DILUTED EARNINGS PER SHARE 14.9 12.2 32.9 -------- -------- -------- DIVIDEND PER SHARE 3.85 3.56 10.80 -------- -------- -------- DIVIDEND COVER 3.9x 3.4x 3.1x The interim dividend of 3.85p per share (1998 3.56p per share) will be paid on 19th May 2000 to shareholders on the register at the close of business on 7th April 2000. 2. GROUP BALANCE SHEET Half year Half year Year ended ended ended 31st December 31st December30th June 1999 1998 1999 £m £m £m FIXED ASSETS Tangible assets 2.5 0.6 1.3 Investment in joint venture: Share of gross assets 8.6 7.8 6.8 Share of gross liabilities (5.9) (5.7) (4.6) -------- -------- -------- 2.7 2.1 2.2 Other investments: interest in own shares 8.0 - - -------- -------- -------- 13.2 2.7 3.5 -------- -------- -------- -------- -------- -------- CURRENT ASSETS Properties held for sale 3.9 3.7 3.7 Stocks 946.9 756.0 818.3 Debtors due within one 12.0 17.2 20.7 Debtors due after more than one year 1.0 1.8 1.3 Bank and cash 6.0 21.1 63.6 -------- -------- -------- 969.8 799.8 907.6 -------- -------- -------- -------- -------- -------- CURRENT LIABILITIES Creditors due within one year (438.3) (325.3) (429.5) -------- -------- -------- NET CURRENT ASSETS 531.5 474.5 478.1 -------- -------- -------- -------- -------- -------- TOTAL ASSETS LESS CURRENT LIABILITIES 544.7 477.2 481.6 CREDITORS DUE AFTER MORE THAN ONE YEAR (65.2) (56.7) (27.3) -------- -------- -------- NET ASSETS 479.5 420.5 454.3 -------- -------- -------- -------- -------- -------- CAPITAL AND RESERVES Share capital 23.4 23.3 23.4 Share premium 177.0 176.2 177.0 Profit retained 279.1 221.0 253.9 -------- -------- -------- EQUITY SHAREHOLDERS' FUNDS 479.5 420.5 454.3 -------- -------- -------- -------- -------- -------- NET ASSETS PER SHARE(p) 205 180 195 -------- -------- -------- -------- -------- -------- GEARING 8% 3% - -------- -------- -------- -------- -------- -------- 3. GROUP CASH FLOW STATEMENT Half year Half year Year ended ended ended 31st December 31st December30th June 1999 1998 1999 £m £m £m Net cash (outflow)/inflow from operating activities: Operating profit 52.6 42.5 115.0 Increase in stocks (130.2) (85.6) (145.5) Decrease/(increase) in debtors 8.0 3.0 (1.1) Increase in creditors 28.4 3.2 78.0 Other non cash movements - (0.1) 0.1 -------- -------- -------- (41.2) (37.0) 46.5 Returns on investments and servicing of finance (2.9) (2.2) (5.9) Taxation - (2.0) (30.4) Capital expenditure and financial investment (9.4) (0.2) (1.1) Acquisitions and disposals - - 1.0 Equity dividends paid (16.8) (15.7) (24.0) -------- -------- -------- Cash outflow before financing (70.3) (57.1) (13.9) Financing 13.1 (1.7) (3.1) -------- -------- ------- Decrease in cash (57.2) (58.8) (17.0) -------- -------- -------- -------- -------- -------- Reconciliation of net cash flow to movement in net debt Decrease in cash (57.2) (58.8) (17.0) Cash flow from (increase)/ decrease in debt (13.1) 1.7 4.0 -------- -------- -------- Change in net debt resulting from cash flows (70.3) (57.1) (13.0) Exchange movements 0.6 0.1 (1.1) -------- -------- -------- Movement in net debt in the period (69.7) (57.0) (14.1) Net funds at 1st July 31.7 45.8 45.8 -------- -------- -------- Net (debt)/funds at 31st December /30th June (38.0) (11.2) 31.7 -------- -------- -------- The financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 1985. The figures for the year to 30th June 1999 are an extract from the full accounts for that year which have been filed with the Registrar of Companies and on which the auditors gave an unqualified opinion. The interim financial information has been prepared on the basis of accounting policies adopted for the year ended 30th June 1999. These policies are set out in the company's Annual Report and Accounts. For further information: Mr C.A. Dearlove or Mr Terry Garrett/Ms Chris Lynch Group Finance Director Ludgate Communications Barratt Developments PLC Telephone: 0191 286 6811 Telephone: 0207 253 2252 ********************* Further copies of the announcement can be obtained from the Company's Registered Office: Barratt Developments PLC, Wingrove House, Ponteland Road, Newcastle upon Tyne, NE5 3DP.

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