Preliminary Results

Barratt Developments PLC 26 September 2001 BARRATT DEVELOPMENTS PLC PRELIMINARY RESULTS TO 30TH JUNE 2001 CHAIRMAN'S STATEMENT Another outstanding year for the Barratt Group. We delivered record profits and out-performed the market, significantly increasing market share and increasing sales completions by 6% at a time when total industry completions fell 8%. An excellent performance which extends to nine years our unrivalled track record of improving all of our key financial statistics. This again highlights our inherent operational strengths and our resilience to fluctuating markets. We commenced our new financial year with record forward sales of £480m and since 1st July we have continued to out-perform the market with sales reservations up 9% year on year, which gives us confidence for the year ahead. Group results for the year ended 30th June 2001 are as follows:- * Pre-tax profit amounted to £178.4m against £143.9m the previous year, an increase of 24%. * Basic earnings per share amounted to 55.1p against 43.3p the previous year, an increase of 27%. * Final dividend of 8.91p per share will be recommended, against 8.03p the previous year, giving a total dividend for the year of 13.07p, an increase of 10%, 4.2 times covered. * Turnover rose to £1,509m against £1,250m the previous year, an increase of 21%. * UK completions rose to 11,310 completions, up 6%, at an average selling price of £127,400, up 13%. * Land stocks increased from 31,700 plots to 35,100 plots, equating to 3 years' volume. * Net cash in hand at the year end amounted to £44.9m which highlights the emphasis placed on cash management. This continued strong balance sheet position was achieved notwithstanding a £113m increased investment in our land stocks and work in progress. * Return on capital employed was 30.7%, maintaining our position amongst the highest in the industry. These excellent results highlight a further period of considerable progress. The housing market had been particularly strong in the South throughout 1999, but slowed a little from April 2000 when interest rates were at their peak and Stamp Duty increased. This produced a tighter market in our first half year and against this background we produced a very creditable sales performance, increasing sales reservations by 6%, the only major housebuilder to do so. Since 1 January and throughout the second half of our financial year interest rates trended down and the market improved and stabilised at a very satisfactory level. Total sales reservations for the year just ended increased 7% year on year and since the start of our new financial year on 1st July they have further improved and are now 9% up, year on year. More recent sales over the last two weeks have also continued at this level. Modest movement in interest rates around 5% and 6% is helping to sustain a stable housing market and the highly competitive mortgage market is further enhancing affordability. All of our regional markets are strong with sales ahead year on year and the Southern market continues to be the strongest. The Group has benefited enormously from our policy of controlled organic expansion, increasing volumes over the last nine years from less than 5,000 to over 11,000 completions and profits by an average of over 20% per annum. This policy has seen our national network expand from 12 to 28 divisions, including four new divisions established during the year trading under our KingsOak brand, which produced 485 completions. A further three new KingsOak divisions are to be added this year and we expect these seven new divisions to contribute 1,200 completions this financial year. We have again demonstrated our ability to respond to changing market conditions with all of our regions increasing volume and profits. Varying levels of purchaser assistance are provided to suit local market needs and achieve optimum sales rates. We continued to provide a part-exchange service, however, the overall demand for this further reduced. Over the year some 18% of our buyers took advantage of this fast and efficient service and we completed 1,940 re-sale transactions. We produce a diverse product range to suit all market sectors, ranging from first-time buyer homes in rural communities priced from £40,000 to luxury six bedroom houses in the stockbroker belt priced at £2.9m. We are industry leaders in inner city and urban redevelopment, producing affordable homes in conjunction with Housing Associations through to luxury high-rise apartments reaching 18 storeys. Our extensive experience in developing all sectors, including mixed use developments, provides us with the widest range of developments and land-buying opportunities. For over 25 years the Group has been an industry leader in urban redevelopment and with over 70% of our homes built on brownfield sites we comfortably exceed the Government's target of 60%. This wealth of experience, coupled with our specialist skills in dealing with the more difficult and often complex sites, positions the Group well to maximise on the current planning regime and Government emphasis on the regeneration of our towns and cities. Despite the extensive planning delays facing the industry, our land teams have again been highly successful and have secured quality sites in locations of proven demand. During the year we acquired 14,710 plots, 30% more than we used, increasing our total land stocks to 35,100 plots, which is equal to three years' volume and in line with our growth objectives. The success of our land buying is reflected in the consistency of our results and a return on capital employed of 31%, one of the highest in our industry. There has been considerable consolidation activity in our sector in the year involving 7 of the top 12 housebuilders. However, our successful track record in securing our land stocks and developing the business organically means that we have no requirement to purchase a land bank via company acquisition, thereby avoiding associated risks. The Group has almost doubled its land bank over the last five years and we now have one of the largest land banks in the sector. At the same time, we have maintained a very strong balance sheet. In the year we increased shareholders' funds by 20% to £631m and at the year end we had £45m net cash in hand, notwithstanding £433m expenditure on land. Our Californian operation continues to make good progress. Operating profits increased by 50% to £6m on turnover up by £35.8m to £107.8m. Local market conditions remain favourable with high levels of employment, good affordability and strong demand. Sales since 1 July are in line with our expectations and have remained consistent over the last few weeks. Our strategic emphasis on re-investing in sites of manageable investment in areas of strong demand, coupled with our substantial forward sales, gives us confidence that our results will continue to improve. In April we sold our remaining interest in the last of our non- housing businesses, Barratt International Resorts, for £8.5m, which contributed £3.7m to pre-tax profit. Throughout the Group we have a very strong and experienced management team which we have continued to strengthen in line with our growth. On 1 July 2001 we were pleased to announce the appointment of a new executive director to the Board, Mr S J Boyes, who joined the Group in 1978 and was formerly Managing Director of our highly-successful division in York and then Regional Director of Barratt Northern. On behalf of the Board I would like to thank all of our employees. Our record results could not have been achieved without their hard work, skill and enthusiasm. Looking ahead, we are benefiting greatly from our organic expansion and we are extremely well placed to continue our progress. The Group commenced the new financial year in a very strong position with a substantial increase in forward sales, up 20% to £480m. Sales reservations since 1 July continue to show a healthy increase of 9% and our selling costs compare favourably with the year just ended. Additionally, we are on course to further increase our outlets in line with our projections, all of which augurs well for our future. We have a very strong balance sheet and are well positioned to take advantage of any trading opportunities which may arise. I am confident that we will continue to outperform the market and build upon our unrivalled track record. Frank Eaton Chairman 26th September 2001 The following are the unaudited results of the Group for the year ended 30th June 2001. ------------------------------------------------------------------------------ 1. GROUP PROFIT & LOSS ACCOUNT Unaudited Audited 2001 2000 £m £m ------------------------------------------------------------------------------ TURNOVER: Group and share of joint venture 1,515.0 1,259.5 LESS: Share of joint venture turnover (5.9) (9.5) ------------------------------------------------------------------------------ GROUP TURNOVER 1,509.1 1,250.0 ______________________________________________________________________________ OPERATING PROFIT 186.2 150.8 SHARE OF OPERATING PROFITS OF JOINT VENTURE 0.9 1.2 PROFIT ON DISPOSAL OF INTEREST IN JOINT VENTURE 3.7 - ------------------------------------------------------------------------------ PROFIT BEFORE INTEREST AND TAXATION 190.8 152.0 INTEREST PAYABLE (12.4) (8.1) ------------------------------------------------------------------------------ PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 178.4 143.9 TAXATION (51.7) (43.7) ------------------------------------------------------------------------------ PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 126.7 100.2 DIVIDENDS (30.2) (27.3) ------------------------------------------------------------------------------ RETAINED PROFIT 96.5 72.9 ______________________________________________________________________________ EARNINGS PER SHARE - BASIC 55.1p 43.3p ______________________________________________________________________________ EARNINGS PER SHARE - DILUTED 54.7p 43.1p ______________________________________________________________________________ DIVIDEND PER SHARE 13.07p 11.88p ______________________________________________________________________________ DIVIDEND COVER 4.2x 3.6x ______________________________________________________________________________ All activities of the group are continuing. ------------------------------------------------------------------------------ 2. STATEMENT OF TOTAL RECOGNISED GAINS AND Unaudited Audited LOSSES 2001 2000 £m £m ------------------------------------------------------------------------------ Profit on ordinary activities after taxation 126.7 100.2 Currency translation differences on foreign currency net investments 1.9 1.4 ------------------------------------------------------------------------------ Total gains and losses recognised since last annual report 128.6 101.6 ______________________________________________________________________________ ------------------------------------------------------------------------------ 3. GROUP BALANCE SHEET Unaudited Audited 2001 2000 £m £m ------------------------------------------------------------------------------ FIXED ASSETS Tangible assets 1.9 2.2 Investment in joint venture: Share of gross assets - 9.6 Share of gross liabilities - (6.6) ------------------------------------------------------------------------------ - 3.0 Other investments: interest in own shares 11.7 10.7 ------------------------------------------------------------------------------ 13.6 15.9 ______________________________________________________________________________ CURRENT ASSETS Properties held for sale 4.9 4.2 Stocks 1,177.6 981.0 Debtors due within one year 28.3 17.7 Debtors due after more than one year 0.7 2.6 Bank and cash 86.6 46.9 ------------------------------------------------------------------------------ 1,298.1 1,052.4 ------------------------------------------------------------------------------ CURRENT LIABILITIES Creditors due within one year (596.4) (476.3) ------------------------------------------------------------------------------ NET CURRENT ASSETS 701.7 576.1 ______________________________________________________________________________ TOTAL ASSETS LESS CURRENT LIABILITIES 715.3 592.0 CREDITORS DUE AFTER MORE THAN ONE YEAR (84.2) (63.3) ------------------------------------------------------------------------------ NET ASSETS 631.1 528.7 ______________________________________________________________________________ CAPITAL AND RESERVES Called up share capital 23.5 23.4 Share premium 179.8 177.1 Profit retained 427.8 328.2 ------------------------------------------------------------------------------ EQUITY SHAREHOLDERS' FUNDS 631.1 528.7 ______________________________________________________________________________ NET ASSETS PER SHARE 269p 226p ______________________________________________________________________________ ------------------------------------------------------------------------------ 4. GROUP SUMMARY CASH FLOW STATEMENT Unaudited Audited 2001 2000 £m £m ------------------------------------------------------------------------------ Net cash inflow from operating activities Operating profit 186.2 150.8 Increase in stocks (190.4) (159.4) (Increase)/decrease in debtors (6.4) 3.0 Increase in creditors 143.4 57.7 Other non cash movements (0.5) (0.6) ------------------------------------------------------------------------------ 132.3 51.5 Returns on investments and servicing of finance (10.0) (6.7) Taxation (48.2) (42.9) Capital expenditure and financial investment (0.9) (11.5) Acquisitions and disposals 4.8 - Equity dividends paid (28.0) (25.8) ------------------------------------------------------------------------------ Cash outflow before financing 50.0 (35.4) Financing 6.4 9.7 ------------------------------------------------------------------------------ Increase/(decrease) in cash 56.4 (25.7) ______________________________________________________________________________ Reconciliation of net cash flow to movement in net funds Increase/(decrease) in cash 56.4 (25.7) Cash flow from increase in debt (3.6) (9.7) ------------------------------------------------------------------------------ Change in net funds/(debt) resulting from cash flows 52.8 (35.4) Exchange movements (2.6) (1.6) ------------------------------------------------------------------------------ Movement in net funds/(debt) in the period 50.2 (37.0) Net (debt)/funds at 1st July (5.3) 31.7 ------------------------------------------------------------------------------ Net funds/(debt) at 30th June 44.9 (5.3) ______________________________________________________________________________ The financial information set out above does not constitute statutory accounts within the meaning of the Companies Act 1985. The figures in the preliminary statement have been taken from the group's draft statutory accounts which have not yet been signed but upon which the auditors are expected to give an unqualified opinion. The figures for the year to 30th June 2000 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 preliminary financial information has been prepared on the basis of accounting policies set out in the company's Annual Report for the year ended 30th June 2000. ------------------------------------------------------------------------------ 5. CASH IN HAND/(BANK DEBT) 2001 2000 £m £m ------------------------------------------------------------------------------ Due within one year (13.3) (27.4) Due after more than one year (28.4) (26.5) ------------------------------------------------------------------------------ (41.7) (53.9) Loan to joint venture - 1.7 Bank and cash deposits 86.6 46.9 ------------------------------------------------------------------------------ Total cash/(debt) 44.9 (5.3) ______________________________________________________________________________ 6. DIVIDENDS The directors propose a final dividend of 8.91p per share (2000: 8.03p) making a total for the year of 13.07p per share (2000: 11.88p). It is proposed that the final dividend will be paid on 16th November 2001, to shareholders on the register, at close of business, on 5th October 2001. 7. EARNINGS PER SHARE Basic earnings per ordinary share is based on the profit after taxation of £126,705,000 (2000: £100,161,000) and the weighted average number of ordinary shares in issue and ranking for dividend during the year of 229,877,640 (2000: 231,075,267). For diluted earnings per share, the weighted average number of shares in issue and ranking for dividend is adjusted to assume the conversion of all dilutive potential shares. The effect of the dilutive potential shares is 1,794,208 (2000: 1,526,567), this gives a diluted weighted average number of shares of 231,671,848 (2000: 232,601,834). 8. NET ASSETS PER SHARE Net assets per ordinary share are based on the net assets at 30th June 2001 of £631.1m (2000: £528.7m) and the number of shares in issue at that date of 234,909,800 (2000: 233,527,024). 9. TAXATION No taxation arises on US operations, (2000: Nil). ------------------------------------------------------------------------------ For further information: Mr C.A. Dearlove OR Ms. C. Lynch/Mr T.Garrett Group Finance Director Square Mile BSMG Barratt Developments PLC Telephone: 0191 286 6811 Telephone: 0207 601 1000 * * * * * * * * * * * * 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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