Final Results

BARRATT DEVELOPMENTS PLC 22 September 1999 PRELIMINARY RESULTS TO 30TH JUNE 1999 CHAIRMAN'S STATEMENT This has been a landmark year in the Barratt Group's history. Our pre-tax profits rose to a record £112 million, Group turnover exceeded £1 billion and we significantly increased market share. These excellent results extend our track record of consistent growth over the past seven years, a performance which is unrivalled in the industry. Our results are all the more creditable given the difficult housing market which existed in the first half of the year, when we again demonstrated our resilience by further increasing sales year on year. Throughout the UK all of our divisions again traded very successfully and we ended the financial year with record forward sales of £343m. Since 1 July we have continued to out-perform the market and increase market share, which gives us confidence for the year ahead. Group results for the year ended 30 June 1999 demonstrate improvements across all key performance indicators: * Pre-tax profit amounted to £112m against £93.3m the previous year, an increase of 20%. * Basic earnings per share amounted to 33.1p against 27.1p the previous year, an increase of 22%. * Final dividend of 7.24p per share will be recommended against 6.7p the previous year, giving a total dividend for the year of 10.8p, an increase of 8%, 3.1 times covered. * Turnover rose to £1,009m against £891m the previos year, an increase of 13%. In the UK we achieved 9,556 completions, an increase of 10%, at an average selling price of £99,500, an increase of 4%. * Shareholders' funds at the year end amounted to £454m, an increase of 14%. * Land stocks increased from 26,045 plots to 29,200 plots, equating to three years' volume. * Net cash in hand at the year end amounted to £32m, which highlights the emphasis placed on cash management. This continues the strong position existing at 30 June 1998 and was achieved notwithstanding a £53m increased investment in our land stocks. * Return on capital employed was 26.2%, maintaining our position amongst the highest in the industry. Of particular note was our strong performance in the face of a slowing market in the first half year, when we continued to significantly increase sales reservations (up 8% year on year), the only national housebuilder to do so. As the housing market improved in the second half year, we benefited fully from our increased presence in the stronger Southern market, where 10 of our 22 UK divisions are located. The South produced a greater proportion of our total sales and this contributed significantly to our higher average selling price and our increased turnover. Our planned expansion into the South has been extremely successful, in fact some 50% of our increased volume was produced by our 9 more recently established divisions, 6 of which are located in the stronger South-East region. During the year we continued our investment programme in the South with an expenditure of £132m, amounting to 45% of our total land spend. This will ensure that we continue to secure a significant share of this important market. We now have 62 sites within and around the M25 out of 92 in Southern England. Our longer-established divisions throughout the remainder of the UK continued to perform successfully, increasing both volume and profits. Our prices range from £40,000 to £2.5 million and our ability to respond to changing market conditions again stood us in good stead with varying levels of purchaser assistance tailored to differing markets. We continued to provide a part-exchange service, however the overall demand for this reduced considerably, particularly in the second half year. Over the year, some 33% of our buyers took advantage of this fast and efficient service and we completed 3,338 resale transactions. We have previously commented on the deplorable land availability and planning situation which exists throughout the UK. Sadly the situation shows no sign of improvement and there appears to be no government will to effect much-needed changes. The result is undue pressure on land costs which is pricing properties out of the reach of many first-time buyers. In addition, unreasonable planning gain demands - which can add thousands of pounds to the price of a home - and lengthy delays in obtaining approvals continue to be serious concerns. Whether for brownfield or greenfield sites, the planning process is equally inefficient and is extremely wasteful of company resources. It is our experience and skills that enable us to overcome these difficulties. The Barratt Group has a long and successful track record of developing brownfield sites and in fact over 60% of our land has had a former use. Our land buying teams have been very successful, increasing land stocks in all our regions and particularly our new divisions. Our investment in land acquisition during the year amounted to £293m, increasing our stocks to 29,200 plots, equal to three years' volume. Our ongoing success in land acquisition and securing development approvals produced a further increase in selling outlets of 8% to 303 at the year end. This ongoing expansion has been extremely successful and we have selectively secured sites within the main population bases, in desirable locations of proven demand. All land buying is stringently controlled to ensure best management of the Group's financial resources and a full return on our investment. Our success is reflected in the ongoing improvement in our margin and our return on capital employed of 26.2%. The year end funding position of £32m cash in hand, notwithstanding our increased investment in land stocks, up £53m, clearly demonstrates this effective control and cash management. In our USA operation we have continued to benefit from an improved market and we are making good progress trading through our older developments. The business returned to profit in the year achieving £1.6m, against a £0.8m loss for the previous year. Legal completions of 206 against 365 for the previous year reflect planned re-investment into the better and more desirable areas of Southern California, which is evident in the average selling price, up £135,000 to £271,000, increasing total turnover from £49.7m to £55.9m. This market continues to be favourable and our emphasis on continuing to re-invest in the more sought-after locations gives us confidence for the year ahead. In the UK we continue each year to strengthen our forward sales position and we conmmenced the new financial year in a very strong position, with forward sales reservations up £102m to a record £343m. Sales reservations in our new financial year continue to show an increase year on year in line with our projections and our selling costs compare favourably with the year just ended. Market conditions continue to be favourable throughout the country, with the Southern market remaining the strongest. House price to earnings ratios and mortgage rates continue to be attractive and the desire for home ownership remains strong. Throughout the Group we have been extremely successful in maintaining a low cost base, which we see as critical to our competitive edge. This emphasis on low overheads and effective cost controls has benefited us greatly and will continue to do so in the future. Our management team has once again demonstrated its ability to succeed and I would like to express my thanks to all my colleagues throughout the Group, both office and site based, whose efforts have brought about the progress we have achieved in the year. Looking ahead we are extremely well placed to continue this progress. Our land bank has been further enhanced by quality acquisitions in first class locations which will enable us to generate consistent sales. We shall also continue to benefit from our management strengths, our outstanding product range and the unrivalled service we provide to our buyers. We face the future with great confidence. Frank Eaton Chairman The following are the unaudited results of the Group for the year ended 30th June 1999. _________________________________________________________________ 1. GROUP PROFIT & LOSS ACCOUNT Unaudited Audited 1999 1998 £m £m _________________________________________________________________ TURNOVER: Group and share of joint ventures 1,016.3 897.0 LESS: Share of joint ventures turnover (7.5) (6.5) _________________________________________________________________ GROUP TURNOVER 1,008.8 890.5 ================================================================= OPERATING PROFIT 115.0 96.6 SHARE OF OPERATING PROFITS OF JOINT VENTURES 1.1 0.8 _________________________________________________________________ PROFIT BEFORE INTEREST AND TAXATION 116.1 97.4 INTEREST PAYABLE (4.1) (4.1) _________________________________________________________________ PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 112.0 93.3 TAXATION (34.7) (30.2) _________________________________________________________________ PROFIT ON ORDINARY ACTIVITIES AFTER TAXATION 77.3 63.1 DIVIDENDS (25.2) (23.4) _________________________________________________________________ RETAINED PROFIT 52.1 39.7 ================================================================= EARNINGS PER SHARE - BASIC 33.1p 27.1p ================================================================= EARNINGS PER SHARE - DILUTED 32.9p 27.0p ================================================================= DIVIDEND PER SHARE 10.8p 10.0p ================================================================= DIVIDEND COVER 3.1x 2.7x ================================================================= All activities of the group are continuing _________________________________________________________________ 2. GROUP BALANCE SHEET Unaudited Audited 1999 1998 £m £m _________________________________________________________________ FIXED ASSETS Tangible assets 1.3 0.5 Investments in joint ventures: Share of gross assets 6.8 7.2 Share of gross liabilities (4.6) (5.5) _________________________________________________________________ 2.2 1.7 _________________________________________________________________ 3.5 2.2 ================================================================= CURRENT ASSETS Properties held for sale 3.7 3.5 Stocks 818.3 670.1 Debtors due within one year 20.7 20.4 Debtors due after more than one year 1.3 6.7 Bank and cash 63.6 68.3 _________________________________________________________________ 907.6 769.0 _________________________________________________________________ CURRENT LIABILITIES Creditors due within one year (429.5) (320.3) _________________________________________________________________ NET CURRENT ASSETS 478.1 448.7 ================================================================= TOTAL ASSETS LESS CURRENT LIABILITIES 481.6 450.9 CREDITORS DUE AFTER MORE THAN ONE YEAR (27.3) (51.5) _________________________________________________________________ NET ASSETS 454.3 399.4 ================================================================= CAPITAL AND RESERVES Called up share capital 23.4 23.3 Share premium 177.0 176.2 Profit retained 253.9 199.9 _________________________________________________________________ EQUITY SHAREHOLDERS' FUNDS 454.3 399.4 ================================================================= NET ASSETS PER SHARE 195p 171p ================================================================= _________________________________________________________________ 3. GROUP SUMMARY CASH FLOW STATEMENT Unaudited Audited 1999 1998 £m £m _________________________________________________________________ Net cash inflow from operating activities Operating profit 115.0 96.6 Increase in stocks (145.5) (133.4) Increase in debtors (1.1) (0.4) Increase in creditors 78.0 79.7 Other non cash movements 0.1 2.4 _________________________________________________________________ 46.5 44.9 Returns on investments and servicing of finance (5.9) (4.0) Taxation (30.4) (25.1) Capital expenditure and financial investment (1.1) (0.2) Acquisitions and disposals 1.0 3.9 Equity dividends paid (24.0) (21.6) _________________________________________________________________ Cash outflow before financing (13.9) (2.1) Financing (3.1) (6.5) _________________________________________________________________ Decrease in cash (17.0) (8.6) ================================================================= Reconciliation of net cash flow to movement in net funds Decrease in cash (17.0) (8.6) Cash flow from decrease in debt 4.0 8.4 _________________________________________________________________ Change in net debt resulting from cash flows (13.0) (0.2) Exchange movements (1.1) 0.2 _________________________________________________________________ Movement in net funds in the period (14.1) - Net funds at 1st July 45.8 45.8 _________________________________________________________________ Net funds at 30th June 31.7 45.8 ================================================================= 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 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 1998 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 1998. _________________________________________________________________ 4. BANK DEBIT/(CASH IN HAND) 1999 1998 £M's £M's _________________________________________________________________ Due within one year 32.6 4.3 Due after more than one year - 19.9 _________________________________________________________________ 32.6 24.2 Loan to joint venture (0.7) (1.7) Bank and cash deposits (63.6) (68.3) _________________________________________________________________ Total cash (31.7) (45.8) ================================================================= 5. DIVIDENDS The directors propose a final dividend of 7.24p per share (1998 6.7p) making a total for the year of 10.8p per share (1998 10.0p). It is proposed that the final dividend will be paid on 19th November 1999, to shareholders on the register, at close of business, on 8th October 1999. 6. EARNINGS PER SHARE Basic earnings per ordinary share is based on the profit after taxation of £77,276,000 (1998 £63,074,000) and the weighted average number of ordinary shares in issue during the year of 233,150,270 (1998 232,461,527). For diluted earnings per share, the weighted average number of shares in issue is adjusted to assume the conversion of all dilutive potential shares. The effect of the dilutive potential shares is 1,446,842 (1998 861,181), this gives a diluted weighted average number of shares of 234,597,112 (1998 233,322,708). 7. NET ASSETS PER SHARE Net assets per ordinary share are based on the net assets at 30th June 1999 of £454.3m (1998 £399.4m) and the number of shares in issue at that date of 233, 506,472 (1998 233,024,896). 8. TAXATION The taxation charge includes a credit of £0.9m (1998 nil) in respect of Californian Unitary Tax for the years 1989 and 1990. 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: 0171 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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