Final Results

Barratt Developments PLC 20 September 2000 BARRATT DEVELOPMENTS PLC PRELIMINARY RESULTS TO 30 JUNE 2000 CHAIRMAN'S STATEMENT The Group has again delivered record results with pre-tax profits rising to £143.9m and earnings per share up by 31%. This excellent performance extends our track record of uninterrupted growth over the past eight years, an achievement which is unrivalled in the housebuilding industry. During this time we have increased earnings per share by an average of over 20% a year. We are well placed to maintain this consistent progress. We ended the financial year with record forward sales of over £400m and since 1 July we have continued to outperform the market, with sales reservations up by 6% year on year. This gives us great confidence for the year ahead. Group results for the year ended 30 June 2000 show all our key financial statistics reached record levels: * Pre-tax profit amounted to £143.9m against £112m the previous year, an increase of 28%. * Basic earnings per share amounted to 43.3p, against 33.1p the previous year, an increase of 31%. * Final dividend of 8.03p per share will be recommended, against 7.24p the previous year, giving a total dividend for the year of 11.88p, an increase of 10%, 3.6 times covered. * Turnover rose to £1,250m, against £1,009m the previous year, an increase of 24%. In the UK we achieved 10,636 completions, up 11%, at an average selling price of £112,600, an increase of 13%. * Shareholders' funds amounted to £529m, an increase of 16%. * Land stocks increased from 29,200 plots to 31,700 plots, equating to three years' volume. * Net borrowings at 30 June 2000 amounted to £5.3m, a gearing of 1% which highlights the emphasis placed on cash management. This continued strong balance sheet position was achieved notwithstanding a £156m increased investment in our land stocks. * Return on capital employed was 29.3%, maintaining our position amongst the highest in the industry. The consistency of the Group's sales performance in varying markets over recent years has been our major strength. In the more difficult markets of 1995 and 1998 we were the only national housebuilder to significantly increase sales and maintain growth in margin and earnings per share. In the current more stable market we are again demonstrating our resilience, increasing sales reservations since 1 July by 6% year on year. We do not seek nor do we expect any improvement in the very substantial UK housing market. The recent slowing has mainly occurred in the South, however the South remains the strongest regional market place and we are confident the overall market will remain significantly robust for our growth objectives to be achieved. Furthermore, this more stable housing market is already benefiting the land market and easing pressures on construction costs, thereby helping to maintain margin growth going forward. Over the past right years, we have successfully expanded our operations with the establishment of 11 new housebuilding divisions. In the year to 30 June 2000, 68% of our volume growth was achieved by these new divisions and we anticipate further volume and profit growth from them. Additionally, on 1 July this year a further 4 new divisions became operational and we project these will together deliver around 600 completions in our new financial year. All of our regions traded extremely successfully, increasing both volume and profits during the period. The Group benefits enormously from a network of divisions covering all of the UK's main population bases. This wide geographic spread, coupled with our diverse product range, enables us to provide homes across all market sectors from £40,000 up to £2.5m and also facilitates prompt decision making and early reaction to changes in regional markets. Through our renowned part exchange service and a range of other sales initiatives we are able to rapidly adapt to varying markets and maintain our volumes. In the year some 22% of our buyers took advantage of our part exchange service thereby securing a fast and efficient transaction. We also completed 2,589 part exchange resales. The Group benefits from selling to all sectors of the market and this also assists our land acquisition programme. We continue to progressively increase the quality and quantity of our land stocks. In the year just ended, our expenditure on land amounted to £458m, increasing our stocks to 31,700 plots, equal to three years' volume. We are industry leaders in urban redevelopment and comfortably exceed the Government's target of 60% of development on brownfield sites, with over 70% achieved throughout the Group. We have the specialist skills and a proven track record in developing the more difficult sites and we are fully participating in the regeneration of our cities and towns. Our land buying teams have been highly successful and continued to secure sites 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 29.3%. Our operation in Southern California continues to make good progress, with profits up by 150% to £4.0m and turnover up by 29% to £72m. We continue to enjoy a good market in Southern California which is supported by growing employment and a buoyant economy. Our strategic emphasis on re-investing in the better markets of Southern California in sites of manageable investment gives us confidence that our results will continue to improve. In the UK, the more recent stabilising of the market will help to sustain a favourable market going forward. Over the last ten years fluctuations in the market, as evidenced in 1995 and 1998, are becoming less pronounced as the Government and Bank of England control the economy more effectively. Modest movement in interest rates around 6% is part of this process. Overall, the mortgage market is extremely competitive, house price to income ratios continue to be favourable, the employment market is positive and personal disposable income continues to rise. All of this is supporting house buyer confidence. The Group commenced the new financial year in a very strong position with a substantial increase in forward sales, up 17% to £403m. Sales reservations since 1 July continue to show a healthy increase in line with our projections and our selling costs compare favourably with the year just ended. All of this indicates further growth and margin improvement. We have continued to strengthen our management team in tandem with the expansion of the business. We have a highly experienced team throughout our countrywide operations which has demonstrated its ability to succeed in varying market conditions. On behalf of the Board I would like to thank all of our employees throughout the Group. Our record results could not have been achieved without their hard work, enthusiasm and skill. Looking ahead we shall seek to build upon our proven track record and our corporate objectives will continue to be to improve earnings per share and generate shareholder value. We are extremely well-placed to continue this progress and we face the future with great confidence. Frank Eaton Chairman 20 September 2000 The following are the unaudited results of the Group for the year ended 30th June 2000. 1. GROUP PROFIT & LOSS ACCOUNT Unaudited Audited --------------------------- 2000 1999 £m £m --------------------------------------------------------------- TURNOVER: Group and share of joint venture 1,259.5 1,016.3 LESS: Share of joint venture turnover (9.5) (7.5) ---------------------------------------------------------------- GROUP TURNOVER 1,250.0 1,008.8 ================================================================ OPERATING PROFIT 150.8 115.0 SHARE OF OPERATING PROFITS OF JOINT VENTURE 1.2 1.1 ---------------------------------------------------------------- PROFIT BEFORE INTEREST AND TAXATION 152.0 116.1 INTEREST PAYABLE (8.1) (4.1) ---------------------------------------------------------------- PROFIT ON ORDINARY ACTIVITIES BEFORE TAXATION 143.9 112.0 TAXATION (43.7) (34.7) ---------------------------------------------------------------- PROFIT ON ORDINARY ACITIVITES AFTER TAXATION 100.2 77.3 DIVIDENDS (27.3) (25.2) ---------------------------------------------------------------- RETAINED PROFIT 72.9 52.1 ================================================================ EARNINGS PER SHARE - BASIC 43.3p 33.1p ---------------------------------------------------------------- EARNINGS PER SHARE - DILUTED 43.1p 32.9p ---------------------------------------------------------------- DIVIDEND PER SHARE 11.88p 10.80p ---------------------------------------------------------------- DIVIDEND COVER 3.6x 3.1x All activities of the group are continuing. 2. GROUP BALANCE SHEET Unaudited Audited ------------------- 2000 1999 £m £m ---------------------------------------------------------------- FIXED ASSETS Tangible assets 2.2 1.3 Investment in joint venture: Share of gross assets 9.6 6.8 Share of gross liabilities (6.6) (4.6) ---------------------------------------------------------------- 3.0 2.2 Other investments: interest in own shares 10.7 - ---------------------------------------------------------------- 15.9 3.5 ================================================================ CURRENT ASSETS Properties held for sale 4.2 3.7 Stocks 981.0 818.3 Debtors due within one year 17.7 20.7 Debtors due after more than one year 2.6 1.3 Bank and cash 46.9 63.6 ---------------------------------------------------------------- 1,052.4 907.6 ---------------------------------------------------------------- CURRENT LIABILITIES Creditors due within one year (476.3) (429.5) ---------------------------------------------------------------- NET CURRENT ASSETS 576.1 478.1 ================================================================ TOTAL ASSETS LESS CURRENT LIABILITIES 592.0 481.6 CREDITORS DUE AFTER MORE THAN ONE YEAR (63.3) (27.3) ---------------------------------------------------------------- NET ASSETS 528.7 454.3 ================================================================ CAPITAL AND RESERVES Called up share capital 23.4 23.4 Share premium 177.1 177.0 Profit retained 328.2 253.9 ---------------------------------------------------------------- EQUITY SHAREHOLDERS' FUNDS 528.7 454.3 ================================================================ NET ASSETS PER SHARE 226p 195p ================================================================ 3. GROUP SUMMARY CASH FLOW STATEMENT Unaudited Audited --------------------------------- 2000 1999 £m £m ---------------------------------------------------------------- Net cash inflow from operating activities Operating profit 150.8 115.0 Increase in stocks (159.4) (145.5) Decrease/(Increase) in debtors 3.0 (1.1) Increase in creditors 57.7 78.0 Other non cash movements (0.6) 0.1 ---------------------------------------------------------------- 51.5 46.5 Returns on investments and servicing of finance (6.7) (5.9) Taxation (42.9) (30.4) Capital expenditure and financial investment (11.5) (1.1) Acquisitions and disposals - 1.0 Equity dividends paid (25.8) (24.0) ---------------------------------------------------------------- Cash outflow before financing (35.4) (13.9) Financing 9.7 (3.1) ---------------------------------------------------------------- Decrease in cash (25.7) (17.0) ================================================================ Reconciliation of net cash flow to movement in net funds Decrease in cash (25.7) (17.0) Cash flow from (increase)/decrease in debt (9.7) 4.0 ---------------------------------------------------------------- Change in net debt resulting from cash flows (35.4) (13.0) Exchange movements (1.6) (1.1) ---------------------------------------------------------------- Movement in net debt in the period (37.0) (14.1) Net funds at 1st July 31.7 45.8 ---------------------------------------------------------------- Net (debt)/funds at 30th June (5.3) 31.7 ================================================================ 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 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 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 1999. ---------------------------------------------------------------- 4. (BANK DEBT)/CASH IN HAND 2000 1999 ----------------------- £m £m ---------------------------------------------------------------- Due within one year (27.4) (32.6) Due after more than one year (26.5) - ---------------------------------------------------------------- (53.9) (32.6) Loan to joint venture 1.7 0.7 Bank and cash deposits 46.9 63.6 ---------------------------------------------------------------- Total (debt)/cash (5.3) 31.7 ================================================================ 5. DIVIDENDS --------- The directors propose a final dividend of 8.03p per share (1999 7.24p) making a total for the year of 11.88p per share (1999 10.80p). It is proposed that the final dividend will be paid on 17th November 2000, to shareholders on the register, at close of business, on 6th October 2000. 6. EARNINGS PER SHARE ------------------ Basic earnings per ordinary share is based on the profit after taxation of £100,161,000 (1999 £77,276,000) and the weighted average number of ordinary shares in issue and ranking for dividend during the year of 231,075,267 (1999 233,150,270). 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 1,526,567 (1999 1,446,842), this gives a diluted weighted average number of shares of 232,601,834 (1999 234, 597,112). 7. NET ASSETS PER SHARE -------------------- Net asserts per ordinary share are based on the net assets at 30th June 2000 of £528.7m (1999 £454.3m) and the number of shares in issue at that date of 233,527,024 (1999 233,506,472). 8. TAXATION -------- No taxation arises on US operations, (1999 Nil). ---------------------------------------------------------------- for further information: Mr C.A. Dearlove or Ms .Chris Lynch/Mr Graham Herring Group Finance Director Golin/Harris Ludgate Barratt Developments PLC Telephone: 0207 253 2252 Telephone: 0191 286 6811 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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