First Full Year Results for Barratt Show Covid Impact

BARRATT DEVELOPMENTS PLC has reported its first full year results that reflect the impact of the covid-19 pandemic.

COVID-19 and the lockdown period significantly reduced completion volumes, increased costs and impacted profit.

The company reported a drop of a third in home completions to 12,604 to the year ending June 2020 from 17,856 last year (29.4%). There was a drop in revenue (28.2%) by almost a third too, with pre-tax profit falling by almost a half (45.9%) from £909.8m in 2019 to £491.8m, impacted by the unprecedented disruption to sales and build in Barratt’s fourth quarter.

Total COVID-19-related costs of £74.3m, comprising £45.2m of safety costs, non-productive site costs and site-based employee costs and £29.1m related to an expected increase in site durations.

After COVID-19 costs, adjusted profit from operations was £507.3m (2019: £904.3m) at an adjusted operating margin of 14.8% (2019: 19.0%).

David Thomas, Chief Executive of Barratt Developments PLC said: “While COVID-19 has had a significant impact on our results, our priority has been to keep our people safe, mitigate the effect of the pandemic on our business and be able to emerge from the crisis in a resilient position.

“Although uncertainties remain, all of our sites are operational, we are seeing very strong consumer demand and our robust financial position means we enter the new financial year with cautious optimism.”

Newbuild Catch Up

Reporting forward sales, the figures suggest that pent up demand for new build housing has built up during the pandemic period. Net private reservations per active outlet per average week from 1 July through to 23 August have been ahead of the prior year at 0.94, compared to 0.68. Forward sales, as at 23 August 2020, were of 15,660 homes with a value of £3,706.5m. This is compared to the same point in previous year when there forward sales of 13,064 homes with a value of £3,037.5m.

Barratts says it has a resilient balance sheet with net cash at 30 June 2020 of £308.2m (2019: £765.7m).

Sustainability

The company restated its commitment to be the country’s leading national sustainable housebuilder demonstrated with new carbon reduction targets. In January 2020, Barratt committed to reducing direct carbon emissions by 29% from 2018 levels, by 2025; and indirect emissions by 11% from 2018 levels, by 2030.