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Barratt absorbs £74m Covid costs

2 Sep 20 A Covid-shaped dent has damaged the annual financial results of leading house-builder Barratt Developments but it still raked in hundreds of millions of pounds in profits.

For the years to 30th June 2020 Barratt Developments made a pre-tax profit of £492m, down 46% on the previous year’s £910m.

Revenue was down 28% to £3,419m (2019: £4,763m) as housing completions fell from 17,856 to 12,604.

Covid-19-related costs came to £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.

Barratt took in £26m of tax-payers money through the government’s coronavirus job retention scheme (CJRS) but paid it all back after the end of the financial year.

Chief executive David Thomas 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. We are now renewing our focus on our medium term targets, on leading the industry in quality and service and on supporting jobs and economic growth by building the homes the country needs."

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While the arrival of the virus towards the end of the financial year was the biggest development at Barratt during the year, it has also been steadily pushing up its use of offsite production and other so-called ‘modern’ methods of construction, or MMC.

“We continue to develop, trial and implement MMC,” said David Thomas. “In 2020 we constructed 2,652 homes (21% of our home completions) using MMC including timber frame, large format block and offsite manufactured ground floor solutions and roof cassettes. Our target is to use MMC in the construction of 25% of our homes by 2025.”

He continued: “Timber frame construction is a sustainable, low energy method of build and is assembled in factories to high standards. Over the last three years, we have built 6,035 homes using timber frame, the majority in Scotland. We are also increasing its use across England and Wales. Last year, we acquired Oregon, a UK manufacturer of timber frames. Oregon, which was already one of our key timber frame suppliers providing high quality products and excellent customer service, has continued to expand and has opened an additional factory as we look to expand further our use of timber frame.”

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