Construction News

Tue September 21 2021

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Barratt bounces back

2 Sep Financial results from volume house-builder Barratt Developments show a strong return to form, with output nearly back to pre-Covid levels.

In the year to 30th June 2021, Barratt Developments generated revenue up 40% to £4,811.7m (2020: £3,419.2m; 2019: £4,763m).

It completed 17,243 new homes during the year (including joint ventures), compared to completed 12,604 in 2020, and 17,856 in 2019.

Pre-tax profit was up 65% to £812.2m (2020: £491.8m; 2019: £910m).

It has also significantly strengthened its balance sheet with year-end net cash of £1,317.4m (2020: £308.2m; 2019: £765.7m).

Build cost inflations is running at between 4% and 5% and expect to remain at this level for the year ahead.

The trends towards building offsite continues, albeit slowly. During the year, Barratt delivered 4,393 homes using offsite component fabrication and other ‘modern’ methods of construction. This equates to 25% of total home completions, compared to 21% in the previous year.

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The table below details the various methods used during the year.

MMCFY21FY20Timber frame3,0032,031Roof cassettes696269Offsite ground floors360143Large format block334209Total4,3932,652Percentage of completions25%21%

Since the Grenfell Tower fire in 2017, which exposed industry-wide issues with cladding systems, Barratt has incurred related charges of £184.2m putting things right. Of this, £81.5m was charged to adjusted items during 2021. It has outstanding provisions of £67.6m. In the current fina ncial year it anticipates adjusted items of at least £40m for costs associated with EWS and cladding related remediation activities.

Chief executive David Thomas said: "We have made excellent progress this year thanks to the resilience, flexibility and hard work of our employees, subcontractors and suppliers, who have also continued to deliver the highest standards of quality and service. We have begun the new financial year in a strong position and, whilst there are still uncertainties ahead, our strong balance sheet, forward order book visibility and construction activity to date all stand us in good stead.

“There is very strong demand for houses across the country and we play a crucial role in providing the high quality and sustainable homes this country needs. As we work towards our medium term target of growing completions to 20,000 homes a year, we are committed to doing so as the leading national sustainable housebuilder – building homes which have a positive environmental, social and economic impact today and into the future."

Andy Murphy, director of investment research firm Edison Group, commented: “"The Company has guided to FY22 volumes of 17,000-17,250 wholly owned completions, a 3% growth in outlets and build cost inflation of 4-5%, which implies modest growth for the year in our opinion. Barratt Developments trades on a price-to-book ratio of 1.45x to June ’21, which compares to Taylor Wimpey on 1.53x to December."

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