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Barratt plans for £350mln extension to cash returns after strong half

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Numbers of new builds completed increased by 9.1% in the half year, while average selling prices fell 0.9%

Barratt Developments PLC (LON:BDEV) said it will pay shareholders a special return of £175mln as an early Christmas present this year and next year as the cash keeps flooding in for its houses.

Britain’s largest housebuilder by volumes kept up its lead with 8,314 houses completed in the half-year to end-December, up 9.1% year-on-year.

Hit by a London housing wobble, the average selling price (ASP) fell 0.9% to £279,800, with private sales ASPs down 1.7%.

But net cash still swelled 11.9% to £433.8mln and the interim dividend was lifted 2.1% to 9.8p per share, with the board also unveiling the extension to its capital return plan with another £175mln in November 2021 on top of the £175mln for this coming November that had already been flagged.

Interim revenues of £2.3bn were up 6.3% and profits before tax rose 3.7% to £423mln, stronger than most analysts expected.

Barratt chief executive David Thomas said: “We have made a good start to our second half and with substantial net cash, a well-capitalised balance sheet and strong forward sales, the outlook for the full year is in line with our expectations.”

Barratt shares, having already risen more than 70% since the start of last year, continued their good momentum with another 5% gain to 859.8p on Wednesday morning.

Broker Liberum said management's unchanged guidance for the year to June was made "probably conservatively" although confidence was shown by the extension of capital returns  Shares trade on 10.7x PER, yielding 5.9% and 1.9x book (CY20E).

Source - Proactive Investor

Photo © Jaggery (cc-by-sa/2.0)

About the author

Philip Scott

Head of Equities, Director

Philip has worked as a Private Client Stockbroker for nearly 20 years, commencing his career in Operations with Rensburg Sheppards (now part of Investec plc) before spending 9 years with Killik & Co advising on and directly managing portfolios. He joined SI Capital in 2006 to head up the Private Client Advisory desk.

Philip is a regular contributor to local media commenting on stock market dynamics and is a Chartered Member of the Chartered Institute for Securities & Investment (MCSI). His RDR qualification gained special recognitionfrom the CISI for achieving the highest combined pass mark in the country for the Investment Advice Diploma in 2012.

“At SI Capital I enjoy being part of a talented team who collectively share the same desire to provide excellence in service.  My focus is to ensure that each client receives effective and optimal management of their assets.”

Philip lives locally, is married with 2 daughters and is an avid sports fan (if now predominantly from the sidelines).  His other interests include music and film.

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