Barratt to pay special dividend

Completions rose by 11 per cent to 16,447, taking them to the highest level for seven years. Average selling prices rose by 7 per cent to £235,000, helping to lift operating margins from 13 per cent to 15.3 per cent. Return on capital employed rose from 19.5 per cent to 23.9 per cent, putting the company well on the way to achieving a target of at least 25 per cent by June 2017.

Despite continued planning constraints, Barratt managed to increase the number of new site openings from 136 to 176, taking the total in operation up by 9 per cent to 399. Overall site numbers are expected to rise by 3 per cent in the year to June 2016. Legacy land continues to decline as part of overall developments, and completions on more recently acquired higher-margin sites rose from 65 per cent to 76 per cent. Around 90 per cent of the owned and controlled land bank now comprises higher-margin sites, up from 84 per cent a year earlier.

Demand for new homes has been supported by the Help to Buy scheme, and completions using this incentive now account for nearly a third of total output. Land prices remain relatively benign, and a total of £957m was spent during the year on acquiring nearly 17,000 plots, all of which met or exceeded the company's internal hurdle rates of 20 per gross margin and 25 per cent return on capital employed.

Analysts at Deutsche Bank forecast diluted EPS of 51.8p in 2016, compared with 44.6p in 2015.