Solid cash generation and a reduction in land creditors boosted Barratt Developments’ (BDEV) net cash balances during the first half of the year, giving management the confidence to extend an annual £175m in special dividend payments to 2021. That is in addition to a target of maintaining profit coverage of the ordinary dividend by a multiple of 2.5.
Taking an £18m provision to update cladding on legacy developments eroded the operating margin during the first-half. Exclude those costs and the metric rose to 19.4 per cent, from 19 per cent in the prior-year period, helped by a greater proportion of larger tenure completions. Total completions were up 9.1 per cent, the highest achieved during a half-year period in 12 years, although the average private selling price (ASP) declined slightly due to a greater proportion of London sales. However, with the remaining wholly-owned Central London units forward sold, the capital city’s drag on ASP should lessen.
Analysts at house broker Peel Hunt forecast adjusted pre-tax profits of £920m and earnings per share of 74p for the year to June 2020, rising to £955m and 78.3p the following year.
| BARRATT DEVELOPMENTS (BDEV) | ||||
| ORD PRICE: | 847p | MARKET VALUE: | £8.63bn | |
| TOUCH: | 847-848p | 12-MONTH HIGH: | 861p | LOW: 520p |
| DIVIDEND YIELD: | 3.5% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 476p* | NET CASH: | £434m | |
| Half-year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2018 | 2.13 | 408 | 32.7 | 9.6 |
| 2019 | 2.23 | 423 | 33.8 | 9.8 |
| % change | +6 | +4 | +3 | +2 |
| Ex-div: | 16 Apr | |||
| Payment: | 11 May | |||
| *Includes intangible assets of £908m, or 89p a share | ||||
