Heavy investments in land have triggered a string set of finals results for housebuilder Barratt Developments, which has recorded a 103% rise in pre-tax profits.
The firm – founded in Newcastle in 1958 – posted pre-tax profits of £390.6m for the year ended June 30, more than double the £192m noted in the previous 12-month period.
Turnover also grew over the year, by 21.1% to £3.157bn, driven by the land investments as well as sustained strength in the housing market – strength the firm expects to plateau in time.
Total plot completions reached 14,838, an 8.6% increase on the 13,663 plots completed in the previous year, and the firm said it has also secured excellent land opportunities, having approved 21,478 plots for purchase.
The group has also exceeded its return on capital employed (ROCE) target – the ratio of net operating profit to its capital employed – of 18% two years ahead of schedule, actually achieving 19.5%, leading to directors setting a new target of 25% by 2017.
The firm re-entered the land market in 2009 and since then it has approved the purchase of £3.8bn of land.
Directors said the group’s aim to transform its old land bank from low margin land to newly-acquired high margin land is also progressing well.
During the year the firm said it has stepped up its focus on the design and quality of the homes, pressing ahead with its customer-first ethos that it believes gives it an edge over the competition, while also driving out costs resulting from poor build quality.
Its special cash payment programme for the next three years, combined with its ordinary dividend, is expected to return around £950m of cash to shareholders.
Looking ahead, the firm expects to see a return to more normal seasonal trends following exceptionally high levels of activity following the launch of Help to Buy in April 2013.
Overall, the directors said the figures demonstrate a strong year for the business, which will result in healthy payouts to shareholders.
The group’s outgoing chairman Bob Lawson, who steps down at the AGM in November to make way for new chairman John Allan CBE, welcomed the results.
He said: “This has been a year of outstanding progress. In addition to stronger market conditions, we have benefitted from the underlying improvements we have embedded in the business. “As a result, our profitability has more than doubled, we have hit our return on capital target two years early and have improved our margins significantly.
“During the year we have continued to benefit from the substantial improvements we have made to our operating performance.
“Acquiring land suitable for development on the right terms is the fundamental building block of our business. Whilst the land market has become more competitive, in particular in the South East, the quality and disciplined approach of our land teams means that high margin land in attractive locations continues to be secured.
“There is no doubt that increasing volumes across the industry have put pressures on our supply chain.
“I am pleased that the long term relationships with our suppliers have ensured that we have been able to work through these issues with little disruption to our business.”