The share price of Barratt Developments (LSE: BDEV) — one of the largest residential property development companies in the UK — is currently down over 4%, despite the company releasing an Annual Report this morning that showed “significantly improved results”.
Pre-tax profit (before exceptional items) increased by almost 74% ,to £192.3m, and operating profit (also before operating exceptional items) for the full year up by 32.2%, to £252.7m, on group revenues that had risen 12.2% for the full year, to £2,606.2m. Completions (including joint ventures) were up over 6%, at 13,663 units, with an increase of 8% in the average selling price, which was up to £194,800.
The company also reported that it had significantly reduced its net debt, from £167.7m in 2012, to £25.9m, as of 30 June 2013.
Barratt’s board is proposing to pay a final dividend of 2.5p per share (no dividend was paid in 2012) and also announced that the company will be adopting a new “progressive dividend policy”, with a target of three times dividend cover for FY16 (this year’s dividend will be covered no less than six times).
Commenting on the results, Group Chief Executive Mark Clare said:
“These are significantly improved results and we have had a very strong start to the new financial year. We are seeing the housing market recovery starting to spread beyond London and the south east with a 29.4% increase in our average net private reservation rate across the Group. Our £2.6 billion commitment to land investment since 2009 puts us in a good position to capitalise on these market trends. We have already increased our completion volumes by over 20% in the past two years and expect to deliver around 45,000 new homes over the next three years.“
At the time of writing Barratt’s share price is 318.5p. That’s up 57% so far in 2013, and 93% on this time last year.
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> Jon doesn’t own shares in Barratt Developments.