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BDEV Barratt Developments Plc

475.60
0.20 (0.04%)
28 Mar 2024 - Closed
Delayed by 15 minutes
Share Name Share Symbol Market Type Share ISIN Share Description
Barratt Developments Plc LSE:BDEV London Ordinary Share GB0000811801 ORD 10P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  0.20 0.04% 475.60 476.20 476.40 480.10 475.60 478.50 12,207,598 16:35:22
Industry Sector Turnover Profit EPS - Basic PE Ratio Market Cap
Operative Builders 5.32B 530.3M 0.5441 8.75 4.64B

Barratt Developments PLC Half-year Report (4822X)

22/02/2017 7:00am

UK Regulatory


Barratt Developments (LSE:BDEV)
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TIDMBDEV

RNS Number : 4822X

Barratt Developments PLC

22 February 2017

22 February 2017

BARRATT DEVELOPMENTS PLC

Half Year results for the six month period ended 31 December 2016

Strong half year for the Group, well on track for the full year

 
                           Half year ended      Half year   Change 
                               31 December          ended 
                                      2016    31 December 
                                                     2015 
------------------------  ----------------  -------------  ------- 
 Total completions[1] 
  (plots)                            7,180          7,626   (5.8%) 
------------------------  ----------------  -------------  ------- 
 Revenue (GBPm)                    1,816.2        1,875.5   (3.2%) 
------------------------  ----------------  -------------  ------- 
 Gross margin[2]                                               2.1 
  (%)                                 20.7           18.6     ppts 
------------------------  ----------------  -------------  ------- 
 Profit from operations 
  (GBPm)                             324.0          301.8     7.4% 
------------------------  ----------------  -------------  ------- 
 Operating margin[3]                                           1.7 
  (%)                                 17.8           16.1     ppts 
------------------------  ----------------  -------------  ------- 
 Profit before tax 
  (GBPm)                             321.0          295.0     8.8% 
------------------------  ----------------  -------------  ------- 
 Interim dividend 
  per share (pence)                    7.3            6.0    21.7% 
------------------------  ----------------  -------------  ------- 
                                                               1.5 
 ROCE[4] (%)                          27.0           25.5     ppts 
------------------------  ----------------  -------------  ------- 
 Net Cash[5] (GBPm)                  196.7           24.2   712.8% 
------------------------  ----------------  -------------  ------- 
 

Highlights

-- Completions outside of London at highest level for nine years; London completions were in line with planned build programme, with significant uplift expected on wholly owned sites in the second half

   --      Half year profit before tax for the period of GBP321.0m, up 8.8% 
   --      ROCE increased by 1.5 ppts to 27.0%, reflecting our fast build and sell model 
   --      Maintained industry-leading customer satisfaction and build quality 

Current Trading

-- Completion growth expected in the second half with record total forward sales (including JV's) as at 19 February 2017 up 17.0% at GBP3,018.2m

   --      Net private reservations per active outlet per average week of 0.77 (2016: 0.76) 

Capital Return Plan

-- Improved and extended Capital Return Plan with ordinary dividend cover re-set at 2.5 times and special dividends of GBP175m in November 2017 and November 2018

Commenting on the results David Thomas, Chief Executive of Barratt Developments PLC said:

"As we reported in the January trading update, we have delivered another very strong first half performance, pre-tax profits were up nearly 9% and completions outside of London at their highest level in nine years.

Whilst we have increased volumes across the UK by 55% in the last five financial years, we have maintained our commitment to build quality and customer service and we are the only major housebuilder with the HBF 5 Star Customer Satisfaction Award.

With a record forward order book, strong consumer demand and a positive lending backdrop, we remain confident in our outlook for the full year. Our confidence in the business going forward is reflected in the improved and extended Capital Return Plan."

There will be an analyst and investor meeting at 9.00am today at Deutsche Bank, 1 Great Winchester Street, London, EC2N 2DB. The presentation will be broadcast live on the Barratt Developments corporate website, www.barrattdevelopments.co.uk, from 9.00am today. A playback facility will be available shortly after the presentation has finished.

A listen only function will also be available.

Dial in: 0800 358 6377

International dial in: +44 (0) 330 336 9105

Access code: 7318349

Further copies of this announcement can be downloaded from the Barratt Developments corporate website www.barrattdevelopments.co.uk or by request from the Company Secretary's office at: Barratt Developments PLC, Barratt House, Cartwright Way, Forest Business Park, Bardon Hill, Coalville, Leicestershire, LE67 1UF.

For further information please contact:

Barratt Developments PLC

 
 David Thomas, Chief Executive       020 7299 4896 
 
   Analyst/investor enquiries 
   Chloe Barnes, Investor 
   Relations                           020 7299 4895 
 
  Media enquiries 
   Tim Collins, Head of Corporate 
    Communications                    020 7299 4874 
   Derek Harris, Head of 
    Public Relations                   020 7299 4873 
 
   Brunswick 
   Jonathan Glass/Wendel 
   Verbeek                             020 7404 5959 
 

Chief Executive's Statement

Strong half year for the Group

The Group has delivered an excellent first half performance, with year on year improvements across our key financial metrics. The fundamentals of the market remain robust, with strong demand supported by good mortgage availability and Help to Buy. Government policy remains supportive and we welcome the recent publication of the housing white paper, which will allow a full debate on addressing the country's housing needs.

Profit before tax increased by 8.8% to GBP321.0m (2015: GBP295.0m) for the period, gross margin improved by 2.1 percentage points to 20.7% and operating margin improved by 1.7 percentage points to 17.8%. ROCE to 31 December 2016 increased by 1.5 percentage points to 27.0% benefiting from further reductions in legacy assets coupled with the business continuing to drive our fast build and sell model.

Completions (including JV's) outside of London are at the highest level for nine years at 6,813 (2015: 6,784). Total completions (including JV's) for the period were 7,180 (2015: 7,626). Our regional sales performance has been very strong particularly in Scotland, the North of England, the North West and the West Midlands. Completions in London were lower at 367 (2015: 842) in line with the Group's planned build programme. The Group expects a significant increase in completions on wholly owned sites in London in the second half.

In London, for homes with higher selling price points, we have supplemented our private sales with other sales agreements: a build and sale agreement on a bespoke development of 39 apartments for a total value of GBP47m, completion of a 54 apartment sale at our JV sites in Fulham and Aldgate and in January we exchanged on a build and sale agreement for 118 apartments at our Nine Elms JV site.

We continue to drive efficiencies across all key aspects of our business and improving our operating margin is a key priority for the Group.

Our focus remains on delivering high quality homes alongside good operational and financial performance and attractive shareholder returns.

Capital Return Plan

The Board recognises an ongoing dividend stream as an important component of total shareholder return, alongside capital appreciation. Given the significant operational and financial improvements the Group has made over the last few years, the Board believes it is now appropriate that the Group returns a higher proportion of earnings through its ordinary dividend. Therefore, going forward the Board proposes to re-set the level of ordinary dividend cover from 3 times to 2.5 times.

When market conditions allow, ordinary dividends will be supplemented with the payment of special dividends. The Board proposes to pay special dividends of GBP175m in November 2017 and November 2018.

For the four years to November 2018 total dividend payments are expected to be around GBP1.4bn based on current analyst estimates.

 
 Capital Return       Ordinary   Special dividend     Total        Total 
  Plan(A)             dividend               GBPm      GBPm        pence 
                          GBPm                                 per share 
------------------  ----------  -----------------  --------  ----------- 
 Year to November 
  2015                   150.6              100.0     250.6         25.1 
------------------  ----------  -----------------  --------  ----------- 
 Year to November 
  2016                   183.7              124.7     308.4         30.7 
------------------  ----------  -----------------  --------  ----------- 
 Year to November    220.5 (B, 
  2017                      C)              175.0     395.5      39.3(C) 
------------------  ----------  -----------------  --------  ----------- 
 Year to November    227.5 (B, 
  2018                      C)              175.0     402.5      40.0(C) 
------------------  ----------  -----------------  --------  ----------- 
 Total                   782.3              574.7   1,357.0        135.1 
------------------  ----------  -----------------  --------  ----------- 
 
   A.    All future ordinary and special dividends are subject to shareholder approval 

B. Based on Reuters consensus estimates of earnings per share of 54.7p for FY17 and 56.4p for FY18 as at 17 February 2017 and applying a two and a half times dividend cover in line with the announced policy

   C.     Based upon 31 December 2016 share capital of 1,006,940,985 shares for proposed payments 

In accordance with the new policy, the Board is pleased to announce an interim dividend of 7.3 pence per share (2016: 6.0 pence per share). This dividend represents one-third of the expected ordinary dividend for the financial year, based on the full year dividend being covered 2.5 times by current consensus earnings.

The interim dividend will be paid on Friday 19 May 2017 to all shareholders on the register on Friday 21 April 2017.

Committed to building more high quality homes

As the demand for housing remains strong, we have continued our disciplined investment to increase housing production, with GBP5.0bn approved for the purchase of over 94,000 plots of land over the last five years.

Additionally, over the last five years we have built more than 77,100 homes (including JV's) of which more than 13,800 were affordable homes (including JV's) sold to registered providers. We have invested in our employees, including 152 new apprentices, trainees, graduates and undergraduates in the period to further expand our skilled workforce, securing future delivery of supply of high quality homes.

Barratt's commitment to quality through excellence in design, build and industry-leading customer service allows us to differentiate ourselves from our competition. This commitment makes us the only national housebuilder with a HBF 5 Star Customer Satisfaction rating - awarded for the 7th consecutive year. The next largest housebuilder with a 5 Star rating builds fewer than 3,000 homes a year.

Last year we won more NHBC Pride in the Job Awards for site management than any other housebuilder for the 12th year in a row. We have also won more Building for Life Awards for excellence in design than any other housebuilder.

There remains a long term housing shortage of all tenures that can be addressed through additional supply in the right locations. We are committed to playing a leading role in addressing this issue.

Our financial results

The Group has delivered a strong first half performance supported by healthy market conditions driving robust consumer demand.

Overall our net private reservation rate was 0.68 (2015: 0.66) per active outlet per week in the half year period.

During the period, we operated from an average of 374 outlets (including JV's) (2015: 386). We have made good progress on new site openings, launching 83 new developments (including JV's) (2015: 63) in the half year. We expect to see average outlet numbers remain broadly flat for the full year when compared against the prior year.

Total completions (including JV's) were 7,180 units (2015: 7,626).

 
 Completions     2016    2015   Variance 
  (plots) 
-------------  ------  ------  --------- 
 Private        5,561   5,993     (7.2%) 
-------------  ------  ------  --------- 
 Affordable     1,221   1,114       9.6% 
-------------  ------  ------  --------- 
 JV               398     519    (23.3%) 
-------------  ------  ------  --------- 
 Total          7,180   7,626     (5.8%) 
-------------  ------  ------  --------- 
 

Total average selling price ('ASP') increased by 3.8% in the period to GBP263,800 (2015: GBP254,200). Private ASP increased by 5.4% in the period to GBP296,400 (2015: GBP281,100) benefiting from changes in mix as well as some underlying house price inflation.

Affordable housing ASP similarly increased in the period by 5.6% to GBP115,300 (2015: GBP109,200).

Our gross margin was 20.7%, up 2.1 percentage points in the period reflecting, amongst other things, new sites coming through at higher margins, mix changes and some underlying inflation. We delivered a gross profit of GBP375.2m (2015: GBP348.4m) in the half year.

Operating profit increased by GBP22.2m to GBP324.0m (2015: GBP301.8m). Operating margin was up by 1.7 percentage points to 17.8% (2015: 16.1%), reflecting our increased gross margin, offset by reduced levels of other income.

Net finance charges were broadly in line with the prior year at GBP29.4m (2015: GBP29.8m). We expect FY17[6] net finance cost to be around GBP65m, comprising GBP25m of cash and GBP40m of non-cash.

In the half year, the Group's share of JV profit was GBP26.3m (2015: GBP22.9m). We continue to expect to deliver JV profit of around GBP45m for FY17. Profit before tax increased by 8.8% to GBP321.0m (2015: GBP295.0m) and the Group recognised GBP61.4m of tax charges at an effective rate of 19.1% (2015: 19.0%). Basic earnings per share increased by 8.4% to 25.9 pence per share (2015: 23.9 pence per share).

Delivery of our strategic objectives

Our strategic objectives remain clear - maintain disciplined growth, deliver on our targets for key financial metrics (minimum ROCE of 25% and gross margin of 20% by the end of FY17) and continue to deliver attractive cash returns. We have made good progress against these objectives during the half year and remain focused to deliver in the second half.

Land and planning

The land market remains attractive from an investment perspective and we continue to secure excellent opportunities that meet or exceed our minimum hurdle rates of 20% gross margin and 25% site ROCE[7]. In the period we approved the purchase of GBP328.2m (2015: GBP558.7m) of land, equating to 39 sites (2015: 54 sites) and 5,262 plots (2015: 10,967 plots). Whilst this is lower than historical levels for the period, it reflects our caution immediately following the EU referendum. However, we continue to expect to approve c. 15,000 plots for purchase in FY17 as a whole and remain on track to achieve our targeted land bank of at least 4.5 years owned and controlled land by the year end.

The Group continues to maintain a balanced capital structure with land and long term work in progress funded by shareholders' funds and land creditors. Land creditors as at 31 December 2016 represented 34% (2015: 36%) of our owned land bank. We continue to secure attractive deferred payment terms on land and expect land creditors as a proportion of the owned land bank to be between 30% and 35% in the medium term.

We continue to target a regionally balanced land portfolio with a supply of owned land of at least 3.5 years and a further 1.0 year of controlled land. Our target is for a shorter than sector average land bank reflecting our focus on ROCE and our fast build and sell model. As at 31 December 2016 we achieved a 4.9 years land supply (excluding JV's) including 3.4 years owned land with both outline and detailed planning consents.

 
 Our land bank                     31 December       31 December 
                                          2016              2015 
----------------------------  ----------------  ---------------- 
 Owned and unconditional 
  land bank (plots)                     52,976            52,007 
----------------------------  ----------------  ---------------- 
 Conditionally contracted 
  land bank (plots)                     24,120            19,949 
----------------------------  ----------------  ---------------- 
 Total owned and controlled 
  land bank (plots)                     77,096            71,956 
----------------------------  ----------------  ---------------- 
 Number of years' supply[8]                4.9               4.5 
----------------------------  ----------------  ---------------- 
 JV's owned and controlled 
  land bank (plots)                      4,911             6,124 
----------------------------  ----------------  ---------------- 
 Strategic land (acres)                 11,400            11,500 
----------------------------  ----------------  ---------------- 
 Land bank carrying value          GBP2,801.3m       GBP2,860.1m 
----------------------------  ----------------  ---------------- 
 

The transformation of our land bank from lower margin land acquired pre 2009 to more recently acquired higher margin land is well progressed. As at 31 December 2016, 94% (2015: 92%) of our owned and controlled land is land acquired post 2009. On the 269 sites that we have acquired and completed since 2009 we have achieved an average gross margin of c. 21%, and an average site ROCE of c. 36%, demonstrating sustained delivery above our hurdle rates on this more recently acquired land. We continue to reduce the absolute value of our lower margin legacy assets. The total book value is down 42% to GBP315.8m as at 31 December 2016 (2015: GBP544.4m).

We remain well positioned to benefit from Government's continuing drive to release public land with our strong track record in partnering and JV's with the public sector, as well as our leading design and sustainability credentials. We are a member of the Homes and Communities Agency Delivery Partner Panel 2 (on all four regions) and the Greater London Authority London Development Panel.

Whilst maintaining a first class operational land bank, we remain focused on securing a longer term land pipeline through the acquisition of strategic land options. In the period ended 31 December 2016, 1,407 plots (2015: 1,542 plots) were transferred from strategic land to our owned land bank. During the half year period 24% of our completions (2015: 22%) were on strategically sourced land, and we expect around 24% of completions to be delivered from strategic land in FY17.

Reflecting our success with planning over the past 12 months we are very well positioned, with 97% of expected FY18 completions (2015: 97% of FY17 completions) having outline or full planning consent.

Improving operating margin

In 2016 the Group undertook a fundamental review of our Barratt and David Wilson housing ranges. The outcome was a reduction in the number of houses in the range which will increase standardisation, simplify construction and reduce build costs whilst maintaining our high standards of design and quality.

We have a carefully managed supply chain which has proved to be very resilient. We have effectively sourced the materials required to underpin our controlled volume growth and the cost of all of our centrally procured materials is now fixed until the end of FY17 with more than 40% fixed for FY18.

On labour, we continue to see some pressure on skilled labour supply with shortages remaining location and trade specific. However, whilst labour costs are still rising, the rate of increase is moderating.

We are also seeking to increase construction efficiency and reduce demand on labour through the use of alternative build options such as timber frames, large format block and light gauge steel frames.

We expect that overall build cost inflation for FY17 will be c. 2-3% and in FY18 we expect this to be c. 3-4%.

Maintaining appropriate financial structure

Net cash as at 31 December 2016 was GBP196.7m (2015: GBP24.2m). The cash outflow from our net cash position of GBP592.0m as at 30 June 2016 reflects normal seasonal trends, investment in land and work in progress to deliver the Group's build programme and the payment of GBP248.3m of dividends in November.

The Group continues to maintain an appropriate financial structure with shareholders' funds and land creditors funding the longer term requirements of the business and with term loans and bank debt funding shorter term requirements for working capital. In December we further strengthened working capital capacity by amending and extending our existing revolving credit facility, removing the GBP150m stepdown in facility size previously due in December 2017 and extending our GBP700m facility to December 2021.

We expect to operate an annual average net debt in the range of GBP150m to GBP200m and expect a net cash position at each financial year end. We anticipate net cash in the range of GBP350m to GBP400m as at 30 June 2017.

Our Strategic Priorities

Within our business we remain focused on our strategic priorities. Each of these priorities has a work plan to drive improvements across the business and they support a set of principles which underpin all of our operations.

Health and safety

Health and safety continues to be a non-negotiable number one priority for the Group and 'Keeping people safe' is a core business principle. We are driving our 'Five Steps to Safety' initiative, which is aimed at improving engagement with our workforce and challenging unsafe attitudes and behaviours. Skill shortages and volume demands continue to put pressure on our performance in this area but we continue to strive for improved standards and the prevention of injury and ill health. In the 12 months to 31 December 2016 our reportable injury incidence rate was 369 (2015: 331), for FY16 the rate was 385 per 100,000 workers.

Customer first

We place customers at the heart of everything we do with their satisfaction being a key performance indicator at all levels of management.

We are the only major national housebuilder to be awarded a HBF 5 Star status rating for seven consecutive years, with over 90% of customers being prepared to recommend us to their friends and family.

We are continuing to improve the quality and efficiency of the ways in which we support customers through the sales process. During the half year period we have launched a range of construction and customer service initiatives to further improve the high quality of our homes. We have also developed a joint training course with the NHBC and delivered this to all Customer Care employees to increase their knowledge and capability.

We have invested in a significant piece of research to better understand customer expectations and needs throughout the customer journey and this insight is now being used to refine our policies and procedures and also to inform the development of our digital capability.

Great places

A key focus of the business continues to be securing the right land in the right place to enable the building of outstanding places to live. Our success in buying land is based on the extensive local knowledge or our land teams and the building of strong relationships with landowners combined with detailed assessments of local market conditions.

During the period we continued to make progress in terms of securing the right operational land, successfully delivering completions from public sector land, and increased investment in longer term strategic sites.

We continue to focus upon design and all of our developments are reviewed against our 'Great places' design standard at the pre-application stage. 'Great places' enables us to meet Building For Life 12, the industry standard for the design of new housing developments.

Leading construction

We put customer satisfaction at the heart of our construction processes with a focus upon getting it right first time which also drives operating efficiencies in our build process and reduces remedial costs.

Our site managers continue to lead the industry. In 2016, 80 NHBC Pride in the Job awards were won on our sites. This was the 12th year in succession that our site managers and the Group have won more of these awards than any other housebuilder.

We are implementing a number of key initiatives in terms of improving efficiency. In addition to building around 1,300 homes during FY17 using timber frames we have completed trials of light gauge steel frames and large format block which give the business additional options with similar benefits as timber frame ensuring we are future proofing our business. We continue to trial various offsite technologies and innovative products and we are investing in research into smart technologies.

Investing in our people

We are committed to the development of our people in order to drive our success. A shortage of skilled workers means that attracting and retaining the best people is an important priority for the business. We aim to have a diverse and inclusive workforce that reflects the communities in which we operate, delivering excellence for our customers by drawing on a broad range of talents, skills and experience.

We are committed to investing in the future and continue to develop our 'Future Talent' strategy, recruiting graduates, apprentices and paid interns into our business.

We also continue to support the wider industry focus on addressing the skills shortage with the HBF, the Construction Industry Training Board and many schools and universities.

Board changes

Mark Rolfe, after more than eight years of distinguished service, stepped down from the Board on 15 November 2016. Jock Lennox, who joined the Board on 1 July 2016, took over as Chair of the Audit Committee and Richard Akers, who joined the Board on 2 April 2012, took over as Senior Independent Director.

As announced on 19 January 2017, Neil Cooper, Chief Financial Officer, left the Group by mutual agreement, effective immediately. The Board have launched a search for a new Chief Financial Officer and a further announcement will be made in due course. David Thomas, who previously held the role of Barratt CFO for six years until July 2015, has reassumed temporary responsibility for the finance function supported by both Philip Schumacher and John Flynn, the Group Financial Controller and Housebuilding Financial Controller respectively. Deputy CEO and Chief Operating Officer, Steven Boyes, will continue to support David with his ongoing executive responsibilities.

The Nomination Committee, as part of its annual review of committee memberships, assessed the composition of Nomination Committees within the FTSE 100. In the majority the Chief Executive was not a member of the Committee and consequently David Thomas, Chief Executive, agreed to step down as a member of the Nomination Committee effective from 21 February 2017. Going forward, the Nomination Committee will comprise of the Chairman and each of the Non-Executive Directors.

Current trading and outlook

The sales performance across the Group in the second half to date has been strong, with net private reservations per average week of 290 (2016: 280), resulting in average net private reservations per active outlet per average week of 0.77 (2016: 0.76).

Our total forward sales (including JV's) as at 19 February 2017 were up 17.0% on the strong prior year at a record GBP3,018.2m.

 
                 19 February 2017     21 February 2016   Variance 
                                                           (GBPm) 
------------  -------------------  -------------------  --------- 
                    GBPm    Plots        GBPm    Plots          % 
------------  ----------  -------  ----------  -------  --------- 
 Private         1,945.8    5,579     1,564.1    5,169       24.4 
------------  ----------  -------  ----------  -------  --------- 
 Affordable        769.8    6,187       523.4    4,448       47.1 
------------  ----------  -------  ----------  -------  --------- 
 Wholly 
  owned          2,715.6   11,766     2,087.5    9,617       30.1 
------------  ----------  -------  ----------  -------  --------- 
 JV                302.6      965       492.0    1,369     (38.5) 
------------  ----------  -------  ----------  -------  --------- 
 Total           3,018.2   12,731     2,579.5   10,986       17.0 
------------  ----------  -------  ----------  -------  --------- 
 

The Group is confident it will deliver on its full year volume guidance. We expect to achieve modest volume growth in wholly owned completions and deliver c. 700 JV completions in FY17, helped by a strong delivery in London in the second half.

We are also on track to achieve our target ROCE of 25%, and remain focused on the delivery of a 20% gross margin for FY17, notwithstanding that the high-end London market presents some headwinds in this regard.

We remain confident in our outlook for the full year as we continue to execute our strategies aimed at ensuring disciplined growth, improving key financial metrics through a focus on efficiency and the continued delivery of attractive cash returns.

Note on forward looking statements

The Half Year results contain certain forward-looking statements about the future outlook for the Group. Although the Directors believe that these statements are based on reasonable assumptions, any such statements should be treated with caution as the future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.

This announcement contains inside information.

David Thomas

Chief Executive

21 February 2017

Principal risks and uncertainties

The Group's financial and operational performance and reputation is subject to a number of potential risks and uncertainties, which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The Directors do not consider that the process of risk management and the principal risks and uncertainties to have changed since the publication of the Annual Report and Accounts for the year ended 30 June 2016.

Economic environment, including housing demand and mortgage availability

Changes in the UK and European macroeconomic environments, including but not limited to unemployment, flat or negative economic growth, buyer confidence, availability of mortgage finance particularly for higher loan to values including government backed schemes, interest rates, competitor pricing, falls in house prices or land values, may lead to a fall in the demand or price achieved for houses, which in turn could result in impairments of the Group's inventories, goodwill and intangible assets.

Land purchasing

The ability to secure sufficient consented land and strategic land options at appropriate cost and quality to provide profitable growth.

Liquidity

Unavailability of sufficient borrowing facilities to enable the servicing of liabilities (including pension funding) and the inability to refinance facilities as they fall due, obtain surety bonds, or comply with borrowing covenants. Furthermore, there are risks from management of working capital such as conditional contracts, build costs, joint ventures and the cash flows related to them.

Attracting and retaining high calibre employees

Inability to recruit and/or retain employees with appropriate skill sets or sufficient numbers of such employees.

Availability of raw materials, subcontractors and suppliers

Shortages or increased costs of materials and skilled labour, the failure of a key supplier or the inability to secure supplies upon appropriate credit terms could increase costs and delay construction.

Government regulation and planning policy

Inability to adhere to the increasingly stringent and complex regulatory environment, including planning and technical requirements affecting the housing market and regulatory requirements more generally.

Construction and new technologies

Failure to identify and achieve key construction milestones, due to factors including the impact of adverse weather conditions, the failure to identify cost overruns promptly, design and construction defects, and exposure to environmental liabilities, which could delay construction, increase costs, reduce selling prices and result in litigation and uninsured losses. There are also risks associated with climate change and the use of new technology in the build process e.g. materials related to carbon reduction.

Joint ventures and consortia

Large development projects, some of which involve joint ventures or consortia arrangements and/or commercial developments, are complex and capital intensive and changes may negatively impact upon cash flows or returns.

Safety, health and environmental

Health and safety or environmental breaches can result in injuries to employees, sub-contractors and site visitors, delays in construction or increased costs, reputational damage, criminal prosecution and civil litigation.

Information technology ('IT')

Failure of the Group's IT systems (whether due to cyber-attacks or other causes) in particular those relating to surveying and valuation, could adversely impact the performance of the Group.

Further details of the Group's principal risks and mitigation of the risks outlined above can be found on pages 41 to 45 of the Annual Report and Accounts for the year ended 30 June 2016, which is available at www.barrattdevelopments.co.uk.

Condensed Consolidated Income Statement

for the half year ended 31 December 2016 (unaudited)

 
                                        Half year   Half year 
                                            ended    ended 31        Year ended 
                                      31 December    December           30 June 
                                             2016        2015    2016 (audited) 
 Continuing operations       Notes           GBPm        GBPm              GBPm 
--------------------------  ------  -------------  ----------  ---------------- 
 Revenue                       2.1        1,816.2     1,875.5           4,235.2 
==========================  ======  =============  ==========  ================ 
 Cost of sales                          (1,441.0)   (1,527.1)         (3,434.8) 
--------------------------  ------  -------------  ----------  ---------------- 
 Gross profit                               375.2       348.4             800.4 
==========================  ======  =============  ==========  ================ 
 Administrative expenses                   (51.2)      (46.6)           (132.0) 
--------------------------  ------  -------------  ----------  ---------------- 
 Profit from operations        2.1          324.0       301.8             668.4 
==========================  ======  =============  ==========  ================ 
 Finance income                5.2            1.8         3.3               5.9 
==========================  ======  =============  ==========  ================ 
 Finance costs                 5.2         (31.2)      (33.1)            (64.1) 
--------------------------  ------  -------------  ----------  ---------------- 
 Net finance costs             5.2         (29.4)      (29.8)            (58.2) 
==========================  ======  =============  ==========  ================ 
 Share of post-tax 
  profit from joint 
  ventures                                   26.3        22.9              71.9 
==========================  ======  =============  ==========  ================ 
 Share of post-tax 
  profit from associates                      0.1         0.1               0.2 
--------------------------  ------  -------------  ----------  ---------------- 
 Profit before tax                          321.0       295.0             682.3 
==========================  ======  =============  ==========  ================ 
 Tax                           2.4         (61.4)      (56.1)           (132.0) 
--------------------------  ------  -------------  ----------  ---------------- 
 Profit for the period                      259.6       238.9             550.3 
--------------------------  ------  -------------  ----------  ---------------- 
 Profit for the period 
  attributable to 
  the owners of the 
  Company                                   259.7       238.6             550.3 
--------------------------  ------  -------------  ----------  ---------------- 
 (Loss)/profit for 
  the period attributable 
  to non-controlling 
  interests                                 (0.1)         0.3                 - 
--------------------------  ------  -------------  ----------  ---------------- 
 Earnings per share 
  from continuing 
  operations 
==========================  ======  =============  ==========  ================ 
 Basic                         2.2          25.9p       23.9p             55.1p 
--------------------------  ------  -------------  ----------  ---------------- 
 Diluted                       2.2          25.6p       23.6p             54.3p 
--------------------------  ------  -------------  ----------  ---------------- 
 

The notes in sections 1 to 6 form an integral part of the condensed consolidated half yearly financial statements.

Condensed Consolidated Statement of Comprehensive Income

for the half year ended 31 December 2016 (unaudited)

 
                                                                     Half year         Year 
                                                                         ended        ended 
                                                      Half year    31 December      30 June 
                                                          ended           2015         2016 
                                                    31 December 
                                                           2016                   (audited) 
                                          Notes            GBPm           GBPm         GBPm 
---------------------------------------  ------  --------------  -------------  ----------- 
 Profit for the period                                    259.6          238.9        550.3 
---------------------------------------  ------  --------------  -------------  ----------- 
 Other comprehensive (expense)/income: 
=======================================  ======  ==============  =============  =========== 
 Items that will not be reclassified 
  to profit or loss 
=======================================  ======  ==============  =============  =========== 
 Actuarial (loss)/gain on 
  defined benefit pension scheme                         (23.3)            7.5        (9.0) 
=======================================  ======  ==============  =============  =========== 
 Fair value adjustment on 
  available for sale financial 
  assets                                                      -            0.5          0.5 
=======================================  ======  ==============  =============  =========== 
 Tax credit/(charge) relating 
  to items not reclassified                                 4.2          (1.6)          1.7 
---------------------------------------  ------  --------------  -------------  ----------- 
 Total items that will not 
  be reclassified to profit 
  or loss                                                (19.1)            6.4        (6.8) 
---------------------------------------  ------  --------------  -------------  ----------- 
 Items that may be reclassified 
  subsequently to profit or 
  loss 
=======================================  ======  ==============  =============  =========== 
 Amounts deferred in respect 
  of effective cash flow hedges                             5.5            2.3          6.3 
=======================================  ======  ==============  =============  =========== 
 Amounts reclassified to the 
  Income Statement in respect 
  of hedged cash flows                      5.2           (1.5)            0.2        (1.1) 
=======================================  ======  ==============  =============  =========== 
 Tax charge relating to items 
  that may be reclassified                                (0.9)          (0.7)        (1.2) 
---------------------------------------  ------  --------------  -------------  ----------- 
 Total items that may be reclassified 
  subsequently to profit or 
  loss                                                      3.1            1.8          4.0 
---------------------------------------  ------  --------------  -------------  ----------- 
 Total comprehensive income 
  recognised for the period                               243.6          247.1        547.5 
---------------------------------------  ------  --------------  -------------  ----------- 
 Total comprehensive income 
  recognised for the period 
  attributable to the owners 
  of the Company                                          243.7          246.8        547.5 
---------------------------------------  ------  --------------  -------------  ----------- 
 Total comprehensive (expense)/income 
  recognised for the period 
  attributable to non-controlling 
  interests                                               (0.1)            0.3            - 
---------------------------------------  ------  --------------  -------------  ----------- 
 

The notes in sections 1 to 6 form an integral part of the condensed consolidated half yearly financial statements.

Condensed Consolidated Statement of Changes in Shareholders' Equity

at 31 December 2016 (unaudited)

 
                                                                                                  Total          Non- 
                       Share     Share    Merger   Hedging      Own   Share-based   Retained   retained   controlling     Total 
                     capital   premium   reserve   reserve   shares      payments   earnings   earnings     interests    equity 
                        GBPm      GBPm      GBPm      GBPm     GBPm          GBPm       GBPm       GBPm          GBPm      GBPm 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 At 1 July 
  2015 (audited)        99.5     219.1   1,109.0    (13.7)    (2.7)          34.0    2,257.2    2,288.5           8.9   3,711.3 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 Profit for 
  the period               -         -         -         -        -             -      238.6      238.6           0.3     238.9 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Amounts deferred 
  in respect 
  of effective 
  cash flow 
  hedges                   -         -         -       2.3        -             -          -          -             -       2.3 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Amounts 
  reclassified 
  to the Income 
  Statement 
  in respect 
  of hedged 
  cash flows               -         -         -       0.2        -             -          -          -             -       0.2 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Fair value 
  adjustments 
  on available 
  for sale 
  financial 
  assets                   -         -         -         -        -             -        0.5        0.5             -       0.5 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Actuarial 
  gains on pension 
  scheme                   -         -         -         -        -             -        7.5        7.5             -       7.5 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Tax on items 
  above taken 
  directly to 
  equity                   -         -         -     (0.7)        -             -      (1.6)      (1.6)             -     (2.3) 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 Total 
  comprehensive 
  income 
  recognised 
  for the period 
  ended 31 
  December 
  2015                     -         -         -       1.8        -             -      245.0      245.0           0.3     247.1 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Dividend payments         -         -         -         -        -             -    (203.1)    (203.1)             -   (203.1) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Issue of shares         0.7       1.0         -         -        -             -      (0.6)      (0.6)             -       1.1 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Share-based 
  payments                 -         -         -         -        -           6.2          -        6.2             -       6.2 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Net purchase 
  of own shares            -         -         -         -    (0.9)             -          -      (0.9)             -     (0.9) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Transfer of 
  share-based 
  payments charge 
  for 
  exercised/lapsed 
  options                  -         -         -         -        -        (10.7)       10.7          -             -         - 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Tax on 
  share-based 
  payments                 -         -         -         -        -         (4.7)        6.7        2.0             -       2.0 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 At 31 December 
  2015                 100.2     220.1   1,109.0    (11.9)    (3.6)          24.8    2,315.9    2,337.1           9.2   3,763.7 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 Profit for 
  the period               -         -         -         -        -             -      311.7      311.7         (0.3)     311.4 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Amounts deferred 
  in respect 
  of effective 
  cash flow 
  hedges                   -         -         -       4.0        -             -          -          -             -       4.0 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Amounts 
  reclassified 
  to the Income 
  Statement 
  in respect 
  of hedged 
  cash flows               -         -         -     (1.3)        -             -          -          -             -     (1.3) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Actuarial 
  losses on 
  pension scheme           -         -         -         -        -             -     (16.5)     (16.5)             -    (16.5) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Tax on items 
  above taken 
  directly to 
  equity                   -         -         -     (0.5)        -             -        3.3        3.3             -       2.8 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 Total 
  comprehensive 
  income 
  recognised 
  for the period 
  ended 30 June 
  2016                     -         -         -       2.2        -             -      298.5      298.5         (0.3)     300.4 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Dividend payments         -         -         -         -        -             -     (60.1)     (60.1)             -    (60.1) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Issue of shares         0.2       2.6         -         -        -             -          -          -             -       2.8 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Share-based 
  payments                 -         -         -         -        -           6.6          -        6.6             -       6.6 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Disposal of 
  own shares               -         -         -         -      0.1             -          -        0.1             -       0.1 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Transfer of 
  share-based 
  payments charge 
  for 
  exercised/lapsed 
  options                  -         -         -         -        -         (0.1)        0.1          -             -         - 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Tax on 
  share-based 
  payments                 -         -         -         -        -         (3.8)        0.5      (3.3)             -     (3.3) 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 At 30 June 
  2016 (audited)       100.4     222.7   1,109.0     (9.7)    (3.5)          27.5    2,554.9    2,578.9           8.9   4,010.2 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 Profit for 
  the period               -         -         -         -        -             -      259.7      259.7         (0.1)     259.6 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Amounts deferred 
  in respect 
  of effective 
  cash flow 
  hedges                   -         -         -       5.5        -             -          -          -             -       5.5 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Amounts 
  reclassified 
  to the Income 
  Statement 
  in respect 
  of hedged 
  cash flows               -         -         -     (1.5)        -             -          -          -             -     (1.5) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Actuarial 
  losses on 
  pension scheme           -         -         -         -        -             -     (23.3)     (23.3)             -    (23.3) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Tax on items 
  above taken 
  directly to 
  equity                   -         -         -     (0.9)        -             -        4.2        4.2             -       3.3 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 Total 
  comprehensive 
  income 
  recognised 
  for the period 
  ended 31 
  December 
  2016                     -         -         -       3.1        -             -      240.6      240.6         (0.1)     243.6 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Dividend payments         -         -         -         -        -             -    (248.3)    (248.3)             -   (248.3) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Issue of shares         0.3       0.9         -         -        -             -          -          -             -       1.2 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Share-based 
  payments                 -         -         -         -        -           6.1          -        6.1             -       6.1 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Purchase of 
  own shares               -         -         -         -    (3.6)             -          -      (3.6)             -     (3.6) 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Transfers 
  in respect 
  of 
  exercised/lapsed 
  options                  -         -         -         -      5.1        (13.9)        8.8          -             -         - 
==================  ========  ========  ========  ========  =======  ============  =========  =========  ============  ======== 
 Tax on 
  share-based 
  payments                 -         -         -         -        -           1.1          -        1.1             -       1.1 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 At 31 December 
  2016                 100.7     223.6   1,109.0     (6.6)    (2.0)          20.8    2,556.0    2,574.8           8.8   4,010.3 
------------------  --------  --------  --------  --------  -------  ------------  ---------  ---------  ------------  -------- 
 

The notes in sections 1 to 6 form an integral part of the condensed consolidated half yearly financial statements.

Condensed Consolidated Balance Sheet

at 31 December 2016 (unaudited)

 
                                                          31 December 2016   31 December 2015   30 June 2016 (audited) 
                                                                                                                  GBPm 
                                                  Notes               GBPm               GBPm 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Assets 
===============================================  ======  =================  =================  ======================= 
 Non-current assets 
===============================================  ======  =================  =================  ======================= 
 Other intangible assets                                             100.0              100.0                    100.0 
===============================================  ======  =================  =================  ======================= 
 Goodwill                                                            792.2              792.2                    792.2 
===============================================  ======  =================  =================  ======================= 
 Property, plant and equipment                                         9.5               10.0                      9.6 
===============================================  ======  =================  =================  ======================= 
 
 Investments in joint ventures and associates                        254.6              223.3                    255.9 
===============================================  ======  =================  =================  ======================= 
 Retirement benefit assets                                               -               19.6                      8.1 
===============================================  ======  =================  =================  ======================= 
 Available for sale financial assets                                   3.7                3.0                      3.8 
===============================================  ======  =================  =================  ======================= 
 Trade and other receivables                                           2.3                2.4                      1.6 
===============================================  ======  =================  =================  ======================= 
 Derivative financial instruments - swaps           5.1                  -                5.5                     11.8 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
                                                                   1,162.3            1,156.0                  1,183.0 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Current assets 
===============================================  ======  =================  =================  ======================= 
 Inventories                                        3.1            4,539.4            4,355.0                  4,326.6 
===============================================  ======  =================  =================  ======================= 
 Available for sale financial assets                                   0.6               89.3                      0.8 
===============================================  ======  =================  =================  ======================= 
 Trade and other receivables                                          94.7               95.2                    149.6 
===============================================  ======  =================  =================  ======================= 
 Cash and cash equivalents                          5.1              361.7              195.6                    758.0 
===============================================  ======  =================  =================  ======================= 
 Derivative financial instruments - swaps           5.1               16.9                  -                        - 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
                                                                   5,013.3            4,735.1                  5,235.0 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Total assets                                                      6,175.6            5,891.1                  6,418.0 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Liabilities 
===============================================  ======  =================  =================  ======================= 
 Non-current liabilities 
===============================================  ======  =================  =================  ======================= 
 Loans and borrowings                               5.1            (110.6)            (170.0)                  (171.5) 
===============================================  ======  =================  =================  ======================= 
 Trade and other payables                                          (563.9)            (634.7)                  (629.9) 
===============================================  ======  =================  =================  ======================= 
 Retirement benefit obligations                                     (10.2)                  -                        - 
===============================================  ======  =================  =================  ======================= 
 Deferred tax liabilities                                            (6.2)              (6.6)                   (10.5) 
===============================================  ======  =================  =================  ======================= 
 Derivative financial instruments - swaps           5.1              (6.5)             (14.3)                    (7.5) 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
                                                                   (697.4)            (825.6)                  (819.4) 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Current liabilities 
===============================================  ======  =================  =================  ======================= 
 Loans and borrowings                               5.1             (70.8)              (7.4)                    (6.0) 
===============================================  ======  =================  =================  ======================= 
 Trade and other payables                                        (1,331.9)          (1,241.2)                (1,513.5) 
===============================================  ======  =================  =================  ======================= 
 Derivative financial instruments - swaps           5.1              (2.5)                  -                    (5.6) 
===============================================  ======  =================  =================  ======================= 
 Current tax liabilities                                            (62.7)             (53.2)                   (63.3) 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
                                                                 (1,467.9)          (1,301.8)                (1,588.4) 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Total liabilities                                               (2,165.3)          (2,127.4)                (2,407.8) 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Net assets                                                        4,010.3            3,763.7                  4,010.2 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Equity 
===============================================  ======  =================  =================  ======================= 
 Share capital                                      5.4              100.7              100.2                    100.4 
===============================================  ======  =================  =================  ======================= 
 Share premium                                                       223.6              220.1                    222.7 
===============================================  ======  =================  =================  ======================= 
 Merger reserve                                                    1,109.0            1,109.0                  1,109.0 
===============================================  ======  =================  =================  ======================= 
 Hedging reserve                                                     (6.6)             (11.9)                    (9.7) 
===============================================  ======  =================  =================  ======================= 
 Retained earnings                                                 2,574.8            2,337.1                  2,578.9 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Equity attributable to the owners of the 
  Company                                                          4,001.5            3,754.5                  4,001.3 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Non-controlling interests                                             8.8                9.2                      8.9 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 Total equity                                                      4,010.3            3,763.7                  4,010.2 
-----------------------------------------------  ------  -----------------  -----------------  ----------------------- 
 

The notes in sections 1 to 6 form an integral part of the condensed consolidated half yearly financial statements.

Condensed Consolidated Cash Flow Statement

for the half year ended 31 December 2016 (unaudited)

 
                                                                        Year ended 
                                             Half year 
                                                 ended                     30 June 
                                                            Half year 
                                                                ended 
                                           31 December    31 December 
                                                  2016           2015         2016 
                                                                         (audited) 
                                  Notes           GBPm           GBPm         GBPm 
-------------------------------  ------  -------------  -------------  ----------- 
 
 Profit from operations                          324.0          301.8        668.4 
-------------------------------  ------  -------------  -------------  ----------- 
 Depreciation                                      2.0            1.8          4.5 
===============================  ======  =============  =============  =========== 
 Loss on disposal of fixed 
  assets                                             -              -          0.2 
===============================  ======  =============  =============  =========== 
 Impairment of inventories                         5.6            0.9          8.6 
===============================  ======  =============  =============  =========== 
 (Profit on redemption)/net 
  impairment of available 
  for sale financial assets                      (1.3)            3.0          2.1 
===============================  ======  =============  =============  =========== 
 Share-based payments charge                       6.1            6.2         12.8 
===============================  ======  =============  =============  =========== 
 Imputed interest on deferred 
  term payables*                    5.2         (16.5)         (18.7)       (34.5) 
===============================  ======  =============  =============  =========== 
 Imputed interest on available 
  for sale financial assets 
  and interest free loans*          5.2              -            1.8          2.9 
===============================  ======  =============  =============  =========== 
 Amortisation of facility 
  fees                              5.2          (1.5)          (1.5)        (2.9) 
===============================  ======  =============  =============  =========== 
 Finance income related 
  to employee benefits              5.2            0.2            0.2          0.4 
-------------------------------  ------  -------------  -------------  ----------- 
 Total non-cash items                            (5.4)          (6.3)        (5.9) 
-------------------------------  ------  -------------  -------------  ----------- 
 Increase in inventories                       (218.4)        (182.3)      (161.6) 
===============================  ======  =============  =============  =========== 
 Decrease/(increase) in 
  trade and other receivables                     49.2           58.2        (0.9) 
===============================  ======  =============  =============  =========== 
 (Decrease)/increase in 
  trade and other payables                     (247.4)         (83.2)        188.5 
===============================  ======  =============  =============  =========== 
 Decrease in available 
  for sale financial assets                        1.6           12.2        100.8 
-------------------------------  ------  -------------  -------------  ----------- 
 Total movements in working 
  capital                                      (415.0)        (195.1)        126.8 
-------------------------------  ------  -------------  -------------  ----------- 
 Interest paid                                  (13.7)         (10.0)       (26.8) 
===============================  ======  =============  =============  =========== 
 Tax paid                                       (61.9)         (47.2)      (109.6) 
-------------------------------  ------  -------------  -------------  ----------- 
 Net cash (outflow)/inflow 
  from operating activities                    (172.0)           43.2        652.9 
-------------------------------  ------  -------------  -------------  ----------- 
 Investing activities: 
 Purchase of property, 
  plant and equipment                            (1.9)          (3.6)        (6.1) 
===============================  ======  =============  =============  =========== 
 Increase in investments 
  accounted for using the 
  equity method                                  (5.8)         (18.6)       (11.9) 
===============================  ======  =============  =============  =========== 
 Dividends received from 
  investments accounted 
  for using the equity method                     33.5           18.3         28.1 
===============================  ======  =============  =============  =========== 
 Interest received                                 1.6            1.3          2.6 
===============================  ======  =============  =============  =========== 
 Net cash inflow/(outflow) 
  from investing activities                       27.4          (2.6)         12.7 
-------------------------------  ------  -------------  -------------  ----------- 
 Financing activities: 
 Dividends paid                     2.3        (248.3)        (203.1)      (263.2) 
===============================  ======  =============  =============  =========== 
 Purchase of own shares                          (3.6)          (0.9)        (0.8) 
===============================  ======  =============  =============  =========== 
 Proceeds from issue of 
  share capital                                    1.2            1.1          3.9 
===============================  ======  =============  =============  =========== 
 Loan repayments                                 (1.0)          (2.5)        (7.9) 
-------------------------------  ------  -------------  -------------  ----------- 
 Net cash outflow from 
  financing activities                         (251.7)        (205.4)      (268.0) 
-------------------------------  ------  -------------  -------------  ----------- 
 Net (decrease)/increase 
  in cash and cash equivalents                 (396.3)        (164.8)        397.6 
===============================  ======  =============  =============  =========== 
 Cash and cash equivalents 
  at the beginning of the 
  period                                         758.0          360.4        360.4 
-------------------------------  ------  -------------  -------------  ----------- 
 Cash and cash equivalents 
  at the end of the period          5.1          361.7          195.6        758.0 
-------------------------------  ------  -------------  -------------  ----------- 
 

The notes in sections 1 to 6 form an integral part of the condensed consolidated half yearly financial statements.

* The balance sheet movements in land, available for sale financial assets and certain interest free loans include non-cash movements due to imputed interest. Imputed interest is therefore included within non-cash items in the statement above.

Notes to the Condensed Consolidated Half Yearly Financial Statements

for the half year ended 31 December 2016 (unaudited)

 
 Section 1 - Basis of preparation 
--------------------------------- 
 
   1.1    Cautionary statement 

The Chief Executive's statement contained in this Half Yearly Financial Report, including the principal risks and uncertainties, has been prepared by the Directors in good faith based on the information available to them up to the time of their approval of this report solely for the Company's shareholders as a body, so as to assist them in assessing the Group's strategies and the potential for those strategies to succeed and accordingly should not be relied on by any other party or for any other purpose and the Company hereby disclaims any liability to any such other party or for reliance on such information for any such other purpose.

This Half Yearly Financial Report has been prepared in respect of the Group as a whole and accordingly matters identified as being significant or material are so identified in the context of Barratt Developments PLC and its subsidiary undertakings taken as a whole.

   1.2    Basis of preparation 

The financial information for the year ended 30 June 2016 is an extract from the published Annual Report and Accounts for that year and does not constitute statutory accounts as defined in s434 of the Companies Act 2006. A copy of the statutory accounts for the year ended 30 June 2016, prepared under International Financial Reporting Standards ('IFRS'), on which the auditors gave an unmodified opinion, which did not draw attention to any matters by way of emphasis and did not contain a statement made under either s498 (2) or (3) of the Companies Act 2006, has been filed with the Registrar of Companies.

   1.3    Going concern 

In determining the appropriate basis of preparation of the condensed consolidated half yearly financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future.

The Group's business activities, together with factors that are likely to affect its future development, financial performance and financial position are set out in the Chief Executive's statement. The material financial and operational risks and uncertainties that impact upon the Group's performance are outlined in the principal risks and uncertainties section of this Half Yearly Financial Report and their relevance to the Group's strategy and mitigation of those risks together with the financial risks including liquidity risk, market risk, credit risk and capital risk are outlined respectively on pages 41 to 45 and on pages 142 to 145 of the Group's Annual Report and Accounts for the year ended 30 June 2016, which is available at www.barrattdevelopments.co.uk.

The financial performance of the Group is dependent upon the wider economic environment in which the Group operates. As explained in the principal risks and uncertainties, factors that particularly impact upon the performance of the Group include changes in the macroeconomic environment including buyer confidence, availability of mortgage finance for the Group's customers and interest rates. In forming their conclusion, the Directors have considered all currently available information about the potential future outcomes of events and changes in conditions that are reasonably possible at the time of making this statement. In doing this they have concluded that no material uncertainties exist.

The Group has total committed facilities and private placement notes of GBP848.3m. The maturity of these facilities range from August 2017 to December 2021, with the GBP700.0m revolving credit facility maturing in December 2021. The committed facilities and private placement notes provide sufficient headroom above our current forecast debt requirements. In addition to these committed borrowing facilities the Group has secured GBP22.4m of financing from the Government's 'Get Britain Building' and 'Growing Places Fund' schemes. These funds are repayable between 31 March 2017 and 31 March 2018. Further committed loan facilities of GBP4.6m are available under agreements with local government which are due to be repaid between March 2018 and March 2020.

Accordingly, after making enquiries and having considered forecasts and appropriate sensitivities, the Directors have formed a judgement, at the time of approving the condensed consolidated half yearly financial statements, that it is appropriate to adopt the going concern basis of accounting for the foreseeable future, being at least twelve months from the date of these condensed consolidated half yearly financial statements. For this reason, they continue to adopt the going concern basis in preparing the condensed consolidated half yearly financial statements.

   1.4    Accounting policies 

The unaudited condensed consolidated half yearly financial statements have been prepared using accounting policies consistent with IFRS as adopted by the European Union ('EU') and in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU.

The unaudited condensed consolidated half yearly financial statements have been prepared using accounting policies and methods of computation consistent with those applied in the preparation of the Group's Annual Report and Accounts for the year ended 30 June 2016.

New standards, amendments and interpretations that have been published and are therefore mandatory for the Group's accounting periods beginning on or after 1 July 2016 and later periods are disclosed on page 116 of the Annual Report and Accounts for the year ended 30 June 2016. None of the amendments and interpretations adopted in the period have had any impact on the profit and loss and net assets or required any additional disclosure in these condensed consolidated half yearly financial statements.

 
 Section 2 - Results for the year and utilisation 
  of profits 
------------------------------------------------- 
 
   2.1    Segmental analysis 

The Group consists of two separate segments for management reporting and control purposes, being housebuilding and commercial development. The Group presents its segmental information on the basis of these operating segments. As the Group operates in a single geographic market, Great Britain, no geographical segmentation is provided.

 
                                   Half year ended                    Half year ended                      Year ended 31 
                                  31 December 2016                   31 December 2015                June 2016 (audited) 
                    House-    Commercial               House-    Commercial               House-    Commercial 
                  building   development     Total   building   development     Total   building   development     Total 
                      GBPm          GBPm      GBPm       GBPm          GBPm      GBPm       GBPm          GBPm      GBPm 
---------------  ---------  ------------  --------  ---------  ------------  --------  ---------  ------------  -------- 
 Consolidated 
  Income 
  Statement: 
 Revenue           1,789.8          26.4   1,816.2    1,824.8          50.7   1,875.5    4,153.3          81.9   4,235.2 
---------------  ---------  ------------  --------  ---------  ------------  --------  ---------  ------------  -------- 
 Profit 
  from 
  operations         318.9           5.1     324.0      296.3           5.5     301.8      662.4           6.0     668.4 
---------------  ---------  ------------  --------  ---------  ------------  --------  ---------  ------------  -------- 
 Profit 
  from 
  operations 
  including 
  post-tax 
  profit/(loss) 
  from 
  joint 
  ventures 
  and 
  associates         346.1           4.3     350.4      319.5           5.3     324.8      734.8           5.7     740.5 
---------------  ---------  ------------  --------  ---------  ------------  --------  ---------  ------------  -------- 
 Finance 
  income                                       1.8                                3.3                                5.9 
===============  =========  ============  ========  =========  ============  ========  =========  ============  ======== 
 Finance 
  costs                                     (31.2)                             (33.1)                             (64.1) 
---------------  ---------  ------------  --------  ---------  ------------  --------  ---------  ------------  -------- 
 Profit 
  before 
  tax                                        321.0                              295.0                              682.3 
===============  =========  ============  ========  =========  ============  ========  =========  ============  ======== 
 Tax                                        (61.4)                             (56.1)                            (132.0) 
---------------  ---------  ------------  --------  ---------  ------------  --------  ---------  ------------  -------- 
 Profit 
  for the 
  period                                     259.6                              238.9                              550.3 
---------------  ---------  ------------  --------  ---------  ------------  --------  ---------  ------------  -------- 
 

Profit from operations includes GBP0.3m (31 December 2015: GBP0.2m; 30 June 2016: GBP0.8m) relating to forfeited deposits and GBP16.4m (31 December 2015: GBP19.8m; 30 June 2016 GBP51.6m) of other income. Other income principally comprises management fees receivable from joint ventures, the sale of freehold reversions, ground rents and property management income.

 
                                                                                                                     30 June 2016 
                                    31 December 2016                       31 December 2015                             (audited) 
 
                    House-    Commercial                  House-     Commercial                  House-    Commercial 
                  building   development       Total    building    development       Total    building   development       Total 
                      GBPm          GBPm        GBPm        GBPm           GBPm        GBPm        GBPm          GBPm        GBPm 
--------------  ----------  ------------  ----------  ----------  -------------  ----------  ----------  ------------  ---------- 
 Balance 
  Sheet: 
  Segment 
  assets           5,806.8          37.6     5,844.4     5,698.2           37.2     5,735.4     5,648.0          42.2     5,690.2 
==============  ==========  ============  ==========  ==========  =============  ==========  ==========  ============  ========== 
 Elimination 
  of 
  intercompany 
  balances                                    (30.5)                                 (39.9)                                (30.2) 
--------------  ----------  ------------  ----------  ----------  -------------  ----------  ----------  ------------  ---------- 
                                             5,813.9                                5,695.5                               5,660.0 
==============  ==========  ============  ==========  ==========  =============  ==========  ==========  ============  ========== 
 Cash and 
  cash 
  equivalents                                  361.7                                  195.6                                 758.0 
--------------  ----------  ------------  ----------  ----------  -------------  ----------  ----------  ------------  ---------- 
 Consolidated 
  total 
  assets                                     6,175.6                                5,891.1                               6,418.0 
--------------  ----------  ------------  ----------  ----------  -------------  ----------  ----------  ------------  ---------- 
 Segment 
  liabilities    (1,881.4)        (64.1)   (1,945.5)   (1,854.4)         (75.7)   (1,930.1)   (2,114.3)        (72.4)   (2,186.7) 
==============  ==========  ============  ==========  ==========  =============  ==========  ==========  ============  ========== 
 Elimination 
  of 
  intercompany 
  balances                                      30.5                                   39.9                                  30.2 
--------------  ----------  ------------  ----------  ----------  -------------  ----------  ----------  ------------  ---------- 
                                           (1,915.0)                              (1,890.2)                             (2,156.5) 
==============  ==========  ============  ==========  ==========  =============  ==========  ==========  ============  ========== 
 Loans 
  and 
  borrowings                                 (181.4)                                (177.4)                               (177.5) 
==============  ==========  ============  ==========  ==========  =============  ==========  ==========  ============  ========== 
 Deferred 
  tax 
  liabilities                                  (6.2)                                  (6.6)                                (10.5) 
==============  ==========  ============  ==========  ==========  =============  ==========  ==========  ============  ========== 
 Current 
  tax 
  liabilities                                 (62.7)                                 (53.2)                                (63.3) 
--------------  ----------  ------------  ----------  ----------  -------------  ----------  ----------  ------------  ---------- 
 Consolidated 
  total 
  liabilities                              (2,165.3)                              (2,127.4)                             (2,407.8) 
--------------  ----------  ------------  ----------  ----------  -------------  ----------  ----------  ------------  ---------- 
 
   2.2    Earnings per share 

Basic earnings per share is calculated by dividing the profit for the half year attributable to ordinary shareholders of GBP259.7m (31 December 2015: GBP238.6m; 30 June 2016: GBP550.3m) by the weighted average number of ordinary shares in issue during the half year, excluding those held by the Employee Benefit Trust which were treated as cancelled, which was 1,003.0m (31 December 2015: 996.3m; 30 June 2016: 998.7m) shares.

Diluted earnings per share is calculated by dividing the profit for the half year attributable to ordinary shareholders of GBP259.7m (31 December 2015: GBP238.6m; 30 June 2016: GBP550.3m) by the weighted average number of ordinary shares in issue adjusted to assume conversion of all potentially dilutive share options from the start of the year, giving a figure of 1,015.1m (31 December 2015: 1,012.3m; 30 June 2016: 1,013.0m) shares.

The earnings per share from continuing operations were as follows:

 
                                 Half year ended     Half year ended      Year ended 
                                31 December 2016    31 December 2015    30 June 2016 
                                                                           (audited) 
                                           pence               pence           pence 
----------------------------  ------------------  ------------------  -------------- 
 Basic earnings per share                   25.9                23.9            55.1 
----------------------------  ------------------  ------------------  -------------- 
 Diluted earnings per share                 25.6                23.6            54.3 
----------------------------  ------------------  ------------------  -------------- 
 
   2.3    Dividends 
 
                                                                                       Half year ended 
                                                                     Half year ended       31 December      Year ended 
                                                                    31 December 2016              2015    30 June 2016 
                                                                                                             (audited) 
                                                                                GBPm              GBPm            GBPm 
----------------------------------------------------------------  ------------------  ----------------  -------------- 
 Amounts recognised as distributions to equity shareholders: 
================================================================  ==================  ================  ============== 
 Final dividend for the year ended 30 June 2016 of 12.3p per                   123.6 
 share                                                                                               -               - 
================================================================  ==================  ================  ============== 
 Special dividend for the year ended 30 June 2016 of 12.4p per                 124.7 
 share                                                                                               -               - 
================================================================  ==================  ================  ============== 
 Interim dividend for the year ended 30 June 2016 of 6.0p per 
  share                                                                            -                 -            60.1 
================================================================  ==================  ================  ============== 
 Final dividend for the year ended 30 June 2015 of 10.3p per 
  share                                                                            -             103.1           103.1 
================================================================  ==================  ================  ============== 
 Special dividend for the year ended 30 June 2015 of 10.0p per 
  share                                                                            -             100.0           100.0 
----------------------------------------------------------------  ------------------  ----------------  -------------- 
 Total dividends distributed to equity shareholders in the 
  period                                                                       248.3             203.1           263.2 
----------------------------------------------------------------  ------------------  ----------------  -------------- 
 Proposed interim dividend for the year ending 30 June 2017 of 
  7.3p per share (year ended 30 
  June 2016: 6.0p per share)                                                    73.5              60.1               - 
----------------------------------------------------------------  ------------------  ----------------  -------------- 
 

The interim dividend of 7.3 pence per share was approved by the Board on 21 February 2017 and has not been included as a liability as at 31 December 2016.

   2.4    Tax 

The corporation tax charge comprises of the best estimate of the expected annual effective corporation tax rate applied to the half year profit before tax plus the impact of rate changes and prior year adjustments. The effective rates are as follows:

 
                                                                                                            Year ended 
                                                                   Half year ended     Half year ended    30 June 2016 
                                                                  31 December 2016    31 December 2015       (audited) 
--------------------------------------------------------------  ------------------  ------------------  -------------- 
 
 Effective rate of corporation tax for the period                            19.1%               19.0%           19.3% 
==============================================================  ==================  ==================  ============== 
 Effective rate of corporation tax for the period excluding 
  the impact of rate changes and 
  prior year adjustments                                                     19.5%               19.7%           19.7% 
--------------------------------------------------------------  ------------------  ------------------  -------------- 
 

As at 31 December 2016 the Group recognised a deferred tax liability of GBP6.2m (31 December 2015: GBP6.6m; 30 June 2016: GBP10.5m).

 
 Section 3 - Working capital 
---------------------------- 
 
   3.1    Inventories 
 
                                                                                            30 June 
                                                   31 December 2016   31 December 2015         2016 
                                                                                          (audited) 
                                                               GBPm               GBPm         GBPm 
------------------------------------------------  -----------------  -----------------  ----------- 
 Land held for development                                  2,801.3            2,860.1      2,880.2 
================================================  =================  =================  =========== 
 Construction work in progress                              1,673.8            1,448.8      1,386.3 
================================================  =================  =================  =========== 
 Part-exchange properties and other inventories                64.3               46.1         60.1 
------------------------------------------------  -----------------  -----------------  ----------- 
                                                            4,539.4            4,355.0      4,326.6 
------------------------------------------------  -----------------  -----------------  ----------- 
 

The Directors consider all inventories to be essentially current in nature although the Group's operational cycle is such that a proportion of inventories will not be realised within twelve months. It is not possible to determine with accuracy when specific inventory will be realised as this will be subject to a number of issues such as consumer demand and the timing of achievement of planning permissions.

During the half year, the Group conducted a review of the net realisable value of specific sites identified as at high risk of impairment. Due to performance variations and changes to viability on individual sites, there were gross impairment charges of GBP6.7m and gross impairment reversals of GBP1.1m resulting in a net impairment charge of GBP5.6m (31 December 2015: GBP0.9m; 30 June 2016: GBP8.6m) included within profit from operations.

The value of inventories expensed in the half year ended 31 December 2016 and included in cost of sales was GBP1,351.5m (31 December 2015: GBP1,430.2m; 30 June 2016: GBP3,233.7m).

 
 Section 4 - Business combinations and other investing 
  activities 
------------------------------------------------------ 
 
   4.1    Investments accounted for using the equity method 

The Group entered into no new joint ventures during the period.

 
 Section 5 - Capital structure and financing 
-------------------------------------------- 
 
   5.1    Net cash 

Drawn debt and net cash at the period end are shown below:

 
                                            31 December 2016   31 December 2015 
                                                        GBPm               GBPm   30 June 2016 (audited) GBPm 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 Cash and cash equivalents                             361.7              195.6                         758.0 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 Drawn debt 
 Non-current borrowings 
=========================================  =================  =================  ============================ 
 Term loans                                           (89.4)             (89.5)                        (90.9) 
=========================================  =================  =================  ============================ 
 Government loans                                     (21.2)             (26.6)                        (21.0) 
=========================================  =================  =================  ============================ 
 Private placement notes                                   -             (53.9)                        (59.6) 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 Total non-current borrowings                        (110.6)            (170.0)                       (171.5) 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 Current borrowings 
=========================================  =================  =================  ============================ 
 Bank overdrafts                                       (0.4)              (1.5)                             - 
=========================================  =================  =================  ============================ 
 Government loans                                      (5.8)              (5.9)                         (6.0) 
=========================================  =================  =================  ============================ 
 Private placement notes                              (64.6)                  -                             - 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 Total current borrowings                             (70.8)              (7.4)                         (6.0) 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 Total borrowings being total drawn debt             (181.4)            (177.4)                       (177.5) 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 Derivative financial instruments 
=========================================  =================  =================  ============================ 
 Foreign exchange swaps                                 16.4                6.0                          11.5 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 Net cash                                              196.7               24.2                         592.0 
-----------------------------------------  -----------------  -----------------  ---------------------------- 
 

Included within non-current borrowings are prepaid facility arrangement fees of GBP10.8m (31 December 2015: GBP10.9m; 30 June 2016: GBP9.5m). The Group includes foreign exchange swaps within net cash as these swaps were entered into to hedge the foreign exchange exposure on the Group's US Dollar denominated private placement notes. The Group's foreign exchange swaps have both an interest rate and an exchange rate element, but only the exchange rate element on the notional amount of the swap is included within the net cash note.

The Group's derivative financial instruments at the period end are shown below:

 
                                                  31 December 2016   31 December 2015 
                                                              GBPm               GBPm   30 June 2016 (audited) GBPm 
-----------------------------------------------  -----------------  -----------------  ---------------------------- 
 Foreign exchange swap - exchange rate element                16.4                6.0                          11.5 
===============================================  =================  =================  ============================ 
 Foreign exchange swap - interest rate element                 0.5              (0.5)                           0.3 
-----------------------------------------------  -----------------  -----------------  ---------------------------- 
 Non-current asset                                               -                5.5                          11.8 
-----------------------------------------------  -----------------  -----------------  ---------------------------- 
 Current asset                                                16.9                  -                             - 
-----------------------------------------------  -----------------  -----------------  ---------------------------- 
  Interest rate swaps - non-current liability                (6.5)             (14.3)                         (7.5) 
-----------------------------------------------  -----------------  -----------------  ---------------------------- 
 Interest rate swaps - current liability                     (2.5)                  -                         (5.6) 
-----------------------------------------------  -----------------  -----------------  ---------------------------- 
 Total liability                                             (9.0)             (14.3)                        (13.1) 
-----------------------------------------------  -----------------  -----------------  ---------------------------- 
  Net derivative financial instruments                         7.9              (8.8)                         (1.3) 
-----------------------------------------------  -----------------  -----------------  ---------------------------- 
 

Movement in net cash is analysed as follows:

 
                                                                                                              Year 
                                                                                                             ended 
                                                                                                           30 June 
                                                                  Half year ended     Half year ended         2016 
                                                                 31 December 2016    31 December 2015    (audited) 
                                                                             GBPm                GBPm         GBPm 
------------------------------------------------------------  -------------------  ------------------  ----------- 
 Net (decrease)/increase in cash and cash equivalents                     (396.3)             (164.8)        397.6 
============================================================  ===================  ==================  =========== 
 Net loan drawdown including foreign exchange loss and fees                 (3.9)               (0.9)        (1.0) 
============================================================  ===================  ==================  =========== 
 Foreign exchange gain on swaps                                               4.9                 3.4          8.9 
============================================================  ===================  ==================  =========== 
 Movement in net cash in the period                                       (395.3)             (162.3)        405.5 
============================================================  ===================  ==================  =========== 
 Opening net cash                                                           592.0               186.5        186.5 
------------------------------------------------------------  -------------------  ------------------  ----------- 
 Closing net cash                                                           196.7                24.2        592.0 
------------------------------------------------------------  -------------------  ------------------  ----------- 
 
   5.2    Net finance costs 
 
                                                                                                                  Year 
                                                                                                                 ended 
                                                                     Half year ended      Half year ended      30 June 
                                                                    31 December 2016     31 December 2015         2016 
                                                                                                             (audited) 
                                                                                GBPm                 GBPm         GBPm 
---------------------------------------------------------------  -------------------  -------------------  ----------- 
 Recognised in the Income Statement: 
===============================================================  ===================  ===================  =========== 
 Finance income 
===============================================================  ===================  ===================  =========== 
 Finance income on short term bank deposits                                    (0.6)                (0.2)        (0.7) 
===============================================================  ===================  ===================  =========== 
 Imputed interest on available for sale financial assets and 
  interest free loans                                                              -                (1.8)        (2.9) 
===============================================================  ===================  ===================  =========== 
 Finance income related to employee benefits                                   (0.2)                (0.2)        (0.4) 
===============================================================  ===================  ===================  =========== 
 Other interest receivable                                                     (1.0)                (1.1)        (1.9) 
---------------------------------------------------------------  -------------------  -------------------  ----------- 
                                                                               (1.8)                (3.3)        (5.9) 
---------------------------------------------------------------  -------------------  -------------------  ----------- 
 Finance costs 
===============================================================  ===================  ===================  =========== 
 Interest on loans and borrowings                                                6.4                  6.8         14.1 
===============================================================  ===================  ===================  =========== 
 Imputed interest on deferred term payables                                     16.5                 18.7         34.5 
===============================================================  ===================  ===================  =========== 
 Amounts reclassified to the Income Statement in respect of 
  hedged cash flows                                                            (1.5)                  0.2        (1.1) 
===============================================================  ===================  ===================  =========== 
 Foreign exchange losses on US Dollar debt                                       4.9                  3.4          8.9 
===============================================================  ===================  ===================  =========== 
 Amortisation of facility fees                                                   1.5                  1.5          2.9 
===============================================================  ===================  ===================  =========== 
 Other interest payable                                                          3.4                  2.5          4.8 
---------------------------------------------------------------  -------------------  -------------------  ----------- 
                                                                                31.2                 33.1         64.1 
---------------------------------------------------------------  -------------------  -------------------  ----------- 
 Net finance costs                                                              29.4                 29.8         58.2 
---------------------------------------------------------------  -------------------  -------------------  ----------- 
 

The weighted average interest rates paid (excluding amortised fees and non-utilisation fees) were as follows:

 
                                       31 December 2016   31 December 2015   30 June 2016 
                                                                                (audited) 
                                                      %                  %              % 
------------------------------------  -----------------  -----------------  ------------- 
 Bank loans excluding swap interest                 N/A                2.1            2.1 
====================================  =================  =================  ============= 
 Net swap payment                                   5.4                5.2            5.2 
====================================  =================  =================  ============= 
 Government loans                                   2.0                2.2            2.2 
====================================  =================  =================  ============= 
 Term loans                                         4.5                4.7            4.7 
====================================  =================  =================  ============= 
 Private placement notes                            8.1                8.1            8.2 
------------------------------------  -----------------  -----------------  ------------- 
 
   5.3    Financial instruments' fair value disclosures 

The fair values of financial assets and liabilities are determined as follows:

-- The fair value of the available for sale financial assets portfolio has been calculated on a loan by loan basis using the present value of the expected future cash flows of each loan. The fair values of other non-derivative financial assets and liabilities are determined based on discounted cash flow analysis using current market rates for similar instruments. Other financial liabilities are subsequently measured at amortised cost using the 'effective interest rate' method.

-- All of the Group's interest rate and cross currency swaps are designated as cash flow hedges. Derivative financial instruments are measured at the present value of future cash flows estimated and discounted based on the applicable yield curves derived from quoted interest rates.

The carrying values and fair values of financial assets and liabilities are as follows:

 
                   Half year ended 31 December 2016     Half year ended 31 December 2015       Year ended 30 June 2016 
                                                                                                             (audited) 
                                               GBPm                                 GBPm                          GBPm 
--------------  -----------------------------------  -----------------------------------  ---------------------------- 
                    Fair value       Carrying value      Fair value       Carrying value   Fair value   Carrying value 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Financial 
 assets 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Derivative 
  financial 
  instruments             16.9                 16.9             5.5                  5.5         11.8             11.8 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Cash and cash 
  equivalents            361.7                361.7           195.6                195.6        758.0            758.0 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Trade and 
  other 
  receivables             62.4                 62.4            60.1                 60.1        106.9            106.9 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Non-current 
  available 
  for sale 
  financial 
  assets                   3.7                  3.7             3.0                  3.0          3.8              3.8 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Current 
  available 
  for sale 
  financial 
  assets                   0.6                  0.6            89.3                 89.3          0.8              0.8 
--------------  --------------  -------------------  --------------  -------------------  -----------  --------------- 
 Total 
  financial 
  assets                 445.3                445.3           353.5                353.5        881.3            881.3 
--------------  --------------  -------------------  --------------  -------------------  -----------  --------------- 
 Financial 
 liabilities 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Derivative 
  financial 
  instruments              9.0                  9.0            14.3                 14.3         13.1             13.1 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Bank 
  overdrafts               0.4                  0.4             1.5                  1.5            -                - 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Trade and 
  other 
  payables             1,650.8              1,638.1         1,687.1              1,664.7      1,883.2          1,870.2 
==============  ==============  ===================  ==============  ===================  ===========  =============== 
 Loans and 
  borrowings             182.1                181.4           178.8                177.4        179.0            177.5 
--------------  --------------  -------------------  --------------  -------------------  -----------  --------------- 
 Total 
  financial 
  liabilities          1,842.3              1,828.9         1,881.7              1,857.9      2,075.3          2,060.8 
--------------  --------------  -------------------  --------------  -------------------  -----------  --------------- 
 

The following table provides an analysis of financial assets and financial liabilities that are measured subsequent to initial recognition at fair value, grouped into levels 1 to 3 based on the degree to which the fair value is observable:

-- Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;

-- Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and

-- Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

There have been no transfers between levels during the half year.

 
                                                                                     Half year ended 31 December 2016 
-------------------------------------------------  ------------------------------------------------------------------ 
                                                                   Fair value measurements at 31 December 2016 using: 
 
                                                                                   Level 2                    Level 3 
                                                          GBPm                        GBPm                       GBPm 
-------------------------------------------------  -----------  --------------------------  ------------------------- 
 Financial assets 
=================================================  ===========  ==========================  ========================= 
 Derivative financial instruments                         16.9                        16.9                          - 
=================================================  ===========  ==========================  ========================= 
 Non-current available for sale financial assets           3.7                           -                        3.7 
=================================================  ===========  ==========================  ========================= 
 Current available for sale financial assets               0.6                           -                        0.6 
-------------------------------------------------  -----------  --------------------------  ------------------------- 
                                                          21.2                        16.9                        4.3 
-------------------------------------------------  -----------  --------------------------  ------------------------- 
 Financial liabilities 
=================================================  ===========  ==========================  ========================= 
 Derivative financial instruments                          9.0                         9.0                          - 
-------------------------------------------------  -----------  --------------------------  ------------------------- 
                                                           9.0                         9.0                          - 
-------------------------------------------------  -----------  --------------------------  ------------------------- 
 
   5.4    Share capital 
 
                                                  31 December 2016   31 December 2015   30 June 2016 (audited) 
-----------------------------------------------  -----------------  -----------------  ----------------------- 
 Allotted and issued ordinary shares (GBPm): 
===============================================  =================  =================  ======================= 
 10p each fully paid                                         100.7              100.2                    100.4 
===============================================  =================  =================  ======================= 
 
 Allotted and issued ordinary shares (number): 
===============================================  =================  =================  ======================= 
 10p each fully paid                                 1,006,940,985      1,002,277,333            1,003,607,066 
-----------------------------------------------  -----------------  -----------------  ----------------------- 
 
 
                                                                                                    Year ended 30 June 
                              Half year ended 31 December 2016   Half year ended 31 December 2015                 2016 
                                                                                                             (audited) 
                                                        number                             number               number 
---------------------------  ---------------------------------  ---------------------------------  ------------------- 
 Options over the Company's 
 shares granted during the 
 period: 
===========================  =================================  =================================  =================== 
 Long Term Performance Plan 
  ("LTPP")                                           2,594,923                          1,880,862            1,880,862 
===========================  ================================= 
 Savings-Related Share 
  Option Scheme 
  ("Sharesave")                                              -                                  -            1,782,338 
===========================  ================================= 
 CFO Scheme                                                  -                            121,880              121,880 
===========================  =================================  =================================  =================== 
 Deferred Bonus Plan 
  ("DBP")                                              520,442                            305,468              305,468 
---------------------------  ---------------------------------  ---------------------------------  ------------------- 
                                                     3,115,365                          2,308,210            4,090,548 
---------------------------  ---------------------------------  ---------------------------------  ------------------- 
 
 
                                                                                                    Year ended 30 June 
                              Half year ended 31 December 2016   Half year ended 31 December 2015                 2016 
                                                                                                             (audited) 
                                                        number                             number               number 
---------------------------  ---------------------------------  ---------------------------------  ------------------- 
 Allotment of shares during 
 the period: 
===========================  =================================  =================================  =================== 
 At the beginning of the 
  period                                         1,003,607,066                        995,452,663          995,452,663 
===========================  =================================  =================================  =================== 
 Issued to satisfy early 
  exercise under Sharesave 
  schemes                                               48,368                             53,503              106,614 
===========================  =================================  =================================  =================== 
 Issued to satisfy 
  exercises under matured 
  Sharesave schemes                                    406,225                            693,820            1,968,683 
===========================  =================================  =================================  =================== 
 Issued to satisfy vesting 
  of LTPP awards                                     2,126,790                          4,620,159            4,620,159 
===========================  =================================  =================================  =================== 
 Issued to satisfy 
  exercises under the DBP                              471,535                          1,457,188            1,458,947 
===========================  =================================  =================================  =================== 
 Issued to the Employee                                281,001 
 Benefit Trust                                                                                  -                    - 
---------------------------  ---------------------------------  ---------------------------------  ------------------- 
                                                 1,006,940,985                      1,002,277,333        1,003,607,066 
---------------------------  ---------------------------------  ---------------------------------  ------------------- 
 

Employee Benefit Trust

The own shares reserve represents the cost of shares in Barratt Developments PLC purchased in the market and held by the Barratt Developments PLC Employee Benefit Trust (the 'EBT') on behalf of the Company in order to satisfy options and awards that have been granted under the Barratt Developments PLC Executive and Employee Share Option Plans, Long Term Performance Plans and Deferred Bonus Plans. These ordinary shares do not rank for dividend and do not count in the calculation of the weighted average number of shares used to calculate earnings per share until such time as they are vested to the relevant employee.

 
                                                                                                               30 June 
                                                                                                                  2016 
                                                                    31 December 2016   31 December 2015      (audited) 
-----------------------------------------------------------------  -----------------  -----------------  ------------- 
 Ordinary shares in the Company held in the EBT (number)                   1,567,202          1,486,849      1,367,707 
-----------------------------------------------------------------  -----------------  -----------------  ------------- 
 Market value of shares held in the EBT at 462.4p (31 December 
  2015: 626.0p; 30 June 2016:                                           GBP7,246,742 
  405.4p) per share                                                                        GBP9,307,675   GBP5,544,684 
-----------------------------------------------------------------  -----------------  -----------------  ------------- 
 

During the period the EBT purchased 664,653 (31 December 2015: nil; 30 June 2016: 150,000) shares and 2,879,326 (31 December 2015: nil; 30 June 2016: nil) shares were issued to the EBT. The EBT disposed of 3,344,484 (31 December 2015: 373,222; 30 June 2016: 642,364) shares in settlement of exercises under the Long Term Performance Plan, the Deferred Bonus Plan, the CFO scheme, the Senior Management Share Option Plan 2009/10 and the Senior Management Incentive Scheme.

 
 Section 6 - Contingencies, related parties, seasonality 
  and principal risks 
-------------------------------------------------------- 
 
   6.1    Contingent liabilities 

6.1.1 Contingent liabilities related to subsidiaries

Certain subsidiary undertakings have commitments for the purchase of trading stock entered into in the normal course of business.

In the normal course of business the Group has given counter-indemnities in respect of performance bonds and financial guarantees, which at 31 December 2016 amounted to GBP456.4m (31 December 2015: GBP601.1m; 30 June 2016: GBP482.0m), and confirm that the possibility of cash outflow is considered minimal and no provision is required.

As disclosed in the Group's Annual Report and Accounts for 30 June 2016 following correspondence with an industry wide final salary pension scheme, there is a risk of an obligation arising in respect of pension scheme funding pursuant to s75 of the Pensions Act 1995 for employees of a subsidiary who left the Group following disposal of its business and assets. The Directors consider that whilst it is increasingly probable that a liability could result in the future; at present the amount of any such provision cannot be reliably estimated given the fundamental uncertainties underlying any such calculation. No provision has been recognised in relation to this matter at 31 December 2016.

The Group is currently engaging with legal and professional advisors in its efforts to understand the position of the Trustee's and how they might reach a reliable estimate of any potential liability following a court determination scheduled to take place in late Spring. The Group will then re-consider its options in respect of any obligation arising in this matter. Therefore disclosure on this matter is made in accordance with Note 6.1.3 below.

6.1.2 Contingent liabilities related to joint ventures and associates

The Group has given counter-indemnities in respect of performance bonds and financial guarantees to its joint ventures totalling GBP66.5m (31 December 2015: GBP56.7m; 30 June 2016: GBP56.5m). The Group has also provided principal guarantees of GBP9.0m (31 December 2015: GBP9.0m; 30 June 2016: GBP9.0m), and cost and interest overrun guarantees in relation to the borrowings of a number of the Group's London joint ventures. At 31 December 2016, no cost or interest overruns had been incurred (31 December 2015: GBPnil; 30 June 2016: GBPnil). The Group's maximum exposure under these cost and interest overrun guarantees is estimated at GBP18.4m as at 31 December 2016.

At 31 December 2016, the Group has an obligation to repay GBP0.9m (31 December 2015: GBP0.9m; 30 June 2016: GBP0.9m) of grant monies received by a joint venture upon certain future disposals of land.

The Group has also given a number of performance guarantees in respect of the obligations of its joint ventures, requiring the Group to complete development agreement contractual obligations in the event that the joint ventures do not perform as required under the terms of the related contracts.

6.1.3 Contingent liabilities related to legal claims

Provision is made for the Directors' best estimate of all known legal claims and all legal actions in progress. The Group takes legal advice as to the likelihood of success of claims and actions and no provision is made where the Directors consider, based on that advice, that the action is unlikely to succeed, or a sufficiently reliable estimate of the potential obligations cannot be made.

There was no contingent liability in respect of such claims at 31 December 2016.

   6.2    Related party transactions 

Related party transactions for the period to 31 December 2016 are detailed below:

6.2.1 Transactions between the Group and its joint ventures

The Group has principally entered into transactions with its joint ventures in respect of development management/other services (with charges made based on the utilisation of these services) and funding. These transactions totalled GBP6.2m (31 December 2015: GBP7.2m; 30 June 2016: GBP14.3m) and GBP1.0m (31 December 2015: GBP0.7m; 30 June 2016: GBP1.3m) respectively. In addition, one of the Group's subsidiaries, BDW Trading Limited, contracts with a number of the Group's joint ventures to provide construction services.

The total amount of LLP capital, outstanding loans and interest due to the Group from its joint ventures at 31 December 2016 was GBP191.3m (31 December 2015: GBP189.7m; 30 June 2016: GBP185.3m). The amounts outstanding are unsecured and will be settled in cash. In addition loans of GBP13.3m (31 December 2015: GBP9.2m; 30 June 2016: GBP47.6m) were owed by the Group to its joint ventures.

The amount of other outstanding payables to the Group from its joint ventures at 31 December 2016 was GBP0.1m (31 December 2015: GBP0.9m; 30 June 2016: GBP0.4m).

The Group's contingent liabilities relating to its joint ventures are disclosed in note 6.1.2.

6.2.2 Transactions between the Group and its associates

There were no outstanding loans due to the Group from its associates at 31 December 2016 or during either comparative period. Other amounts due to the Group from its associates amounted to GBPnil (31 December 2015: GBPnil; 30 June 2016: GBPnil). The Group's contingent liabilities relating to its associates are disclosed in note 6.1.2.

6.2.3 Transactions between the Group and its Directors

The Board and certain members of senior management are related parties within the definition of IAS 24 (Revised) 'Related Party Disclosures' and Chapter 11 of the UK Listing Rules.

Other than as described below transactions between the Group and key management personnel in the first half of the year ending 30 June 2017 were limited to those relating to remuneration, previously disclosed as part of the Director's Remuneration report within the Group's Annual Report and Accounts for 30 June 2016 and as outlined in note 5.4 above. Options granted to senior management are disclosed in aggregate in note 5.4. There have been no other material changes to the arrangements between the Group and key management personnel.

   6.2.4   Property purchases by related parties 

During the half year ended 31 December 2016, the Group entered into the following transactions which, for the purposes of IAS 24 are considered to be 'related party transactions':

In December 2016, David Thomas, Chief Executive, exchanged and completed on a Barratt showhome at a BDW Trading Limited site. Details of the transaction are as included on page 99 of the Group's Annual Report and Accounts for 30 June 2016. Payment for the property was made in accordance with the Group's normal terms of trading. As at 31 December 2016, there was no outstanding balance on this transaction.

In December 2016, a connected person of David Thomas, Chief Executive, exchanged on a David Wilson house from BDW Trading Limited. Details of the transaction are as included on page 99 of the Group's Annual Report and Accounts for 30 June 2016. The property exchanged on 29 December 2016 and a balance of GBP490,500 remained outstanding which is due to be paid on legal completion, which is now expected to be in April 2017, in accordance with the Group's normal terms of trading.

The transactions were conducted in the ordinary course of business at a fair and reasonable market price based on independent market valuations and similar comparable transactions. They have been subject to the usual level of scrutiny and review applied to proposed purchases by other employees, and have included a review by Internal Audit, the Company Secretary and the Group's legal advisers.

The Company's shareholders approved the transactions at the 2016 Annual General Meeting.

There have been no 'smaller related party transactions' as defined in Listing Rule 11.1.10R for the period ended 31 December 2016.

Statement of Directors' Responsibilities

The Directors confirm that to the best of their knowledge these condensed consolidated half yearly financial statements have been prepared in accordance with IAS 34 as required by DTR 4.2.4R. They also confirm that to the best of their knowledge that the Interim Management Report herein includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year) and DTR 4.2.8R (disclosure of related party transactions and changes thereto).

The Directors of Barratt Developments PLC during the half year were:barr

J M Allan, Chairman

D F Thomas, Chief Executive

N Cooper, Chief Financial Officer (resigned 19 January 2017)

S J Boyes, Chief Operating Officer and Deputy Chief Executive

M E Rolfe, Senior Independent Director (resigned 16 November 2016)

R J Akers, Senior Independent Director

T E Bamford, Non-Executive Director

N Bibby, Non-Executive Director

J F Lennox, Non-Executive Director (appointed 1 July 2016)

The Half Yearly Financial Report was approved by the Board on 21 February 2017.

D F Thomas

Chief Executive

Independent review report to Barratt Developments PLC

We have been engaged by the Company to review the condensed set of financial statements in the Half Yearly Financial Report for the six months ended 31 December 2016 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated statement of changes in shareholders' equity, the condensed consolidated balance sheet, the condensed consolidated cash flow statement and related notes 1 to 6.2. We have read the other information contained in the Half Yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The Half Yearly Financial Report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the Half Yearly Financial Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1.4, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this Half Yearly Financial Report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the Half Yearly Financial Report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the Half Yearly Financial Report for the six months ended 31 December 2016 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

21 February 2017

[1] Includes joint venture ('JV') completions in which the Group has an interest

[2] Gross margin is calculated as gross profit divided by revenue

[3] Operating margin is calculated as profit from operations divided by revenue

[4] Return on capital employed ('ROCE') is calculated as earnings before interest, tax, operating charges relating to the defined benefit pension scheme and operating exceptional items, divided by average net assets adjusted for goodwill and intangibles, tax, cash, loans and borrowings, retirement benefit assets/obligations and derivative financial instruments

[5] Net cash / debt is defined as cash and cash equivalents, bank overdrafts, interest bearing borrowings and foreign exchange swaps

[6] FY is financial year ending 30 June

[7] Site ROCE on land acquisition is calculated as site operating profit (site trading profit less sales overheads less allocated administrative overheads) divided by average investment in site land, work in progress and equity share

[8] Based upon completions in the 12 months ended 31 December

This information is provided by RNS

The company news service from the London Stock Exchange

END

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