Barratt Developments PLC has announced its annual results for the year ended 30 June 2023. Despite operating in a challenging environment, the company delivered a strong operational performance. Total home completions declined by 3.9% compared to the previous year, reflecting the market slowdown experienced from September 2022. The company maintained its industry leadership in build quality, customer service, and sustainability, receiving awards for NHBC Pride in the Job and HBF 5 Star customer satisfaction. Barratt Developments was also awarded membership of CDP's Climate Change A List for Leadership.

The company's adjusted gross profit was £1,130.4 million, a decrease of 13.6% compared to the previous year, and adjusted gross margin stood at 21.2%. This decline in profitability was attributed to the fall in customer demand, house price inflation running below build cost inflation, and the impact of operational gearing as the market slowed down. Adjusted profit before tax was £884.3 million, in line with market expectations.

Barratt Developments reported adjusted items relating to costs associated with legacy properties of £179.2 million, resulting in a reported profit before tax of £705.1 million. The company maintained a strong balance sheet with net cash of £1,069.4 million at the end of June 2023. The return on capital employed (ROCE) declined to 22.2% compared to 30.0% in the previous year.

The company declared a final ordinary dividend per share of 23.5p, resulting in a total ordinary dividend for the financial year of 33.7p. The dividend cover for FY24 will be 1.75 times in line with the company's stated dividend policy. However, due to current market uncertainty, the Board has decided to retain surplus capital to maintain the resilience of the Group's balance sheet.

Looking ahead, Barratt Developments aims to drive revenue through targeted use of incentives, sales to the private rental and social housing sectors, and managing build activity while controlling the cost base. The company will also adopt a highly selective approach to land buying and continue to lead the industry in sustainability.

In terms of current trading, short-term demand has been impacted by mortgage affordability challenges. As of 27 August 2023, the company was 49% forward sold with respect to private wholly owned home completions for FY24. The net private reservation rate per active outlet per average week from 1 July 2023 to 27 August 2023 was 0.42, including contributions from the private rental sector and sales to registered providers of social housing. Based on current market conditions, Barratt Developments is targeting total home completions of between 13,250 and 14,250 in FY24.