Dividends may remain off the table at Barratt Developments (BDEV) after its latest trading update but talk of ‘cautious optimism’ and reports of the UK potentially waiving stamp duty on property purchases for six months helped lift the shares 7.7% to 528.2p.

Barratt said it would not propose an ordinary dividend for 2020 or a previously announced special dividend of £175 million at its annual general meeting in October.

In March 2020, the company cancelled its interim dividend of 9.8p per share, which was due to be paid on 11 May.

However, the company touted 'cautious optimism' as the new financial year got underway, supported by a strong forward order book and well capitalised balance sheet.

All operational sites were reopened by 30 June and all employees, other than those shielding, had now recommenced working in the business, the company said.

Completion volumes were significantly hurt by the lockdown period, falling to 12,6041 homes for the year ended 30 June, from 17,856 homes in the previous financial year.

On the other hand the forward order book was 'strong' with total forward sales (including JVs) as at 30 June 2020 of 14,326 homes, up from 11,419 homes last year, at a value of £3,249.7m, up from £2,604.1m.

Citing the positive impact from the Help to Buy scheme, unsurprisingly the company added its voice to the chorus from the sector asking for an extension of the scheme beyond March 2021.


Elsewhere, the company revealed it would pay £70 million to fix faulty apartment blocks designed by a third party even though it has no legal liability.

Irish stockbroker Davy said: ‘Barratt Developments is painting a reasonable picture of recovery in volumes following the lockdown period. Sites are already back at 75% run rate and this is expected to improve towards 100% in the near term.

'Demand has been surprisingly robust since the restart of sites and the forward order book has seen significant growth.’

AJ Bell investment director Russ Mould said: ‘Barratt’s concession that mortgage availability is key to the health of the new homes market is a reminder that any reduced willingness on the part of lenders to hand out high loan-to-value mortgages could be damaging.

‘This nagging concern could build as the full economic impact of the coronavirus crisis comes through.’


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Issue Date: 06 Jul 2020