Results round-up: Lloyds Bank, Barratt, Serco, Weir

Lloyds Bank more than doubled full year pre-tax profits to £4.2bn from £1.6bn in 2015 as it announced a special 0.5p-a-share dividend.

Underlying profits came in at £7.9bn, slightly lower than £8.1bn in the previous year. Total income was £17.5bn compared with £17.6bn in 2016.

Pre-tax profits for the fourth quarter rose to £973m from a £507m loss in the same period last year

A final ordinary dividend of 1.7p a share was declared making a total ordinary dividend of 2.55p a share, up 13% on 2015.

Conduct charges of £2.1bn include a further £1bn provision for PPI, which was down from last year´s £4bn. The rest covered a range of other conduct issues of which £475m was recognised in the fourth quarter.

The charge for the year included £280m relating to packaged bank accounts, £261m for arrears-related activities on secured and unsecured retail products and £94m over insurance policies issued by Clerical Medical Investment Group products sold in Germany, together with a number of other conduct risk provisions totalling £450m across all divisions, Lloyds said.

Lloyds, owner of the Halifax and HBOS banks, added that the government's stake, purchased as part of the £20.5bn 2008 bailout during the financial crash, was now down to 5%.

December´s acquisition of credit card provider MBNA will boost profits margins, management expects, enabling it to better tackle the low UK interest rate environment.

"Given our UK focus, our performance is inextricably linked to the health of the UK economy which has been more resilient than the market expected post referendum, with GDP growth of 2% in 2016," said chief executive Antonio Horta-Osorio.

"The UK's decision to leave the European Union means the exact nature of our relationship with Europe going forward remains unclear and the economic outlook is uncertain.

"However, the recovery in recent years with low unemployment, reduced levels of household and corporate indebtedness and increased house prices means the UK is well positioned."

Barratt Developments

Housebuilder Barratt Developments posted its half year results to 31 December on Wednesday, reporting completions outside of London as being at their highest level for nine years.

The FTSE 100 company said London completions were in line with the planned build programme, with significant uplift expected on wholly owned sites in the second half.

Total completions stood at 7,180 plots, down 5.8%, with total revenue dipping 3.2% to £1.82bn.

Barratt’s gross margin for the period improved 2.1 percentage points year-on-year to 20.7%, while its profit from operations was up 7.4% at £324m.

Half year profit before tax for the period was £321.0m, up 8.8%, off an operating margin of 17.8%, an improvement of 1.7 percentage points.

The board declared an interim dividend per share of 7.3p, a 21.7% uplift.

Return on capital employed stood at 27% for the half-year, up 1.5 percentage points, while net cash improved 712.8% year-on-year to £196.7m.

“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,” said chief executive David Thomas.

Serco

FTSE 250 outsourcer Serco reported a drop in trading profit for the year to the end of December as revenue declined, but it swung to a pre-tax profit and reiterated its guidance for 2017.

Underlying trading profit fell to £82.1m from £95.9m, with discontinued operations – the exit of its private sector business process outsourcing operations – reducing profits by £19m.

The company swung to a pre-tax profit of £29.6m from a loss of £69.4m in 2015.

Reported revenue from continuing operations slipped to £3.01bn from £3.18bn the year before. Revenue including discontinued operations fell 13% to £3.05bn, comprising 11% an organic decline from net contract attrition and an 8% reduction from disposals, partially offset by a 6% currency benefit.

Order intake in the period was up 40%, with £2.5bn total value of signed contracts and the pipeline of larger new bid opportunities ended the year at £8.4bn, up 30% on the year.

Serco said guidance for 2017 is unchanged and at current foreign exchange rates, it expects revenue of around £3.1bn and underlying trading profit of between £65m and £70m.

Chief executive Rupert Soames said: "These results show that the execution of our five-year plan remains on track. Trading in 2016 was better than we expected at the start of the year, although this was in large part due to the resolution of a number of commercial matters in the first half, which will not recur; trading in the second half was in line with the guidance we gave at the time of our half-year results."

Weir

Oil services outfit Weir reported a 22% fall in full year pre-tax profits to £170m as it was hit by the collapse in prices but said it had returned to growth in the final quarter as prospects for the sector brightened.

The company reported a 10% rise order growth in the fourth quarter as mining and oil and gas markets showed signs of recovery.

In North America the division broke even in the same quarter and the company expected a return to “modest profitability”.

Revenues fell 2% on a reported basis to £1.84bn. The dividend remained unchanged at 44p a share.

Chief executive Jon Stanton said he had been encouraged by macro commodity trends and “signs in our mining and oil and gas markets that point to a cyclical upturn”.

"Minerals increased revenues from both original equipment and aftermarket. Oil & Gas extended its technology leadership amidst difficult end markets and Flow Control benefited from its recent restructuring which supported margins in challenging downstream energy markets,” he said.