Good morning, ladies and gentlemen. A warm welcome to Barclays Full Year Results Presentation for the year ended the 30th April 2020. I'm Tony Pidgeley, Chairman of the Barclays Group. Following my introduction remarks, I will hand over to our Finance Director, Richard Stern, to run through the financial results for the year. Rob Perrins, Barclays' Chief Exec, will then update on our strategy and operational performance.
These are excellent results from Barclays in what are, of course, highly challenging and uncertain times. 6 months ago, we were concerned with the uncertainty from the U. K. Political backdrop and Brexit. This has improved to some extent by Descender's decisive general election result, and 2020 had begun with improved momentum and optimism, something for everybody to believe in.
COVID-nineteen is a different and completely unprecedented challenge that has stopped this momentum in its tracks and indeed, our country. The health and safety and well-being of our people, customers, our supply chain has been our first priority, and we've quickly adapted our working practices in line with government and industry guidance. In very short time, this crisis has dramatically changed our economy, our society, our everyday lives of our people. We've seen a fantastic response from our frontline public services, and the U. K.
Government has taken unprecedented steps to support business. We're seeing a rapid shakeout of the economy with the resilience of sectors and individual companies being cruelly exposed. Barclays, however, is well set to withstand and respond to this, an unprecedented challenge. Our strategy is designed for what is, by nature, a highly cyclical business. Our financial strength and experienced management team have enabled us to make a considered response to COVID-nineteen.
We have not furloughed our staff nor have we used any other forms of emergency government funding to support us or our people. Our autonomous structure and entrepreneurial spirit gives us real flexibility and means we can adapt quickly and perform in the new operating environment. I've been immensely proud of the way our people have responded, and this reflects the culture and values of Barclays. I'd like to thank each and every one of them and all our partners for their resilience in these difficult and challenging times. As we look to the future, it's important that we reflect on our industry and work with government to ensure we emerge stronger, work in partnership and collaboration to the benefit of the people.
For the homebuilding sector, this is an opportunity to put people at the heart of our thinking and become sustainable placemakers and community builders. This means simply embracing communities, engagement, net diversity gain, creating inclusive, welcoming and tenured brine communities, delivering national space standards and quality outside space for everybody to be part of that community, enabling 0 carbon living by 2,030, investing in innovation such as our own precise manufactured homes from our own factory. There's also a role for government. Ours in construction can lead economical recovery, and I very much hope that we will see this and our Prime Minister will lead from the front. A review of SDLT, an extension of the current out to buy scheme, an easing of planning red tape and Section 106 conditions, a review of SIL and continued investment by the government in affordable housing.
And so to conclude, we have a housing crisis and many other issues to solve our society. Our role in this is to create fantastic homes, strengthen our communities, improve the lives of those living in our communities, better places for people of all generations. This is our Barclays part of the solution to building the much needed homes in London, the Southeast that will lead to a fair society that this country needs and deserves. Thank you very much. And I will now hand over to our Group Finance Director, Richard.
Thank you, Tony, and good morning, everyone. I will take you through the results today, beginning with a summary and touching on the drivers of revenue and profitability before looking in more detail at the income statement, cash flow and balance sheet, finishing with the land holdings. Beginning then with a summary of performance for the year. We have delivered £503,700,000 of pretax profit, down 35% from £775,200,000 last time, broadly in line with the guidance given this time last year. This is ahead of the adjusted guidance provided in our COVID-nineteen update of the 27th March and reflects good performance on completions over the subsequent 5 weeks.
Prior to the COVID-nineteen lockdown, we were on track to meet the prevailing consensus, which had increased over the course of the year to approximately £550,000,000 Earnings per share for the year is down 32.5 percent to 324.9p. This is slightly less than the decrease in pretax profits due to share buybacks in the year. The operating margin is 24.5%, which compares to 26% in the prior year, and the pretax return on equity was 16.6%, slightly ahead of the 15% long term baseline. Looking now at the financial position of the company. Shareholders' funds or net assets are now €3,100,000,000 with net asset value per share up 7.2 percent to £24.72 enhanced by the purchase of 3,500,000 shares in the year.
Shares in issue have reduced from 128,600,000 at the start of the year to 125,500,000 at the 30th April 2020. Net cash is 1,138,900,000, 163,900,000, up from €975,000,000 at the start of the year. This reflects some mix of factors, which I will look at later in the presentation. In terms of future visibility, we have cash due on forward sales covering the next 3 years of 1,900,000,000. This is slightly ahead of the last year end.
It reflects the normalization of our business profile following the post financial crisis trading and delivery period and a good period of trading up to lockdown. This represents a very strong order book. Approximately 50% of these forward sales relate to 2020, 2021, 40% to the following year and 10% thereafter. The estimated future gross profit in our land holdings has increased to £6,400,000,000 and I will look at this in more detail later. This slide highlights the key components of revenue and profitability.
We have sold 2,723 homes at an average selling price of £677,000 in the year. This compares to 3,698 homes at an average selling price of £748,000 for last year. As always, the average selling price or ASP reflects the mix of properties delivered in the year. Volumes were anticipated to be around 20% lower this year than last, and COVID-nineteen has resulted in the additional reduction of around 5%. While difficult to forecast at this time, we anticipate volumes in FY 'twenty one to be similar to FY 'twenty, perhaps a little lower.
ASP will be slightly higher due to the mix impact of the reprofiling of our sites in the current environment with relatively more London homes being delivered compared to out of London than previously anticipated. In addition to the group numbers, 4.35 sales have come through the joint ventures in the year at an average selling price of £723,000 This compares to 261 sales at an average price of £475,000 in the prior year. The majority of homes sold this year were in St. William, including the first two hundred completions at Prince of Wales Drive in Battersea, and this is the reason for the increase in the average selling price. In terms of the contribution to profits from joint ventures, the contribution this year was ahead of guidance, and this means that next year's contribution will fall by around onethree, increasing by approximately twofold in the following year.
Taken together with the guidance on volumes and average selling price for the group, this means that profits for the coming year will be at similar levels to 20 nineteentwenty, but we are anticipating these to be weighted towards the second half of the year, approximately onethree to twothree due to the operational disruption around COVID-nineteen. The long term trajectory will see average selling price reduce towards the land bank level and volumes increase, with delivery increasingly focused around our regeneration sites and an increasing contribution from the St. William sites. Turning now to the income statement performance for 20 nineteentwenty. Revenue decreased by 35.1 percent to 1920,400,000 due principally to the anticipated production in residential volumes and average selling price as set out previously.
Within the overall reduction, the prior year included £160,000,000 of revenue from commercial property disposals, which included the sale of the hotel at 250 City Road and 70,000 square feet of restaurants and bars at 1 Tower Bridge. At €37,000,000 revenue from commercial property disposals in these results is back to a more normal level. Gross profit is reduced by 31.2 percent to €637,400,000 This reduction is lower than the fall in revenue due to the gross margin being slightly higher this time at 33.2% compared to 31.3% last time. Gross margin does vary according to mix and was 34% for the second half of last year. Net finance costs remain low and represent imputed interest on creditors and normal costs associated with our banking facilities.
As explained on the previous slide, the commencement of completions in St. William has resulted in the increased contribution from joint ventures this year, with £8,800,000 last time increased to £33,300,000 in these results. The effective tax rate for the year is 18 point 6% with no unusual items. This slide sets out the cash flows for the year, which resulted in an increase in net cash of £164,000,000 from £975,000,000 to £1139,000,000 at the year end. £504,000,000 has been generated from profits, with a net outflow of £75,000,000 from working capital.
There are 3 important components in this working capital movement, all of which are dealt with on the next three slides. These are £440,000,000 outflow from increased inventory, offset by a €97,000,000 increase in customer deposits and £267,700,000 increase in other working capital, largely represented by an increase in long term land creditors. Joint ventures had a net inflow of €112,900,000 primarily due to dividends received from the St. Edward joint venture. During the year, we paid tax of €89,800,000 acquired 130,500,000 of shares through buybacks and we paid dividends of 149,800,000 Looking forward, we anticipate investing a further net 300,000,000 into the balance sheet in FY 'twenty one as we continue investing in our regeneration sites.
I will not go through each line on the balance sheet, which is shown on this slide and shows net assets increasing by 138,000,000 to £3,100,000,000 as I will run through the 2 big numbers, inventories and creditors, in the next two slides. The only item I will highlight here is that reduction in non current assets due to the dividends received from St. Edward in the year. This slide analyzes the GBP 440,000,000 increase in inventories in more detail. The overall land cost in the balance sheet has increased by £226,000,000 meaning that new land acquired exceeded the cost of land used in production in the year.
The cost incurred in the year includes the cost of new sites acquired unconditionally. Within this is the acquisition of Camden Goods Yard from Morrisons in the second half of the year. The Costa sites previously acquired conditionally that have become unconditional in the year and moved on to the balance sheet, including the Steamers and Street site in East London. And the final element is planning related costs incurred in the year, such as the community infrastructure levy and Section 106 costs. The second big movement is in build work in progress.
This has increased by £210,000,000 as new build investment has exceeded the build cost expensed. This investment was anticipated as we develop out our new regeneration sites and as I just mentioned on the previous slide, is expected to continue into the coming year. Completed stock has remained stable at 140,000,000 and it includes 244 residential units across some 29 developments. Moving on to the next slide. Creditors have increased by £375,000,000 in the year.
There are two main reasons for this. Firstly, a £97,000,000 increase in customer deposits as new reservations exceeded the revenue taken to the income statement in the year, reflecting good sales and a normalization of our trading profile. Secondly, a £280,000,000 increase in land creditors. The majority of this is long term with the 2 largest new land creditors being in respect of Stephenson Street and Camden Goods Yard. 109,000,000 of the land creditors balance is due for payment in the next 12 months.
Moving on to our financing. The group facilities remain at £750,000,000 consisting of a drawn £300,000,000 term loan and a £450,000,000 revolving credit facility. Through these facilities, we have certainty of financing out until November 2023. At the year end, Barclays was ungeared with net cash of 1,100,000,000 and total available liquidity of 1,900,000,000 taking into account these bank facilities. During the second half of the year, the group's William joint venture refinanced its bank facilities, increasing these from 150,000,000 to 360,000,000 for a new 3 year term with 2 1 year extension options.
Finally, this slide summarizes our land holdings at the 30th April 2020. Estimated future gross margin has increased to €6,400,000,000 compared to £6,200,000,000 last year with plot numbers increased to 58,413 from 54,955. After taking account of plots taken to sales in the year, we've added a net 3,458 plots to the land bank. This is through the addition of 6 sites in the year, new planning and optimization of existing planning consents and market reassessments. After accounting for the GBP 743,000,000 of gross profit taken to sales, approximately GBP 922,000,000 of gross profit has been added to the land holdings.
Approximately half of this relates to the new sites acquired and the other half to optimization and reappraisal. Thank you very much, and I will now hand over to Rob Perrings.
Thank you, Richard, and good morning. I am Rob Perrons, Chief Executive of the Barclays Group. Before looking at Barclays performance and strategy, I'd like to summarize our immediate operational response to COVID-nineteen. Our first priority has to ensure the health and safety and well-being of employees, supply chain and customers. We at Barclays are very aware that COVID-nineteen is the first is first and foremost a human tragedy, but one that will also have profound economic consequences and this places a significant responsibility on all companies.
We acted quickly to adapt our site working practices, which enabled us to maintain a level of production across all of our sites, always adhering to guidance from government, Public Health England and the Construction Leadership Council. Initially, production levels fell to around 40%, and we are now back up to around 80% of normal production capacity. This is thanks to the experience and expertise of our construction and health and safety teams. Actual production was also impacted by material shortage as much of the supply chain shut down, which is now largely reversed. Today's 20% reduction from full capacity is due to the amended site operating procedures, which requires social distancing and additional monitoring.
Our marketing suites were closed from the 24th March, and we quickly transitioned the use of technology to support sales and completions. We reopened our marketing suite on the 16th May for appointments with clear policies to ensure social distancing is enforced. Our office based employees move quickly and seamlessly to remote working, aided by our resilient information technology infrastructure. We have now adapted our offices, undertaking the necessary risk assessments to provide safe working environment to those who need to be in the office so we can operate a more balanced hybrid model. Finally, I can confirm that Barclays has not taken advantage of the government's furlough scheme or participated in the COVID corporate financing facility, choosing instead to address the challenge presented by COVID-nineteen from its own resources.
Turning to Barclays results announcement. I'd like to focus today on the strong position that Barclays in and the transition we have been undertaking over the last 5 years, moving from the Central London sites acquired in the financial crisis to building a unique development business, which tackles some of the most complex sites in London and the Southeast. Richard has clearly set out the financial performance of the group along with a very strong cash position And I would like to highlight the following. Our pretax profit of £504,000,000 exceeded our initial expectations going into lockdown, which were £475,000,000 This is in line with the guidance at the start of the year, which was for profit to fall by onethree, completing the return to more normal levels. We have invested in the balance sheet as we bring forward our new regeneration sites.
An additional 210,000,000 has gone into work in progress, and we are forecasting further net investment in these sites over the next 2 years. COVID-nineteen has highlighted the need for business resilience and financial strength, and we ended the year with net cash of 1,100,000,000, forward sales of 1,900,000,000, an exceptionally strong position. This financial strength, combined with the group's uniquely long term business model expertise, mean we are well placed to deliver and optimize the €6,400,000,000 of estimated gross margin in the land bank. We now have 26 significant development opportunities in London and the Southeast, which I'd like to look at in more detail on the next slide. These 26 regeneration sites shown on this slide are sites which others do not have the resources, expertise or risk appetite to undertake at scale provide extensive opportunity to add value over the cycle.
As Richard has said, these sites are highly capital intensive, particularly in the early stages of remediation, servicing and creating the initial sense of place. As the last slide set out, these sites are the foundation of our long term purpose and strategy and our commitment to our stakeholders. Barclays' purpose is to build homes, strengthen communities and improve people's lives using our commercial success to make valuable and enduring contribution to society, the economy and the natural world. As we continue to invest in our unique operating model, our holistic approach to place making, putting people, nature, connectivity and the health and well-being of the wider community at the core will be even more important in the post COVID-nineteen world. Underpinned by this model and our financial strength, Barclays continues to target accumulative pretax return on equity of at least 15% over the cycle, broadly equivalent to a £500,000,000 pretax profit per annum.
This provides the confidence to reaffirm our commitment to annual shareholders' returns of £280,000,000 per annum. The previously proposed £455,000,000 return of surplus capital has been deferred for up to 2 years. This will now be delivered either through enhanced shareholder returns or invested in incremental land investment or a combination of the 2. This recognizes the current volatility from COVID-nineteen and the potential to acquire incremental land interest should opportunities arise. During the period of deferral, the company will provide clear visibility of this surplus capital by retaining it on the balance sheet.
I would now like to look at the sales performance in the market. Going into lockdown, Barclays was experiencing a stable trading environment with sentiment having been buoyed by decisive U. K. Election results in December. As a consequence, sales for the 12 month period have been some 10% ahead of the prior year.
Pricing remained firm throughout the year, and we have secured prices above our business plan levels, broadly covering cost increases. The split of our customers remains broadly fifty-fifty between owner occupiers and investors, with overseas customers accounting for the majority of investors. Sales in April May reflected the impact of the lockdown and were around 50% of normal levels with pricing stable, a good result given the impact on the home buying process. We have seen an encouraging increase in activity as the economy gradually reopens, but it's too early to determine where demand will settle over the coming months. To really kick start the economy and enable the feel good factor return, we need to see demand side stimulus from government, including the reduction in stamp duty, an extension of help to buy, longer mortgage offer period and investment in truly affordable homes.
Looking forward, the fundamentals remain strong with unsupply and low interest rates, and this remains a good time to buy in London and the Southeast for those who have a deposit, particularly when compared to the cost of renting. Now looking at land and planning. Barclays continues to appraise a number of new land opportunities. We have bought 6 new sites comprising around 4,500 new homes. This includes a site on the Old Kent Road in Southwark for around 1300 homes, where we have completed a challenging land assembly through unconditional acquisitions a site in Brentford for around 1900 homes, which is also a land assembly of 2 conditional purchases by a St.
Edward joint venture. A site in Camden for around 6 50 homes, where we'll also be re providing a Morrison store. And outside London, a site in Tonbridge, Kent and sites in Brighton and Worthing in Sussex within the St. William joint venture. Our focus in London continues to be getting our controlled sites into production.
And now, when I turn to planning, we have secured planning consents on 8 sites in the year. And we have obtained 55 revisions and amendments on other sites. We had a refusal in the year on our Hartford site in St. William, and we managed to secure a consent by appeal shortly before the year end. While we have had notable successes in boroughs who want to see new housing, in the main planning is taking even longer, It's very expensive and increasingly bureaucratic.
As we emerge from COVID-nineteen, the planning systems need to be reviewed, both in terms of its cost and complexity. We would abolish SIL for sites over 100 units and focus Section 106 obligations on delivering benefits for the local community. In terms of build costs, increases continued at around 4% until the end of 2019. From the beginning of the calendar year, build costs have remained level. As the U.
K. Emerges from lockdown, we expect further deflationary pressure on the costs in the short term due to lower activity levels. Looking further afield, we will continue to work with our supply chain to mitigate the risks of any material shortage in the event of a second wave of COVID-nineteen or should a trade agreement not be secured with the EU by the end of the year. These do both remain important risks that cannot be discounted and which cannot be totally mitigated. We have maintained around 11,000 people working across our 70 sites in production during the year with a total 32,000 U.
K. Direct and indirect jobs supported across the economy by what Barclay. Turning to our modular factory. The year has seen good progress in the development of our precision manufacturing facility in Airbus fleet. The machinery is now ordered to enable production of the first prototypes to begin next year.
This slide shows the status of our 98 development sites, of which 45 are in London and 53 in the Southeast and Birmingham. We have completed 6 sites and removed a conditional site in St. Edward and acquired 6 new sites in the year. This leads to the reduction in number of sites from 99 at the start of the year to 98 now. The sites in production have increased by a net one to 70 with 7 sites started and 6 sites mentioned above completing.
Of the 16 owned sites not yet in construction, 12 have at least a resolution to grant planning position, which significantly reduces the balance sheet risk in our land holdings. Of the 12 conditionally contracted sites, 3 now have at least a resolution to grant planning. We are targeting 10 new site starts in the coming year, but this is dependent upon market conditions. The next two slides are the map setting out the locations of all of our sites. I will not dwell on these, so you can note the 6 new sites added in the year are marked with asterisks.
This slide is our London sites and I'll leave it up for a short time to enable you to review it. This slide shows our sites outside London and again, I will leave it up for a short time to enable you to review. Turning briefly to our joint ventures. St. Edward is our joint venture with M and G and it currently comprises 5,300 homes.
This is an increase of 1600 homes in the year, largely due to the inclusion of the 1900 homes at the new site in Brentford in London, which is conditional on planning. During the year, the site at Wallingford was moved into production. St. William is our joint venture with National Grid, comprising some 10,900 homes, which is up from 9,800 a year ago. It has been a good year for St.
William. It is now a profitable company with 8 sites in production. We also obtained planning for 2,800 homes at Popular and 350 Homes at Hartford. Consistent with the previous guidance, we anticipate Sir William to be materially earnings enhancing by 'twenty three, 'twenty four. So lastly, I conclude with a summary of our guidance.
It is very difficult to forecast in these volatile times with the nature and complexity of the prevailing macro risks. We will always prioritize protecting the balance sheet ahead of annual profits and financial strength is therefore of paramount importance. We do have 1,100,000,000 of net cash. We have forward sales of 1,860,000,000 and we do have unrivaled land holdings. In 2021, we are looking to deliver similar profits to 20 nineteen-twenty 20, but these will be weighted towards the second half when we expect to deliver twothree of this year's profits.
Looking forward, we continue to target a cumulative pretax return on equity of 15% for the 6 year period ending 30th April 2025. This broadly equates to £500,000,000 pretax profit per annum. We are looking to selectively add to our land holdings and are targeting the estimated future gross margin in the land holdings to grow to £7,500,000,000 by 2025. Turning to shareholder returns. We remain committed to our £280,000,000 annual shareholder return program, which we are able to make through either dividends or share buybacks.
This now equates to £2.23 per share following the acquisition of 14,600,000 shares for £515,000,000 at an average price of £35.25 since December 2016. Of the next GBP140 million, which is committed to be paid by the 30 September 2020, €6,000,000 has already been returned through share buybacks. We also remain committed to delivering value to shareholders from the previously identified surplus capital of £455,000,000 We have deferred the return of this by up to 2 years and provided the flexibility for this to be utilized either through enhanced cash returns to shareholders or investment in incremental land interest should opportunities arise to enhance shareholder value over the cycle. We do see the potential of such incremental land investments due to the macro uncertainty of volatility, and this incremental land investment will be defined as cash paid on land interests over and above the cost of land used in the income statement from the 1st May 2020. The surplus capital remain on the balance sheet until it is used for either enhanced cash returns or incremental land investments.
I do thank you very much for your time and very much for listening.