Barratt reduces losses and boosts order book

Feb 24 2010 By Karen Dent, The Journal

FURTHER evidence of recovery in the housing market came today in Barratt's latest set of results, which showed the housebuilder has cut its losses, increased its selling prices and boosted its order book.

Barratt made a loss of  £48.5m before tax and exceptional items in the six months to the end of December, down from a £80.6m loss the year before.

And its operating profit before exceptional items - which were mainly related to a change in its financing arrangements -  rose to £21m from £16.m last time. Its selling prices were also up by 3.5%, putting a £166,300 price tag on the average Barratt home.

Barratt, which was set up in Newcastle in 1958, is now back in the market to buy land for building. Since the middle of last year it has agreed to buy 74 new sites at a cost of £358m, where it plans to build 9,038 homes.

Chief executive, Mark Clare, said: “During the last six months, we have improved our trading performance, successfully refinanced the business and invested in new land.

“The value of our forward order book is now up 27% year on year and with our ongoing focus on optimising selling prices we are expecting to see significant improvements in operating margin in the second half.”

Barratt more than halved its debt to £605.3m, after raising £720.5m in a share placing and selling off some commercial property on its books.
Mr Clare said that the smaller debt meant Barratt was better placed to benefit from improvements in the housing market.

“The group is now in a stronger position to develop existing sites and to take advantage of land purchasing opportunities as they arise,” he said.

“During the period, the recovery of the UK new housing market continued in terms of customer demand and pricing, albeit mortgage availability remained restricted, particularly in the higher loan to value segment. 

“Further recovery in the UK new housing market will depend on improvement in the general economic conditions and in the availability of higher loan to value mortgages.”