13th May 2015 06:35
LONDON (Alliance News) - Barratt Developments PLC Wednesday said it remains on track to report a significant improvement in its results in the year to end-June, as it expects housing completions to be ahead of previous guidance and as it reported a 17.9% increase in total forward sales by May 10.
The housebuilder said it now expects housing completions for the year to June 30 to be about 16,100, up from 14,838 in its last financial year, and it said forward sales including joint ventures stood at GBP2.59 billion as of May 10, up from GBP2.20 billion on May 11, 2014.
"Our investment in circa GBP4.5 billion of approved land for new housing since 2009 continues to deliver results. Completions for financial year 2015 are expected to increase by circa 9% and our forward order book, at more than GBP2.5 billion, is the highest level ever achieved by the group," it said in a statement.
"We are on track to deliver a further significant step up in our financial performance in financial year 2015, making good progress towards achieving our financial year 2017 targets of a gross margin of at least 20% and return on capital employed of at least 25%," it added.
Barratt said its strong trading is continuing to be supported by an improving mortgage market, with customers able to choose from a wider range of mortgage products at very competitive interest rates, and as first-time buyers continue to get support from the UK government's Help to Buy scheme. The house prices it is achieving are continuing to rise, it said.
It said it had been able to drive a higher level of reservations from its legacy, lower-margin sites thanks to the strong market, and as a result expects to sell 250 more units than previously expected in the current financial year, boosting profit by about GBP4 million. It now expects its completions excluding joint ventures to be about 15,250.
The company said it has launched 64 new developments in the 19 weeks to May 10, and expects to deliver further "controlled" volume growth in its next financial year. It is currently operating from 404 active sales sites, up from 362 a year ago.
Barratt added that the land market remains attractive and it still expects to approve about 16,000 plots in the current financial year, down from 21,478 in its last fiscal year. About 9,900 strategic plots have been approved so far in the current year.
It added that it still expects to have a net cash position of between GBP50 million and GBP100 million at the end of the current year, compared with GBP73.1 million at the end of last year.
By Steve McGrath; [email protected]; @stevemcgrath1
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