19th Nov 2007 07:02
Barratt Developments PLC19 November 2007 19 November 2007 Barratt Developments PLC Interim Management Statement Barratt Developments PLC is publishing today its first Interim ManagementStatement as required by the UK Listing Authority's Disclosure and TransparencyRules. This statement covers the 19 week period from 1 July 2007. At the end of September, the Group issued its preliminary results for the yearended 30 June 2007. As anticipated at the time, the cumulative impact of 5interest rate rises over the previous 18 months, combined with the effect of themore recent liquidity squeeze on the availability and cost of mortgage finance,has led to a tightening of the UK housing market. These conditions have continued throughout this period and the Group continuesto prioritise operating margins rather than volume, by focusing on costreduction and deploying its sales capabilities to deliver completion volumes andsale prices at satisfactory levels. Private sales per week per site were lower when compared with the particularlystrong period last year, but were more in line with 2005/6 levels. Thisreflects the more challenging market conditions but also our decision not topursue the lower margin segments of the buy to let market. Cancellation rateshave continued to track broadly in line with historic norms but are above lastyear's exceptionally low levels and remain sensitive to mortgage availability. In the period to the end of October, net average selling prices increased by 2%,despite average sales discounts running marginally higher than the same periodlast year. As a result, we expect our operating margin for the half year to be broadly inline with the guidance given at the preliminary results. The average number of outlets is forecast at 580 for the first half, rising to620 in the second half, reflecting the phasing of planning approvals. Based oncurrent trends, first half completions are expected to be approximately 8,750units. We continue to maintain a strong forward order book, which currently stands atapproximately £1.8bn. Together with completions to date, we have now securedaround 61% of our full year requirement. We continue to make good progress in delivering the announced synergy targets ofat least £30m in 2007/8 rising to at least £60m the following year. The Group'snew IT systems are currently being rolled out in accordance with plan. Net debt at the end of the first half of the financial year is expected to beapproximately £1.7bn. At the end of October, Group net assets, excludinggoodwill, were circa £2.0bn representing just over £5.80 per share. The Boardremains committed to maximising shareholder value by prudently managing thebalance sheet, taking into account current and future market conditions. Mark Clare, Group Chief Executive commented, "We expect to enter the New Year with increased outlets, a highly focused salesoperation and with an increased expectation that the interest rate cycle haspeaked. However, consumer confidence and mortgage finance availability andpricing, will be key to determining the success of the 2008 Spring sellingseason. Barratt's highly experienced management team will remain focused on efficientand effective operational delivery, whilst optimising its land spend to ensurewe are ready to capitalise on any improvement in market conditions. Looking forward, the fundamentals of the market remain strong with demandexceeding supply and with a Government committed to increasing the supply of newhousing." - ends - For further information please contact: Barratt Developments PLCMark Clare, Group Chief ExecutiveMark Pain, Group Finance Director For analyst/investor enquiries, please contact: Barratt Developments PLC 020 7299 4880James Mason, Head of IR For media enquiries, please contact:Weber Shandwick Financial 020 7067 0700Terry Garrett / Nick Dibden This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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