17th Jan 2008 07:01
Barratt Developments PLC17 January 2008 Immediate Release 17 January 2008 Barratt Developments PLC TRADING UPDATE Barratt Developments PLC is today issuing a trading update for the 6 months to31 December 2007, ahead of interim results, which will be announced on 27February 2008. Highlights • Robust margins in line with management expectations. • Average selling prices maintained and costs reduced. • Strong land bank and tighter investment criteria reducing second half spend. • Encouraging forward sales of £1.26bn. • Operational integration of Wilson Bowden complete and synergies on target. Mark Clare, Group Chief Executive commented, "Against a backdrop of a more difficult housing market, we have continued totrade satisfactorily with prices holding up and costs reduced. Whilst the historically strong Spring selling period is ahead of us it is stilltoo early to know what the market will bring. However, we have entered the NewYear with an encouraging forward order book, increasing outlets and fallinginterest rates." SalesOn a statutory basis, total completions increased by 26% to 9,056 (2006: 7,206)and exceeded our estimate given in November of 8,750 units. Private completionswere 24% higher at 7,177 (2006: 5,791) and social housing completions rose 33%to 1,879. The average selling price of £177,900 (2006: £165,000) increased 8%. On a pro forma basis (assuming Wilson Bowden had been acquired on 1 July 2006),total completions fell from 10,623 to 9,056 reflecting an expected reduction inoutlets, lower buy to let activity and tougher market conditions. Private average selling prices rose 0.5% to £199,900 (2006: £199,000). Socialaverage selling prices rose 4.9% to £93,300 (2006: £88,900). Overall, totalaverage selling prices decreased by 0.9% to £177,900 (2006: £179,500) reflectingmix changes between private and social completions. MarginIn what has been a more challenging environment, we have continued to pursue ourstrategy outlined in the Interim Management Statement of protecting our marginrather than driving for volume. Our focus continues to be on holding sellingprices whilst delivering cost savings and this should enable us to deliver afirst half operating margin well within the range of previous guidance. LandWe continue to manage our balance sheet prudently and as a result of tightenedland buying criteria we now expect spend this year to be circa £0.3bn below ourprevious guidance of £1.5bn. Our land bank has increased marginally to c. 113,500 plots (December 2006proforma: 109,300), of which 79% is owned and 21% is agreed subject to contract.This equates to 5.3 years supply at 2006/7 volumes (December 2006 proforma: 5.1years). BorrowingsHalf year borrowings were in line with expectations at approximately £1.7bn,well inside our committed facilities and banking covenants. IntegrationThe operational integration of Wilson Bowden is now complete and good progresshas been made on the rollout of the new IT systems. We are confident ofachieving our synergy targets of £30m in 2007/8 rising to at least £60m thefollowing year. OutlookOur forward order book stands at £1.26bn (2006 pro forma: £1.34bn) and takingaccount of completions to date and those forward sales expected to complete inthe second half, we have now secured 69% (2006 pro forma: 74%) of the year'sforecast volumes. The historically strong Spring selling period is ahead of us, but it is stilltoo early to tell what the market will bring. However, we enter the New Yearwith a more favourable interest rate environment, with an encouraging forwardorder book, an increasing number of outlets and a good geographic and productspread. We believe that the market fundamentals, which support the industry,remain strong. A conference call for analysts and investors will be held at 8-30am today.Please contact Weber Shandwick Financial on 020 7067 0700 for the dial indetails. A recording of the conference call will be available on the InvestorRelations section of our website www.barrattdevelopments.co.uk, from 11am. - ends - For further information please contact:Barratt Developments PLCMark Clare, Group Chief ExecutiveMark Pain, Group Finance DirectorJames Mason, Head of Investor Relations 020 7299 4880 For media enquiries, please contact:Weber Shandwick FinancialTerry Garrett / Nick Dibden 020 7067 0700 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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