11th Jul 2007 07:00
Barratt Developments PLC11 July 2007 11 July 2007 Barratt Developments PLC TRADING UPDATE Barratt Developments PLC is today issuing a trading update for the year ended30th June 2007, ahead of preliminary results to be announced on 26th September2007.* Highlights • Good completion growth from both Barratt and Wilson Bowden • Robust pre tax profit in line with market expectations • Strong forward sales position in both businesses • Enhanced land bank well positioned to deliver 2007/8 completions • Wilson Bowden integration ahead of plan with delivery of synergy targets on track. Sales and MarginsTotal completions for Barratt Homes increased by 6% to 15,517 (2006 : 14,601)with second half performance at 8,311 up 9% on the same period last year.Average selling prices of £169,700 (2006 : £165,800) were up c. 2.3% on 2006. The competitiveness of the market and product mix changes have constrainedaverage selling price growth. However, the combination of a number of highmargin sites coming through to completion alongside tight cost control shouldenable us to deliver a full year operating margin percentage at similar levelsto last year. Wilson Bowden produced a strong performance in the 6 months to 30th June 2007.Total completions increased by 19% to 2,635 (2006 : 2,211) at an average sellingprice of £209,400 (2006 : £205,900 ) up 1.7%. Operating margins for David WilsonHomes and Wilson Bowden Developments were in line with management expectations. LandAs a result of continued investment, the enlarged group's landbank has grownfrom 103,600 plots at December 2006 to 109,700 at June 2007. Included in thisare 23,300 plots agreed subject to contract (June 2006 : 23,500). Thisrepresents a landbank of c.5.1 years at the current combined annual productionrate of 21,500 and is supplemented by over 12,000 acres of strategic land. GearingAs previously indicated, the enlarged group's continued investment has resultedin the business running higher gearing levels. At 30th June total borrowings(including c.£0.9bn of acquisition financing) were c£1.3bn. IntegrationThe integration of Barratt and Wilson Bowden is progressing rapidly and is aheadof plan. We are on track to deliver annualised pre-tax cost synergies of atleast £45m in the second full year after completion. The new organisation structure and management of the housebuilding business,comprising 35 operating divisions, is in place. Site transfers and re-brandinghave commenced and good progress has been made on the reduction of head officeand operational support costs. Through the application of best practice opportunities across the company, weare identifying further synergy savings beyond that originally envisaged. OutlookForward sales for the Group at 1st July 2007 totalled £1,414m, 15% ahead of June2006 (£1,232m). Barratt Homes' forward sales at £1,010m were up 20% (£845m atJune 2006) and David Wilson Homes forward sales were up 4% at £404m (£387m atJune 2006). Going forward it would be prudent to assume that the cumulative effect ofinterest rate rises will cause the housing market to tighten. However, we arecontinuing to see good momentum on sales reservations, which, combined with ourstrong forward sales position, land bank and focus on cost efficiency, give usconfidence that we can compete effectively. We believe that the ongoing imbalance between supply and demand will continue tounderpin our growth and will be strongly supported by the enhanced capability ofthe new group from its broader product range, improved geographic coverage,regeneration and social housing skills and commercial development operations. * On 26 September 2007, we will be reporting statutory results for BarrattDevelopments PLC that include two months of Wilson Bowden plc. In May and June,Wilson Bowden typically produces c. 60% of its sales for the six month period toJune. To allow proper comparison of the performance of the separate parts of theenlarged group, we will also be giving detail of the operating record for eachof the two businesses for the six-month period to June 2007. - Ends - For further information please contact: Barratt Developments PLC 020 7067 0700Mark Clare, Chief ExecutiveMark Pain, Finance Director Weber Shandwick Financial 020 7067 0700Terry GarrettNick DibdenJames White This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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