Interim Management Statement

RNS Number : 1549S

Barratt Developments PLC

13 May 2009

 



Barratt Developments PLC

Interim Management Statement

Barratt Developments PLC ('Barratt') is today publishing its Interim Management Statement covering the 19 week period from 1 January 2009 to 10 May 2009.

Highlights

• Visitor and reservation rates up on first half reflecting the Spring selling season and improved sentiment.
  
• Satisfactory balance achieved between volume and selling prices.  Whilst higher activity levels and lower stock has supported selling prices, there remains some downward pressure from lender valuations.
  
• Continued focus on cash generation through control of cost, land investment and lower stock and work in progress levels.
  
• Debt reduction in line with management expectations.

Mark Clare, Group Chief Executive commented,

'Since the New Year we have sold over 4,600 homes at acceptable prices. We are on track to deliver volumes and margins in line with our expectations. Whilst there are early signs of stability, the housing market remains challenging, and is constrained by a lack of mortgage finance on appropriate terms.'

Revenues

Total sales outlets for the period averaged 474, with effective sales outlets averaging 414. Total sales outlets are expected to average around 500 for the Group's financial year.

Visitor levels per site for the 19 week period were down 6% compared to the prior year comparable period. However, since 1 January 2009, we have seen visitor levels per site up approximately 17% on the first half of our financial year.

Total net reservations averaged 243 per week over the last 19 weeks with private net reservations averaging 223 per week. This equates to 0.47 private sales per week per site, up 4.4% on the same period last year and up 20.5% compared to the first half.

Over the last six weeks, since 30 March, visitors per site were up 7.8% and net private reservations were up 58.8% compared with the depressed level in the same period last year.

Cancellation rates have averaged approximately 16% for the period, compared to 25.7% in the prior year.  We have adopted an increasingly cautious approach to the recording of reservations, reflecting our concerns over the availability of mortgage finance. We expect the cancellations rate to trend upwards in keeping with normal seasonal trends as we approach the June year end.

Margins remain in line with management expectations.

The forward order book currently stands at £778.2m equating to 5,253 plots up from £455.8m and 3,529 plots at 1 January 2009. Of the current forward order book, £437.9m (56%) is contracted.

Costs

We continue to make progress in delivering further cost savings through; improved efficiency and build cost initiatives (including labour and material reductions), site replans and overhead improvements. We are on track to deliver the £80m savings for the next financial year, highlighted at our interim results in February.

Balance Sheet

All elements of cash investment continue to be tightly controlled driving progress to reduce debt.

We expect total land spend for the financial year to be around £300m.  We are investing in land, where we are contractually committed to do so, or where there are investment opportunities requiring limited funding in the near term.  At current sales rates, the Group's landbank equates to approximately 5.3 years' supply.

Work in progress is being closely managed on a site by site, unit by unit basis. Unreserved roof to complete units, which stood at 3,822 units at 31 December 2008 have reduced by 37% to 2,405 at 10 May, 2009.

Stock levels continue to decline, and as at 10 May, we had 771 unreserved stock units, equating to 3.5 weeks supply at current sales rates. This is down 47% from the holding of 1,465 units at 31 December 2008.

Part exchange stock levels have continued to fall, and we currently have 73 unreserved units compared to 346 at 31 December 2008, down 79%. 

At the end of April net debt was in line with the Group's business plan. As detailed in our interim results announcement in February, as a result of continued uncertainty in the market, there remains risks to forecast revenues and cash flows. However based upon current trading and our detailed forecasts, the Group is expected to continue to comply with its financial covenants.

Wilson Bowden Developments

Total cash generated from the divestment of specific Wilson Bowden development assets now totals c.£180m with a further c.£20m expected over the next 12 months.  The balance of the investments and development opportunities will now be retained and managed by a dedicated team to realise value when the market improves and to pursue opportunities to create value from the wider Barratt portfolio.

Outlook

There are early signs that some stability is returning to the new homes market, and the Spring selling season has shown improved visitor traffic and reservation levels compared to the first half of our financial year.  Over time, it is hoped that the measures introduced to increase mortgage lending will provide additional support to the market.  However volumes are currently at low levels, mortgage finance remains constrained and visibility is limited. We therefore remain cautious as to near term trading prospects.

- Ends -

Conference call for analysts and investors.

Mark Clare, Group CEO and Mark Pain, Group FD will be hosting a conference call at 08.00am today, Wednesday 13 May 2009, to discuss the Interim Management Statement.

To access the conference call

Dial-in: 020 8609 3823

A replay facility will be available until 27 May 2009

Dial-in: [phone]   Passcode: 262602

Certain statements may be forward looking statements. By their nature, forward looking statements involve a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends or activities should not be taken as representation that such trends or activities will continue in the future. Accordingly undue reliance should not be placed on forward looking statements.

For further information, please contact:

Barratt Developments PLC
Mark Clare, Group Chief Executive
Mark Pain, Group Finance Director
For analyst/media enquiries, please contact:
James Mason, Head of Investor Relations	020 7299 4880
Dan Bridgett, Head of External Affairs	020 7299 4873
Maitland
Liz Morley	020 7379 5151

 

END

 

 

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