Interim Management Statement

RNS Number : 6146C

Barratt Developments PLC

17 November 2009

 



Barratt Developments PLC

Interim Management Statement

This Interim Management Statement ("IMS") covers the 19 week period from 1 July 2009 to 8 November 2009 ("the IMS period"). 

Mark Clare, CEO Barratt Developments commented:

"With the successful refinancing of the business now completed, we have substantially reduced debt levels and are in a strong position to buy land as opportunities emerge and to open new sites.  Our net private reservation rates per site are running 34% ahead of last year.  While trading conditions in the housing market have improved, activity levels will remain constrained until the availability of mortgage finance increases particularly at higher loan to value levels."

Current trading

The stability in the UK housing market seen in the first half of the calendar year has continued into the current trading period. The Group is achieving its target net reservation rate with prices ahead of budget. 

Visitor levels per active site for the IMS period averaged 1.88 per week (2008: 1.88), with net private reservations averaging 204 per week (2008: 197).  Our net private reservation rate for the IMS period equates to 0.55 homes per active site per week (2008: 0.41).  These reservation rates include cancellations of 13.4% for the IMS period (2008: 23.7%).  We continue to adopt a cautious approach to recording reservations as a result of the limited availability of mortgage finance.  

The forward order book at 8 November 2009 stood at £846.6m (2008: £817.7m) of which £506.0m was contracted (2008: £481.5m).  5,228 plots (2008: 5,513) were included within the forward order book of which 38% were social plots (2008: 45%).

As at 8 November we were operating from 362 active sites (2008: 449) and 415 total sites (2008: 515). During the first 19 weeks we have opened 39 active sites and expect site numbers to be broadly stable during the year.  The business continues to focus on managing stock levels to operate at the optimal level in the current environment.

Whilst the land market remains subdued, we have continued to identify and approve the purchase of a number of sites, largely on deferred terms.

Net debt

On 23 September 2009 we announced a fully underwritten Placing and Rights Issue, raising gross proceeds of £720.5m, and the renegotiation of our banking facilities. The equity issue has significantly strengthened the financial position of the Company and was completed successfully on 4 November 2009 and amended financing facilities came into effect on 16 November 2009.  We currently anticipate that net debt as at 31 December 2009 will be around £700m (2008: £1,422.8m).  

Exceptional costs

As outlined in our announcement on 23 September 2009, as a consequence of amending the Group's financing arrangements, we will incur exceptional costs within the first half of FY10 of around £125m. 

Based on the recent stability in pricing we do not anticipate any additional impairment within our housebuilding business.

Outlook

Whilst there has been an improvement in market conditions, further recovery will be dependent on increases in mortgage lending particularly in the higher loan to value segment.   With these constraints remaining in place, we continue to expect total completions for FY10 to be approximately 12,000, with around 16% of the total comprising social units. Consistent with the re-planning and build programme, a shift in product mix towards a higher proportion of houses is expected.  We continue to anticipate that this change in mix will improve average selling prices by around 8-10% for the financial year.

Note - Reservation rates

	Average net	Net private	Net private	Net private	Net private
	private	reservations	reservations	reservations	reservations
	reservations	per week per	per week per	per week per	per week per
	per week	total site	active site	active site	active site
	19 Weeks	19 Weeks	19 Weeks	1st Half	2nd Half
FY09	197	0.36	0.41	0.45	0.52
FY10	204	0.48	0.55	n/a	n/a

Conference call for analysts and investors

Mark Clare, Group CEO and David Thomas, Group FD will be hosting a conference call at 08:00am today, Tuesday 17 November 2009, to discuss the Interim Management Statement.

To access the conference call:

Dial-in: 020 7906 8567 

A replay facility will be available until 3 December.

Dial-in: 020 7075 6589. Passcode: 252294#

Barratt will be holding its Annual General Meeting today at 2:30pm at the offices of UBS Limited, 1 Finsbury Avenue, London

Certain statements in this IMS 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.

-Ends-

For further information, please contact:

Barratt Developments PLC
Mark Clare, Group Chief Executive	020 7299 4890
David Thomas, Group Finance Director
For media enquiries, please contact:
Barratt Developments PLC
Dan Bridgett, Head of External Affairs	020 7299 4873
Maitland
Liz Morley	020 7379 5151
Neil Bennett

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