Trading Update
Barratt Developments PLC
11 July 2007
11 July 2007
Barratt Developments PLC
TRADING UPDATE
Barratt Developments PLC is today issuing a trading update for the year ended
30th June 2007, ahead of preliminary results to be announced on 26th September
2007.*
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 Margins
Total 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 constrained
average selling price growth. However, the combination of a number of high
margin sites coming through to completion alongside tight cost control should
enable us to deliver a full year operating margin percentage at similar levels
to 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 selling
price of £209,400 (2006 : £205,900 ) up 1.7%. Operating margins for David Wilson
Homes and Wilson Bowden Developments were in line with management expectations.
Land
As a result of continued investment, the enlarged group's landbank has grown
from 103,600 plots at December 2006 to 109,700 at June 2007. Included in this
are 23,300 plots agreed subject to contract (June 2006 : 23,500). This
represents a landbank of c.5.1 years at the current combined annual production
rate of 21,500 and is supplemented by over 12,000 acres of strategic land.
Gearing
As previously indicated, the enlarged group's continued investment has resulted
in the business running higher gearing levels. At 30th June total borrowings
(including c.£0.9bn of acquisition financing) were c£1.3bn.
Integration
The integration of Barratt and Wilson Bowden is progressing rapidly and is ahead
of plan. We are on track to deliver annualised pre-tax cost synergies of at
least £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-branding
have commenced and good progress has been made on the reduction of head office
and operational support costs.
Through the application of best practice opportunities across the company, we
are identifying further synergy savings beyond that originally envisaged.
Outlook
Forward sales for the Group at 1st July 2007 totalled £1,414m, 15% ahead of June
2006 (£1,232m). Barratt Homes' forward sales at £1,010m were up 20% (£845m at
June 2006) and David Wilson Homes forward sales were up 4% at £404m (£387m at
June 2006).
Going forward it would be prudent to assume that the cumulative effect of
interest rate rises will cause the housing market to tighten. However, we are
continuing to see good momentum on sales reservations, which, combined with our
strong forward sales position, land bank and focus on cost efficiency, give us
confidence that we can compete effectively.
We believe that the ongoing imbalance between supply and demand will continue to
underpin our growth and will be strongly supported by the enhanced capability of
the 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 Barratt
Developments 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 to
June. To allow proper comparison of the performance of the separate parts of the
enlarged group, we will also be giving detail of the operating record for each
of the two businesses for the six-month period to June 2007.
- Ends -
For further information please contact:
Barratt Developments PLC 020 7067 0700
Mark Clare, Chief Executive
Mark Pain, Finance Director
Weber Shandwick Financial 020 7067 0700
Terry Garrett
Nick Dibden
James White
This information is provided by RNS
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