Barratt expects profit before tax of £40m

14th Jul 2011 07:03

Barratt Developments wrapped up the season of trading updates from house builders by giving thanks to the London market, as conditions outside of the nation's capital continue to remain challenging in some areas.The group confirmed its return to profitability in the year, and expects to deliver a profit before tax and exceptional items of around £40m, compared to a loss the year before of £33.0m. That will send the investment analysts rooting through their drawers for a pencil and a rubber, as market consensus for profit before tax for the year to June 2011 is £32.7m.Completions in the second half of Barratt's financial year, which runs to June, were in line with the corresponding period of 2010, pushing total completions for the year up to 11,171, down from 11,377 the year before. The group saw an increase in the private dwelling average selling price of around 5% year-on-year in the second half to around £204,000 from £195,000 a year earlier, driven by changes in the mix of properties offered. For the year as a whole, the average selling price climbed to around £178,000 from £174,000 the year before, with the average selling price for social housing declining to around £112,000 from £120,000.Net private reservations per active site per week in the second half were 0.48, down from 0.52 in the corresponding period of the year before, but a significant improvement on the first half performance of 0.39 reservations. For the full year, net private reservations per active site per week were 0.44 (2010: 0.50). The cancellation rate for the full year was 20.6% (2010: 18.0%).The group welcomed the launch of the government's new shared equity scheme, FirstBuy, in which Barratt has secured an allocation of £24.9m. "FirstBuy is a timely boost and is already proving popular, but market recovery cannot be sustained without improved lending conditions. Our focus remains on improving margin rather than driving volumes," said Mark Clare, the group's chief executive.There was good news on the operating margin front, however, which improved to around 7.8% from 5.9% in the second half of the preceding year.Net debt at the end of the period was lower than the market had been led to expect, at around £330m, down from £366.9m the year before. --jh