Barratt narrows losses

24th Feb 2010 07:04

Housebuilder Barratt Developments has cut half year losses and predicts a "significant" improvement in operating margin in the second half versus the first as it begins selling more houses and fewer flats.A loss before tax and exceptional items of £48.5m for the last six months of 2009 was much less than the £80.6m deficit reported a year ago, as was the loss after exceptional items of £178.4m versus £594.5m in 2008.Exceptional items of £129.9m relating to amended financing arrangements following its fundraising, were much less than last year's £513.9m, swelled by impairment of inventories and restructuring costs. Total completions were 5,053, down from 6,905 in 2008 and revenue fell to £872.4m from £1.26bn. The sale of more houses improved the average selling price by 3.5% to £166,300.Forward sales at the end of 2009 of £651.2m, up £455.8m the year before, had increased to £847.4m, up 27%, by 21 February, meaning Barratt has already secured 77% of its full year requirement. For the last six weeks, the company has delivered 0.55 private sales per active site per week, up 12.2% on the first half of the financial year, slightly better than the 0.53 for 2009 and above budgeted prices. "The group now believes it can achieve the optimal balance between margin and volume with a full year completions target of around 11,500 units, with average selling prices increasing by 8 to 10% year on year, mainly as a result of the mix change with more houses and less flats being sold," the firm said. "This will contribute to a significant improvement in operating margin in the second half compared to the first half. Further recovery in the UK new housing market will depend on improvement in the general economic conditions and in the availability of higher loan to value mortgages."