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Barratt profits surge despite £10.7m Manchester jv hit

Barratt saw a 159 per cent surge in profits last year as it halved its debt pile - but incurred a £10.7m cost after a jv partner went into liquidation.

Reporting annual results for the year ended 30 June 2012, Barratt said group revenues were up 14 per cent to £2.32bn, with completions of 12,637 units (2011: 11,078). 

The house builder said that ‘over time’ it expects to move to around 450 active sites - up from the 2012 average of 387 sites - which would result in around 15,000 annual completions, including joint ventures.

Full year profit before tax and exceptional items increased by 159.3 per cent to £110.7m, from £42.7m in 2011. It comes three years after the firm reported a £679m loss.

However, £10.7m was shaved off in consolidation costs when Barratt had to buy out its partner’s 50 per cent share in a joint venture called Base Regeneration LLP for a nominal £1. It came after the joint venture partner, Manchester-based Artisan, went into liquidation in March.

Barratt bought the share in Base Regeneration LLP on 9 May and consolidated it within the group during the year. Barratt had entered the jv to develop several sites in Greater Manchester in 2006, including a 720 unit scheme in Hattersley.

Despite this, Barratt’s group net debt was almost halved to £167.7m in the year, from £322.6m. The maturity dates of its banking facilities range from April 2013 to July 2021, with £690m of the revolving credit facilities maturing in May 2015.

The housebuilder said the primary driver of the group’s profit growth was the increased proportion of completions from newer, higher margin land.  During the period 4,381 completions - or 35 per cent - were on new plots. This is expected to increase to just over 50 per cent of completions in 2012/13.

Group chief executive Mark Clare said:  “The year has seen a rapidly improving performance across the group which shows that our strategy is delivering, with profits up 159 per cent and an almost halving of our net debt. 

“In the current financial year we expect to make further good progress, with more than half of completions forecast to be delivered from our more recently acquired higher margin land.”

Average selling prices increased to £180,500 (2011: £178,300) with private average selling prices increasing by 1.5 per cent to £201,800 (2011: £198,900).

Barratt also completed 2,805 (2011: 2,634) social Housing units at an average selling price of £105,700 (2011: £112,300).

While welcoming NewBuy and FirstBuy initiatives, Barratt said it has also been offering affordable ‘top-up loans’ on a secured and unsecured basis, to give customers access to alternative means of bridging the deposit gap.

The firm completed 1,694 (2011: 609) homes under both the HomeBuy Direct and the FirstBuy schemes, and supported 894 (2011: 1,823) purchasers with its own shared equity packages.

At 30 June 2012, the firm had 54,209 (2011: 60,083) owned and controlled plots in its land bank.

It said no dividend will be paid for last year.

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