Barratt’s sales have returned to “normal levels” and it has completed a £1billion refinancing package, the housebuilder announced this morning.
It told the Stock Exchange that as at 8 May 2011, forward sales stood at £1.0bn (2010: £1.1bn), of which £653.2m, or 62 per cent, was contracted (2010: £684.1m, or 64 per cent).
The firm also revealed it had completed a £1bn debt refinancing project to May 2015. Net debt will increase to about £450m following the refinancing and the payment of about £67m in exceptional costs.
In an interim management statement covering the period from 1 January to 8 May, Barratt Developments said it expected to see a “significant improvement in operating profit” by the end of its financial year in June.
Chief executive Mark Clare said afterwards the company was looking to return to ‘normalised’ margins by 2014.
Barratt chiefs highlighted the refinancing package, continuing progress on margins, and the “growth agenda” from the government. This includes the FirstBuy scheme, accelerated release of public land, the reduction of regulatory costs, and improvements in planning.
Barratt said sales rates had returned to more normal levels with net private reservations per active site per week during the period of 0.53, significantly ahead of the first half rate of 0.39, and almost up to the 0.56 recorded this time last year.
The company has continued to see an increase in private average selling prices, up by 4 per cent on the same period last year.
In the statement, Mr Clare said: “We are encouraged by the improvement in market conditions we’ve seen since the start of 2011, following a challenging autumn period.
“Our strategy for recovery is progressing well and we continue to expect a substantial increase in operating profit in our second half. The successful refinancing provides a strong platform for the business and will enable us to reduce the effective cost of financing going forward.”
The company opened 55 sites in the period and expects to open a further 24 by the end of the financial year. For the full financial year, Barratt anticipates agreeing terms on about 8,000 plots with the majority on deferred payment terms.
They have agreed terms on £78.8m of land purchases, equating to 1,696 plots. “Delivery of completions from these new higher margin sites will drive profitability and margin for the group,” it added.
Barratt expects activity to remain constrained in the near term, “reflecting the continued lack of higher loan to value mortgage products, particularly in the new build sector”.