UK’s Barratt plummets to loss

Barratt developments reported annual sales to the end of June of UK£ 2,2 billion (€ 2,5 billion), down -35,7% on the UK£ 3,5 billion (€ 3,8 billion) recorded last year.

Following a 2008 pre-tax profit of UK£ 137 million (€ 150 million) the owner of Barratt Homes and David Wilson Homes slumped to a UK£ 679 million (€ 742 million) pre-tax loss this year.

Exceptional items included a UK£ 499 million impairment of inventories, set against a background where the cost of sales was UK£ 370 million greater than revenues generated. Completions for the year shrank by -29% to 13202, down from 18588 in 2008, while the average selling price fell -14% to UK£ 157200 (€ 172000), down from UK£ 183100 (€ 200000) a year ago.

Group chief executive, Mark Clare said, "This has been an intensely difficult year for the Group following the sharp decline in the UK housing market.

"However, in the second half we have been able to maintain price levels and increase our reservation rates. These encouraging trends have continued through the summer and into the autumn."

In view of the more positive trends and in order to strengthen the company's finances, the Board at Barratt Developments has announced that it will reduce its debt levels through a placing and rights issue aimed to generate gross proceeds of UK£ 720 million (€ 787 million).

Mr Clare said, "This will enable the Group to develop a number of existing sites and take advantage of land purchasing opportunities as they arise."