Full year results hit by financing costs and land write-downs

Housebuilder Barratt has an £11.5m loss in full year results out today, on the back of flatlining revenue.

The builder said the loss for the 12 months to June this year, was down from the £162.9m reported in 2010, and came on turnover of £2.04bn, exactly the same as last year.

However, it managed to increase its operating profits before exceptional items by 50%, raising its margin from 4.4% to 6.6%. It was hit by £54.2m in exceptional items, mostly down to the re-financing of its debt in May, as well as a £65m “gross impairment” after it reviewed the value of its land bank.

Chief executive Mark Clare said the outlook for the housing market remained “challenging” despite greater stability in the last 6 months of the year. He said that since the year end in June, sales had been “in-line with normal seasonal trends.”

Clare said: “This has been a year of good progress against a challenging backdrop, particularly in the first half of our financial year. We have achieved a 50% increase in profit from operations before operating exceptional items, agreed terms on 8,861 plots of land, were awarded HBF Five Star status for a second consecutive year, and refinanced our business until 2015.

“We are well placed to secure further margin growth although the housing market is likely to remain challenging.”

The firm also said Barratt had continued to drive down construction prices over the year, forcing a 1.4% reduction in prices, and it would continue to put pressure on this over the year.

Clare said the business spent £450m buying land for over 8,000 plots over the year, raising the money owed by the group on deferred purchases of land to £700.7m from £566.8m a year ago. Barratt also launched a new range of house types today.