Housebuilder Barratt Developments PLC has reported strong trading for the six months ended December 31, 2013.
In an update posted yesterday on the London Stock Exchange, the group, founded in Newcastle and now based in Leicestershire, announced its total housing completions had risen by 19% compared to the same period the previous year, going from 5,194 to 6,195.
Total forward sales, meanwhile, were up 65% in terms of plots, rising from 4,258 to 7,007.
In terms of value, the increase was 71% – or £1.26bn, compared to £742.1m.
Group chief executive Mark Clare said: “As a result of the continued recovery of the housing market across all regions and our £3.1bn investment in a new land over the last four years, we have been able to increase materially the number of new homes being built and our profitability.
“Our disciplined approach to running the business is delivering significant improvements across all key financial metrics and with forward sales of over £1.2bn, we are well placed for the 2014 financial year and beyond.”
During the period, the group saw higher sales rates across all regions, in part due to the positive impact of the Help to Buy scheme on the demand for new homes, particularly among first-time buyers.
The initiative was used in around 29% of Barratt’s completions, excluding joint ventures.
Private completions were up 22.7% to 5,202, while affordable completions were down slightly, from 844 units to 751 units.
Joint venture completions in which the group had an interest, meanwhile, went from 109 units to 242.
Throughout the six months, average selling price (ASP) increased by 13.7% to £211,000, with private ASP jumping 11.4% to £225,000.
Margins are expected to increase in line with Barratt Developments’ expectations.
“We continue to see excellent opportunities in the buying market across all divisions, and in the first six months approved the purchase of 11,394 plots, compared to 9,320 in 2012,” the trading update said.
“We are maintaining our disciplined approach and all land approved in the period meets both our minimum hurdle rates of a 20% gross margin and 25% return on capital employed, assuming no future house price inflation.
“In the South East and London, where the market is more competitive, we are focused on acquiring land from the public sector and sites which are larger or more technically complex.
“In both areas, we have a strong capability and track record.”
Net debt was expected to be £155m, down from the £331.7m recorded in 2012, but significantly higher than the £25.9m of June 2013, reflecting “normal seasonal trends and the group’s build programme”.
Among the forward sales, those in the private market, excluding joint ventures, were up 62.7% on the prior year to £872.9m, equating to 3,331 plots.
Joint venture private forward sales, which were largely in the London region, amounted to £163.8m, compared to £39.4m in 2012, and equating to 256 plots.
The trading update comes ahead of Barratt’s interim results for the period, due for publication on February 27.