Buoyant Barratt books record £1bn in forward house sales

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The Independent Online

Barratt Developments, one of the country's biggest housebuilders, declared the housing market was now "steady" and revealed forward sales were running 27 per cent ahead of last year.

Reporting full-year results, David Pretty said that the market was "normal". Signing off his last results in charge, he said: "The market's not running away as some commentators would have you believe - we can do good business, as our strong forward sales are showing."

Mr Pretty will retire at Christmas after 27 years at the company, the last four as the chief executive. He will formally hand over to his successor, Mark Clare, 48, the former head of British Gas, next week and stay on in an advisory capacity until the end of the year.

The company's average selling price and pre-tax profits slipped for the year to the end of June, but that was because it sold more social housing units and more homes in the cheaper markets of the north of England. Underlying profits gained 3.4 per cent to £378.4m.

Tessa Guy, an analyst at Investec Securities, said: "The net cash position was £34.9m at the year end, providing the potential to make an acquisition, and the new management team could be the catalyst. We estimate that if it were to spend £1bn this would take gearing to around 60 per cent."

Barratt has been sweating its assets more this year in an effort to maintain earnings. Mr Pretty said he had been negotiating deals with suppliers and subcontractors to get better terms in return for security of work.

These and other cost measures, he estimated, had contributed £20m to the performance of the company this year.

"We wanted to squeeze out any fat that might have crept into the system, so we've been talking to suppliers and sub-contractors in return for giving them security of work," he said.

"When you've grown for 14 consecutive years, it does give sub-contractors confidence over security. When you have 14,600 homes and you make small savings on 450 sites, it adds up to a lot."

Barratt has spent £840m this year investing in its land base, growing its land supply to 4.5 years or 66,500 plots.

Since the end of the financial year, forward sales have surged ahead. They now stand at £1.14bn, a record for the company, 27 per cent higher than last year. Together with completions since June, Barratt has now secured 56 per cent of its full-year sales target for the current financial year.