Wednesday, February 25, 2009

Barratt Developments headed the same route as Barratt Shoes?

Barratt loss on house market woes

UK housebuilder Barratt Developments has reported a loss of almost £600m in the second half of 2008 after having to write down the value of land it owns. It reported a pre-tax loss of £592.4m from a £192.4m profit a year earlier. Though it said there were "some signs" of increased activity in the housing market, it added mortgage availability was hampering demand for new homes. The results came a day after rival Redrow also said it had fallen from a profit to a loss in the same period.

Posted by jack c @ 10:11 AM (1272 views)
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11 thoughts on “Barratt Developments headed the same route as Barratt Shoes?

  • Mark Wadsworth says:

    Damn, you beat me to it by a split second. Here are my favourite bits:

    The bulk of Barratt’s losses came from a £494.9m impairment charge on the value of its land bank – because of falling property values and shrinking demand for homes.

    and

    “Barratt said the housing market was “intensely difficult”, with its average selling prices having dropped by almost 10% to £160,700 over the period”

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  • Something I don’t understand: why is it if we have a housing shortage and construction is choked of by all the restrictions on building house construction is down (i.e. barratt and the rest are building a lot less then the could be building even with the restrictions)?

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  • @Mark Wadsworth – “Damn, you beat me to it by a split second” – 2 minutes actually (LOL).

    my favourite bit – “it said there were “some signs” of increased activity in the housing market” – yes these include cheeky offers on way over priced properties and a dramatic increase in posession orders to name but a few “increased activities”

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  • One of the most interesting aspects of this is that IIRC, landbank valuation is undertaken by internal auditors, so there is a very real chance that the value of the landbank has been overstated to reduce their impairment charges.

    Food for thought.

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  • With regards to these figures there is only one action to take…… we must as a country (and tax payer) bail this company out if it needs our help, this may go some way to propping up house prices in the future so we can all pay more for our housing and these companies become rich again and the chief execs can fly in their helicopters or hold expensive parties. We have to do something………………where is GB.

    Another dismal report, more lost jobs on the cards………

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  • mark wadsworth says:

    As at a year ago, I worked out that Barratt’s land bank was worth just shy of £2,000 million, I haven’t done comparable workings for December 2008 yet (being in the middle of something else), but even if their £500 million write down is correct, that’s a handsome 25% drop in six months.

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  • MW – gotta love your arrogance in 5. No question that your calculations might be wrong – just theirs.. fab!

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  • mark wadsworth says:

    Timmy T, if the book value of their shares is £2,300 million and their market value is £280 million, doesn’t that tell you that something* on their balance sheet is overvalued by £2,020?

    It certainly tells me that.

    * Quite what is a different topic.

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  • Mark – yep, it tells me that like most other companies its share price has naff all to do with what the company is worth. They used to do that, now they are just another vehicle for betting.

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  • According to Telegraph,.Barratts land bank was worth 3.8 billion GBP as of 11 Jul 2008 (on Net)

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  • it_is_going_with_a_bang says:

    They were hardly likely to be big winnners in house market woes!
    From the land dealings I’ve seen personally they are offering 50% less than 2 years ago – if that – when buying land now.
    Gives you an idea of the true value of their betting slips.

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