House builder Barratt reports £590 million loss

By Lorraine Turner

LONDON (Reuters) - House builder Barratt Developments (BDEV.L) reported heavy losses after writing down the value of its land on Wednesday while its bombed-out shares rallied on relief the result wasn't even worse.

Barratt reported a pretax loss of 592.4 million pounds after exceptional costs in the six months to end-December, compared with a 194.6 million pound profit in the same period last year. The result included a writedown of 494 million pounds.

"The focus is on the scale of the land writedowns, 494 million pounds, its probably within people's estimates," said Kate Moy, analyst at Arbuthnot Securities.

Shares in Barratt jumped 6.64 percent at 76.25 pence by 9:24 a.m. having lost 82 percent of their value in the last 12 months.

The housebuilder, which was left saddled with debt from its acquisition of the large house builder Wilson Bowden in 2007, crucially added that it is operating within its banking covenants and has "...no plans to do a rights issue this year."

Analysts fear that Barratt may come close to breaching its loan-to-value banking covenants which place obligations on the borrower to operate within certain parameters.

"Clearly there has been no breach, but with the LTV trigger levels still not disclosed, the market is going to remain concerned that with debt at 1.42 billion pounds...that a breach could still occur," said Robin Hardy at KBC Peel Hunt.

Barratt said it had made a further 700 job cuts on top of a 1,200 anticipated job losses announced in July following site closures as developments are completed.