Bellway p.l.c.
Trading Update
Wednesday
14 June 2017
Bellway is today issuing a trading update in respect of the
period from 1 February to 4 June
2017.
Highlights
-
Sales demand in the period was strong, with a 13% increase in
the reservation rate to 221 per week (2016 – 196 per week).
-
The increase in housing completions for the full year to
31 July 2017 is expected to approach
10% (2016 – 8,721), another year of significant volume growth.
-
A robust trading performance should result in an operating
margin slightly in excess of 22% (2016 – 22%) for the full
financial year.
-
Significant investment in land, with 10,250 plots contracted
(2016 – 8,600 plots) and all land in place to meet next year’s
growth target.
-
Value of forward order book of homes due for completion beyond
31 July 2017 is ahead at £900 million
(2016 – £846 million).
-
A commitment to customer care has resulted in Bellway regaining
its status as a five star housebuilder.*
Ted
Ayres, Chief Executive, commented:
“Robust market conditions, together with a clear operational
focus, is enabling Bellway to continue increasing its contribution
to the supply of much needed new homes. We have made a
significant investment in land and work in progress over a number
of years and this, together with a strong balance sheet and
substantial operational capacity for expansion, should ensure that
Bellway is well positioned to deliver further volume growth, this
year and beyond. This successful implementation of our
disciplined growth strategy is leading to ongoing enhancements in
shareholder value.”
Market and current trading
The housing market remains positive and continues to be
supported by low unemployment, good availability of affordable
mortgage finance and the continued provision of Help to Buy.
Customer demand for new homes remains strong across all regions and
has increased throughout Spring, in accordance with the usual
seasonal trend, unabated by any uncertainty in the weeks preceding
the recent General Election. These favourable market
conditions, together with a 6% increase in the number of active
outlets to 237 (2016 – 223), has led to the Group achieving 221
reservations per week (2016 – 196 per week), an increase of almost
13% compared to the same period last year.
As a result of this strong sales performance, together with the
substantial investment in work in progress, the Board is now
confident that volume growth should approach 10% for the year
ending 31 July 2017, ahead of our
original target.
At the same time as delivering this growth, Bellway maintains
its emphasis on build quality, customer care and health and
safety. This sustainable and responsible approach to building
new homes has resulted in Bellway regaining its status as a five
star housebuilder, the highest rating achievable and one of only
two national housebuilders to achieve this accolade. In
addition, ten of our site managers have recently received NHBC
health and safety awards, recognising their success in this
important area, with this strong performance representing 18% of
the total awards issued across the industry.
In line with previous guidance, the Board still expects that the
Group will achieve an average selling price of around £260,000 in
the current financial year. The pricing environment remains
positive, with modest pricing gains being achieved on most new
sites brought to the market. This, together with previous
investment in higher value locations, should result in further
improvements to the average selling price, beyond this financial
year.
The positive trading environment, together with the Group’s
strong financial disciplines, means that the Board now expects the
operating margin for the full financial year to be slightly in
excess of 22% (2016 – 22%), improving further upon last year’s
record performance.
Land buying and financial position
The strategy of volume growth is supported by the availability
of good quality land at attractive rates of return and as a result
of ongoing investment, Bellway has contracted to acquire some
10,250 plots since 1 August 2016
(2016 – 8,600 plots). In addition, there are heads of terms
agreed, and solicitors instructed, to purchase a further 5,500
plots. Bellway now owns all of the land required, with the
benefit of a detailed planning permission, in order to meet next
year’s growth target.
Depending upon the timing of land opportunities, the Board
expects net bank debt to be less than £50 million by 31 July 2017.
Outlook
The total order book at 4 June
2017, of which 70% is contracted, stood at 5,819 homes
(5 June 2016 – 5,346 homes) and
includes reservations with a value of £900 million (2016 – £846
million) due for completion beyond 31 July 2017. This strong
forward sales position not only supports this year’s volume growth
target, but should also ensure that Bellway is well placed to
deliver further growth next year, subject to market conditions
remaining unchanged.
Whilst the outcome of the general election has provided a degree
of instability with regards to future Government policy, all
political parties recognise the need for increased housing
output. The Board also remains mindful of the wider
uncertainty as negotiations to leave the EU commence, however, the
Group’s strong forward order book, consistent capital disciplines
and strong operational focus should ensure that it is well placed
to continue its strategy of disciplined volume growth.
* As measured by the Home Builders’ Federation Customer
Satisfaction survey
FOR FURTHER INFORMATION PLEASE
CONTACT:
TED
AYRES, CHIEF EXECUTIVE AND KEITH ADEY, FINANCE DIRECTOR FROM
7:00 AM ONWARDS ON 0191 217 0717.
Certain statements in this
announcement are forward–looking statements which are based on
Bellway p.l.c.’s expectations, intentions and projections regarding
its future performance, anticipated events or trends and other
matters that are not historical facts. Such forward–looking
statements can be identified by the fact that they do not relate
only to historical or current facts. Forward–looking
statements sometimes use words such as ‘aim’, ‘anticipate’,
‘target’, ‘expect’, ‘estimate’, ‘intend’, ‘plan’, ‘goal’,
‘believe’, or other words of similar meaning. These
statements are not guarantees of future performance and are subject
to known and unknown risks, uncertainties and other factors that
could cause actual results to differ materially from those
expressed or implied by such forward–looking statements.
Given these risks and uncertainties, prospective investors are
cautioned not to place undue reliance on forward–looking
statements. Forward–looking statements speak only as of the
date of such statements and, except as required by applicable law,
Bellway p.l.c. undertakes no obligation to update or revise
publicly any forward–looking statements, whether as a result of new
information, future events or otherwise.