Bellway p.l.c.
Trading Update
Tuesday
8 August 2017
Bellway is today issuing a trading update for the year ended
31 July 2017 ahead of its preliminary
results announcement on Tuesday 17 October
2017.
Highlights
-
Housing revenue is expected to increase by over 13% to £2.5
billion (2016 – £2,204.6 million).
-
Further volume growth with a 10.6% increase in the number of
housing completions to 9,644 (2016 – 8,721).
-
The operating margin is expected to rise to slightly in excess
of 22% (2016 – 22.0%).
-
Excellent forward sales position with a 16% growth in the value
of the forward order book to £1,296.3 million (2016 – £1,117.1
million).
-
Substantial growth achieved whilst maintaining balance sheet
strength, with net cash of £16 million (2016 – £26.5 million)
providing significant capacity for future investment.
Ted
Ayres, Chief Executive, commented:
“A focus on delivering growth, set against a backdrop of
favourable market conditions, has helped Bellway to surpass last
year’s record in respect of both volume and operating margin and
further increase the Group’s contribution to the supply of much
needed new homes. This excellent trading performance,
together with additional investment in attractive land
opportunities, ensures that Bellway is well placed to continue its
disciplined growth strategy.”
Market and current trading
Throughout the year, robust consumer demand for new homes has
been supported by the ongoing availability of cost effective
mortgage finance and the continued provision of Help to Buy.
This has contributed to the rate of sale, enabling the Group to
record an average of 187 reservations per week (2016 – 169), an
increase of almost 11% compared to last year.
The private sales rate gathered pace in the second half of the
financial year as a result of new site openings and ongoing
investment in work in progress. Demand since the General
Election has remained strong, with customers’ appetite to purchase
a new home so far unaffected by any uncertainty in the wider
economy.
Results
Bellway completed the sale of 9,644 new homes (2016 – 8,721),
923 more than last year and an increase of 10.6%. The
average selling price of homes sold rose by 2.9% to a record
£260,000 (2016 – £252,793), with this diluted by a higher
proportion of lower value social housing completions, which
represented almost 22% of the total (2016 – 16%). The pricing
environment remained positive, supported by robust demand
throughout the country.
The growth in volume and average selling price should result in
housing revenue increasing by over 13% to £2.5 billion (2016 –
£2,204.6 million). This is almost 2.3 times the housing
revenue reported just four years ago for the year ended
31 July 2013, demonstrating the rapid
rate of increase achieved as a result of the ongoing growth
strategy.
As previously reported, the operating margin for the full
financial year is expected to rise to slightly in excess of 22%
(2016 – 22.0%).
Land buying and financial position
The land market remains attractive and our land teams continue
to identify value enhancing opportunities to support the growth
strategy in the future. Bellway contracted to acquire 11,613
plots (2016 – 9,555) on sites that meet or exceed our minimum
acquisition criteria in respect of gross margin and return on
capital employed. As a result of this investment, all of the
land required is in place to meet the Board’s growth aspirations in
respect of the financial year ending 31 July
2018.
Notwithstanding significant investment in both land and work in
progress, Bellway ended the year with net cash of £16 million (2016
– £26.5 million).
Outlook
At the same time as achieving significant volume growth, the
forward sales position is strong and the order book at 31 July 2017 rose by 16% to £1,296.3 million
(2016 – £1,117.1 million), with this representing 4,749 homes (2016
– 4,644 homes).
Bellway has significant capacity for further volume growth, both
from its existing divisional structure and as a result of its
ability to open new divisions in areas of strong demand. This
capacity, together with a strong balance sheet, is enabling the
Group to continue its disciplined growth strategy and deliver
further value for shareholders.
* All figures exclude joint venture
completions in which the Group has an interest.
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.