Bellway PLC Trading Update
08 February 2018 - 6:00PM
UK Regulatory
TIDMBWY
Bellway p.l.c.
Trading Update
Thursday 8 February 2018
Bellway p.l.c. is today issuing a trading update for the six months ended 31
January 2018 ahead of its interim results announcement on Tuesday 20 March
2018.
Highlights
* Housing revenue is expected to rise by in excess of 14% to around GBP1.3
billion (2017 - GBP1,142.9 million).
* Further volume growth, with a 6.3% rise in the number of housing
completions to 4,741 (2017 - 4,462).
* The average selling price has risen by almost 7.8% to a record GBP276,000
(2017 - GBP256,140).
* A 7.2% rise in the weekly reservation rate has contributed to a strong
forward sales position, with the value of the forward order book growing by
15.7% to GBP1,297 million (2017 - GBP1,121 million).
* Significant investment in land with 6,726 plots contracted (2017 - 6,287
plots) on sites with attractive rates of return, supporting the Group's
continued growth ambitions.
John Watson, Executive Chairman, commented:
"Bellway is continuing to make a sizeable contribution to the supply of much
needed new homes and has delivered a further increase in both volume and
average selling price in the six month trading period. Significant investment
in land, together with ongoing plans to expand the divisional structure, should
lead to a further increase in output and hence result in additional value
creation for our shareholders."
Market conditions and trading
Market conditions continue to be favourable and customer demand for new homes
remains strong. Notwithstanding the modest increase in the Bank of England
base rate in November, mortgage rates remain low by historical standards,
ensuring that the cost of financing a new Bellway home remains affordable.
This, together with positive Government support, including new measures such as
SDLT relief for most first time buyers, continues to provide financial support
to purchasers and hence improve accessibility to mortgage finance.
In this positive trading environment, interest from customers remains high,
with website traffic and visitors to sales outlets both ahead of last year.
Reservations have followed their usual seasonal trend, with the quieter, albeit
positive, summer period followed by an increase in activity over the autumn
months. The Group has taken 178 reservations per week (2017 - 166), an
increase of 7.2% compared to the same period last year and the cancellation
rate, a barometer of customer confidence, remains low at under 11% (2017 -
under 12%).
Results
The number of homes legally completed rose by 6.3% to 4,741 (2017 - 4,462),
with all geographic regions in which the Group operates performing well. The
average selling price of homes sold rose by almost 7.8% to GBP276,000 (2017 - GBP
256,140), principally as a result of investment in higher value locations
throughout the country, where stronger demand and robust pricing has influenced
land acquisition over recent years. In addition, the overall average selling
price has been further enhanced by the completion of 53 homes (2017 - nil) from
our flagship development at Nine Elms in Battersea, where the average selling
price in the period was GBP562,000.
For the full financial year, continued changes in mix, together with the
further contribution of higher value apartments at Nine Elms, should mean that
the overall average selling price will rise to in excess of GBP280,000 (31 July
2017 - GBP260,354).
As a result of the strong trading performance, housing revenue for the six
months ended 31 January is expected to increase by over 14% to around GBP1.3
billion (2017 - GBP1,142.9 million). The operating margin for the first half of
the year is expected to rise, to slightly above 22% (2017 - 22.0%), and the
Group should be able to achieve an operating margin of around 22% for the full
financial year (31 July 2017 - 22.3%), provided that current market conditions
continue.
Further investment to secure future growth
The land market remains appealing and the Group has had a very successful
period identifying further good quality opportunities at attractive rates of
return. To that extent, Bellway has contracted to acquire 6,726 plots (2017 -
6,287 plots), with a total value of GBP401 million (2017 - GBP405 million), across
56 sites (2017 - 52 sites). The anticipated gross margin on those sites
contracted is expected to be in excess of 24%, based on today's selling prices.
The prospect for further investment in additional, good quality land remains
strong and the Group has a strong future pipeline of potential acquisitions,
with heads of terms agreed on some 5,750 plots (2017 - 5,300 plots). All sites
owned by the Group are being actively progressed through the planning system in
order that construction can commence as quickly as possible and Bellway can
continue increasing its output of new homes.
Financial position
The balance sheet remains strong, with net bank debt3 of GBP131 million (2017 - GBP
175.1 million), representing modest gearing4 of under 6% (2017 - 8.9%). In
accordance with the usual seasonal trading pattern, net bank debt3 is expected
to reduce by the end of the financial year.
Outlook
As a result of the strong trading performance, the forward order book,
comprising 4,629 homes (2017 - 4,487 homes), has risen in value by 15.7% to GBP
1,297 million (2017 - GBP1,121 million). Whilst growth this financial year will
in part be determined by the outcome of the spring selling season, given the
strength of the forward order book, the Board expects that the Group will be
able to replicate the rate of volume growth achieved in the first half and in
doing so, complete the sale of around an additional 600 homes for the year
ending 31 July 2018.
Beyond this year, whilst the exit from the EU provides a degree of uncertainty
across the wider economy, the fundamental parameters supporting the housing
market remain strong. Previously announced plans to open a new twentieth
division, located in Scotland, are progressing well and in addition, the Board
continues to appraise expansion opportunities in other areas of the country.
Provided capital can be invested in areas of strong demand, Bellway is well
placed to deliver additional volume growth beyond this financial year, both
from its existing structure and through the opening of new divisions.
1 All figures relating to completions, order book, reservations,
cancellations and average selling price exclude the Group's share of its joint
ventures.
2 All comparatives are to the prior year equivalent six month period ended
31 January 2017 or as at 31 January 2017 ('2017') unless otherwise stated.
3 Net bank debt is cash and cash equivalents less bank debt.
4 Gearing is calculated as net bank debt divided by total equity.
FOR FURTHER INFORMATION PLEASE CONTACT:
JASON HONEYMAN, CHIEF OPERATING OFFICER 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.
END
(END) Dow Jones Newswires
February 08, 2018 02:00 ET (07:00 GMT)
Bellway (LSE:BWY)
Historical Stock Chart
From Apr 2024 to May 2024
Bellway (LSE:BWY)
Historical Stock Chart
From May 2023 to May 2024