7th Feb 2017 10:22
LONDON (Alliance News) - Bellway PLC on Tuesday said it plans to build around 5.0% more homes in its current financial year than the prior year, after having increased its completion levels in the first half.
Shares in Bellway were up 3.9% at 2,614.00 pence on Tuesday morning and are now down only 4.4% since prior to the Brexit vote, despite having fallen around 38% in the weeks immediately after the referendum result.
The FTSE 250-listed housebuilder said its built 4,462 houses in the first half ended January 31, up 6.5% from the 4,188 houses it built in the same period the prior year.
In light of its strong order book, at GBP1.12 billion at the end of its first half, up from GBP1.03 billion a year earlier, Bellway said it expects to deliver 5.0% further volume growth in the current financial year to end July 31. In the previous financial year, completion numbers rose 13% year-on-year to 8,721 homes.
The order book currently comprises of 4,487 homes, up from 4,434 homes a year earlier.
The average private selling price of the homes it sold in the first half rose by more than 4.0% to GBP291,000 from GBP279,053 in the prior year, and Bellway said that for the full financial year it should achieve "at least this rate of growth" in private average selling prices.
The overall average selling price of completions, however, slipped slightly to GBP256,000 from GBP257,280 the prior year, as a greater proportion of the properties were lower-value social homes, with the percentage of these rising to 21% from 13%.
Bellway said, however, it still expects the overall average selling price to rise to GBP260,000 for the year ending July 31 from GBP251,793 the prior year.
All divisions are performing well, Bellway said, adding that sales prices achieved on reservations have been in line with or modestly ahead of expectations. The group said both sales prices and demand in London have remained "firm", and there is "significant requirement" for affordable homes.
The group achieved a reservation rate of 166 homes per week in the period, up 6.0% from 156 homes per week the same period a year earlier, helped by the UK government's Help-to-Buy scheme and an ongoing programme of site openings, it said.
Bellway said it expects its operating margin to come in at around 22% for the six months ended January 31, and said it expects to be able to maintain the operating margin at this level for the full financial year, if current market conditions continue.
Despite remaining mindful of market uncertainty in the wake of the Brexit vote, Bellway pointed to its "significant investment in land" in the period, having spend GBP380.0 million on land and land creditors, up from GBP315.0 million for the same period the prior year. This is equal to around 6,287 plots of land, up from 5,445 plots of land the prior year.
After taking into consideration the increased land investment and following a GBP90.6 million dividend payment in January, Bellway ended the period with net bank debt of GBP175.0 million, representing gearing of 9.0%, up from GBP58.9 million a year earlier representing 4.5% gearing.
Bellway said it expects its net bank debt to reduce by the end of its financial year.
"Market conditions remain positive and accordingly Bellway is continuing to invest in a controlled manner, both in land and work in progress, in order to achieve further disciplined volume growth, thereby creating additional value for shareholders," said Chief Executive Ted Ayres.
By Hannah Boland; [email protected]; @Hannaheboland
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