Bellway p.l.c. is today issuing a pre-close trading update for the financial year ended 31 July 2012 and is also updating the market on forthcoming Board
changes.
Trading Update
The Group has completed the sale of 5,226 homes, an increase of 6.2% compared with the previous year's total of 4,922, with this growth being derived primarily from completions of private homes, which have risen by 13.4% to 4,358 (2011 - 3,843). The greater proportion of private completions, combined with other changes in product and geographical mix, have resulted in the average selling price increasing by more than 6% from £175,613 to around £187,000. The operating margin for the full year will be at least 11% (2011 - 8.5%), representing continued growth compared with the 10.1% achieved in the first half of the financial year and, as a result, profit before tax will be modestly ahead of current consensus of £98 million.
The demand for new homes has remained resilient throughout the year and this, combined with investment in new site openings, has resulted in the Group securing an average of 101 reservations per week (2011 - 93), an improvement of almost 9% on the previous financial year. The enhanced reservation rate has been achieved with no overall increase in average sales incentives, whilst simultaneously restricting the use of shared equity schemes to less than 7% of reservations taken. The Government's NewBuy scheme has contributed 133 reservations in the 20 weeks since its launch on 12 March 2012. The longer-term effectiveness of this incentive, however, remains dependent on lenders' product affordability and credit scoring criteria.
Total reservations in the nine weeks since the Interim Management Statement (`IMS') on 8 June have followed the usual seasonal slowdown but remain ahead of the same period last year. The order book has grown in value by 3.4% to £441.2 million (2011 - £426.8 million), representing 2,533 homes (2011 - 2,497 homes).
The Group has continued to be active in the land market, especially in the south of England, having spent £305 million on land and land creditors (2011 - £250 million) with heads of terms agreed on a further 4,650 plots. As a consequence, the Group ended the year with net bank debt of £41 million (2011 - £3.4 million net cash). With committed bank facilities of £300 million, Bellway is well placed to pursue further opportunities in the land market, whilst maintaining strict disciplines in terms of both return on capital and margin.
Against this background, and assuming stability in both the mortgage market and employment conditions, the Group is in a strong position to continue to deliver its strategy of growth in volume, average selling price and operating margin through a combination of changes in mix and the introduction of newly acquired higher margin land.
