Residential property developer Bellway says it is well placed to deliver further growth and increased profitability in the current financial year.
In an interim management statement, covering the 18 week period from August 1, 2014, to November 30, 2014, the Newcastle-headquartered group, which employs around 2000 people, said its home reservation rate remained “robust” at 147 per week, compared to 144 per week in 2013.
The London market remained strong, while across the rest of the country, there was a positive pricing environment, resulting in the group achieving selling prices in line with, or slightly in excess of, initial acquisition expectations.
The interim management statement said: “These positive market conditions, together with strong control of administrative and construction costs, should result in continued operating margin progression.
“This will be enhanced this year as the gross margin on completions should benefit from historic revenue gains on London schemes acquired in recent years.
“As a consequence, the group should be able to achieve an operating margin of around 20% for the year ending 31 July, 2015.”
Bellway had also experienced continued success in the land market, having spent £233m on land and land creditors, compared to £121m in 2013, for opportunities that meet or exceed its minimum acquisition criteria.
In addition, it has heads of terms agreed on a further 4,400 plots, with a value of £320m.
The statement said: “The availability of good quality land, a disciplined approach to investment and a focus on acquiring those sites where an attractive return on capital can be achieved, should enable Bellway to continue to deliver its strategy of volume growth and generate long term value for shareholders.”
Plans are now at an advanced for the opening of a 16th Bellway division in the second half of this financial year.
As market conditions with respect to both sales and land buying continue to be favourable, the firm believes it can deliver significant earnings growth and ongoing improvements in return on capital in the year ahead.
If approved at today’s (December 12) AGM, a final dividend of 36p per share, compared to 21p last year, will be paid to shareholders on January 14, 2015.
This will bring the total dividend for the year ended July 31, 2014, to 52p, an increase of 73.3% on 2013.
Bellway chief executive Ted Ayres said: “Demand for new housing is resilient across the country and continues to be supported by the availability of affordable, higher loan to value mortgages and in particular, the continuation of the Government’s Help to Buy scheme.
“Further disciplined investment in land should mean that the group is well placed to deliver continued volume growth, further improvements in return on capital employed and another significant increase in profitability in the current financial year.”