Interim Management Statement
Friday 8 June 2012
Bellway is today updating the market with regard to its current trading
position by issuing an Interim Management Statement (IMS) relating to the
period from 1 February to 31 May 2012.
Demand throughout the spring selling season has remained resilient with visitor
levels and reservation rates continuing to outperform expectations. During the
seventeen week period under review reservations, net of cancellations, have
averaged 122 per week, an increase of 9% on the prior year. The increase in the
private weekly sales rate is more marked at 19%, having been attained from an
average of 210 sites, compared to 195 last year.
Whilst sales incentives continue to be used, the enhanced reservation rate has
been achieved despite continuing to restrict the use of shared equity, which
represented only 8% of reservations taken. The Group welcomes the introduction
of the Government's NewBuy mortgage indemnity guarantee scheme which has
contributed 90 reservations in the eleven weeks since its launch. The longer
term success of this initiative will depend upon the approach of lenders to
mortgage rates and credit scoring criteria and to this extent, it will be some
months before the Group is able to determine whether NewBuy will have any
incremental effect on sales rates.
The target set at the beginning of the financial year of achieving 5% volume
growth is now secure, subject to build delivery, and the Board is therefore
confident that legal completions for the year ending 31 July 2012 should exceed
those achieved last year by around 300 units. In addition, some 1,600
reservations have been taken for completion in 2012/13.
The average selling price in respect of reservations taken since 1 February is
£190,400, an increase of 5% compared to the same period last year. The increase
is primarily due to a combination of the ongoing contribution of higher value
units from the Group's divisions which have exposure to the London market,
together with a greater proportion of private reservations.
Operating margins continue to improve as the Group remains focussed on cost
control and replenishing the land bank with new sites. An increasing proportion
of completions from these new sites, where margins are typically in excess of
20%, should now result in the Group producing an operating margin of at least
11% for the full year.
The Group's land teams have continued to be active in the market, having
expended £195 million on land and land creditors and having agreed heads of
terms on a further 4,800 plots. The Group continues to adopt a disciplined
approach to land buying by focussing on return on capital and margin whilst
remaining mindful of local market and employment conditions. The Group had net
bank debt of £35 million at 31 May and depending upon the profile of land
opportunities over the coming weeks, the Board anticipates a modest level of
gearing at the year end.
Assuming consumer demand and the availability of affordable mortgage finance
remain unchanged, then the Group's capacity to grow geographically, combined
with a strong balance sheet, mean that Bellway is well positioned to continue
its three pronged strategy of increasing volume, average selling price and
John Watson, Group Chief Executive and Keith Adey, Group Finance Director will
be hosting a site visit at New Festival Quarter, 41 Upper North Street, Poplar
E14 6SY, today, Friday 8 June 2012, from 11.30am during which no new financial
information will be given. The Group will announce a trading update for the
financial year ending 31 July 2012 on Tuesday 7 August.
FOR FURTHER INFORMATION PLEASE CONTACT:
JOHN WATSON, GROUP CHIEF EXECUTIVE & KEITH ADEY, GROUP FINANCE DIRECTOR FROM
7.30AM ON 0207 262 3226 AND FROM 10.00AM ONWARDS ON 07855 337007 (JOHN WATSON)
AND 07837 188643 (KEITH ADEY)
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.