• Issue 44

  • Feb 2019

The Source


On Track To Top Targets at Bovis

In trading update for YE 31 December 2018, Chief Executive at Bovis Homes Group, Greg Fitzgerald stated: “The significant improvement in operational performance across all areas of the business is expected to deliver a record year of profits for the Group. Customer satisfaction is a key priority and the Group’s return to 4-star housebuilder status along with another controlled and disciplined period end reflect this.  We are looking forward to delivering the first homes from our new housing range in 2019 and continuing to make further operational and financial progress.”

The housebuilder delivered a total of 3,759 new homes in the year, in-line with expectations and up 3% on last year (2017: 3,645). Private homes reached 2,567 (2017: 2,573) units whilst affordable housing units were slightly up at 1,192 (2017: 1,072).

Total average selling price on completions for the year came out at £273k (2017: £272.4k) with private average selling price also slightly up on the last year at £338k (2017: £334.5k).

The group anticipates a substantial step-up in operating margin for the year, with profits for 2018 also expected to be slightly ahead of market consensus; this is due, in part, to the company’s successful implementation of operational improvements across all areas of the business during the past 18 months.

The trading statement reported: “The industry fundamentals remain strong with customer demand for new homes supported by attractive mortgage finance and government initiatives, in particular Help to Buy. Whilst it is too early in the year to comment on 2019 trading, early signs are encouraging.”

“As reported in November, we saw Brexit uncertainty driving a slowdown in discretionary buyers of our larger homes. Building on our much improved relationships with housing associations, we have increased our level of private sales to housing associations and see further opportunities in this area.  In addition, our stronger operating model and margin initiatives will support the business.”

Countryside Confirms Positive First Quarter

In a recent trading update, Countryside Properties has reported a strong performance in the first quarter, stating that their Q1 performance was “in line with our full year expectations with lower private completions being replaced with strong growth in PRS (private rented sector) and affordable.”

In the period from October 1 to December 31, 2018, total group completions soared 28% to 1,094 homes, in comparison to the same period last year. Extensive increases in both private rented sector homes, up 66% to 341 homes, and affordable homes, rising 52% to 413 homes led to this “strong” growth in completions for Countryside.

However, as a result of the phasing of completions in Countryside’s Partnerships division in both the current and prior year, the private for sale completions rate across the group decreased in the quarter to 340 homes (2018: 376 homes).

Equally, overall net private reservation rate slowed in December; 0.63 against the previous year’s 0.70, with the group private average selling price remaining consistent with the year prior at £395,000 (2018: £394,000).

The Housebuilding division of Countryside saw a rise of 30% in private completions to 164 homes, whilst the division’s total forward order book increased 27% to £286 million.

Completions for the company’s Partnerships division also saw an upturn of 35% to 850 homes, aided by the additional 249 homes from the company’s acquisition of Westleigh Homes. This results in a total forward order book of £659 million, an increase of 115%.

Countryside’s group CEO, Ian Sutcliffe, said: “Our balanced business model continues to give us sector leading growth and greater resilience from our mixed tenure delivery. We have a record forward order book and continue to win new business in our Partnerships division, giving us visibility of future earnings and continued growth potential.”

Persimmon’s Profits Surpass Market Expectations

Persimmon achieved another “strong trading performance” during 2018 and shares have risen on the news that their profits will exceed the market’s expectations.

In an update ahead of full year results, total group revenues reached £3.74 billion, 4% higher than the previous year (2017: £3.60bn).

New housing revenues also rose by 4% to £3.55bn (2017: £3.42bn), with legal completions increasing by 3% to 16,449 new homes (2017: 16,043), which includes 13,341 private sales of new homes (2017: 13,274).

Average selling price was 1% higher than last year at circa £215,560 (2017: £213,321).

Similarly, forward sales (at 31 December 2018) reached approximately £1,395m, 3% up on last year (2017: £1,356m), powered by second half legal completion volumes of 8,377, an improvement of 305 on the first half of the year (H1: 8,072).

“As we look forward to the 2019 spring season, Persimmon is in an excellent market position. We anticipate our pre-tax profits for 2018 will be modestly ahead of current market consensus, having benefitted from the new developments we have opened through the year,” Persimmon said.

“Whilst the future performance of the UK economy is currently subject to increased levels of uncertainty the Group is well positioned with its strong outlet network together with the availability of a range of attractive house types at affordable prices across the regions of the UK, supported by a high quality land bank and conservative financial structure.”

“Strong Performance” Again for Taylor Wimpey

Taylor Wimpey’s upbeat trading statement just issued reports that performance is in line with expectations, with total completions up 3%.

Pete Redfern, CEO, commented, “I am pleased to report another year of strong performance, in line with our expectations. Despite wider macroeconomic uncertainty, the housing market remained stable during 2018 and we had a good trading performance. We are continuing to deliver against our strategy and ended the year in a positive position, underpinned by our strong order book and balance sheet.”

Group net private reservation rate for 2018 stood at 0.80 homes per outlet per week (2017: 0.77) whilst cancellation rates remained low at 14% (albeit slightly higher than in 2017.)

Average selling prices on private completions improved by 2% to £301k (2017: £296k), with the overall average selling price staying exactly the same at £264k (2017: £264k).

The housebuilder ended the year with an “excellent” total order book value of £1,782 million (December 2017: £1,628 million). This represents 8,304 homes (2017: 7,136 homes) with Taylor Wimpey reporting that affordable homes accounted for 23% of its total completions in 2018.

Taylor Wimpey were also ahead of expectations with a robust net cash balance of c.£644 million at the end of the year (December 2017: £511.8 million.)

Redfern said: “Whilst it is clearly too early to give a definitive view on 2019 trading, we continue to see solid forward sales indicators and start the year with a very strong order book.

He added: “However, we will continue to closely monitor market conditions for any potential impact on customer confidence in light of the wider political and economic uncertainty. We have made good progress throughout 2018 in embedding further enhancements for our customers and further improving our employee experience, whilst realising the investments we have made to underpin future growth capability and delivery success. As we transition to our new strategy announced in May 2018, we reiterate our previous guidance for 2019 for similar volumes to 2018, in current market conditions, with significant volume growth potential for 2020 onwards.”