• Issue 38

  • Jul 2018

The Source

Housebuilder News

Avant Forge Ahead

Northern UK housebuilder, Avant Homes, has achieved “another year of record revenues and profits,” driven by product, outlet growth, geographic expansion and improved operational efficiency, with the company recently reporting that their sales performance remained “very strong” throughout the year.

Avant saw their total home completions rise 16% to 1,902 during the year ending 27th April 2018 against the equivalent period the previous year and private completions were also up at 1,625, an increase of 16%. Average sales per site per week dropped slightly from 0.81 in 2017 to 0. 74, but across an increased average number of selling sites; 42 compared to last year’s 36.

A sales rate of 0.79 in the first six months of 2018 matched the rate of last year and a 6% lift in private average selling price to £257,000 drove a 21% increase in revenue, to £447 million. Avant’s core operating profit also grew 43% to £65.9 million.

In addition, the company stated that as of 30th June 2018, they had forward sold 42% of the homes needed to meet targets for the 2019 full financial year.

Colin Lewis, Avant’s CEO, noted that the company’s product “continues to be our hero”, with their design and specification supporting its success. He added that Avant was on track for 20 new outlets to deliver their new “Bridge” range, featuring simpler designs, in 2019.

In the past 18 months, Avant has also been developing their strategy of operating dual sales outlets from one site, improving the absorption rate, which was one of key findings in the recent
Letwin Review: “We anticipated the pressure would come from government for us to do more. And with having two outlets on one site, we can get our portfolio to work harder.”

Avant’s fifth operating region, Central (which covers South Yorkshire, Derbyshire and North Nottinghamshire), is now fully operational and on site at its first 3 outlets, and the company’s five-year strategy is to more than double their output to 4,000 homes on a £1 billion turnover.

Trading Boost at Barratt

In a recent trading update, Barratt reported their highest level of completions in a decade, completing 17,579 homes in the year ending June 2018, up 184 on last year’s figure (2017: 17,395).

The company also said that it expects profit before tax to be around £835 million, against 2017’s £765.1 million. Total plots forward sold as at end of June 2018 are up 4% at 10,155 (2017: 9,762 plots), at a value of £2,175.7 million (2017: £2,144.4 million).

The sales rate of 0.72 net private reservations per active outlet per week matched last year’s figure, whilst average completion selling price increased by around 5% to around £289,000 (2017: £275,200). Private ASP also increased by 5.1% to around £329,000 (2017: £313,100), mainly due to mix changes and underlying house price inflation.

The company confirmed that the land market remains attractive and that £933.9 million of operational land for purchase was approved in the 2018 financial year, which Barratt anticipates to equate to 20,951 plots (2017: 18,497 plots). The group has, approximately, a 3.7 year supply of owned and consented land, plus a further 1.1 years of controlled land, resulting in a total of 4.8 years supply.

David Thomas, Barratt CEO said: “It has been a very good year for the group both operationally and financially with strong customer demand for our high quality new homes across our business. As we celebrate our 60th anniversary we have delivered our highest number of completions in a decade, reinforcing our position as the UK’s largest housebuilder, whilst continuing to lead the industry in customer satisfaction and build quality. We begin the new financial year with a healthy forward order book, a strong cash position and a continued focus on delivery of operational improvement across our business. Across the country we are building much needed new homes, creating jobs and supporting economic growth.”

“We are committed to investing in the future of housebuilding and are one of the largest employers of apprentices in the industry,” said Barratt. “In 2013 we created the UK’s first ever degree programme in housebuilding, in partnership with Sheffield Hallam University, with the first students having graduated this summer. We also continue to develop, trial and implement modern methods of construction and in FY18 we built and sold over 1,900 units using timber frame, large format block or light gauge steel frame.”

Profits Buoyant at Bovis

Bovis CEO, Greg Fitzgerald, has reported that they expect to deliver a “significant step up in profitability for the half year as we start to see the financial benefits from the strategic direction, changes implemented, and specific margin initiatives launched over the past 18 months.”

During their six months to the end of June, the company’s total completions rose slightly ahead of expectations, just 4% against the previous year, to 1,580. This figure comprised 1,030 private units, (down on 2017’s 1,140) whilst affordable units were up to 550 against last year’s 372, reflecting Bovis’ planned build programme to deliver a higher proportion of affordable units.

Bovis’ sales rate lifted 8% to 0.52 net private reservations per site per week and the company reported that the period end was “controlled and disciplined”.

They also declared that the company’s focus for the half year was on achieving a “high level of customer service” following its well-publicised quality issues, confirming they had achieved a 4-star rating (well above 80%) in their HBF customer satisfaction survey from October 2017 to date.

Consistent Performance at Countryside

In a recent trading update, Countryside has reported that performance is in line with company expectations.

The housebuilder said that average weekly site visitors were up 3% year on year, whilst open sales outlets are up 25% at 60 compared to 48 in 2017. The company is also seeing a 3% house price inflation, although build cost inflation is at 3% to 4%.

“Given our confidence in the operational performance of the group and the visibility of future work”, Countryside has issued new medium term guidance and anticipates growth in total completions of 10-15% per annum and an adjusted operating margin of around 17%.

Lucrative Forecast at Linden

Linden Homes have issued a recent update, reporting a “strong overall performance” for the year ending 30th June 2018 with further significant improvement in margin. They stated their performance reflected “very good progress against our strategic objectives”.

Linden achieved 3,442 unit completions during the annual trading period, up from 2017’s 3,296 units. Similarly, their average private sales price rose 4% to £367,000 and although their sales rate for this financial year was slightly down on last year’s 0.62, at 0.59 units per site per week, the company operated from an average of 85 outlets against 2017’s 77.

The housebuilder has a forward sales position totalling £366 million, representing 2,326 units (2017: £373 million and 2,229 units).

Peter Truscott, CEO at parent company, Galliford Try, said the company: “has achieved a strong underlying performance in the financial year and continues to make good progress against its growth plans to 2021 across all three businesses.

“Linden Homes has delivered sales growth in line with expectations and at a further significantly improved operating margin, and enters the new financial year with sales exchanged and reserved of £366 million.”

Steady Performance for Persimmon

Persimmon have issued an update ahead of their half year results and reported a steady performance.

Persimmon’s legal completions increased 3.6% to 8,072 homes during the period January to June 2018, against the equivalent period last year. Their average selling price rose 1.2% to around £215,800.

Similarly, the company’s housing revenues for the first six months of 2018 were £1.74 billion, up 5% on 2017, with the weekly private sales rate in line with last year at 0.78 from an average of 375 active sales outlets.

Persimmon’s total forward sales improved 5% to £1.68 billion as of 30th June 2018, with the company stating: “The group has a strong platform to achieve further growth in the second half.”