Bellway bemoans lack of first-time buyers

By coincidence, its results coincided with Budget Day, where Alistair Darling decided to scrap stamp duty for first-time purchases under £250,000. Bellway welcomes the move, and has clearly benefited from the government-backed deposit lending programme HomeBuy Direct, where builders advance half of a 30 per cent deposit to qualifying first time buyers. This scheme accounted for 14 per cent of Bellway's sales in the period.

In the first half, completions were 11.6 per cent up on the prior year, average sales prices remained flat, and the forward order book increased 18 per cent to £435m. Bellway expects to increase the number of sites it is trading from 180 to 200 in 12 month's time, having acquired 40 sites since the start of the recession. This will boost operating margins up from the 6.1 per cent reported in the six month period and the cash rich company remains on the look out for good value land.

"We want to spend £300m on land purchases this year, but it's a long and complicated process, so we will probably manage £200m," says finance director Alistair Leitch, adding this compared to just £90m spent on land in the whole of last year. Currently, the builder has agreed terms on 3,250 plots worth around £150m, but doesn't expect them all to come through. "I'm disappointed that we currently have £70m cash on the balance sheet. I'd rather have £20m and have spent £50m on land already, but you can't buy it in the supermarket," Mr Leitch adds.

Broker Panmure Gordon forecasts full year pre-tax profits of £40.6m, EPS of 24.2p and a year-end net asset value (NAV) of 856p.

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