Booming Bellway

House completions rose 13 per cent to 7,752, while the average selling price was 5 per cent higher at £224,000. This combination of scale benefits and house price inflation pushed the operating margin up from 17.2 per cent to a record 20.4 per cent.

The strong trading environment has continued, with a forward order book of 4,568 homes worth over £1bn. The company expects to achieve volume growth of 10 per cent in the current financial year, and to cater for this demand Bellway spent £620m increasing its land holdings to 36,211 plots. Despite this, net debt stood at a nominal £38.5m at the year-end, against a £3.6m net cash position a year earlier. Average reservations per week grew from 148 to 153, and further growth here will be underpinned by the opening of new trading divisions in Bristol and Kent.

As with other builders, Bellway has experienced an increase in sub-contractor costs, principally as a result of skilled labour shortages. However, cost inflation has been more than covered by the rise in selling prices. Also, there are signs that upward pressure on material costs, notably bricks, is easing as manufacturers crank up production. Scale has also helped spread some costs over a larger base: administrative costs fell from 4.1 per cent to 3.8 per cent of revenues.

Analysts at Numis upgraded their estimates for the year to July 2016 by 6 per cent, and now forecast pre-tax profits of £420m and EPS of 273.9p.