Bellway considers plans to divide Scottish arm after leap in profits
The UK’s fourth-largest housebuilder Bellway is considering splitting its Scottish operations into two divisions after “an exceptional year of progress”.
Speaking after reporting a 75 per cent jump in annual profits, chief executive Ted Ayres said that if the market remains strong the group could soon be back to pre-recession completion levels north of the Border.
However, expansion is likely to be dependent on the Scottish Government providing more funding for its Help to Buy scheme after the current allocation runs out next year.
“Scotland has been one of our best-selling divisions over the last six to nine months,” Ayres told The Scotsman. “We’ve seen sales go up and profits go up and that’s given us the confidence to buy more land.”
Home sales rose 21.2 per cent in the year to July 1 to 6,851, producing turnover of £1.486 million, a rise of nearly 34 per cent on the 2013 figure.
Gross profit rose 55.6 per cent to £316.4m, and pre-tax profit was £245.9m, an increase of 74.5 per cent.
The increase in earnings enabled the board to propose a final dividend of 36p per share, bringing the total dividend payment for the year to a record 52p.
The company has acquired sites at Cumbernauld, Dalkeith and Winchburgh, and expects to sign a deal for land at Kilmarnock soon. Ayres said the firm was still able to buy land within its target margin levels and saw scope for further expansion.
Before the financial crisis, Bellway was building about 800 homes a year in Scotland, through two divisions centred around Edinburgh and Glasgow.
A collapse in demand for flats forced it to rethink, with output falling as low as 300 in 2008-9 and the two teams being merged into one. But the group re-focused its operations, concentrating on “traditional” two storey houses in Central Belt locations.
After a boost from the introduction of the Scottish Help to Buy scheme, Ayres says the firm should build around 600 homes in the current financial year.
He added: “It looks as though there’s a possibility to take that further.”
Bellway chairman John Watson, said: “This has been an exceptional year of progress for the group in which we have delivered record revenue and profit.
“There has been a significant improvement in customer confidence during the year and this has enabled Bellway to accelerate the construction and delivery of much needed new homes.
“The outlook remains positive with a record forward order book and this should enable the group to deliver volume growth of around 10 per cent in the current financial year.”