The first half of the financial year has however seen a marked slowdown in the
Our business remains fundamentally strong, both operationally and financially, with an experienced leadership team, a strong net cash position and a resilient and flexible business model. We are focused on successfully navigating the challenges ahead and continuing to deliver excellent quality and service for our customers.'
Highlights
Total home completions including joint ventures ('JVs') at 8,626 (HY22: 8,067).
Sales rate of 0.44 (HY22: 0.79) net private reservations per active outlet per week1 during the period with a net reservation rate per average week of 0.30 (HY22: 0.69) for the period from
Total forward order book (including JVs) as at
Net land approvals have been negative with a net 290 plots cancelled (HY22: 8,869 approved).
Strong balance sheet with net cash2 as at
Our sustainability performance recognised with the Group joining the CDP's Climate Change A List for Leadership, one of just 283 companies worldwide and the top-rated
Assuming net reservation rates increase in line with normal Spring trading patterns to around 0.50 homes per active outlet per week, we will remain on track to deliver consensus total home completions of 17,4753. However, should the usual seasonal improvement not occur and trading remain at recent levels, the Group would expect to deliver total home completions for FY23 in the range of 16,0004 to 16,5004.
Trading
We delivered a strong financial and operational performance in the first half, with total home completions advancing 6.9% as we worked through our forward order book to deliver much-needed new homes across the country. We maintained our industry-leading performance in quality, customer satisfaction, health and safety and sustainability. The outlook reflects a challenging current market backdrop, as our customers face increased costs of borrowing and ongoing cost of living challenges, which will undoubtedly impact trading in the second half.
In the period our net private reservations1 per week were 155 (HY22: 259) with the net private reservation rate per outlet per week at 0.44 (HY22: 0.79). The private net reservation rate per average week has shown a sequential slowdown from 0.60 through to
The slowing reservation rate in the first quarter of FY23 reflected the political and economic uncertainties at that time, particularly around impending cost of living challenges, coupled with a limited availability of homes for early occupation given our strong forward order book. The second quarter saw a material impact from the significant escalation in mortgage interest rates on both affordability and homebuyer confidence.
In the half year, we operated from an average of 360 (HY22: 337) active outlets (including 8 JVs (HY22: 8)), an increase of 6.8% on the prior year. The growth in active outlets has been driven by a successful first half, launching 52 (HY22: 46) new outlets (including JVs), but also reflects the impact of the significantly lower private reservation rate, extending the average sale outlet's life.
We delivered 8,626 (HY22: 8,067) home completions (including JVs of 362 (HY22: 395)), representing growth of 6.9% on last year's first half. The growth in home completions in the period resulted from our particularly strong forward sales position and the increased level of work in progress carried into the new financial year, as well as strong construction activity in the period.
Construction activity was in line with planned output, with an average of 333 (HY22: 341) equivalent homes (including JVs) constructed per week. Construction activity moderated in the second half of the period as the business moved to align production with slowing reservation activity. During the second half, we anticipate construction activity will continue to moderate as customer commitments within our order book are satisfied and as construction activity continues to align with reservation activity.
Our total average selling price ('ASP') increased by c.14.6% to c.
Total forward sales (including JVs) as at
We are now 77%5 forward sold with respect to private wholly owned home completions for FY23 (FY22: 89%6), of which approximately 86% are either completed or exchanged (FY22: 80%).
Land
Throughout the period we have been very selective with respect to the land opportunities on which we have been prepared to bid, reflecting the increased uncertainty on the outlook for both the
In the period we have approved 16 new sites but these were more than offset by 22 previously approved sites which will no longer proceed, resulting in a net cancellation of 6 sites in the half (HY22: net approval of 48 sites). The approved sites added 3,003 plots, with 3,293 plots removed with respect to the sites no longer proceeding, resulting in a net cancellation of 290 plots in the half year (HY22: net addition of 8,869 plots).
Reflecting the strength of our existing land bank and the uncertainty in the sales market, we continue to anticipate that land approvals will be substantially below replacement level in FY23.
Balance sheet and liquidity
The Group remains financially strong with a net cash position this half year at c. GBP965m2 from
To date the Group has purchased 26.3 million shares for cancellation with respect to the buyback programme announced on
During the period, we also extended our
Leading the industry in sustainability, build quality and customer service
We are determined to maintain our position as the leading national sustainable housebuilder and our commitments to build quality and customer service remain undiminished.
We were delighted that our sustainability performance has been recognised in the 2022 CDP annual results with
In the industry specific NextGeneration awards, we were once again the highest ranked national housebuilder and at the Housebuilder Awards in
Our build quality continues to be recognised through the NHBC Pride in the Job Awards for site management. Following our site teams' success in
We also remain the only major housebuilder to be awarded the maximum 5 Star rating by our customers in the HBF customer satisfaction survey for 13 years in a row.
We remain in constructive discussions with the
Outlook
The outlook for the second half of FY23 is uncertain with homebuyer confidence and the availability and competitive pricing of mortgages critical to the health of the
Our full year out-turn will depend on how the market evolves in the early months of 2023. Assuming net reservation rates increase in line with normal Spring trading patterns to around 0.50 homes per active outlet per week, we will remain on track to deliver consensus total home completions of 17,4753. However, should the usual seasonal improvement not occur and trading remain at recent levels, the Group would deliver total home completions for FY23 in the range of 16,0004 to 16,5004.
We have taken a number of actions to respond to current market conditions, including significantly reducing land approvals, pausing recruitment of new employees and introducing further controls for new site openings to manage our working capital deployment. Reservation activity in the first quarter of the new calendar year will determine whether any further action will be required.
The Group is in a strong financial position with a substantial net cash balance and a solid forward sales position. This provides us with a robust platform and gives us flexibility to continue to respond to market conditions as they evolve throughout the coming year.
With our excellent land bank and highly experienced operational teams throughout our business, we remain well placed to continue to deliver much-needed, high-quality and energy-efficient, sustainable homes across the country.
This trading update contains certain forward-looking statements about the future outlook for the Group. Although the Directors believe that these statements are based upon reasonable assumptions, any such statements should be treated with caution as future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.
Contact:
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