Galliford Try posted an impressive rise in the Group’s pre-tax profit, which soared to £143 million.
The Group reported that Linden Homes was generating an improved operating margin of 19.5% (2017: 18.2%) and operating profit up 8% to £184.4m (2017: £170.3m).
The business increased completions to 3,442 units (2017: 3,296), with private housing accounting for 2,587 (2017: 2,537) and affordable housing accounting for 855 (2017: 759).
Average selling prices were £367,000 for private housing, up 4% (2017: £354,000) and £134,000 for affordable homes, up 11% (2017: £121,000). The slightly higher private average selling price principally reflected sales in London in the year, which made up a relatively small proportion of the units but had much higher than average selling prices.
“We continue to expect average selling prices to reduce over the strategy period to 2021, reflecting increased standardisation and the growth in regions away from the South East,” said Peter Truscott, Chief Executive of Galliford Try. “In the year only 9% of Linden Homes’ units had selling prices in excess of £600,000.”
There were 85 active selling sites on average during the year, up from 77 in 2017. Sales per site per week of 0.59, compared with 0.62 in the previous year. Cancellation rates were steady at 19% (2017: 19%). The business has sales in hand of £510m (2017: £545m).
During the year, Lindon introduced a third generation of standard layouts. The plots being built using these layouts are showing the expected benefits in reduced build costs.
“The land market remains favourable, allowing us to secure the plots we need at attractive margins,” said Truscott.” We have a landbank of 11,830 plots (2017: 11,250), which we estimate is equivalent to around 3.5 years’ supply and provides a sustainable business platform. The figure represents sites we own and control, including sites under option but excluding our longer-term options on strategic land. 100% of required land for the 2019 financial year is in place and 83% is secured for 2020.”
Around 87% of Linden Homes’ landbank relates to houses, with the remainder apartments. The average cost per plot is £69,000 and the expected average selling price per plot is £292,000. The gross development value of its landbank is £3.4bn (2017: £3.4bn).
Truscott, Chief Executive, said, “We have delivered a very strong underlying performance during the year, driven by excellent progress towards our strategic objectives across all three businesses.
“Linden Homes continued to prioritise margin growth, benefiting from further standardisation and the robust control of overheads. This resulted in increased profitability in a year with modest house price inflation.
“Volumes also grew reflecting the strength of our product offering, and with the sector supported by Help to Buy, good mortgage availability and the cut in stamp duty for first-time buyers. The land market continues to be favourable, allowing us to buy land at robust margins, in the right locations for our new standardised product.”