Avant has maintained its positive momentum over the last 12 months, delivering another year of record revenues and profits, driven by outlet growth, geographic expansion and improved operational efficiency. The group enters the new financial year in excellent shape and expects to deliver further strong growth, reaffirming its strategy to become a £1bn turnover, 4,000-unit business in the next five-years.
Total completions for the 52 weeks ended 27 April 2018 were 1,902, up 16% on the prior year (FY17: 1,636). Private completions increased by 16% to 1,625 (FY17: 1,406), supported by a healthy increase in average selling price by 6% to £257k (FY17: £243k). This drove revenue to £447m (FY17: £369m), an increase of 21%.
Across the first six months of the 2018 calendar year, sales performance has remained strong, with sales per site per week of 0.79, in line with the comparable period in FY17.
Continued land investment in selected Northern UK locations added 3,071 plots to the owned and contracted land supply which now stands at 7,921 plots with further options now held over more than 5,000 plots. The business saw continued growth in scale in FY18, with outlets at the end of April up 42% at 71 outlets compared to 50 outlets in April 2017
Sales performance remained very strong over the year, with robust visitor levels and reservation rates in both the autumn and spring. An increase in selling outlets helped drive the increase in total private reservations supported by a healthy rate of sale, with average sales per site per week of 0.74 (FY17: 0.81) across an average of 42 selling sites, compared to 36 in the prior year.
The Group remains committed to improving operational efficiency, shown by the increase in its core operating margin to 14.9% (FY17: 12.9%).
The Group is focused on improving the efficiency of its asset base and this has resulted in Return on Capital Employed (‘ROCE’) also advancing to a record 20.9% (FY17: 18.3%). More importantly, the Underlying Core ROCE, which excludes the impact of legacy assets, and therefore is a more accurate measure of the future sustainable performance of the Group, was 22.9% (FY17: 20.1%).
Commenting on the results, Colin Lewis, Chief Executive of Avant Homes, said: “FY18 was a landmark year for Avant, as we delivered another record performance across the board. The continuing health of housing market conditions in the Midlands, the north of England and the central belt of Scotland where we operate and the continued buoyancy of our mid-market offering supports our plan to ramp up our growth targets to more than double our output to 4,000 aspirational, design-led homes per annum by 2023.
“We remain committed to investing in land in our key Northern regions, exemplified by our excellent land supply, and have made positive progress optimising our efficiencies and increasing our margins. Our product range continues to evolve to cover a larger portion of the UK housing market and customer demand for our aspirational homes is increasing.
“We welcomed the findings of the Letwin Review, which completely exonerated housebuilders in relation to accusations of “landbanking” while also highlighting the importance of market absorption rates and of addressing the skills shortage the industry currently faces. For the last 18 months we have been developing our strategy of operating dual sales outlets from one site, focusing on the more efficient use of capital and improving the absorption rate, which is precisely the issue identified by Letwin. We also look forward to working with new housing minister Kit Malthouse and hope that he shares our long-term approach to building the homes that the UK badly needs.
“Overall, our Northern UK markets remain supportive, and we have begun our new financial year strongly as we build towards our intention of becoming a £1bn turnover business.”
Over the 12 months to 27 April 2018, Avant's owned and contracted land supply grew to 7,921 plots (FY17: 6,758 plots) with a potential gross development value (GDV) of £1.9bn, reflecting the Group’s success in the land market. This represented a net increase of 1,163 plots across the year, which has been delivered through adopting a selective approach to land acquisition, focusing on suitable locations in the North of England and central belt of Scotland, as well as the opening of a new Central region as announced in late 2017.
Strategic land is an increasingly important element of Avant’s land programme and, during the year, the Group has successfully pulled through 1,062 plots (35%) from its strategic land supply in the year. Avant will continue to invest in order to replenish its strategic land pipeline, which currently includes options held over approximately 5,000 plots. To this end, the Group was delighted to appoint a new Group Strategic Land Director early in the new financial year to lead its expansion in this area.
Selected key sites acquired during the 2018 financial year include sites in Nottingham, Sheffield, Durham and Glasgow.
Avant’s £200m 5-year RCF, which it secured with HSBC, RBS, Santander and Bank of Ireland in August 2017, has supported its land acquisition programme and the opening of its new central region.
The company has started the new financial year well and as at 30 June 2018 has forward sold 42% of the homes needed to meet Group targets for the FY19 full year.
Across the first six months of the 2018 calendar year the Group has achieved a sales rate of 0.79 which, being in line with the same period last year, is evidence of the resilience of the Northern UK housing market.
Looking ahead, the Board is confident that FY19 will be another record year for Avant, with an ongoing supportive economic market backdrop and continued momentum in the market.