CALA Homes has signalled it is on course for a year of record revenue and profits growth as its strategy to bring a higher volume of homes to market began to reap dividends.
The housebuilder said it has sold 90 per cent of the homes it will bring to market in the financial year to June 30, with net private reservations at an average selling price of £537,000 - 27 per cent up on last year.
Cala, which has now fully integrated Banner Homes following its acquisition in March, contracted 38 new sites, or 1,478 plots, in the eight months ended February 28, offering a potential gross development value of £564 million. And it secured planning permission for 33 sites (938 plots) with a potential GDV of £417m, on which work is expected to start in the coming months.
Speaking almost year to the day since the Banner deal, chief executive Alan Brown said: "We've had a really good eight month period - we are on course for another record year for Cala in both revenues and profits.
"We've announced previously that we brought into place in 2013, and it is in this financial year where you see the first year of that growth. That's where the record revenue and profits are going to be coming from."
Mr Brown said Cala had started the 2015 calendar year strongly. It has been active in land acquisition land and has benefited from relatively benign market conditions, noting that "supply is sufficient for demand at the moment."
The average sale per site per week is up to 0.56 from 0.37 in the year to date, the company said, with sales helped by sales price inflation in the region of four per cent since the start of the financial year.
Mr Brown said that factors such record low interest rates, the strength of the UK economy and a continuing shortage of housing were helping to fuel demand.
Asked for his view on interest rates, which according to some commentators may fall further, Mr Brown said: "People are expecting that in the medium term interest rates will go up, and anybody taking out a mortgage these days - particularly with the Mortgage Market Review that took place in April last year - they are being stress tested much more significantly for rate increases. I think that's just part of the process now.
"Unless there is a sudden massive rise in interest rates, which no one is expecting, I don't see that as being a challenge."
The Banner deal means Cala now has eight operating regions across the UK, five of which are in Scotland. Mr Brown said trading north of the Border has been "very similar" to the rest of country this year, with sites meeting volume targets and making broadly the same progress on selling price.
Cala said it operated from an average of 38 months in the first eight months of the year, up from 24 in the same period last year, and is currently working from 41. It expects this number to increase as sites move through the planning system and as it continues its drive to deliver more homes.
The company said the financial backing of main shareholders Legal & General and Patron Capital has allowed it to steadily increase its land bank, providing the platform for its growth strategy.
In addition to the 38 sites contracted in the eight months, a further 12, capable of delivering 1500 homes, have been contracted and will be promoted through the planning system.
In recent months Cala has regularly been linked with a stock market flotation and Mr Brown said it remains an option - if not in the immediate term.
"Our backers Legal & General and Patron have invested so they can make a return at some point," he said, "but at the moment our focus is very much focused on our growth strategy.
"Doing a listing is one of the options we will consider."
Asked if Cala was contemplating further acquisitions, Mr Brown added: "It's off the agenda for now. We are on a significant growth trajectory.
"Turnover is going to increase substantially between now and 2017, and we don't need to do acquisitions to do more. That's not to say we wouldn't do an acquisition, but it is certainly not on the agenda at the moment."
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