Wainhomes beats forecast with pounds 6m maiden results

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WAINHOMES, the housebuilder whose shares have fallen 21 per cent since coming to the market in March, beat expectations with its maiden full-year results but struck a cautious note on house-price inflation for the rest of the year, writes Tom Stevenson.

Ron Smith, chief executive, said he did not expect prices to rise more than 3 per cent this year. Until recently some analysts had forecast rises of up to 7 per cent.

He said slightly lower selling prices and increased land costs had squeezed gross margins but pointed to Wainhomes' unbroken history of double-digit operating margins throughout the recession.

Completions were a record 950 in the year, 40 per cent higher than in 1989 thanks to the company's expansion from its North-west core into the Midlands and South. Overall sales in the new build sector have fallen by a quarter over the same period.

Pre-tax profits were pounds 6.22m, 18 per cent up on last year and ahead of the pounds 6.1m forecast at the flotation. Earnings per share rose 22 per cent to 9.6p. There was no dividend.

Despite the rise in land prices, Wainhomes increased its land bank by 700 plots to 3,102 during the year. The company plans sales of 1,800 a year within three years.

The shares' poor performance since flotation has been in line with the building sector as a whole.