RESERVATIONS at housebuilder Bellway increased 13 per cent in the month following the Brexit vote relative to the previous year, as a survey from the Federation of Master Builders Scotland revealed small to medium-sized firms in the Scottish construction sector saw growth in the three months following the plebiscite.

Bellway revealed the details on its post-Brexit performance in its annual accounts for the year-ending July 31, which saw record revenue of £2.2 billion, a 27 per cent uplift on the previous year.

Profit before tax surged 40 per cent to £500m as the group’s operating margin was boosted to 22 per cent, giving its earnings per share of 328.7p, also 40 per cent up on last year.

Bellway said demand for new homes was robust, with reservations up 10 per cent on the previous year, at 169 per week – helped by a “resilient” performance from the date of the Brexit vote until its year-end.

“Outside of London, it’s business as usual,” said chief executive Ted Ayres. “People want to carry on, buy houses, [saying] let’s not worry and just wait and see how Brexit transpires.”

In Scotland, Mr Ayres said Bellway was performing “very, very well” with an increase in the number of legal completions to more than 700, from 655, while the average selling price pushed past £200,000.

Bellway recently exchanged on a large site on the periphery of Edinburgh, and Mr Ayres noted that the planning system north of the Border helped facilitate growth.

“Scotland is an important part of the company’s business and we continue to invest there,” he said. “There are differences in the planning system; in Scotland it’s far more positive and quicker than in parts of the UK, so we have a successful land buying teams in Scotland and we know already about the imminent releases being suggested in Scotland.”

Finance Director Keith Adey said the company was taking advantage of strong market conditions, but remaining disciplined with its growth strategy, focusing on improving return on capital employed (ROCE).

This year, ROCE grew by 430 basis points to 28.2 per cent. Mr Adey said the company’s long-term target was 20 per cent.

“[It’s higher] due to pricing gains above our expectations, and slightly faster sales rates than expected, so long-term as we keep buying land as we are, maintaining more than 20 per cent then we’ll be very pleased. Short term outlook I think we’ll stay in the high 20s because of the strength of the market.”

Bellway has 28,879 plots with detailed planning permission (DPP), representing almost three year’ supply at the current build rate. As a result of DPP plots increasing by 7,265 in the year, Bellway’s land pipeline has reduced to 10,100.

Mr Ayres said that in addition its controlled land bank, Bellway has recognises that green field strategic land can be a valuable source of supply; three regional strategic land directors have been employed to identify and acquire longer term land.

Since the Brexit vote, Bellway’s shares have recovered to 2,277p, after collapsing 38 per cent to 1,689p, but Mr Ayres said he believed the price continued to be undervalued.

If you look at the returns we’re generating and the compounded effect of reinvesting back in to generate further growth, if you look at the dividend we’re paying out, the underlying macro-economic factors that directly affect us, such as demand for new homes, interest rates, and mortgage availably then we think long term growth prospects for the group are very good, so our analysis is that we are undervalued, perhaps not just in the sector but compared with our peers.”

In the last three years, Bellway has grown its dividend 260 per cent. It has proposed a 108p dividend this year, up 40 per cent.

Mr Adey also said he believed there was room for upward movement in interest rates without causing a slowdown in the housing market. “Mortgage payments are at 30 per cent of take home income, on average, compared to long-term high 30s and 40 per cent, so there is scope for modest rate rises without having too much of an impact on the housing market”.

The results come as a survey by the Federation of Master Builders (FMB) Scotland suggested small to medium-sized firms in the Scottish construction sector reported growth in the first three months after the Brexit vote. However, the rate of growth has slowed from the previous quarter.

Gordon Nelson, director of FMB Scotland, said: “Despite some of the ominous warnings on what the referendum vote might mean for consumer confidence in Scotland, demand for domestic building work and new build homes has so far defied any significant dip.”