Interim Management Statement

Interim Management Statement

Bovis Homes Group PLC

Bovis Homes Group PLC
Interim Management Statement
18 November 2009

Bovis Homes Group PLC is today issuing its 2009 Interim Management Statement for the period from 1 July in accordance with the UK Listing Authority’s Disclosure and Transparency Rules.

In the year to 13 November, the Group has sustained its strong current year performance in private home reservations, and has achieved 1,488 private reservations, some 83% ahead of the comparative figure for the same period in 2008 (811 private reservations). When combined with the Group’s social housing sales and private sales held at 1 January, the Group has achieved cumulative sales of 2,178 homes (2008: 2,023 homes). Of these, and in line with the Group’s previous guidance, the Group anticipates legally completing circa 1,800 homes in 2009 (2008: 1,817 homes), with the balance forming a solid forward sales position for 2010. Of the anticipated legal completions, circa 1,500 are expected to be private homes (2008: 1,223 homes) and circa 300 are expected to be social homes (2008: 594 homes).

Following signs of stabilisation in the housing market in the first half of 2009, the Group has seen further signs of an improving market backdrop. External house price indices have suggested incremental pricing improvements during the third quarter helped by low levels of second hand stock for sale and with some regional differences in pricing sentiment emerging. The Group itself has experienced a modest improvement in underlying private sales prices for reservations taken since its June half year together with some regional mix changes. Volumes of mortgage approvals also continue to grow, albeit off a low base and only to levels that would historically be regarded as significantly below average. The mortgage market still remains difficult to access for first-time buyers and other buyers requiring higher loan-to-value multiples.

Benefiting from the combination of increased private home sale rates, strong working capital control and tight cost control, the Group has delivered circa £197 million of cash inflow in the period from 1 January 2009 to 13 November 2009 with circa £138 million from trading and a further £59 million from its equity raising in September. As at 13 November, the Group had circa £89 million of net cash in hand. This leaves the Group well positioned to acquire the residential land assets currently being progressed through its acquisitions process. Subject to due diligence on such opportunities, the Group anticipates being able to advise on a number of consented land acquisitions when it reports its full year results for 2009.

The Group is required to assess the carrying value of its inventory at each period end. Based on the Group’s present view of current and future sales price trends, there is a likelihood that a net provision release will be made at the end of the 2009 financial year. The Group will provide further information on the extent of inventory provision movements at the date of its preliminary results announcement in March 2010, after taking into account market pricing trends between now and then together with any reliable estimates of price movements thereafter.

The Group is now delivering good build cost savings for future production through re-specification of materials used and negotiation of new labour contracts to achieve labour savings. This is an encouraging development which will enable the Group to control future costs whilst absorbing increases anticipated from forthcoming regulation changes facing the housebuilding industry. Improvements will also be achieved through replanning where appropriate recognising that the typical Bovis Homes product mix featuring traditional mid market houses already relates well to current market conditions.

Looking ahead into 2010, the Group expects to see a continuation of the current market backdrop, with pricing stability and further modest growth in mortgage availability. The Group’s focus will be on the commencement of development on existing owned land assets and the acquisition of new residential land assets to grow the output capacity of the Group.

With a strong balance sheet and a clear strategy underpinned by both the capacity and ability to acquire new residential land assets which have the potential to achieve at or above investment hurdle rate returns, the Group remains well placed to create value for its shareholders into the future.

Conference Call for Analysts and Investors

David Ritchie, Chief Executive and Neil Cooper, Group Finance Director of Bovis Homes will host a conference call at 09:45am today, Wednesday 18 November 2009, to discuss the interim trading update.

To access the call please dial 020 7138 0820 and quote passcode: 4754255#. Please dial in 5 minutes prior to the start of the conference call to allow time for registration. A recording of the conference call will be available until midnight on 24 November 2009 on 020 7111 1244, accessible with the same passcode.

Certain statements may be forward looking statements. Forward looking statements involve evaluating a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements. Forward looking statements regarding past trends, results or activities should not be taken as a representation that such trends, results or activities will continue in the future. Undue reliance should not be placed on forward looking statements.

Enquiries:

David Ritchie, Chief Executive

Neil Cooper, Finance Director

Bovis Homes Group PLC

Tel: [phone]

Â

Andrew Best / Emily Hunt

Shared Value Limited

Tel: [phone]

07798 576 378