AGM Trading Statement

RNS Number : 2528N

Bovis Homes Group PLC

15 May 2015

 



15 May 2015

Bovis Homes Group PLC

AGM Trading Statement

Strong progress in line with growth strategy

Bovis Homes Group PLC is holding its Annual General Meeting at 12.00 noon today.  This statement comments on the Group's current trading, financial performance and outlook for the current financial year. This statement covers the period from 1 January 2015 to date and supplements the update given with the 2014 final results on 23 February 2015.

David Ritchie, Chief Executive, commented:

"During the year to date, we have traded well in a positive UK housing market building a strong forward sales position on an increased number of sales outlets.  We are on track to deliver our expected growth for 2015 and a further increase in shareholder returns.  We are planning to step up the 2015 full year dividend to 40 pence per share compared to our previously stated commitment to pay at least 35 pence per share.

"Strong progress is again being achieved in growing the consented land bank, including an enhanced level of strategic land conversion.  This will support the Group to continue to deliver strong returns for shareholders in future years."

Current trading

The Group has traded well to date during 2015 with good progress made in delivering the pipeline of sales to achieve the next stage of planned growth.  Good levels of customer confidence combined with an increased number of active traditional housing sites under development by the Group continue to provide the opportunity for growth.  The UK economy remains positive with good quality home buyers able to access cost effective mortgage finance.

Solid progress has been made in the year to date with the total forward sales position for 2015 delivery, including legal completions to date, standing at 3,049 homes at 8 May 2015, 8% ahead of the prior year.  The Group has been trading from an average of 100 sales outlets during the year to date which represents an 8% increase on the comparative period.  Weekly sales rates to date have been robust at 0.65 net private reservations per site against a strong comparative of 0.69 last year.  Sales prices continue to show sustainable increases with the average private sales price achieved to date circa 2% ahead of the Group's expectations set in Q4 2014. 

Housing production is currently 9% ahead of the prior year, supporting the plan for 2015.  Encouragingly, the Group is now building more than double the number of new homes per annum since launching its growth strategy five years ago.  The Group's production plans are on track to deliver the expected volume for this year: these reflect the ongoing challenges of accessing the necessary labour resource, both directly employed and sub contracted.  The Group anticipates that whilst build cost pressure continues within the supply chain, the impact of such cost increases in 2015 will be at least covered by sales price increases.

Given the lower level of work in progress at the start of the year, as previously reported in February, and the production programmes established for this year, including the timing of new site launches, the legal completion profile for 2015 is expected to be more weighted towards the second half year.  The Group expects this profile to be comparable with historical H1:H2 splits rather than the stronger first half profile delivered in 2014 (41% of legal completions in H1 2014).

Land acquisitions

The residential land market remains attractive with a good supply of consented land in the Group's targeted locations.  The Group has added to the consented land bank 1,759 plots on 10 sites and controls under conditional contract a further circa 1,200 plots on 11 sites which are expected to be added to the land bank.  A strong pipeline of land with terms agreed is in place to deliver the targeted level of around 40 new site acquisitions during 2015.  The Group continues to be disciplined in its approach to land acquisition with robust hurdle rates and no allowance for future house price inflation included in its land appraisals.  The average expected return on capital employed on land acquired this year is circa 30%.

The Group's land position continues to benefit from strategic conversion and it has made significant progress in delivering planning consent on four major sites.  These sites at North Wokingham, Bishops Stortford, Tavistock, and Witney are controlled by the Group and will deliver over 2,000 plots with high profit margins and returns above existing hurdle rates.

Outlook

The Group remains on track to deliver its expected result for 2015.  The Group is executing its growth strategy with investment in consented land, increased active sales outlets and robust rates of delivery per site.  Volume in 2015 is expected to grow in line with active sales outlet growth coupled with an increase in average sales price and robust profit margins.  The increase in revenue planned in 2015 is expected to enable the Group for the first time to deliver a capital turn in excess of one times, further enhancing the Group's return on capital employed. 

Dividend

The Group has previously indicated a dividend for 2015 ahead of its prevailing dividend policy of a one-third of earnings pay-out ratio.  In 2014, the Group announced a full year dividend of 35 pence per share, which represented 45% of earnings per share in that year.  Subject to the normal shareholder approvals, the Group is planning to step up the 2015 full year dividend to 40 pence per share compared to its previously stated commitment to pay at least 35 pence per share.

Board

The Board is delighted that Earl Sibley joined the Group and the Board as Group Finance Director on 16 April 2015.  With effect from today John Warren retires from the Board.  John has been a non-executive director since 2006 and has been Chairman of the Audit Committee since 2007.  The Board would like to thank John for all his dedication and hard work and wishes him every success in the future.  The Board is also delighted that Ralph Findlay has joined the Board as a non-executive director with effect from 7 April 2015.  Ralph will take on the role of Chairman of the Audit Committee with effect from today. 

Conference call for analysts and investors

David Ritchie, Chief Executive and Earl Sibley, Group Finance Director of Bovis Homes will host a conference call at 08:15am today, Friday 15 May 2015 to discuss the AGM Statement.

To access the call please dial [phone] and enter pincode 36672890# when prompted.  Please dial in five 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 14 June 2015.  To access the playback facility, please dial [phone] and enter conference reference 657987# when prompted.

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.

-ENDS-

Enquiries:           David Ritchie, Chief Executive

Earl Sibley, Group Finance Director

                             Bovis Homes Group PLC

Tel: [phone]

Andrew Jaques / Reg Hoare / James White / Giles Robinson

MHP Communications

Tel: [phone]

 

END

 

 

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