Half Yearly Report

RNS Number : 3147K

Bovis Homes Group PLC

20 August 2012

 



20 August 2012

BOVIS HOMES GROUP PLC

RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2012

HALF YEAR PROFIT DOUBLED AND GUIDANCE REAFFIRMED FOR

STRONG SHAREHOLDER RETURNS GROWTH IN 2012

Bovis Homes Group PLC today announces its interim results for 2012.

	H1 2012	H1 2011	Change
Revenue	£170.3m	£133.6m	+27%
Gross Profit	£36.8m	£26.8m	+37%
Housing gross margin	20.9%	20.1%	+0.8ppts
Operating profit	£17.6m	£10.0m	+76%
Operating margin	10.3%	7.5%	+2.8ppts
Profit before tax	£16.2m	£8.1m	+100%
Earnings per share	8.9p	4.4p	+102%
Dividend per share	3.0p	1.5p	+100%
Net cash	£22.2m	£45.7m

Operational highlights

·     Legal completions of 944 homes (H1 2011: 801 homes), an increase of 18% with an average sales price of £164,400 (H1 2011: £163,400)

·     Average active sales outlets increased by 21% to 82 in H1 2012 from 68 in H1 2011

·     Two land sales achieved in H1 2012, delivering a profit of £3.9 million (H1 2011: Nil)

·     1,037 consented plots on eight sites added to the land bank during H1 2012, with a further 419 consented plots on two sites added in H2 to date

·     Contracts in place at 20 August 2012 to acquire another circa 1,200 plots on ten sites, the majority of which are expected to be added to the consented land bank in H2 2012

·     Terms agreed in principle to acquire a further 20 sites, representing in excess of 3,000 plots

·     Consented land bank of 13,620 plots as at 30 June 2012, with potential gross profit of £574 million, calculated using prevailing sales prices and build costs (31 December 2011: 13,723 plots with gross profit potential of £524 million)

·     19,829 potential plots of strategic land (31 December 2011: 18,749 potential plots)

Current trading and outlook

·     Strong trading in 2012 to date (33 trading weeks) with a 19% increase in private reservations to 1,253 homes (2011: 1,049) at a sales rate of 0.46 net private reservations per site per week

·     Sales rates in the last seven weeks at 0.46 net private reservations per site per week, slightly ahead of the comparable prior year period

·     Cumulative sales achieved to date for 2012 legal completion of 1,968 homes (2011: 1,607)

·     Sales prices achieved to date marginally ahead of Group expectations

·     Active sales outlets currently at 82, with an expected average of 83 for 2012 (2011: 73), an increase of 14%

·     Average sales price for 2012 legal completions expected to be circa 6% greater than 2011, reflecting significant improvements in mix

·     Housing gross margin expected to be between 21% and 22% for 2012 full year (2011: 20.8%), with an expected operating margin of between 12% and 13% (2011: 10.0%)

·     Further significant improvement in return on capital employed for the 2012 full year, expected to approach 7.5% (2011: 5.0%)

Commenting on the results, David Ritchie, Chief Executive of Bovis Homes Group PLC said:

"The Group has delivered a strong performance during the first half of 2012 with profit before tax doubling against the backdrop of stable, but challenging, market conditions. This increase has been delivered through the compound positive effect of increased volumes, improved average sales price and stronger profit margins.

"As a result of a greater number of active sales outlets with an increasing proportion of new, more profitable sites, the Group's profits will, subject to stable market conditions, continue to increase significantly in the second half of 2012, in line with the Group's expectations.

"The investments already made in high quality, consented residential land, combined with the strong pipeline of future land opportunities, will support further sales outlet growth into 2013 and beyond. While investing strongly, the Group is controlling capital employed through land bank management and by managing working capital tightly, which will, based on stable market conditions, lead to strongly improving shareholder returns going forward.

"With the progressive, sustainable improvement in the Group's profits and the Board's confidence in the Group's growth strategy, the interim dividend has been doubled to 3.0 pence per share."

Enquiries:	David Ritchie, Chief Executive	Results issued by	Andrew Jaques / Reg Hoare /
	Jonathan Hill, Finance Director		James White
	Bovis Homes Group PLC		MHP Communications
	On 20 August - tel: [phone]		On 20 August - tel: [phone]
	Thereafter - tel: [phone]

Analysts wishing to remotely listen in to the presentation at 09:30am may dial [phone] followed by the participant code 995771#.

Certain statements in this press release are 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.

Introduction

During the first half of 2012, Bovis Homes has made significant progress in delivering its strategy to improve returns with a doubling of profit, a strong increase in the number of active sales outlets and the successful continuation of investment in consented and strategic land.

This has been achieved against the backdrop of stable, but challenging, UK housing market conditions, reflecting the continuing restriction of higher loan to value mortgage lending, which particularly constrains first time buyers with limited deposits.

Strategy

The focus of the Group's strategy is to deliver further material improvements in shareholder returns by increasing profitability whilst improving the efficiency of capital employed. The strategy can be successfully delivered during a period of stable market conditions and is flexible enough to operate during short periods of market weakness.

The Group will deliver enhanced profits from the compound positive effect of:

·     Volume growth from a greater number of sales outlets, delivered through consented land acquisition, primarily in the south of England.

·     Higher average sales price from traditional homes on better located sales outlets.

·     Stronger profit margins from an increasing proportion of legal completions from new higher margin sites.

Building the future profit potential in the land bank will be delivered by:

·     Adding new consented sites to the land bank which will achieve higher profit margins.

·     Progressively trading through older, lower margin sites.

·     Continuing investment in strategic land and delivering strategic land conversion through achievement of residential planning consent.

Greater efficiency of capital employed will be delivered by:

·     Efficient cash utilisation with more sites being acquired on deferred terms.

·     Maintaining tight control of work in progress.

·     Managing the land bank through selective sales of consented plots on sites.

Significant progress has been made in the delivery of this growth strategy with:

·     circa 8,000 consented plots acquired since the housing market downturn.

·     circa 30 new sales outlets expected to launch in 2012, with 33 new sales outlets having opened in 2011.

·     six land sales delivered since the housing market downturn with further land sales to be undertaken selectively.

The successful execution of this strategy should enable the Group, assuming stable market conditions, to continue to increase output capacity progressively and further improve margins in 2013 and beyond. The Group considers that the required investment can be managed with its existing capital structure. This should lead to an increase in the Group's return on equity to a level where it exceeds its cost of capital.

Revenue

The Group generated total revenue of £170.3 million during the first half of 2012, compared to total revenue in H1 2011 of £133.6 million, an increase of 27%.

Units		2012		2011
Private legal completions		806		681
Social legal completions		138		120
Total legal completions		944		801
Revenue (£m)
Private legal completions		141.1		119.4
Social legal completions		14.1		11.5
Housing revenue		155.2		130.9
Other revenue		1.9		2.7
Land sales revenue		13.2		-
Total revenue		170.3		133.6

Housing revenue in the first six months of 2012 was £155.2 million, 19% ahead of the same period in the prior year. Other revenue was £1.9 million (H1 2011: £2.7 million) and land sales revenue was £13.2 million (H1 2011: Nil).

The Group legally completed 944 homes in the first six months of 2012 (H1 2011: 801). Of these, 806 were private homes (H1 2011: 681 homes), an increase of 18%.  Social homes comprised 15% of total legal completions (138 homes), consistent with 15% (120 homes) in the first half of 2011.

In the first six months of 2012 the average sales price of homes legally completed was £164,400 (H1 2011: £163,400) and the average sales price of the Group's private legal completions was £175,000 (H1 2011: £175,300). The increasing benefit of stronger sales prices on new sites was offset in the first half year by an increased proportion of legal completions from midlands / northern sites, trading out lower priced product. Housing market prices are considered to have remained unchanged during the year to date.

The average size of the Group's private home legal completions decreased by 2.0% to 996 square feet in H1 2012 (H1 2011: 1,017 square feet), in part due to the increased contribution of smaller homes where customers took advantage of the FirstBuy scheme.  The sales price per square foot increased by 2.0%. The Group's social home legal completions decreased in average size to 805 square feet in the first half of 2012 (H1 2011: 833 square feet).  Overall, the average size of the Group's legally completed homes decreased by 2.2% and the sales price per square foot increased by 2.9%.

Operating profit

The Group delivered an operating profit for the six months ended 30 June 2012 of £17.6 million at an operating margin of 10.3% (H1 2011: £10.0 million at an operating margin of 7.5%).

The gross margin achieved in the first half of 2012 was 21.6%, which compared to 20.1% in 2011. The Group delivered a land sales profit of £3.9 million (H1 2011: Nil).  Housing gross margin increased to 20.9% (H1 2011: 20.1%), which, with relatively stable market pricing year on year, was generated from the increasing contribution from new higher margin sites acquired since the downturn.

As anticipated, overheads have increased by 14% and constitute 11.3% of revenue in the first half of 2012 (H1 2011: 12.6%). The Group has invested in sales and marketing activity, given the increasing number of active sales outlets, and in progressing newly acquired sites through the detailed planning and design phases to start work on site, all such costs being written off as incurred.  The Group expects that overheads as a percentage of revenue will reduce from 9.8% in 2011 towards 9% for the 2012 full year.

Profit before tax

The Group achieved profit before tax of £16.2 million, comprising operating profit of £17.6 million, net financing charges of £1.5 million and a profit from the joint venture of £0.1 million.  This compares to £10.0 million of operating profit, £2.0 million of net financing charges and a profit from the joint venture of £0.1 million in the first six months of 2011, generating a profit before tax of £8.1 million in that period.  There were no exceptional items in the first six months of either 2011 or 2012.

Dividends

With the Group's growth strategy delivering as expected and a strong improvement in the performance and future prospects of the Group, an interim dividend of 3.0p per share has been declared (2011 interim dividend: 1.5p).  The Board expects to continue to increase dividends progressively as earnings per share increase.

The interim dividend will be paid on 23 November 2012 to holders of ordinary shares on the register at the close of business on 28 September 2012.  The Board has decided to close the Scrip dividend scheme.  In its place, a new dividend reinvestment plan (DRIP) will be offered, giving shareholders the opportunity to continue reinvesting their dividends.  In contrast to the Scrip dividend scheme, under which new shares were issued, the new DRIP, operated by the Registrar, will buy existing shares for shareholders on the market through a special dealing arrangement.  Documentation inviting shareholders to participate will be issued on or around 1 October 2012.

Financing & cashflow

The Group incurred net financing charges of £1.5 million in the first half of 2012 (H1 2011: £2.0 million).  The decrease is primarily due to a lower charge for imputed interest on land of £1.4 million (H1 2011: £2.2 million). This charge reflects the difference between the cost and nominal price of land bought on deferred terms which is charged to the income statement over the life of the deferral of the consideration payable.  The decrease in average land creditors during the period compared to the same period in 2011 has, therefore, reduced this charge. Net bank interest and fees for H1 2012 were £1.4 million (H1 2011: £1.2 million).  The Group benefited from a £0.4 million (H1 2011: £0.3 million) net pension financing credit in the first half of 2012, the expected return on scheme assets being in excess of interest on scheme obligations.  The Group also benefited from a finance credit of £0.7 million (H1 2011: £0.7 million) arising from unwinding the discount on its available for sale financial assets during the first half of 2012.  There was £0.2 million of other financing credit during H1 2012 (H1 2011: £0.4 million).

Having started the year with a net cash balance of £50.8 million, the Group's net cash balance as at 30 June 2012 was £22.2 million with £27.8 million of cash in hand, offset by £5.1 million of loans received from the Government and £0.5 million liability, representing the fair market value of an interest rate swap.  The cash outflow during the six months reflected the Group's assertive land investment as part of its strategy, as payments associated with consented land purchases exceeded net cash generated from housing and land sales.

In the first six months of 2012, the Group generated an operating cash inflow before land expenditure of £33.8 million, continuing to demonstrate strong underlying cash generation from the Group's existing assets.  Work in progress levels have remained under tight control with the Group constructing approximately the same number of units worth of production as it sold through legal completions in the first half year.

Taxation

The Group has recognised a tax charge of £4.3 million on profit before tax of £16.2 million at an effective tax rate of 26.3% (H1 2011: tax charge of £2.2 million at an effective rate of 27.5%).

Pensions

The Group's pension scheme deficit increased by £5.6 million to £8.0 million as at 30 June 2012, compared to a deficit of £2.4 million at 31 December 2011.  Scheme liabilities increased to £86.0 million from £79.1 million, the increase being primarily due to a reduction in the discount rate applied to liabilities, as a result of falling bond yields. Scheme assets grew over the six months to £78.0 million from £76.7 million.

Net assets

Net assets per share as at 30 June 2012 was 547p as compared to 538p at 30 June 2011.

Analysis of net assets		2012		2011
		£m		£m
Net assets at 1 January		728.6		710.8
Profit after tax for the six months		11.9		5.9
Share capital issued		0.3		0.6
Net actuarial movement on pension scheme through reserves		(4.5)		3.4
Adjustment to reserves for share based payments		0.2		0.3
Dividends settled		(4.7)		(4.0)
Net assets at 30 June		731.8		717.0

Land

Land investments

The Group has continued to take advantage of opportunities to acquire high quality consented land. In the six months ended 30 June 2012, the Group added 1,037 consented plots on eight sites to the land bank at a cost of £64 million.  These plots, 76% of which are located in the south of England, have an estimated future revenue of £239 million and an estimated future gross profit potential of £61 million based on prevailing sales prices and build costs, delivering an estimated future gross margin of 25.4%.  Of these plots, 147 plots were delivered through conversion of strategic land, reflecting an unusually quiet period of conversion for the Group.

Since 30 June 2012, the Group has added to the land bank a further 419 consented plots on two sites. As at 20 August 2012, the Group held contracts to acquire circa 1,200 plots on ten sites, the majority of which are expected to be added to the consented land bank in H2 2012. Additionally, the Group had agreed terms in principle on a further 20 sites, representing in excess of 3,000 plots.

During the first half of the year the Group sold two parcels of consented residential land. The Group will continue to undertake land sales selectively.

Land bank

The Group held 13,620 consented plots in its land bank at 30 June 2012 compared to 13,723 consented plots held at the start of the year.  72% of the plots within the land bank were located in the south of England, where the housing market continues to show greater robustness, and 48% of the consented land bank (6,557 plots) has been added since the low point of house prices in the market downturn.  The Group estimates that the gross profit potential on the plots within the consented land bank at 30 June 2012, based on prevailing sales prices and build costs, has increased to £574 million with a gross margin of 22.6% (31 December 2011: gross profit of £524 million at a gross margin of 21.4%).

The average consented land plot cost at the start of 2012 was £42,100.  This has increased to £43,900 at 30 June 2012 as a result of the addition of new traditional housing sites in higher value locations, where the average plot cost is higher, and a lower number of written down plots held in the land bank at the end of the half year (15% of land plots versus 17% at the start of the year).

The Group has for a long time recognised the importance of strategic land. During the first half of 2012, the Group has continued to invest in strategic land and also to convert strategic land into the consented land bank. As a result, the Group's strategic land bank increased by over 1,000 plots to 19,829 potential plots, compared to 18,749 potential plots at 31 December 2011.

Market conditions

The key constraint for the UK housing market remains the continued restricted mortgage availability at higher loan to value ratios. Monthly mortgage approval data has been generally stable for the last two years, averaging between 45,000 and 55,000 approvals per month.  The Group strongly supported the Government's FirstBuy initiative, which provided a good incentive to bring first time buyers into the housing market. The Group's existing FirstBuy allocation is expected to be utilised in the third quarter of this year. In addition, the Group expects NewBuy to provide further support to the new homes market, while banks remain cautious with lending.

Trading during the summer period this year has been noted across the housebuilding sector as being less strong than earlier in the year, with a more marked summer seasonality effect than was seen in either 2010 or 2011.  This, combined with macroeconomic issues impacting consumer sentiment, has created a more challenging trading environment since June.

Consistent with 2011, overall market pricing has remained stable during 2012 to date, although with some regional differences. Pricing in prime southern locations has been more robust than in locations further north. In the short term, the Group expects market pricing to remain relatively stable at the current levels, as the Group foresees few significant changes in either housing market supply or overall customer demand.

Current trading

The Group has experienced robust trading in the year to date with an increase in private reservations over 33 trading weeks of 19% to 1,253 homes (2011: 1,049 homes). In this period, the average private sales rate has been 0.46 net reservations per site per week, slightly ahead of the sales rate of 0.45 achieved in the same period of the prior year.  The growth in reservations has been driven from the 17% increase in active sales outlets, which have averaged 82 to date, compared to an average of 70 in the prior period.

Encouragingly, the Group has achieved a private sales rate in the last seven weeks of 0.46 net private reservations per site per week, slightly ahead of the comparable prior year period.  As at 17 August 2012, the Group has achieved 1,968 net sales for legal completion in 2012, as compared to 1,607 net sales at the same point in 2011, an increase of circa 360 homes.

Outlook

The Group expects to be active on an average of 83 sales outlets for H2 2012, an increase of 6% on the 78 achieved in H2 2011. Subject to stable market conditions, this increase in sales outlets will further support reservation levels and underpin the expected growth in total legal completions for 2012 over 2011.

Given that the average sales price of private homes, either legally completed to date or sold for 2012 delivery, as at 30 June 2012 stood at £189,300, the Group expects the overall average sales price for 2012 legal completions to be circa 6% greater than that achieved in 2011.

The Group has achieved a strong profit margin improvement in the first half of 2012 over H1 2011 and expects that, on the basis of current reservations and subject to stable market conditions, the housing gross margin for the full year will be in the range of 21% to 22%.  For full year 2012, overheads as a percentage of total revenue are expected to reduce towards 9% from the 9.8% achieved in 2011. As a result, the Group expects to deliver an operating margin of between 12% and 13% (2011: 10.0%).  Return on capital employed for the 2012 full year is expected to approach 7.5% (2011: 5.0%), representing a further significant improvement arising from the Group's growth strategy.

Looking ahead to 2013, the Group owns, controls or is currently acquiring a total of around 105 sales outlets which will be operational during 2013 and are expected to contribute circa 90 to the 2013 sales outlet average.  The strength of the pipeline of further land acquisition opportunities gives the Group confidence that this average will increase further. 

With an increasing proportion of legal completions expected from sites acquired since the housing market downturn and with a greater number of active sales outlets, the Group expects that, based on stable market conditions, volumes, average sales price and profit margins will continue to increase in 2013 delivering another strong increase in return on capital employed, which should rise towards 10%.  The Group considers that it has the resources and opportunities to continue its strong growth beyond 2013 with the existing financial resources in the Group.

Bovis Homes Group PLC
Group income statement

For the six months ended 30 June 2012 (unaudited)		Six months ended		Six months ended		Year ended
		30 June 2012		30 June 2011		31 Dec 2011
		£000		£000		£000
Revenue		170,275		133,565		364,782
Cost of sales		(133,516)		(106,715)		(292,546)
Gross profit		36,759		26,850		72,236
Administrative expenses		(19,197)		(16,831)		(35,876)
Operating profit before financing costs		17,562		10,019		36,360
Financial income		1,375		1,353		2,843
Financial expenses		(2,869)		(3,376)		(7,349)
Net financing costs		(1,494)		(2,023)		(4,506)
Share of profit of Joint Venture		127		125		243
Profit before tax		16,195		8,121		32,097
Income tax expense		(4,262)		(2,234)		(8,831)
Profit for the period attributable to equity holders of the parent		11,933		5,887		23,266
Earnings per share
Basic		8.9p		4.4p		17.5p
Diluted		8.9p		4.4p		17.5p

Group statement of comprehensive income

For the six months ended 30 June 2012 (unaudited)		Six months ended		Six months ended		Year ended
		30 June 2012		30 June 2011		31 Dec 2011
		£000		£000		£000
Profit for the period		11,933		5,887		23,266
Actuarial (losses)/gains on defined benefit pension scheme		(5,980)		4,570		(3,390)
Deferred tax on actuarial movements on defined benefit pension scheme		1,415		(1,219)		851
Total comprehensive income for the period attributable to equity holders of the parent		7,368		9,238		20,727

Bovis Homes Group PLC

Group balance sheet

As at 30 June 2012 (unaudited)		30 June 2012		30 June 2011		31 Dec 2011
		£000		£000		£000
Assets
Property, plant and equipment		11,521		11,328		11,614
Investments		5,236		4,995		5,327
Restricted cash		770		250		659
Deferred tax assets		4,435		2,595		3,498
Trade and other receivables		2,146		17,164		2,017
Available for sale financial assets		41,098		34,101		38,653
Retirement benefit assets		-		2,080		-
Total non-current assets		65,206		72,513		61,768
Inventories		820,460		816,588		797,756
Trade and other receivables		79,446		47,038		77,422
Cash and cash equivalents		27,794		61,001		56,177
Total current assets		927,700		924,627		931,355
Total assets		992,906		997,140		993,123
Equity
Issued capital		66,871		66,679		66,836
Share premium		212,318		210,946		212,064
Retained earnings		452,620		439,366		449,671
Total equity attributable to equity holders of the parent		731,809		716,991		728,571
Liabilities
Bank and other loans		5,606		15,299		5,402
Other financial liabilities		1,102		2,236		1,243
Trade and other payables		65,888		88,230		45,451
Retirement benefit obligations		7,980		-		2,444
Provisions		1,859		1,971		1,776
Total non-current liabilities		82,435		107,736		56,316
Trade and other payables		173,090		167,898		202,665
Provisions		1,535		1,571		1,535
Current tax liabilities		4,037		2,944		4,036
Total current liabilities		178,662		172,413		208,236
Total liabilities		261,097		280,149		264,552
Total equity and liabilities		992,906		997,140		993,123

These condensed consolidated interim financial statements were approved by the Board of directors on 17 August 2012.                                 

Bovis Homes Group PLC

Group statement of changes in equity

For the six months ended 30 June 2012		Total		Issued		Share		Total
(unaudited)		retained earnings		capital		premium
		£000		£000		£000		£000
Balance at 1 January 2012		449,671		66,836		212,064		728,571
Total comprehensive income and expense		7,368		-		-		7,368
Deferred tax on other employee benefits		14		-		-		14
Issue of share capital		-		35		254		289
Share based payments		230		-		-		230
Dividends to shareholders		(4,663)		-		-		(4,663)
Balance at 30 June 2012		452,620		66,871		212,318		731,809
Balance at 1 January 2011		433,799		66,609		210,409		710,817
Total comprehensive income and expense		20,727		-		-		20,727
Issue of share capital		-		227		1,655		1,882
Share based payments		1,121		-		-		1,121
Dividends paid to shareholders		(5,976)		-		-		(5,976)
Balance at 31 December 2011		449,671		66,836		212,064		728,571
Balance at 1 January 2011		433,799		66,609		210,409		710,817
Total comprehensive income and expense		9,238		-		-		9,238
Deferred tax on other employee benefits		13		-		-		13
Issue of share capital		-		70		537		607
Share based payments		299		-		-		299
Dividends to shareholders		(3,983)		-		-		(3,983)
Balance at 30 June 2011		439,366		66,679		210,946		716,991

Bovis Homes Group PLC

Group statement of cash flows

For the six months 30 June 2012 (unaudited)		Six months ended		Six months ended		Year ended
		30 June 2012		30 June 2011		31 Dec 2011
		£000		£000		£000
Cash flows from operating activities
Profit for the period		11,933		5,887		23,266
Depreciation		435		334		747
Adjustment for sale of assets to Joint Venture		-		-		234
Impairment of available for sale assets		490		577		1,274
Financial income		(1,375)		(1,353)		(2,843)
Financial expense		2,869		3,376		7,349
Profit on sale of property, plant and equipment		(7)		(22)		(33)
Equity-settled share-based payment expense		230		299		1,121
Income tax expense		4,262		2,234		8,831
Share of results of Joint Venture		(127)		(125)		(243)
Increase in trade and other receivables		(5,243)		(17,996)		(37,951)
Increase in inventories		(22,701)		(52,231)		(33,396)
(Decrease)/increase in trade and other payables		(10,781)		59,128		47,517
Increase/(decrease) in provisions and employee benefits		29		(187)		(3,484)
Cash generated from operating activities		(19,986)		(79)		12,389
Interest paid		(863)		(1,702)		(2,311)
Income taxes paid		(3,770)		(732)		(5,085)
Net cash generated from operating activities		(24,619)		(2,513)		4,993
Cash flows from investing activities
Interest received		813		332		420
Acquisition of property, plant and equipment		(350)		(367)		(1,073)
Proceeds from sale of plant and equipment		15		34		52
Investment in Joint Venture		-		-		(500)
Movements in loans with Joint Venture		-		-		(125)
Dividends received from Joint Venture		243		-		200
Investment in restricted cash		(111)		(112)		(522)
Net cash generated from investing activities		610		(113)		(1,548)
Cash flows from financing activities
Dividends paid		(4,574)		(3,426)		(4,146)
Proceeds from the issue of share capital		200		50		52
Drawdown of borrowings		-		-		(10,177)
Net cash generated from financing activities		(4,374)		(3,376)		(14,271)
Net decrease in cash and cash equivalents		(28,383)		(6,002)		(10,826)
Cash and cash equivalents at start of period		56,177		67,003		67,003
Cash and cash equivalents at end of period		27,794		61,001		56,177

Notes to the condensed consolidated interim financial statements

1       Basis of preparation

Bovis Homes Group PLC ('the Company') is a company domiciled in the United Kingdom. The condensed consolidated interim financial statements of the Company for the six months ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as 'the Group') and the Group's interest in associates.

The condensed consolidated interim financial statements were authorised for issue by the directors on 17 August 2012. The financial statements are unaudited but have been reviewed by KPMG Audit Plc.

The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

The figures for the half years ended 30 June 2012 and 30 June 2011 are unaudited. The comparative figures for the financial year ended 31 December 2011 are not the Company's statutory accounts for that financial year. Those accounts have been reported on by the Company's auditors and delivered to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006.

The preparation of a condensed set of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Judgements made by management in the application of adopted IFRSs that have significant effect on the financial statements and estimates with a significant risk of material adjustment in following years remain those published in the Company's consolidated financial statements for the year ended 31 December 2011.

The condensed interim financial statements have been prepared in accordance with IAS34 'Interim Financial Reporting' as endorsed by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed consolidated interim financial statements have been prepared applying the accounting policies and presentation that were applied in the preparation of the Company's published consolidated financial statements for the year ended 31 December 2011, which were prepared in accordance with IFRSs as adopted by the EU.

2              Seasonality

In common with the rest of the UK housebuilding industry, activity occurs year round, but there are two principal selling seasons: spring and autumn. As these fall into two separate half years, the seasonality of the business is not pronounced, although it is biased towards the second half of the year under normal trading conditions.

3              Segmental reporting

All revenue and profit disclosed relate to continuing activities of the Group and are derived from activities performed in the United Kingdom.

4              Earnings per share

(Unaudited)		Six months ended		Six months ended		Year ended
		30 June 2012		30 June 2011		31 Dec 2011
		pence		pence		pence
Basic and diluted earnings per share		8.9		4.4		17.5

Basic earnings per share

Basic earnings per ordinary share for the six months ended 30 June 2012 is calculated on a profit after tax of £11,933,000 (six months ended 30 June 2011: profit after tax of £5,887,000; year ended 31 December 2011: profit after tax of £23,266,000) over the weighted average of 133,248,378 (six months ended 30 June 2011: 132,755,559; year ended 31 December 2011: 132,860,480) ordinary shares in issue during the period.

Diluted earnings per share

The calculation of diluted earnings per share at 30 June 2012 was based on the profit attributable to ordinary shareholders of £11,933,000 (six months ended 30 June 2011: profit after tax of £5,887,000; year ended 31 December 2011: profit after tax of £23,266,000).

The Group's diluted weighted average ordinary shares potentially in issue during the six months ended 30 June 2012 was 133,372,229 (six months ended 30 June 2011: 132,839,762; year ended 31 December 2011: 132,944,264).

5              Dividends

The following dividends per qualifying ordinary share were settled by the Group.

(Unaudited)		Six months ended		Six months ended		Year ended
		30 June 2012		30 June 2011		31 Dec 2011
		£000		£000		£000
May 2012: 3.5p (May 2011: 3.0p)		4,663		3,983		3,983
November 2011: 1.5p		-		-		1,993
		4,663		3,983		5,976

The Board determined on 17 August 2012 that an interim dividend of 3.0p for 2012 be paid.  The dividend will be settled on 23 November 2012 to shareholders on the register at the close of business on 28 September 2012.  This dividend has not been recognised as a liability at the balance sheet date.

6              Related party transactions

Transactions between fellow subsidiaries, which are related parties, during the first half of 2012 have been eliminated on consolidation, as have transactions between the Company and its subsidiaries during this period. The Group's associates and joint ventures are disclosed in the Group's Annual report and accounts 2011.

Transactions between the Group and key management personnel in the first half of 2012 were limited to those relating to remuneration, previously disclosed as part of the Group's Report on directors' remuneration published with the Group's Annual report and accounts 2011. No material change has occurred in these arrangements in the first half of 2012.

Mr Malcolm Harris, a Group Director, is a non-executive director of the Home Builders Federation (HBF), to whom the Group pays subscription fees and fees for research as required. Net amounts payable for each period were as follows:

(Unaudited)		Six months ended		Six months ended		Year ended
		30 June  2012		30 June 2011		31 Dec 2011
		£000		£000		£000
HBF		47		36		85

There have been no related party transactions in the first six months of the current financial year which have materially affected the financial performance or position of the Group, and which have not been disclosed.

Transactions with Joint Venture

Bovis Homes Limited is contracted to provide property and letting management services to Bovis Peer LLP. Fees charged in the period, inclusive of VAT, were £72,000 (six months ended 30 June 2011: £66,600; year ended 31 December 2011: £133,200).

During the year ended 31 December 2011, inventory was transferred to Bovis Peer LLP for a cash consideration of £2,156,438.  In addition to the existing loan of £1,450,355, a further loan of £125,000 was provided, also at an annual interest rate of LIBOR plus 2.4%. No other loans or sales of inventory have taken place.

Interest charges made in respect of the loans were £26,000 (six months ended 30 June 2011: £22,000; year ended 31 December 2011: £46,000).

7              Reconciliation of net cash flow to net cash

(Unaudited)		Six months ended		Six months ended		Year ended
		30 June 2012		30 June 2011		31 Dec 2011
		£000		£000		£000
Net decrease in cash and cash equivalents		(28,383)		(6,002)		(10,826)
Drawdown of borrowings		-		-		10,177
Fair value adjustments to interest rate swaps		(76)		92		(315)
Fair value adjustment to interest free loans		(128)		(66)		61
Net cash at start of period		50,775		51,678		51,678
Net cash at end of period		22,188		45,702		50,775
Analysis of net cash:
Cash		27,794		61,001		56,177
Bank and other loans		(5,123)		(15,299)		(4,995)
Fair value of interest rate swaps		(483)		-		(407)
Net cash		22,188		45,702		50,775

8              Circulation to shareholders

This interim report is sent to shareholders.  Further copies are available on request from the Company Secretary, Bovis Homes Group PLC, The Manor House, North Ash Road, New Ash Green, Longfield, Kent  DA3 8HQ. Further information on Bovis Homes Group PLC can be found on the Group's corporate website www.bovishomesgroup.co.uk, including the analyst presentation document which will be presented at the Group's results meeting on 20 August 2012.

 

END

 

 

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