Interim Management Statement

RNS Number : 8285Q

Bovis Homes Group PLC

12 November 2012

 



12 November 2012

Bovis Homes Group PLC

Interim Management Statement

Expected returns on track for 2012 combined with strong land investment

Bovis Homes Group PLC is today issuing an Interim Management Statement for the period from 1 July 2012.

Current trading

The Group has now secured sufficient reservations to deliver its anticipated full year legal completions.  Net private reservations achieved in the 45 weeks to 9 November 2012 were 1,669 (2011: 1,517). Net reservations per site per week for this period have averaged 0.46, in line with the rate achieved in the same period in 2011.  The average number of active sales outlets during this period has increased by 12%.  The Group is currently operating from 83 active sales outlets and expects the number at the year end to approach 90, with in excess of 30 new sales outlets launched during 2012.

Average sales price achieved in the year to date for private reservations expected to legally complete in 2012 is circa £190,000, which compares with £180,100 achieved on private legal completions in 2011.  This increase reflects an improvement in the sales mix by location and size of home.  Prices in the housing market are broadly stable with prices being generally stronger in the south of England.

Land acquisitions

The Group has continued to invest assertively in good quality consented land and has now acquired 2,331 consented plots on 16 sites during 2012, mainly for family homes located in the south of England.  These sites in aggregate are anticipated to deliver, as a minimum, the Group's hurdle rates for gross margin and ROCE, based on current sales prices, build costs and sales rates.  There are currently a further circa 1,000 consented plots on eight sites where the Group is in the final stages of acquisition. 

In addition, circa 750 plots across eight sites, which are awaiting conditions to be satisfied, are contracted and are expected to be added to the consented landbank in the near future. Beyond these, the pipeline of both consented and strategic land remains strong, giving the Group confidence that it can continue to deliver in line with its growth strategy.

Financial Position

On 9 November 2012, the Group had net debt of £65 million.  Given the phasing of housing revenues relative to land and construction cost cash flows, the Group expects to move towards a net cash position at the year end.

Outlook

As at 9 November 2012, cumulative sales achieved to date and expected to legally complete during 2012 were circa 2,350 homes.   With the significant increase in private average sales prices due to improving mix, the Group remains on track to deliver a strong increase in revenue in 2012.

The gross profit margin for 2012 is expected to increase to circa 22%, reflecting the increasing proportion of homes sold on post-downturn sites.  Combined with the benefit of improving overhead efficiency, the operating margin for 2012 is expected to be circa 13%, significantly ahead of 2011's operating margin of 10%. 

This significant increase in operating margin combined with improved capital turn will provide an increase in ROCE to approaching 7.5% for 2012 from 5% in 2011.  Subject to stable market conditions continuing, the Group is confident that it can deliver further growth in revenue with strong increases in profit margins.  This profit growth combined with a stable capital base will deliver further strong improvements in ROCE in 2013 and beyond.

Enquiries:         David Ritchie, Chief Executive

                         Jonathan Hill, Finance Director

                         Bovis Homes Group PLC

 Tel: [phone]

 Andrew Jaques/Reg Hoare/James White

 MHP Communications

 Tel: [phone]

Conference Call for analysts

David Ritchie, Chief Executive, and Jonathan Hill, Finance Director, of Bovis Homes will host a conference call at 08:30 today, Monday 12 November 2012, to discuss the Interim Management Statement.

To access the call please dial [phone] and quote passcode: 746766#.  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 13 December 2012 on 020 3140 0698, accessible with the passcode 387881#.

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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.

 

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