Interim Management Statement

RNS Number : 4408D

Bovis Homes Group PLC

16 May 2012

 



16 May 2012

Bovis Homes Group PLC

Interim Management Statement

Strong current trading with improving returns guidance

Bovis Homes Group PLC is holding its Annual General Meeting at 12.00pm today.  This statement comments on the Group's current trading and financial performance and provides guidance on the outlook for the current financial year.  In line with the requirements of the UK Listing Authority's Disclosure and Transparency Rules, this Interim Management Statement covers the period from 1 January 2012 to the date of this statement.

Strategy

Market conditions remain stable in the UK housing market. Based on these conditions continuing, the ongoing delivery of the Group's growth strategy is expected to generate strongly improved returns.  Profits are expected to grow significantly from the compound positive effect of:

·    increased legal completion volume from a greater number of active sales outlets and stronger sales rates;

·    higher average sales price from an increased proportion of sales of traditional homes on more southerly based sites; and

·    improved profit margins from an increased contribution from sites acquired since the housing market downturn.

The Group is also maintaining rigorous control of capital employed, which should lead to a strongly improving return on capital employed.

As further evidence of the successful delivery of its strategy, the Group is delighted to report the achievement of the maximum five star rating in the most recently announced Home Builders Federation's annual customer satisfaction survey.

Current trading

Trading in the 19 weeks to 11 May 2012 has been strong and the Group has achieved 783 private net reservations (2011: 589), a 33% increase year on year.  This has been driven by a 23% increase in the average number of active sales outlets to 82 (2011: 67), and a 9% improvement in the sales rate per sales outlet, with an average private sales rate of 0.50 net reservations per week per sales outlet (2011: 0.46).  The number of visitors to the Group's sites has also increased by 51% in the year to date compared to the same period last year.

Having started 2012 with 230 forward sold private reservations, as at 11 May 2012 the Group held 1,013 private reservations for 2012 legal completion (2011: 790).  Including social housing units expected to legally complete in 2012, at 11 May 2012 the Group held a total sales position of 1,437 units which compares to 1,049 units at the same point in 2011.

Sales prices achieved on reservations to date have been modestly above management's expectations.  The mix of homes has improved and the Group therefore expects the average sales price in the half year results to be ahead of the comparative period of 2011.  These mix improvements are anticipated to continue during the balance of 2012 which will lead to further increases in average sales price in the second half year compared to the first half.

The profit margins on the reservations achieved to date have shown improvement over the prior year, the increased contribution from sites acquired since the housing market downturn delivering the anticipated margin enhancement.

The Group welcomes the launch of the NewBuy mortgage product, which enables customers to access 95% loan to value mortgages.  There has been strong interest in NewBuy since its launch and the early signs are promising, however NewBuy's ongoing success relies on the availability of mortgages with competitive interest rates.

Land management

The Group has remained highly active in the land market and currently has legal agreements in place to acquire 1,774 housing plots on 14 sites.  A number of these sites are being acquired on a conditional basis where the Group's commitment to expenditure only arises when the planning consent has been achieved, thus generating a stronger return on capital employed.  The Group anticipates achieving planning consent on these conditionally acquired sites during 2012.  In addition, the Group has in excess of 2,500 plots on sites where terms are agreed and which are being progressed to acquisition.

Balance sheet

The Group's balance sheet remains strong.  On 11 May 2012, the Group had modest net debt of £4 million and expects to be in a similar position at the half year.  This balance sheet strength will enable the Group to continue to invest in land to grow the business.

Outlook

The Group remains confident of its prospects for 2012. Based on current market conditions continuing, it is anticipated that increased legal completions at a higher average sales price and at an improved gross profit margin, alongside improved overhead efficiency, will deliver a return on capital approaching 7.5% in 2012 (2011: 5%).

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]

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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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