Interim Results

BOVIS HOMES GROUP PLC INTERIM RESULTS for the six months ended 30 June 2003 Issued 8 September 2003 The Board of Bovis Homes Group PLC today announced its interim results for 2003. * Pre tax profit increased by 11% to £46.0 million showing a 23% compound annual increase over the last five years * Earnings per share increased by 10% to 27.6p showing a 22% compound annual increase over the last five years * Interim dividend increased by 15% to 5.3 pence net per ordinary share * Operating margin increased by 3.5 percentage points to 25.6% * Strategic land holdings increased to 22,430 potential plots after transferring 516 plots to consented land holdings during the first six months * Plots with planning consent at 10,596 plots (owned: 10,122 plots/controlled: 474 plots) * Period end net borrowings of £84.9 million (20% gearing) Commenting on the results, Malcolm Harris, Chief Executive of Bovis Homes Group PLC said: "The Group has produced a good set of interim results despite the effect on consumer confidence arising from the conflict in Iraq early in the year. The prospects for adding considerable shareholder value through the conversion of strategic land holdings are encouraging. 516 plots of land were transferred from strategic land to consented land during the first six months of 2003. A further 489 plots have received favourable planning committee decisions (subject to S106 agreements) which should enable transfer to our consented land bank in the second half of the year. Brockworth Airfield, Gloucester, has received an Inspector's favourable decision which should enable a minimum of 1,300 plots to be transferred from strategic land to consented land pursuant to planning consent being granted. Based upon current market conditions we are confident of the prospects of the Group for the full year and, with our new regional structure in place, we are well set to expand and deliver sustainable increases in shareholder value in 2004 and beyond." Enquiries: Malcolm Harris, Chief Executive Results issued by: Andrew Best / Emily Bruning Bovis Homes Group PLC Shared Value Limited On Monday 8 September Tel: 020 7321 5022/5027 Tel: 020 7321 5022/5027 Thereafter Tel: 01474 872427 Chairman's interim statement Bovis Homes has strengthened its position during the first half of 2003 with a solid improvement in profit and a further increase in the operating margin, notwithstanding that the early part of 2003 was adversely affected by the conflict in the Middle East which reduced consumer confidence. The Group has made investments in new land in prime locations, assisted by its extensive banking facilities, whilst at the same time continuing to generate a strong return on capital employed. Results For the six months ended 30 June 2003 the Group achieved a pre tax profit of £46.0 million, representing an increase of 11% over the pre tax profit of £41.5 million for the same period in 2002. Earnings per share improved by 10% to 27.6 pence. The Group's operating margin increased to 25.6% compared with 22.1% for the first six months of 2002. The increase in profits was generated from a turnover of £190.6 million compared with £201.2 million in the equivalent prior year period. Included in this year's figure were land sales income and other income of £9.3 million compared with £7.8 million for the first six months of 2002. The Group's average sales price increased to £190,800 for the current year compared to £169,300 for the comparable six months of 2002. This represented an increase year on year of 12.7%. The average size of unit legally completed increased by 1.4%. Hence, average sales price per square foot increased by 11.1%. An improvement in mix and location of homes legally completed during the first half of 2003 contributed to this increase in average sales price per square foot. As indicated in the Group's trading update on 2 July 2003, the half year results were generated from a lower volume of legal completions than the prior year. In the first six months of 2003, the Group legally completed 950 homes compared with 1,142 legal completions in the same period last year. Dividends The interim dividend of the Company will amount to 5.3 pence net per share, an increase of 15% over 2002's interim dividend of 4.6 pence. This dividend will be paid on 21 November 2003 to holders of ordinary shares on the register at the close of business on 24 October 2003. Cash flow and borrowings The Group has invested significantly in working capital during the first half of 2003 including the settlement of the deferred terms consideration for the Hatfield site, acquired in 2001. This has contributed towards a cash outflow from operating activities during the six months ended 30 June 2003 of £59.0 million. Consequently, the Group's net borrowings have increased to £84.9 million compared with the opening position of cash in hand of £4.6 million. This level of net borrowing represented a net debt/equity ratio of 20.0%. During the six months ended 30 June 2003, the average net debt/equity ratio was 21.0%. Land There continued to be a focus during the first half of 2003 on securing land in prime locations. The strategic land bank increased to 22,430 potential plots at 30 June 2003 compared to 21,841 potential plots held at the start of the year. The Group's consented land holdings stood at 10,596 plots (10,122 owned plots and 474 controlled third party owned plots) at 30 June 2003 compared with 10,716 plots (10,243 owned plots and 473 controlled third party owned plots) at the start of the year. The marginal decrease in consented land holdings arose, in part, as a result of delays incurred in concluding successful planning consents on a number of the Group's strategic land opportunities. The Group anticipates progressing these strategic opportunities to a successful conclusion during the second half of 2003. The Board I am pleased to announce the appointment of a new non executive director to the Board. Mrs Lesley Anne MacDonagh, who is Managing Partner of Lovells, Solicitors, joined the Board on 4 July 2003 and, on behalf of the Board, I welcome Mrs MacDonagh and look forward to working with her. As a result of this appointment, the Board now comprises four independent non executive directors and three executive directors. Market conditions The housing market has witnessed a period of instability during the first half of 2003. The conflict in Iraq increased uncertainty across the UK economy and consumers became more cautious. The housing market was similarly affected with much speculation over house price increases and affordability. Notwithstanding this speculation, affordability has continued to be good particularly after the recent Bank of England base interest rate cut to 3.5% House prices have continued to rise and recent comments from the Halifax indicate renewed activity in the housing market. The fundamentals of the housing market have not changed. Historical and current undersupply have generated a housing shortage, which underpins demand for new housing. Prospects The Group has focused on delivering sustainable shareholder returns and has applied its strategies consistently, utilising its land holdings effectively and maximising the profit from each home constructed. The Group has expanded its regional structure in recent years through the launch of the Northern region. The Northern region has grown rapidly and is now generating strong returns and margins. During 2003, the Eastern region has been launched with a small management team which has commenced investment within the areas of Cambridgeshire, Lincolnshire, Norfolk and Suffolk. Further regions will be established as and when appropriate to implement the expansion plan of the Group. Shareholder value has been enhanced from the Group's continued emphasis upon maximising returns through strong margins. The half year performance provides a good base for the second half of 2003. Based on the prevailing activity in the housing market, the Group is confident of its prospects for the full year. Nigel Mobbs Chairman 5 September 2003 Bovis Homes Group PLC Group profit and loss account For the six months ended 30 June 2003 Six months Six months ended ended Year ended 30 June 2003 30 June 2002 31 Dec 2002 (unaudited) (unaudited) (audited) £000 £000 £000 ________________________________________________________________________________________ Turnover - continuing operations 190,620 201,166 461,284 Cost of sales (123,070) (138,950) (315,668) ________________________________________________________________________________________ Gross profit 67,550 62,216 145,616 Administrative expenses (18,663) (17,696) (36,025) ________________________________________________________________________________________ Operating profit - continuing operations 48,887 44,520 109,591 Interest receivable and similar income 103 143 807 Interest payable and similar charges (2,982) (3,124) (5,695) ________________________________________________________________________________________ Profit on ordinary activities before 46,008 41,539 104,703 taxation Tax on profit on ordinary activities (13,900) (12,500) (31,200) ________________________________________________________________________________________ Profit on ordinary activities after 32,108 29,039 73,503 taxation Dividends proposed/paid (6,191) (5,458) (16,365) ________________________________________________________________________________________ Retained profit for the financial period 25,917 23,581 57,138 ________________________________________________________________________________________ Basic earnings per ordinary share 27.6p 25.2p 63.5p ________________________________________________________________________________________ Diluted earnings per ordinary share 27.5p 24.9p 63.0p ________________________________________________________________________________________ Group statement of total recognised gains and losses For the six months ended 30 June 2003 Six months Six months ended ended Year ended 30 June 2003 30 June 2002 31 Dec 2002 (unaudited) (unaudited) (audited) £000 £000 £000 ________________________________________________________________________________________ Profit for the financial year after 32,108 29,039 73,503 taxation - continuing operations Total recognised gains and losses 32,108 29,039 73,503 relating to the year ________________________________________________________________________________________ Prior year adjustment to recognise - 614 614 deferred tax asset ________________________________________________________________________________________ Total recognised gains and losses 32,108 29,653 74,117 recognised since the last annual report ________________________________________________________________________________________ In both the current and preceding financial periods there was no material difference between the historical cost profits and losses and those reported in the profit and loss account. Bovis Homes Group PLC Group balance sheet At 30 June 2003 30 June 2003 30 June 2002 31 Dec 2002 (unaudited) (unaudited) (audited) £000 £000 £000 ________________________________________________________________________________________ Fixed assets Tangible assets 8,581 7,542 8,215 Investments 1,788 1,436 1,123 ________________________________________________________________________________________ 10,369 8,978 9,338 ________________________________________________________________________________________ Current assets Stocks and work in progress 592,314 549,842 544,496 Debtors due within one year 20,166 8,001 13,185 Debtors due after more than one year 5,226 8,260 5,082 Cash and short term deposits 4 52,224 81,548 ________________________________________________________________________________________ 617,710 618,327 644,311 ________________________________________________________________________________________ Creditors: amounts falling due (107,790) (182,692) (163,224) within one year ________________________________________________________________________________________ Net current assets 509,920 435,635 481,087 ________________________________________________________________________________________ Total assets less current liabilities 520,289 444,613 490,425 Creditors: amounts falling due after (93,877) (79,396) (91,657) more than one year Provisions for liabilities and charges (1,675) (1,800) (1,794) ________________________________________________________________________________________ Net assets 424,737 363,417 396,974 ________________________________________________________________________________________ Capital and reserves Called up share capital 58,735 58,359 58,359 Share premium 140,444 138,974 138,974 Revaluation reserve 203 203 203 Profit and loss account 225,355 165,881 199,438 ________________________________________________________________________________________ Equity shareholders' funds 424,737 363,417 396,974 ________________________________________________________________________________________ These interim accounts were approved by the board of directors on 5 September 2003. Bovis Homes Group PLC Group cash flow statement For the six months ended 30 June 2003 Six months Six months ended ended Year ended 30 June 2003 30 June 2002 31 Dec 2002 (unaudited) (unaudited) (audited) £000 £000 £000 ________________________________________________________________________________________ Net cash (outflow)/inflow from operating (58,978) 44,073 107,399 activities Returns on investments and servicing of finance Interest received 262 143 667 Interest paid (2,935) (2,302) (5,042) ________________________________________________________________________________________ (2,673) (2,159) (4,375) ________________________________________________________________________________________ Taxation paid (17,000) (10,600) (27,612) ________________________________________________________________________________________ Capital expenditure and financial investment Purchase of tangible fixed assets (1,048) (1,523) (2,706) Sale of tangible fixed assets 108 287 327 Purchase of fixed asset investments (828) (400) (400) Sale of fixed asset investments - 42 72 ________________________________________________________________________________________ (1,768) (1,594) (2,707) ________________________________________________________________________________________ Equity dividend paid (10,920) (9,842) (15,182) ________________________________________________________________________________________ ________________________________________________________________________________________ Cash (outflow)/inflow before management of (91,339) 19,878 57,523 liquid resources and financing Management of liquid resources and financing Decrease/(increase) in short term deposits 81,544 (43,000) (75,544) Increase in borrowings - 18,000 12,000 Issue of ordinary share capital 1,846 4,318 4,318 ________________________________________________________________________________________ 83,390 (20,682) (59,226) ________________________________________________________________________________________ Decrease in cash (7,949) (804) (1,703) ________________________________________________________________________________________ Bovis Homes Group PLC Group reconciliation of movements in shareholders' funds For the six months ended 30 June 2003 Six months Six months ended ended Year ended 30 June 2003 30 June 2002 31 Dec 2002 (unaudited) (unaudited) (audited) £000 £000 £000 ________________________________________________________________________________________ Opening shareholders' funds 396,974 335,518 335,518 Issue of ordinary shares 1,846 4,318 4,318 Total recognised gains and losses for the 32,108 29,039 73,503 period Dividends paid and proposed (6,191) (5,458) (16,365) ________________________________________________________________________________________ Closing shareholders' funds 424,737 363,417 396,974 ________________________________________________________________________________________ Group reconciliation of operating profit to operating cash flows For the six months ended 30 June 2003 Six months Six months ended ended Year ended 30 June 2003 30 June 2002 31 Dec 2002 (unaudited) (unaudited) (audited) £000 £000 £000 ________________________________________________________________________________________ Operating profit 48,887 44,520 109,591 Depreciation and amortisation 743 833 1,636 Profit on disposal of tangible fixed assets (6) (17) (19) Increase in stocks (47,818) (5,842) (496) (Increase)/decrease in debtors (7,277) 2,317 332 (Decrease)/increase in creditors (53,507) 2,262 (3,645) ________________________________________________________________________________________ Net cash (outflow)/inflow from operating (58,978) 44,073 107,399 activities ________________________________________________________________________________________ Group reconciliation and analysis of net debt For the six months ended 30 June 2003 Six months Six months ended ended Year ended 30 June 2003 30 June 2002 31 Dec 2002 (unaudited) (unaudited) (audited) £000 £000 £000 ________________________________________________________________________________________ Decrease in cash (7,949) (804) (1,703) Cash (inflow)/outflow from change in net (81,544) 25,000 63,544 debt ________________________________________________________________________________________ Change in net debt (89,493) 24,196 61,841 Opening net funds/(debt) 4,613 (57,228) (57,228) ________________________________________________________________________________________ Closing net funds/(debt) (84,880) (33,032) 4,613 ________________________________________________________________________________________ Analysis of net funds/(debt): Cash 4 3,224 4 Bank overdraft (9,884) (4,256) (1,935) Short term deposits - 49,000 81,544 Borrowings (75,000) (81,000) (75,000) ________________________________________________________________________________________ (84,880) (33,032) 4,613 ________________________________________________________________________________________ Notes to the accounts 1 Basis of preparation The interim accounts have been prepared on a basis consistent with the accounting policies adopted for the year ended 31 December 2002. These policies are set out in the Group's Annual Report and Accounts. The interim accounts do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim accounts for the six months ended 30 June 2002 and 30 June 2003 have not been audited. The interim accounts for the six months ended 30 June 2003 have been independently reviewed by the Group's auditors, KPMG Audit Plc, and their independent review report is included within these interim results. The comparative figures included in respect of the six months ended 30 June 2002 have not been reviewed by KPMG Audit Plc and their independent review report states this fact. The abridged information in these interim accounts relating to the year ended 31 December 2002 is derived from the full accounts upon which the auditors issued an unqualified opinion and which have been delivered to the Registrar of Companies. 2 Earnings per share Basic earnings per ordinary share for the six months ended 30 June 2003 is calculated on profit after tax of £32,108,000 (six months ended 30 June 2002: £29,039,000; year ended 31 December 2002: £73,503,000) over the weighted average of 116,233,056 (six months ended 30 June 2002: 115,257,326; year ended 31 December 2002: 115,667,157) ordinary shares in issue during the period. Diluted earnings per ordinary share is calculated on profit after tax of £32,108,000 (six months ended 30 June 2002: £29,039,000; year ended 31 December 2002: £73,503,000) over the diluted weighted average of 116,847,860 (six months ended 30 June 2002: 116,482,160; year ended 31 December 2002: 116,616,844) ordinary shares potentially in issue during the period. The diluted average number of shares is calculated in accordance with FRS 14 "Earnings Per Share". The dilutive effect relates to the average number of potential ordinary shares held under option during the period. This dilutive effect amounts to the number of ordinary shares which would be purchased using the aggregate difference in value between the market value of shares and the share option exercise price. The market value of shares has been calculated using the average ordinary share price during the period. Only share options which have met their cumulative performance criteria have been included in the dilution calculation. There is no dilutive effect on the profit after tax used in the diluted earnings per share calculation. 3 Dividends The interim dividend of 5.3 pence net per ordinary share will be paid on 21 November 2003 to holders of ordinary shares on the register at the close of business on 24 October 2003. 4 Taxation The rate of corporation tax applied was 30% for the six months to 30 June 2003 and for the six months ended 30 June 2002, as adjusted to take account of deferred taxation movements. Independent review report by KPMG Audit Plc to Bovis Homes Group PLC Introduction We have been engaged by the Company to review the financial information which comprises the Group profit and loss account, balance sheet, cash flow statement and related notes. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the Listing Rules of the Financial Services Authority. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Listing Rules which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where they are to be changed in the next annual accounts in which case any changes, and the reasons for them, are to be disclosed. Review work performed We conducted our review in accordance with the guidance contained in Bulletin 1999/4: Review of interim financial information issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review is substantially less in scope than an audit performed in accordance with Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Whilst the Company has previously produced an interim review report, that report has not previously been subject to an interim review. As a consequence, the review procedures set out above have not been performed in respect of the comparative period for six months ended 30 June 2002. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2003. KPMG Audit Plc Chartered Accountants London 5 September 2003

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