Trading Update

RNS Number : 0083K

Bovis Homes Group PLC

08 July 2011

 



8 July 2011

Bovis Homes Group PLC

Trading update

Solid trading on increasing sales outlets with margins improving

The Group is today issuing a trading update covering the six month period ended 30 June 2011 ahead of reporting its half year results, due to be announced on Tuesday, 30 August 2011.

Trading

Operating in a stable market, the Group has achieved 802 net private reservations in the first six months (2010: 691), a 16% increase.  The net private sales rate per site per week was 0.45 (H1 2010: 0.42) with sales prices achieved to date in line with the Group's expectations.

For the six months ended 30 June 2011 the Group legally completed 801 homes, compared to 803 homes in the same period in 2010.  The 2010 legal completions benefited from the sale of 215 units into a private rental joint venture.  The average sales price increased by circa 3% year on year and the housing gross margin was circa 20% (H1 2010: 16.6%).  The Group expects to deliver an operating margin for the half year of at least 7% (H1 2010: 4.2%).

As a result of the Group's assertive land investment since the housing market downturn, the Group anticipates launching a total of 33 sales outlets during 2011, of which 19 opened in the first half of the year.  The Group expects the average number of sales outlets will be 73 for the full year (2010: 66).

Cumulative reservations expected to legally complete in 2011, including social housing units, stood at 1,333 homes at 30 June 2011 (30 June 2010: 1,474 homes, including the 215 private rental joint venture homes).

Positively, the Group has recently received confirmation of funding for 446 homes under the Government's FirstBuy Scheme.  This will provide assistance in delivering first time buyer home sales during the second half of 2011 and into 2012.

Land management

The Group continues to take advantage of opportunities to acquire high quality consented land.  In the six months ended 30 June 2011, 1,571 consented plots have been added on 9 new sites, 85% of the plots being in the south of England.  This land is anticipated to deliver revenue, based on current sales prices and current build costs, of £339 million at a gross margin above 25%.  Terms have been agreed in principle on a further 20 sites, representing an additional circa 2,500 plots, the vast majority of which are located in the south of England. Of the total of circa 4,000 plots acquired or with terms agreed, approximately 35% relates to conversion of strategic land.

Progress is also being made to sell plots on selected sites, particularly those which have a longer trade out period by virtue of their size.  One land sale has completed in the first half of 2011 with two further contracted land sales expected to complete in the second half of 2011.  Terms have been agreed on a further two land sales expected to complete in 2011.

Balance sheet

The Group has retained a prudent balance sheet with work in progress tightly managed and net cash of £46 million as at 30 June 2011.  Deferred payment terms on new land acquisitions are being negotiated to contribute to the achievement of strong returns on capital employed.  The Group's balance sheet management, cash resources and flexible banking arrangements support the continuation of the consented land investment programme.

Outlook

Commenting on the outlook, Chief Executive David Ritchie said:

"On the basis of the current stable market conditions continuing, the Group remains confident that it can deliver on its expectations for 2011 and will continue to invest to increase output capacity to deliver higher returns to shareholders."

Enquiries:                David Ritchie, Chief Executive

                                Jonathan Hill, Finance Director

                                Bovis Homes Group PLC

        Tel: [phone]

        Andrew Jaques/Reg Hoare/James White/Giles Robinson

        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 09:00am today, Friday 8 July 2011, to discuss this trading statement.   To access the call please dial 0800 368 1950 and quote passcode: 970064#.  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 Friday 15 July 2011, commencing approximately 30 minutes after the live call has finished, on: 0800 368 1890, access code: 378232#.

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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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