Trading update

RNS Number : 7508I

Bovis Homes Group PLC

08 July 2013

 



8 July 2013

Bovis Homes Group PLC

Trading update

Strong continuing improvement in housing profit and significant land investment

The Group is today issuing a trading update for the six month period ended 30 June 2013 ahead of reporting its half year results due to be announced on Monday, 19 August 2013.

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

"The Group has performed well in the first half of 2013 with a significant further improvement in housing profit, delivered from the ongoing successful execution of the Group's growth strategy. Trading in the first half of 2013 has been strong and the Group has achieved a 40% increase in private reservations compared to the same period in 2012.  Continuing its success in the land market, the Group has added 2,767 new consented plots to the land bank. With the positive progress in executing its growth strategy, the Group is well positioned to deliver higher shareholder returns."

Trading

The Group has delivered reservations ahead of its expectations, achieving 1,389 net private reservations in the first six months (H1 2012: 993), a 40% increase. The net private sales rate per site per week improved by 26% to 0.59 (H1 2012: 0.47), benefiting from the improving quality of active sales outlets and the positive effect of stronger home buyer sentiment, supported by the Help to Buy scheme launched in April 2013. In the second quarter of 2013, the Group has achieved a net private sales rate per site per week approximately 60% ahead of the prior year comparative period.

During the first six months, the Group has traded on an average of 91 active sales outlets, 11% greater than the average of 82 in the same period in 2012. As at 30 June 2013 cumulative reservations expected to legally complete in 2013, including social housing, stood at 2,287 homes (30 June 2012: 1,646 homes). Sales prices achieved to date are modestly ahead of the Group's expectations.

For the six months ended 30 June 2013, the Group legally completed 963 homes (H1 2012: 944). The Group's average sales price on legal completions increased by 15% to £188,500 (H1 2012: £164,400), primarily from the improving mix of homes.

For the half year, the Group expects to report a housing gross margin of circa 23% (H1 2012: 20.9%) and a housing operating margin approaching 11% (H1 2012: 8.7% restated*). The positive compound effect of increasing volume, the strong increase in the average sales price and the improving profit margin will lead to a strong increase in housing profit in the half year compared to the first half of last year.  There was no land sale income or profit in the first half of 2013, compared to land sale income of £13.2 million with a profit of £3.9 million in the first half year in 2012.

Subject to stable market conditions continuing, sales rates are expected to support both the delivery of the Group's volume growth targets for 2013 and allow the Group to enhance its year end forward order book, supporting further growth in 2014.

Land management

The Group continues to take advantage of opportunities to acquire high quality consented land. In the six months ended 30 June 2013, the Group has added 2,767 consented plots on 18 sites, on which it expects to deliver a return on capital in excess of 20%. The Group also has in place contracts to acquire another 1,018 plots on 11 sites, the majority of which are expected to be added to the consented land bank in H2 2013.

Balance sheet

Whilst investing strongly in land in the first half of the year, the Group has retained a prudent balance sheet. As at 30 June 2013 net debt was £48 million. The Group's balance sheet management, cash resources and flexible banking arrangements continue to support the Group's accelerated investment in consented land to grow the business and enhance returns.

Market conditions

Even though the general economic background remains challenging, the housing market has shown signs of strong improvement.  Consumers are increasingly able to access mortgage finance and the launch of the Help to Buy shared equity scheme, replacing FirstBuy, has had a positive effect on customers' confidence to buy a home and their ability to transact. These positive effects are expected to support greater activity in the new homes market, which in turn will provide an impetus to the number of new homes built.  The Group continues to view positively the Government's initiatives to support the housebuilding sector.

Outlook

The Group remains confident of its prospects to further enhance shareholder value and continue to deliver improvements in returns over the coming years. The compound positive effect of greater volume, increasing average sales price and improving housing profit margin provides good visibility that, based on stable market conditions continuing, return on capital employed can be further improved in 2013 to circa 10% (2012: 7.7% restated*).

Notice of results

The Group intends to issue its half year results for the six months ended 30 June 2013 on 19 August 2013.

* 2012 comparables restated for amendment to IAS19 "employee benefits"

-ENDS-

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, Monday 8 July 2013, to discuss this trading statement. To access the call please dial 020 3139 4830 and quote passcode: 74272902#. 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 Monday 15 July 2013, commencing approximately 30 minutes after the live call has finished, on: 020 3426 2807, access code: 640502#.

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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.

 

END

 

 

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