Trading Update

RNS Number : 2005C

Bovis Homes Group PLC

15 January 2015

 



15 January 2015

Bovis Homes Group PLC
Trading Update

Record volume of homes drives strong increase in returns in 2014

Bovis Homes Group PLC is today issuing the following trading update ahead of reporting its final results for the year ended 31 December 2014 on Monday 23 February 2015.

Significant revenue and profits growth

The Group has delivered on its growth ambitions for 2014 and expects to announce a significant increase in profit before tax, in line with market expectations, driven by the compound positive effect of:

·    a 29% growth in legal completions to a record number of 3,635 homes (2013: 2,813);

·    an increase of 11% in the Group's average sales price to £216,600 (2013: £195,100), due to stronger mix and improved house prices; and

·    a strong improvement in operating profit margin to circa 17% (2013: 14.9%), driven both by an increasing contribution from legal completions on sites acquired since the housing market downturn and by improving overhead efficiency.

The strong growth in profitability combined with effective management of capital enabled the Group to achieve its anticipated material improvement in return on capital employed to approximately 16% for 2014 (2013: 10.4%).

Record land investment

Delivering its strategy of increasing land investment in a disciplined way when the market for consented land is favourable, the Group achieved a record year of land investment during 2014, adding 7,300 plots to the consented land bank across 42 sites, replenishing at twice the rate of homes sold.  At the end of 2014, the Group's land bank had grown to circa 18,000 consented plots, providing around five years of consented land supply at 2014 volume levels.

Robust balance sheet with strong capital management

The Group had net cash of £5 million at the year end, having started 2014 with £18 million of net debt, reflecting strong management of capital during a year of record land investment.

Dividends

At the time of the half year results, the Group indicated its intention to pay a full year dividend for 2014 of 35 pence per share, an increase of 169%.  The Group therefore intends to propose paying a final dividend for 2014 of 23 pence per share in May 2015, in addition to the interim dividend of 12 pence per share paid in November 2014.

Positive trading and outlook

The Group achieved 3,218 net private reservations in 2014, 16% ahead of the 2,773 achieved in 2013.  Net reservations per site per week was 0.54 (2013: 0.59), excluding the 509 PRS reservations achieved in 2014.  The lower sales rate reflects the slowing market in H2 2014 compared to the very strong market conditions in H2 2013, which benefited from the introduction of Help to Buy in Q2 2013.  In line with its strategic plan, the Group delivered an 8% increase in the average number of active sales outlets to 97 (2013: 90).

As at 1 January 2015, the Group held its strongest forward sales position for many years with 1,752 reservations for 2015 delivery, 27% ahead of the 1,377 reservations at the start of 2014.  Of these, there were 979 private homes, 41% ahead of the 2014 opening position of 692.  The Group also held 773 social housing reservations for 2015 legal completion (2014 opening position: 685).

The Group started 2015 with 103 active sales outlets.  With sites progressing through the planning system including the land purchases made in 2014, the Group expects to continue to grow its average number of active sales outlets in line with its strategic plan during 2015.

Assuming that the housing market conditions in 2015 will be similar to 2014, the combined effect of the strong forward order book and the expected growth in active sales outlets will enable the Group to increase volume, albeit at a slower pace than in 2014.  The Group therefore expects 2015 will be another successful year of growth in revenue and profit giving rise to further improvement in returns.

Strategy for growth

The Group is successfully delivering its strategic plan to achieve growth to optimal scale and enhance returns.  Strong land buying, including significant conversion of strategic land, during this current benign period in the consented land market is enabling growth in the size of the business through an increased number of sales outlets.  This growth drives increased volume in stable market conditions at strong profit margins.  The Group is confident of its future prospects and ability to deliver improved shareholder returns through higher return on capital employed and increasing dividends in 2015 and beyond.

Commenting, David Ritchie, Chief Executive of Bovis Homes, said:

"We have delivered significant growth in 2014 with record volumes, and material increases in revenue, profits and returns.  We have continued to execute our strategic plan successfully despite the housing market moderating in the second half of 2014.  The size of the business is set to grow further after a record year of land investment in 2014.  Subject to market conditions being similar to 2014, we expect to deliver further growth in revenue and profit, giving rise to further improvement in returns in 2015."

Conference call for analysts and investors

David Ritchie, Chief Executive and Jonathan Hill, Group Finance Director of Bovis Homes will host a conference call at 08:30am today, Thursday 15 January 2015 to discuss the trading update.

To access the call please dial [phone] and enter pincode 60378108# when prompted.  Please dial in five 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 Thursday 5 February 2015.  To access the playback facility, please dial 020 3426 2807 and enter conference reference 653442# when prompted.

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.

-ENDS-

Enquiries:  

David Ritchie, Chief Executive
Jonathan Hill, Group Finance Director
Bovis Homes Group PLC
Tel: [phone]

Reg Hoare, James White, Giles Robinson
MHP Communications
Tel: [phone]

 

END

 

 

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