Trading Update

RNS Number : 8032O

Bovis Homes Group PLC

10 November 2016

 

10 November 2016

Bovis Homes Group PLC

Trading update

 

David Ritchie, Chief Executive, commented:

"Another year of both growth in volume and increase in average sales price is expected to deliver record revenues for the Group in 2016.  As a result, we are on track to deliver increased profit and a further improvement in return on capital employed, in line with our expectations.

We continue to trade well, drive production across all our sites, invest in our people and acquire high quality land outside London.  Housing market fundamentals remain supportive despite greater market uncertainty and we continue to manage the business through the cycle to deliver sustainable shareholder returns."

 

Current trading

The backdrop for housebuilding in the UK continues to be positive with demand for new homes running ahead of housing supply.  Political support remains in place as evidenced by the improved planning regime and the continuation of the Help to Buy equity loan scheme.  At the same time unemployment continues to be low and the mortgage market remains competitive. 

Aside from the weeks immediately after the EU referendum, the Group's sales during the year to date have followed a normal seasonal pattern with the weekly private sales rate per site having averaged 0.6 (2015: 0.59).  We have reservations in place to achieve over 5% growth in legal completion volume in the year and sales prices remain robust as we continue to sell homes at prices in line with our expectations.  The average sales price for 2016 is expected to be around 10% ahead of last year, driven by improving mix and increased underlying market pricing.  The combination of increased volume and sales price growth is expected to deliver an increase in revenue and capital turn for 2016, supporting a further improvement in return on capital employed.

During the year to date, we have been operating from a similar average number of sales outlets as in 2015.  Whilst we have launched 28 new sales outlets in 2016 to date, strong sales rates have enabled the closure of a greater number of existing sales outlets.  Our mix of sales outlets has improved further as we continue to increase the number of active high quality sites in the south of England.  The improving sales rates anticipated on these newer sites and the increasing proportion of affordable housing in our mix is expected to support future volumes. 

We continue to drive build activity on all sites and production to date is running some 5% ahead of the prior year.  The availability of labour remains a constraint on activity across the sector and whilst our sub-contract cost inflation rate has moderated since the second half of 2015, we continue to see market cost increases.

 

Land

We have remained disciplined in our land investment and continue to buy high quality consented land in prime locations outside London, these new sites being acquired at returns in line with our increased hurdle rates.  The supply of land into the market remains good and the land market continues to reflect the current environment.  In the first half of 2016 we acquired 1,267 consented plots across 11 new sites and since then we have acquired or approved for acquisition a further 1,033 consented plots across nine sites with a significant number of further consented land investments at an advanced stage.

The Group has enjoyed further success in achieving planning consent on strategic land in the second half of 2016, delivering circa 1,300 plots, in particular 1,000 plots at Collingtree, Northamptonshire.  Progress continues to be made with landowners to agree the acquisition of strategic sites, with around 10,500 plots currently controlled in the strategic land bank with planning agreed.

 

Balance sheet

Our balance sheet remains robust and we anticipate a net cash position at the end of the year.

The Board

We are delighted that Nigel Keen will be joining the Board as a non executive director on 15 November 2016.  Nigel is Property and Development Director of the John Lewis Partnership.

We will provide a further trading update on 13 January 2017.

Enquiries:            David Ritchie, Chief Executive

Earl Sibley, Group Finance Director Bovis Homes Group PLC

Reg Hoare/James White/Giles Robinson 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.

 

END

 

 

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