Trading Statement

Trading Statement

Bovis Homes Group PLC

Bovis Homes Group PLC

Trading update

15 January 2010

Bovis Homes Group PLC is today issuing the following trading update ahead of the reporting of its preliminary results for the year ended 31 December 2009 on Monday 8 March 2010.

In line with expectations, the Group legally completed 1,803 homes in 2009 (2008: 1,817), of which 1,527 were private homes, up 25% on the prior year (2008: 1,223) and 276 were social and partnership homes (2008: 594). At £154,600, the Group’s average sales price in 2009 was 2.5% higher than the equivalent in 2008 (£150,800). This rise was heavily influenced by a falling contribution in the sales mix from lower priced social and partnership homes, which made up just 15% of the mix in 2009 versus 33% in 2008. The average sales price of the Group’s private homes in 2009 was £165,500 versus £181,000 in 2008.

The Group anticipates that pre exceptional pre-tax profit will be in line with the Board’s expectations. The Group has previously indicated a likelihood of a net inventory provision release at the end of the 2009 financial year arising from the Group’s assessment of the carrying value of inventory, and this remains the Group’s current expectation. Further information on the extent of this net provision release together with the resultant impact on future trading profits will be provided with the Group’s preliminary results announcement in March.

During 2009, the Group sustained its strong performance in private home reservations, achieving 1,801 private reservations during the year, some 82% ahead of the prior year’s 989 private reservations. This was achieved from, on average, 85 active sales outlets. Given the Group’s caution in land investment at the peak of the market and its careful control of working capital investment in 2009, active sales outlets have decreased as expected with 78 active sales outlets at the start of 2010 and an expectation that the average number of active sales outlets over the year will be circa 70.

As at 31 December 2009, the Group had a sales order book for 2010 delivery of 643 homes, some 218 homes greater than the same position in 2009.

Following a first half in which the Group legally completed 754 units and constructed only 221 units worth of housing, the Group has successfully delivered further working capital release in the second half, with 1,049 legal completions and a total of 690 units worth of housing constructed. As at 31 December 2009, the Group held housing work in progress equivalent to 986 homes which compares favourably to the position at the start of 2009 of work in progress equivalent to 1,878 homes.

As at 31 December 2009, the Group had net cash in hand of £113 million (2008: net debt £108 million) reflecting a cash inflow of £221 million over the year. Of this, £162 million arose from trading with the remaining £59 million arising from the Group’s share placing in September.

Looking ahead, the Group’s strategy remains consistent: to grow the output capacity of the Group through the acquisition of residential land, providing an increase in sales outlets to support volume growth: and, in so doing, contributing to growth in profits and improved financial returns. The Group has made good progress in securing further construction cost savings and has re-entered the residential land market during the latter part of 2009 following a successful period of de-gearing and supported by its share placing. Good progress has been made across the geographical areas of focus and the Group has acquired four sites in late 2009, with terms agreed in principle on a further 15 sites.

Towards the end of 2009, the Group initiated discussions with its banking syndicate in regards to its existing banking facility. The Group now has credit approval subject to documentation for a replacement £150 million syndicated facility which would mature in September 2013 and which will reduce its effective interest cost. The new facility will provide the Group with the financial flexibility to allow it to benefit from its strong balance sheet by continuing the process of re-investment in residential land, to increase the output capacity of the Group. The Group anticipates successfully completing the documentation process and entering into this new facility before its preliminary 2009 results are announced. The Group anticipates writing off the c£4 million un-amortised portion of the one-off fee paid in December 2008 in relation to the existing agreement as an exceptional item in its 2009 results. Further information will be provided once the refinancing exercise is completed.

The Group continues to expect trading conditions in 2010 to be subdued relative to historical levels, given ongoing economic uncertainty. Mortgage approval volumes are slowly rising, but mortgage providers continue to require record high levels of deposits, particularly from first-time buyers. This all said, longer-term market demand and supply trends remain positive. With a strong balance sheet and a clear strategy, the Group is confident of its ability to create value for its shareholders into the future.

Conference Call for Analysts and Investors

David Ritchie, Chief Executive and Neil Cooper, Group Finance Director of Bovis Homes will host a conference call at 08:30am today, Friday 15 January 2010, to discuss the interim trading update.

To access the call please dial 020 7138 0844 and quote passcode: 8128482#. 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 22 January 2010 on 020 7111 1244, accessible with the same passcode.

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.

Enquiries:	Â	Â	David Ritchie, Chief Executive
			Neil Cooper, Finance Director
			Bovis Homes Group PLC
			Tel: [phone]
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			Andrew Best / Emily Hunt
			Shared Value Limited
			Tel: [phone]
			07798 576 378