AGM Trading Statement

RNS Number : 8453D

Bovis Homes Group PLC

02 May 2017

2 May 2017

BOVIS HOMES GROUP PLC

Trading statement for the period covering 1 January 2017 to date

Bovis Homes Group PLC is holding its Annual General Meeting ("AGM") at 2:00pm today in Tunbridge Wells. This statement comments on the Group's current trading and outlook for the financial year.

Greg Fitzgerald, Chief Executive commented:

"I am confident that Bovis will return to being a leading UK housebuilder and excited by the challenge ahead. The clear focus for 2017 is on improving our production processes and efficiency thereby ensuring we deliver quality homes to our customers. By the end of June I will have visited all our developments and met the majority of our people; we have already identified improvements to streamline the business, provide greater focus and be more agile."

Current trading

Our current trading in the year to date has been in line with our expectations. We have opened 8 new sites in the period and are currently operating from 95 active outlets. We expect our average number of active sites to remain stable for 2017.

As announced in February we have slowed our rate of production for 2017 and for the full year expect to deliver completion volumes c. 10% to 15% below the 2016 level before returning to normal industry production levels. Our build programme for the year to date is expected to deliver c. 1,500 completions in the first 6 months of 2017.

Customer interest in our homes remains strong with prospects per active outlet consistently ahead of the prior year level for the past 8 weeks. The Group's sales rate of 0.48 net private reservations per site per week for the year to date is in-line with our 2017 production plans and reflects a controlled sales release across a number of our developments and our priority focus on customer service.

As highlighted in February, the Group's first half profitability will be impacted by increased build costs within our cost base brought into the year and an increased level of investment across the business to address issues faced in 2016.

The Group will incur one-off advisory fees of c. £2.8m related to the merger proposals received from Redrow and Galliford Try and the Group's strategic review announced in February.

Land

We continue to see good opportunities in the land market that exceed our minimum required returns. We aim to replenish our landbank in 2017 and thereafter maintain an underlying 4 year consented landbank. Our strategic landbank remains a valuable supply of high quality land and we have seen significant early success in 2017 with the conversion of strategic sites at Bishop's Stortford, Didcot and West Witney totalling 834 plots. As a result we are in a strong position for our 2018 delivery with the vast majority of the land we require already owned with planning consent.

Leasehold rents

We note the recent commentary around leasehold rents. As a business it is our standard practice to sell our new houses on a freehold basis. In the rare circumstances in the past where we have not sold houses freehold, this has been due to local factors, such as acquiring sites with existing leasehold arrangements in place. With any of our homes sold on a leasehold basis including our apartments, the ground rent is set at market rates and rent increases are referenced to RPI and at no greater than 5 yearly intervals.

Dividends

Subject to shareholder approval at today's AGM and given the Board's confidence in the future prospects of the business a final dividend of 30.0 pence per share (2015: 26.3 pence per share) will be paid on 19 May 2017, giving a total dividend for 2016 of 45.0 pence per share (2015: 40 pence per share).

Our strategic review will determine the Group's dividend policy going forward and for 2017 the Board remains committed to at least maintaining the total proposed dividend at the declared level for 2016.

Outlook

The demand for new homes remains robust across all regions and overall we have seen some modest house price inflation in the period. We have made clear progress in addressing the issues faced during 2016 and in particular have re-established a 'customer first' culture across the business. The group is confident it will deliver on its expectations for 2017.

We are clear in our goal of delivering shareholder value through maximising returns from the Group's valuable landbank and returning Bovis to being an industry leading housebuilder. Greg Fitzgerald will conclude a strategic and structural review of the Group over the coming months and will provide an update with the half year results announcement which has been re-scheduled for 7 September 2017.

Certain statements in this press release are 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 representative on that such trends, results or activities will continue in the future. Undue reliance should not be placed on forward looking statements.