Interim Results

Bovis Homes Group PLC 11 September 2000 BOVIS HOMES GROUP PLC INTERIM RESULTS Unaudited results for the six months ended 30 June 2000 Issued 11 September 2000 The Board of Bovis Homes Group PLC today announced its interim results for 2000. * Operating profit increased 31% to £27.7 million (1999: £21.2 million) * Pre tax profit increased 30% to £26.5 million (1999: £20.3 million) * Earnings per share increased by 30% to 16.3 pence (1999: 12.5 pence) * Operating margin increased to 21.4% (1999: 18.7%) * Plots with planning consent increased to 10,007 plots (1999: 9,195 plots) * Strategic land holdings increased to 17,740 potential plots (1999: 16,758 potential plots) * Interim dividend increased 8.3% to 3.9 pence net per ordinary share (1999: 3.6 pence) * Period end net borrowings of £39.0 million (14.5% gearing) Commenting on the results, Malcolm Harris, the Chief Executive of Bovis Homes Group PLC said: 'The Group's emphasis upon continuous improvement to all of its activities, with particular attention to design and land management, is delivering ongoing positive results. Our trading experience to date this year has been varied, an excellent start to the year reverted to a more normal seasonal selling pattern during the summer. The fundamentals of the housing market remain sound and we are well placed to deliver good results for the full year and in a strong position for 2001 and beyond.' Enquiries: Malcolm Harris, Chief Executive Bovis Homes Group PLC Tel: 020 7600 0809 on Monday 11 September Tel: 01474 872427 thereafter Andrew Best / Emily Bruning Shared Value Limited Tel: 020 7600 0809 on Monday 11 September Tel: 020 7321 5010 thereafter Chairman's interim statement Bovis Homes has built upon its success in 1999 with further improvements in profitability and asset base during 2000. This progress has arisen from the Group's consistent focus on maximising shareholder returns. Results For the six months ended 30 June 2000 the Group achieved a pre tax profit of £26.5 million representing an increase of 30% over the pre tax profit of £20.3 million for the same period in 1999. Earnings per share of 16.3 pence was also 30% improved over 1999's 12.5 pence. The Group legally completed 1,056 homes at an average sales price of £121,200 compared with 975 legal completions in the same period last year at an average sales price of £106,600. The operating margin increased to 21.4% compared with 18.7% for the first six months of 1999. The increase in unit completions with a further improvement in operating margin over 1999 demonstrates the Group's ongoing aim to re-balance the profit contribution between the first and second halves of the year whilst at the same time maintaining focus on maximising profit margins and return on capital employed. Dividends The interim dividend of the Company will amount to 3.9 pence net per share, an increase in excess of 8% over 1999's interim dividend. This dividend will be paid on 24 November 2000 to holders of ordinary shares on the register at the close of business on 6 October 2000. Land A key factor in the Group's ongoing ability to deliver strong profit margins is the strength of the land bank. At 30 June 2000 the Group held 10,007 plots of consented land compared with 9,195 plots at the same time last year. The strategic land bank stood at 17,740 potential plots at 30 June 2000, an increase on the 16,758 potential plots held at 30 June 1999. Market conditions After a strong start to 2000, the housing market has now steadied. In recent months house prices have remained stable with the fundamentals of the housing market sound, the cost of borrowing being affordable aided by a competitive mortgage market. This has been supported by recent statistics published by the Halifax indicating a slow down in the annual rate of selling price increases and a forecast that they will now rise at a more sustainable rate for the foreseeable future. Prospects The strategies aimed at maximising shareholder return continue to be applied consistently and, in a more constrained market, the Group's ability to effectively utilise its land bank and maximise profit potential will be the key to success. Our ongoing review and improvement programme along with shrewd investment in prime land will continue to support these strategies. The half year results present a strong foundation for the full year and given prevailing market conditions we are confident of the prospects of the Group for the full year. Sir Nigel Mobbs Chairman 11 September 2000 Group profit and loss account For the six months ended 30 June 2000 Six months Six months ended ended Year ended 30 June 30 June 31 Dec 1999 2000 1999 (unaudited) (unaudited) (audited) £000 £000 £000 -------- -------- --------- Turnover - continuing operations 129,687 113,121 277,804 Cost of sales (88,566) (80,297) (196,298) -------- -------- -------- Gross profit 41,121 32,824 81,506 Administrative expenses (13,389) (11,626) (24,568) -------- -------- -------- Operating profit - continuing operations 27,732 21,198 56,938 Interest receivable and similar income 52 31 96 Interest payable and similar charges (1,312) (886) (1,598) -------- -------- -------- Profit on ordinary activities before taxation 26,472 20,343 55,436 Taxation on profit on ordinary activities (8,000) (6,200) (16,900) -------- -------- -------- Profit on ordinary activities after taxation 18,472 14,143 38,536 Dividends proposed/paid (4,410) (4,061) (12,186) -------- -------- -------- Retained profit for the financial period 14,062 10,082 26,350 ======== ======== ======== Basic earnings per ordinary share 16.3p 12.5p 34.2p Diluted earnings per ordinary share 16.2p 12.4p 33.8p In both the current and preceding financial periods there were no other recognised gains or losses. In both the current and preceding financial periods there was no material difference between the historical cost profits and losses and those reported in the profit and loss account. Group balance sheet At 30 June 2000 30 June 30 June 31 Dec 1999 2000 1999 (unaudited) (unaudited) (audited) £000 £000 £000 --------- -------- -------- Fixed assets Tangible assets 8,502 8,387 8,395 Investments 1,259 24 673 -------- -------- --------- 9,761 8,411 9,068 -------- -------- -------- Current assets Stocks and work in progress 402,712 325,082 360,275 Debtors due within one year 6,701 11,748 8,426 Debtors due after more than one year 5,214 4,392 4,743 Cash and short term deposits 290 6,434 362 --------- --------- -------- 414,917 347,656 373,806 -------- --------- -------- Creditors: amounts falling due within one year (135,978) (99,783) (101,197) -------- -------- --------- Net current assets 278,939 247,873 272,609 -------- -------- -------- Total assets less current liabilities 288,700 256,284 281,677 Creditors: amounts falling due after more than one year (18,084) (16,032) (25,250) Provisions for liabilities and charges (1,602) (1,653) (1,492) -------- --------- --------- Net assets 269,014 238,599 254,935 ======== ======== ======== Capital and reserves Called up share capital 56,539 56,399 56,535 Share premium 132,698 132,103 132,685 Revaluation reserve 817 817 817 Profit and loss account 78,960 49,280 64,898 -------- -------- -------- Equity shareholders' funds 269,014 238,599 254,935 ======== ======== ======== Group cash flow statement For the six months ended 30 June 2000 Six months Six months Year ended ended ended 30 June 30 June 31 Dec 1999 2000 1999 (unaudited) (unaudited) (audited) £000 £000 £000 -------- -------- -------- Net cash (outflow)/inflow from operating activities (20,807) (1,318) 36,265 Returns on investments and servicing of finance Interest received 52 31 95 Interest paid (1,249) (882) (1,591) -------- -------- -------- (1,197) (851) (1,496) -------- -------- -------- Taxation paid (5,100) (939) (15,981) -------- -------- -------- Capital expenditure and financial investment Purchase of tangible fixed assets (1,073) (2,110) (2,975) Sale of tangible fixed assets 193 176 266 Purchase of investments (586) - - -------- -------- -------- (1,466) (1,934) (2,709) ------- -------- -------- Equity dividend paid (8,124) (7,524) (11,586) -------- -------- -------- Cash (outflow)/inflow before management of liquid resources and financing (36,694) (12,566) 4,493 Management of liquid resources and financing Movement in short term deposits - (1,630) 8 Movement in short term borrowings 30,862 15,733 (5,000) Issue of ordinary share capital 17 - 69 -------- -------- -------- 30,879 14,103 (4,923) -------- -------- -------- (Decrease)/increase in cash (5,815) 1,537 (430) -------- -------- -------- Group reconciliation of movements in shareholders' funds Six months Six months Year ended ended ended 30 June 30 June 31 Dec 1999 2000 1999 (unaudited) (unaudited) (audited) £000 £000 £000 -------- -------- -------- Opening shareholders' funds 254,935 228,517 228,517 Issue of ordinary shares 17 - 718 Total recognised gains and losses for the period 18,472 14,143 38,536 Funding of share issue to Qualifying Employee Share Ownership Trust - - (650) Dividends paid and proposed (4,410) (4,061) (12,186) -------- -------- -------- Closing shareholders' funds 269,014 238,599 254,935 ======== ======== ======== Group reconciliation of operating profit to operating cash flows Six months Six months Year ended ended ended 30 June 30 June 31 Dec 1999 2000 1999 (unaudited) (unaudited) (audited) £000 £000 £000 -------- -------- -------- Operating profit 27,732 21,198 56,938 Depreciation 784 706 1,499 Profit on disposal of tangible fixed assets (11) (38) (64) Increase in stocks (42,437) (4,881) (40,074) Decrease/(increase) in debtors 1,254 (1,203) (1,913) (Decrease)/increase in creditors (8,129) (17,100) 19,879 -------- -------- -------- Net cash (outflow)/inflow from operating activities (20,807) (1,318) 36,265 ======== ======== ======== Group reconciliation and analysis of net debt Six months Six months Year ended ended ended 30 June 30 June 31 Dec 1999 2000 1999 (unaudited) (unaudited) (audited) £000 £000 £000 -------- -------- -------- (Decrease)/increase in cash (5,815) 1,537 (430) Movement in short term deposits - 1,630 (8) Movement in short term borrowings (30,862) (15,733) 5,000 -------- -------- -------- Change in net debt (36,677) (12,566) 4,562 Opening net debt (2,279) (6,841) (6,841) -------- -------- -------- Closing net debt (38,956) (19,407) (2,279) ======== ======== ======== Split: Cash and short term deposits 290 6,434 362 Bank overdraft (8,384) (5,108) (2,641) Short term borrowings (30,862) (20,733) - -------- -------- -------- Notes to the accounts 1 Basis of preparation The interim accounts have been prepared on a basis consistent with the accounting policies adopted for the year ended 31 December 1999. These policies are set out in the Group's Annual Report and Accounts. The interim accounts do not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. The interim accounts for the six months ended 30 June 1999 and 30 June 2000 have not been audited. The abridged information in these interim accounts relating to the year ended 31 December 1999 is derived from the full accounts upon which the auditors issued an unqualified opinion and which have been delivered to the Registrar of Companies. 2 Earnings per share Basic earnings per ordinary share for the six months ended 30 June 2000 is calculated on profit after tax of £18,472,000 (six months ended 30 June 1999: £14,143,000; year ended 31 December 1999: £38,536,000) over the weighted average of 113,070,189 (six months ended 30 June 1999: 112,808,192; year ended 31 December 1999: 112,817,440) ordinary shares in issue during the period. Diluted earnings per ordinary share is calculated on profit after tax of £18,472,000 (six months ended 30 June 1999: £14,143,000; year ended 31 December 1999: £38,536,000) over the diluted weighted average of 114,408,855 (six months ended 30 June 1999: 113,960,807; year ended 31 December 1999: 114,103,935) ordinary shares potentially in issue during the year. The diluted average number of shares is calculated in accordance with FRS 14 'Earnings Per Share'. The dilutive effect relates to the average number of potential ordinary shares held under option during the year. This dilutive effect amounts to the number of ordinary shares which would be purchased using the aggregate difference in value between the market value of shares and the share option exercise price. The market value of shares has been calculated using the average ordinary share price during the year. Only share options which have met their cumulative performance criteria have been included in the dilution calculation. There is no dilutive effect on the profit after tax used in the diluted earnings per share calculation. 3 Dividends The interim dividend of 3.9 pence net per ordinary share will be paid on 24 November 2000 to holders of ordinary shares on the register at the close of business on 6 October 2000. 4 Taxation The rate of corporation tax applied was 30% for the six months ended 30 June 2000 and 30.25% for the six months ended 30 June 1999.

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