Clarification Statement

RNS Number : 0455D

Bovis Homes Group PLC

24 March 2014

 



24 March 2014

Clarification Statement

The "Private Rental Sector Deals" announcement released earlier today at 7am under RNS No 9743C via RNS Reach distribution circuit, has been re-released for transparency purposes.

The announcement is unchanged and is reproduced in full below.

Bovis Homes Group PLC

SUCCESS IN SECURING RETURN ENHANCING PRIVATE RENTAL SECTOR DEALS

Bovis Homes Group PLC today announces that contracts have been signed for two separate private rental sector (PRS) transactions.

Demonstrating strong innovation to drive growth and shareholder returns, the Group has signed contracts with two separate investors, one of which is accessing funding through the Government's Build to Rent Scheme, to sell new homes under two PRS transactions across a range of sites already owned by the Group.

The two transactions involve circa 510 homes with a total revenue of approximately £80 million, of which circa 250 homes are expected to legally complete in 2014 with the remainder in 2015.  These homes will be delivered over and above the Group's prevailing private sales, accelerating the development on each of the sites included without sales risk, with an average housing profit margin which is not expected to dilute the Group's anticipated operating margin in 2014 and 2015.  The strong profit delivery combined with the acceleration of capital turn enabled by these transactions will act as a further positive contributor to increasing the Group's return on capital employed in both 2014 and 2015.

The first transaction for circa 190 homes is focused on the south, particularly on larger sites where the Group may have considered selling land phases to enhance capital turn and where the PRS transaction, as an alternative to such land sales, delivers stronger returns.  In respect of this transaction, the Group will partner with the investor and invest approximately £1 million for an approximately 27% equity stake in the PRS investing entity and will also advance £4 million as a secured loan.  The second transaction involves the delivery of circa 320 new homes on sites mainly in the midlands and north, enabling the Group to accelerate trading through some of its older sites, some of which are written down. 

Positive impact on returns

Assuming current market conditions continue, the strong private sales position of the Group combined with the additional volume arising from the PRS transactions should enable the Group to deliver a strong increase in total reservations during 2014.  The Group now aims to deliver between 3,650 and 3,850 legal completions in 2014 (including circa 250 PRS homes) with a further enhanced forward order book for 2015 which will include the balancing circa 250 PRS homes.  With a clear focus on controlling the capital employed of the Group, capital turn is now expected to increase to around 0.9 in 2014.  As a result, return on capital employed is expected to increase strongly to approximately 15% in 2014 (2013: 10.4%) with further progress anticipated thereafter.

Commenting, David Ritchie, Chief Executive said:

'We are delighted to have agreed these two Private Rental Sector deals which will provide the opportunity to deliver over 500 additional new homes during 2014 and 2015.  Through achieving this, Bovis Homes is accelerating delivery across a number of its existing housing sites and enhancing shareholder returns.'

- ENDS -

Enquiries:           David Ritchie, Chief Executive

                                Jonathan Hill, Group Finance Director

                                Tel: [phone]

Reg Hoare, James White and Giles Robinson

                                MHP Communications

                                Tel: [phone]

 

END

 

 

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