Trading update

RNS Number : 2018S

Bovis Homes Group PLC

06 July 2015

 



6 July 2015

Bovis Homes Group PLC

Trading update

On track to deliver further growth in shareholder returns

The Group is today issuing a trading update for the six month period ended 30 June 2015 ahead of reporting its half year results due to be announced on Monday, 17 August 2015.

Highlights

·      Record half year volume of legal completions at 1,525 new homes (H1 2014: 1,487)

·      Average sales price on legal completions increased by 6% to £222,000 (H1 2014: £210,000)

·      Cumulative reservations achieved to 30 June 2015 and expected to legally complete in 2015 of 3,505 homes (30 June 2014: 3,297)

·      2,944 consented plots of land across 17 new sites approved for purchase in H1 2015

·      Intention to increase the interim dividend for 2015 by 14% to 13.7 pence per share (H1 2014: 12.0 pence per share)

David Ritchie, Chief Executive, commented:

"The Group has delivered a record number of first half legal completions, made possible by the high quality land investments made during the last few years.

We continue to trade well in a positive UK housing market delivering a strong forward sales and build position on an increased number of sales outlets.  As a result we are on track to deliver our expected growth for 2015 and a further increase in return on capital employed supported by robust profit margins and improved capital turn.

Future growth in shareholder returns is being underpinned by further disciplined investment in new consented and strategic land."

Half year results and current trading

The Group has delivered a record half year volume of 1,525 homes, a 3% increase on the prior year.  As previously guided in May of this year, the Group's legal completion profile in 2015 is expected to be more weighted to the second half of the year than was the case in the prior year (H1 2014: 41%).  Given the higher proportion of traditional family homes along with robust housing market conditions, the Group's average private sales price increased to £264,000, 10% ahead of the comparative of £240,000 in H1 2014.  Overall, including the increased share of social housing, the Group's average sales price increased by 6% to £222,000 (H1 2014: £210,000).

The Group has been trading from an average of 100 sales outlets during the year to date which represents an 8% increase on the comparative period.  Weekly private sales rates to date have remained robust at an average of 0.63 net private reservations per site against the strong comparative in 2014 of 0.65.  The total forward sales position for 2015 delivery, including legal completions to date, stood at 3,505 homes at 30 June 2015 (30 June 2014: 3,297).  Housing production is currently 13% ahead of the prior year which provides a strong base for the planned volume growth for 2015.  The Group remains on track to deliver its expected total volume of legal completions for 2015.

Land

The Group has continued to take advantage of a positive land market to acquire high quality land at above hurdle rate margins and returns, with a focus on traditional housing sites mainly in the south of England (outside of central London).  In the first half of 2015, the Group added 2,687 consented plots on 15 sites to the land bank and has approved for purchase two further consented sites contributing 257 plots which are expected to be added in early July.  Beyond this there is in place a strong pipeline of land with terms agreed to deliver the targeted level of around 40 new site acquisitions during 2015.  The Group continues to be disciplined in its approach to land acquisition with robust hurdle rates and no allowance for future house price inflation included in its land appraisals.  The average expected return on capital employed on land acquired to date this year is circa 28%.

The Group is pleased with the progress being made on a number of its significant strategic land holdings.  These are expected to provide a valuable source of development land, primarily in the south of England, as planning consents are achieved.  In particular, the Group has either secured or is in the final stages of securing planning consent on four major strategic sites at Bishops Stortford (where the first 180 plots have already been added to the consented land bank), North Wokingham, Witney, and Tavistock.  In total these sites will deliver over 2,000 future consented plots to the land bank with high profit margins and returns above existing hurdle rates.

Balance sheet

Given the significant investment in consented land in the first half year, the Group had net debt of approximately £60 million as at 30 June 2015 (31 December 2014: net cash of £5 million, 30 June 2014: net debt of £48 million).

Interim dividend

The Board has previously reported its aim to step up the full year dividend for 2015 to 40 pence per share and is now pleased to confirm that it intends to declare an interim dividend for 2015 of 13.7 pence per share, an increase of 14% on the prior year (H1 2014: 12.0 pence per share).

Outlook

The Group remains on track to achieve its expectations for 2015 against a positive backdrop of robust market conditions. 

The Group is executing its growth strategy with investment in consented land, increased active sales outlets and robust rates of delivery per site.  Volume in 2015 is expected to grow in line with active sales outlet growth and this, coupled with an increase in average sales price is expected to deliver an increase in revenue with capital turn in excess of one times.  The increase in revenue combined with a strong net profit margin positions the Group to deliver a strong financial performance this year with a further increase in return on capital employed.

Conference call for analysts and investors

David Ritchie, Chief Executive and Earl Sibley, Group Finance Director of Bovis Homes will host a conference call at 08:30am today, Monday 6 July 2014 to discuss this trading statement.

To access the call please dial [phone] and enter pincode 57205740# when prompted.  Please dial in five 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 Tuesday 4 August 2015.  To access the playback facility, please dial 020 3426 2807 and enter conference reference 659088# when prompted.

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.

-ENDS-

Enquiries:              David Ritchie, Chief Executive

                                Earl Sibley, Group Finance Director

                                Bovis Homes Group PLC

Tel: [phone]

Reg Hoare / James White / Giles Robinson / Charlie Barker

MHP Communications

Tel: [phone]

 

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