18 January 2013
Bovis Homes Group PLC
Profits ahead of expectations with strong land purchases supporting further growth
Bovis Homes Group PLC is today issuing the following trading update ahead of reporting its preliminary results for the year ended 31 December 2012 on Monday 25 February 2013.
The Group has delivered significant profit growth and has invested strongly in consented land during 2012. The Group expects to report a return on capital employed of circa 7.5% for the year.
Sales and profits growth
The Group expects to announce profit before tax for 2012 ahead of market expectations, driven by the compound positive effect of:
· 15% growth in legal completions to 2,355 (2011: 2,045), of which 1,854 (2011: 1,624) were private and 501 (2011: 421) were social;
· an increase of 5% in the Group's average sales price to £170,700 (2011: £162,400), resulting from an improved mix; and,
· a significant increase in operating profit margin to circa 13.5% (2011: 10.0%), driven by an increasing contribution from legal completions on sites acquired since the housing market downturn, a positive contribution from land sales and improving overhead efficiency.
Substantial land investment
During 2012, the Group invested strongly in circa 3,500 plots of consented land on 24 sites. Of these, circa 2,650 plots on 18 sites were added to the consented land bank during 2012 and the balance is expected to be added during the early months of 2013.
The Group legally completed three land sales during 2012 generating a total income of £18 million (2011: £38 million) and £5 million of profit (2011: £2 million).
Robust balance sheet
The Group has continued to control housing work in progress and at the end of 2012 had 912 homes worth of production included within work in progress (2011: 949).
Despite the significant land investment, the Group remained in a positive cash position at the year end, with net cash of £19 million, having started 2012 with £51 million of net cash.
As at 1 January 2013, the Group held forward sales for 2013 delivery of 778 homes, an increase of 37% compared to the 568 homes at the start of 2012, reflecting both the stronger private reservations position and an improved level of social housing reservations.
The Group started 2013 with 90 active sales outlets, an increase of 13% on the 80 active sales outlets at the start of 2012. With the land purchases made to date and the continuation of investment in both consented and strategic land, the Group expects to grow its active sales outlets further in 2013. Assuming stable market conditions, this increase will enable the Group to continue to drive growth in returns in 2013.
Commenting, David Ritchie, Chief Executive of Bovis Homes, said:
"2012 was a successful year for Bovis Homes. We delivered significant growth in profits and returns as a result of our continued strategy for growth through investment in high quality consented and strategic land. This strategy will be further progressed in 2013, which, subject to stable market conditions, should deliver strong improvements in the Group's returns in 2013 and beyond."
Conference call for analysts and investors
David Ritchie, Chief Executive and Jonathan Hill, Group Finance Director of Bovis Homes will host a conference call at 08:30am today, Friday 18 January 2013 to discuss the trading update.
To access the call please dial +44 (0)20 3139 4830 and enter pincode 11191747# 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 Friday 8 February 2013. To access the playback facility, please dial 020 3426 2807 and enter conference reference 636066# 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.
David Ritchie, Chief Executive
Jonathan Hill, Group Finance Director
Bovis Homes Group PLC
Tel: 01474 876200
Andrew Jaques, James White, Giles Robinson
Tel: +44 (0)203 128 8756