8 November 2013
Bovis Homes Group PLC
Interim Management Statement
Strong profit growth for 2013 and a significantly increased forward sales position for 2014
Bovis Homes Group PLC is today issuing an Interim Management Statement for the period from 1 July 2013.
The Group has continued to trade strongly throughout the period, in line with expectations as at the time of its Interim Results announcement.
The Group achieved its targeted private reservations total for 2013 legal completion around the end of September, significantly earlier than in prior years. The Group has followed its plan to accelerate the building of its private forward order book for 2014, which is already materially greater than the private forward order book as at 1 January 2013.
Net private reservations achieved in the 44 weeks to 1 November 2013 were 2,390, 45% ahead of the 1,650 achieved in the same period in 2012. Net reservations per site per week for this period have averaged 0.60, an increase of 30% over the 0.46 achieved in the comparable period in 2012. The average number of active sales outlets during this period has increased by 11%.
Trading conditions remain encouraging, with improved access to higher loan to value mortgages and Government support in the form of the Help to Buy scheme contributing to an already more confident housing market.
The opportunity to purchase high quality consented land capable of delivering attractive returns remains significant. The Group has continued to invest assertively and has now added circa 3,300 plots on 22 sites to the consented land bank to date during 2013 at full hurdle rate returns. A further circa 1,200 plots on 13 sites are contracted, a number of which are expected to be added to the consented land bank before the year end.
Additionally the Group has a large number of plots under negotiation with land owners for contract either in late 2013 or 2014 with a significant proportion already with planning consent. Some of these plots are on relatively large sites where appropriate deferred terms are being negotiated to ensure strong returns can be achieved.
With the sites already acquired during 2013 and the positive pipeline, the Group is confident of delivering further strong sales outlet growth in 2014 and 2015.
As at 7 November 2013, the Group had net debt of £125 million. Given the phasing of housing receipts and land payments, the Group expects to end 2013 with a modest net debt position.
The Group anticipates delivering circa 2,800 legal completions in 2013 and is well placed to achieve this, given the current sales position. The Group continues to expect the average sales price for 2013 legal completions to be at least 10% greater than that achieved in 2012, primarily reflecting mix benefits.
The gross profit margin for 2013 is expected to increase to at least 23%, benefiting from the higher proportion of legal completions on post-downturn sites. With improving overhead efficiency, the operating margin for 2013 is expected to approach 15%, strongly ahead of the 13.4% achieved in 2012.
The increasing operating margin, combined with the improving capital turn, is expected to deliver a ROCE of at least 10% in 2013. With a significantly enhanced forward order book at the start of 2014 and an increasing number of active sales outlets during 2014, the Group expects to continue its strong growth in volumes, profits and therefore ROCE, all based on current market conditions continuing.
David Ritchie, the Chief Executive of Bovis Homes Group PLC said:
"Our strong trading performance has continued through the third quarter and we are confident of achieving our targeted result for the year as whole. Our forward order book is in its best position for many years. With further increases in active sales outlets, supported by ongoing assertive land buying, the Group is confident of its future prospects and ability to deliver significantly improved returns."
Enquiries: David Ritchie, Chief Executive
Jonathan Hill, Finance Director
Bovis Homes Group PLC
Tel: 07855 432 699
Andrew Jaques/Reg Hoare/James White
Tel: 020 3128 8100
Conference Call for analysts
David Ritchie, Chief Executive, and Jonathan Hill, Finance Director, of Bovis Homes will host a conference call at 08:30 today, Friday 8 November 2013, to discuss the Interim Management Statement.
To access the call please dial +44 (0)20 3139 4830 and quote passcode: 69535453#. Please dial in 5 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 7 December 2013 on 020 3426 2807, accessible with the passcode 643530#.
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.