16 January 2014
Bovis Homes Group PLC
Strong increase in returns in 2013: material growth in forward order book for 2014
Bovis Homes Group PLC is today issuing the following trading update ahead of reporting its final results for the year ended 31 December 2013 on Monday 24 February 2014.
Significant revenue and profits growth
The Group expects to announce a significant increase in profit before tax for 2013, in line with market expectations, driven by the compound positive effect of:
· a 19% growth in legal completions to 2,813 (2012: 2,355), including a 26% increase in private homes to 2,330 (2012: 1,854);
· an increase of 14% in the Group's average sales price to £195,100 (2012: £170,700), primarily due to an improved mix of larger homes with a greater proportion of higher value Southern sites; and,
· a significant improvement in operating profit margin to approaching 15% (2012*: 13.3%), driven both by an increasing contribution from legal completions on sites acquired since the housing market downturn and by improving overhead efficiency.
The strong growth in profitability will enable the Group to achieve its anticipated material improvement in ROCE to in excess of 10% for 2013 (2012: 7.7%).
* Adjusted for IAS19R
Substantial land investment
During 2013, the Group added 3,737 plots to the consented land bank on 27 sites. Additionally, circa 2,800 plots on 12 sites were contracted at the year end and are expected to be added to the consented land bank during the early months of 2014, as conditions are satisfied. At the end of 2013, the Group's land bank stood at 14,638 consented plots, providing over five years of land supply at 2013 volume levels.
Robust balance sheet
As expected, the Group had net debt of £18 million at the year end, having started 2013 with £19 million of net cash, reflecting the Group's significant land investment during the year.
Positive current trading and outlook
Trading has continued to be robust in the latter months of 2013 and this momentum has been maintained into the opening weeks of 2014.
The Group achieved 2,773 net private reservations in 2013, 48% ahead of the 1,873 achieved in 2012. Net reservations per site per week increased by 34% to 0.59 (2012: 0.44). Active sales outlets during 2013 averaged 90, 10% ahead of 2012's average of 82.
As at 1 January 2014, the Group held 1,377 forward sales for 2014 delivery, 77% ahead of the 778 forward sales at the start of 2013. Of these, 692 were private homes, 178% ahead of the 2013 opening position of 249. The Group also had 685 social housing reservations for 2014 legal completion, compared to the 529 social homes reserved at the start of 2013.
The Group started this year with 94 active sales outlets. 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 during 2014.
The combined effect of the strong forward order book, the expected growth in active sales outlets and an improving average sales price will enable the Group to continue to drive revenue growth, assuming stable market conditions. With improving profit margins, the Group's profits and ROCE are both expected to show further strong improvement in 2014.
Commenting, David Ritchie, Chief Executive of Bovis Homes, said:
"2013 was another successful year for Bovis Homes. We delivered significant growth in profits and returns as a result of our continued strategy of growth through investment in high quality consented and strategic land. 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 further significant improvement in returns."
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, Thursday 16 January 2014 to discuss the trading update.
To access the call please dial +44 (0)20 3139 4830 and enter pincode 32081377# 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 Thursday 6 February 2014. To access the playback facility, please dial 020 3426 2807 and enter conference reference 645143# 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
Reg Hoare, James White, Giles Robinson
Tel: +44 (0)20 3128 8100