Interim Results
BOVIS HOMES GROUP PLC
13 September 1999
BOVIS HOMES GROUP PLC
INTERIM RESULTS
Unaudited results for the six months ended 30 June 1999
Issued 13 September 1999
The Board of Bovis Homes Group PLC today announced its interim results for
1999.
* Operating profit increased 27% to £21.2 million (1998: £16.7 million)
* Pre tax profit increased 20% to £20.3 million (1998: £16.9 million)
* Earnings per share increased by 21% to 12.5p (1998: 10.3p)
* Operating margin increased by 9% to 18.7% (1998: 17.1%)
* Interim dividend increased 8% to 3.6 pence net per ordinary share (1998:
3.33 pence)
* Plots with planning consent increased to 9,195 plots (1998: 8,550 plots)
* Strategic land holdings of 16,758 potential plots (1998: 14,211 potential
plots)
* Period end net borrowings of £19.4 million (8% gearing)
Commenting on the results, Malcolm Harris, the Chief Executive of Bovis Homes
Group PLC said:
'The Group has continued to concentrate upon improving shareholder value
through continuous product design, specification changes and skilful
management of the Group's land holdings. There is an increased focus on
research and development of production techniques to facilitate enhanced build
efficiency.
All sections of the business improved their profits and operating margins
compared with the corresponding period in 1998 and future profit growth has
been facilitated through additional investment in prime sites.
Current trading conditions are good with reservations over 10% ahead of the
comparative period in 1998. We are, therefore, confident of our prospects for
the full year and are well placed for the future.'
Chairman's interim statement
Bovis Homes has continued its encouraging progress during the first half of
1999 with improved profits and margins over the comparable period in 1998, and
has underpinned further profit growth through the strengthening of both the
consented and strategic land holdings compared to this time last year.
Results
For the six months ended 30 June 1999 the Group's unaudited operating profit
increased by 27% to £21.2m (1998 : £16.7m). Interest payable less receivable
absorbed £0.9m (1998: net receivable of £0.2m) to leave pre tax profit 20%
higher at £20.3m (1998 : £16.9m). Earnings per share of 12.5 pence showed an
increase of 21% over 10.3 pence in 1998.
The operating margin increased to 18.7% from 17.1% for the same period last
year, enhanced by new products and improved specification, in good market
conditions. The focus remained on adding shareholder value by maximising
profits through continued product innovation, process research and
development, and skilful land investment and management. The Group achieved
975 unit completions at an average selling price of £106,600 compared with 952
unit completions at an average selling price of £99,800 in the first six
months of 1998.
Dividends
The interim dividend of the Company will amount to 3.6 pence net per share, an
increase in excess of 8% over 1998's interim dividend. This dividend will be
paid on 26 November 1999 to holders of ordinary shares on the register at the
close of business on 8 October 1999.
Land
Bovis Homes has continued its progressive investment policy in pursuit of
prime land and at 30 June 1999 held 9,195 plots of consented land compared
with 8,550 plots at 30 June 1998. In addition it has strengthened its
strategic land bank from 14,211 potential plots at 30 June 1998 to 16,758
potential plots at 30 June 1999, after transferring 502 plots from the
strategic land bank into the consented land bank during the first half year.
Market conditions
The Company has benefited from improved consumer confidence during the first
six months of the year but has not experienced unsustainable conditions in any
area in which it operates. There is evidence of a shortage of high value
properties in both London and in the provinces. The strength of this
specialist sector is not, however, indicative of the overall market. We do
not believe that the recent increase in interest rates is justifiable as far
as the housing market is concerned.
Prospects
The Group will continue to focus on profitability with the view to maximising
shareholder returns. Ongoing product improvement, promotion of strategic land
holdings and identification of opportunities to purchase land through
negotiation will continue to ensure that shareholders' funds are invested
effectively.
The results for the half year are encouraging and in light of our consistent
policies and current trading conditions in the housing market, we are
confident of the prospects of the Group for the full year.
Sir Nigel Mobbs
Chairman
13 September 1999
Group profit and loss account
For the six months ended 30 June 1999 Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
1999 1998 1998
(unaudited) (unaudited) (audited)
£000 £000 £000
---------- ---------- ---------
Turnover - continuing operations 113,121 97,457 234,285
Cost of sales (80,297) (70,114) (167,818)
--------- --------- ---------
Gross profit 32,824 27,343 66,467
Administrative expenses (11,626) (10,681) (21,339)
--------- --------- ---------
Operating profit - continuing operations 21,198 16,662 45,128
Interest receivable and similar income 31 395 555
Interest payable and similar charges (886) (116) (661)
--------- --------- ---------
Profit on ordinary activities before 20,343 16,941 45,022
taxation
Taxation on profit on ordinary activities (6,200) (5,300) (13,900)
--------- --------- ---------
Profit on ordinary activities after 14,143 11,641 31,122
taxation
Dividends proposed/paid (4,061) (3,760) (11,280)
--------- --------- ---------
Retained profit for the financial period 10,082 7,881 19,842
========= ========= =========
Basic earnings per ordinary share 12.5p 10.3p 27.6p
--------- --------- ---------
Diluted earnings per ordinary share 12.4p 10.3p 27.5p
--------- --------- ---------
In both the current and preceding financial periods there was no material
difference between the historical cost profits and losses and those reported
in the profit and loss account.
Group statement of total recognised gains and losses
For the six months ended 30 June 1999 Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
1999 1998 1998
(unaudited) (unaudited) (audited)
£000 £000 £000
---------- ---------- ---------
Profit for financial period 14,143 11,641 31,122
Impairment loss on revalued asset - (67) (67)
Total recognised gains relating to the 14,143 11,574 31,055
period ========== ========== =========
Group balance sheet
At 30 June 1999 30 June 30 June 31 Dec
1999 1998 1998
(unaudited) (unaudited) (audited)
£000 £000 £000
---------- ---------- ---------
Fixed assets
Tangible assets 8,387 9,460 7,121
Investments 24 24 24
--------- --------- ---------
8,411 9,484 7,145
---------- --------- ---------
Current assets
Stocks and work in progress 325,082 265,890 320,201
Debtors due within one year 11,748 6,320 10,981
Debtors due after more than one year 4,392 4,582 3,957
Cash and short term deposits 6,434 24,986 370
--------- --------- ---------
347,656 301,778 335,509
--------- --------- ---------
Creditors: amounts falling due within one (101,436) (82,705) (96,533)
year --------- ---------- ---------
Net current assets 246,220 219,073 238,976
--------- --------- ---------
Total assets less current liabilities 254,631 228,557 246,121
Creditors: amounts falling due after more (16,032) (12,001) (17,604)
than one year --------- ---------- ---------
Net assets 238,599 216,556 228,517
========= ========= =========
Capital and reserves
Called up share capital 56,399 56,399 56,399
Share premium 132,103 132,103 132,103
Revaluation reserve 817 817 817
Profit and loss account 49,280 27,237 39,198
--------- ---------- ---------
Equity shareholders' funds 238,599 216,556 228,517
========= ========= =========
Group cash flow statement
For the six months ended 30 June 1999 Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
1999 1998 1998
(unaudited) (unaudited) (audited)
£000 £000 £000
---------- ---------- ---------
Net cash outflow from operating (1,318) (3,763) (20,285)
activities
Returns on investments and servicing of
finance
Interest received 31 395 555
Interest paid (882) (134) (1,002)
---------- --------- ---------
(851) 261 (447)
--------- --------- ---------
Taxation paid (939) (3,250) (11,288)
--------- --------- ---------
Capital expenditure and financial
investment
Sale of tangible fixed assets 176 90 3,324
Purchase of tangible fixed assets (2,110) (788) (2,288)
---------- --------- ---------
(1,934) (698) 1,036
--------- --------- ---------
Equity dividend paid (7,524) - (3,756)
--------- --------- ---------
Cash outflow before management
of liquid resources and financing (12,566) (7,450) (34,740)
Management of liquid resources
Movement in short term deposits (1,630) 5,004 29,618
Movement in short term borrowings 15,733 - 5,000
Increase/(decrease) in cash 1,537 (2,446) (122)
--------- --------- ---------
Group reconciliation of movements in shareholders' funds
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
1999 1998 1998
(unaudited) (unaudited) (audited)
£000 £000 £000
---------- ---------- ---------
Opening shareholders' funds 228,517 208,742 208,742
Total recognised gains and losses for the 14,143 11,574 31,055
period
Dividends proposed/paid (4,061) (3,760) (11,280)
--------- --------- ---------
Closing shareholders' funds 238,599 216,556 228,517
========= ========= =========
Group reconciliation of operating profit to operating cash flows
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
1999 1998 1998
(unaudited) (unaudited) (audited)
£000 £000 £000
---------- ---------- ---------
Operating profit 21,198 16,662 45,128
Depreciation 706 639 1,290
(Profit)/loss on disposal of tangible (38) - 74
fixed assets
Increase in stocks (4,881) (22,194) (76,505)
(Increase)/decrease in debtors (1,203) 1,727 (2,819)
(Decrease)/increase in creditors (17,100) (597) 12,547
--------- ---------- ---------
Net cash outflow from operating (1,318) (3,763) (20,285)
activities ========= ========= =========
Group reconciliation and analysis of net debt
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
1999 1998 1998
(unaudited) (unaudited) (audited)
£000 £000 £000
---------- ---------- ---------
Increase/(decrease) in cash 1,537 (2,446) (122)
Movement in short term deposits 1,630 (5,004) (29,618)
Movement in short term borrowings (15,733) - (5,000)
--------- --------- ---------
Change in net funds (12,566) (7,450) (34,740)
Opening net (debt)/funds (6,841) 27,899 27,899
--------- --------- ---------
Closing net (debt)/funds (19,407) 20,449 (6,841)
========= ========= =========
Split:
Cash and short term deposits 6,434 24,986 370
Bank overdraft (5,108) (4,537) (2,211)
Short term borrowings (20,733) - (5,000)
--------- --------- --------
Notes to the accounts
1. Earnings per share
Basic earnings per ordinary share for each period is calculated on the
weighted average of 112.8 million ordinary shares in issue throughout each
period. Diluted earnings per ordinary share is calculated on a weighted
average of 113.9 million ordinary shares (6 months to 30 June 1998: 113.4
million ordinary shares; 12 months to 31 December 1998: 113.2 million ordinary
shares) after adjusting the weighted average number of ordinary shares to
assume conversion of potentially dilutive ordinary shares, being unexercised
share options.
2. Dividends
The interim dividend of 3.6 pence net per ordinary share will be paid on 26
November 1999 to holders of ordinary shares on the register at the close of
business on 8 October 1999.
3. Taxation
Corporation tax has been estimated based upon the weighted average standard
rate of 30.25% for 1999.
4. Basis of preparation
The interim accounts have been prepared on a basis consistent with the
accounting policies adopted for the year ended 31 December 1998. These
policies are set out in the Group's Annual Report and Accounts. In addition,
the Group has adopted Financial Reporting Standards 12 and 13. The adoption
of these new standards has not impacted upon these interim accounts. The
interim accounts do not constitute statutory accounts within the meaning of
Section 240 of the Companies Act 1985.
The interim accounts for the six months ended 30 June 1998 and 30 June 1999
have not been audited. The abridged information in these interim accounts
relating to the year ended 31 December 1998 is derived from the full accounts
upon which the auditors issued an unqualified opinion and which have been
delivered to the Registrar of Companies.
5. Year 2000
The issue primarily concerns the inability of some electronic systems to
recognise and process accurately date sensitive information prior to, during
and after the year 2000. In 1997 the Millennium Committee was formed under the
chairmanship of a main board director to assess, recommend and implement any
changes to ensure continuation of operations through the millennium. The
committee has met regularly and reports to the main board at each board
meeting on progress to date.
An audit of suppliers' readiness is progressing satisfactorily and will
continue through to the year end. Internal systems of any significance will
have been modified or changed before the year end. It is not anticipated
material costs will be incurred. This is, however, a complex issue and there
is no absolute guarantee that problems will not be encountered.
For further information:
Malcolm Harris, Chief Executive Tel: 01474 872427
Bovis Homes Group PLC
Andrew Best / Emily Bruning
Shandwick International Tel: 0171 329 0096
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