54% increase in legal completions to 1,487 homes (H1 2013: 963 homes)
Average sales price on private legal completions, excluding PRS homes, of £239,500, 20% higher than H1 2013 (£200,200), driven by mix and modest improvements in house prices
A record 4,597 consented plots on 23 sites added to the land bank
Growing consented land bank of 17,702 plots as at 30 June 2014 (31 December 2013: 14,638 plots)
19,608 plots of strategic land (31 December 2013: 20,108)
Current trading and outlook
Cumulative sales achieved to week 32 for 2014 legal completion of 3,530 homes (2013: 2,505), with the Group being nearly fully sold for legal completions in 2014
Average sales price for 2014 legal completions expected to be between £210,000 and £215,000
2014 operating margin expected to increase to between 17% and 18% (2013: 14.9%)
Material improvement in ROCE for 2014, now expected to be circa 16.0% (2013: 10.4%)
Updated strategic plan set out to deliver optimal scale and returns
Growing to an optimal scale with annual volumes of between 5,000 and 6,000 new homes
Managing the housing cycle to maximise returns, while effectively stewarding shareholders' capital, targeting ROCE of at least 20% by 2016
With the Board's confidence in the strategic plan, intention to pay an enhanced dividend of 35 pence per share in 2014 and at least 35 pence per share in 2015 (2013: 13.5 pence) and a revised dividend policy thereafter
Commenting on the results, David Ritchie, Chief Executive of Bovis Homes Group PLC said:
"I am delighted to report that the Group is delivering on its growth strategy and combined with housing market improvements is producing fast improving returns. We have developed a strategic plan which would see the business, in a stable housing market, growing over the next few years to annual volumes of between 5,000 and 6,000 new homes at premium profit margins benefiting from the effectiveness of the operating model.
"In the first half of 2014 the Group has delivered a record number of legal completions leading to a 150% increase in operating profit. This significant increase is the result of the compound positive effect of increased volumes, improved average sales price and stronger profit margins.
"The Group has also had its most successful half year of land investment acquiring around 4,600 high quality consented plots on 23 sites. This will support further sales outlet growth into 2015 and beyond, which is expected to lead to further strong improvements in return on capital employed.
"The strong trading position will enable the delivery of a significant increase in profits in 2014 in line with our expectations, subject to stable market conditions. With a further increase in capital turn, this level of profit is expected to generate a return on capital in 2014 of approximately 16%.
"Given its confidence in this strategic plan and considering the Group's ongoing capital requirements, the Board intends to pay an enhanced dividend for 2014 of 35 pence per share, of which 12 pence has been declared as an interim dividend, a 200% increase on the 2013 interim dividend. The Board also intends to pay a dividend of at least 35 pence per share in 2015."
