Bovis Homes Group PLC Trading update
Profits ahead of expectations with strong land purchases supporting further growth
Overview
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.
Outlook
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
