TIDMBVS
RNS Number : 8037E
Bovis Homes Group PLC
16 May 2013
16 May 2013
Bovis Homes Group PLC
Interim Management Statement
Strong current trading and significant land investment
achieved
Bovis Homes Group PLC is holding its Annual General Meeting at
12.00pm today. This statement comments on the Group's current
trading and financial performance and provides guidance on the
outlook for the current financial year. In line with the
requirements of the UK Listing Authority's Disclosure and
Transparency Rules, this Interim Management Statement covers the
period from 1 January 2013 to the date of this statement.
David Ritchie, Chief Executive, commented:
"The ongoing success of the Group's growth strategy has driven
strong trading in early 2013. Homebuyer sentiment has been
improving and, with the recently announced Government initiatives,
sales rates have increased ahead of management's expectations. The
increased number of active sales outlets in excellent locations,
delivered from the Group's assertive land buying over the last few
years, provides a great opportunity to take advantage of the
improving market backdrop and further strengthen shareholder
returns."
Current trading
Trading in the 19 weeks to 10 May 2013 has been strong with the
Group achieving 989 private net reservations (2012: 783), a 26%
increase year on year. This has been driven by an 11% increase in
the average number of active sales outlets to 91 (2012: 82), and a
14% improvement in the average private sales rate to 0.57 net
reservations per site per week (2012: 0.50). The number of visitors
to the Group's sites has increased by 29% in the year to date
compared to the same period last year.
Having started 2013 with 249 forward sold private homes, as at
10 May 2013 the Group held 1,238 private sales for 2013 legal
completion (2012: 1,013). Including social housing units expected
to legally complete in 2013, at 10 May 2013 the Group's total sales
position to date was 1,852 units (2012: 1,437).
Sales prices achieved on reservations to date have been modestly
above management's expectations. The Group expects the average
sales price in the half year results to be materially ahead of the
prior year comparable period due to improved mix. The housing
profit margin is also expected to increase compared to the first
half of 2012.
The strong rate of reservations achieved, with a significant
contribution from new sales outlets, will deliver a material
increase in legal completions in the second half of the year. Legal
completion volumes in the first half of 2013 are expected to be at
a similar level to the first half of 2012.
Subject to current market conditions continuing, sales rates are
expected to support both the delivery of the Group's volume growth
targets for 2013 and allow the Group to enhance its year end
forward order book, supporting further growth in 2014.
Market conditions
The Group welcomes the Government's announcement of initiatives
to support the housebuilding sector, especially the recently
launched Help to Buy shared equity product, which enables customers
to purchase a home with a 5% deposit and a 20% shared equity loan
from the Government. Experience with Help to Buy in its early weeks
has been encouraging with strong interest from home buyers and an
increase in visitor numbers to the Group's sales outlets.
Whilst it remains difficult to assess its full potential
positive effect on legal completion volumes, the Group is confident
that this Government backed shared equity product will drive
transaction volumes in the new build sector. This will in turn
provide impetus to the number of new homes built. Given the Group's
strategy of strong sales outlet growth since the housing market
downturn, it is very well positioned to exploit the growth
opportunities provided by the Help to Buy product.
The mortgage market continues to show signs of modest
improvement. However, mortgage approval and residential transaction
data reflect the ongoing challenging conditions facing the UK
housing market. The Group's growth strategy has been based on the
assumption that these challenging market conditions will continue
such that any market improvement will provide additional growth
opportunities.
Land acquisitions
The Group has taken advantage of increasing opportunities to
acquire consented land anticipated to deliver hurdle rate margins
and has been highly successful in adding 2,238 consented plots on
14 sites to the land bank in the year to date. Additionally, a
number of sites have been acquired on a conditional basis, which
are expected to be added to the land bank during the remainder of
2013. This early success in land investment strongly supports the
Group's aim of increasing the number of sales outlets in 2014.
The Group is well ahead of its plan in respect of consented land
acquisitions this year and will manage investment during the
remainder of 2013 to ensure that land investment is balanced
suitably against improving capital turn. Given the quality of the
land pipeline combined with the existing consented and strategic
land banks, the Group can adopt a selective approach to future land
investment to replenish its land bank at strong rates of
return.
Balance sheet
With significant land payments made in early 2013, the Group had
net debt of GBP110 million as at 10 May 2013. This position is
expected to reduce to a materially lower level of net debt at 30
June 2013 and to move towards a cash neutral position at the year
end.
Outlook
The Group views its prospects for 2013 with increased
confidence. Based on current market conditions continuing, it is
anticipated that increased legal completions at a higher average
sales price and at an improved gross profit margin, combined with
enhanced overhead efficiency, will continue to improve the return
on capital to a level approaching 10% for 2013 (2012: 7.7%).
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 May 2013 to discuss the Interim Management
Statement.
To access the call please dial +44 (0)20 3139 4830 and enter
pincode 43146550# 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 June 2013. To access the playback facility, please
dial 020 3426 2807 and enter conference reference 639301# 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.
-ENDS-
Enquiries: David Ritchie, Chief Executive
Jonathan Hill, Finance Director
Bovis Homes Group PLC
Tel: 07855 432 699
Andrew Jaques / Reg Hoare / James White
MHP Communications
Tel: 0203 3128 8100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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