TIDMBVS
RNS Number : 5361F
Bovis Homes Group PLC
23 February 2015
23 February 2015
BOVIS HOMES GROUP PLC
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2014
STRONGLY IMPROVING RETURNS AND GROWTH STRATEGY ON TRACK
Bovis Homes Group PLC today announced its final results for the
financial year ended 31 December 2014 which have been prepared in
accordance with International Financial Reporting Standards as
adopted by the EU ('IFRS').
Financial highlights for 2014
2014 2013 Change
Revenue GBP809.4m GBP556.0m +46%
Profit before tax GBP133.5m GBP78.8m +69%
Basic earnings per share 78.6p 44.9p +75%
Dividend per share 35.0p 13.5p +159%
Net profit margin * 17.0% 14.9% +2.1ppts
ROCE ** 16.2% 10.6% +5.6ppts
Net cash / (debt) GBP5.2m GBP(18.0)m
-- Significant profit improvement from record legal completions
with stronger average sales price and improved net profit
margin
-- Return on capital employed target for 2014 achieved
-- Strong balance sheet
Operational highlights for 2014
2014 2013 Change
Legal Completions
Number of legal completions 3,635 2,813 +29%
Average sales price GBP216,600 GBP195,100 +11%
Reservations
Private reservations in year 3,218 2,773 +16%
Net private reservations per
site per week *** 0.64/0.54 0.59 +8%/-8%
Forward sales at year end 1,752 1,377 +27%
Consented land
Consented plots added 7,300 3,737 +95%
Sites added 42 27 +56%
Sites owned at year end 128 102 +25%
Plots in consented land bank
at year end 18,062 14,638 +23%
-- Record year of legal completions
-- Strong forward order book for 2015
-- Record year of land investment at the right point in the cycle
-- Strong growth in sites in land bank at the year end
Robust current trading (to 20 February 2015)
-- 479 private reservations achieved in first seven weeks of 2015 (2014: 468)
-- 2,336 cumulative sales achieved at 20 February 2015 for 2015 legal completion (2014: 1,875)
-- Sales prices achieved on cumulative sales to date circa 2% ahead of Group expectations
-- 575 plots on four sites added to the consented land bank to date in 2015
* Net profit margin is calculated as operating profit and share
of profit of joint venture, divided by revenue
** ROCE is calculated as operating profit and share of profit of
joint venture, divided by average opening and closing capital
employed excluding net cash
*** Net private reservations per site per week including /
excluding PRS reservations
Commenting, David Ritchie, the Chief Executive of Bovis Homes
Group PLC said:
"I am delighted to report excellent results for 2014. With a
record number of homes delivered and stronger sales prices and
profit margins, profit before tax has increased by 69%. We have
also achieved our return on capital employed target for 2014 and
are confident in our ability to deliver a further improvement in
return on capital employed in 2015.
"We laid out our strategic ambitions for the Group at the time
of our Half Year Results. This plan envisages the business, in a
stable housing market, delivering sustainable growth over the next
few years to annual volumes of between 5,000 and 6,000 new homes.
We are on track to deliver this strategic plan, supported by record
land investment in 2014 at the right point in the cycle.
"Given its confidence in our future prospects and having
considered ongoing capital requirements, the Board is maintaining
its guidance on dividends and will be recommending a full year
dividend of 35 pence, an increase of 159%. The Board also intends
to pay a dividend of at least 35 pence per share in 2015.
"I would like to recognise the considerable effort, commitment
and hard work of our employees during 2014 and thank them all for
their contribution to the Group's success."
Enquiries: David Ritchie, Chief Executive Results issued Reg Hoare / James
by White /
Jonathan Hill, Finance Giles Robinson
Director
Bovis Homes Group PLC MHP Communications
On 23 February On 23 February
tel: 07855 432 699 tel: 020 3128 8100
Thereafter - tel: 01474 876200
Certain statements in this press release are 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.
Chief Executive's Statement
Bovis Homes has made considerable progress during 2014,
achieving a record number of legal completions with a strong
improvement in profit and driving a further significant improvement
in return on capital employed. Profit before tax has increased by
69% to GBP133.5 million and the Group has achieved a return on
capital employed of 16.2%, 53% higher than 2013. Basic earnings per
share has increased by 75% to 78.6 pence (2013: 44.9 pence).
The Group has delivered a record year, acquiring high quality
land assets in its target areas, while maintaining a robust balance
sheet with year end net cash of GBP5.2 million.
The strategic plan communicated at the time of the 2014 Half
Year Results laid out the ambitions for the Group. The Group aims
to deliver market leading performance over the cycle from long term
land investment with a focus on building and selling quality family
homes. The Group's strategies to achieve this are as follows:
-- Acquiring, designing and developing quality traditional
housing sites, focusing primarily in the south of England
(excluding London)
-- Creating aspirational homes using its well specified
Portfolio traditional housing range in desirable settings,
delivered with excellent customer service
-- Growing to an optimal scale to suit the selected geography
and product range, which enables ongoing high quality management of
risk and reward through short lines of management control
-- Managing the business across the housing cycle to maximise
returns, while effectively stewarding shareholders' capital
-- Enabling motivated and engaged employees and business
partners to work ethically within a safe and healthy
environment
With the excellent progress made during 2014 delivering on these
strategies, the Group is confident that its strategic plan is on
track.
Acquiring, designing and developing quality traditional housing
sites, focusing primarily in the south of England (excluding
London)
2014 was the Group's most successful year for land investment,
acquiring high quality consented land assets focused on specific
search areas in the south of England and prime locations in the
midlands and northwest. The Group has maintained strong discipline
in its approach to land investment and applies rigorous criteria
for the acquisition of consented land, reflecting not only the
anticipated profit margin and return on capital employed, but also
site specific risks and geographic concentration risk.
During the year the Group added 7,300 plots on 42 sites to the
consented land bank at a cost of GBP340 million (2013: 3,737 plots
on 27 sites at a cost of GBP225 million). The plots added have an
estimated future revenue of GBP1,717 million and an estimated
future gross profit potential of GBP447 million, based on appraisal
sales prices and build costs. On average the plots are expected to
deliver a gross margin of circa 26% and a return on capital
employed between 25% and 30%. Of these plots, 82% were located in
the south of England, taking the proportion of plots in the
consented land bank to 75% in the south. On the sites acquired
during 2014, traditional homes represented 86% of the private homes
to be built.
The strong performance in purchasing land has continued in 2015,
with 575 consented plots on four sites added to date in 2015, and a
significant pipeline of sites with terms agreed being positively
progressed.
In order to drive improved use of capital, the Group completed
three land sales totalling 237 plots during 2014. The selected land
sale parcels were on some of the Group's larger sites. Further land
sales are planned in 2015.
The consented land bank was approximately five years supply at
2014 legal completion volume, amounting to 18,062 plots as at 31
December 2014 (2013: 14,638). The gross profit potential on these
consented plots at the 2014 year end, based on current sales prices
and current build costs, was estimated at GBP1,017 million with a
gross margin of 25.2% (2013: GBP727 million at 24.2%). At that
point, the consented land bank contained 128 sites with 25 of these
sites still to be launched for sale. This provides confidence in
the Group's growth for 2015 as these sites progress to being active
sales outlets.
Creating aspirational homes using its well specified Portfolio
traditional housing range in desirable settings, delivered with
excellent customer service
During 2014 the Group achieved record production of circa 3,500
homes, a 20% increase on 2013 to support the delivery of new homes,
whilst effectively managing housing work in progress. Work in
progress turn increased to 3.6 times (2013: 2.7). Housing work in
progress ended 2014 at 923 units worth of production (2013: 1,040),
equivalent to less than one quarter's worth of anticipated volume
at the start of 2015.
During 2010, the Group reviewed its private housing range and
designed the "Portfolio" range of traditional homes for modern
living, incorporating great space with efficient design and build.
Not only have these homes been excellently received by customers,
but they are also highly efficient to build. The Group has migrated
across to the Portfolio range, where planning allows. During 2014,
38% of the private homes legally completed were from the Portfolio
range, up from 23% in 2013. This percentage is expected to grow
further in 2015.
The Portfolio range is ideally suited to edge of town and
village locations, which are precisely the locations where the
Group has invested in 2014, including attractive market towns from
Bovey Tracy and Ottery St Mary in Devon and Tetbury and Kemble in
Gloucestershire, to Godalming in Surrey, Salisbury and Bursledon in
Hampshire and Elsenham and Takeley in Essex.
As a result of moving towards a more traditional housing mix,
the proportion of traditional private homes sold has increased to
66% in 2014 from 59% in 2013. Three storey homes reduced to 21% of
legal completions (2013: 22%) and apartments have decreased to 13%
(2013: 19%).
In 2014, the average sales price of homes legally completed
increased by 11% to GBP216,600 (2013: GBP195,100). The average
sales price of private legal completions, excluding private rental
sector ("PRS"), was 18% higher at GBP250,800 (2013: GBP212,700),
benefiting from the mix effect of higher sales prices on new sites
and market pricing improvements of circa 5% ahead of expectations
set prior to the start of 2014. The average sales price for PRS
homes was GBP166,900, reflecting their location and the smaller
product delivered under these agreements.
Improving activity levels and higher sales prices in the new
homes market has led to increasing construction costs, with the
main driver being subcontract labour. The Group's average
construction cost for legal completions in 2014 was 12% higher than
in 2013, compared to an increase in private sales prices of 14%.
The Group estimates the market driven element of this build cost
increase to be circa 7% with other cost increases arising from the
increasing size of the Group's average home, specification
improvements and the ongoing impact of switching the mix of homes
to the south of England where subcontractor rates are higher.
As well as cost increases, the industry has faced challenges to
deliver adequate levels of production during the last eighteen
months. This has resulted primarily from shortages in subcontract
labour, which has impacted Bovis Homes, given the Group's
significant growth. Production delays have also had an adverse
effect on the customer experience leading to the Group's internal
"recommend a friend" score reducing to 82% in 2014 from 90% in
2013. Actions plans have been put in place to improve performance
in this important area.
Growing to an optimal scale to suit the selected geography and
product range, which enables ongoing high quality management of
risk and reward through short lines of management control
The Group has laid out its ambitious plan to grow annual volume
to between 5,000 and 6,000 homes, through an increase in active
sales outlets which can be delivered through the acquisition of
circa 40 consented sites annually.
In 2014 the Group has taken a major step forward in scale,
delivering a 29% increase in legal completions to 3,635 homes
(2013: 2,813). Private legal completions, including 286 PRS homes,
increased by 26% to 2,931 (2013: 2,330). Legal completions of
social homes were 704 (2013: 483), representing 19% of total legal
completions (2013: 17%).
Average active sales outlets of 97 were 8% higher than the 90 in
2013. This combination of active sales outlet growth in 2014
supported by PRS reservations enabled the Group to achieve 3,218
private reservations, a 16% increase on the 2,773 achieved in 2013.
Net private reservations per site per week was 0.64 and, excluding
the PRS reservations, was 0.54 (2013: 0.59). This reduction
resulted from a more normal seasonal market during the summer
period of 2014 compared to 2013, which benefited from the first
year of Help to Buy, as well as a moderating of the overall housing
market in the second half of the year.
This level of private reservations enabled the Group to carry
forward into 2015 a significantly enhanced private forward order
book of 979 private reservations (2014: 692). When combined with
increased active sales outlets of 103 at the start of 2015 and the
expected site openings in 2015 driven by the 42 consented sites
acquired in 2014, the Group is confident that further growth
towards its optimal scale can be achieved during 2015. The sites
acquired in 2015 to date and the pipeline of further sites either
already contracted or at an advanced stage of negotiation should
support further growth into 2016.
The Group's new organisational structure which became effective
at the start of 2014 has bedded in well and the six operating
businesses are functioning effectively. The two developing
businesses in Thames Valley and South Midlands, which continue to
be run on modest overheads, are progressing towards being fully
operational and are expected to deliver their first legal
completions during 2016.
Managing the business across the housing cycle to maximise
returns, while effectively stewarding shareholders' capital
Driving shareholder value across the housing cycle requires
strong land acquisition at the bottom of the cycle and slowing
investment before the peak. The Group continues to view the housing
market, excluding London, as being at an early stage of its growth
phase in this cycle. After a long period of stable pricing and
activity between 2009 and H1 2013, significant market house price
increases have only occurred in the last year and a half. While
there continues to be a shortage of credit to smaller
housebuilders, discipline is being demonstrated by those
participating in the consented land market. This is evidenced by
the recently published view by Knight Frank that greenfield
residential land values increased by only 2.3% in 2014, reflecting
the interplay between sales prices and build costs and the
competitive landscape. The Group continues to believe that this is
the right time to be investing assertively in consented land.
Demand for new housing remains strong with UK household
formation continuing to be projected above 200,000 per annum and
new housing targeted by the Government for delivery above this
number while completions fall significantly short of this target.
The UK planning system has increased its delivery of planning
consents leading to an improving flow of available, cost effective
residential consented land. The opportunity exists for well
capitalised housebuilders to invest in this land to increase
housing supply.
Strategic land is critical to the Group to contribute to the
supply of land into the consented land bank through the housing
cycle. During 2014 the Group made a strong investment in new
strategic land with the addition of circa 4,500 new plots to the
strategic land bank. Circa 3,000 plots were converted to the
consented land bank, making up 41% of plots added during the
year.
As a result, the strategic land bank at 31 December 2014 had
increased to 21,350 potential plots (2013: 20,108). These plots are
spread across 76 sites. The Group's long-term investment in and
promotion of strategic land has resulted in the consented land bank
as at 31 December 2014 having been sourced 45% from the strategic
land bank (2013: 49%). Within the Group's strategic land bank are
2,900 plots across nine sites where residential planning consent
has already been agreed and progress is being made by the Group to
finalise planning agreements and acquire these sites. Additionally,
a plan for the Group's controlled land for 3,200 plots at
Wellingborough, Northamptonshire is being developed. This is
expected to lead to site development commencing with the first new
homes being completed in 2016.
The Group continues to promote effectively its existing
strategic sites, working with local stakeholders to secure planning
consent. A good proportion of the Group's existing strategic land
is approaching a point where planning consents are expected to be
achieved. This strategic land will allow the Group to continue to
be highly selective in the consented land market, especially
important as and when this market shows signs of increased
competition. The Group anticipates that circa 50% of its land bank
in the future is likely to be sourced from strategic land. The
combined effect of consented land market investment with strategic
land conversion is expected to provide the Group with a strong
pipeline of sites with profit margins and returns at the point of
investment above its existing hurdle rates.
Enabling motivated and engaged employees and business partners
to work ethically within a safe and healthy environment
The Group recognises the critical role that its people play in
the delivery of the strategic plan. The increased activity in the
new build market has made attracting and retaining talent ever more
important. With a growing business, employees have increased from
771 at the start of 2014 to 928 at the end 2014, which has been
supported by higher levels of investment to support recruitment,
training and development.
In the build department where staff turnover is most pronounced,
a site manager training programme has been established during 2014,
which welcomed its first cohort of trainees primarily from military
backgrounds with further programmes to be run in the future.
Additionally, the apprentice programme is being expanded in 2015 to
increase the intake across the business.
The Board
Jonathan Hill, the Group Finance Director, announced his
intention in September 2014 to leave the Group in order to pursue
other career options. Jonathan will continue serving with the Group
until 6 March 2015. The Board would like to thank Jonathan for his
significant contribution to both the Board and to the strong
performance of the Group during his period of service. The Board is
pleased to confirm that the search process for Jonathan's
replacement is close to finalisation. An announcement is expected
to be made in the near future.
John Warren will retire from the Board at the 2015 AGM to be
held on 15 May 2015 after the allotted nine years as a
non-executive director and eight years as Audit Committee Chairman.
The Board would like to thank John for his valuable contribution
during his time on the Board. The Board is pleased to announce that
Ralph Findlay, currently Chief Executive of Marston's PLC, will be
appointed as a non-executive director with effect from 7 April 2015
and will chair the Audit Committee from the conclusion of the 2015
AGM.
Market conditions
The first half of 2014 was a period of strong levels of customer
demand in the housing market supported by good availability of
mortgage finance. Monthly mortgage approvals, according to the Bank
of England, averaged 67,500 during the first half of 2014. The
summer period returned to a more typical seasonal pattern with
lower activity during July and August. At the same time consumer
confidence reduced resulting in a weaker autumn trading period.
During the second half of 2014, monthly mortgage approvals reduced
to an average of 61,700.
The extension of Help to Buy through to 2020, announced in March
2014, provided the industry with increased certainty of support in
the medium term. The Group views this development positively,
providing further time for the mortgage market to develop under the
positive control delivered by the Mortgage Market Review.
House prices have been rising at a positive rate across many
regional markets with stronger rises in the south of England,
offset by more modest changes in the midlands and north of England.
The Group experienced an increase in sales prices during 2014
compared to its expectations set prior to the start of the year of
circa 5% due to market pricing improvements.
With the improvements in activity levels and higher sales
prices, the cost of building new homes has increased and the supply
of additional labour to fully support the higher production levels
remained constrained in 2014. The main driver of the increase in
costs has been subcontract labour, but material prices have also
contributed to the increase. The pressure experienced during 2014
seems to be reducing at the start of 2015.
Customer demand appears robust at the start of 2015. Mortgage
rates are at historic low rates and real wages are growing,
supporting affordability. The changes to stamp duty announced by
the Government in 2014 are also positive for consumers. The
forthcoming general election brings a period of uncertainty.
History would suggest that sales activity will moderate for a few
weeks before the election, followed by a rebound after. The Group
is aware of this likely impact and is presently working to maximise
the current positive sales activity to grow the order book.
Current trading
The Group entered 2015 with forward sales of 1,752 homes, a 27%
improvement on the 1,377 homes brought forward at the start of
2014. Of these, 979 were private homes (2014: 692) and 773 were
social (2014: 685).
The Group has delivered 479 private reservations in the first
seven weeks of 2015, modestly ahead of the 468 private reservations
achieved in the strong market conditions enjoyed in early 2014.
Operating from an average of 101 active sales outlets during this
period (2014: 93), the Group has achieved a sales rate per site per
week of 0.68 (2014: 0.72). Sales prices achieved on these private
reservations to date have been ahead of the Group's expectations
set prior to the start of 2015 by circa 2%.
As at 20 February 2015, the Group held 2,336 sales for legal
completion in 2015, as compared to 1,875 sales at the same point in
2014, an increase of 25%. Of these, private sales amounted to 1,458
homes (2014: 1,160), with social housing sales of 878 homes (2014:
715).
Overall this represents a robust start to 2015.
Outlook
The strong sales position brought forward from 2014 combined
with robust trading in the first seven weeks of 2015 has positioned
the Group well for 2015. With the expectation of further growth in
active sales outlets during 2015 driven by the land acquisitions
achieved in 2014, the Group is confident that it can deliver its
expected legal completion growth in 2015.
The housing market is demonstrating a strong correlation between
sales prices and costs, such that further increases in build costs
are expected to be at least covered by increases in sales prices.
The Group continues to benefit from an increasing proportion of
legal completions from post downturn sites which are in better
locations with a stronger product offering and have higher returns.
These legal completions are expected to contribute to a stronger
profit margin. With firm control of capital employed, capital turn
is expected to improve to in excess of 1.0 in 2015. Based on stable
market conditions, the Group expects to deliver a further positive
step in 2015 towards its ambition of at least 20% return on capital
employed in 2016.
The Group anticipates 2015 being another successful year of
growth and strong returns.
Financial Review
Revenue
During 2014, the Group generated total revenue of GBP809.4
million, an increase of 46% on the previous year (2013: GBP556.0
million). Housing revenue was GBP783.6 million, 43% ahead of the
prior year (2013: GBP548.7 million) and other income was GBP4.2
million (2013: GBP4.3 million). Land sales revenue, associated with
three land sales, was GBP21.6 million in 2014, compared to one land
sale achieved in 2013 with a total revenue of GBP3.0 million.
Profit before interest and tax
The Group delivered a 66% increase in profit before interest and
tax for the year ended 31 December 2014 to GBP137.9 million (2013:
GBP83.1 million) at a net profit margin of 17.0% (2013: 14.9%).
Housing net profit margin in 2014 was 17.0% (2013: 15.0%) and
reached 17.7% in the second half of 2014.
Housing gross margin increased to 24.5% in 2014 from 23.5% in
2013, in line with the circa 1% improvement expected by the Group.
The gross margin benefited from the increased contribution from
legal completions on sites acquired post the housing market
downturn. During 2014, market sales price gains enabled the Group
to cover construction cost increases, supporting a continuing
strong profit margin.
Total gross profit was GBP197.2 million (gross margin: 24.4%),
compared with GBP130.3 million (gross margin: 23.4%) in 2013. The
profit on land sales in 2014 was GBP3.9 million (2013: GBP0.1
million).
Overheads, including sales and marketing costs, increased by 26%
in 2014, as the Group invested early to support the large number of
land assets acquired and the increased number of sales outlets. The
overheads to housing revenue ratio improved to 7.5% in 2014 from
8.5% in 2013.
Profit before tax and earnings per share
Profit before tax increased by 69% to GBP133.5 million,
comprising operating profit of GBP137.6 million, net financing
charges of GBP4.4 million and a profit from joint ventures of
GBP0.3 million. This compares to GBP78.8 million of profit before
tax in 2013, which comprised GBP82.8 million of operating profit,
GBP4.3 million of net financing charges and a profit from joint
ventures of GBP0.3 million. Basic earnings per share for the year
improved by 75% to 78.6p compared to 44.9p in 2013.
Financing
Net financing charges during 2014 were GBP4.4 million (2013:
GBP4.3 million). Net bank charges were GBP4.5 million (2013: GBP3.5
million), as a result of higher net debt during 2014 compared to
2013. The Group incurred a GBP3.0 million finance charge (2013:
GBP3.1 million charge), reflecting the imputed interest on land
bought on deferred terms. The Group also benefited from a finance
credit of GBP3.0 million (2013: GBP2.3 million) arising from the
unwinding of the discount on its available for sale financial
assets during 2014 and other credits of GBP0.1 million.
Taxation
The Group has recognised a tax charge of GBP28.3 million at an
effective tax rate of 21.2% (2013: tax charge of GBP18.7 million at
an effective rate of 23.7%). The Group has a current tax liability
of GBP14.0 million in its balance sheet as at 31 December 2014
(2013: current tax liability of GBP9.2 million).
Dividends
As previously communicated the Board will propose a 2014 final
dividend of 23.0p per share. This dividend will be paid on 22 May
2015 to holders of ordinary shares on the register at the close of
business on 27 March 2015. The dividend reinvestment plan gives
shareholders the opportunity to reinvest their dividends in
ordinary shares. Combined with the interim dividend paid of 12.0p,
the dividend for the full year totals 35.0p compared to a total of
13.5p paid in 2013, an increase of 159%.
Net assets
2014 2013
GBPm GBPm
------------------------------------------------ ------ -----
Net assets at 1 January 810.3 758.8
Profit after tax for the year 105.2 60.1
Share capital issued 0.5 1.0
Net actuarial movement on pension scheme
through reserves (5.7) 2.9
Deferred tax on other employee benefits 0.3 -
Adjustment to reserves for share based payments 0.8 0.8
Net movement in shared equity (3.5) -
Dividends paid to shareholders (28.8) (13.3)
---------------------------------------------------- ----- -----
Net assets at 31 December 879.1 810.3
---------------------------------------------------- ----- -----
As at 31 December 2014 net assets of GBP879.1 million were
GBP68.8 million higher than at the start of the year. Net assets
per share as at 31 December 2014 were 655p (2013: 604p).
Inventories increased during the year by GBP154.5 million to
GBP1,125.5 million. The value of residential land, the key
component of inventories, increased by GBP124.3 million, as the
Group invested ahead of usage. At the end of 2014, the remaining
provision held against land carried at net realisable value was
GBP12.9 million, after utilisation of GBP6.7 million during the
year. Other movements in inventories were an increase in work in
progress of GBP23.3 million and an increase in part exchange
properties of GBP6.9 million.
Trade and other receivables increased by GBP18.1 million,
primarily due to higher amounts owing from housing associations.
Trade and other payables totalled GBP360.5 million (2013: GBP242.6
million). Land creditors increased to GBP198.2 million (2013:
GBP123.8 million) with the Group taking advantage of the
opportunity to defer payments to land vendors. Trade and other
creditors increased to GBP162.3 million (2013: GBP118.8 million),
with higher build activity leading to increased amounts owed to
subcontractors and material suppliers.
Pensions
Taking into account the latest estimates provided by the Group's
actuarial advisors, the Group's pension scheme on an IAS19R basis
had a deficit of GBP0.7 million at 31 December 2014 (2013: surplus
of GBP3.2 million). Scheme assets grew over the year to GBP103.3
million from GBP94.7 million and the scheme liabilities increased
to GBP104.0 million from GBP91.5 million.
Net cash and cashflow
Having started the year with net debt of GBP18.0 million, the
Group generated an increased operating cash inflow before land
expenditure of GBP336 million (2013: GBP204 million), owing to
higher profitability and increased land recovery on record legal
completions. Net cash payments for land investment grew to GBP246
million (2013: GBP203 million), as a result of the increased land
investment offset by higher land creditors. Non-trading cash
outflow increased to GBP67 million (2013: GBP38 million) with the
greater dividend and corporation tax payments. As at 31 December
2014 the Group's net cash balance was GBP5.2 million with GBP52.3
million of cash in hand, offset by bank loans of GBP43.0 million,
GBP4.0 million of loans received from the Government and GBP0.1
million being the fair value of an interest rate swap.
At 31 December 2014, the Group had in place a committed
revolving credit facility of GBP175 million, of which GBP50 million
expires in December 2015 and GBP125 million in March 2017.
Additionally, the Group had a fully drawn three year term loan of
GBP25 million, repayable in January 2016.
Bovis Homes Group PLC
Group income statement
For the year ended 31 December 2014 2013
GBP000 GBP000
---------------------------------------- -------- --------
Revenue 809,365 556,000
Cost of sales (612,129) (425,693)
----------------------------------------- -------- --------
Gross profit 197,236 130,307
Administrative expenses (59,672) (47,476)
----------------------------------------- -------- --------
Operating profit before financing costs 137,564 82,831
Financial income 3,360 2,815
Financial expenses (7,727) (7,134)
----------------------------------------- -------- --------
Net financing costs (4,367) (4,319)
Share of profit of joint venture 287 283
Profit before tax 133,484 78,795
Income tax expense (28,276) (18,727)
----------------------------------------- -------- --------
Profit for the period attributable
to equity holders of the parent 105,208 60,068
----------------------------------------- -------- --------
Earnings per share
---------------------------------------- -------- --------
Basic 78.6p 44.9p
Diluted 78.2p 44.8p
----------------------------------------- -------- --------
Group statement of comprehensive income
For the year ended 31 December 2014 2013
GBP000 GBP000
------------------------------------------------------- ------- ------
Profit for the period 105,208 60,068
Other comprehensive income
Items that will be reclassified to profit and
loss:
Shared equity movement (2,887) -
Deferred tax on shared equity movement (621) -
Items that will not be reclassified to profit
and loss:
Actuarial (losses) / gains on defined benefit
pension scheme (7,166) 3,693
Deferred tax on actuarial movements on defined
benefit pension scheme 1,481 (748)
Total comprehensive income for the period attributable
to equity holders of the parent 96,015 63,013
--------------------------------------------------------- ------- ------
Bovis Homes Group PLC
Group balance sheet
At 31 December 2014 2013
GBP000 GBP000
------------------------------------ --------- ---------
Assets
Property, plant and equipment 13,634 13,526
Investments 8,107 5,089
Restricted cash 1,426 1,823
Deferred tax assets 2,645 1,451
Trade and other receivables 2,534 1,560
Available for sale financial assets 39,433 44,844
Retirement benefit asset - 3,237
Total non-current assets 67,779 71,530
-------------------------------------- --------- ---------
Inventories 1,125,518 971,016
Trade and other receivables 58,862 41,713
Cash and cash equivalents 52,257 12,025
Total current assets 1,236,637 1,024,754
-------------------------------------- --------- ---------
Total assets 1,304,416 1,096,284
-------------------------------------- --------- ---------
Equity
Issued capital 67,114 67,048
Share premium 213,850 213,428
Retained earnings 598,154 529,786
-------------------------------------- --------- ---------
Total equity attributable to equity
holders of the parent 879,118 810,262
-------------------------------------- --------- ---------
Liabilities
Bank and other loans 47,010 30,064
Trade and other payables 99,092 29,631
Retirement benefit obligations 668 -
Provisions 1,840 2,052
-------------------------------------- --------- ---------
Total non-current liabilities 148,610 61,747
-------------------------------------- --------- ---------
Trade and other payables 261,436 212,926
Other financial liabilities - 784
Provisions 1,236 1,411
Current tax liabilities 14,016 9,154
Total current liabilities 276,688 224,275
-------------------------------------- --------- ---------
Total liabilities 425,298 286,022
-------------------------------------- --------- ---------
Total equity and liabilities 1,304,416 1,096,284
-------------------------------------- --------- ---------
These financial statements were approved by the Board of
directors on 20 February 2015.
Bovis Homes Group PLC
Group statement of changes in equity
Total Issued Share Total
For the year ended 31 December retained capital premium
earnings
GBP000 GBP000 GBP000 GBP000
------------------------------- --------- ------- ------- -------
Balance at 1 January 2013 479,391 66,908 212,550 758,849
Total comprehensive income
and expense 63,013 - - 63,013
Issue of share capital - 140 878 1,018
Deferred tax on other employee
benefits (23) - - (23)
Share based payments 766 - - 766
Dividends paid to shareholders (13,361) - - (13,361)
Balance at 31 December
2013 529,786 67,048 213,428 810,262
------------------------------- --------- ------- ------- -------
Balance at 1 January 2014 529,786 67,048 213,428 810,262
Total comprehensive income
and expense 96,015 - - 96,015
Issue of share capital - 66 422 488
Deferred tax on other employee
benefits 304 - - 304
Share based payments 838 - - 838
Dividends paid to shareholders (28,789) - - (28,789)
Balance at 31 December
2014 598,154 67,114 213,850 879,118
------------------------------- --------- ------- ------- -------
Bovis Homes Group PLC
Group statement of cash flows
For the year ended 31 December 2014 2013
GBP000 GBP000
-------------------------------------------- -------- --------
Cash flows from operating activities
Profit for the year 105,208 60,068
Depreciation 1,853 1,180
Revaluation of available for sale financial
assets (1,288) (47)
Financial income (3,360) (2,815)
Financial expense 7,727 7,134
Profit on sale of property, plant and
equipment (115) (24)
Equity-settled share-based payment
expense 838 766
Income tax expense 28,276 18,727
Share of result of joint venture (287) (283)
(Increase) / decrease in trade and
other receivables (13,956) 28,737
Increase in inventories (154,501) (107,419)
Increase / (decrease) in trade and
other payables 116,475 (4,911)
Decrease in provisions and retirement
benefit obligations (3,795) (2,845)
--------------------------------------------- -------- --------
Cash generated from operations 83,075 (1,732)
Interest paid (3,746) (5,781)
Income taxes paid (23,708) (14,634)
--------------------------------------------- -------- --------
Net cash from operating activities 55,621 (22,147)
--------------------------------------------- -------- --------
Cash flows from investing activities
Interest received 107 269
Acquisition of property, plant and
equipment (2,084) (2,802)
Proceeds from sale of plant and equipment 238 30
Movement in loans with Joint Venture (2,751) 360
Purchase of investment in Joint Ventures (373) -
Dividends received from Joint Venture 283 267
Reduction / (investment) in restricted
cash 397 (671)
Net cash from investing activities (4,183) (2,547)
--------------------------------------------- -------- --------
Cash flows from financing activities
Dividends paid (28,789) (13,361)
Proceeds from the issue of share capital 488 1,018
Increase in borrowings 17,095 24,666
Net cash from financing activities (11,206) 12,323
--------------------------------------------- -------- --------
Net increase / (decrease) in cash and
cash equivalents 40,232 (12,371)
Cash and cash equivalents at 1 January 12,025 24,396
--------------------------------------------- -------- --------
Cash and cash equivalents at 31 December 52,257 12,025
--------------------------------------------- -------- --------
Notes to the financial statements
1 Basis of preparation
Bovis Homes Group PLC ('the Company') is a company domiciled in
the United Kingdom. The consolidated financial statements of the
Company for the year ended 31 December 2014 comprise the Company
and its subsidiaries (together referred to as 'the Group') and the
Group's interest in associates and joint ventures.
The consolidated financial statements were authorised for issue
by the directors on 20 February 2015. The financial statements were
audited by KPMG LLP.
The financial information set out above does not constitute the
company's statutory financial statements for the years ended 31
December 2014 or 2013 but is derived from those financial
statements. Statutory financial statementsfor 2013 have been
delivered to the registrar of companies, and those for 2014 will be
delivered in due course. The auditors have reported on those
financial statements; their reports were (i) unqualified, (ii) did
not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
The consolidated financial statements have been prepared in
accordance with IFRS as adopted by the EU, and the accounting
policies have been applied consistently for all periods presented
in the consolidated financial statements.
The preparation of financial statements in conformity with IFRS
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis of making
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ
from these estimates.
2 Basis of consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 December. Control is achieved
where the Company has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its
activities. The existence and effect of potential voting rights
that are currently exercisable or convertible are considered when
assessing whether the Group controls another entity. The financial
statements of subsidiaries are included in the consolidated
financial statements from the date that control commences until the
date that control ceases.
Associates are those entities in which the Group has significant
influence, but not control, over the financial and operating
policies. The consolidated financial statements include the Group's
share of the total recognised gains and losses of associates on an
equity accounted basis, from the date that significant influence
commences until the date that significant influence ceases.
Joint ventures are those entities in which the Group has joint
control over the financial and operating policies. The consolidated
financial statements include the Group's share of the total
recognised gains and losses of joint ventures on an equity
accounted basis, from the date that joint control commenced until
joint control ceases.
3 Accounting policies
There have been no changes to the Group's accounting policies.
These accounting policies will be disclosed in full within the
Group's forthcoming financial statements.
4 Reconciliation of net cash flow to net cash / (debt)
2014 2013
GBP000 GBP000
------------------------------------- ------- -------
Net increase / (decrease) in net
cash and cash equivalents 40,232 (12,371)
Increase in borrowings (17,095) (24,546)
Fair value adjustments to interest
rate swaps 149 209
Fair value adjustment to interest
free loans - (121)
Net (debt) / cash at start of period (18,039) 18,790
-------------------------------------- ------- -------
Net cash / (debt) at end of period 5,247 (18,039)
-------------------------------------- ------- -------
Analysis of net cash / (debt):
Cash and cash equivalents 52,257 12,025
Unsecured loans (46,951) (29,856)
Fair value of interest rate swaps (59) (208)
Net cash / (debt) 5,247 (18,039)
-------------------------------------- ------- -------
5 Income taxes
Current tax
Current tax is the expected tax payable or receivable on the
taxable income or loss for the year, calculated using a corporation
tax rate of 21.5% applied to the pre-tax income or loss, adjusted
to take account of deferred taxation movements and any adjustments
to tax payable for previous years. Current tax receivable for
current and prior years is classified as a current asset.
6 Dividends
The following dividends were declared by the Group:
2014 2013
GBP000 GBP000
Prior year final dividend per share
of 9.5p (2013: 6.0p) 12,715 8,010
Current year interim dividend per share
of 12.0p (2013: 4.0p) 16,074 5,351
------------------------------------------ ------ ------
Dividends declared 28,789 13,361
------------------------------------------ ------ ------
The Board has decided to propose a final dividend of 23.0p per
share in respect of 2014.
7 Earnings per share
Basic earnings per share
The calculation of basic earnings per share at 31 December 2014
was based on the profit attributable to ordinary shareholders of
GBP105,208,000 (2013: GBP60,068,000) and a weighted average number
of ordinary shares outstanding during the year ended 31 December
2014 of 133,902,247 (2013: 133,643,311), calculated as follows:
Profit attributable to ordinary shareholders
2014 2013
GBP000 GBP000
------------------------------------ -------- -------
Profit for the period attributable
to ordinary shareholders 105,208 60,068
Weighted average number of ordinary shares
2014 2013
------------------------------------- ------------ ------------
Issued ordinary shares at 1 January 133,643,311 133,294,726
Effect of own shares held (241,111 ) (288,388 )
Effect of shares issued in year 500,047 636,973
------------------------------------- ------------ ------------
Weighted average number of ordinary
shares at 31 December 133,902,247 133,643,311
------------------------------------- ------------ ------------
Diluted earnings per share
The calculation of diluted earnings per share at 31 December
2014 was based on the profit attributable to ordinary shareholders
of GBP105,208,000 (2013: GBP60,068,000) and a weighted average
number of ordinary shares outstanding during the year ended 31
December 2014 of 134,573,167 (2013: 133,933,279).
The average number of shares is increased by reference to the
average number of potential ordinary shares held under option
during the period. This reflects the number of ordinary shares
which would be purchased using the aggregate difference in value
between the market value of shares and the share option exercise
price. The market value of shares has been calculated using the
average ordinary share price during the period. Only share options
which have met their cumulative performance criteria have been
included in the dilution calculation.
Weighted average number of ordinary shares (diluted)
2014 2013
---------------------------------------- ------------ ------------
Weighted average number of ordinary
shares at 31 December 133,902,247 133,643,311
Effect of share options in issue which
have a dilutive effect 670,920 289,968
---------------------------------------- ------------ ------------
Weighted average number of ordinary
shares (diluted) at 31 December 134,573,167 133,933,279
---------------------------------------- ------------ ------------
8 Circulation to shareholders
The consolidated financial statements will be sent to
shareholders on or about 23 March 2015. Further copies will be
available on request from the Company Secretary, Bovis Homes Group
PLC, The Manor House, North Ash Road, New Ash Green, Longfield,
Kent, DA3 8HQ.
Further information on Bovis Homes Group PLC can be found on the
Group's corporate website www.bovishomesgroup.co.uk, including the
slide presentation document which will be presented at the Group's
results meeting on 23 February 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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