TIDMBVS
RNS Number : 1621W
Bovis Homes Group PLC
17 August 2015
17 August 2015
BOVIS HOMES GROUP PLC
RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015
Strong financial performance and dividend growth reflect
successful delivery of strategy
Bovis Homes Group PLC today announces its half year results for
the six months ended 30 June 2015.
Financial and operational highlights for H1 2015
H1 2015 H1 2014 Change
---------------------------- ---------- ---------- ---------
Revenue GBP350.7m GBP322.1m +9%
Operating profit GBP54.3m GBP51.2m +6%
Net profit * GBP56.0m GBP51.3m +9%
Net profit margin 16.0% 15.9% +0.1ppts
Profit before tax GBP53.8m GBP49.4m +9%
Basic earnings per
share 32.1p 28.8p +11%
Dividend per share 13.7p 12.0p +14%
Return on capital employed
** 15.6% 13.4% +2.2ppts
Net debt GBP58.8m GBP45.3m
* Net profit is operating profit plus Group share of joint
venture profits
** Return on capital employed ("ROCE") is net profit for 12
months to 30 June divided by average of actual opening and closing
invested capital
-- Record number of legal completions at 1,525 homes
(H1 2014: 1,487 homes)
-- Average sales price on private legal completions,
excluding PRS homes, of GBP264,200, 10% higher than
H1 2014 (GBP239,500) driven by mix and improvements
in market house prices
-- 2,687 consented plots on 15 sites added to the land
bank in the first half with a further 573 plots
on five sites added since 30 June 2015
-- Consented land bank of 19,081 plots on 135 sites
at 30 June 2015 (31 December 2014: 18,062 plots;
128 sites)
-- Strong investment in strategic land with the Group
holding 23,287 strategic plots across 86 sites (31
December 2014: 21,350 strategic plots; 76 sites)
-- Average active sales outlets in the first half year
of 100 (H1 2014: 93), an 8% increase
Current trading and outlook
-- Cumulative sales achieved to 14 August for 2015
delivery of 3,768 homes, with the Group on track
to achieve expected volume for full year
-- Production achieved to 14 August 11% ahead of the
same period in 2014 provides strong base for delivery
of the planned volume for 2015 and work in progress
for 2016
-- Capital turn in 2015 expected to be in excess of
1.0 times with improving net profit margin, leading
to strong increase in ROCE
Flexible strategy to deliver strong returns and reach
steady state output
-- Focused on growth during positive housing market
conditions with continuous assessment of housing
cycle
-- Taking advantage of significant land acquisition
opportunities at higher ROCE
-- Evolving Group structure to manage future growth
-- Increased revenue with improved capital efficiency
driving higher financial returns
-- Confidence in delivery of strategy supports intention
to pay a dividend of 40 pence per share in 2015
(2014: 35 pence)
Commenting on the results, David Ritchie, Chief Executive of
Bovis Homes Group PLC said:
"We have delivered a strong first half performance in 2015 with
a record number of legal completions and a further improvement in
return on capital employed. Our long term land investment in high
quality locations, including delivery from strategic land, is
providing a consented land bank which supports growth in active
sales outlets leading to increased volumes.
I am pleased to report that significant land opportunities
continue to be available at higher returns meaning disciplined
investment in consented land should underpin future growth in
shareholder returns. With positive market conditions prevailing, we
continue to assess the housing cycle and will adapt our strategy
appropriately. We anticipate that the addition of around 40 sites
per annum will support our medium term growth strategy to deliver
volumes of between 5,000 and 6,000 new homes each year.
For 2015, we are on track to deliver our expected volume of new
homes and remain confident in our outlook for the year as a whole.
The combination of strong revenue growth and higher profit margins
with improved capital efficiency will drive higher capital turn and
return on capital employed. With this anticipated improvement in
returns, the Board intends to increase the full year dividend to 40
pence per share."
Enquiries: David Ritchie, Results Reg Hoare / James
Chief Executive issued by White
Earl Sibley, / Giles Robinson
Finance Director
Bovis Homes Group MHP Communications
PLC
On 17 August - tel: 020 On 17 August - tel:
3128 8788 020 3128 8756
Thereafter - tel: 01474
876200
Analysts wishing to remotely listen in to the presentation at
09.30am may dial +44 (0)20 3139 4830 followed by the participant
code 66871234#.
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.
Introduction
Bovis Homes continues to deliver successfully its growth
strategy and is on track to deliver increased shareholder returns
during the current financial year. The Group's high quality land
bank, including conversion from strategic land, is facilitating
volume growth at strong sales prices and high profit margins. This,
combined with higher capital turn, underpins achievement of the
Group's growth objectives.
The positive housing market conditions in the UK continue with
growth in both transaction levels and sales prices. Housing demand
continues to run ahead of new housing supply with the availability
of development land supported by increasing levels of planning
permissions. The Government has an ambition for the country to
build over 200,000 new homes a year and is supporting new
housebuilding through its commitment to Help to Buy and driving
land supply through the planning process.
Strategic plan
The Group's strategic plan remains to deliver growth in
shareholder returns from:
-- Disciplined land investment, both consented and strategic, to
grow the business in a controlled way towards a steady state of
between 5,000 and 6,000 new homes per annum
-- Investment in people to allow the continuous evolution of the
Group's structure to manage this future growth
-- Ongoing assessment of housing cycle with flexibility to adapt
the plan to changes in the market
-- Strong operational execution of the plan which has been
further evidenced by the first half performance
Land investment
The Group continues to implement its land investment strategy,
including strong levels of conversion from strategic land, to
provide growth in volume at strong sales prices and high profit
margins. The aim to acquire c40 new sites each year is supported by
the rate of land acquisitions during 2014 and H1 2015. As a result
the Group remains on track to increase its number of owned
consented sites during the next few years. Ongoing investment at
this rate each year will enable the Group to operate from the
required average number of sales outlets to deliver around 5,000 to
6,000 new homes annually.
The investment is focused in the Group's targeted, primarily
Southern, geographies within which the Group believes there is
strong market demand for housing and sufficient supply of land to
fulfil its growth ambitions in the current market environment.
Evolving Group structure to manage future growth
As planned, in order to effectively manage the increased annual
volume and support growth the current structure of six operating
regions will be increased to eight regions in 2016. Firstly, the
existing Central region will be split into a West Midlands region
and an East Midlands region and secondly, the fledgling Thames
Valley region will become operational during 2016.
In order to manage this growth, the management team will be
strengthened through promotions from within the business. Keith
Carnegie (currently Central Division Managing Director) will take
up the new role of Chief Operating Officer from 1 January 2016
reporting to David Ritchie. Keith will oversee the key Group wide
functions to maintain the required level of support to the more
extensive operations. The two operating divisions, each overseeing
four regions, will continue to report directly to David Ritchie and
will be headed up by existing members of the Group's senior
management team.
The evolved structure will ensure the Group continues to operate
a decision making and control environment that aims to make high
quality business choices in an agile manner, while managing risk
effectively through short lines of management control.
Continually assessing the housing cycle
The growth strategy is progressing well during the current
positive housing market conditions. The Group continues to assess
the housing cycle and has the ability to adapt quickly. Robust
discipline in the investment strategy is demonstrated by the
acquisitions made at above hurdle rate margins and the improving
capital turn. The processes in place enable the Group to stop its
land investment quickly when required and adjust the overall land
holdings as the cycle evolves. The long term investment strategy,
including the ambition to source around 50% of consented land from
strategic land, provides greater flexibility of land supply in a
changing economic environment as well as contributing sites with
strong sales prices and high profit margins.
Strong operational execution
In the current cycle the Group has increased investment in land
with strong profit margins and increased capital turn. The record
investment in 42 sites during 2014 has been followed by a strong
level of investment in the current year to date. This investment in
the land bank is delivering additional sales outlets and growth in
volume in line with the strategy.
The Group is on track to deliver its expected volume of legal
completions in 2015. The average sales price is improving due to
further mix improvements and market-wide house price rises. The
Group expects its capital turn to be in excess of 1.0 times for
2015. Looking further forward with net profit margins improving
towards 20%, a ROCE of at least 20% is expected to be achieved in
2016.
Given the Group's progress in executing its strategy, its
confidence in delivering strong growth in returns and having
considered the current modest levels of net debt, the Board intends
to pay total dividends for 2015 of 40 pence per share.
Operational Review
Revenue
The Group generated total revenue of GBP350.7 million during the
first half of 2015, an increase of 9% compared to GBP322.1 million
in H1 2014.
Units H1 2015 H1 2014
---------------------------------------- ------- -------
Private legal completions 1,079 1,107
Private Rental Sector legal completions 101 106
Social legal completions 345 274
----------------------------------------- ------- -------
Total legal completions 1,525 1,487
----------------------------------------- ------- -------
Revenue (GBPm)
Private legal completions (including
PRS) 299.1 282.9
Social legal completions 39.9 29.3
----------------------------------------- ------- -------
Revenue from legal completions 339.0 312.2
Other revenue 3.5 2.9
----------------------------------------- ------- -------
Housing revenue 342.5 315.1
Land sales revenue 8.2 7.0
----------------------------------------- ------- -------
Total revenue 350.7 322.1
----------------------------------------- ------- -------
Revenue from legal completions in H1 2015 was GBP339.0 million,
9% ahead of the same period in the prior year. With other revenue
of GBP3.5 million (H1 2014: GBP2.9 million), housing revenue was
GBP342.5 million (H1 2014: GBP315.1 million). Two land sales were
achieved during H1 2015 with revenue of GBP8.2 million (H1 2014:
GBP7.0 million).
The Group achieved a record number of 1,525 legal completions in
H1 2015, a 3% increase on the first half of 2014 (1,487 homes). As
previously guided, the Group's legal completion profile in 2015 is
expected to be more weighted to the second half of the year than
was the case in the prior year (H1 2014: 41%). Of total legal
completions, 1,079 were private homes (H1 2014: 1,107 homes) and a
further 101 homes were completed under Private Rental Sector (PRS)
transactions. Social homes comprised 23% of total legal completions
(345 homes), compared to 18% (274 homes) in H1 2014, reflecting the
prevailing mix of social units in the land bank.
In the first half of 2015 the average sales price of homes
legally completed increased by 6% to GBP222,300 (H1 2014:
GBP210,000). The average sales price of private legal completions,
excluding PRS, was 10% higher at GBP264,200 (H1 2014: GBP239,500),
benefiting from the mix effect of higher sales prices on new sites
and market house price improvements. The average private sales
price per square foot increased by 5% in H1 2015 compared to that
achieved in H1 2014. The average sales price for PRS homes was
GBP138,300 (H1 2014: GBP167,500), reflecting their location and the
smaller product delivered under these deals.
Net profit
The Group increased net profit for the six months ended 30 June
2015 by 9% to GBP56.0 million at a net profit margin of 16.0% (H1
2014: GBP51.3 million at a net profit margin of 15.9%). Net profit
included GBP1.7 million related to profits from the Group's
interest in joint ventures (H1 2014: GBP0.1 million).
The gross margin achieved in H1 2015 was 25.1% (H1 2014: 24.8%)
and included the contribution from two land sales. Housing gross
margin was 24.6% (H1 2014: 25.0%) which was generated by an
increasing contribution from sites acquired since the downturn,
offset by the increased proportion of lower margin social units in
the mix in the first half year. The effects of house price
inflation across the market offset the impact of increased build
costs, enabling profit margins on sites to be maintained.
Construction costs for legal completions in the first half of 2015
increased to GBP117,300 per unit, circa 10% higher than H1 2014,
reflecting the ongoing increase in average size of product and
geographic mix, as well as the inflationary impacts of labour and
materials. The average construction cost per square foot increased
by 6% in H1 2015 compared to H1 2014 reflecting market cost
movements. The land sales profit recognised during H1 2015 was
GBP4.0 million, compared to GBP1.0 million in H1 2014.
Overheads constituted 9.6% of revenue in the first half of 2015
(H1 2014: 8.9%) with the Group investing to support volume growth.
The planned growth in overhead costs of 18% resulted from increased
staff costs to support the larger business, increased sales and
marketing activity supporting the increasing number of active sales
outlets, and the cost of progressing newly acquired sites through
the detailed planning and design phases to start work on site. All
such costs are written off as incurred.
The Group's share of interest in joint ventures includes the
benefit from the revaluation of both the Bovis Peer LLP and IIH Oak
Investors LLP PRS property portfolios in the period ended 30 June
2015.
Profit before tax
Profit before tax of GBP53.8 million comprised net profit of
GBP56.0 million and net financing charges of GBP2.2 million. This
compares to a profit before tax in H1 2014 of GBP49.4 million,
resulting from GBP51.3 million of net profit and GBP1.9 million of
net financing charges. There were no exceptional items in the first
six months of either 2015 or 2014.
Interim dividend
In accordance with the Group's stated intention in respect of
dividends, an interim dividend of 13.7 pence per share has been
declared (2014 interim dividend: 12.0 pence). This represents
slightly over one third of the intended total dividend for 2015 of
40.0 pence per share.
The interim dividend will be paid on 20 November 2015 to holders
of ordinary shares on the register at the close of business on 25
September 2015. The dividend reinvestment plan, introduced in 2012,
gives shareholders the opportunity to reinvest their dividends.
Financing and cashflow
The Group incurred net financing charges of GBP2.2 million in
the first half of 2015 (H1 2014: GBP1.9 million).
Having started the year with net cash of GBP5.0 million,
significant land investment and additional work in progress has
resulted in net debt as at 30 June 2015 of GBP58.8 million (30 June
2014: GBP45.3 million). This comprised GBP28.2 million of cash in
hand, offset by GBP85.0 million of bank debt and GBP2.0 million of
Government loans.
In the first six months of 2015, the Group generated an
operating cash inflow before land expenditure of GBP79.0 million
(H1 2014: GBP107.9 million), demonstrating strong underlying cash
generation from the Group's asset base and investment in work in
progress to support growth. As a result of the Group's land
investments, payments in H1 2015 associated with land purchases
less cash recoveries on land sales were GBP95.3 million (H1 2014:
GBP106.8 million). With a cash outflow from non-trading items of
GBP47.7 million including the dividend payment of GBP30.8 million
(H1 2014: GBP12.7m), the overall net cash outflow for the six
months ended 30 June 2015 was GBP64.0 million (H1 2014: GBP27.3
million).
Taxation
The tax charge was GBP10.8 million on profit before tax of
GBP53.8 million, representing an effective tax rate of 20.1% (H1
2014: tax charge of GBP10.8 million at an effective rate of
21.9%).
Land
H1 2015 H1 2014
----------------------------------- ----------- -----------
Consented plots added 2,687 4,597
Sites added 15 23
Sites owned at period end 135 121
Plots in consented land bank at
period end 19,081 17,702
------------------------------------ ----------- -----------
Average consented land plot cost GBP48,600 GBP45,900
----------------------------------- ----------- -----------
Proportion in South of England 77% 71%
------------------------------------ ----------- -----------
The Group has continued to follow its long term investment
strategy with acquisitions made in prime locations focused in the
South of England. These acquisitions further strengthen the
consented land bank and the Group has strong visibility on
delivering its planned growth for the foreseeable future.
In the six months ended 30 June 2015 the Group added 2,687
consented plots on 15 sites to the land bank at a cost of GBP154
million. These plots have an estimated future revenue of GBP704
million and an estimated future gross profit potential of GBP183
million based on appraisal point sales prices and build costs,
delivering an estimated future gross margin of 25.9%. The average
return on capital employed of the land acquired based on investment
appraisal at the time of acquisition is c29%.
As at 30 June 2015, the Group held conditional contracts to
acquire 1,692 plots on 13 sites, the majority of which are expected
to be added to the consented land bank in the near term. Since 30
June 2015, the Group has added a further 573 consented plots across
five sites, taking the year to date additions to 3,260 consented
plots across 20 sites.
The estimated gross profit potential on the consented land bank
plots as at 30 June 2015, based on prevailing sales prices and
build costs, has increased to GBP1,134 million with a gross margin
of 25.5% (31 December 2014: GBP1,017 million at 25.2%).
Written down land in the land bank at 30 June 2015 made up 5% of
plots (31 December 2014: 6%) and only 3% of the estimated future
revenue from the land bank. The remaining provision on written down
plots as at 30 June 2015 was GBP9.8 million (31 December 2014:
GBP12.9 million).
Strategic land
The successful conversion of strategic land continues to be a
key driver of value for the Group. New strategic land investments
added 2,299 plots into the strategic land bank, giving a total of
23,287 strategic plots at the half year controlled across 86
strategic sites. During the first half of 2015, by virtue of the
timing of delivery of planning consents, the Group converted a
modest 229 plots from the strategic land bank into the consented
land bank.
Good progress has been made on a number of significant strategic
land holdings. These are expected to provide a valuable source of
development land, primarily in the South of England, as planning
consents are achieved. In particular, the Group has either secured
or is in the final stages of securing planning consent on six major
strategic sites at Bishops Stortford (where the first 180 plots
have already been added to the consented land bank), North
Wokingham, Witney, Edwalton, Gravesend and Tavistock. In total
these sites will deliver c3,000 future consented plots to the land
bank with high profit margins and returns above existing hurdle
rates. These sites will be added to the consented land bank once
price notice/option exercise processes are complete and generally
benefit either from significant deferred terms on purchase or the
ability to add the land over a number of years through tranche
drawdown. The strategic land bank reflects positively the Group's
strategy of investment with 68% of the strategic plots being in the
South of England.
The Group has made good progress with its major strategic asset
at Wellingborough. Work has commenced on the initial stages of the
infrastructure project related to the delivery of over 3,000 homes
on the site. The Group owns c1,000 plots within its consented land
bank and controls the balance of in excess of 2,000 plots of land
with planning consent in its strategic land bank. Improvements to
the site's planning consent, combined with amendments to the
relationship with landowners, has enabled the Group to take
positive steps towards a housing start expected in late 2015. The
nature of the Wellingborough development allows the capital for the
project to be deployed progressively through the project. This
investment profile combined with plans by the Group to invite
development partners on to the site are expected to deliver strong
returns for the Group.
The Group expects its strategic land assets will provide strong
replenishment for the consented land bank over the coming years.
The size of this opportunity supports the Group's aim for 50% of
its consented land bank to be sourced through strategic means over
time.
Pensions
The Group had a pension scheme surplus of GBP9.8 million as at
30 June 2015 (31 December 2014: deficit of GBP0.7 million). Scheme
assets grew over the six months to GBP111.8 million from GBP103.4
million. Scheme liabilities decreased to GBP102.0 million from
GBP104.0 million. The movement on the scheme in the six months
primarily relates to a special contribution from the Group into the
scheme of GBP7.8 million and an increase in the discount rate
applied to liabilities, as a result of changes in bond yields.
Net assets
Net assets per share as at 30 June 2015 were 666p as compared to
624p at 30 June 2014.
Analysis of net assets 2015 2014
GBPm GBPm
------------------------------------ ------ ------
Net assets at 1 January 879.1 810.3
Profit after tax for the six months 43.0 38.6
Share capital issued 0.4 0.2
Purchase of own shares (0.1) -
Net actuarial movement on pension
scheme through reserves 2.3 (1.7)
Adjustment to reserves for share
based payments 0.7 0.7
Dividends paid (30.8) (12.7)
------------------------------------- ------ ------
Net assets at 30 June 894.6 835.4
------------------------------------- ------ ------
As at 30 June 2015, net assets were GBP15.5 million higher than
at the start of the year. Inventories increased during the six
months by GBP156.9 million to GBP1,282.4 million. As a result of
the investment in consented land, the land bank increased by
GBP91.0 million to GBP965.7 million. Work in progress increased
from the start of 2015 by GBP62.2 million to GBP287.7 million, as
the Group built a larger number of homes on a greater number of
sites for legal completion in H2 2015, as well as investing in
infrastructure for this greater number of sites. Trade and other
receivables increased by GBP11.8 million to GBP73.2 million, as a
result of increased receivables due from Housing Associations on a
higher number of social legal completions, and a substantial VAT
debtor related to land acquisitions at the half year.
Trade and other payables totalled GBP462.7 million (31 December
2014: GBP360.5 million). Of these, land creditors increased to
GBP264.4 million (31 December 2014: GBP198.2 million), reflecting
the investment in new land benefiting from greater levels of
deferral, and trade and other creditors were GBP198.3 million (31
December 2014: GBP162.3 million), increasing with higher levels of
build activity. Net cash reduced by GBP64.0 million.
Market conditions
In the first half of 2015, the UK housing market has continued
to be robust, with a solid level of mortgage availability and
positive home buyer confidence. The extension of the Government's
Help to Buy scheme has also assisted in maintaining a level of
consumer confidence in the housing market and this shared equity
product continues to have a positive effect on transactional
activity in the new homes market. Mortgage lending is also
supporting activity with monthly approvals reaching a level which
supports over one million housing transactions per year.
The Group supports the recent focus from the Government on
housebuilding, including the continued push to drive the required
level of planning permissions through the system, recognising that
this in turn helps the market for new land to remain disciplined.
The land market continues to be active and the Group continues to
purchase land at, or above, required hurdle rate profit margins and
returns. The recent changes announced by the Government to control
future movements in social affordable rental values are being
reviewed to assess the potential effect on future values available
for affordable rented tenure social housing.
Strong housing demand is leading to overall market pricing
improvements, with the Group having experienced pricing ahead of
expectations across its portfolio of sites. This is most pronounced
in the South East of England and particularly areas with a
proximity to London. Offsetting these pricing improvements is the
impact of rising construction costs. The combination of pricing
gains and cost increases imply relatively stable land values and
sustainable site profit margins.
Current trading
The Group traded from an average of 100 sales outlets during the
first half of 2015 which represented an 8% increase on the
comparative period last year. Weekly private sales rates in the
period remained robust at an average of 0.63 net private
reservations per site against the strong comparative in 2014 of
0.65. The total forward sales position for 2015 delivery, including
legal completions to date, stood at 3,505 homes at 30 June 2015 (30
June 2014: 3,297). At 30 June 2015 the Group was operating from 102
sales outlets as compared to 98 at the same date in 2014.
As at 14 August 2015, the Group had achieved 3,768 sales for
legal completion in 2015. In recent weeks, the Group has also
commenced the building of its private forward order book for 2016.
Sales rates in the summer since the half year have been robust at
0.58 net reservations per site per week compared to 0.45 in the
comparative period of 2014. The average private sales price of
private homes sold for 2015 delivery currently stands at
cGBP260,000 which represents an increase of 8% over the comparable
price at this point in 2014.
Housing production to 14 August 2015 was 11% ahead of the prior
year which provides a strong base for the delivery of the planned
volume for 2015 and a higher level of work in progress for 2016.
Levels of build activity continue to increase and as a result there
is short term excess of demand in the supply chain with resultant
increases in cost. The Group's national agreements with key
material suppliers ensure a steady supply of the required materials
at the agreed prices for this year. Subcontract labour rates have
been increasing ahead of house price increases to date, although
this is considered a short term effect which can be controlled. The
Group is pro-actively addressing the demand for labour through its
apprentice programmes and targeted recruitment, for example
personnel leaving the military. Overall (materials and labour
combined) the annual build cost inflation impacting the current
pipeline of homes for 2015 delivery is estimated at around 7%.
Outlook
The Group remains confident that 2015 will be another successful
year of growth and strong returns. Given the current sales position
and prevailing sales rates, the Group is on track to deliver its
expected volume of legal completions for 2015. The Group expects to
deliver an increase in average sales price and an improvement in
net profit margin in 2015 compared to the prior year. Capital turn
in 2015 is expected to be in excess of 1.0 times.
Looking out to 2016, further growth in profit with an
improvement in net profit margin towards 20%, combined with capital
turn over 1.0 times, is expected to generate a ROCE of at least
20%.
Strong dividends will complement growing ROCE, highlighted by
the Board's intention to pay a dividend of 40 pence per share for
2015. Thereafter, the Board intends to pay approximately one third
of earnings as a dividend with any cash surplus to requirements
contributing to additional dividend payments.
Principal risks and uncertainties
The Group is subject to a number of risks and uncertainties as
part of its activities. The Board regularly considers these and
seeks to ensure that appropriate processes are in place to manage,
monitor and mitigate these risks. The directors consider that the
principal risks and uncertainties facing the Group are those
outlined on pages 28 to 31 of the Annual Report and Accounts 2014,
which is available from www.bovishomesgroup.co.uk. The Group has in
place processes to monitor and mitigate these risks.
Going Concern
As stated in note 1 to the condensed consolidated interim
financial statements, the directors are satisfied that the Group
has sufficient resources to continue in operation for the
foreseeable future, a period of not less than 12 months from the
date of this report. Accordingly they continue to adopt the going
concern basis in preparing the condensed consolidated interim
financial statements.
Bovis Homes Group PLC
Group income statement
For the six months ended 30 Six Six
June 2015 (unaudited) months months Year
ended ended ended
30 June 30 June 31 Dec
2015 2014 2014
GBP000 GBP000 GBP000
----------------------------------- -------- -------- --------
Revenue 350,702 322,060 809,365
Cost of sales (262,596) (242,272) (612,129)
------------------------------------ -------- -------- --------
Gross profit 88,106 79,788 197,236
Administrative expenses (33,800) (28,637) (59,672)
------------------------------------ -------- -------- --------
Operating profit before financing
costs 54,306 51,151 137,564
Financial income 2,205 1,778 3,360
Financial expenses (4,372) (3,706) (7,727)
------------------------------------ -------- -------- --------
Net financing costs (2,167) (1,928) (4,367)
Share of profit of Joint Ventures 1,687 145 287
Profit before tax 53,826 49,368 133,484
Income tax expense (10,809) (10,757) (28,276)
------------------------------------ -------- -------- --------
Profit for the period attributable
to equity holders of the parent 43,017 38,611 105,208
------------------------------------ -------- -------- --------
Earnings per share
Basic 32.1p 28.8p 78.6p
------------------------------------ -------- -------- --------
Diluted 32.0p 28.7p 78.2p
------------------------------------ -------- -------- --------
Group statement of comprehensive income
For the six months ended 30 Six months Six months Year
June 2015 (unaudited) ended ended ended
30 June 30 June 31 Dec
2015 2014 2014
GBP000 GBP000 GBP000
------------------------------------ ---------- ---------- -------
Profit for the period 43,017 38,611 105,208
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
Remeasurements on defined
benefit pension scheme 2,847 (2,254) (7,166)
Deferred tax on actuarial
remeasurements on defined
benefit pension scheme (550) 575 1,481
----------
Total comprehensive income
for the period attributable
to equity holders of the parent 45,314 36,932 96,015
------------------------------------- ---------- ---------- -------
Bovis Homes Group PLC
Group balance sheet
As at 30 June 2015 (unaudited) 30 June 30 June 31 Dec
2015 2014 2014
GBP000 GBP000 GBP000
Assets
Property, plant and equipment 14,024 13,594 13,634
Investments 8,721 6,983 8,107
Restricted cash 1,426 1,995 1,426
Deferred tax assets 1,200 2,100 2,645
Trade and other receivables 1,166 2,158 2,534
Available for sale financial
assets 38,559 43,445 39,433
Retirement benefit assets 9,812 1,030 -
Total non-current assets 74,908 71,305 67,779
---------------------------------- --------- --------- ---------
Inventories 1,282,363 1,097,311 1,125,518
Trade and other receivables 72,067 72,520 58,862
Cash and cash equivalents 28,176 56,710 52,257
Total current assets 1,382,606 1,226,541 1,236,637
---------------------------------- --------- --------- ---------
Total assets 1,457,514 1,297,846 1,304,416
---------------------------------- --------- --------- ---------
Equity
Issued capital 67,174 67,076 67,114
Share premium 214,238 213,610 213,850
Retained earnings 613,202 554,713 598,154
---------------------------------- --------- --------- ---------
Total equity attributable
to equity holders of the parent 894,614 835,399 879,118
---------------------------------- --------- --------- ---------
Liabilities
Bank and other loans 60,000 102,034 47,010
Trade and other payables 127,119 93,328 99,092
Retirement benefit obligations - - 668
Provisions 1,840 2,084 1,840
---------------------------------- --------- --------- ---------
Total non-current liabilities 188,959 197,446 148,610
---------------------------------- --------- --------- ---------
Bank and other loans 26,975 - -
Trade and other payables 335,576 253,052 261,436
Provisions 1,237 1,413 1,236
Current tax liabilities 10,153 10,536 14,016
Total current liabilities 373,941 265,001 276,688
---------------------------------- --------- --------- ---------
Total liabilities 562,900 462,447 425,298
---------------------------------- --------- --------- ---------
Total equity and liabilities 1,457,514 1,297,846 1,304,416
---------------------------------- --------- --------- ---------
These condensed consolidated interim financial statements were
approved by the Board of directors on 14 August 2015.
Bovis Homes Group PLC
Group statement of changes in equity
For the six months ended
30 June 2015 Total Issued Share Total
(unaudited) retained capital premium
earnings
GBP000 GBP000 GBP000 GBP000
------------------------------- --------- ------- ------- -------
Balance at 1 January
2015 598,154 67,114 213,850 879,118
Total comprehensive
income and expense 45,314 - - 45,314
Issue of share capital - 60 388 448
Purchase of own shares (173) - - (173)
Share based payments 745 - - 745
Dividends paid to shareholders (30,838) - - (30,838)
Balance at 30 June 2015 613,202 67,174 214,238 894,614
-------------------------------- --------- ------- ------- -------
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
-------------------------------- --------- ------- ------- -------
Balance at 1 January
2014 529,786 67,048 213,428 810,262
Total comprehensive
income and expense 36,932 - - 36,932
Issue of share capital - 28 182 210
Share based payments 710 - - 710
Dividends paid to shareholders (12,715) - - (12,715)
Balance at 30 June 2014 554,713 67,076 213,610 835,399
-------------------------------- --------- ------- ------- -------
Bovis Homes Group PLC
Group statement of cash flows
For the six months ended 30 Six Six
June 2015 (unaudited) months months Year
ended ended ended
30 June 30 June 31 Dec 2014
2015 2014
GBP000 GBP000 GBP000
----------------------------------- -------- -------- -----------
Cash flows from operating
activities
Profit for the period 43,017 38,611 105,208
Depreciation 996 899 1,853
Revaluation of available for
sale assets (224) (172) (1,288)
Financial income (2,205) (1,778) (3,360)
Financial expense 4,372 3,706 7,727
Profit on sale of property,
plant and equipment (43) (115) (115)
Equity-settled share-based
payment expense 573 710 838
Income tax expense 10,809 10,757 28,276
Share of results of Joint
Ventures (1,687) (145) (287)
Increase in trade and other
receivables (9,036) (26,913) (13,956)
Increase in inventories (156,844) (126,295) (154,501)
Increase in trade and other
payables 100,067 99,687 116,475
(Increase)/decrease in provisions
and employee benefits (7,575) 57 (3,795)
------------------------------------ -------- -------- -----------
Net cash from operations (17,780) (991) 83,075
Interest paid (2,317) (1,530) (3,746)
Income taxes paid (13,547) (9,595) (23,708)
------------------------------------ -------- -------- -----------
Net cash from operating activities (33,644) (12,116) 55,621
------------------------------------ -------- -------- -----------
Cash flows from investing
activities
Interest received 37 13 107
Acquisition of property, plant
and equipment (1,395) (1,090) (2,084)
Proceeds from sale of plant
and equipment 52 238 238
Movement in loans with Joint
Ventures 512 (1,295) (2,751)
Movement in investment in
Joint Ventures 473 (718) (373)
Dividends received from Joint
Ventures 250 283 283
(Investment)/reduction in
restricted cash - (172) 397
Net cash from investing activities (71) (2,741) (4,183)
------------------------------------ -------- -------- -----------
Cash flows from financing
activities
Dividends paid (30,838) (12,715) (28,789)
Proceeds from the issue of
share capital 448 210 488
Drawdown of borrowings 40,024 72,047 17,095
Net cash from financing activities 9,634 59,542 (11,206)
------------------------------------ -------- -------- -----------
Net (decrease)/increase in
cash and cash equivalents (24,081) 44,685 40,232
Cash and cash equivalents
at start of period 52,257 12,025 12,025
------------------------------------ -------- -------- -----------
Cash and cash equivalents
at end of period 28,176 56,710 52,257
------------------------------------ -------- -------- -----------
Notes to the condensed consolidated interim financial
statements
1 Basis of preparation
Bovis Homes Group PLC ('the Company') is a company domiciled in
the United Kingdom. The condensed consolidated interim financial
statements of the Company for the six months ended 30 June 2015
comprise the Company and its subsidiaries (together referred to as
'the Group') and the Group's interest in associates and joint
ventures.
The condensed consolidated interim financial statements were
authorised for issue by the directors on 14 August 2015. The
financial statements are unaudited but have been reviewed by PwC
LLP the Company's auditors who were appointed on 15 May 2015.
The condensed consolidated interim financial statements do not
constitute statutory accounts within the meaning of Section 434 of
the Companies Act 2006.
The figures for the half years ended 30 June 2015 and 30 June
2014 are unaudited. The comparative figures for the financial year
ended 31 December 2014 are an extract from the Group's statutory
accounts for that financial year. Those accounts have been reported
on by the Company's auditors, at the time KPMG LLP, and delivered
to the Registrar of Companies. The report of the auditors was (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 preparation of a condensed set of financial statements
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amount of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Judgements made by management in the application of adopted
IFRSs that have a significant effect on the financial statements
and estimates with a significant risk of material adjustment in
following years have been reviewed by the directors and remain
those published in the Company's consolidated financial statements
for the year ended 31 December 2014.
The condensed consolidated interim financial statements have
been prepared in accordance with IAS34 'Interim Financial
Reporting' as endorsed by the EU. As required by the Disclosure and
Transparency Rules of the Financial Conduct Authority, the
condensed consolidated interim financial statements have been
prepared by applying the accounting policies and presentation that
were applied in the preparation of the Company's published
consolidated financial statements for the year ended 31 December
2014, which were prepared in accordance with IFRSs as adopted by
the EU.
The directors are satisfied that the Group has sufficient
resources to continue in operation for the foreseeable future, a
period of not less than 12 months from the date of this report.
Accordingly they continue to adopt the going concern basis in
preparing the condensed consolidated interim financial
statements.
2 Seasonality
In common with the rest of the UK housebuilding industry,
activity occurs year round, but there are two principal selling
seasons: spring and autumn. As these fall into two separate half
years, the seasonality of the business is not pronounced, although
it is biased towards the second half of the year under normal
trading conditions.
3 Segmental reporting
All revenue and profit disclosed relate to continuing activities
of the Group and are derived from activities performed in the
United Kingdom.
Notes to the condensed consolidated interim financial statements
continued
4 Earnings per share
Six months Six months Year
ended ended ended
30 June 30 June 31 Dec
2015 2014 2014
(Unaudited) pence pence pence
--------------------------- ---------- ---------- ------
Basic earnings per share 32.1 28.8 78.6
Diluted earnings per share 32.0 28.7 78.2
---------------------------- ---------- ---------- ------
Basic earnings per share
Basic earnings per ordinary share for the six months ended 30
June 2015 is calculated on a profit after tax of GBP43,017,000 (six
months ended 30 June 2014: profit after tax of GBP38,611,000; year
ended 31 December 2014: profit after tax of GBP105,208,000) over
the weighted average of 134,081,809 (six months ended 30 June 2014:
133,845,797; year ended 31 December 2014: 133,902,247) ordinary
shares in issue during the period.
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2015
was based on the profit attributable to ordinary shareholders of
GBP43,017,000 (six months ended 30 June 2014: profit after tax of
GBP38,611,000; year ended 31 December 2014: profit after tax of
GBP105,208,000).
The Group's diluted weighted average ordinary shares potentially
in issue during the six months ended 30 June 2015 was 134,342,093
(six months ended 30 June 2014: 134,489,646; year ended 31 December
2014: 134,573,167).
5 Dividends
The following dividends per qualifying ordinary share were
settled by the Group.
(Unaudited) Six
months Six months Year
ended ended ended
30 June 30 June 31 Dec
2015 2014 2014
GBP000 GBP000 GBP000
May 2015: 23.0p (May 2014:
9.5p) 30,838 12,715 12,715
November 2014: 12.0p - - 16,074
---------------------------- ------- ---------- -------
30,838 12,715 28,789
------- ---------- -------
The Board determined on 14 August 2015 that an interim dividend
of 13.7p for 2015 be paid. The dividend will be settled on 20
November 2015 to shareholders on the register at the close of
business on 25 September 2015. This dividend has not been
recognised as a liability at the balance sheet date.
Notes to the condensed consolidated interim financial statements
continued
6 Available for sale assets
Available for sale financial assets - shared equity
Receivables on extended terms granted as part of a sales
transaction are secured by way of a legal charge on the relevant
property, categorised as an available for sale financial asset, and
are stated at fair value. Gains and losses arising from changes in
fair value are recognised directly in equity in retained earnings,
with the exceptions of impairment losses, the impact of changes in
future cash flows and interest calculated using the 'effective
interest rate' method, which are recognised directly in the income
statement. Where the investment is disposed of, or is determined to
be impaired, the cumulative gain or loss previously recognised in
equity is included in the income statement for the period. Given
its materiality, this item is being disclosed separately on the
face of the balance sheet.
Available for sale financial assets relate to legal completions
where the Group has retained an interest through agreement to defer
recovery of a percentage of the market value of the property,
together with a legal charge to protect the Group's position. The
Group participates in three schemes. 'Jumpstart' schemes are
receivable 10 years after recognition with 3% interest charged
between years 6 to 10. The 'HomeBuy Direct' and 'FirstBuy' schemes
are operated together with the Government. Receivables are due 25
years after recognition with interest charged from year 6 onwards
at a base value of 1.75% plus annual RPI increments. These assets
are held at fair value being the present value of expected future
cash flows taking into account the estimated market value of the
property at the estimated date of recovery.
30 June 30 June 31 Dec
2015 2014 2014
GBP000 GBP000 GBP000
------------------------------ ------- ------- ------
Non-current asset - Available
for sale assets 38,559 43,445 39,433
------------------------------- ------- ------- ------
Key assumptions
30 June 30 June 31 Dec
2015 2014 2014
------------------------------ ------- ------- ------
Discount rate, incorporating
default rate 9.0% 7.9% 9.0%
Average house price inflation
per annum for the next three
years 3.4% 3.2% 3.3%
------------------------------- ------- ------- ------
Reconciliation of shared equity asset
2015
GBP000
------------------------------------------- -------
Balance at 1 January 39,433
Redemptions (2,689)
Revaluation taken through income statement 224
Imputed interest 1,591
-------------------------------------------- -------
Balance at 30 June 38,559
-------------------------------------------- -------
Sensitivity - available for sale financial assets
2015 2014
increase increase
assumptions assumptions
by 1% by 1%
------------------------------------- ----------- -----------
Discount rate, incorporating default
rate (2,161) (2,844)
House price inflation 2,796 1,458
--------------------------------------- ----------- -----------
Notes to the condensed consolidated interim financial statements
continued
7 Related party transactions
Transactions between fellow subsidiaries, which are related
parties, during the first half of 2015 have been eliminated on
consolidation, as have transactions between the Company and its
subsidiaries during this period. The Group's associates and joint
ventures are disclosed in the Group's Annual Report and Accounts
2014.
Transactions between the Group and key management personnel in
the first half of 2015 were limited to those relating to
remuneration, previously disclosed as part of the Group's Report on
directors' remuneration published with the Group's Annual Report
and Accounts 2014. No material change has occurred in these
arrangements in the first half of 2015.
In January 2015 Bovis Homes Limited entered into a contract with
the Bovis Homes Pension Scheme for the sale of a portfolio of
homes. During the six month ended June 2015 all 54 homes under the
contract were legally completed for a total consideration of
GBP10,719,500.
Transactions with Joint Ventures
Bovis Homes Limited is contracted to provide property and
letting management services to Bovis Peer LLP. Fees charged in the
period, inclusive of VAT, were GBP76,000 (six months ended 30 June
2014: GBP73,000; year ended 31 December 2014: GBP148,000).
Loans totalling GBP1,575,355 were provided to Bovis Peer LLP in
prior years at an annual interest rate of LIBOR plus 2.4%. During
the period these were reduced to GBP150,000. No other loans or
sales of inventory have taken place. Interest charges made in
respect of the loans were GBP9,406 (six months ended 30 June 2014:
GBP19,000; year ended 31 December 2014: GBP37,000).
Bovis Homes Limited is part of a Joint Venture, IIH Oak
Investors LLP, to invest in 190 private rental homes. During the
period 18 homes were sold to the Joint Venture (six months ended 30
June 2014: 46; year ended 31 December 2014: 129) for cash
consideration of GBP4,780,302 (six months ended 30 June 2014:
GBP11,136,143; year ended 31 December 2014: GBP28,787,381). 13% of
the revenue and profit in respect of these sales has been
eliminated from the Group results in accordance with IFRS 11.
As at 30 June 2015 loans of GBP3,363,908 were in place with IIH
Oak Investors LLP at an interest rate of 6%. Interest charges made
in respect of the loans were GBP152,000 (six months ended 30 June
2014: nil; year ended 31 December 2014: nil).
8 Reconciliation of net cash flow to net cash
Six Six
months months Year
ended ended ended
30 June 30 June 31 Dec
2015 2014 2014
(Unaudited) GBP000 GBP000 GBP000
---------------------------------- ------- -------- -------
Net (decrease)/increase in
cash and cash equivalents (24,081) 44,685 40,232
Drawdown of borrowings (40,024) (71,999) (17,095)
Fair value adjustments to
interest rate swaps 59 77 149
Fair value adjustment to interest
free loans - (48) -
Net cash at start of period 5,247 (18,039) (18,039)
----------------------------------- ------- -------- -------
Net cash at end of period (58,799) (45,324) 5,247
----------------------------------- ------- -------- -------
Analysis of net cash:
Cash 28,176 56,710 52,257
Bank and other loans (86,975) (101,903) (46,951)
Fair value of interest rate
swaps - (131) (59)
Net cash (58,799) (45,324) (5,247)
----------------------------------- ------- -------- -------
Notes to the condensed consolidated interim financial statements
continued
9 Circulation to shareholders
This interim report is sent to shareholders. Further copies are
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 analyst presentation document which will be presented
at the Group's results meeting on 17 August 2015.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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