TIDMBVS
RNS Number : 2669H
Bovis Homes Group PLC
16 May 2014
16 May 2014
Bovis Homes Group PLC
Interim Management Statement
Significant increase in activity driving strongly improving
returns
Bovis Homes Group PLC is holding its Annual General Meeting at
12.00pm today. This statement comments on the Group's current
trading, financial performance and outlook for the current
financial year. This statement covers the period from 1 January
2014 to date and supplements the update given with the 2013 Final
Results on 24 February 2014.
Highlights
-- 78% increase in cumulative private reservations achieved to
date for 2014 delivery including 253 units from innovative Private
Rental Sector deals to 2,096 (2013 comparative: 1,176)
-- Ongoing mix benefits combined with sales prices achieved
ahead of expectations producing a strong increase in average sales
price. Sales price increases expected to at least cover build cost
increases
-- House build production stepping up to meet increased sales
activity with 80% more homes built in the first four months of 2014
compared to the same period in 2013
-- Maintaining a disciplined approach to investing in land,
significant progress made with 3,273 consented plots across 17
sites added to the land bank in 2014 to date with a strong pipeline
of contracted and agreed terms land deals being progressed for
further acquisition in 2014
-- The Group is now confident of achieving a strong increase in
return on capital employed to at least 15% in 2014, assuming stable
market conditions
David Ritchie, Chief Executive, commented:
"Strong trading since the start of 2014 provides further
evidence of the ongoing successful delivery of the Group's growth
strategy. When combined with the positive market backdrop, this has
enabled the Group to balance the delivery of strong sales rates
with positive pricing improvements. With revenues increasing
significantly and profit margins rising, the Group is confident of
delivering a further strong improvement in return on capital
employed in 2014, assuming stable market conditions. The Group
continues to enjoy major success in land investment which will
enable the business to drive strong shareholder returns in future
years."
Current trading
The Group has achieved 1,151 net private reservations in the 18
weeks to 9 May 2014 (2013: 927), a 24% increase year on year. Net
private reservations per site per week have improved by 21% to 0.69
(2013: 0.57). In addition, 253 homes have been contracted for 2014
legal completion as part of the innovative Private Rental Sector
transactions previously announced.
During the 18 weeks to 9 May 2014, the Group was operating from
an average of 93 active sales outlets (2013 comparative: 90). This
is expected to grow further during the year as the number of new
sites progressing to launch continues to exceed an increasing
number of anticipated sales outlet closures.
Having started 2014 with 692 forward sold private homes, as at 9
May 2014 the Group's total private sales for 2014 delivery
(including legal completions in the year to date) were 2,096 units
(2013: 1,176), an increase of 78%. In addition, the Group has circa
700 social housing units which it expects to deliver this year.
This cumulative position reflects the strong sales performance this
year which has been driven by the Group's growth strategy alongside
positive market conditions. The Group remains confident of its
ability to deliver both its targeted volume growth for 2014 and an
enhanced forward sales position for 2015.
Sales prices continue to increase ahead of management
expectations with net prices achieved on private reservations to
date averaging circa 3% ahead of target unit prices established in
late 2013. List prices have been increased progressively in the
year to date and the use of sales incentives has moderated, both
having a positive effect on the net sales prices achieved. With
ongoing capacity constraints in the material and labour supply
markets, build costs for 2014 legal completions are expected to
increase by circa 5%. Positively, sales price increases are
expected to at least cover this level of cost increase.
Compared to the first half of 2013, the Group expects to deliver
a materially higher proportion of this year's legal completions in
the first half of 2014 with an improved average sales price and
increased profit margin, both primarily due to improved mix.
With strong growth in sales activity, the Group is stepping up
home production activity from 2013 to meet its volume targets for
2014. In the first four months of 2014 production was 80% higher
than the first four months of 2013, demonstrating the Group's
increased capacity to deliver new homes. The Group is aware of the
importance of its positive contribution to the Government's
ambition to increase new homes production.
Land acquisitions
The Group has made significant progress in investing in land
demonstrating its strong capability to drive value through the land
acquisition process and exploit its positive reputation in the land
market.
To date in 2014, the Group has added 3,273 consented plots on 17
sites to the land bank and controls under conditional contract a
further 808 plots on eight sites which are expected to be added to
the land bank during the remainder of 2014. There exists a strong
pipeline of terms agreed land deals which will deliver further
acquisitions during 2014. The Group continues to apply discipline
in its approach to land acquisition with consistent hurdle rates
and no future house price inflation included in its land
appraisals.
Balance sheet
With significant land payments made in 2014 to date, the Group
had net debt of GBP96 million as at 9 May 2014. This net debt
position is expected to be lower at 30 June 2014.
Outlook
Given the current sales position for 2014 combined with improved
sales prices and profit margin, the Group is confident of achieving
its targets in 2014. With the aim to deliver between 3,650 and
3,850 legal completions in 2014 and a clear focus on controlling
the capital employed of the Group, return on capital employed is
now expected to increase strongly to at least 15% in 2014 (2013:
10.4%).
The outlook for the Group continues to be very positive as a
result of the land investment made to date which will enable the
delivery of strong shareholder returns in the future.
Board
As of today's date Colin Holmes retires from the Board. Colin
has been a non-executive director since 2006 and has been Chairman
of the Remuneration Committee since 2008. The Board would like to
thank Colin for all of his dedication and hard work and wish him
every success in the future.
Conference call for analysts and investors
David Ritchie, Chief Executive and Jonathan Hill, Group Finance
Director of Bovis Homes will host a conference call at 08:30am
today, Friday 16 May 2014 to discuss the Interim Management
Statement.
To access the call please dial +44 (0)20 3139 4830 and enter
pincode 96717709# when prompted. Please dial in five minutes prior
to the start of the conference call to allow time for registration.
A recording of the conference call will be available until midnight
on Friday 6 June 2014. To access the playback facility, please dial
020 3426 2807 and enter conference reference 648297# when
prompted.
Certain statements may be forward looking statements. Forward
looking statements involve evaluating a number of risks,
uncertainties or assumptions that could cause actual results to
differ materially from those expressed or implied by those
statements. Forward looking statements regarding past trends,
results or activities should not be taken as a representation that
such trends, results or activities will continue in the future.
Undue reliance should not be placed on forward looking
statements.
-ENDS-
Enquiries: David Ritchie, Chief Executive
Jonathan Hill, Finance Director
Bovis Homes Group PLC
Tel: 07855 432 699
Andrew Jaques / Reg Hoare / James White
MHP Communications
Tel: 0203 3128 8100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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