Bovis Homes Group PLC Trading update (2240G)
19 November 2015 - 6:00PM
UK Regulatory
TIDMBVS
RNS Number : 2240G
Bovis Homes Group PLC
19 November 2015
19 November 2015
Bovis Homes Group PLC
Trading update
Bovis Homes Group PLC is today issuing a trading update ahead of
its financial year end on 31 December 2015.
Current trading
The Group's sales rate has strengthened in the autumn sales
period. Since the beginning of September, we have achieved a weekly
private sales rate 20% ahead of the prior year (excluding PRS) at
0.62 reservations per site. We have sufficient reservations to
deliver the planned volume growth of over 8% in 2015, which would
represent a record volume of homes for the Group, and construction
activity to complete homes targeted for this year is on track.
Sales prices have continued to be robust and we expect the average
sales price for 2015 to be circa 7% ahead of the prior year. As a
result of this good progress, the Group is set to deliver an
increase in capital turn to over one times and a further
improvement in return on capital employed for the full year.
Following planning delays on a number of new high profit margin
sites, the overall mix of homes for 2015 is more weighted to
existing sites than previously anticipated. In the short term,
subcontract labour availability remains the key constraint on
delivering increased production which has driven cost inflation
although this is showing signs of moderating. Accordingly, whilst
sales prices continue to move ahead, we now expect the
aforementioned mix effect combined with the impact of higher cost
increases to lead to an operating profit margin in 2015 only
marginally ahead of the prior year (2014: 17%).
The Group continues to deliver strong profit from targeted land
sales, mainly related to long term strategic sites, in line with
the overall land strategy and focus on capital efficiency.
We have made good progress with reservations for 2016, which
stand at around 1,650 homes, 18% higher than at the same point last
year. In recent weeks we have been active on 107 sales outlets and
have been trading from an average of 103 sales outlets in the year
to date.
Structure
We announced the launch of two new regions in the second half of
2015 to support the growth of the business over the next few years.
Our new West Midlands and East Midlands regions have been created
by splitting our existing Central region. The recently launched
Thames Valley region is gearing up to deliver its first new homes
having secured planning on its first three sites. This new
structure will provide improved operational focus in our regional
businesses and will support effective management of our growth
strategy.
Land
During 2015 to date, we have added 25 consented sites and circa
4,000 plots. The average return on capital employed of the land
acquired in 2015 based on investment appraisal at the time of
acquisition is circa 28%.
Our growth strategy continues to be focused on investment in
high quality land in the Group's targeted areas. A large pipeline
of terms agreed land opportunities is in place, which when combined
with expected strategic land successes provides confidence in the
Group's ability to deliver our planned future growth. The consented
land market continues to be disciplined with land values reacting
sensibly to changes in housing market conditions.
We continue to make good progress with our valuable strategic
land assets. Since the half year, planning consent has been
achieved for 750 units at Tavistock and 690 units at Wokingham. We
are also progressing 386 units at Edwalton, 257 units at Witney and
201 units at Gravesend where planning has been confirmed subject to
finalisation of S106 agreements. During October, a resolution to
grant planning consent was achieved for circa 1,700 units at North
Whiteley and last week, a resolution to grant planning was secured
for circa 1,000 units at Bexhill. All of these sites are controlled
through call options which will allow the Group to acquire the
sites at a discount to the agreed market value. Some of these sites
are able to be acquired on tranche drawdown or using deferred
payment terms which will enable the Group to manage the capital
related to these sites. Development partners are also being
identified for the larger sites as appropriate.
In summary, David Ritchie, Chief Executive, commented:
"Bovis Homes is taking another step forward with its growth
strategy in 2015. We continue to trade well supported by a strong
market backdrop and have in place the required pipeline of sales to
deliver our planned volume growth for the full year.
"The growth in volume and increase in sales prices are expected
to deliver strong revenue growth and a capital turn in excess of
one. Whilst our operating profit margin is now expected to be only
marginally ahead of the prior year, the Group remains on track to
deliver a further increase in return on capital employed in
2015.
"We continue to invest in high quality land, including the
successful conversion of our valuable strategic land assets, and
remain confident of delivering our strategy of growth in volumes
and returns."
Enquiries: David Ritchie, Chief Executive
Earl Sibley, Group Finance Director
Bovis Homes Group PLC
Tel: 07855 432 699
Reg Hoare/James White/Giles Robinson
MHP Communications
Tel: 020 3128 8788
Conference Call for analysts
David Ritchie, Chief Executive, and Earl Sibley, Group Finance
Director, of Bovis Homes will host a conference call at 09:30
today, Thursday 19 November 2015, to discuss the Trading
Update.
To access the call please dial +44(0)1452 580 111 and quote
conference ID: 82804076. Please dial in 5 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 16 December 2015 on +44(0)1452 550 000, accessible with the
conference ID: 82804076.
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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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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