Bovis Homes Group PLC Trading Update (2570K)
06 July 2017 - 4:00PM
UK Regulatory
TIDMBVS
RNS Number : 2570K
Bovis Homes Group PLC
06 July 2017
6 July 2017
BOVIS HOMES GROUP PLC
First half trading in-line with expectations
Bovis Homes Group PLC (the 'Group') is issuing a trading update
for the six month period ended 30 June 2017 ahead of reporting its
half year results and the outcome of its strategic review on 7
September 2017.
Greg Fitzgerald, Group CEO said
"The trading performance in the first half of our financial year
is in-line with management expectations. In the past 11 weeks I
have spent a good amount of time with each of our operating
regions, visited 85 sites and met the vast majority of our people.
We continue to identify and implement operational improvements and
I am very confident we can deliver a successful turnaround,
returning Bovis Homes to being a leading UK housebuilder. I look
forward to providing an update on the Group's strategy with the
presentation of our half year results in September."
Current trading
Trading in the first half has been in-line with our
expectations. As announced in February, we have slowed our rate of
production for 2017 and we continue to expect to deliver completion
volumes for the full year c. 10% to 15% below the 2016 level. In
the first half we delivered 1,512 (2016: 1,601) completions of
which 1,140 (2016: 1,212) were private units.
The Group's sales rate of 0.48 (2016: 0.62) net private
reservations per site per week in the half is in-line with our 2017
production plans and reflects a controlled sales release across a
number of our developments and our priority focus on customer
service.
We have opened 15 new sites in the period and operated from an
average of 96 (2016: 100) active sales outlets.
We continue to see an improvement in our average selling price,
increasing by c. 9% in the first half, to c. GBP277,000 (2016:
GBP255,000). This increase has been driven by changes in mix and a
modest increase in average underlying prices.
As previously noted, the Group's first half profitability has
been impacted by increased build costs within our cost base brought
into the year and an increased level of investment across the
business in the period to address legacy issues. This includes a
higher level of investment in our site presentation bringing all of
our developments up to the high standard we and our customers
expect.
Customer service
Transforming our customer service is a key priority with a
target of progressively returning our HBF rating to the top
quartile of listed housebuilders. In the first half we delivered
customer service training to the majority of all of our employees
and strengthened our customer service function. The delivery of our
completions in the first half has been a controlled process and the
homes have been finished to the high standard expected.
We have made good progress addressing a high level of customer
issues in the first half. Following the CEO's review of the
business, the Group has taken a further GBP3.5m of provision in the
first half, taking the total one-off costs related to these legacy
issues to GBP10.5m, of which GBP7.0m was provided for in 2016. This
further provision will ensure we are fully resourced to complete
the works identified as swiftly as possible whilst at the same time
delivering the appropriate high level of service to our new
customers. We are confident that all legacy issues are now
identified and that where possible these issues will be fully dealt
with and the related costs incurred during this financial year.
Land
We continue to see good opportunities in the land market that
exceed our required returns and in the first half added 2,337 plots
to our consented landbank, including 821 plots at our site in
Wellingborough. Excluding Wellingborough, 62% of the additions in
the first half have been sourced from our strategic landbank. We
aim to operate with an underlying consented landbank of around 4
years.
We are in a strong position for our 2018 delivery with all our
required land owned of which 87% already has reserved matters
planning consent.
Balance sheet
The Group has a strong balance sheet with net debt as at 30 June
2017 of only c. GBP33m (30 June 2016: net debt GBP7.6m).
Driving cash back into the business and managing our balance
sheet is a key priority, with our focus on working capital
management, the disposal of low returning assets and optimising the
structure of our land bank.
Outlook
This is the year we re-set the business and led by our new CEO
we are making good progress tackling our operational priorities
alongside our strategic and structural review.
The demand for new homes continues to be robust across all
regions and customer interest in our homes remains strong.
We remain clear in our goal of enhancing shareholder value
through maximising returns from the Group's valuable landbank and
returning Bovis Homes to being a leading UK housebuilder.
We will provide a full update on the Group's strategic review
with the presentation of our half year results on 7 September
2017.
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 representative on
that such trends, results or activities will continue in the
future. Undue reliance should not be placed on forward looking
statements.
For further information please contact:
Bovis Homes Group PLC 01474 876219
Earl Sibley, Group Finance
Director 07811 988617
Susie Bell, Interim Head
of IR
Maitland
Neil Bennett
James McFarlane 020 7379 5151
This information is provided by RNS
The company news service from the London Stock Exchange
END
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