Interim Management Statement
Bovis Homes Group PLC
Bovis Homes Group PLC
Interim Management Statement
18
November 2009
Bovis Homes Group PLC is today issuing its 2009 Interim Management
Statement for the period from 1 July in accordance with the UK Listing
Authority’s Disclosure and Transparency Rules.
In the year to 13 November, the Group has sustained its strong current
year performance in private home reservations, and has achieved 1,488
private reservations, some 83% ahead of the comparative figure for the
same period in 2008 (811 private reservations). When combined with the
Group’s social housing sales and private sales held at 1 January, the
Group has achieved cumulative sales of 2,178 homes (2008: 2,023 homes).
Of these, and in line with the Group’s previous guidance, the Group
anticipates legally completing circa 1,800 homes in 2009 (2008: 1,817
homes), with the balance forming a solid forward sales position for
2010. Of the anticipated legal completions, circa 1,500 are expected to
be private homes (2008: 1,223 homes) and circa 300 are expected to be
social homes (2008: 594 homes).
Following signs of stabilisation in the housing market in the first half
of 2009, the Group has seen further signs of an improving market
backdrop. External house price indices have suggested incremental
pricing improvements during the third quarter helped by low levels of
second hand stock for sale and with some regional differences in pricing
sentiment emerging. The Group itself has experienced a modest
improvement in underlying private sales prices for reservations taken
since its June half year together with some regional mix changes.
Volumes of mortgage approvals also continue to grow, albeit off a low
base and only to levels that would historically be regarded as
significantly below average. The mortgage market still remains difficult
to access for first-time buyers and other buyers requiring higher
loan-to-value multiples.
Benefiting from the combination of increased private home sale rates,
strong working capital control and tight cost control, the Group has
delivered circa £197 million of cash inflow in the period from 1 January
2009 to 13 November 2009 with circa £138 million from trading and a
further £59 million from its equity raising in September. As at 13
November, the Group had circa £89 million of net cash in hand. This
leaves the Group well positioned to acquire the residential land assets
currently being progressed through its acquisitions process. Subject to
due diligence on such opportunities, the Group anticipates being able to
advise on a number of consented land acquisitions when it reports its
full year results for 2009.
The Group is required to assess the carrying value of its inventory at
each period end. Based on the Group’s present view of current and future
sales price trends, there is a likelihood that a net provision release
will be made at the end of the 2009 financial year. The Group will
provide further information on the extent of inventory provision
movements at the date of its preliminary results announcement in March
2010, after taking into account market pricing trends between now and
then together with any reliable estimates of price movements thereafter.
The Group is now delivering good build cost savings for future
production through re-specification of materials used and negotiation of
new labour contracts to achieve labour savings. This is an encouraging
development which will enable the Group to control future costs whilst
absorbing increases anticipated from forthcoming regulation changes
facing the housebuilding industry. Improvements will also be achieved
through replanning where appropriate recognising that the typical Bovis
Homes product mix featuring traditional mid market houses already
relates well to current market conditions.
Looking ahead into 2010, the Group expects to see a continuation of the
current market backdrop, with pricing stability and further modest
growth in mortgage availability. The Group’s focus will be on the
commencement of development on existing owned land assets and the
acquisition of new residential land assets to grow the output capacity
of the Group.
With a strong balance sheet and a clear strategy underpinned by both the
capacity and ability to acquire new residential land assets which have
the potential to achieve at or above investment hurdle rate returns, the
Group remains well placed to create value for its shareholders into the
future.
Conference Call for Analysts and Investors
David Ritchie, Chief Executive and Neil Cooper, Group Finance Director
of Bovis Homes will host a conference call at 09:45am today, Wednesday
18 November 2009, to discuss the interim trading update.
To access the call please dial 020 7138 0820 and quote passcode:
4754255#. 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 24 November 2009 on 020 7111 1244,
accessible with the same passcode.
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.
Enquiries:
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David Ritchie, Chief Executive
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Neil Cooper, Finance Director
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Bovis Homes Group PLC
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Tel: 01474 876200
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Andrew Best / Emily Hunt
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Shared Value Limited
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Tel: 07773 012 971
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07798 576 378
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