Trading Statement
Bovis Homes Group PLC
Bovis Homes Group PLC
Trading update
15 January 2010
Bovis Homes Group PLC is today issuing the following trading update
ahead of the reporting of its preliminary results for the year ended 31
December 2009 on Monday 8 March 2010.
In line with expectations, the Group legally completed 1,803 homes in
2009 (2008: 1,817), of which 1,527 were private homes, up 25% on the
prior year (2008: 1,223) and 276 were social and partnership homes
(2008: 594). At £154,600, the Group’s average sales price in 2009 was
2.5% higher than the equivalent in 2008 (£150,800). This rise was
heavily influenced by a falling contribution in the sales mix from lower
priced social and partnership homes, which made up just 15% of the mix
in 2009 versus 33% in 2008. The average sales price of the Group’s
private homes in 2009 was £165,500 versus £181,000 in 2008.
The Group anticipates that pre exceptional pre-tax profit will be in
line with the Board’s expectations. The Group has previously indicated a
likelihood of a net inventory provision release at the end of the 2009
financial year arising from the Group’s assessment of the carrying value
of inventory, and this remains the Group’s current expectation. Further
information on the extent of this net provision release together with
the resultant impact on future trading profits will be provided with the
Group’s preliminary results announcement in March.
During 2009, the Group sustained its strong performance in private home
reservations, achieving 1,801 private reservations during the year, some
82% ahead of the prior year’s 989 private reservations. This was
achieved from, on average, 85 active sales outlets. Given the Group’s
caution in land investment at the peak of the market and its careful
control of working capital investment in 2009, active sales outlets have
decreased as expected with 78 active sales outlets at the start of 2010
and an expectation that the average number of active sales outlets over
the year will be circa 70.
As at 31 December 2009, the Group had a sales order book for 2010
delivery of 643 homes, some 218 homes greater than the same position in
2009.
Following a first half in which the Group legally completed 754 units
and constructed only 221 units worth of housing, the Group has
successfully delivered further working capital release in the second
half, with 1,049 legal completions and a total of 690 units worth of
housing constructed. As at 31 December 2009, the Group held housing work
in progress equivalent to 986 homes which compares favourably to the
position at the start of 2009 of work in progress equivalent to 1,878
homes.
As at 31 December 2009, the Group had net cash in hand of £113 million
(2008: net debt £108 million) reflecting a cash inflow of £221 million
over the year. Of this, £162 million arose from trading with the
remaining £59 million arising from the Group’s share placing in
September.
Looking ahead, the Group’s strategy remains consistent: to grow the
output capacity of the Group through the acquisition of residential
land, providing an increase in sales outlets to support volume growth:
and, in so doing, contributing to growth in profits and improved
financial returns. The Group has made good progress in securing further
construction cost savings and has re-entered the residential land market
during the latter part of 2009 following a successful period of
de-gearing and supported by its share placing. Good progress has been
made across the geographical areas of focus and the Group has acquired
four sites in late 2009, with terms agreed in principle on a further 15
sites.
Towards the end of 2009, the Group initiated discussions with its
banking syndicate in regards to its existing banking facility. The Group
now has credit approval subject to documentation for a replacement £150
million syndicated facility which would mature in September 2013 and
which will reduce its effective interest cost. The new facility will
provide the Group with the financial flexibility to allow it to benefit
from its strong balance sheet by continuing the process of re-investment
in residential land, to increase the output capacity of the Group. The
Group anticipates successfully completing the documentation process and
entering into this new facility before its preliminary 2009 results are
announced. The Group anticipates writing off the c£4 million
un-amortised portion of the one-off fee paid in December 2008 in
relation to the existing agreement as an exceptional item in its 2009
results. Further information will be provided once the refinancing
exercise is completed.
The Group continues to expect trading conditions in 2010 to be subdued
relative to historical levels, given ongoing economic uncertainty.
Mortgage approval volumes are slowly rising, but mortgage providers
continue to require record high levels of deposits, particularly from
first-time buyers. This all said, longer-term market demand and supply
trends remain positive. With a strong balance sheet and a clear
strategy, the Group is confident of its ability 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 08:30am today, Friday 15
January 2010, to discuss the interim trading update.
To access the call please dial 020 7138 0844 and quote passcode:
8128482#. 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 22 January 2010 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.
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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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