Bovis Homes Group PLC Trading Update (6524T)

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RNS Number : 6524T

Bovis Homes Group PLC

05 July 2018

5 July 2018

BOVIS HOMES GROUP PLC

Strong first half performance

Bovis Homes Group PLC (the 'Group') is issuing a trading update for the six month period ended 30 June 2018 ahead of reporting its half year results on 6 September 2018.

Greg Fitzgerald, Group CEO said

"We expect to deliver a significant step up in profitability for the half year as we start to see the financial benefits from the strategic direction, changes implemented, and specific margin initiatives launched over the past 18 months. In addition, we have delivered another disciplined and orderly period end with our customer satisfaction score continuing to trend at well above 80%."

Current trading

The Group delivered a total of 1,580 (2017: 1,512) completions in the half year, slightly ahead of our expectations and an increase of 4% on the prior year. Of this 1,030 (2017: 1,140) were private units and 550 (2017: 372) affordable. The higher percentage of completions from affordable homes in the half reflects the planned build programme across our developments. For the full year, we continue to expect affordable to be a similar proportion of total completions as 2017.

Our private average selling price in the period was c. GBP335,000 (2017: GBP334,700), with underlying prices remaining firm, some positive movement from our price optimisation initiative launched in January, and a lower proportion of high-end product compared to the prior year. Our total average selling price was c. GBP261,000 (2017: GBP277,400), reflecting the higher contribution from affordable content in the period.

The Group's sales rate for the half was up 8% to 0.52 (2017: 0.48) net private reservations per site per week. This rate excludes the previously announced sale of 275 units to Heylo Housing to be completed in 2018.

As planned, we opened 17 new sites in the period and operated from an average of 86 (2017: 96) active sales outlets. We have a further 6 new sites to launch in the next quarter, and expect our average active sites number to increase in the second half.

Quality and customer service

Our half year period end was controlled and disciplined, with an overriding focus on delivering a high level of customer service. The Group's HBF Customer Satisfaction score (1 October 2017 to date) continues to trend at well above 80%, a 4 star rating, with 3 of our regions trending at 5 star (90% and above)*.

We are delighted to announce that six Bovis Homes site managers and their teams have been awarded NHBC Pride in the Job Quality Awards. This is up from our two awards last year and in line with the highest number for the Group since 2004.

Land

We continue to have very good visibility on our land supply with 98% of units for 2019 secured of which 92% have detailed planning in place.

We have invested in our land teams during the first half and this is already delivering progress with 828 plots secured across five sites in the first half. In addition, we have terms agreed for c. 1,200 plots on a further four open market sites and three strategic conversions.

Our strategic landbank remains a valuable source of land. In the first half we gained planning consent on a total of 678 plots and we entered into five new options with a further new option agreement well progressed.

Balance sheet

The Group balance sheet has further strengthened in the period with a net cash position as at 30 June 2018 of c. GBP40m (2017: Net debt GBP32.4m). We remain on track to deliver a total of at least GBP180 million of additional cash into the business by December 2018 from our balance sheet optimisation programme.

In the period we made good progress in terms of our exit from two PRS JV's including two bulk disposals. We continue to reduce our part exchange holdings which are now c. GBP10m and have significantly reduced our average holding time for properties.

Our discussions regarding joint ventures and the reduction of our investment in our larger sites at Sherford, near Plymouth and Wellingborough, continue to make progress and we expect to realise c. GBP50m cash benefit from these transactions in this financial year. We have invested in our work in progress during the first half to deliver the higher proportion of private homes expected in the second half, alongside the ongoing investment at Wellingborough where we expect the first legal completions later this year.

Outlook

The housing market fundamentals remain robust, with good demand for new homes across all our regions and underlying pricing remaining firm. We are very pleased with the Group's first half performance and are in a strong position to deliver upon our expectations for the full year.

We are making clear progress towards our medium term targets including a 23.5% gross margin and 25% return on capital employed and believe our margin initiatives represent further potential for the Group in the medium term.

* HBF National Survey of Housebuilders. Percentage based on responses for the current survey year from 1 October 2017 to date. Bovis Homes Group was awarded a 2 star rating (60.0% - 69.9%) for the survey period covering the 12 months from October 2016 to 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                   01732 280272 
 Earl Sibley, Group Finance Director     07811 988617 
 Susie Bell, Head of IR 
Maitland 
 Neil Bennett 
 James McFarlane                         020 7379 5151 
 

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July 05, 2018 02:00 ET (06:00 GMT)