report16 Jan 2012 08:19
2011 profit expected to be in line with current market consensus(1)
Strong forward trading position for 2012
Overview
Bovis Homes Group PLC is today issuing the following trading update ahead of reporting its preliminary results for the year ended 31 December 2011 on Monday 27 February 2012.
The Group has delivered significant profit growth in 2011 and is well positioned to improve returns further in 2012 and beyond.
Sales and profits growth
The Group expects to announce a profit before tax for 2011 in line with current market consensus(1) expectations.
The Group legally completed 2,045 homes in 2011 (2010: 1,901), an increase of 8%, of which 1,624 were private (2010: 1,592 including the 215 home joint venture deal) and 421 were social (2010: 309). The underlying increase in private legal completions, excluding the joint venture deal, was 18%. The increase in social housing was driven by the significant number of new site openings in 2011.
The average private sales price increased by 4.5% to GBP180,100 in 2011 (2010: GBP172,400). This increase was almost entirely due to the improved mix of homes as the Group increases the contribution from family homes in the south of England. Combined with the higher proportion of social homes, the overall average sales price in 2011 was GBP162,400 (2010: GBP160,700).
The Group expects the 2011 housing gross margin to be in excess of 20% (2010: 17.9%), as a result of the full year effect of build cost savings and the initial contribution from legal completions on stronger profit margin sites acquired since the housing market downturn. With overheads in line with expectations, the Group anticipates that for 2011 the operating margin will be circa 10% (2010: 7.3%) and the return on capital employed will approach 5%.
During 2011, the Group achieved 1,653 net private reservations (2010: 1,334), an increase of 24%. This reflected an 11% increase in the average number of active sales outlets in 2011 to 73 from 66 in 2010 and an improvement in the net reservations per site per week of 11% to 0.43 versus 0.39 in 2010.
At 1 January 2012, the Group held forward sales for 2012 delivery of 568 homes, an increase of 35% compared to the 420 homes at the start of 2011, reflecting both the stronger private reservations position and an improved level of social housing reservations.
Improving efficiency of capital employed
During 2011, 18 sites and circa 2,600 plots have been added to the consented land bank, of which circa 1,000 plots were converted from strategic land. 88% of these plots are located in the south of England. The pipeline for land remains strong, with terms agreed to acquire around 20 sites, which will deliver over 2,000 plots.
The Group has continued to review its land holdings to rebalance capital employed through land sales on its larger sites. The Group achieved its five targeted land sales for 2011. Of these, four land sales legally completed in 2011, s
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