24th Feb 2014 09:05
LONDON (Alliance News) - Bovis Homes PLC Monday became the latest UK housebuilder to report and increase in profit for 2013, boosted by improving housing market conditions and an increase in the number of mortgages products available including high loan to value packages.
In response, Bovis raised its dividend 50% to 13.5 pence, from 9.0 pence a year earlier.
The Kent-based firm posted a 48% increase in pretax profit to GBP78.8 million for the year ended December 31, 2103 from GBP53.2 million a year earlier, as revenue rose 31% to GBP556.0 million from GBP425.5 million in 2012.
The company saw a 14% increase in average sales price to GBP195,100 from GBP170,700 a year earlier, primarily due to the sale of larger homes and a greater proportion of higher-value southern sites. It also saw growth in legal completions of 19% to 2,813 homes from 2,355 homes in 2012.
All the UK's housebuilders have reported an accelerating recovery in the UK housing market through 2013 and into this year, particularly in the southeast where Bovis Homes has high exposure. The builders virtually halted new construction in the wake of the financial crisis as banks pulled mortgage financing and the ensuing economic crisis put off house buyers. The companies instead focused on paying down debt.
"The housing market is recovering with higher activity levels and improving house prices expected to more than compensate for supply chain cost increases," Chief Executive David Ritchie said in a statement. "This positive market is acting as a welcome backdrop for the group's continued successful execution of its growth strategy."
Bovis said housing revenue rose 36% to GBP548.7 million in 2013 from GBP402.0 million a year earlier, while land sales revenue, which included the sale of just one site, was GBP3 million. In the corresponding period, the firm made three land sales with total revenue of GBP17.8 million.
In 2013, new homes were handed over to 872 customers who were able to use shared equity products, including the Help to Buy scheme, as part of their home purchase. During 2012, shared equity products, including government backed schemes, were used to support customers buying 535 new homes, Bovis said.
The first phase of the Help to Buy scheme in England started in April 2013, making buyers of newly built homes eligible for a 20% equity loan from the government on top of their 5% deposit. The second phase, which started in the Autumn, guarantees a portion of a buyer's mortgage.
Bovis Homes said it sees the Help to Buy scheme as an attractive replacement for other shared equity products.
Looking ahead, the firm said it is in a strong position with 468 private reservations achieved in the first seven weeks of 2014 compared with 285 in 2013, while negotiations for two private rental sector transactions for around 500 homes - of which around 250 would legally complete in 2014 - are at an advanced stage.
Planning has also been approved on three major strategic projects at Witney, Winnersh and Bishops Stortford which will deliver, in aggregate, over 1,200 plots to consented land in the future.
"With the current strong sales position and assuming current market conditions continue, the group is confident of its ability to deliver strong increases in volume, revenue and profit in 2014 with the aim of achieving a return on capital employed for the year of at least 14%," Ritchie added.
Bovis Homes shares were up 1.2% at 910.50 pence early Monday.
By Anthony Tshibangu; [email protected]; @AnthonyAllNews
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