15th Aug 2016 08:50
LONDON (Alliance News) - Housebuilder Bovis Homes Group PLC on Monday said its sales rate has slowed since the UK's EU referendum result was announced, but it has continued to see good demand for its properties, leaving it confident on the second half.
This came as the group delivered growth in pretax profit and revenue for the first half of 2016, driven by it selling more homes at higher prices.
Shares in Bovis were down 2.2% to 818.00 pence on Monday morning, one of the worst performers in the FTSE 250.
Bovis Chief Executive David Ritchie said it is "too early to judge" the impact the UK's EU referendum result and the subsequent policy moves made by the Bank of England will have, but the "underlying market fundamentals for UK housing remain positive". Bovis said it was closely monitoring market conditions in order to assess the impact of the vote.
The company said the ongoing dynamic of significant demand for housing but undersupply in the UK has continued, with demand for homes strengthened by low interest rates and good mortgage availability. With ongoing support from the UK government for the housing sector, the outlook for the market remains strong from a fundamental perspective.
But Bovis said its weekly private sales rate per site has declined to 0.5 since the turn of the half, compared to an average of 0.59 for the first half of 2016, which was down from 0.61 a year earlier.
The company said the slowdown was in line with normal seasonal weakness in homebuying over the summer months, but the softer sales rate does come in the wake of the UK's vote to leave the EU, the result of which hammered housebuilder shares in the immediate aftermath of the result announcement.
However, Bovis said its reservation rates are improving following a slowdown in July and it has seen strong customer interest in new show homes launched in recent weeks. This gives the group confidence sales rates will improve in the autumn.
The mid-cap company said pretax profit in the half to the end of June grew to GBP61.7 million from GBP53.8 million a year prior, up 15%. This was driven by an 18% rise in revenue to GBP412.8 million from GBP350.7 million.
Bovis said it sold 1,601 new homes in the first half, up 5.0% year-on-year, at an average price of GBP254,500 per unit, a 14% rise.
The group declared an interim dividend of 15.0p per share, up 9.0% from the 13.7p paid a year earlier.
"We have been pleased with the resilient level of interest shown by potential home buyers contacting us. Our robust balance sheet, with debt lower than last year, means that we are well positioned to continue to take advantage of prime land opportunities at potentially higher returns. Overall, we remain confident in our strategy to deliver long-term growth in shareholder returns," Ritchie added.
By Sam Unsted; [email protected]; @SamUAtAlliance
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