6th Jul 2015 10:05
LONDON (Alliance News) - FTSE 250-listed housebuilder Bovis Homes Group PLC on Monday outlined plans to increase its interim dividend after it said home sales rose in the first half of 2015 at higher prices and said its pipeline of future developments looks robust.
Bovis shares were trading up 2.0% to 1,164.00 pence on Monday, one of the best performers in the FTSE 250.
Bovis said it is planning to hike its interim dividend for the six months to June 30 to 13.7 pence per share, up 14% from the 12.0 pence per share payout it made a year earlier.
The bigger payout to shareholders follows a rise in legal completions in the first half to 1,525 homes, up from 1,487 a year earlier and a record sales volume for the company in the half. For the full-year, the group expects to legally complete 3,505 homes, up from 3,297 in 2014, backing its earlier guidance that its completions will be weighted to the second half and leaving it set to meet its expectations for the full year.
Weekly private sales rates in the year to date have remained solid in the year at 0.63 net private reservations per site, the company said, against a strong comparative of 0.65 a year earlier. Housing production at the half-year is 13% ahead year-on-year, providing a strong base for the volume growth Bovis expects to deliver for the full-year.
In addition to more selling more homes, the price Bovis has sold the home at increased to an average of GBP222,000 in the half-year, up from GBP210,000 a year earlier. Excluding social housing sales, its average private sales price rose to GBP264,000, up 10% year-on-year.
Bovis said it has been trading from an average of 100 sales outlets in the half, up 8% year-on-year.
On the land front, Bovis said it has continued to take advantage of buoyant land markets in the UK to acquire high-quality land above its minimum rate of margins and returns, with a focus on traditional housing sites primarily in the south of England, outside of London. Its average expected return on capital employed for the land acquired in the year to date is around 28%, it said.
In the first half, Bovis added 2,687 consented plots on 15 sites to its land bank and has approved the acquisition of two further consented sites, which will deliver another 257 plots. It added its land bank pipeline remains robust, with terms agreed to deliver its targeted level of around 40 new site acquisitions for the full year.
Bovis also said it has made progress on a number of strategic land holdings and has secured or is in the final stages of securing planning consent on four major strategic sites at Bishops Stortford, North Wokingham, Witney and Tavistock. The sites will, in total, provide more than 2,000 consented plots to the land bank, with high profit margins and returns above its minimum target rate of return.
"The group has delivered a record number of first half legal completions, made possible by the high quality land investments made during the last few years," said Bovis Chief Executive David Ritchie.
"We continue to trade well in a positive UK housing market delivering a strong forward sales and build position on an increased number of sales outlets. As a result, we are on track to deliver our expected growth for 2015 and a further increase in return on capital employed supported by robust profit margins and improved capital turn," he added.
The good results from Bovis come after larger rival Persimmon PLC last week said it too had traded well in the first half, with legal completion volumes and revenue both rising, average selling prices higher, and its total forward sales value at the end of June up by 15%, defying the slowdown in planning applications and house-buying activity prior to the UK General Election in May.
Persimmon had said demand has been backed by an increasingly competitive mortgage market, along with continued employment growth and a boost to disposable income levels in the UK, echoing Bovis optimism that the rest of 2015 will be underpinned by positive market conditions.
Taylor Wimpey PLC, Barratt Developments PLC and Galliford Try PLC, the latter of which operates the Linden Homes housebuilding business, are all set to publish trading updates in the coming week.
By Sam Unsted; [email protected]; @SamUAtAlliance
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