6th May 2008 07:00
Bovis Homes Group PLC Interim Management Statement Tuesday 6 May 2008 Bovis Homes Group PLC is holding its Annual General Meeting at 11:30am on 9 May2008 at the New Connaught Rooms, 61-65 Great Queen Street, London. In advance ofthe AGM, this interim management statement comments on the financial performanceof the Group for the period from 1 January 2008 to the date of this statementand on the outlook for the current financial year. At the time of its preliminary results announcement for the year ended 31December 2007, issued on 10 March 2008, the Group commented that the short termoutlook for the housing market in 2008 remained uncertain, with a reducedavailability of mortgage finance adversely impacting the housing market, andreducing consumer confidence. More recently, conditions in the housing market have deteriorated sharply. Wellpublicised negative developments in the mortgage market have continued apace,with a large number of mortgage products being withdrawn, mortgage interestrates and fees being increased and more substantial deposits being required by arange of different lenders. This, together with a general reduction in thequantum of mortgage finance availability, has contributed to a much reducedvolume of mortgages being approved, such that the British Bankers Associationhas reported a 46% decline in the number of mortgage approvals for housepurchases in March 2008 compared to March 2007. Combined with ongoing adversepress speculation about the housing market, this is making homebuyers markedlymore cautious. As a result, the Group's reservation levels since the date of the preliminaryresults announcement have been disappointing. Reservations achieved to date for2008 total 1,382 homes as compared to 1,979 reservations at the same time in2007, a decrease of 30%. Housing gross margins for private reservations achievedto date in 2008 have been maintained at high levels. However, if the recent moredifficult conditions in the housing market persist, and the level ofreservations, allied with the increase in cancellation rates, seen in recentweeks does not improve, the Group will not be able to achieve a volume of legalcompletions in 2008 that falls within the range of the Board's expectations atthe time of the preliminary results announcement. In light of the recent market deterioration, the Board now expects that theGroup's results for the first half of the year to 30 June 2008 will besignificantly lower than it had previously anticipated and that with ongoingmarket uncertainties, the outlook for the remainder of 2008 is difficult topredict. The timing of any improvement in the housing market is uncertain and, therefore,the Group is positioning itself to allow it to trade across a range of differingmarket outcomes. Whilst the Group continues to seek to maximise sales values inthose locations where market conditions remain orderly, sales prices have beenand will be adjusted, where appropriate, to reflect local market conditions. Anumber of measures are being put into place to manage cash flows in relation toland, construction work in progress and overheads. The Group anticipates openinga number of new sales outlets over the next few months, with investment beingcautiously controlled, again based on local market conditions. This willincrease the Group's opportunities for reservations from these new sales outletsand should allow returns to be achieved as early as possible on consented landowned by the Group. Whilst the short term trading environment remains unfavourable, the Groupcontinues to work on sustaining a high quality land bank to underpin futureprofitable growth through strategic conversion, and the number of plots in itsland bank has increased since 1 January 2008. The Group has achieved residentialplanning consent on circa 5,400 plots of strategic land, circa 3,200 plots ofwhich are now owned and included in the consented land bank. The remaining 2,200plots are held under long term option by the Group. The consented land bank nowstands at circa 14,000 plots, with approximately 50% of this land bankoriginating as strategic land. Notably, residential planning consent has beenachieved during 2008 on the Group's major strategic investments at Filton, northBristol, and Wellingborough. These two sites provide the Group with high qualityland in good locations. The Group has bilateral committed loan facilities totalling £220 million whichdo not mature until 2010. Net borrowings currently stand at circa £92 million,which is in line with the Group's expectations as it approaches its normalfirst-half year borrowing peak in May. The Board continues to act in the long term interests of its shareholders.Whilst acknowledging that short term profits are adversely affected by currentmarket conditions, the Group's long term investment strategy in land forhousebuilding will assist the Group in delivering sustained good medium and longterm performance. The underlying shortage of houses in the United Kingdom, asevidenced by the Government's ambition to deliver three million new homes by2020, will underpin housing market activity in the future. With modest gearingand a strong consented land bank, Bovis Homes remains well positioned to benefitfrom improved housing market conditions when they arise. Conference Call for analysts Please note that Malcolm Harris, Chief Executive, David Ritchie, Group ManagingDirector and Neil Cooper, Group Finance Director of Bovis Homes will host aconference call at 09:00am today, Tuesday 6 May 2008, to discuss this statement. To access the call please dial 020 8515 2301 and ask for the Bovis Homes InterimManagement Statement conference call. Please dial in 5 minutes prior to thestart of the conference call to allow time for registration. For further information, please contact: Bovis Homes Group PLCTel: 020 7321 5010Malcolm Harris, Chief ExecutiveDavid Ritchie, Group Managing DirectorNeil Cooper, Group Finance Director Shared Value LimitedTel: 020 7321 5010Andrew BestEmily Bruning Copyright Business Wire 2008Related Shares:
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