More good news from another House Builder – Bovis Homes Group PLC today announced its preliminary results for the financial year ended 31 December 2010
A full copy of the Statement can be seen by following the links at the bottom of this post but the high lights on its land / site purchases and housing stock are posted below details regarding its trading figures and profit can be seen on our Onyx Consultants blog site:
Overview
Financial Highlights:
· Pre tax profit increased to £18.5 million (2009: £7.5 million pre exceptional items)
· Basic earnings per share increased to 10.6p (2009: 4.4p pre exceptional items)
· Recommencement of dividends with a proposed payment of 3.0p for 2010 (2009: Nil)
· Improvement in gross margin at 17.9% (2009 pre exceptional items: 16.1%)
· Increase in operating margin to 7.2% (2009 pre exceptional items: 6.2%)
· £52 million of net cash at 31 December 2010 (2009: £112 million)
· Strong trading cash inflows during 2010 of £93 million
· Net land expenditure of £137 million
Land Highlights:
· Significant progress with land investment strategy with acquisitions located mainly in the south of England:
· c3,700 consented plots added in the year
· Terms agreed at 31 December 2010 to acquire a further 2,500 plots, of which 875 plots have been acquired as at the date of this announcement
· Strong land bank with significant future margin potential:
· 13,766 plots of land with planning consent as at 31 December 2010, with potential gross profit of £461 million, calculated using current sales prices and current build costs (31 December 2009: 12,042 plots)
· 17,325 potential plots of strategic land (2009: 16,363 potential plots) with 822 plots converted to consented land bank in 2010
The Group has been successful with land investment in 2010 with the addition of c3,700 high quality consented plots to the land bank at a cost of £203 million. Approximately 80% of these plots are located in the south of England. These plots have an estimated future revenue of £711 million and an estimated future gross profit potential of £181 million based on current sales prices and current build costs, delivering an estimated future gross margin of over 25%. Of the plots added to the consented land bank, 822 plots were delivered through conversion of strategic land.
The Group held a consented land bank of 13,766 plots at 31 December 2010, an increase of 1,724 plots from 12,042 plots held at 31 December 2009. Of the 13,766 plots, 69% are located in the south of England, where the housing market continues to show greater robustness. At the year end, the consented land bank included 3,931 consented plots which have been acquired since the nadir of house prices in the current downturn. The Group estimates that the gross profit potential on the plots within the consented land bank at the 2010 year end, based on current sales prices and current build costs, has increased to £461 million with a gross margin of 20.0%, compared to the position at 30 June 2010, when the gross profit potential was £412 million with a gross margin of 19.2%. The increase of £49 million demonstrates the contribution to the Group’s future profits from its recent land acquisitions.
The average consented land plot cost at the start of 2010 was £35,200. This has increased over the year to £41,000 at 31 December 2010 as a result of a lower number of written down plots held in the land bank at the end of the year (26% of land plots versus 36% at the start of the year) and the addition of new prime southern traditional housing sites where the average plot cost is higher.
As at 31 December 2010, the Group had agreed terms for the acquisition of an additional c2,500 plots. Of these, 875 plots have been acquired since the year end at a cost of £57 million and with a gross profit potential of £51 million, based on current sales prices and current build costs, delivering a gross margin of over 25%.
Looking forward, the Group’s strong balance sheet, with net cash as at 31 December 2010 of £52 million, together with the Group’s existing £150 million committed bank facility, provides it with the ability to continue its land investment strategy. Further, the Group anticipates selectively selling some of its consented land, particularly on those sites which have a longer trade out period by virtue of their size. This will assist in the funding of new land acquisitions and will improve the spread of the Group’s land bank, which will enhance capital turn and increase return on capital employed in the future.
The further execution of the Group’s land strategy will support the Group in achieving its medium term aspiration of operating from over 100 active sales outlets with consequential growth in volumes and profit margins, based on current market conditions, and thus materially improving shareholder returns.
The strategic land bank at 31 December 2010 amounted to 17,325 potential plots as compared to 16,363 potential plots at 31 December 2009. The Group added c1,800 potential plots to the strategic land bank during 2010, thus enabling the strategic land bank to grow in size notwithstanding the successful conversion of over 800 plots into the consented land bank. The Group has for a long time recognised the potential of strategic land investment and, as visibility over the effects of the changes to the planning environment improves, the Group intends to increase its investment in strategic land.
A full copy of the statement from Bovis Homes can be obtained from their website http://www.bovishomesgroup.co.uk/information-on/press-releases/
If you are a house builder and need assistance with your commercial requirements or a subcontractor looking for an introduction to major house builders such as Bovis Homes then contact Andrew Fella at Onyx Construction Consultants Ltd
