Margins bounce at Bovis as build costs dive

30th Aug 2011 07:06

Margins are on the mend at house builder Bovis Homes, which saw profits more than double in the first half of 2011.Profit before tax surged to £8.6m in the first six months of the year from £3.5m the year before.The housing gross margin grew to 20.1% from 16.3% the year before, while the operating margin climbed to 7.5% from 4.2%. The housing gross margin for the full year is expected to approach 20%, the company said, up from 17.9% last year.Revenue advanced to £133.6m from £115.6m in the first half of last year.Earnings per share raced ahead to 4.4p from 1.8p at the interim stage at 2010, while net assets per share edged up to 538p from 520p.The company had positive trading cash inflows in the first half of £47m, and ended the trading period with £46m of net cash, down from £52m at the end of 2010.The interim dividend has been restored, with the board proposing to pay 1.5p per share.Legal completions dipped to 801 homes from 803 in the first half of last year, but the average sales price increased by 3.2% to £163,400 (2010: £158,400), while the company enjoyed a significant reduction in build costs.Average active sales outlets increased to 68 from 64 in the first half of last year. The company expects active sales outlets to average 78 in the second half of the year, up from 68 in the second half of 2010.The strong trading pattern has continued into the second half of the year. In the first 34 weeks of the year there has been a 19% increase in private reservations to 1,087 homes from 912 at the corresponding stage of last year. Cumulative sales achieved to date totals 1,645 homes, down from 1,695 homes at the same stage last year. The company is targeting a full year growth of between 5% and 10% growth in legal completions over 2010."As a result of opening a significant number of the new, more profitable sites, active sales outlets will grow through 2011, supporting higher sales. Subject to current market conditions continuing, the group's profit margins will continue to improve, particularly in 2012 when a significant proportion of housing completions will come from these new sites," said Chief Executive, David Ritchie."Further investments in high quality, consented residential land are continuing, which will support further sales outlet growth in 2012. Additionally, land sales are progressing well, which will enable the Group to improve the efficiency of its capital employed," Ritchie added.--jh