Profits surge at Bovis Homes

14th Mar 2011 06:41

Housebuilder Bovis Homes didn't disappoint with full-year results towards the top end of forecasts, a first dividend since 2008, and an "encouraging" start to the current year.It made a pre-tax profit of £18.5m, up from £7.5m in 2009, driven by higher volumes, price increases and cost cutting. Revenue rose to £298.6m from £281.5m last time. "Reassuring results," reckon analysts at RBS.Lower construction costs, 4% increase in legal completions to 1,592 and a better average sale price of £172,300 bumped the average profit generated per private home by 13%. Including social homes, legal completions rose 5% to 1,901 and prices climbed 3.9% to £160,700.A lot of today's detail had been flagged back in January's update, so eyes are on the outlook, which appears better than it has been for some time.Sales enquiries jumped 24% in the first nine weeks of 2011, visitor numbers rose 28%, and reservations are up 11% on a similar number of active sales outlets. Prices are "stable". Kent-based Bovis expects 33 new sales outlets to open this year - 23 in the first half - "the most significant site launch programme for many years". The average number of active outlets is seen up by 10 to 76.The income from land sales at "a number" of its bigger sites this year will go towards further land acquisitions. The better spread of land will increase active sales outlets, benefitting volumes and profits, and improving the efficiency of its capital employed "in the mid term", chief executive David Ritchie says.As flagged a few months ago, the land bank grew by about 3,700 plots in 2010, mostly in the south of England. That cost the firm £203m, though the gross profit potential is put at £181m. Just over a third of the extra 2,500 plots agreed by the end of 2010 have now been bought."Assuming the continuation of current market conditions, the group can increase significantly its returns on both capital employed and equity over the coming years," the firm said.And there's a final dividend of 3p a share, the first payout since the 5p received by shareholder at the interim results in 2008. Bovis paid a half-year divi of 20p the year before that.