Bovis Homes Group has reported its final results for the financial year ended 31 December 2013 which shows a boost in profits by 46% to £82.8 million.
Operating profits increased as a result of the compound positive effect of an increased volume of legal completions sold at a higher average sales price generating a stronger profit margin.
During 2013, the Group achieved 2,773 private reservations, a 48% increase on the 1,873 achieved in 2012.
Net private sales per site per week increased by 34% to 0.59 (2012: 0.44), as a result of the improving quality of the Group’s active sales outlets and the benefit of a recovering housing market.
Active sales outlets averaged 90 during 2013, an increase of 10% on the 82 achieved during 2012.
One effect of the positive sales rate was that some sites were completed more quickly than expected. Also certain sites were launched later than anticipated due to planning delays. These two factors led to the Group achieving a marginally lower average number of active sales outlets than had been expected at the start of 2013.
The Group has also continued to acquire land assets in the south of England and in the midlands and northwest, where it is considered the housing market will be more robust.
David Ritchie, the chief executive of Bovis Homes Group PLC said:”The Group has a clear and robust growth strategy, which has enabled the delivery of an excellent performance in 2013, with strong growth in profit and return on capital employed. A rigorous focus on targeted land acquisition, together with tight management of costs and capital have enabled the Group to take full advantage of the more favourable market conditions to increase volumes, improve sales prices and strengthen margins.
“With the current strong sales position and assuming current market conditions continue, the Group is confident of its ability to deliver strong increases in volume, revenue and profit in 2014 with the aim of achieving a return on capital employed for the year of at least 14%.”
House prices have been rising at a modest rate across many regional markets with stronger rises in the south of England, offset by more modest changes in the midlands and north of England. As expected, with activity and sales prices rising, the cost of building houses is also rising as material suppliers enjoy increased demand for their products and subcontractors see an ability to increase rates.
The Government’s Help to Buy shared equity product, launched in April 2013, has provided strong impetus to the new build industry, supporting first time buyers in particular.