Bovis Homes Profit Declines

Bovis Homes Group
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Bovis Homes announced that its pre-tax profit declined last year to £123.6m at end of 2007, compared with £132m in 2006. Bovis Homes is one of the UK’s oldest and most successful house builders. The company is proud of its reputation and history, which stretches back more than a century to when it was first established in London in 1885 by Charles William Bovis.

Commenting on the results, Malcolm Harris, Chief Executive of Bovis Homes Group, said, “2007 was a challenging year for the industry following several interest rate increases, allied with a reduction in availability of funding particularly for first-time buyers. Against that background, the Group delivered a good performance, in particular in maintaining a strong operation margin.”

Looking forward, although the long term position relating to supply and demand has not changed, the current housing market is weak. Cumulative sales reservations to 7th March 2008 are 1,267 as compared to 1,582 at the same point in the previous year. Our performance through the spring period remains critical in establishing the likely volume outcome for the current year. For the year as a whole, unless decisive action is taken now to reduce interest rates and more normal conditions return to the mortgage market, it is likely that volumes will be well below those achieved in 2007.

Bovis Homes operates primarily in England and Wales. The Group has minimal exposure in Central London although it does operate in a focused way inside Greater London. Bovis’s projects are largely in the good quality mid-market – with a portfolio of products covering the main housing segments – from two-bedroom houses through to six-bedroom family homes, in addition to apartments and sheltered retirement homes.

During last year, Bovis legally completed 2,930 homes compared with 3,123 during 2006. The average sales price achieved for private homes increased by 3.8 per cent. However, with more social and partnership properties completed increasing from 13 per cent in 2006 to 22 per cent in 2007, the average sales price for the whole company was reduced by 2.3 per cent, from £183,700 in 2006 to £179,500 in 2007.

The successful acquisition of Elite Homes in October 2007 had a small dilutive impact, driven by the fact that property prices in the North of England are typically lower than those elsewhere in England. The operating margin remained at 22.8 per cent in 2007 compared with 23.1 per cent in 2006.

Tim Melville-Ross, chairman of Bovis Homes said, “The Group remains confident in the long term prospects for house building in the UK and notes the announcement of Government targets for house building, which is well in excess of current rates of development and an indicator of a long term excess of demand over supply.

Editor: Simon

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