Cost focus helps Bovis lift profits

HOUSEBUILDER Bovis Homes today said profits more than doubled after it benefited from its focus on controlling costs and building more family homes.

The Kent-based group reported that pre-tax profits rose 131% to £8.1 million in the half year to June 30 as it put in a “strong performance” despite the slowdown in the housing market.

It has looked to sell more family homes, which are less exposed to first-time buyers struggling to get onto the property ladder, and has bought more land in the south of England, where the market has been more resilient. The average price of its homes rose 3.2% to £163,400 compared to a year ago.

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Its operating margins increased to 7.5% from 4.2% after it reduced construction costs and it started to benefit from snapping up land at cheaper prices following the recession.

Revenues increased 16% to £133.6 million in the period amid the “stable, but challenging, market conditions”.

Bovis completed the sale of 801 homes in the period, slightly down on the 803 a year ago.

However, the group said it had seen strong trading in recent months, with a 19% increase in private reservations to 1,087 homes in 2011 so far.

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As a result, it expects the number of completions to rise by between 5% and 10% over the full year.

The group also predicted its profits will continue to grow as its strategy bears further fruit.

It has made further progress in buying land, mainly in the south of England, and is set to open a total of 14 new sites in the second half of the year.

Chief executive David Ritchie said: “As a result of opening a significant number of new, more profitable sites, active sales outlets will grow through 2011, supporting higher sales.

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“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.”

The group announced a dividend of 1.5p. It scrapped dividends for two-and-a-half years in the wake of the financial crisis and property slump but announced it would return to making payments at the start of 2011.

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