Lift for investors as Bovis to resume dividend

The Kent-based group reported a 4 per cent rise in average selling prices to 160,700 over last year and said sales completions rose 5 per cent.

It now expects full-year profits to come in ahead of City predictions for underlying pre-tax profits of 16.3m – and will restart paying shareholder dividends for the first time in two-and-a-half years.

Bovis is the second builder to deliver profits cheer this week after Charles Church owner Persimmon upped its profit guidance, with the sector benefiting from a shift in sales towards houses and better margins on land bought at cheap prices.

But the industry is wary of 2011 amid spending cuts and mortgage lending constraints, with Bovis saying conditions will remain "subdued".

Bovis said its 2010 selling price hike was driven by private sales, with 1,592 completions against 309 for social homes.

The group has a forward order book of 420 homes for 2011, which it said had held firm against underlying orders seen at the start of 2010.

But it joined rivals in cautioning over the year ahead.

It said: "The group continues to expect trading conditions in 2011 to be subdued relative to historical levels, with ongoing economic uncertainty.

"Mortgage approval volumes remain weak, with mortgage providers requiring high levels of deposit, particularly from first-time buyers."

"This all said, the long term imbalance between the demand and supply of housing remains positive for the housebuilding sector," added Bovis.

Bovis will pay a dividend for 2010 in May – its first since the financial crisis struck in 2008.

Last year was a resurgent one for Bovis after it returned to profit with a 3.5m surplus for the six months to June 30.

It is confident of further growth as it snaps up land at attractive prices, having bought around 3,700 plots in 2010 and agreed terms on a further 2,500 plots.

Analysts at Bofa Merrill Lynch said while macroeconomic issues would likely continue to overshadow the sector in 2011, the traditional spring selling season from mid-February could act as the next key short-term potential catalyst.