Bovis Homes is confident it can deliver higher returns to shareholders as it predicts increased margins in the second half of 2011, the house builder said today.
In a trading update covering the six months ended 30 June, Bovis said 1,571 consented plots have been added on nine new sites, with 85 per cent of them in the south of England. It expects £339m of revenue, at a gross margin of 25 per cent.
Describing a stable market, the group said it has achieved 802 net private reservations in the first six months, compared with 691 in the year before, meaning a 16 per cent increase. The group completed 801 homes, compared to 803 homes in the same six-month period in 2010.
Bovis has also received confirmation of funding for 446 homes under the government’s FirstBuy Scheme.
Of the total of 4,000 plots acquired or with terms agreed, about 35 per cent relates to conversion of strategic land. The average sales price increased by 3 per cent year on year and the housing gross margin was 20 per cent. The company expects to deliver an operating margin for the half year of at least 7 per cent, compared with 4.2 per cent in the first half of 2010.
Chief Executive David Ritchie said: “On the basis of the current stable market conditions continuing, the group remains confident that it can deliver on its expectations for 2011 and will continue to invest to increase output capacity to deliver higher returns to shareholders.”
The company described a “prudent balance sheet”, with £46m in the bank. Terms have been agreed in principle on a further 20 sites, meaning an additional 2,500 plots, the vast majority of which are located in the south of England.