Bovis Homes profits surge as sale prices climb

Bovis Homes Group saw 2012 pre-tax profits jump 69 per cent after achieving higher volumes, improved sales prices and stronger margins.

The UK homebuilder delivered profits of £54.1m, compared to £32.1m the year before, meeting the upper end of market expectations.

Revenues climbed 17% year-on-year from £72.2m to £92.9m and the company raised its dividend to 9.0p, up 80% from 5.0p in 2011.

Earnings per share soared 75% to 30.7p from 17.5p.

Results were driven by a 5.0% rise in the average sales price to £170,700, an increase of 3.4 percentage points in operating margin to 13.4%, and volume growth.

Volume was boosted by a jump in the number of active sales outlets from 73 to 82, taking the total to 90.

Land investments in 3,591 consented plots also bolstered the company's performance.

"The group delivered strong growth in profit and return on capital employed in 2012 in a challenging but stable market environment," Chief Executive David Ritchie said.

"These improvements have been achieved through the compound positive effect of increased volumes, improved sales prices and stronger margins."

The group is aiming to deliver enhanced shareholder returns by improving the efficiency of its capital through continuing its focus on both land bank management and tight control of working capital, he added.

Looking ahead, Bovis said it would increase investments in promoting strategic land holdings at a cost of circa £3.5m higher than in 2012.

"This significant investment for future value generation will impact the profits deliverable in 2013 and will constrain the rate of growth in housing gross margin in 2013, compared to 2012, but will support further growth thereafter," the company said.

RD