Bovis Homes Group PLC (LON:BVS) today issued a trading update in respect of the period from 1 July to 11 November 2018.
Greg Fitzgerald, Group CEO said
“The Group’s improved operating performance including the transformation of our customer service and step change in build processes and quality is driving a significant improvement in our financial performance. We are fully sold for this year and continue to target a record year of profits for 2018.”
Strong sales position
We are fully sold for our targeted FY 2018 completions and expect to deliver another controlled and disciplined period end in December.
Customer satisfaction is a top priority and the Group is consistently delivering high levels, with our HBF Customer Satisfaction score for the year from 1 October 2017 trending at well above 80%. We are confident of achieving our target of a HBF 4 star customer satisfaction rating for 2018.
Our sales rate per outlet per week for the year to date is 0.51 (2017: 0.51), with pricing in line with our expectations. Whilst we have maintained our rate of sale, the uncertainty surrounding Brexit has impacted discretionary buyers. We have increased our use of part exchange which is running at c. 15% of reservations in the second half. We continue to be disciplined in our use of part exchange with completions in the period operating in line with our policies and procedures.
Help to Buy remains an important scheme, particularly for first time buyers, and we are pleased with the Government’s extension for a further two years to March 2023. The restrictions to the scheme from March 2021 are not unexpected, and we do not expect any significant reduction in the use of the scheme for our new homes as a result.
Increased land activity
As planned we have increased our land activity to ensure we maintain a good supply of high quality developments in line with our target of a 3.5 to 4.0 year owned land bank. We are seeing good opportunities in the land market and continue to make acquisitions with an average expected gross margin of at least 26% and ROCE of 25%. In the second half to date, we have secured 1,988 plots across 9 developments of which 4 have been converted from our strategic land bank. In addition to these developments we have agreed terms for c.1,000 plots across 8 developments that we expect to convert into our land bank in the balance of 2018 or the first quarter of 2019.
Balance sheet optimisation
We are advancing our 50:50 JV agreement at Wellingborough and continue to expect to deliver our target of a minimum of £180m of cash released into the business from our balance sheet optimisation programme by December 2018.
We are making good progress against our medium term targets and on track to achieve a number of them as early as this December. We expect 2018 completions to be in line with our expectations and with progress on our margin initiatives and improved operating performance, Bovis Homes continues to target profits for the year to be at a record level, in-line with the Board’s expectations.