Homebuilder Bovis Homes Group Plc (BVS.L) reported Monday that its first-half profit doubled from last year as revenues were benefited by increase in legal completions and average prices. The company also doubled its dividend, and said it expects significant growth in second-half profit, in line with expectations.
First-half 2012 pre-tax profit doubled to 16.20 million pounds from 8.12 million pounds last year. Profit attributable to equity holders of the parent climbed to 11.93 million pounds from 5.89 million pounds a year ago.
Revenue increased 27 percent to 170.3 million pounds from 133.6 million pounds in the 2011 period. Housing revenue climbed 19 percent.
Legal completions grew 18 percent to 944 homes with an average sales price of 164,400 pounds, higher than the price of 163,400 pounds a year ago. Average active sales outlets increased 21 percent to 82.
Housing gross margin grew 0.8 percentage points to 20.9 percent and operating margin climbed 2.8 percentage points to 10.3 percent.
Commenting on the results, Chief Executive David Ritchie said, "The Group has delivered a strong performance during the first half of 2012 with profit before tax doubling against the backdrop of stable, but challenging, market conditions. This increase has been delivered through the compound positive effect of increased volumes, improved average sales price and stronger profit margins."
Further, the company declared an interim dividend of 3 pence per share, double from last year, to be paid on November 23 to holders of ordinary shares on the register at the close of business on September 28.
Regarding the current trading, the company said it has experienced robust trading in the year to date with an increase in private reservations over 33 trading weeks of 19 percent to 1,253 homes. As of August 17, the company has achieved 1,968 net sales for legal completion, compared to 1,607 net sales at the same point in 2011. The company added that the sales prices achieved to date are marginally ahead of its expectations.
Looking ahead, Bovis Homes expects to be active on an average of 83 sales outlets for second half, an increase of 6 percent. The company also expects that the overall average sales price for 2012 legal completions would be about 6 percent greater than that achieved in 2011.
Ritchie added, "As a result of a greater number of active sales outlets with an increasing proportion of new, more profitable sites, the Group's profits will, subject to stable market conditions, continue to increase significantly in the second half of 2012, in line with the Group's expectations."
The housing gross margin for the full year will be in the range of 21 percent to 22 percent, higher than 20.8 percent last year, and operating margin will be between 12 percent and 13 percent, higher than 10 percent a year ago, the company noted.
Bovis Homes added that its investments combined with the strong pipeline of future land opportunities will support further sales outlet growth into 2013 and beyond.
Bovis Homes shares are currently trading at 505.25 pence in London, up 12.25 pence or 2.48 percent.
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