Bovis invests for continued growth

After a record 2014, house-builder Bovis Homes has reported further growth in the first half of 2015.

For the six months ended 30 June 2015, Bovis built 1,525 new homes (2014 H1: 1,487), generating £350.7m of revenue, up 9% on last year’s £322.1m. Net profit was also up 9% to £56.0m (2014 H1: £51.3m).

Meanwhile the company is continuing to invest in land to maintain growth. During the first six months of 2015, Bovis Homes grew its land bank from 21,350 strategic plots across 76 sites to 23,287 plots across 86 sites.

The aim is to grow the business to one that builds between 5,000 and 6,000 new homes per year. By comparison, Bovis Homes built 3,635 new homes in 2014 and 2,813 in 2013.

To manage the extra work the current structure of six operating regions will be increased to eight regions in 2016.  Firstly, the existing Central region will be split into a West Midlands region and an East Midlands region and secondly, the new Thames Valley region will become operational during 2016.

In addition, Keith Carnegie (currently Central Division managing director) will take up the new role of chief operating officer from 1st January 2016 reporting to chief executive David Ritchie.

Commenting on the first-half results, Mr Ritchie said: “We have delivered a strong first half performance in 2015 with a record number of legal completions and a further improvement in return on capitalemployed.  Our long term land investment in high quality locations, including delivery from strategic land, is providing a consented land bank which supports growth in active sales outlets leading to increased volumes.

“I am pleased to report that significant land opportunities continue to be available at higher returns meaning disciplined investment in consented land should underpin future growth in shareholder returns.  With positive market conditions prevailing, we continue to assess the housing cycle and will adapt our strategy appropriately.  We anticipate that the addition of around 40 sites per annum will support our medium term growth strategy to deliver volumes of between 5,000 and 6,000 new homes each year.

“For 2015, we are on track to deliver our expected volume of new homes and remain confident in our outlook for the year as a whole.  The combination of strong revenue growth and higher profit margins with improved capital efficiency will drive higher capital turn and return on capital employed.”