Bovis Homes 2015 profit jumps 20%

Bovis Homes reported a jump in full year pre-tax profit and revenue as legal completions and prices rose and the housebuilder sounded an upbeat note on 2016.

For the year ended 31 December, pre-tax profit came in at £160.1m up from £133.5m in 2014, on revenue of £946.5m, up 17%.

The company said revenue growth was driven by record legal completions and a strong increase in the average sales price.

The number of legal completions was up 8% from the previous year to 3,934 while the average sales price advanced 7% to £231,600.

Meanwhile, forward sales at the year-end were 2,003 compared with 1,752 in 2014.

Chief executive David Ritchie said: “We have delivered record profit driven by another year of record volume. We have invested well during 2015 in new consented land and achieved a strong level of conversion from our strategic land bank.

“While it has been a time of operational challenge with fast moving market conditions, we are delivering our strategic growth plan and have evolved our management and business structure at the start of 2016 to support further growth.”

The board recommended a final dividend of 26.3p per share, giving a total dividend for the year of 40p versus the previous year’s 35p.

Looking ahead, Bovis expressed confidence that if market conditions remain stable, it will be able to improve return on capital employed further in 2016.

“In the current housing market, our plan envisages the business delivering sustainable growth over the next few years to achieve annual volumes of between 5,000 and 6,000 new homes,” said Ritchie.

Shore Capital said profit was a touch ahead of its forecast of £157m but more or less in line with consensus.

“A largely in-line statement with a still generally positive bent highlighting the still very favourable market climate at the desire to expand the business,” it said.

However, the brokerage said that at this stage, it can see nothing that would materially alter its forecasts for any of the future years and so it maintained its pre-tax profit estimate of £184m for full year 2016, which is in line with consensus.

“We remain cautious of the house builders generally on valuation grounds and through concerns about sustainability of margins through the rest of this cycle and, more particularly, beyond this cycle.”

Liberum said Bovis shares look cheap compared to the sector, but return on equity is weak compared to peers and the brokerage sees better value in Bellway, which “has an excellent record of growing without operational hiccups”.

At 1234 GMT, Bovis shares were up 0.1% to 911p.