Bovis sounds note of caution with £8.6m loss

Aug 25 2009 by Iain Laing, The Journal

BUILDER Bovis Homes has sounded a note of caution on the housing market as it reported a £8.6m loss in the first half of the year.

The firm said while there had been improvements in the number of mortgage approvals and the rate of house price decline, a lack of loan availability and rising unemployment could continue to constrain prices.

Bovis’ pre-tax loss for the six months to June 30 includes write-downs of £9.8m relating to its land portfolio and contracts. Stripping this out, Bovis reported a pre-tax profit of £1.2m.

The firm said it had made “good progress” despite a significant fall in house prices, with private completions up 18% and overheads slashed by 48%.

Sharp falls saw the average sales price of private homes decline from £196,700 in the first six months of 2008 to £164,700 in the second half of last year. In the first six months of this year, Bovis said the average price was £160,400.

And while house prices have fallen as the property market stagnated, Bovis said the size of the homes it offered for sale had increased.

Private homes legally completed during the first half of this year were an average 996 square feet, compared with 964 square feet in the first half of 2008 and 980 square feet in the second half of 2008. Bovis said this reflected an approximate 21% fall in price per square foot from the peak early last year.

Group revenues were down 18% in the period to £122.6m as housing revenue fell by 16% to £120.4m and Bovis suspended its land sales.

Bovis legally completed 754 homes compared with 851 in the same period last year. Private reservations were up 92% in the first half, to 901, which Bovis said reflected its aim “to drive volume more assertively” this year.

By the end of the first half Bovis had slashed net debt to £14m after paying off £94m following a period of strong net cash inflow.

The firm said it expects to be cash positive at the end of 2009 and had taken actions to shore up the business in response to the sharp downturn in the housing market.

It said it was now well positioned to take advantage of future opportunities in the property market.