Bovis moves back into profit

HOUSEBUILDER Bovis is steaming ahead with plans to invest in new land after returning to profit in 2009.

The FTSE 250 group says it has restarted its land acquisition scheme with four sites with planning consent snapped up in the fourth quarter of 2009 and terms agreed on another 15.

It had £122m net cash in its coffers in at the end of the year and believes it is "well positioned to increase its output capacity, as markets recover, supporting future profitable growth".

Bovis reported pre-tax profits of £4.8m in 2009 compared to a pre-tax loss of £78.7m the previous year.

It completed 1,803 homes and generated revenues of £281.5m.

The average sales price rose by three per cent to £154,600 as it concentrated its efforts on private homes rather than social housing.

However, the value of the average private home dropped to £165,000 – around 20 per cent lower than the price tag back in 2007.

The group, one of the smaller among the listed housebuilders, also released £11.6m of provisions during the second half of the year, more than offsetting the £9m charge in first half trading.

This reflects the “recovery of site viability in certain locations arising from improved sales prices and reduced construction costs,” it said.

Bovis was also more optimistic than many of its rivals in its outlook, predicting that conditions should be relatively stable in 2010. However it maintains that the month-by-month volatility will continue to make its presence felt.

“A degree of stabilisation in house prices evidenced in the marketplace in later 2009 will continue into 2010.

“Statistics would suggest the market as a whole has seen the commencement of modest pricing growth in the second half of 2009, although the group remains somewhat cautious due to the relatively low levels of second hand stock supporting price growth in the second hand market which appears to have moved ahead at a faster rate than the new build sector during 2009,” it added.