Housebuilding boss downplays Help to Buy influence

Housebuilder Bovis Homes Group has announced a 19 per cent jump in first half pre-tax profits to £18.6m and that it has already sold around 90 per cent of its homes for the year. However, its chief executive denied the success was due entirely to a government-fuelled housing bubble (release).

Bovis’s average house price increased by 15 per cent in the period to £188,500, although the company refrained from mentioning the government’s Help to Buy scheme, saying instead the improvement was down to an “improving mix of homes”.

Speaking to BBC Radio 4 later, chief executive David Ritchie said the programme had helped the market, but was “just another product”.

Earlier today, Rightmove said Help to Buy had boosted house sales transactions by five per cent – but housing supply is up just 0.2 per cent. It called for the scheme to be marketed clearly to potential sellers as well as buyers, adding that average asking prices across the country are up 5.5 per cent on one year ago.

In Bovis’s results release, Ritchie said the group has performed “strongly”, delivering a 50 per cent increase in housing operating profit.

This significant increase is a result of the ongoing successful execution of the Group's strategy reflecting the compound positive effect of increased volumes, improved average sales price and stronger profit margins….

The Group is circa 90% sold for the current financial year. This will allow the Group to deliver the required remaining reservations over the next few weeks and to build a significantly enhanced forward order book for 2014.

The positive trading position, combined with an increasing proportion of legal completions on new, more profitable sites, will enable the Group to increase profits significantly in 2013 in line with its expectations, subject to stable market conditions. With a further increase in capital turn, this strong profit is expected to generate a return on capital for 2013 of at least 10%.

The success of the Group in acquiring high quality, consented residential land, combined with the strong pipeline of future land opportunities, will support further sales outlet growth into 2014 and beyond. This in turn is expected to lead to further strong improvements in return on capital employed going forward.

Basic earnings per share increased to 10.8p from 8.6p. The interim dividend was boosted by a third to 4.0p per share.