Half-yearly financial report 2012
Bovis Homes Group PLC
www.bovishomesgroup.co.uk
Performance
01 Financial and operational highlights
02 Interim management report
Financial
06 Group income statement
06 Group statement of comprehensive income
07 Group balance sheet
08 Group statement of changes in equity
09 Group statement of cash flows
10 Notes to the condensed consolidated interim
financial statements
12 Statement of directors’ responsibility
12 Independent review report by KPMG Audit Plc
to Bovis Homes Group PLC
13 Directors and principal offices
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Financial and operational highlights
Revenue
£170.3m
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+27%
2011: £133.6m
Operating profit
£17.6m
+76%
2011: £10.0m
Operating margin
10.3%
+2.8ppts
2011: 7.5%
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Profit before tax
£16.2m
+100%
Earnings per share
8.9p
+102%
2011: £8.1m
2011: 4.4p
Dividend per share
3.0p
+100%
2011: 1.5p
Net assets per share
547p
Net cash
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+9p
2011: 538p
944
s Legal completions
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+18%
£22.2m
2011: £45.7m
Average sales
outlets 82
+21%
2011: 801
2011: 68
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Land bank plots
13,620
2011: 14,470
Half-yearly financial report 2012 | Performance | 01
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Building the future profit potential in the land bank will be
delivered by:
• adding new consented sites to the land bank which will
achieve higher profit margins.
• progressively trading through older, lower margin sites.
• continuing investment in strategic land and delivering
strategic land conversion through achievement of residential
planning consent.
Greater efficiency of capital employed will be delivered by:
• efficient cash utilisation with more sites being acquired on
deferred terms.
• maintaining tight control of work in progress.
• managing the land bank through selective sales of consented
plots on sites.
Significant progress has been made in the delivery of this
growth strategy with:
• circa 8,000 consented plots acquired since the housing
market downturn.
• circa 30 new sales outlets expected to launch in 2012, with
33 new sales outlets having opened in 2011.
• six land sales delivered since the housing market downturn
with further land sales to be undertaken selectively.
The successful execution of this strategy should enable the
Group, assuming stable market conditions, to continue to
increase output capacity progressively and further improve
margins in 2013 and beyond. The Group considers that the
required investment can be managed with its existing capital
structure. This should lead to an increase in the Group‘s return
on equity to a level where it exceeds its cost of capital.
Malcolm Harris
Chairman
During the first half of 2012, Bovis
Homes has made significant progress
in delivering its strategy to improve
returns with a doubling of profit, a
strong increase in the number of active
sales outlets and the successful
continuation of investment in consented
and strategic land.
This has been achieved against the
backdrop of stable, but challenging, UK
housing market conditions, reflecting
the continuing restriction of higher
loan to value mortgage lending, which
particularly constrains first time buyers
with limited deposits.
Strategy
Revenue
The Group generated total revenue of £170.3 million during
the first half of 2012, compared to total revenue in H1 2011 of
£133.6 million, an increase of 27%.
The focus of the Group’s strategy is to deliver further material
improvements in shareholder returns by increasing profitability
whilst improving the efficiency of capital employed. The strategy
can be successfully delivered during a period of stable market
conditions and is flexible enough to operate during short
periods of market weakness.
The Group will deliver enhanced profits from the compound
positive effect of:
Units
Private legal completions
Social legal completions
Total legal completions
• volume growth from a greater number of sales outlets,
Revenue (£m)
delivered through consented land acquisition, primarily in the
south of England.
Private legal completions
Social legal completions
• higher average sales price from traditional homes on better
Housing revenue
located sales outlets.
Other revenue
• stronger profit margins from an increasing proportion of legal
Land sales revenue
completions from new higher margin sites.
Total revenue
02 | Half-yearly financial report 2012 | Performance
2012
2011
806
138
944
681
120
801
141.1
119.4
14.1
11.5
155.2
130.9
1.9
13.2
2.7
-
170.3
133.6
Bovis Homes has made significant progress in delivering
its strategy to improve returns
Housing revenue in the first six months of 2012 was £155.2
million, 19% ahead of the same period in the prior year. Other
revenue was £1.9 million (H1 2011: £2.7 million) and land sales
revenue was £13.2 million (H1 2011: Nil).
The Group legally completed 944 homes in the first six months
of 2012 (H1 2011: 801). Of these, 806 were private homes
(H1 2011: 681 homes), an increase of 18%. Social homes
comprised 15% of total legal completions (138 homes),
consistent with 15% (120 homes) in the first half of 2011.
In the first six months of 2012 the average sales price of homes
legally completed was £164,400 (H1 2011: £163,400) and the
average sales price of the Group’s private legal completions
was £175,000 (H1 2011: £175,300). The increasing benefit of
stronger sales prices on new sites was offset in the first half
year by an increased proportion of legal completions from
midlands / northern sites, trading out lower priced product.
Housing market prices are considered to have remained
unchanged during the year to date.
The average size of the Group’s private home legal
completions decreased by 2.0% to 996 square feet in
H1 2012 (H1 2011: 1,017 square feet), in part due to the
increased contribution of smaller homes where customers
took advantage of the FirstBuy scheme. The sales price per
square foot increased by 2.0%. The Group’s social home legal
completions decreased in average size to 805 square feet in
the first half of 2012 (H1 2011: 833 square feet). Overall, the
average size of the Group’s legally completed homes decreased
by 2.2% and the sales price per square foot increased by 2.9%.
Operating profit
The Group delivered an operating profit for the six months
ended 30 June 2012 of £17.6 million at an operating margin
of 10.3% (H1 2011: £10.0 million at an operating margin
of 7.5%).
The gross margin achieved in the first half of 2012 was 21.6%,
which compared to 20.1% in 2011. The Group delivered a land
sales profit of £3.9 million (H1 2011: Nil). Housing gross margin
increased to 20.9% (H1 2011: 20.1%), which, with relatively
stable market pricing year on year, was generated from the
increasing contribution from new higher margin sites acquired
since the downturn.
As anticipated, overheads have increased by 14% and constitute
11.3% of revenue in the first half of 2012 (H1 2011: 12.6%).
The Group has invested in sales and marketing activity, given
the increasing number of active sales outlets, and in progressing
newly acquired sites through the detailed planning and design
phases to start work on site, all such costs being written off
as incurred. The Group expects that overheads as a percentage
of revenue will reduce from 9.8% in 2011 towards 9% for the
2012 full year.
Profit before tax
The Group achieved profit before tax of £16.2 million,
comprising operating profit of £17.6 million, net financing
charges of £1.5 million and a profit from the joint venture of
£0.1 million. This compares to £10.0 million of operating profit,
£2.0 million of net financing charges and a profit from the
joint venture of £0.1 million in the first six months of 2011,
generating a profit before tax of £8.1 million in that period.
There were no exceptional items in the first six months of either
2011 or 2012.
Dividends
With the Group’s growth strategy delivering as expected and a
strong improvement in the performance and future prospects
of the Group, an interim dividend of 3.0p per share has been
declared (2011 interim dividend: 1.5p). The Board expects to
continue to increase dividends progressively as earnings per
share increase.
The interim dividend will be paid on 23 November 2012 to
holders of ordinary shares on the register at the close of
business on 28 September 2012. The Board has decided to
close the Scrip dividend scheme. In its place, a new dividend
reinvestment plan (DRIP) will be offered, giving shareholders the
opportunity to continue reinvesting their dividends. In contrast
to the Scrip dividend scheme, under which new shares were
issued, the new DRIP, operated by the Registrar, will buy
existing shares for shareholders on the market through a special
dealing arrangement. Documentation inviting shareholders to
participate will be issued on or around 1 October 2012.
Financing and cash flow
The Group incurred net financing charges of £1.5 million in
the first half of 2012 (H1 2011: £2.0 million). The decrease is
primarily due to a lower charge for imputed interest on land
of £1.4 million (H1 2011: £2.2 million). This charge reflects the
difference between the cost and nominal price of land bought
on deferred terms which is charged to the income statement
over the life of the deferral of the consideration payable.
The decrease in average land creditors during the period
compared to the same period in 2011 has, therefore, reduced
this charge. Net bank interest and fees for H1 2012 were
£1.4 million (H1 2011: £1.2 million). The Group benefited from
a £0.4 million (H1 2011: £0.3 million) net pension financing
credit in the first half of 2012, the expected return on scheme
assets being in excess of interest on scheme obligations.
The Group also benefited from a finance credit of £0.7 million
(H1 2011: £0.7 million) arising from unwinding the discount
on its available for sale financial assets during the first half
of 2012. There was £0.2 million of other financing credit during
H1 2012 (H1 2011: £0.4 million).
Bovis Homes Group PLC | 03
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Having started the year with a net cash balance of £50.8
million, the Group’s net cash balance as at 30 June 2012 was
£22.2 million with £27.8 million of cash in hand, offset by
£5.1 million of loans received from the Government and
£0.5 million liability, representing the fair market value of an
interest rate swap. The cash outflow during the six months
reflected the Group’s assertive land investment as part of its
strategy, as payments associated with consented land purchases
exceeded net cash generated from housing and land sales.
In the first six months of 2012, the Group generated an
operating cash inflow before land expenditure of £33.8 million,
continuing to demonstrate strong underlying cash generation
from the Group’s existing assets. Work in progress levels have
remained under tight control with the Group constructing
approximately the same number of units worth of production
as it sold through legal completions in the first half year.
Taxation
The Group has recognised a tax charge of £4.3 million on
profit before tax of £16.2 million at an effective tax rate of
26.3% (H1 2011: tax charge of £2.2 million at an effective
rate of 27.5%).
Pensions
The Group’s pension scheme deficit increased by £5.6 million
to £8.0 million as at 30 June 2012, compared to a deficit of
£2.4 million at 31 December 2011. Scheme liabilities increased
to £86.0 million from £79.1 million, the increase being primarily
due to a reduction in the discount rate applied to liabilities, as
a result of falling bond yields. Scheme assets grew over the six
months to £78.0 million from £76.7 million.
Net assets
Net assets per share as at 30 June 2012 was 547p as compared
to 538p at 30 June 2011.
Analysis of net assets
Net assets at 1 January
Profit after tax for the six months
Share capital issued
Net actuarial movement on pension
scheme through reserves
Adjustment to reserves for share based payments
Dividends settled
Net assets at 30 June
2012
£m
2011
£m
728.6
710.8
11.9
0.3
(4.5)
0.2
(4.7)
5.9
0.6
3.4
0.3
(4.0)
731.8
717.0
Land
Land investments
The Group has continued to take advantage of opportunities
to acquire high quality consented land. In the six months
ended 30 June 2012, the Group added 1,037 consented plots
on eight sites to the land bank at a cost of £64 million.
These plots, 76% of which are located in the south of England,
have an estimated future revenue of £239 million and an
estimated future gross profit potential of £61 million based on
prevailing sales prices and build costs, delivering an estimated
future gross margin of 25.4%. Of these plots, 147 plots were
delivered through conversion of strategic land, reflecting an
unusually quiet period of conversion for the Group.
Since 30 June 2012, the Group has added to the land bank
a further 419 consented plots on two sites. As at 20 August
2012, the Group held contracts to acquire circa 1,200 plots on
ten sites, the majority of which are expected to be added to the
consented land bank in H2 2012. Additionally, the Group had
agreed terms in principle on a further 20 sites, representing in
excess of 3,000 plots.
During the first half of the year the Group sold two parcels
of consented residential land. The Group will continue to
undertake land sales selectively.
Land bank
The Group held 13,620 consented plots in its land bank at
30 June 2012 compared to 13,723 consented plots held at
the start of the year. 72% of the plots within the land bank
were located in the south of England, where the housing
market continues to show greater robustness, and 48% of the
consented land bank (6,557 plots) has been added since the
low point of house prices in the market downturn. The Group
estimates that the gross profit potential on the plots within
the consented land bank at 30 June 2012, based on prevailing
sales prices and build costs, has increased to £574 million with
a gross margin of 22.6% (31 December 2011: gross profit of
£524 million at a gross margin of 21.4%).
The average consented land plot cost at the start of 2012
was £42,100. This has increased to £43,900 at 30 June 2012
as a result of the addition of new traditional housing sites in
higher value locations, where the average plot cost is higher,
and a lower number of written down plots held in the land
bank at the end of the half year (15% of land plots versus
17% at the start of the year).
The Group has for a long time recognised the importance
of strategic land. During the first half of 2012, the Group
has continued to invest in strategic land and also to convert
strategic land into the consented land bank. As a result, the
Group’s strategic land bank increased by over 1,000 plots to
19,829 potential plots, compared to 18,749 potential plots at
31 December 2011.
04 | Half-yearly financial report 2012 | Performance
Bovis Homes has made significant progress in delivering
its strategy to improve returns
Principal risks and uncertainties
The Group is subject to a number of risks and uncertainties as
part of its activities. The Board regularly considers these and
seeks to ensure that appropriate processes are in place to
manage, monitor and mitigate these risks. The principal risks and
uncertainties facing the Group are outlined on page 22 of the
Annual report and accounts 2011, which is available from
www.bovishomesgroup.co.uk. The directors consider that the
principal risks and uncertainties, which could have a material
impact on the Group’s performance in the remaining six months
of financial year, remain unchanged.
Market conditions
The key constraint for the UK housing market remains the
continued restricted mortgage availability at higher loan to
value ratios. Monthly mortgage approval data has been generally
stable for the last two years, averaging between 45,000 and
55,000 approvals per month. The Group strongly supported the
Government’s FirstBuy initiative, which provided a good incentive to
bring first time buyers into the housing market. The Group’s existing
FirstBuy allocation is expected to be utilised in the third quarter of
this year. In addition, the Group expects NewBuy to provide further
support to the new homes market, while banks remain cautious
with lending.
Trading during the summer period this year has been noted across
the housebuilding sector as being less strong than earlier in the
year, with a more marked summer seasonality effect than was seen
in either 2010 or 2011. This, combined with macroeconomic issues
impacting consumer sentiment, has created a more challenging
trading environment since June.
Consistent with 2011, overall market pricing has remained stable
during 2012 to date, although with some regional differences.
Pricing in prime southern locations has been more robust than in
locations further north. In the short term, the Group expects market
pricing to remain relatively stable at the current levels, as the Group
foresees few significant changes in either housing market supply or
overall customer demand.
Current trading
The Group has experienced robust trading in the year to date with
an increase in private reservations over 33 trading weeks of 19%
to 1,253 homes (2011: 1,049 homes). In this period, the average
private sales rate has been 0.46 net reservations per site per week,
slightly ahead of the sales rate of 0.45 achieved in the same period
of the prior year. The growth in reservations has been driven from
the 17% increase in active sales outlets, which have averaged 82 to
date, compared to an average of 70 in the prior period.
Encouragingly, the Group has achieved a private sales rate in the
last seven weeks of 0.46 net private reservations per site per week,
slightly ahead of the comparable prior year period. As at 17 August
2012, the Group has achieved 1,968 net sales for legal completion
in 2012, as compared to 1,607 net sales at the same point in 2011,
an increase of circa 360 homes.
Outlook
The Group expects to be active on an average of 83 sales outlets
for H2 2012, an increase of 6% on the 78 achieved in H2 2011.
Subject to stable market conditions, this increase in sales outlets will
further support reservation levels and underpin the expected growth
in total legal completions for 2012 over 2011.
Given that the average sales price of private homes, either legally
completed to date or sold for 2012 delivery, as at 30 June 2012
stood at £189,300, the Group expects the overall average sales
price for 2012 legal completions to be circa 6% greater than that
achieved in 2011.
The Group has achieved a strong profit margin improvement in
the first half of 2012 over H1 2011 and expects that, on the basis
of current reservations and subject to stable market conditions,
the housing gross margin for the full year will be in the range
of 21% to 22%. For full year 2012, overheads as a percentage
of total revenue are expected to reduce towards 9% from the
9.8% achieved in 2011. As a result, the Group expects to deliver
an operating margin of between 12% and 13% (2011: 10.0%).
Return on capital employed for the 2012 full year is expected to
approach 7.5% (2011: 5.0%), representing a further significant
improvement arising from the Group’s growth strategy.
Looking ahead to 2013, the Group owns, controls or is currently
acquiring a total of around 105 sales outlets which will be
operational during 2013 and are expected to contribute circa 90
to the 2013 sales outlet average. The strength of the pipeline of
further land acquisition opportunities gives the Group confidence
that this average will increase further.
With an increasing proportion of legal completions expected from
sites acquired since the housing market downturn and with a
greater number of active sales outlets, the Group expects that,
based on stable market conditions, volumes, average sales price and
profit margins will continue to increase in 2013 delivering another
strong increase in return on capital employed, which should rise
towards 10%. The Group considers that it has the resources and
opportunities to continue its strong growth beyond 2013 with the
existing financial resources in the Group.
Malcolm Harris
Chairman
Bovis Homes Group PLC | 05
Group income statement
For the six months ended 30 June 2012 (unaudited)
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit before financing costs
Financial income
Financial expenses
Net financing costs
Share of profit of Joint Venture
Profit before tax
Income tax expense
Profit for the period attributable to equity holders of the parent
Earnings per share
Basic
Diluted
Group statement of comprehensive income
For the six months ended 30 June 2012 (unaudited)
Profit for the period
Actuarial (losses)/gains on defined benefit pension scheme
Deferred tax on actuarial movements on defined benefit pension scheme
Six months
ended
30 June 2012
£000
Six months
ended
30 June 2011
£000
Year ended
31 Dec 2011
£000
170,275
133,565
364,782
(133,516)
(106,715)
(292,546)
36,759
26,850
72,236
(19,197)
(16,831)
(35,876)
17,562
10,019
36,360
1,375
1,353
2,843
(2,869)
(3,376)
(7,349)
(1,494)
(2,023)
(4,506)
127
125
243
16,195
8,121
32,097
(4,262)
(2,234)
(8,831)
11,933
5,887
23,266
8.9p
8.9p
4.4p
4.4p
17.5p
17.5p
Six months
ended
30 June 2012
£000
Six months
ended
30 June 2011
£000
Year ended
31 Dec 2011
£000
11,933
5,887
23,266
(5,980)
4,570
(3,390)
1,415
(1,219)
851
Total comprehensive income for the period attributable to equity holders of the parent
7,368
9,238
20,727
06 | Half-yearly financial report 2012 | Financial
Group balance sheet
As at 30 June 2012 (unaudited)
Assets
Property, plant and equipment
Investments
Restricted cash
Deferred tax assets
Trade and other receivables
Available for sale financial assets
Retirement benefit assets
Total non-current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total current assets
Total assets
Equity
Issued capital
Share premium
Retained earnings
Total equity attributable to equity holders of the parent
Liabilities
Bank and other loans
Other financial liabilities
Trade and other payables
Retirement benefit obligations
Provisions
Total non-current liabilities
Trade and other payables
Provisions
Current tax liabilities
Total current liabilities
Total liabilities
30 June 2012
£000
30 June 2011
£000
31 Dec 2011
£000
11,521
11,328
11,614
5,236
4,995
5,327
770
250
659
4,435
2,595
3,498
2,146
17,164
2,017
41,098
34,101
38,653
-
2,080
-
65,206
72,513
61,768
820,460
816,588
797,756
79,446
47,038
77,422
27,794
61,001
56,177
927,700
924,627
931,355
992,906
997,140
993,123
66,871
66,679
66,836
212,318
210,946
212,064
452,620
439,366
449,671
731,809
716,991
728,571
5,606
15,299
5,402
1,102
2,236
1,243
65,888
88,230
45,451
7,980
1,859
-
1,971
2,444
1,776
82,435
107,736
56,316
173,090
167,898
202,665
1,535
4,037
1,571
2,944
1,535
4,036
178,662
172,413
208,236
261,097
280,149
264,552
Total equity and liabilities
992,906
997,140
993,123
These condensed consolidated interim financial statements were approved by the Board of directors on 17 August 2012.
Bovis Homes Group PLC | 07
Group statement of changes in equity
For the six months ended 30 June 2012 (unaudited)
Own
shares
held
£000
Retirement
benefit
obligations
£000
Other
retained
earnings
£000
Total
retained
earnings
£000
Issued
capital
£000
Share
premium
£000
Total
£000
Balance at 1 January 2011
(2,222)
(14,951)
450,972
433,799
66,609
210,409
710,817
Total comprehensive income and expense
Deferred tax on other employee benefits
Issue of share capital
Own shares disposed
Share based payments
Dividends to shareholders
Balance at 30 June 2011
-
-
-
144
-
-
3,351
5,887
9,238
-
-
-
-
-
13
-
(144)
299
13
-
-
299
(3,983)
(3,983)
-
-
70
-
-
-
-
-
537
-
-
-
9,238
13
607
-
299
(3,983)
(2,078)
(11,600)
453,044
439,366
66,679
210,946
716,991
Balance at 1 January 2011
(2,222)
(14,951)
450,972
433,799
66,609
210,409
710,817
Total comprehensive income and expense
Issue of share capital
Own shares disposed
Share based payments
Dividends paid to shareholders
-
-
281
-
-
(2,539)
23,266
20,727
-
-
20,727
-
-
-
-
-
(281)
-
-
1,121
1,121
(5,976)
(5,976)
227
1,655
1,882
-
-
-
-
-
-
-
1,121
(5,976)
Balance at 31 December 2011
(1,941)
(17,490)
469,102
449,671
66,836
212,064
728,571
Balance at 1 January 2012
(1,941)
(17,490)
469,102
449,671
66,836
212,064
728,571
Total comprehensive income and expense
Deferred tax on other employee benefits
Issue of share capital
Share based payments
Dividends to shareholders
Balance at 30 June 2012
-
-
-
-
-
(4,565)
11,933
7,368
-
-
-
-
14
-
14
-
230
230
(4,663)
(4,663)
-
-
35
-
-
-
-
254
-
-
7,368
14
289
230
(4,663)
(1,941)
(22,055)
476,616
452,620
66,871
212,318
731,809
08 | Half-yearly financial report 2012 | Financial
Group statement of cash flows
For the six months ended 30 June 2012 (unaudited)
Cash flows from operating activities
Profit for the period
Depreciation
Adjustment for sale of assets to Joint Venture
Impairment of available for sale assets
Financial income
Financial expense
Profit on sale of property, plant and equipment
Equity-settled share-based payment expense
Income tax expense
Share of results of Joint Venture
Increase in trade and other receivables
Increase in inventories
(Decrease)/increase in trade and other payables
Increase/(decrease) in provisions and employee benefits
Cash generated from operating activities
Interest paid
Income taxes paid
Net cash generated from operating activities
Cash flows from investing activities
Interest received
Acquisition of property, plant and equipment
Proceeds from sale of plant and equipment
Investment in Joint Venture
Movement in loans with Joint Venture
Dividends received from Joint Venture
Investment in restricted cash
Net cash generated from investing activities
Cash flows from financing activities
Dividends paid
Proceeds from the issue of share capital
Drawdown of borrowings
Net cash generated from financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at start of period
Cash and cash equivalents at end of period
Six months
ended
30 June 2012
£000
Six months
ended
30 June 2011
£000
Year ended
31 Dec 2011
£000
11,933
5,887
23,266
435
-
490
334
-
577
747
234
1,274
(1,375)
(1,353)
(2,843)
2,869
3,376
7,349
(7)
230
(22)
299
(33)
1,121
4,262
2,234
8,831
(127)
(125)
(243)
(5,243)
(17,996)
(37,951)
(22,701)
(52,231)
(33,396)
(10,781)
59,128
47,517
29
(187)
(3,484)
(19,986)
(79)
12,389
(863)
(1,702)
(2,311)
(3,770)
(732)
(5,085)
(24,619)
(2,513)
4,993
813
332
420
(350)
(367)
(1,073)
15
-
-
243
34
-
-
-
52
(500)
(125)
200
(111)
(112)
(522)
610
(113)
(1,548)
(4,574)
(3,426)
(4,146)
200
-
50
-
52
(10,177)
(4,374)
(3,376)
(14,271)
(28,383)
(6,002)
(10,826)
56,177
67,003
67,003
27,794
61,001
56,177
Bovis Homes Group PLC | 09
Notes to the condensed consolidated interim financial statements
1 Basis of preparation
Bovis Homes Group PLC (‘the Company’) is a company domiciled in the United Kingdom. The condensed consolidated interim financial statements of
the Company for the six months ended 30 June 2012 comprise the Company and its subsidiaries (together referred to as ‘the Group’) and the Group’s
interest in associates.
The condensed consolidated interim financial statements were authorised for issue by the directors on 17 August 2012. The financial statements are
unaudited but have been reviewed by KPMG Audit Plc.
The condensed interim financial statements do not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.
The figures for the half years ended 30 June 2012 and 30 June 2011 are unaudited. The comparative figures for the financial year ended 31 December
2011 are not the Company’s statutory accounts for that financial year. Those accounts have been reported on by the Company’s auditors and delivered
to the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew
attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies
Act 2006.
The preparation of a condensed set of financial statements requires management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Judgements made by management in the application of adopted IFRSs that have significant effect on the financial statements and estimates with a
significant risk of material adjustment in following years remain those published in the Company’s consolidated financial statements for the year ended
31 December 2011.
The condensed interim financial statements have been prepared in accordance with IAS34 ‘Interim Financial Reporting’ as endorsed by the EU.
As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed consolidated interim financial statements have
been prepared applying the accounting policies and presentation that were applied in the preparation of the Company’s published consolidated financial
statements for the year ended 31 December 2011, which were prepared in accordance with IFRSs as adopted by the EU.
2 Seasonality
In common with the rest of the UK housebuilding industry, activity occurs year round, but there are two principal selling seasons: spring and autumn.
As these fall into two separate half years, the seasonality of the business is not pronounced, although it is biased towards the second half of the year
under normal trading conditions.
3 Segmental reporting
All revenue and profit disclosed relate to continuing activities of the Group and are derived from activities performed in the United Kingdom.
4 Earnings per share
(Unaudited)
Basic and diluted earnings per share
Six months
ended
30 June 2012
Pence
Six months
ended
30 June 2011
Pence
Year
ended
31 Dec 2011
Pence
8.9
4.4
17.5
Basic earnings per share
Basic earnings per ordinary share for the six months ended 30 June 2012 is calculated on a profit after tax of £11,933,000 (six months ended 30 June
2011: profit after tax of £5,887,000; year ended 31 December 2011: profit after tax of £23,266,000) over the weighted average of 133,248,378
(six months ended 30 June 2011: 132,755,559; year ended 31 December 2011: 132,860,480) ordinary shares in issue during the period.
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2012 was based on the profit attributable to ordinary shareholders of £11,933,000
(six months ended 30 June 2011: profit after tax of £5,887,000; year ended 31 December 2011: profit after tax of £23,266,000).
The Group’s diluted weighted average ordinary shares potentially in issue during the six months ended 30 June 2012 was 133,372,229
(six months ended 30 June 2011: 132,839,762; year ended 31 December 2011: 132,944,264).
5 Dividends
The following dividends per qualifying ordinary share were settled by the Group.
(Unaudited)
May 2012: 3.5p (May 2011: 3.0p)
November 2011: 1.5p
Six months
ended
30 June 2012
£000
Six months
ended
30 June 2011
£000
Year
ended
31 Dec 2011
£000
4,663
3,983
-
-
4,663
3,983
3,983
1,993
5,976
The Board determined on 17 August 2012 that an interim dividend of 3.0p for 2012 be paid. The dividend will be settled on 23 November 2012 to
shareholders on the register at the close of business on 28 September 2012. This dividend has not been recognised as a liability at the balance sheet date.
10 | Half-yearly financial report 2012 | Financial
Notes to the condensed consolidated interim financial statements continued
6 Related party transactions
Transactions between fellow subsidiaries, which are related parties, during the first half of 2012 have been eliminated on consolidation, as have
transactions between the Company and its subsidiaries during this period. The Group’s associates and joint ventures are disclosed in the Group’s Annual
report and accounts 2011.
Transactions between the Group and key management personnel in the first half of 2012 were limited to those relating to remuneration, previously
disclosed as part of the Group’s Report on directors’ remuneration published with the Group’s Annual report and accounts 2011. No material change has
occurred in these arrangements in the first half of 2012.
Mr Malcolm Harris, a Group Director, is a non-executive director of the Home Builders Federation (HBF), to whom the Group pays subscription fees and
fees for research as required. Net amounts payable for each period were as follows:
(Unaudited)
HBF
Six months
ended
30 June 2012
£000
Six months
ended
30 June 2011
£000
Year
ended
31 Dec 2011
£000
47
36
85
There have been no related party transactions in the first six months of the current financial year which have materially affected the financial performance
or position of the Group, and which have not been disclosed.
Transactions with Joint Venture
Bovis Homes Limited is contracted to provide property and letting management services to Bovis Peer LLP. Fees charged in the period, inclusive of VAT,
were £72,000 (six months ended 30 June 2011: £66,600; year ended 31 December 2011: £133,200).
During the year ended 31 December 2011, inventory was transferred to Bovis Peer LLP for a cash consideration of £2,156,438. In addition to the
existing loan of £1,450,355, a further loan of £125,000 was provided, also at an annual interest rate of LIBOR plus 2.4%. No other loans or sales of
inventory have taken place.
Interest charges made in respect of the loans were £26,000 (six months ended 30 June 2011: £22,000; year ended 31 December 2011: £46,000).
7 Reconciliation of net cash flow to net cash
(Unaudited)
Net decrease in cash and cash equivalents
Repayment of borrowings
Fair value adjustments to interest rate swaps
Fair value adjustments to interest free loan
Net cash at start of period
Net cash at end of period
Analysis of net cash:
Cash
Bank and other loans
Fair value of interest rate swaps
Net cash
Six months
ended
30 June 2012
£000
Six months
ended
30 June 2011
£000
Year
ended
31 Dec 2011
£000
(28,383)
(6,002)
(10,826)
-
(76)
-
92
(128)
(66)
10,177
(315)
61
50,775
51,678
51,678
22,188
45,702
50,775
27,794
61,001
56,177
(5,123)
(15,299)
(4,995)
(483)
-
(407)
22,188
45,702
50,775
8 Circulation to shareholders
This interim report is sent to shareholders. Further copies are available on request from the Company Secretary, Bovis Homes Group PLC, The Manor
House, North Ash Road, New Ash Green, Longfield, Kent DA3 8HQ. Further information on Bovis Homes Group PLC can be found on the Group’s
corporate website www.bovishomesgroup.co.uk including the analyst presentation document which will be presented at the Group’s results meeting on
20 August 2012.
Bovis Homes Group PLC | 11
Statement of directors’ responsibility
We confirm to the best of our knowledge:
• the condensed set of financial statements has been prepared in accordance with IAS34 Interim Financial Reporting as adopted by the EU;
• the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7.R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the
financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining
six months of the year; and
(b) DTR 4.2.8.R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so.
For and on behalf of the Board,
David Ritchie
Chief Executive
Jonathan Hill
Group Finance Director
17 August 2012
Independent review report by KPMG Audit Plc to Bovis Homes Group PLC
Introduction
We have been instructed by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months
ended 30 June 2012 which comprises the Group income statement, Group statement of comprehensive income, Group balance sheet, Group statement
of changes in equity, Group statement of cash flows and the related explanatory notes. We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of
financial statements.
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the
Disclosure and Transparency Rules (“the DTR”) of the UK’s Financial Services Authority (“the UK FSA”). Our review has been undertaken so that we might
state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Directors’ responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FSA.
As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the EU. The condensed set of
financial statements included in this half-yearly financial report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by
the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on
our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial
information consists of making enquiries, principally of persons responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and
consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the
DTR of the UK FSA.
Stephen Wardell for and on behalf of KPMG Audit Plc
Chartered Accountants
London
17 August 2012
12 | Half-yearly financial report 2012 | Financial
Directors and principal offices
Bovis Homes Group PLC
Board of Directors
Malcolm Robert Harris
Chairman (non-executive)
Alastair David Lyons
Non-executive Deputy Chairman
John Anthony Warren
Non-executive Director
Colin Peter Holmes
Non-executive Director
David James Ritchie
Chief Executive
Jonathan Stanley Hill
Group Finance Director
Group Company Secretary
Martin Trevor Digby Palmer, FCIS
Group Company Secretary
1 Bovis Homes Group PLC
3 South West region
The Manor House
Cleeve Hall
North Ash Road
New Ash Green
Longfield
Kent DA3 8HQ
Tel: (01474) 876200
Fax: (01474) 876201
Cheltenham Road
Bishops Cleeve
Cheltenham
Gloucestershire GL52 8GD
Tel: (01242) 662400
Fax: (01242) 662488
DX: 41950 New Ash Green 2
DX: 137901 Bishops Cleeve 2
2 South East region
4 Central region
The Manor House
Bromwich Court
North Ash Road
New Ash Green
Longfield
Kent DA3 8HQ
Tel: (01474) 876200
Fax: (01474) 876201
Highway Point
Gorsey Lane
Coleshill
Birmingham B46 1JU
Tel: (01675) 437000
Fax: (01675) 437030
DX: 41950 New Ash Green 2
DX: 728340 Coleshill 2
Information in respect of the Group’s press releases, interim reports, annual report and accounts and other
investor relations information is available at www.bovishomesgroup.co.uk
Bovis Homes Group PLC | 13
Bovis Homes Group PLC, The Manor House, North Ash Road, New Ash Green, Longfield, Kent DA3 8HQ.
www.bovishomesgroup.co.uk
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