Half-yearly financial report 2013
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
13 Independent review report by KPMG LLP
to Bovis Homes Group PLC
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Financial and operational highlights
Housing revenue†
£183.2m
+17%
2012: £157.1m
Housing operating
profit† £20.4m
+50%
2012*: £13.6m
Housing operating
margin† 11.1%
+2.4ppts
2012*: 8.7%
Profit before tax
£18.6m
+19%
2012*: £15.6m
Earnings per share
10.8p
Dividend per share
4.0p
+ 26%
2012*: 8.6p
+ 33%
2012: 3.0p
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£188,500
s Average sales price
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+15%
Legal completions
963
Consented plots
acquired
2,767
2012: £164,400
2012: 944
2012: 1,037
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Sales rate per week
0.59
Active sales outlets
91
+28%
+11%
2012: 0.46
2012: 82
Private reservations
1,712
+43%
2012: 1,195
* Restated following the adoption of IAS19R “Employee Benefits”
† Housing revenue and housing operating profit exclude revenue and profit from land sales
Half-yearly financial report 2013 | 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.
• continuing investment in strategic land and delivering
strategic land conversion through achievement of residential
planning consent.
• progressively trading through older, lower margin sites.
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 acquiring smaller sites on
average and selectively selling consented plots on larger sites.
Significant progress has been made in the delivery of this
growth strategy with c12,000 consented plots across c80
new sites acquired since the housing market downturn.
The majority of these new sites are in the south of England
and are expected to deliver stronger sales prices and profit
margins. These new sites are contributing to an increase in the
number of sales outlets operated by the Group, which reached
92 during the first half of 2013, an increase of over 50%
compared to the low point of 60 sales outlets reached during
the first half of 2010.
The ongoing successful execution of this strategy will enable
the Group, assuming the continuation of current market
conditions, to continue to increase output capacity and,
therefore increase revenue and further improve profit margins
in the full year 2013. As a result, return on capital employed
is now expected to increase to at least 10.0% in 2013. In the
foreseeable future, with capital turn and margins expected to
continue to improve, the Group believes that the return on
capital employed can achieve a level within the range of 15%
to 18%, assuming current market conditions continue.
Revenue
The Group generated total revenue of £184.4 million during
the first half of 2013, compared to total revenue in H1 2012 of
£170.3 million.
Units
Private legal completions
Social legal completions
Total legal completions
Revenue (£m)
Private legal completions
Social legal completions
Revenue from legal completions
2013
839
124
963
2012
806
138
944
168.0
13.6
141.1
14.1
181.6
155.2
1.6
183.2
1.2
1.9
157.1
13.2
184.4
170.3
Malcolm Harris
Chairman
During the first half of 2013, Bovis
Homes has made significant progress in
the ongoing delivery of its strategy to
improve shareholder returns with a strong
improvement in housing profit, an increase
in the number of active sales outlets, a
material improvement in the rate of sale
per site and the successful continuation of
investment in consented and strategic land.
The general UK economy remains weak,
but is showing initial signs of a recovery
in growth. In the first half of 2013 the
UK housing market has been measurably
stronger than in 2012. Home buyers have
greater access to mortgages and appear
more confident about buying a home.
This has been supported by the Help to
Buy shared equity scheme, launched by the
Government in April 2013.
Strategy
The focus of the Group’s strategy remains to deliver material
improvements in shareholder returns by increasing profitability
whilst improving the efficiency of capital employed.
The Group will deliver enhanced profits from the compound
positive effect of:
• volume growth from a greater number of sales outlets,
primarily in the south of England and improving the sales
rate per site.
• higher average sales price from traditional homes on better
located sales outlets.
• stronger profit margins from an increasing proportion of
legal completions from new higher margin sites.
Other revenue
Housing revenue
Land sales revenue
Total revenue
02 | Half-yearly financial report 2013 | Performance
In
Bovis Homes has made significant progress in the ongoing
delivery of its strategy to improve shareholder returns
Revenue from legal completions in the first six months of 2013
was £181.6 million, 17% ahead of the same period in the
prior year. With other revenue of £1.6 million (H1 2012: £1.9
million), housing revenue was £183.2 million (H1 2012: £157.1
million). The land sales revenue during H1 2013 related to the
recognition of deferred land sales income, associated with the
delivery of services to a parcel of land sold in 2011 (H1 2012:
£13.2 million).
The Group legally completed 963 homes in the first six months
of 2013 (H1 2012: 944). Of these, 839 were private homes (H1
2012: 806 homes), an increase of 4%. Social homes comprised
13% of total legal completions (124 homes), compared to 15%
(138 homes) in the first half of 2012.
In the first six months of 2013 the average sales price of homes
legally completed increased by 15% to £188,500 (H1 2012:
£164,400), reflecting an improving mix of homes. The average
sales price of the Group’s private legal completions was 14%
higher at £200,200 (H1 2012: £175,000), benefiting from
stronger sales prices on new sites. The underlying year to date
increase in housing market prices is considered to have been
modest at some 1% to 2%.
Operating profit
The Group delivered an operating profit for the six months
ended 30 June 2013 of £20.5 million at an operating margin
of 11.1% (H1 2012*: £17.5 million at an operating margin of
10.3%). Excluding land sales, the Group increased operating
profit by 50% to £20.4 million with an operating margin of
11.1% (H1 2012*: £13.6 million at an operating margin
of 8.7%).
The gross margin achieved in the first half of 2013 was 23.0%,
which compared to 21.6% in H1 2012. The land sales profit
recognised during H1 2013 was £0.1 million, compared to
£3.9 million in H1 2012. Housing gross margin increased to
23.1% (H1 2012: 20.9%), which was generated by an
increasing contribution from the higher margin sites acquired
since the downturn.
As anticipated, overheads increased by 13% and constituted
12.0% of housing revenue in the first half of 2013 (H1 2012*:
12.2%). 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 are
written off as incurred. The Group expects that overheads as a
percentage of revenue will reduce from 9.5% in 2012* to below
9% for the 2013 full year.
*Restated following the adoption of IAS19R
Profit before tax
The Group achieved profit before tax of £18.6 million,
comprising operating profit of £20.5 million, net financing
charges of £2.0 million and a profit from joint ventures of
£0.1 million. This compares to £17.5 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 2012,
generating a profit before tax of £15.6 million in that period,
restated for IAS19R. There were no exceptional items in the first
six months of either 2013 or 2012.
Dividends
With the accelerating delivery of the Group’s growth strategy
and a strong improvement in the performance and future
prospects of the Group, an interim dividend of 4.0p per share
has been declared (2012 interim dividend: 3.0p). The Board
expects to continue to increase dividends progressively as
earnings per share increase.
The interim dividend will be paid on 22 November 2013 to
holders of ordinary shares on the register at the close of business
on 27 September 2013. The dividend reinvestment plan,
introduced in 2012, gives shareholders the opportunity to
reinvest their dividends.
Financing and cash flow
The Group incurred net financing charges of £2.0 million in the
first half of 2013 (H1 2012*: £2.0 million). The effect of IAS19R
on the H1 2012 finance charge was an increased charge of
£0.5 million.
Having started the year with a net cash balance of
£18.8 million, significant land investment has resulted in net
debt outstanding as at 30 June 2013 of £48.4 million. This
comprised £11.7 million of cash in hand, offset by £55.0 million
of bank debt, £4.8 million of loans received from the
Government and a £0.3 million liability, representing the fair
market value of an interest rate swap.
In the first six months of 2013, the Group generated an
operating cash inflow before land expenditure of £51.1 million
(H1 2012: £33.8 million), continuing to demonstrate strong
underlying cash generation from the Group’s existing assets.
As a result of the Group’s assertive land investments, payments
in H1 2013 associated with land purchases less cash recoveries
on land sales were £107.7 million (H1 2012: £50.9 million).
With a cash outflow from non-trading items of £10.6 million,
the overall net cash outflow for the six months ending 30 June
2013 was £67.2 million (H1 2012: £28.6 million).
Taxation
The Group has recognised a tax charge of £4.2 million on
profit before tax of £18.6 million at an effective tax rate of
22.6% (H1 2012*: tax charge of £4.1 million at an effective rate
of 26.3%).
Pensions
The Group had a pension scheme surplus of £1.8 million as
at 30 June 2013, compared to a deficit of £3.2 million at
31 December 2012. Scheme assets grew over the six months to
£87.3 million from £85.2 million. Scheme liabilities decreased to
£85.5 million from £88.4 million, primarily due to an increase
in the discount rate applied to liabilities, as a result of rising
bond yields.
Bovis Homes Group PLC | 03
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Net assets
Net assets per share as at 30 June 2013 was 577p as compared
to 547p at 30 June 2012.
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
2013
£m
2012*
£m
758.8
728.6
14.4
0.9
3.8
0.3
(8.0)
11.5
0.3
(4.1)
0.2
(4.7)
770.2
731.8
As at 30 June 2013 net assets were £11.4 million higher than
at the start of the year. Inventories increased during the six
months by £142.6 million to £1,006.2 million. As a result of the
strong investment in consented land, the land bank increased
by £119.2 million. Work in progress increased from the start
of 2013 by £27.7 million, as the Group built a larger number
of homes on a greater number of sites for legal completion in
H2 2013. Other movements in inventories relate to a decrease
in part exchange properties of £4.3 million. Trade and other
receivables reduced by £21.2 million, as a result of a reduction
in debtors related to land sales of £8.9 million and recovery of
amounts due from housing associations at the 2012 year end.
Available for sale financial assets held as current assets at the
2012 year end of £7.2 million have reduced to Nil, with the full
recovery of cash on units held in an investment fund into which
the Group had sold show home properties. Trade and other
payables totalling £291.3 million (31 December 2012: £249.3
million) comprised land creditors of £169.8 million
(31 December 2012: £123.8 million) and trade and other
creditors of £121.5 million (31 December 2012: £125.5 million).
Net cash reduced by £67.2 million.
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 2013, the Group added 2,767 consented plots
on 18 sites to the land bank at a cost of £166 million. These
plots have an estimated future revenue of £629 million and
an estimated future gross profit potential of £163.3 million
based on prevailing sales prices and build costs, delivering an
estimated future gross margin of 26.0%. Of these, 866 plots
were delivered through conversion of strategic land.
As at 30 June 2013, the Group held contracts to acquire 1,018
plots on 11 sites, the majority of which are expected to be
added to the consented land bank in H2 2013.
04 | Half-yearly financial report 2013 | Performance
Land bank
The Group held 15,579 consented plots in its land bank at
30 June 2013 (31 December 2012: 13,776). 73% of the plots
within the land bank were located in the south of England,
where the housing market continues to show greater strength,
and 61% of the consented land bank (9,522 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 2013,
based on prevailing sales prices and build costs, has increased
to £733 million with a gross margin of 23.5% (31 December
2012: gross profit of £600 million at a gross margin of 22.7%).
The average consented land plot cost at the start of 2013 was
£45,800. This has increased to £48,200 at 30 June 2013 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 (11% of land plots versus 13% at the
start of the year). The remaining provision on written down
plots as at 30 June 2013 was £25.3 million.
The Group continues to recognise the importance of strategic
land. During the first half of 2013, the Group has continued to
invest in strategic land and also to convert strategic land into
the consented land bank. Good progress is being made in the
promotion of a number of major strategic sites with potential
to obtain planning in the near term. As at 30 June 2013, the
Group’s strategic land bank stood at 19,341 potential plots,
compared to 19,318 potential plots at 31 December 2012.
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 directors
consider that the principal risks and uncertainties facing the
Group are those which were outlined on page 22 of the
Annual report and accounts 2012, which is available from
www.bovishomesgroup.co.uk, and additionally risks relating to
the supply chain in respect of the availability and cost of labour
and materials, which have heightened in recent months.
The Group has in place processes to monitor and mitigate
these risks.
Market conditions
In the first half of 2013, the UK housing market has
demonstrated signs of improvement with evidence of increased
mortgage availability and stronger home buyer confidence.
Monthly mortgage approvals which were previously steady
at circa 50,000 approvals per month have increased to circa
58,000 approvals in both May and June 2013, representing
a significant increase in the rate of approvals. Given the long
standing constraint on activity in the housing market arising
from low levels of mortgage finance, this recent increase is a
positive indicator for the market.
Bovis Homes has made significant progress in the ongoing
delivery of its strategy to improve shareholder returns
The launch of the Government’s Help to Buy shared equity scheme
on 1 April 2013 added to what was already a more confident
housing market backdrop and early signs are that this shared equity
product is having a positive effect on transactional activity in the
new homes market.
The Group has achieved a strong profit margin improvement in
the first half of 2013 over H1 2012 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 between 23%
and 24%.
As a result of these market positives, trading across the new build
sector has been strong during the first half of 2013 and in the
early weeks of the third quarter, with good sales rates and a less
pronounced summer lull in reservations than in previous years.
As such, the trading environment appears robust at this time and
is creating a growing sense of confidence in the market.
With overheads as a percentage of total revenue expected to reduce
to below 9% for 2013 (2012*: 9.5%), the Group expects to deliver
an operating margin approaching 15% (2012*: 13.3%). Return on
capital employed for 2013 is now expected to be at least 10.0%
(2012*: 7.7%), representing a further significant improvement
arising from the Group’s growth strategy.
Looking ahead to 2014, given the strong land acquisitions achieved
during 2013 to date, many of which were added early in the year,
the Group is confident that it can deliver another strong year of
sales outlet growth. Furthermore the strength of the pipeline of
further land acquisition opportunities gives the Group confidence
that sales outlet growth can continue through 2014 and into 2015.
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 2014. This is expected
to deliver another strong increase in return on capital employed
and enable the Group to achieve a shareholder return in excess of
the Group’s WACC. The Group considers that it has the resources
and opportunities to continue its strong growth beyond 2014 and,
subject to current market conditions continuing, the Group is well
positioned to further enhance shareholder returns.
Malcolm Harris
Chairman
With the increase in home buyer confidence and a greater ability
to transact, overall market pricing is showing an increased level
of resilience with marginal market sales price increases becoming
evident in certain locations, particularly in the south of England.
Current trading
The Group has experienced strong trading in the year to date with
an increase in private reservations over the 32 trading weeks to 9
August 2013 of 43% to 1,712 homes (2012: 1,195 homes). In this
period, the average private sales rate has been 0.59 net reservations
per site per week, 28% ahead of the sales rate of 0.46 achieved in
the same period of the prior year. The growth in reservations has
also been delivered through an 11% increase in active sales outlets,
which have averaged 91 to date, compared to an average of 82 in
the prior period. Sales prices achieved to date have been modestly
ahead of the Group’s expectations. Circa 500 customers have
reserved using the Government’s Help to Buy shared equity scheme
since its launch.
As at 9 August 2013, the Group had achieved 2,505 net sales for
legal completion in 2013, as compared to 1,844 net sales at the
same point in 2012, an increase of 661 homes.
Outlook
The Group is now around 90% sold for the current financial year.
Given stable market conditions, reservations achieved over the
next few weeks will deliver the targeted volume for 2013. This will
enable the Group to build a significantly enhanced forward order
book for 2014 from an earlier date than in prior years. The delivery
of an enhanced forward order book will provide a strong base on
which volume growth for the first half of 2014 can be achieved.
This is also expected to enable the Group to deliver a more even
balance of legal completions between the first and second half
years in 2014.
For 2013, the combination of the expected legal completion volume
and an expected increase of at least 10% in average sales price will
deliver strong year on year revenue growth.
Bovis Homes Group PLC | 05
Group income statement
For the six months ended 30 June 2013 (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 2013 (unaudited)
Profit for the period
Actuarial gains/(losses) on defined benefit pension scheme
Deferred tax on actuarial movements on defined benefit pension scheme
Six months
ended
30 June 2013
£000
Six months
ended
30 June 2012
restated - note 1
£000
Year ended
31 Dec 2012
restated - note 1
£000
184,412
170,275
425,533
(141,999)
(133,516)
(328,634)
42,413
36,759
96,899
(21,896)
(19,307)
(40,186)
20,517
17,452
56,713
1,175
1,375
2,933
(3,110)
(3,319)
(6,656)
(1,935)
(1,944)
(3,723)
59
127
254
18,641
15,635
53,244
(4,238)
(4,125)
(13,051)
14,403
11,510
40,193
10.8p
10.8p
8.6p
8.6p
30.2p
30.1p
Six months
ended
30 June 2013
£000
Six months
ended
30 June 2012
restated - note 1
£000
Year ended
31 Dec 2012
restated - note 1
£000
14,403
11,510
40,193
4,930
(5,420)
(3,500)
(1,134)
1,278
797
Total comprehensive income for the period attributable to equity holders of the parent
18,199
7,368
37,490
06 | Half-yearly financial report 2013 | Financial
Group balance sheet
As at 30 June 2013 (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
Available for sale financial assets
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 2013
£000
30 June 2012
£000
31 Dec 2012
£000
12,155
11,521
11,910
5,126
5,236
1,567
770
5,387
1,152
2,411
4,435
3,097
1,833
2,146
1,930
45,113
41,098
43,869
1,760
-
-
69,965
65,206
67,345
1,006,208
820,460
863,597
42,538
79,446
64,844
-
-
7,119
11,706
27,794
24,396
1,060,452
927,700
959,956
1,130,417
992,906
1,027,301
67,024
66,871
66,908
213,287
212,318
212,550
489,912
452,620
479,391
770,223
731,809
758,849
60,096
5,606
5,606
599
1,102
706
81,006
65,888
50,681
-
1,863
7,980
1,859
3,171
1,668
143,564
82,435
61,832
210,282
173,090
198,620
1,413
4,935
1,535
4,037
2,065
5,935
216,630
178,662
206,620
360,194
261,097
268,452
Total equity and liabilities
1,130,417
992,906
1,027,301
These condensed consolidated interim financial statements were approved by the Board of directors on 16 August 2013.
Bovis Homes Group PLC | 07
Group statement of changes in equity
For the six months ended 30 June 2013 (unaudited)
Balance at 1 January 2013
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 2013
Balance at 1 January 2012
Total comprehensive income and expense
Deferred tax on other employee benefits
Issue of share capital
Share based payments
Dividends paid to shareholders
Balance at 31 December 2012
Balance at 1 January 2012
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
Total
retained
earnings
£000
Issued
capital
£000
Share
premium
£000
Total
£000
479,391
66,908
212,550
758,849
18,199
51
-
281
(8,010)
-
-
-
-
116
737
-
-
-
-
18,199
51
853
281
(8,010)
489,912
67,024
213,287
770,223
449,671
66,836
212,064
728,571
37,490
33
-
861
(8,664)
-
-
72
-
-
-
-
486
-
-
37,490
33
558
861
(8,664)
479,391
66,908
212,550
758,849
449,671
66,836
212,064
728,571
7,368
14
-
230
(4,663)
-
-
35
-
-
-
-
254
-
-
7,368
14
289
230
(4,663)
452,620
66,871
212,318
731,809
08 | Half-yearly financial report 2013 | Financial
Group statement of cash flows
For the six months ended 30 June 2013 (unaudited)
Cash flows from operating activities
Profit for the period
Depreciation
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
Decrease/(increase) in trade and other receivables
Increase in inventories
Increase/(decrease) in trade and other payables
Decrease/(increase) 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
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 2013
£000
Six months
ended
30 June 2012
restated - note 1
£000
Year ended
31 Dec 2012
restated - note 1
£000
14,403
11,510
40,193
491
87
435
490
906
889
(1,175)
(1,375)
(2,933)
3,110
3,319
6,656
(19)
281
(7)
230
(14)
861
4,238
4,125
13,051
(59)
(127)
(254)
30,809
(5,243)
(3,587)
(142,611)
(22,701)
(65,841)
40,599
(10,781)
1,093
(457)
139
(2,401)
(50,303)
(19,986)
(11,381)
(3,519)
(863)
(1,707)
(5,635)
(3,770)
(9,922)
(59,457)
(24,619)
(23,010)
95
813
773
(744)
(350)
(1,213)
27
417
15
243
25
243
(415)
(111)
(493)
(620)
610
(665)
(8,010)
(4,574)
(8,664)
853
200
54,544
-
558
-
47,387
(4,374)
(8,106)
(12,690)
(28,383)
(31,781)
24,396
56,177
56,177
11,706
27,794
24,396
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 2013 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 16 August 2013. The financial statements are
unaudited but have been reviewed by KPMG LLP.
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 2013 and 30 June 2012 are unaudited. The comparative figures for the financial year ended 31 December
2012 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 have been reviewed by the directors and remain those published in the Company’s consolidated
financial statements for the year ended 31 December 2012, with the exception of the application of new accounting standards.
The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a
date of initial application of 1 January 2013:
IFRS13 establishes a single framework for measuring fair value and making disclosures about fair value measurements, when such measurements are
required or permitted by other IFRSs. In particular, it unifies the definition of fair value as the price at which an orderly transaction to sell an asset or to
transfer a liability would take place between market participants at the measurement date. In accordance with the transitional provisions of IFRS13, the
Group has applied the new fair value measurement guidance prospectively, and has not provided any comparative information for new disclosures.
IAS19 (Revised 2011) “Employee Benefits” outlines the accounting requirements for employee benefits. The Standard establishes the principle that the
cost of providing employee benefits should be recognised in the period in which the benefit is earned by the employee, rather than when it is paid or
payable, and outlines how each category of employee benefits are measured, providing detailed guidance in particular about post-employment benefits.
This impacts the measurement of various components representing movements in the defined benefit pension obligation and associated disclosures, but
not the Group’s total obligation.
The application of IAS19 (Revised 2011) has resulted in the interest cost and expected return on assets being replaced by a net interest charge/credit on
the net defined benefit pension liability/surplus. Certain costs previously recorded as part of finance costs or other comprehensive income have now been
presented within administrative expenses.
The comparative period and full year have been restated with profit being £0.4 million lower and £0.7 million lower respectively, and other comprehensive
income is £0.4 million higher and £0.7 million higher including the tax impact of the changes. The Group records actuarial adjustments immediately so
there has been no affect on the prior year pension deficit.
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 Conduct 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 2012, 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.
10 | Half-yearly financial report 2013 | Financial
Notes to the condensed consolidated interim financial statements continued
4 Earnings per share
(Unaudited)
Basic earnings per share
Diluted earnings per share
Six months
ended
30 June 2013
Pence
Six months
ended
30 June 2012
restated - note 1
Pence
Year
ended
31 Dec 2012
restated - note 1
Pence
10.8
10.8
8.6
8.6
30.2
30.1
Basic earnings per share
Basic earnings per ordinary share for the six months ended 30 June 2013 is calculated on a profit after tax of £14,403,000 (six months ended 30 June
2012 restated: profit after tax of £11,510,000; year ended 31 December 2012 restated: profit after tax of £40,193,000) over the weighted average of
133,464,080 (six months ended 30 June 2012: 133,248,378; year ended 31 December 2012: 133,294,726) ordinary shares in issue during the period.
Diluted earnings per share
The calculation of diluted earnings per share at 30 June 2013 was based on the profit attributable to ordinary shareholders of £14,403,000 (six months
ended 30 June 2012 restated: profit after tax of £11,510,000; year ended 31 December 2012 restated: profit after tax of £40,193,000).
The Group’s diluted weighted average ordinary shares potentially in issue during the six months ended 30 June 2013 was 133,719,575 (six months ended
30 June 2012: 133,372,229; year ended 31 December 2012: 133,432,911).
5 Dividends
The following dividends per qualifying ordinary share were settled by the Group.
(Unaudited)
May 2013: 6.0p (May 2012: 3.5p)
November 2012: 3.0p
Six months
ended
30 June 2013
£000
Six months
ended
30 June 2012
£000
Year
ended
31 Dec 2012
£000
8,010
4,663
-
-
8,010
4,663
4,663
4,001
8,664
The Board determined on 16 August 2013 that an interim dividend of 4.0p for 2013 be paid. The dividend will be settled on 22 November 2013 to
shareholders on the register at the close of business on 27 September 2013. This dividend has not been recognised as a liability at the balance sheet date.
6 Related party transactions
Transactions between fellow subsidiaries, which are related parties, during the first half of 2013 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 2012.
Transactions between the Group and key management personnel in the first half of 2013 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 2012. No material change has
occurred in these arrangements in the first half of 2013.
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 2013
£000
Six months
ended
30 June 2012
£000
Year
ended
31 Dec 2012
£000
59
47
93
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 £73,000 (six months ended 30 June 2012: £72,000; year ended 31 December 2012: £144,000).
Loans totalling £1,575,355 were provided in prior years 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 £24,000 (six months ended 30 June 2012: £26,000; year ended 31 December 2012: £49,000).
Bovis Homes Group PLC | 11
Notes to the condensed consolidated interim financial statements continued
7 Reconciliation of net cash flow to net cash
(Unaudited)
Net decrease in cash and cash equivalents
Drawdown 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 2013
£000
Six months
ended
30 June 2012
£000
Year
ended
31 Dec 2012
£000
(12,690)
(28,383)
(31,781)
(54,544)
115
(61)
-
(76)
-
(9)
(128)
(195)
18,790
50,775
50,775
(48,390)
22,188
18,790
11,706
27,794
24,396
(59,795)
(5,123)
(5,190)
(301)
(483)
(416)
(48,390)
22,188
18,790
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
19 August 2013.
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
16 August 2013
12 | Half-yearly financial report 2013 | Financial
Independent review report by KPMG LLP 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 2013 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 Conduct Authority (“the UK FCA”). 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 FCA.
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 2013 is not prepared, in all material respects, in accordance with IAS 34 as adopted by the EU and the
DTR of the UK FCA.
Stephen Wardell for and on behalf of KPMG LLP
Chartered Accountants
London
16 August 2013
Bovis Homes Group PLC | 13
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
North Ash Road
New Ash Green
Longfield
Kent DA3 8HQ
Tel: (01474) 876200
Fax: (01474) 876201
Cleeve Hall
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, The Manor House, North Ash Road, New Ash Green, Longfield, Kent DA3 8HQ.
www.bovishomesgroup.co.uk
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