14 November 2017

BOVIS HOMES GROUP PLC

Trading update

Bovis Homes Group PLC (the 'Group') is today issuing a trading update in respect of the period from 1 July to 10 November 2017 (the 'period').

Greg Fitzgerald, Group CEO said

"We are making encouraging progress towards all of our medium term performance targets with continued improvement in customer satisfaction and excellent progress in optimising the balance sheet and bringing additional cash into the business.  We expect to have a net cash position of at least £100 million as at 31 December 2017.  Trading is in line with expectations, the market remains strong, and we are on track to deliver another disciplined period end."

Strong sales position

We are fully sold for our targeted FY 2017 completions with an average sales rate over the period of 0.52 (H1 2017: 0.48).

Pricing remains robust and we expect to deliver an increase in the average selling price for FY 2017, largely driven by changes in mix with a modest increase in underlying prices.

Significant improvement in customer satisfaction

Delivering a high level of customer satisfaction across the Group remains a key priority and we are pleased to report that our HBF Customer Satisfaction rating on completions since 1 February 2017 has averaged 75%, equivalent to a 3-star rating.  We remain confident in achieving our medium term target of a 4-star rating.

Operating structure

Our initiatives to simplify and streamline our operating structure to reduce costs and make us more agile, are progressing well and we are on track to deliver our target of overheads being a maximum of 5% of revenue from FY 2018 onwards.  As previously announced, we expect to take an exceptional restructuring charge of c. £4 million in H2 2017.

We are advancing the development of our new product range which will provide us with c. 22 attractive, new house types to be launched across the Group in 2018.

Balance sheet restructuring

We have set out a clear programme of balance sheet optimisation targeting a minimum of £180 million additional cash flow into the business by December 2018.

We are pleased to have concluded the disposal of the Group's shared equity portfolio in the period, generating a cash receipt of £21.9 million.  We are very focused on reducing our level of work in progress and have seen a significant reduction in our holdings of both stock properties and part-exchange units during the period.

We have also made two land sales in the period realising proceeds of £12.9 million.  We will continue to review our land bank as we progress towards our target of reducing to 3.5 to 4.0 years of owned land (14,000 - 16,000 plots).

We therefore expect the Group to have a strong net cash position as at 31 December 2017 of at least £100 million. 

Outlook

The demand for new homes continues to be robust across all our regions and customer interest remains good.  The industry fundamentals are strong given the Government's housing policy, in particular Help to Buy, the low interest rate environment, and the competitive mortgage market.

We set out our clear operational priorities for 2017 to transform and re-set the business and have made positive progress against these.  We are confident of delivering profit, pre one-off and exceptional costs, in-line with the Board's expectations for FY 2017 and a significant improvement in profits for FY 2018.

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