Record profits for Bovis Homes as housing demand continues to climb

The average cost of one of the housebuilder’s homes jumped 7pc in 2015 to £231,600

Housebuilder Bovis Homes has reported record profits for 2015 as the housing market continues to hot up.

The company’s annual results, which were released to the stock market this morning, revealed that pre-tax profit grew 20pc last year to £160.1m, up from £133.5m in 2014.

Revenue grew 17pc to £946.5m, driven by a 7pc rise in average sales prices to £216,600 and strong demand for new homes.

The final dividend of 26.3p a share brings the total shareholder payout for the year to 40p, up 14pc on 2014.

During the year, the company added 35 sites, equivalent to 6,058 homes, to its land bank. These plots have an estimated future revenue value of around £1.7bn and an estimated profit potential of around £440m, based on current sales prices and how much it costs to build the homes.

Bovis is currently in the final stages of securing planning on eight major sites, which could house 5,000 new homes. In total, the group aims to build between 5,000 and 6,000 properties each year.

Chief executive David Ritchie said growth in the UK’s housing market continued to fuel business, with demand outstripping supply.

He also said that while the the housing market would continue to grow, there were some constraints on the amount of capital available to smaller housebuilders.

He added: “While it has been a time of operational challenge with fast moving market conditions, we are delivering our strategic growth plan and have evolved our management and business structure at the start of 2016 to support further growth. Assuming market conditions remain stable we are confident in our ability to improve return on capital employed further in 2016.”

Monthly figures from the Bank of England showed mortgage approvals were 18pc higher last year and in 2014, driven by fixed interest rates.

House prices continue to rise across regional markets, but the cost of building new homes is expected to increase further, thanks to an ongoing shortage in the labour market.

[Source:- Telegraph]