Bovis to restore dividend as housing market improves
Saturday 10 July 2010
Bovis cheered investors with plans to reinstate its dividend next year, as it became the latest housebuilder to report rising property prices and sales.
The company stopped paying dividends 18 months ago as the recession forced it to slash its workforce by 40 per cent, restructure its debt and focus more on social housing.
But Bovis said it intended to resume the payments at the end of this financial year, "assuming the continuation of current market conditions in the new homes market". It said this change of heart was prompted by confidence about its medium-term prospects, its net cash position of £79m and its investments in land. Over the six months to 30 June, Bovis completed 803 home sales – 6 per cent more than in the same period a year ago.
For private properties, the group's average sale price for the half-year was £163,500, compared to £160,400 last year. Bovis said it had been delivering "solid" private weekly sales rates and achieving prices ahead of its own expectations. However, when the greater proportion of social housing was taken into account, the builder's average selling price slipped slightly, from £159,700 to £158,500. The cautious optimism voiced by Bovis followed a half-year update earlier this week from its rival Persimmon, which also said it was selling more homes and at higher average prices.
Bovis said it had added to its land bank about 1,900 plots with planning consent this year and had agreed terms on a further 2,500. The builder has been using the £60m raised through a shares placing last September to take advantage of cheap land prices.
Nevertheless, Bovis warned that the market for new homes remained "subdued", blaming the "ongoing liquidity" issues faced by first-time buyers, which is limiting transaction volumes and keeping sale prices low. According to the Halifax, property prices dropped by 0.6 per cent last month following a similar decline in May.
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