Bovis reports 130% rise in pre-tax profits
Housebuilder Bovis has today reported profits more than doubled in the six months to the end of June as a result of cost-cutting and rising house prices.
The company said pre-tax profits surged to £8.1 million in the six month period compared with £3.5 million in the same period a year earlier, while revenue rose by £18 million to £133.6 million.
Meanwhile, operating profits totalled £10 million compared with £4.8 million the first six months of 2010 and an operating margin of 4.2%.
However, the housebuilder only completed 801 new homes – relatively unchanged from the 803 a year ago.
The average sale prices increased 3.2% to £163,400 from £158,400.
David Ritchie, the company’s chief executive, said: “This increase has been delivered through improved profit margins generated from reduced construction costs on existing sites and the initial contribution from new higher margin sites acquired since the housing market downturn.”
The company acquired 1,571 more sites in the first half of the year – primarily in the south of England, while agreeing agreed terms on a further 2,500 sites.
Despite the encouraging figures, the company said the housing market remains constrained by the lack of mortgage availability.
The company’s share price was up more than 5% after publishing its figures.
In other news today, the Bank of England revealed mortgage approvals picked up significantly in July to a 14-month high.
According to the central Bank, there were 49,239 loans approved in the month – higher than the upwardly revised 48,500 for June and a significant improvement on April’s 45,855 which represented a four-month low.
The figure was also slightly higher than analysts’ forecasts but still remain well below levels seen prior to the financial crisis.
Since the early 1990s, mortgage approvals have averaged around 90,000 a month but the credit crunch saw a tightening of lending criteria and many have been unable to secure a mortgage unless they have a significant deposit and this, in turn, is having a negative impact on the housing market.