Bovis dividend boost after move away from FTBs

By Ed Monk for Thisismoney.co.uk
Updated: 06:26 EDT, 14 March 2011

Bovis Homes dodged falling property prices by shunning first time buyers and building more family homes last year, more than doubling underlying profits in the process.

Solid foundations: Bovis was able to raise its average selling price.

The builder reported a pre-tax profit of £18.5m for 2010 – up 147% on 2009 – and cheered investors with news that it will pay a dividend for the first time in two-and-a-half years.

Shares in Bovis are 13.7p - 3.2% - higher at 443.3p.

Bovis said that a move to build more family homes had proved lucrative. Average selling prices rose 4% to £160,700 and the number of homes sold increased 5% to 1,900, which helped to drive a 6% increase in revenues to £298.6m.

Bovis has made an 'encouraging' start to 2011, with reservations up 11% in the first nine weeks of the year, and the number of people visiting sites up 28%.

It expects to launch 33 new sales outlets, which would be its 'most significant site launch programme for many years'.

Bovis also reported that it has increased the amount of land it has bought for future development, adding that it was now an 'excellent time to invest' after prices fell from pre-recession peaks.

By the end of 2010 it had agreements to buy a further 2,500 plots of land, in addition to 13,800 plots with planning consent.

Bovis said mortgage availability will continue to restrain buyers in 2011 but expects prices to remain stable as a whole. It has been buying more land in the south of England where it believes prices will remain more robust than the north.

Rival housebuilders Persimmon, Taylor Wimpey and Redrow have also reported improved profits in recent weeks as the sector recovers from the recession that caused sales and property prices to plummet.