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Bovis Homes: Trading update
Bovis Homes issued a gloomy trading update for the six months to June 2005. The company said property transactions in England and Wales in the first quarter of 2005 were 24% lower than last year and Bovis’ own completions were down 16% to 1089 in the first half of the year. Social (low cost housing)completions made up 22.6% of total completions compared to 10.8% last year. Reservations (excluding forward sales for 2006) totalled 2,038 units, a 3% reduction from last years’ position.
The company does not expect to meet its budgeted sales volumes this year,
Both average selling prices and average size of house sold have declined, average selling prices fell to £179,800 (2004: £201,000) while the average size of house sold declined to 1060 square feet (2004:1167 square feet).
Gross margin have contracted to 33% (2004:34.7%), partly due to increased sales incentives, but administrative expenses are line with last year.
The share trades at 650p, on a prospective PE (2006 earnings) of 6.9x, within the sector range with a yield of 4.7%.
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