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Record profits for Bovis Homes sees record profits as housing demand climbs





Strong financial performance 

•Record legal completions of 3,934 homes (2014: 3,635)
• 17% increase in revenue to £947m (2014: £809m), exceeding 1 times capital turn 
• Operating profit margin of 17.3% (2014: 17.0%) Well positioned for future growth 
• Over 19,800 consented plots across 142 sites 
• Over 23,000 strategic plots across 80 sites - c8,000 plots with planning agreed 
• Strong balance sheet with net cash of £30m (2014: £5m ) Improving cash returns
 • 14% increase in dividend to 40p (2014: 35p)


Despite the country  facing  a house-building crisis ,seventeen percent increase in revenue to £947m (2014: £809m), exceeding 1 times capital turn was made by national house builder Bovis homes Plc


A decade ago, the Barker Review of Housing Supply noted that about 250,000 homes needed to be built every year to prevent spiralling house prices and a shortage of affordable homes.




By building them out more slowly it means they can maximise the value of their assets," It may be in their business interest to do this ;previously said the chief executive of the Town and Country Planning Association.

But what it means for the country is that developers are sitting on land for houses that could be put on the market and relieve the housing shortage. It shows the need for the state to take charge of developing large sites so that not all the homes are under the control of the big house builders.


Two years ago , Mark Carney, governor of the Bank of England, complained that house building in the UK was half that of his native Canada, despite the UK having a population twice the size

The consequences have been rocketing prices in London, the South East and some other parts of the country.Carney has also warned that the housing market posed the biggest risk to Britain's economic recovery as a shortage of new homes drives up prices.



Chief executive David Ritchie [above] of Kent based house builder Bovis said, based on the current housing market, the business will deliver "sustainable growth" in the coming years and achieve "annual volumes of between 5,000 and 6,000 new homes".

He added: "Activity levels continue to increase across the sector and in the near term the availability of skilled labour remains a constraint.




Bovis ,has  warned the lack of skilled workers within the construction industry would drive up costs as activity levels increased.

"This labour shortage has driven higher than expected levels of construction cost inflation."

The company said that the average cost for a consented plot of land had also risen over the period from £46,600 to £49,200.


The trading update comes as a report at the beginning of February showed Britain's construction output slipped in the final three months of last year, despite an upsurge in activity in December.

The Office for National Statistics said earlier in the month that building output shrunk 0.4% in the fourth quarter compared to three months before, failing to meet expectations of a 0.1% drop.


With the lack of housing new housing stock  prices paid by first-time buyers were will only continue rising, in tow  with house prices,UK house prices increased by 6.7% in the year to December 2015
and for owner-occupiers (existing owners), prices increased by 6.9% for the same period.

The Bank of England Governor has also said, "that rising house prices represent the biggest risk to the economy."


Research published last year by the TCPA showed that latest household projections suggest that we need over 220,000 additional homes in England each year until 2031 if the projected growth in households is to be accommodated, and currently we are building only 54% of that number - putting pressure on prices and rents




Bovis Homes Group PLC Final results 2015 






BOVIS HOMES GROUP PLC
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
GROWTH STRATEGY ON TRACK AND RECORD PROFIT DELIVERED

Bovis Homes Group PLC today announces its final results for the financial year ended 31 December 2015 which have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ('IFRS').

Financial highlights for 2015
·      Significant revenue growth driven by record legal completions and a strong increase in average sales price
·      Record profits delivered
·      Return on capital employed achieved in line with 2015 target
·      Increased dividend as planned
·      Strong balance sheet

2015
2014
Change
Revenue
£946.5m
£809.4m
+17%
Profit before tax
£160.1m
£133.5m
+20%
Basic earnings per share
95.4p
78.6p
+21%
Dividend per share
40.0p
35.0p
+14%
Operating profit margin
17.3%
17.0%
+0.3ppts
Return on capital employed *
18.3%
16.2%
+2.1ppts
Net cash
£30.0m
£5.2m


Operational highlights for 2015
·      Land investment aligned with growth strategy
·      Achieved planned growth in sites owned at the year end
·      Improved forward sales position


2015
2014
Change
Legal Completions



Number of legal completions
3,934
3,635
+8%
Average sales price
£231,600
£216,600
+7%
Reservations



Private reservations in year (excluding PRS)
2,986
2,709
+10%
Net private reservations per site per week (excluding PRS)
0.56
0.54
+4%
Forward sales at year end
2,003
1,752
+14%
Consented land



Consented plots added
6,058
7,300

Sites added
35
42

Sites owned at year end
142
128

Plots in consented land bank at year end
19,814
18,062


Long term strategy to deliver strong shareholder returns
·      Growth to continue during current positive housing market conditions
·      Business structure and leadership team evolved and strengthened supporting planned growth
·      Improving profits and capital efficiency driving higher financial returns
·      Significant strategic land holdings with planning agreed
·      Strategy of operational flexibility through the cycle

* ROCE is calculated as operating profit divided by average opening and closing capital employed excluding net cash and investment in joint ventures

Commenting, David Ritchie, the Chief Executive of Bovis Homes Group PLC said:
"We have delivered record profit driven by another year of record volume.  We have invested well during 2015 in new consented land and achieved a strong level of conversion from our strategic land bank.  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.
In the current housing market, our plan envisages the business delivering sustainable growth over the next few years to achieve annual volumes of between 5,000 and 6,000 new homes. 

I am pleased to reconfirm that, in line with guidance, the Board is recommending a full year dividend of 40 pence, an increase of 14%, reflecting our confidence in the Group's future growth prospects.

I would like to recognise the considerable commitment and hard work of our employees during 2015 and thank them all for their contribution to the Group's success."

Enquiries
David Ritchie, Chief Executive
Results issued by
Reg Hoare / James White /

Earl Sibley, Group Finance Director

Giles Robinson

Bovis Homes Group PLC

MHP Communications

On 22 February
tel: 07921 107717

On 22 February
tel: 020 3128 8540

Thereafter - tel: 01474 876200


Certain statements in this press release are forward looking statements.  Forward looking statements involve evaluating a number of risks, uncertainties or assumptions that could cause actual results to differ materially from those expressed or implied by those statements.  Forward looking statements regarding past trends, results or activities should not be taken as a representation that such trends, results or activities will continue in the future.  Undue reliance should not be placed on forward looking statements.

Chief Executive's statement

Bovis Homes is delivering its growth strategy, achieving a record number of legal completions during 2015 while investing in high quality land assets in its target areas and delivering further increases in shareholder returns.  The increase in volume, aligned with higher average sales prices, delivered a strong improvement in operating profit.  Our capital turn in 2015 exceeded one times and this along with an increase in operating margin led to a further improvement in return on capital employed.  Profit before tax increased by 20% to £160.1 million and return on capital employed was 18.3%, 2.1 percentage points higher than 2014.  Our balance sheet remains robust with year end net cash of £30 million.

The strategic plan communicated during 2014 laid out the ambitions for the Group.  We aim to deliver market leading performance over the cycle from long term land investment with a focus on building and selling quality family homes.

The positive housing market conditions in the UK continue, with growth in both transaction levels and sales prices.  Housing demand continues to run ahead of new housing supply with the availability of development land supported by increasing levels of planning permissions.  The Government has an ambition for the industry to build over 200,000 new homes a year and is supporting new housebuilding through its renewed commitment to Help to Buy, Starter Homes and driving land supply through the planning process.  The Group is wholly aligned with this strategy to deliver the homes the nation needs as it steadily grows its capacity and output year on year.

Strategic plan

The Group's strategic plan remains to deliver growth in shareholder returns from:

·     Disciplined land investment, both consented and strategic, to grow the business in a controlled way towards a steady  state of between 5,000 and 6,000 new homes per annum
·     Investment in people to underpin the continuous evolution of the Group's structure to manage the future growth
·     Ongoing assessment of the housing cycle ensuring flexibility to adapt the plan to changes in the market
·     Execution of the plan which has been further evidenced by the performance during 2015

Land investment supporting future growth

The Group continues to implement its disciplined land investment strategy, including strong levels of conversion from strategic land, to provide growth in volume at strong sales prices and high profit margins.  We acquired 35 sites during 2015 following the acquisition of 42 sites in 2014, in line with our ambition to acquire around 40 new sites per year.  This growth is further supported by the good progress we have made in the year with many key sites in our strategic land portfolio.  As at 31 December 2015, the Group owned 142 consented sites and remains on track to increase further its number of owned consented sites during the next few years.  Our strategic ambition of delivering between 5,000 and 6,000 new homes per annum will be achieved by operating around 150 sales outlets at steady state.  Average sales outlet numbers will increase towards this level over time with land investment.

This investment is focused in the Group's targeted, primarily Southern, geographies within which the Group believes there is strong market demand for housing and sufficient supply of land to fulfil its strategic ambitions.  Our rigorous acquisition criteria are applied to every proposal, reflecting not only the anticipated profit margin and return on capital employed, but also site specific risks and geographic concentration risk.



2015

2014

Consented plots added

6,058

7,300

Sites added

35

42

Sites owned at period end

142

128

Plots in consented land bank at period end

19,814

18,062


Average consented land plot cost


£49,200


£46,600

Proportion in South of England

76%

75%


In the year the Group added to the land bank 6,058 consented plots on 35 sites at a cost of £343 million.  These plots have an estimated future revenue of c£1,700 million and an estimated future gross profit potential of c£440 million based on sales prices and build costs at the point of appraisal, delivering an estimated future gross margin of 26.4%.  The average return on capital employed of the land acquired based on investment appraisal at the time of acquisition is c28%.

The estimated gross profit potential of the Group's consented land bank plots as at 31 December 2015, based on prevailing sales prices and build costs, has increased to £1,247 million with a gross margin of 25.5% (31 December 2014: £1,017 million at 25.2%).  Written down land in the land bank at 31 December 2015 made up only 2% of plots (31 December 2014: 6%).

The successful conversion of strategic land continues to be a key driver of value for the Group.  New strategic land investments added 3,827 plots into the strategic land bank, giving a total of 23,083 strategic plots at the year end across 80 strategic sites.  The strategic land bank reflects positively the Group's strategy of land acquisition with 68% of the strategic plots in the South of England.  During 2015, the Group converted 2,217 plots from the strategic land bank into the consented land bank.

The Group has either secured or is in the final stages of securing planning consent on eight major strategic sites: Bishop's Stortford (where the first 180 plots have already been added to the consented land bank), North Whiteley, Bexhill, Witney, Edwalton, Gravesend, Taunton and Tavistock.  In total, these sites will deliver over 5,000 consented plots with high profit margins and returns above existing hurdle rates.  These sites will be acquired once valuation and option exercise processes are complete.  The sites generally benefit either from significant deferred terms on purchase or the ability to add the land over a number of years through tranche drawdown.  Our site at Wellingborough obtained revised planning consent in December 2015 for 3,650 plots which supports the start of housebuilding on site during 2016 with the expectation of achieving a profit margin in excess of our hurdle rates.  Overall, around 8,000 plots of the strategic land bank have planning agreed.  In a number of cases, development partners are being identified for these larger sites, in line with the Group's aims for capital efficiency. 

An example of working with a development partner is on our strategic site at North Wokingham which was acquired in December and is included within the year end land bank.  We sold a parcel of the development to a Registered Social Landlord (RSL) in December and have entered into a contract with the same RSL to develop a mix of private and social dwellings.  This development has already commenced construction on the key infrastructure roads in the early weeks of 2016. 

In pursuit of capital efficiency the Group completed in 2015 the sale of 4 parcels of land on strategically sourced sites, and further land sales are planned in 2016.

The successful execution of our plan in respect of our key strategic sites has the potential to deliver a significant long term benefit to the business. The Group's strategic land assets represent one of its key differentiators.  We expect these assets will provide strong replenishment for the consented land bank over the coming years.  The size of this opportunity supports the Group's aim for 50% of its consented land bank to be sourced through strategic means in the future.

Evolving Group structure to better manage a bigger business

As planned, in order to manage effectively the increased annual volume and support growth the Group has been operating as eight regional businesses since 1 January 2016.  The changes have seen the formation both of our West Midlands and East Midlands regions from splitting our existing Central region and of the fledgling Thames Valley region, which is planning to deliver its first new homes during 2016.  The evolved structure ensures greater management focus in our regional geographies and maintains our ability to make the right business choices in an agile manner, whilst managing risk effectively through short lines of management control.  The eight regions are structured in two operating divisions, each overseeing four regions.  In line with our strategy this operating structure provides the platform to deliver between 5,000 and 6,000 homes per annum.

In order to manage this growth, the management team has been strengthened through promotions from within the business.  Keith Carnegie, previously Central Division Managing Director and with over 15 years' experience with the Group, has taken up the new role of Chief Operating Officer from 1 January 2016.  Keith is responsible for how the business operates across all its regional businesses and also oversees the key Group wide support functions.  The Group is clear on its operating priorities going forward and in particular is focused on how we safely build quality homes, ensuring each of our developments is set up to deliver our production plans and that we follow consistently our robust processes and procedures from site acquisition through planning and construction onto sales. Keith is also leading a review of the Group support functions to assess how these need to evolve to support our future growth.

The Group recognises the critical role that our people play in the delivery of the strategic plan.  In particular, we are investing in our leadership team through formal development programmes accompanying more informal mentoring across all our business operations.  Overall, our employee base continues to grow with the scale of the business. We closed the year with 1,062 employees having increased from 928 at the start of 2015.  This growth has been supported by higher levels of investment to support recruitment, training and development.

Given the current labour constraints impacting the sector, staff turnover remains most pronounced in our build department.  During the year, we recruited 192 new employees into our construction teams including 37 new apprentices. Our Build Academy programme first developed in 2014 has been a key part of our approach to supporting new members of our construction team.

Continually assessing the housing cycle

The Group continues to view the housing market as being supportive of growth during the current upswing in the cycle.  There continue to be constraints on capital available to smaller housebuilders and discipline is being demonstrated in the consented land market.  Demand for new housing remains strong with increasing housing transaction levels and higher sales prices (the Halifax house price index rose over 9% in 2015). Demand is supported by an active mortgage market and low interest rates.  The planning system is delivering an increased level of planning consents underpinning our investment in strategic land and providing a good supply of consented land into the market.  However, the level of new build homes being supplied continues to be below Government targets.  As a result, we believe a good opportunity remains for well capitalised housebuilders to invest in land to increase housing supply.

Robust discipline in our investment strategy is demonstrated by our record of land acquisitions made at above hurdle rate margins and our improving capital turn.  We continue to assess the housing cycle and have the ability to adapt quickly.  We have processes in place that enable the Group to stop its land investment quickly when required and adjust the length of its overall land holdings as the cycle evolves. Our long term investment strategy, including our ambition to source around 50% of consented land from strategic land, provides greater flexibility of land supply in a changing economic environment whilst contributing sites with strong sales prices and high profit margins.

Execution of the plan

In 2015, the Group has taken another step forward in scale, delivering an 8% increase in legal completions to 3,934 homes (2014: 3,635).  Private legal completions (excluding PRS) increased by 10% to 2,901 (2014: 2,645).  Legal completions of social homes were 848 (2014: 704), representing 22% of total legal completions (2014: 19%) more in line with the proportion of social housing plots in our land bank.

Average active sales outlets of 102 were 6% higher than the 97 in 2014, although this increase reflects delays to sales launches of some new higher margin sites.  The combination of active sales outlet growth in 2015 and a greater southern focus enabled the Group to achieve 2,986 private reservations (excluding PRS), a 10% increase on the 2,709 achieved in 2014.  Net private reservations (excluding PRS) per site per week was 0.56 compared to 0.54 in 2014.  Whilst this represents a robust sales rate it also reflects the Group's ambition to match sales rates more closely with production rates and the availability of finished homes. 

Our average sales price increased by 7% to £231,600 (2014: £216,600) with the average sales price of private legal completions (excluding PRS) 8% higher at £272,100 (2014: £250,800).  These average prices benefit both from the improved geographical and product mix on new sites driving higher sales prices and estimated annual market pricing improvements of circa 4-5%.

During 2015, 55% of the private homes legally completed were from the "Portfolio" range, up from 38% in 2014.  This percentage is expected to grow further in 2016.  The "Portfolio" range of homes continues to be excellently received by customers and they are also highly efficient to build.  In addition, as planned, the proportion of traditional private homes sold increased to 70% in 2015 from 66% in 2014.  Three storey homes reduced to 18% of legal completions (2014: 21%) and apartments have decreased to 12% (2014: 13%).

The Group achieved production levels 12% ahead of 2014.  Work in progress turn remained high at 3.5 times (2014: 3.6).  Housing work in progress ended 2015 at 929 units worth of production (2014: 923), equivalent to less than one quarter's worth of our 2015 volume.  Looking forward through 2016 we aim to align our production rates further with our sales rates and target a more even flow of production.

Activity levels continue to increase across the sector and in the near term the availability of skilled labour remains a constraint.  This labour shortage has driven higher than expected levels of construction cost inflation.  In addition, we have seen additional cost pressure in the business as we drive increased activity levels on site from higher prelim costs and the impact of replacing underperforming sub-contractors.  The Group's average construction cost per square foot in 2015 was 8% higher than in 2014.  Whilst we continue to see signs of these cost increases moderating, managing our construction cost base remains a key priority for the business.  We are seeking to develop further our strategic partnerships with our key sub-contractors, manage our materials costs through Group-wide agreements, in addition to driving continuous review and improvements across all sites and all areas of spend. 

Market conditions
 
The housing market in 2015 represented a positive trading environment.  Customer demand was strong throughout the year with weekly prospect levels running ahead of 2014.  Monthly mortgage approvals, according to the Bank of England, were 18% higher in the year supported by unchanged interest rates. 

The Government's support for the housebuilding sector has continued during the year through driving the UK planning system to deliver consented land, the extension of Help to Buy through to 2021, and the initiatives announced in respect of Starter Homes.  Whilst we welcome the news on Help to Buy which provides greater certainty and confidence in the market, the proposals in respect of Starter Homes are still developing and their effect will become clearer in time.

House prices continue to rise across many regional markets with stronger growth in the south of England.  Whilst there are signs that cost pressure is moderating in 2016, continuing rising activity levels in the sector may drive ongoing constraints in labour supply.  As a result, the cost of building new homes is expected to increase further.

Current trading

The Group entered 2016 with a strong forward sales position with 2,003 total reservations, a 14% improvement on 2015.


2015
2014
Change




Private
841
756
+11%
PRS
38
223
-83%
Social
1,124
773
+45%
Total forward sales at 31 December
2,003
1,752
+14%

The Group is currently trading on 102 sales outlets (2015: 99).  The pipeline of new sites controlled by the Group currently being managed through the planning, procurement and early phases of construction is expected to increase this level further through 2016. 

The Group has delivered 429 private reservations in the first seven weeks of 2016, this equates to a sales rate per site per week of 0.60 compared to 0.68 in 2015 which benefited from some bulk investor reservations.  Sales prices achieved on these private reservations to date have been ahead of the Group's expectations set prior to the start of 2016.

Outlook

In the current cycle the Group has increased its investment in land with strong profit margins and increased capital turn whilst maintaining a robust balance sheet position.

The strong sales position brought forward from 2015 combined with the strong pipeline of new sites expected to commence trading in the next few months provides a solid platform from which to expect further growth in 2016.  The profile of our anticipated sales outlet launches means that legal completions in 2016 will be weighted to the second half year in a similar manner to 2015.  In contrast, the increased overhead costs being incurred to manage the enlarged Group will be evenly spread over the year.

The average sales price continues to improve due to further product and site mix improvements and market-wide house price rises.  As a result, the Group expects a further improvement in capital turn for 2016.  We expect to see growth in gross profit margin in 2016 driven by a greater proportion of new higher profit margin sites in the mix.  We expect further modest improvements in overhead efficiency, despite investing in the Group's evolving structure, which together with higher gross profit margins are expected to underpin our operating profit margin progression.  Given the increased capital turn and the improving profit margin, we maintain our ambition to drive continued growth in return on capital employed.  The Group has seen strong forward sales and robust trading in early 2016 in line with our expectations and anticipates 2016 being another successful year of growth and strong returns.

Financial Review

Revenue
The Group generated total revenue of £946.5 million, an increase of 17% on the previous year (2014: £809.4 million).  Housing revenue was £910.1 million, 16% ahead of the prior year (2014: £783.6 million) and other revenue was £6.4 million (2014: £4.2 million).  Land sales revenue, associated with four land sales, was £30.0 million in 2015, compared to three land sales achieved in 2014 with a total revenue of £21.6 million.

Operating profit

The Group delivered a 19% increase in operating profit for the year ended 31 December 2015 to £163.5 million (2014: £137.6 million) at an operating profit margin of 17.3% (2014: 17.0%).

Total gross profit was £232.3 million (gross margin: 24.5%), compared with £197.2 million (gross margin: 24.4%) in 2014.  The profit on land sales in 2015 was £8.8 million (2014: £3.9 million) as the Group continues its strategy of managing its capital base through the disposal of parcels of land on large sites, often strategically sourced.

Housing gross margin was 24.4% in 2015, broadly in line with 24.5% in 2014.  During 2015, the Group's construction costs increased by 8% per square foot, ahead of sales price gains of 4% per square foot, although these gains largely ensured the housing gross margin was maintained.  In addition, the housing gross margin in the year was impacted by delays in completions of new higher margin sites resulting in the overall mix of homes being more weighted to existing sites.

Overheads, including sales and marketing costs, increased by 15% in 2015, as the Group invested early to advance the delivery of the large number of land assets under its control and to support the enlarged structure of the Group.  The overheads to revenue ratio improved to 7.3% in 2015 from 7.4% in 2014.

Profit before tax and earnings per share

Profit before tax increased by 20% to £160.1 million, comprising operating profit of £163.5 million, net financing charges of £5.2 million and a profit from joint ventures of £1.8 million.  This compares to £133.5 million of profit before tax in 2014, which comprised £137.6 million of operating profit, £4.4 million of net financing charges and a profit from joint ventures of £0.3 million.  The profit from joint ventures in 2015 included the benefits of revaluing both the Bovis Peer LLP and IIH Oak Investors LLP PRS property portfolios in the period.

Basic earnings per share for the year improved by 21% to 95.4p compared to 78.6p in 2014.  This improvement has resulted in a return on equity of 15% (2014: 13%).

Financing

Net financing charges during 2015 were £5.2 million (2014: £4.4 million).  Net bank charges were £3.3 million (2014: £4.5 million), as a result of modestly higher net debt during 2015 than 2014 outweighed by a lower level of commitment fees and issue costs amortised in 2015.  The Group incurred a £4.9 million finance charge (2014: £3.0 million charge), reflecting the imputed interest on land bought on deferred terms.  The Group also benefited from a finance credit of £2.9 million (2014: £3.0 million) arising from the unwinding of the discount on its available for sale financial assets during 2015 as well as other credits of £0.1 million.

Taxation

The Group has recognised a tax charge of £32.1 million at an effective tax rate of 20.0% (2014: tax charge of £28.3 million at an effective rate of 21.2%).  The Group has a current tax liability of £16.9 million in its balance sheet as at 31 December 2015 (2014: current tax liability of £14.0 million).

Dividends

As previously communicated the Board will propose a 2015 final dividend of 26.3p per share.  This dividend will be paid on 20 May 2016 to holders of ordinary shares on the register at the close of business on 29 March 2016. The dividend reinvestment plan gives shareholders the opportunity to reinvest their dividends in ordinary shares.  Combined with the interim dividend paid of 13.7p, the dividend for the full year totals 40p and compares to a total of 35p for 2014, an increase of 14%.  Maintaining a level of dividend ahead of our base policy of one-third of retained earnings is a sign of the Board's continued confidence in the Group's strategic plan.

Net assets

2015

2014


£m

£m

Net assets at 1 January

879.1

810.3

Profit after tax for the year

128.0

105.2

Share capital issued

0.6

0.5

Purchase of own shares

(2.4
)
-

Net actuarial movement on pension scheme through reserves

0.2

(5.7
)
Deferred tax on other employee benefits

-

0.3

Adjustment to reserves for share based payments

1.5

0.8

Net movement in shared equity

-

(3.5
)
Dividends paid to shareholders

(49.2
)
(28.8
)
Net assets at 31 December

957.8

879.1


As at 31 December 2015 net assets of £957.8 million were £78.7 million higher than at the start of the year.  Net assets per share as at 31 December 2015 were 714p (2014: 655p).

Inventories increased during the year by £193.0 million to £1,318.5 million.  The value of residential land, the key component of inventories, increased by £139.0 million, as the Group invested ahead of usage.  At the end of 2015, the remaining provision held against land carried at net realisable value was £6.7 million, after utilisation of £5.5 million during the year.  Other movements in inventories were an increase in work in progress of £49.8 million and an increase in part exchange properties of £4.2 million.

Trade and other receivables increased by £34.6 million, primarily due to higher amounts owing from housing associations and amounts receivable relating to land sales completed in 2015.   Trade and other payables totalled £535.2 million (2014: £360.5 million).  Land creditors increased to £322.9 million (2014: £198.2 million) with the Group taking advantage of the opportunity to negotiate deferred payments to land vendors.  Trade and other creditors increased to £212.3 million (2014: £162.3 million), with a 12% increase in build activity leading to increased amounts owed to subcontractors and materials suppliers.







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