January 15, 2010 / 7:36 AM / 9 years ago

UPDATE 2-Housebuilder Bovis sees order book up; 2010 subdue


* Completes 1,803 homes in 2009 vs 1,817 in 2008

* To secure cheaper debt facility in next few weeks

* Says average selling price rises by 2.5 pct to 154,600 stg

(Adds CEO, analyst comment, background, recasts lead)

By Lorraine Turner

LONDON, Jan 15 (Reuters) - British housebuilder Bovis (BVS.L) reported a strong cash position at the end of 2009 and echoed comments from peers of a stabilisation in the sector, despite stunted mortgage activity.

Chief executive David Ritchie said the withdrawal of players in the mortgage market such as Northern Rock and Bradford & Bingley has left a vacuum, which is not likely to be filled in the near future.

“The market has lost a couple of major contributors...We’re relying on the traditional core lenders (but) they are unable to step up their level of activity,” said Ritchie.

“If people were able to do more transactions, demand would be strong,”

British house sales and prices stabilised in the second half of 2009 after one of the sharpest drops in activity in decades, helped by continued low interest rates.

But mortgage approvals continues to drag on the outlook for the sector. “We can not expect mortgage availablity to improve in the next 6 to 12 months dramatically,” said Ritchie.

Mortgage approvals for house purchases rose to 60,518 in November, according to the Bank of England — up from a low of 27,424 a year earlier but still below pre-credit crunch levels which averaged over 90,000. Bovis Homes, one of the smaller midcap UK listed housebuilders, reported a net cash position of 113 million pounds at the end of 2009, after a cash inflow of 221 million. This was boosted by 60 million pound share placing in September.

Bovis also said on Friday that it is in the process of securing a new 150 million pound debt facility until September 2013. The debt, to be secured in the next few weeks, is on “much cheaper” terms than before, said Ritchie.

“The existing debt facility was preventing investment in new land, so the new credit line and the cash inflow give Bovis the fire power,” said Robin Hardy at KBC Peel Hunt.

“This positive news on the financial potential is likely to drive a positive near term reaction and is likely to push the shares towards NAV,” he added.

Bovis said its full-year underlying profit is set to meet its expectations, and it is on track to make write backs, after over

Bovis took a total of 80 million pounds write downs in 2009.

Bovis, which had a sales order of 643 homes for 2010 delivery, up by 218 homes year-on-year, said it completed 1,803 homes in 2009 compared with 1,817 in 2008.

Meanwhile the average selling price of houses rose by 2.5 percent to 154,600 pounds, it added.

Reporting by Lorraine Turner; Editing by Victoria Bryan

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