Bovis profits double on cost-cutting and rising prices

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Media captionDavid Ritchie from Bovis Homes: "We're frustrated by the lack of support for first time buyers"

Bovis has reported profits up twofold, thanks to falling build costs and rising house prices.

The homebuilder made £8.1m in profits before tax in the first six months of the year, up 130% from the same period in 2010, its interim results said.

The firm only completed 801 new homes, almost unchanged from a year earlier.

But average sale price rose 3.2%, while a "significant reduction in build costs" helped increase operating profit margins from 4.2% to 7.5% of revenues.

"We put in place a growth strategy as far back of 2009, and that allowed us in the first half of 2011 to really drive construction cost savings through our business on the homes that we handed over to customers," chief executive David Ritchie told BBC Breakfast news.

Commenting on the interim results, Mr Ritchie said that the firm faced "stable, but challenging, market conditions".

"We have seen an increase in the average sales price, but that is largely due to mix rather than the underlying pricing," he told the BBC. "Pricing is stable."

Mr Ritchie said Bovis was now seeing the benefit from higher-margin sites it was able to buy up during the housing downturn.

The firm said it had acquired 1,571 more sites in the last six months, mainly in the south of England, and had agreed terms on another 2,500 plots.

"Subject to current market conditions continuing, the group's profit margins will continue to improve, particularly in 2012 when a significant proportion of housing completions will come from these new sites," said Mr Ritchie.

The firm announced an interim dividend of 1.5p, having decided in March to resume dividend payments after they were suspended during the downturn.

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