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EP_19.jpg July/August 2005
Cover Story
Interview
Up to Speed
A Better Future
Betonac
Bovis Homes
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BUILT ON EXPERTISE
The Bovis Homes Group is one of the foremost house building companies in the UK.

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05.jpg Bovis Homes PLC is one of the UK’s leading house builders, and has been listed on the Stock Exchange since 1997. The group is a member of the FTSE4Good index and the FTSE 250. It provides high quality houses in attractive locations throughout England and Wales, offering an extensive portfolio of property designs including modern apartments, terraced cottages, stylish three storey town houses, and imposing family homes. In addition it operates a successful retirement living business.

Malcolm Harris, Bovis CEO comments: “Our homes are recognisable by their distinctive styles, appealing living environments and attractive appearance. Our architects design each home to meet modern requirements for living accommodation, light and space. The majority of our developments now offer larger homes with living accommodation across three floors. The additional area provides flexibility, to allow clients to use the space to suit their specific needs. We recognise customer’s requirements can and do change.”

This strategy has seen Bovis Homes achieve its seventh consecutive year of profit growth, with a compound growth of 21 per cent per annum, since its flotation. Additionally, Bovis enjoyed record profits during the 2004 financial year, with an increase in profit by 18 per cent to £145.2 million, compared to £123 million in 2003. This result was achieved from a total turnover of £600 million, 17 per cent greater than the previous year.

The success of 2004, in what was a volatile housing market, has seen knock-on effects for Bovis in 2005. Malcolm adds: “The group has delivered a year of record profits with a nine per cent increase in the volume of legal completions. Although legal completions for the first half of 2005 are expected to be lower than the same period in 2004. We do expect to continue past trends and increase volume for the whole year by at lest ten per cent.

“House prices in the market we operate within at the moment are quite stable and our sales rate is in line with our expectations. We are aware that the second-hand market is slower, with volume down 30 per cent. This causes a delay in people being able to sell their existing homes and slows down the sales chain.”

The slowing in the first half is sighted as one of the reasons for the lower legal completions in 2005, when compared to the previous year. This is because the clients Bovis predominately concentrates on are the mid-market owner-occupiers. House sales price growth reached unsustainable levels in 2003. Consequently, speculations created a general concern that the housing market could witness a severe downturn. The second half of 2004 and the first half of 2005 saw the consumer reflecting this concern with a slower house sales price growth and a slow down in property transactions. Despite this, Bovis expects sales to pick up in the second half of this year.

Malcolm comments: “Many of our purchasers are in property chains and we found in the first five months of the year that the slowing in the market has caused a delay in the completion of these chains. This means that some of the completions that we historically would have expected to have in the first half year will now come into the second half of the year. As far as we are concerned the second half of 2005 has a much higher content of social housing, third party design and build properties, and smaller homes, which will then enable us to achieve our forecast volumes.”

Due to the volatile nature of the housing market Bovis continues to employ a consistent strategy in pursuit of its core objectives. The strategy involves focusing on delivering the maximum value achievable from each home constructed and legally completed. A growing coverage of the UK through an expanding regional structure contributed to growth. It aims to deliver a quality product to the housing market that is driven by customer needs, employing modern construction techniques that use materials pre-finished under factory conditions along with ongoing focus on build quality on the sites. New products are designed to improve the houses that are offered to customers and Bovis operates a customer care team, which is a core part of the regional management structure, providing pre-handover inspections and post occupation customer care services.

In a housing market where further sales prices increases may be more difficult to achieve, its strategy to grow the size of its business through increased coverage of England and Wales is considered the best way forward. Subject to the conditions of the market, it intends to launch in further regions, particularly in locations where Bovis has a large strategic landholding which are anticipated to deliver a large number of land plots with residential consent in the short term.

Malcolm talks a little about the company’s employees: “Bovis Homes is a people business. It is essential that the right individuals are recruited, trained and motivated. The objective is to ensure that Bovis employs the highest calibre of employees, who add value to the business and are sensitive to the demands and requirements of our customers, whilst having the drive and flair to move the operation forward without compromising corporate governance.”

Malcolm concludes: “We are on course to deliver the predicted 9000 plots of consented land through the strategic land bank between 2004 and 2006. We started 2005 with a strong land bank and a product range designed to appeal to the segment of the market where housing transactions are motivated by need rather than speculative appetite. The launch of new regions will assist in driving us to increased activity levels. We are well placed to operate successfully in a more challenging market, our anticipation is that current economic trends will continue, and we expect another successful year.”  CT-E

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