Frequently asked questions

Where does Bovis Homes operate?
Bovis Homes operates primarily in England and Wales. The Group has minimal exposure in Central London although it does operate in a focused way inside the M25. The Group’s operations are largely in the good quality mid-market, with a portfolio of products covering the main housing segments: from two bedroom houses through to five and six bedroom family homes, in addition to apartments and ‘very sheltered’ retirement homes.
 
What are the future plans of the Group?
The Group’s focus is the maximisation of shareholder value. Our aim is to grow the business organically, increasing the number of regions, sales outlets and volume of legal completions, whilst achieving an attractive operating margin, and at a good return on capital employed.

Would the Group consider an acquisition?
The Group’s aim from all of its activities is to continue to add shareholder value. In this context, if an acquisition opportunity arose that was consistent with its long term strategies and represented fair value, then it would be considered.
 
Explain how the Group’s operating margins are sustainable?
The Group’s operating margin is supported by new product development, innovative construction techniques, centralised procurement and a long standing investment in strategic land, as well as keen control over product pricing.

Strategic land has grown in its contribution over recent years and the Group aspires to source 100% of its legal completions through strategic means. Strategic land offers the Group the ability to acquire land at a discount to market value, having deployed its expertise in achieving planning consent. This discount is in return for accepting a higher degree of risk around the achievement of planning than would be displayed if consented land was purchased.

How does strategic land work?
Strategic land can take two forms: the procurement and management of a land purchase option or the purchase of a freehold site without residential planning consent (hope land).  

In buying an option, the Group buys the right to purchase land at a future date once residential planning has been secured. The Group uses its town planning expertise to assist in securing planning consent for the site in return for which the Group has the right to purchase the land at a discount to market value at the point the option is exercised. Many of the Group’s land purchase options provide us with the ability to draw down the land in tranches deferring the acquisition costs over the course of the development.

Where the Group buys the freehold of land without residential planning consent, it aims to add substantial value by deploying the Group’s town planning expertise in attaining residential planning consent without any further payments to the vendor, thus generating reduced cost compared to prevailing residential land values.

What is in store for the housing industry?
Government studies estimate that housing demand is going to continue into the mid-term, driven by demographic and societal changes. The levels of household formation estimated by the government are currently running ahead of actual housing completions and this is creating a supply and demand imbalance for the industry that will tend to keep consumer demand positive. Of course, the national economy and localised supply and demand issues will also play a role in how the industry fairs as will the performance of individual management teams.
 
What relationship does Bovis Homes have with Bovis Lendlease?
Bovis Homes Group PLC is an independent public quoted company and has no involvement with Bovis Lendlease. Bovis Homes separated from Bovis Construction in 1997 when we became independent and Bovis Construction was later bought by Lendlease.

What are the success factors for Bovis Homes?
Key strengths include:

• A high organisational focus on the health and safety of our employees and stakeholders
• Experienced professional senior management supported by excellent qualified staff, all incentivised through rewards based on short, medium and long term improvements in profits and shareholder return
• A well established long term investment strategy in strategic land
• In-house expertise in all functions of the business
• An experienced land buying team including qualified town planners with focus on strategic land and purchase of land through private treaty
• An attractive consented land bank with a good percentage sourced through the strategic land route
• Substantial strategic land holdings with potential for servicing a proportion of the Group’s future land requirements
• A mid-market quality product range covering the main housing segments in the market
• An innovative approach to house design and housebuilding with new techniques critically appraised prior to being incorporated in the construction process
• Investment in research and development in respect of material usage and handling, labour efficiency, build techniques and product design
• A process of continual improvement operating in all parts of the business, identifying best practice and employing such best practice in a standardised way across the Group
• A long term commitment to training across all functions of the Group.