Bovis to push ahead with float despite volatility

Bovis Homes is pushing ahead with its flotation despite the volatility in the stock market. P&O, owner of Bovis, admitted yesterday that it considered postponing the flotation last week when world markets were on the verge of collapse.

The house-builder is scheduled to end its 23-year absence from the stock market on 11 December with an expected price tag of around pounds 300m. Shares in Bovis will be placed with institutions but private investors will be able to subscribe through stockbrokers and independent financial advisers.

The pathfinder prospectus, published yesterday, shows that several directors will receive bonuses to enable them to subscribe for shares at the placing price, which will be fixed a week before trading begins on the stock market. Malcolm Harris, chief executive, will receive a taxable bonus of pounds 173,000, Ron Walford, finance director, will get pounds 94,500 and five other directors will receive bonuses totalling pounds 232,000. All seven executive directors have agreed to apply for additional shares, and employees have the right to apply for a minimum of pounds 500 worth of shares each.

P&O will sell all its shares and new shares are being issued to raise pounds 194m to repay Bovis debts to its former parent. The new public company will be debt-free.

Bovis ranks 12th in the UK league of house-builders, selling 2,456 homes at an average price of pounds 90,100 last year and making an operating profit of pounds 29.4m on a turnover of pounds 267m. Profit before tax was pounds 23.3m.

Mr Harris said the company's best strength was its policy of combining a range of facades and finishes with a handful of basic designs and using standardised components.

It has a landbank of 8,398 sites with planning permission, enough to last for almost three-and-a-half years at last year's building rates, plus options on a further 13,400 sites. In the six months to the end of June it sold 1,097 homes at an average cost of pounds 95,100 and made an operating profit of pounds 14.3m on a turnover of pounds 111m, pushing up the profit margin yet again to 13.1 per cent.

Only three UK house-builders, Redrow, Wilson Bowden and Berkeley, did better.

In South-east England Bovis margins reached 17.4 per cent last year.

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