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Bovis building up momentum

SHARE TIP UPDATE: The housebuilder has scrapped its dividend in its drive for cash generation
March 9, 2009

Housebuilder Bovis Homes appears to be faring the housing downturn more robustly than its larger, more indebted rivals, but nevertheless reported a pre-tax loss of £79m last year.

IC TIP: Hold at 392p

Strip out exceptional charges, which included a further £75m land writedown and £5.7m restructuring costs, and Bovis made an underlying pre-tax profit of £14.4m. Its underlying operating margin - famously one of the highest in the business - collapsed to 7.5 per cent from 22.4 per cent a year ago. Nevertheless, this is still a better performance than rival which reported margins of 1.5 per cent at full-year results last week.

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