The restructuring at Bovis (BVS) is now complete, with steps taken to simplify the operating structure and to reduce costs. The housebuilder is now planning to limit overheads to just 5 per cent of turnover. As part of the process, production rates were reduced, which explains the drop in profits.
However, the business is now starting to throw off a lot of cash, and a special dividend of around 45p a share will be paid towards the end of 2018 as part of special payments worth 134p a share over the next three years. Other targets include a 25 per cent return on capital employed by 2020 and 4,000 annual completions.
As the completions target is a relatively modest step up from the 3,645 achieved in 2017, and with a targeted land bank equivalent to three-and-a-half to four years of output, Bovis has slowed its land procurement. This also allows it to be more selective, and gross margins in 2017 exceeded 26 per cent. It has also been selling unwanted land, with five sales raising £30.5m in 2017, with an eventual target of raising £80m-£100m through land sales.
Analysts at Numis are forecasting adjusted pre-tax profit for the year ending December 2018 of £157.5 and EPS of 95.7p (from £122.4m and 73.4p in 2017).
| BOVIS (BVS) | ||||
| ORD PRICE: | 1,066p | MARKET VALUE: | £1.44bn | |
| TOUCH: | 1,059-1,066p | 12-MONTH HIGH: | 1,222p | LOW: 771p |
| DIVIDEND YIELD: | 4.5% | PE RATIO: | 16 | |
| NET ASSET VALUE: | 784p | NET CASH: | £145m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2013 | 0.56 | 79 | 44.9 | 13.5 |
| 2014 | 0.81 | 133 | 78.6 | 35 |
| 2015 | 0.95 | 160 | 95.4 | 40 |
| 2016 | 1.05 | 155 | 90.1 | 45 |
| 2017 | 1.03 | 114 | 68.0 | 47.5 |
| % change | -2 | -26 | -25 | +6 |
| Ex-div: | 29 Mar | |||
| Payment: | 25 May |
