Bovis Homes has confirmed it recently received and rejected two merger proposals. These possible offers were a cash and shares proposal equal to 814p per share from Redrow, and an all-share proposal from Galliford Try, which would value the group at 886p per share.
After indicating to both groups that the terms of these proposals were not satisfactory, Bovis says discussions with Redrow have not continued, but talks with Galliford Try remain ongoing. There can be no certainty that an offer from either party will be forthcoming. The shares rose 9.9% on the news.
Full year trading:
The group was unable to deliver the anticipated unit sales and customer service performance in the second half. With labour and material cost inflation continuing, and the deferral of 180 homes into next year, profit margins fell from 17.3% to 15.2%. Despite average sales prices rising 10% to £254,900 and completions nudging up to 3,977, profit before tax was £154.7m, down 3% on 2015.
The group suspended investment in new land around the time of the EU referendum, so has ended the year with 18,704 plots in its land bank, as opposed to 19,814 last year.
The group is to increase its focus on customer service, meaning that its rate of production and completion volumes for 2017 are to be 10 to 15% below 2016 levels. While the 2016 dividend is increased 13% to 45p per share, the group intends to hold the dividend flat in 2017.
Unless otherwise stated, all estimated figures, including prospective dividend yields, are taken from a consensus of analyst forecasts compiled by Thomson Reuters. These estimates should not be taken as a reliable indicator of future performance.
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