CEO appointment and operational update

RNS Number : 6249B

Bovis Homes Group PLC

05 April 2017

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF THAT JURISDICTION.

Bovis Homes Group PLC ("Bovis" or the "Company")

CEO appointment and operational update

Rejection of Galliford Try PLC ("Galliford") merger proposal

The Board of Bovis is pleased to announce the appointment of Greg Fitzgerald as its new Chief Executive. Greg Fitzgerald is the former Chief Executive and Chairman of Galliford, where he spent over 30 years of his career. During his time as Chief Executive, he oversaw the transformation of Galliford, increasing the scale of the housebuilding business and improving profitability. Greg Fitzgerald is a former non-executive Director of the NHBC and is currently non-executive Chairman at Ardent Hire Solutions and Baker Estates Limited.

Greg Fitzgerald's appointment as Chief Executive will take place with effect from 18 April 2017.

Following Greg Fitzgerald's appointment, Earl Sibley will resume his role as Group Finance Director. The Board would like to thank Earl for his strong interim leadership.

Operational update

Current sales and reservations are in line with the Board's expectations and we are making good progress with our priorities for 2017. Operational processes and controls have been fundamentally reviewed with improvements and standardisation implemented across all regions.

We have significantly enhanced our customer service function across all regions and more than half of all Bovis employees have participated in a bespoke Customer Training Programme, with all employees targeted by the end of April. In addition we are making good progress with resolving the high level of customer service issues we faced at the start of 2017.

In 2017 the Group is focused on re-setting the business and driving operational improvements through cost efficiencies, more effective build processes and improvements in quality.

Following this period of re-setting, we will progress towards delivering the high level of returns embedded in our quality land assets.

We aim to replenish our land bank during 2017 and thereafter maintain an underlying 4 year consented land bank. The Group continues to secure attractive land opportunities and has had early success in 2017 with the conversion of strategic sites at Bishop's Stortford, Didcot and West Witney totalling 834 plots.

We are progressing our programme of balance sheet optimisation over the next two years from the sale of our shared equity assets, a reduction in part exchange assets, the continuation of land sales where appropriate and a strategic partnership at our site in Wellingborough. This balance sheet optimisation programme is expected to accelerate the Group's delivery of an improved return on capital employed.

The Board intends to return to shareholders any excess capital which results from this programme and from improved cash generation from operations.

Overall, good progress has been made with our review of our strategy and structure which we announced in February. Following his appointment, Greg Fitzgerald will assume leadership of this review with a view to developing further our plans to deliver value to shareholders.

Rejection of Galliford proposal

Bovis notes the announcement by Galliford this morning withdrawing its merger proposal.

In recent weeks, the Company has held discussions with Galliford to assess the merits of Galliford's merger proposal, focusing on the potential synergies that might result from a combination of the businesses. Following these discussions, Galliford re-affirmed the terms of its merger proposal and the level of synergies expected to arise from the combination.

The Board has reviewed the merger proposal and concluded that it failed to reflect the underlying value of the Bovis business. Accordingly, the Board has decided to reject the proposal as it believes that an independent strategy under the leadership of Greg Fitzgerald will deliver greater value for shareholders.

The rejection has been communicated to Galliford.

This announcement has been made without the consent of Galliford.

Greg Fitzgerald remuneration terms

The following summarises the principal terms of the remuneration package agreed between Bovis and Greg Fitzgerald:

-      Annual Salary of £650,000

-      Annual Bonus of up to 100% of salary payable in shares and deferred for 3 years. For 2017 only, the Annual Bonus will be based on his leadership of the review of strategy and structure.

-      LTIP award of up to 200% of salary for each of the first two years and 150% of salary thereafter. Performance will be measured over a 3 year period using measures in line with our Remuneration Policy. Awards will also be subject to a 2 year holding period.

-      An award of shares of up to 100% of salary to recompense Greg Fitzgerald for relinquishing management of certain investments in order to take up this role. This award will vest at the end of December 2018 provided the Bovis Total Shareholder Return is at least in line with the median performance of sector peers over the period.

Further details of the remuneration package will be sent to shareholders in due course. It is expected that a vote to approve relevant terms will take place at a general meeting of shareholders (EGM) to be convened on the same day as the forthcoming AGM of the Company.

Ian Tyler, non-executive Chairman, said: "We are delighted that Greg has agreed to be our new Chief Executive. He brings a wealth of housebuilding experience and I am confident he will rapidly drive performance across the Bovis business."

Greg Fitzgerald, incoming Chief Executive, said: "Bovis has a great brand, excellent people and a high quality land bank. I very much look forward to working with the management team to restore Bovis' position as a leading housebuilder and deliver significantly improved returns to shareholders."

Enquiries

Bovis Ian Tyler Earl Sibley	[phone]
Moelis & Company (financial adviser to Bovis) Mark Aedy Liam Beere	[phone]
Maitland Neil Bennett James McFarlane	[phone]

Jefferies (joint corporate broker to Bovis)

Antonia Rowan	[phone]
Paul Nicholls	[phone]
Numis (joint corporate broker to Bovis)
Heraclis Economides	[phone]
Richard Thomas	[phone]

Important notices

This announcement contains inside information.

There is no further information which requires disclosure under 9.6.13R of the Listing Rules of the UK Listing Authority.

A copy of this announcement (subject to any restrictions relating to persons resident in restricted jurisdictions) will be available at www.Bovishomesgroup.co.uk/investor-centre/rns-announcements promptly and in any event by no later than 12.00 noon on 6 April 2017. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.

Moelis & Company UK LLP ("Moelis & Company"), which is authorised and regulated by the Financial Conduct Authority in the UK, is acting exclusively as financial adviser to Bovis and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Bovis for providing the protections afforded to clients of Moelis & Company nor for providing advice in connection with the matters referred to herein. Neither Moelis & Company nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Moelis & Company in connection with this announcement, any statement contained herein or otherwise.

Jefferies International Limited ("Jefferies"), which is authorised and regulated by the Financial Conduct Authority in the UK, is acting exclusively as corporate broker to Bovis and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Bovis for providing the protections afforded to clients of Jefferies nor for providing advice in connection with the matters referred to herein. Neither Jefferies nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Jefferies in connection with this announcement, any statement contained herein or otherwise.

Numis Securities Limited ("Numis"), which is authorised and regulated by the Financial Conduct Authority in the UK, is acting exclusively as corporate broker to Bovis and no one else in connection with the matters described in this announcement and will not be responsible to anyone other than Bovis for providing the protections afforded to clients of Numis nor for providing advice in connection with the matters referred to herein. Neither Numis nor any of its subsidiaries, branches or affiliates owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Numis in connection with this announcement, any statement contained herein or otherwise.

 

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