Preliminary Results 2007

Bovis Homes Group PLC
10 March 2008







                             BOVIS HOMES GROUP PLC

            PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2007

                              Issued 10 March 2008

The Board of Bovis Homes Group PLC today announced its preliminary results for
2007 which have been prepared in accordance with International Financial
Reporting Standards as adopted by the EU ('IFRS').


   • Pre tax profit of £123.6 million (2006: £132.0 million stated before
     one-off pension credit of £3.5 million; £135.5 million inclusive of pension
     credit)
   • Basic earnings per share of 72.4p per share (2006: 77.8p per share pre
     one-off pension credit)
   • Continuing sector-high operating margin at 22.8% pre Elite acquisition
     one-offs and fair value charges: 22.4% inclusive (2006: 23.1% pre one-off
     pension credit)
   • A year of successful investment: acquisition and integration of Elite
     Homes, purchase of Filton, Bristol and achievement of outline planning in
     early 2008 for key strategic site at Wellingborough
   • Full year dividend increased by 17% to 35.0p net per ordinary share
     (2006: 30.0p) with final dividend at 17.5p per share reflecting half of 
     full year dividend as announced at interim
   • Strategic land holdings increased to 24,868 potential plots (2006:
     24,719 potential plots)
   • 11,413 plots with planning consent owned/controlled (2006: 12,395 plots)
   • Modest gearing, with £44 million of year end net debt


Commenting on the results, Malcolm Harris, the Chief Executive of Bovis Homes
Group PLC said:


'2007 was a challenging year for the industry following several interest rate
increases, allied with a reduction in availability of funding, particularly for
first-time buyers. Against that background, the Group delivered a good
performance, in particular in maintaining a strong operating margin. Shareholder
value was added through the successful promotion of strategic land including
Filton in Bristol and Stanton Cross, Wellingborough.


'Looking forward, although the long term position relating to supply and demand
has not changed, the current housing market is weak. Cumulative sales
reservations for 2008 to 7 March 2008 are 1,262 as compared to 1,582 at the same
point in the previous year. Our performance through the spring period remains
critical in establishing the likely volume outcome for the current year. For the
year as a whole, unless decisive action is taken now to reduce interest rates
and more normal conditions return to the mortgage market, it is likely that
volumes will be well below those achieved in 2007.


'Looking beyond 2008, the Board believes that with its strong land position,
healthy balance sheet, and highly experienced management team, the Group is well
placed to benefit when sentiment improves.'

Enquiries: Malcolm Harris, Chief Executive                
           Neil Cooper, Finance Director
           Bovis Homes Group PLC                   
           On Monday 10 March - tel: [phone]
           Thereafter - tel: [phone]  
                                      
           Results issued by: Andrew Best / Emily Bruning
           Shared Value Limited
           On Monday 10 March - tel: [phone]

Chairman's statement


With activity in the housing marketplace slowing during 2007, Bovis Homes has
delivered a good performance whilst maintaining a sector-high operating profit
margin.

During 2007, the Group continued to focus on its long term investment programme,
and was successful in the second half of 2007 in both gaining a 'resolution to
grant' planning permission at its major project in Filton, Bristol and in
subsequently acquiring this key site. Good progress has also been made at
Wellingborough. After receiving a 'resolution to grant' planning permission in
December 2006, this major project received its outline planning consent in
January 2008. Whilst the Group remained cautious in investing in consented land
during 2007, it is well positioned to take advantage of opportunities to acquire
consented land that may arise during 2008.


The Group successfully acquired Elite Homes Group Ltd, a regional housebuilder,
during the second half of 2007, which complements the Group's existing
activities in the north of England. Physical integration is now complete, as is
the re-branding of existing outlets, and the land bank acquired is enabling the
region to deliver against its existing growth plans, in a geography where land
acquisition has been difficult given planning constraints.

Whilst the Group made several large investments during the year, the Group
exited 2007 with low gearing, and only £44 million of net debt, leaving it well
placed to continue to develop going forward.


Results


For the year ended 31 December 2007, the Group achieved a pre-tax profit of
£123.6 million, as against a comparable £132.0 million in 2006 (stated before a
one-off non-cash pension credit of £3.5 million). Earnings per share was 72.4p
in 2007 as compared to 77.8p per share before pension credit in 2006.

Total revenue generated was £555.7 million (2006: £597.3 million), and the Group
legally completed on 2,930 homes (2006: 3,123) in the year.


The average sales price of private homes grew by 3.8% year against year.
However, the overall average sales price fell by 2.3%, from £183,700 in 2006 to
£179,500 in 2007. The main factor behind this movement was mix, with social
housing taking a greater proportion of the whole in 2007, as compared to 2006.


The operating margin of the Group remained strong at 22.4%. This was somewhat
diluted by the impact of one-off restructuring and other fair value adjustments
associated with the acquisition of Elite Homes. Adjusting for these, the
underlying operating margin was 22.8%, only marginally behind the prior year:
23.1% pre one-off pension credit.


Dividend


The Group remains committed to its existing guidance on dividends, which is that
dependent on business environment, and conditional on any necessary approvals,
the Group will double its dividend from 20.0p per share in 2004 to 40.0p per
share in 2008. Looking beyond 2008, the Board remains intent on a progressive
dividend policy over the long term, business environment permitting.


Consistent with the Group's existing guidance, but also reflecting the changes
in interim payout ratio announced and made at the half year 2007, the Group is
proposing a final dividend for the year of 17.5p per share. In total, taken
together with the interim dividend of 17.5p per share paid in November 2007, the
Group's total dividend for 2007 is 35.0p per share, a year on year increase of
16.7%. This dividend is covered 2.1 times by the basic earnings per share of
72.4p.





The proposed final dividend of 17.5p per share for 2007 will be paid on 23 May
2008 to shareholders on the register at the close of business on 28 March 2008.
The Board intends to offer a scrip dividend alternative. Shareholders will be
able to choose between new ordinary shares or cash, for some or all of their
dividend under this programme.


The Board

Following the retirement of Mr Mark Nicholls from the Board at the AGM in 2007,
the make-up of the Board has remained stable: with four non-executive directors
including myself, and three executive directors.


Looking ahead, on 2 July 2008 I shall be standing down and will be succeeded as
non-executive Chairman by Mr Malcolm Harris, the current Chief Executive. Mr
David Ritchie, the current Group Managing Director will step up as Chief
Executive, and his current position will cease to exist.


Whilst the Group recognises that the appointment of the new chairman diverges
from the Combined Code's recommended practice, the Group has actively canvassed
its major shareholders and is therefore confident that this change is not only
in the best interests of the Group but is also strongly supported by
shareholders. The Group is in the process of appointing an independent
non-executive deputy Chairman as part of these changes.

Employees


The Board would like to thank its employees and sub-contractors for their
efforts and achievements during a year that has been challenging in many
respects. In particular, the Board would like to thank Mr Peter Baker, the
regional Managing Director of South West region who retired during the year
after 26 years service and its Northern regional team for its efforts in support
of the Elite Homes acquisition, as well as welcoming Elite Homes employees to
the Bovis Homes Group.


Market conditions & prospects

The housing market during 2007 has been impacted by the tightening of interest
rates over the first half of 2007, and then the banking crisis during the second
half, which has had an impact in terms both of availability of credit and
consumer confidence. In fact, the ongoing GfK NOP omnibus survey on consumer
confidence suggested that the consumer climate for major purchases was at its
lowest ebb for 15 years in December 2007.


The Group remains confident in the long term prospects for housebuilding in the
UK, and notes the announcement of Government targets for housebuilding well in
excess of current rates of development: an indicator of a long term excess of
demand over supply.


However, the Group also recognises that the short term outlook for the market
remains uncertain. Notwithstanding this, the Group is well placed to trade
across a range of differing market conditions: with its good quality mid-market
product mix, long term investment programme in strategic land, and present low
gearing. As a result, the Group remains confident in its ability to deliver
shareholder value over the mid and long term.



Tim Melville-Ross

Chairman







Performance Review


During the year, Bovis Homes legally completed 2,930 homes, of which 2,293 were
private, and 637 were social and partnership. This is as compared to 3,123 legal
completions during 2006 of which 2,714 were private and 409 were social and
partnership.


The average sales price achieved for private homes increased by 3.8% compared
with the previous year. The average size of private homes legally completed was
broadly the same, at 1,023 square feet, as the previous year, at 1,028 square
feet, with the Group's migration in mix to a smaller and more marketable good
quality mid-market offering largely complete.


With a large increase in social and partnership properties in the mix, moving
from 13% in 2006 to 22% in 2007, the average sales price for the Group reduced
by 2.3%, from £183,700 in 2006 to £179,500 in 2007, and the average size of
property legally completed was 969 square feet compared with 992 square feet in
2006.


The successful acquisition of Elite Homes in October 2007 added 118 legal
completions to the Group's total 2007 performance and had a small dilutive
impact on average sales price, driven by the fact that property prices in the
north of England are typically lower than those elsewhere in England.


The operating margin remained strong in 2007, given prevailing market
conditions. The reported operating margin at 22.4% was adversely impacted by the
one-off restructuring costs and fair value adjustments associated with the
acquisition of Elite Homes. Adjusting for these, the underlying operating margin
at 22.8% was ahead of that at the half year, only marginally reduced versus
23.1% achieved in 2006.


Market sector analysis
Year ended 31 December              2007                         2006

                          %    Units      Average      %    Units      Average
House type                            sales price                  sales price
                                                £                            £
------------------------------------------------------------------------------
One and two bedroom      31      916      141,100     32      996      134,300
Three bedroom            27      793      210,700     31      957      200,700
Four bedroom             12      340      278,800     14      436      265,000
Five or more bedroom      6      182      351,600      7      230      324,100
Retirement Living         2       62      283,400      3       95      242,200
Social housing           15      430       85,500      9      274       88,200
Partnership housing
(third                    7      207       79,200      4      135       78,400
party owned land
units)
------------------------------------------------------------------------------
Group                   100    2,930      179,500    100    3,123      183,700
------------------------------------------------------------------------------












Product mix analysis
Year ended 31 December              2007                         2006

                          %    Units      Average      %    Units      Average

House type                            sales price                  sales price
                                                £                            £
------------------------------------------------------------------------------
Traditional              23      664      199,600     30      941      189,500
Room-in-roof             10      295      322,200     13      389      300,400
Three storey             21      632      220,500     21      646      213,400
Apartments               22      640      138,000     20      643      129,000
Retirement Living         2       62      283,400      3       95      242,200
Social housing           15      430       85,500      9      274       88,200
Partnership housing
(third                    7      207       79,200      4      135       78,400
party owned land
units)
------------------------------------------------------------------------------
Group                   100    2,930      179,500    100    3,123      183,700
------------------------------------------------------------------------------

Unit completions and average sales price
Year ended 31 December                    2007                   2006
                                 Units          Average    Units       Average
                                            sales price            sales price
                                                      £                      £

South East                         703          207,600      906       212,100
South West                         819          138,200      836       148,700
Central                            567          194,200      510       204,200
Eastern                            435          185,400      504       167,400
Northern                           344          170,000      272       168,500
Retirement Living                   62          283,400       95       242,400
------------------------------------------------------------------------------
Group                            2,930          179,500    3,123       183,700
------------------------------------------------------------------------------

The Group's consented land bank fell by 982 plots from 12,395 plots at 1 January
2007 to 11,413 plots at 31 December 2007. This closing land bank represented 3.9
years of supply at 2007 activity levels. In a manner consistent with its
approach in recent years, the Group has been somewhat cautious during 2007 in
its approach to acquiring consented land, having regard to prevailing land
prices. Of the 2,266 plots added, 641 plots were transferred from the strategic
land bank, and 1,625 plots were secured in the market, including 824 as part of
the acquisition of Elite Homes.


The strategic land bank as at 31 December 2007 was 24,868 potential plots (2006:
24,719 potential plots). The Group transferred 598 plots into the consented land
bank during 2007, and added a further net 747 potential plots.


Contained within the strategic land bank, but enjoying a 'resolution to grant'
residential planning consent at 31 December 2007 were 5,300 plots in two
locations: Filton in Bristol and Wellingborough. The 2,200 plots associated with
Filton are expected to be in the consented land bank by the half year, together
with 900 plots at Wellingborough. This latter amount will reflect that
proportion of land likely to be on the balance sheet by the half year, with the
remainder of the 3,100 plots relating to Wellingborough remaining under control
via an option. These remaining plots will stay disclosed in the strategic land
bank until ownership is taken through exercise of the Group's option.


Excluding both social housing and third party owned land, the average plot cost
was £48,400, which represented 23.5% of the average private sales price during
the year. The equivalent figure for 2006 was £46,900 representing 23.6% of the
average private sales price for that year.


Consented land bank
Total plots as at 31 December                                2007        2006
                                                            Plots       Plots
-----------------------------------------------------------------------------
South East                                                  2,687       3,237
South West                                                  2,565       3,135
Central                                                     2,162       2,143
Eastern                                                     1,946       2,199
Northern                                                    1,765       1,313
-----------------------------------------------------------------------------
Group (exc. third party owned land plots)                  11,125      12,027

Third party owned land plots
South East                                                     93          88
South West                                                    195         280
-----------------------------------------------------------------------------
Group consented land bank                                  11,413      12,395
-----------------------------------------------------------------------------
Urban redevelopment - Legal agreement exchanged*              536         700
Development approved by planning committee subject to
S106 being signed*                                          5,304       3,100
-----------------------------------------------------------------------------
Aggregate holdings                                         17,253      16,195
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Years' supply based upon legal completions in the year
(Consented land bank)                                         3.9         4.0
Years' supply based upon legal completions in the year
(Aggregate holdings)                                          5.9         5.2
-----------------------------------------------------------------------------
* held in strategic land bank


Strategic land bank
Total potential plots as at 31 December                         2007        2006
                                                               Plots       Plots
--------------------------------------------------------------------------------
South East                                                     8,440       8,400
South West                                                     5,161       4,545
Central                                                        9,306       9,417
Eastern                                                          702       1,268
Northern                                                       1,259       1,089
--------------------------------------------------------------------------------
Group strategic land bank                                     24,868      24,719
--------------------------------------------------------------------------------
Years' supply based upon completions in the year                 8.5         7.9
--------------------------------------------------------------------------------

Although 20% ROCE remains the Group's objective over the business cycle, and
remains a criterion for land investments, the Group will take decisions from
time to time that affect the short term delivery of this measure where
opportunities arise to add shareholder value in the longer term. Firstly, the
Group has invested in major strategic land sites, ahead of their conversion into
land with residential planning permission and subsequent generation of returns.
Secondly, the Group acquired Elite Homes towards the end of the financial year
for a total consideration of £72.3 million; of which £25.7 million was paid to
the shareholders of Elite, with the Group assuming £46.2 million of debt. Allied
to these decisions, the performance of the Group in terms of its volume of legal
completions has impacted ROCE during 2007, which was 17%.


In terms of senior management progression, Mr Tim Melville-Ross who joined the
Board in 1997 is retiring from his position as Chairman on 2 July 2008. The
Board wishes to thank him for the significant contribution that he has made
towards the Group's progress and would like to acknowledge the skill and
expertise he has brought to bear as a highly effective Board member and Chairman
over this period.


Outlook for 2008


In the shorter term, economic uncertainties coupled with the cost and
availability of credit have adversely affected consumer confidence. The Group
expects that the outcome of the spring selling season during 2008 will be a good
marker to allow a balanced assessment of likely performance in a year where
wider macro-economic trends are currently depressing confidence and thus
activity. For the year as a whole, unless decisive action is taken now to reduce
interest rates and more normal conditions return to the mortgage market, it is
likely that volumes will be well below those achieved in 2007. Given current
sales trends, a further increase in social mix is likely to occur in 2008.


In current conditions the Group has a number of clear priorities: to focus on
controlling its cost base and ensuring that cash flow is well managed, enabling 
it to act quickly when opportunities present themselves; to continue to leverage
its strength in the acquisition and promotion of strategic land, a key source of
long term superior shareholder value; and to continue its existing pricing
strategy.


As already outlined, the Group believes that the long term supply and demand
dynamic in its industry remains extremely positive, with Government projections
for required housing completions running well ahead of current building volumes
across the industry.


Looking beyond 2008 therefore, the Board believes that with its strong land
position, healthy balance sheet, and highly experienced management team, the
Group is well placed to benefit when sentiment improves.



Malcolm Harris

Chief Executive



Financial review

Profit before tax and earnings per share


Pre-tax profit for the Group for the year ended 31 December 2007 was £123.6
million. This is as compared to £132.0 million for the year ended 31 December
2006, stated before a one-off pension credit of £3.5 million. Basic earnings per
share for 2007 was 72.4p, a reduction of 5.4p or 7% on the prior year stated
before the one-off pension credit.

Revenue


Total revenue for the Group was £555.7 million in 2007 as compared to £597.3
million in 2006. The key component of revenue for the Group is housing revenue,
which was £525.9 million for the year ended 31 December 2007, as compared to
£573.7 million for the prior year.


The Group legally completed 2,930 homes in 2007, of which 118 were contributed
by the Group's recent acquisition, Elite Homes. This is as compared to 3,123
legal completions in 2006.


The average sales price of legal completions fell slightly, from £183,700 in
2006 to £179,500 in 2007. Within this, the average sales price for private
completions in 2007 increased by 3.8%. More than offsetting this, social housing
as a share of the selling mix grew from 13% in 2006 to 22% in 2007 depressing
the overall average sales price.


Over the recent past, the Group has been repositioning its sales mix away from
larger, more discretional properties towards good quality mid-market homes. This
process is now largely complete, as evidenced by the relatively small 0.5% year
over year change in the average size of its private completions. The overall
year over year decline of 2.3% in the Group's average size of legal completions
is more marked than this, from 992 square feet in 2006 to 969 square feet in
2007, because of the aforementioned increased social mix.


The Group disposed of £25.1 million of land during 2007, as compared to £19.5
million in 2006. Other income at £4.7 million for 2007 was broadly in line with
the prior year at £4.1 million.


Operating profit


The Group delivered £124.4 million of operating profit for the year ended 31
December 2007 at an operating margin of 22.4%.


This margin was diluted by the impact of the £1.0 million one-off restructuring
costs associated with the acquisition of Elite Homes, as well as by the £1.0
million impact of the fair value adjustments made to the inventory of Elite
Homes acquired by the Group. Adjusting for these two items, the underlying
operating margin of the Group for 2007 was 22.8%, as compared to 23.1%, pre
pension credit, delivered in 2006. This was a creditable performance, and
demonstrates the Group's focus in this area, being particularly pleasing given
the impact of both interest rate hikes and the financial crisis on consumer
sentiment during 2007, as well as the associated market dislocation in credit
availability.


Profit from land sales, less option costs, was £10.0 million in 2007, as
compared with £7.8 million of profit from land sales, less option costs, in
2006.


Given the nature of trading during 2007, the Group maintained a tight control
over overhead costs by reducing its absolute cost and holding its ratio to
revenue static despite falling levels of legal completions and housing revenue.


The Group's administrative expenses as a percentage of revenue, which include
sales and marketing costs, together with any bonus payable, was in line with the
previous year: at 8.7% of sales in 2007 as compared to 8.7% of sales in 2006
after adjusting for the one-off pension credit.

Analysis of margin                          Total housing             Group
                                          2007       2006        2007       2006
                                             %          %           %          %
---------------------------------------------------------------------------------
Revenue                                  100.0      100.0       100.0      100.0
Land costs                               (19.7)     (19.6)      (20.2)     (19.8)
Construction costs                       (50.0)     (49.2)      (48.7)     (48.4)
---------------------------------------------------------------------------------
Gross profit                              30.3       31.2        31.1       31.8
Administrative expenses (inc.
sales and marketing costs)                                       (8.7)      (8.7)
---------------------------------------------------------------------------------
Operating profit                                                 22.4       23.1
---------------------------------------------------------------------------------
Note: 2006 data excludes £3.5 million pension credit


Financing


Net financing costs were £0.8 million in 2007 (2006: £5.8 million). The key
driver of this year over year movement was the interest earned from the positive
net cash balance held by the Group for the majority of the year, but the Group
also benefited from a favourable net pension financing credit during 2007.


Bank interest net income for 2007 was £2.4 million, which included arrangement
fee and commitment fee charges. This is as compared to a £3.6 million net charge
in 2006. Offsetting this, the Group incurred a £4.1 million finance charge
(2006: £2.2 million) reflecting the difference between the cost and nominal
price of land bought on deferred terms and which is charged to the income
statement over the life of the deferral of the consideration payable.


The Group benefited from a £0.9 million net pension financing credit during
2007: this credit arose as a result of the expected return on plan assets being
in excess of the interest on the plan obligations. The equivalent number in 2006
was £0.3 million, which was reported in administrative expenses in that year.

Taxation


The Group has accounted for a tax charge of £36.7 million through the income
statement at an effective rate of 29.7% (2006: 29.9%). Of this charge, the
current year tax was £37.2 million, the deferred tax charge was £0.1 million and
the Group enjoyed the benefit of a £0.6 million rebate relating to a prior year.


The deferred tax charge related in part to the final £2.0 million special cash
contribution made by the Group to the pension scheme, offset by the deferred tax
credit arising in the year following changes made in the initial carrying value
of assets and liabilities of Elite Homes arising from its fair value exercise.
All deferred tax balances at the end of 2007 have been restated at 28%, given
the upcoming change in corporation tax in April 2008.

Dividends


The Group paid the 2006 final dividend of 20.0p per share, and the 2007 interim
dividend of 17.5p per share during 2007. In total, this equated to £45.0 million
(2006: £31.8 million). Post-tax earnings in 2007 were 1.9 times the dividend
paid as compared to 2.9 times in 2006. At the 2007 half year, the Group
announced that it would rebalance the payment of its interim and final dividend,
and so the interim 2007 dividend reflected half of the expected full payment, as
opposed to the previous one-third. Had this previous treatment been applied, the
Group would have covered its dividend payment 2.3 times.

The Board is recommending a 17.5p per share final dividend for 2007, which would
take the total dividend for the year to 35.0p per share, in line with its
previously announced commitment on dividends.


Net assets


The Group's net assets at 31 December 2007 were £723.7 million, £45.9 million
higher than the net asset position as at 31 December 2006. Whilst the movement
was predominantly driven by the movement in retained earnings, the Group's net
assets position also benefited from an increase in share capital and share
premium through the uptake of scrip dividends and from an actuarial gain arising
from the Group's defined benefit pension scheme.


Net assets per share as at 31 December 2007 was £5.99 as compared to £5.62 at 31
December 2006.

Analysis of net assets
                                                         2007         2006
                                                           £m           £m
--------------------------------------------------------------------------
Net assets at 1 January                                 677.8        598.1
Profit for the year                                      86.9         95.0
Dividends                                               (45.0)       (31.8)
Share capital issued                                      1.4          9.2
Net actuarial gain on defined benefits
pension scheme                                            2.4          6.1
Deferred tax on other employee benefits                  (0.8)         0.2
Adjustment to the fair value of cash flow
hedges                                                    0.1          0.5
Adjustment to reserves for share based
payments                                                  0.9          0.5
--------------------------------------------------------------------------
Net assets at 31 December                               723.7        677.8
--------------------------------------------------------------------------

Acquisition of Elite Homes Group Ltd


On 12 October 2007, the Group acquired Elite Homes Group Ltd, a northern
housebuilder together with its three subsidiaries. The acquisition was for a
total consideration of £72.3 million; of which £25.7 million was paid to the
shareholders of the company, with the Group assuming £46.2 million of debt.


The Group's consolidated results contain the trading results of Elite Homes from
12 October through to 31 December and the balance sheet of Elite Homes,
following a fair value exercise on acquisition. The Group has expensed £1.0
million of one-off restructuring costs in 2007 relating to the acquisition and
integration of this business. This cost is included in administrative expenses.


As at the balance sheet date, the Group has recognised £9.2 million of acquired
goodwill arising on consolidation. The Group believes that this goodwill is
sustained by the overhead cost benefits arising as a result of the substantial
geographic overlap between Elite Homes and the Group's existing Northern region,
together with the subsequent rationalisation of structure and organisations
which has occurred. The Group has also gained access to strategic land
capability and opportunities across the north of England.


Pensions


Following an actuarial valuation of the Group's defined benefit pension scheme
in 2004, which revealed a deficit, the Group agreed with the trustees of the
pension scheme a number of special cash contributions to be made by the Group to
the scheme to help mitigate the deficit that existed at that point. The final
payment of £2.0 million was made during 2007. An actuarial valuation was
undertaken as at 30 June 2007, revealing that the scheme was then in surplus.


This valuation has been rolled forward to 31 December 2007, with the help of
estimates provided by the Group's actuarial advisors. Positively, the Group's
deficit of £5.1 million at the end of 2006 is now a surplus of £1.0 million as
at the end of 2007, benefiting from the £2.0 million special contribution
outlined above, together with an actuarial gain of £3.7 million.


The actuarial gain is made up of two elements: firstly, £1.5 million arising
from changes between previous actuarial assumptions, and the actual outturn, and
secondly £2.2 million arising from movements in the underlying actuarial
assumptions used. Specifically, the movement in bond yields during 2007 has led
to a reassessment of the discount rate to be applied in calculating the value of
the scheme's liabilities.

Analysis of pension scheme (surplus) / deficit
                                                            2007       2006
                                                              £m         £m
---------------------------------------------------------------------------
Pension deficit at 1 January                                 5.1       22.4
Contributions into the pension scheme                       (3.4)      (7.5)
One-off pension credit                                         -       (3.5)
Expense to the income statement                              1.0        2.3
Actuarial gain on defined benefits pension
scheme                                                      (3.7)      (8.6)
---------------------------------------------------------------------------
Pension (surplus) / deficit at 31 December                  (1.0)       5.1
---------------------------------------------------------------------------

Cashflow


2007 has seen a marked swing in the Group's cash balances over the year. For the
majority of the year, the Group held substantial sums of cash on deposit. The
Group entered the year with £102.7 million net cash in hand, and had £107.8
million net cash in hand at the half year. During the second half of 2007, the
Group made two major investments: firstly, the acquisition of Elite Homes, and
secondly, the purchase of its strategic site at Filton, Bristol. As a result of
this investment, the Group closed the year with a modest gearing position and
net borrowings.


Excluding the impact of these large individual investments, the Group saw an
increase in working capital between the start and the end of 2007, with an
increased £8 million investment in home exchange properties reflecting an
increased use of this effective selling tool. Work in progress was £18 million
higher, and land creditors fell by £40 million. The increase in land sales and
in social and partnership housing sales has led to an increase in trade
receivables.


Net borrowings & banking facilities


As at 31 December 2007, the Group had £0.3 million of cash in hand, and
borrowings of £44.6 million. The Group has in place currently £225 million of
banking facilities, made up of bilateral committed revolving loan facilities
effective until early 2010, together with a short term overdraft facility to
facilitate cash management.


On average, the Group held £49 million of cash during 2007. Accordingly, the
Group had no average gearing excluding land creditors. Including land creditors,
the Group's average gearing was 5%. Year end gearing was 6% excluding land
creditors or 15% including land creditors. The Group's peak monthly borrowing
was £114 million at the end of November.


Financial risk & liquidity


In general, the Group seeks to mitigate any exposure to material interest rate
fluctuations through interest rate swaps. The maturity terms on these swaps will
be reviewed when taken out, with care taken to ensure that borrowings of an
appropriate term are likely to be in place to match the interest rate swaps
being taken out. The Group's outstanding interest rate swaps expired in December
2007, and having regard to current and future estimates of monetary policy, the
Group has delayed entering into further swaps at present. This position will be
reviewed during the first half of 2008.


The Group's banking arrangements outlined above are considered to be adequate in
terms of flexibility and liquidity for its medium term cashflow needs. With less
than £1 million of net financing charges, net interest cover during 2007 was
over 154 times, as compared with over 24 times during 2006.


As the Group functions wholly in the UK, currency risk management is not a
consideration.


Financial Reporting


There have been no changes to the Group's accounting policies during 2007. The
Group has adopted IFRS7 during the year, which has altered the disclosures given
in respect of financial instruments.



Neil Cooper

Group Finance Director





Bovis Homes Group PLC
Group income statement
For the year ended 31 December 2007
                                                  2007               2006
                                                  £000               £000
-------------------------------------------------------------------------
Revenue - continuing operations                555,702            597,290
Cost of sales                                 (382,659)          (407,204)
-------------------------------------------------------------------------
Gross profit                                   173,043            190,086
Administrative expenses                        (48,653)           (48,803)
-------------------------------------------------------------------------
Operating profit before financing costs        124,390            141,283
Financial income                                 6,158                654
Financial expenses                              (6,962)            (6,453)
-------------------------------------------------------------------------
Net financing costs                               (804)            (5,799)
-------------------------------------------------------------------------
Profit before tax                              123,586            135,484
-------------------------------------------------------------------------
Income tax expense                             (36,727)           (40,446)
-------------------------------------------------------------------------
Profit for the period attributable to equity
holders of the parent                           86,859             95,038
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Basic earnings per ordinary share                 72.4p              79.8p
-------------------------------------------------------------------------
Diluted earnings per ordinary share               72.2p              79.5p
-------------------------------------------------------------------------


Bovis Homes Group PLC

Group balance sheet
At 31 December 2007                                    2007          2006
                                                       £000          £000
-------------------------------------------------------------------------
Assets
Goodwill                                              9,176             -
Property, plant and equipment                        14,451        14,778
Available for sale financial assets                   1,085             -
Investments                                              22            22
Deferred tax assets                                   3,233         6,089
Trade and other receivables                           2,589         2,850
Retirement benefit asset                              1,010             -
-------------------------------------------------------------------------
Total non-current assets                             31,566        23,739
-------------------------------------------------------------------------
Inventories                                         870,550       758,078
Trade and other receivables                          52,725        22,446
Cash                                                    346       142,841
-------------------------------------------------------------------------
Total current assets                                923,621       923,365
-------------------------------------------------------------------------
Total assets                                        955,187       947,104
-------------------------------------------------------------------------

Equity
Issued capital                                       60,415        60,288
Share premium                                       156,734       155,494
Hedge reserve                                             -          (112)
Retained earnings                                   506,594       462,162
-------------------------------------------------------------------------
Total equity attributable to equity holders of the
parent                                              723,743       677,832
-------------------------------------------------------------------------

Liabilities
Bank loans                                           25,000        25,100
Trade and other payables                             28,816        44,264
Retirement benefit obligations                            -         5,140
Provisions                                            1,463         1,512
-------------------------------------------------------------------------
Total non-current liabilities                        55,279        76,016
-------------------------------------------------------------------------
Bank overdraft                                        3,588             -
Bank loans                                           16,000        15,060
Trade and other payables                            142,291       159,368
Provisions                                              500           602
Current tax liabilities                              13,786        18,226
-------------------------------------------------------------------------
Total current liabilities                           176,165       193,256
-------------------------------------------------------------------------
Total liabilities                                   231,444       269,272
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Total equity and liabilities                        955,187       947,104
-------------------------------------------------------------------------
These accounts were approved by the Board of directors on 7 March 2008.


Bovis Homes Group PLC

Group statement of cash flows
For the year ended 31 December 2007
                                                         2007          2006
                                                         £000          £000
---------------------------------------------------------------------------
Cash flows from operating activities
Profit for the year                                    86,859        95,038
Depreciation                                            1,421         1,499
Financial income                                       (6,158)         (654)
Financial expense                                       6,962         6,453
Profit on sale of property, plant and equipment           (43)         (120)
Equity-settled share-based payment expenses               133           455
Income tax expense                                     36,727        40,446
Other non-cash items                                      996             -
---------------------------------------------------------------------------
Operating profit before changes in working capital
and provisions                                        126,897       143,117
---------------------------------------------------------------------------
(Increase) / decrease in trade and other                     
receivables                                           (29,821)       51,099
(Increase) / decrease in inventories                  (42,195)       23,295
(Decrease) / increase in trade and other payables     (39,519)       19,619
Decrease in provisions and employee benefits           (6,301)       (8,590)
---------------------------------------------------------------------------
Cash generated from operations                          9,061       228,540
---------------------------------------------------------------------------
Interest paid                                          (4,812)       (5,829)
Income taxes paid                                     (39,052)      (35,342)
---------------------------------------------------------------------------
Net cash from operating activities                    (34,803)      187,369
---------------------------------------------------------------------------
Cash flows from investing activities
Interest received                                       5,420           512
Acquisition of property, plant and equipment             (879)       (1,668)
Proceeds from sale of plant and equipment                 106           174
Acquisition of subsidiary net of cash acquired        (73,304)            -
---------------------------------------------------------------------------
Net cash from investing activities                    (68,657)         (982)
---------------------------------------------------------------------------
Cash flows from financing activities
Dividends paid                                        (44,990)      (31,757)
Proceeds from the issue of share capital                1,367         9,234
Drawdown / (repayment) of borrowings                    1,000       (15,000)
---------------------------------------------------------------------------
Net cash from financing activities                    (42,623)      (37,523)
---------------------------------------------------------------------------
Net (decrease) / increase in cash and cash
equivalents                                          (146,083)      148,864
Cash and cash equivalents at 1 January                142,841        (6,023)
---------------------------------------------------------------------------
Cash and cash equivalents at 31 December               (3,242)      142,841
---------------------------------------------------------------------------


Bovis Homes Group PLC

Group statement of recognised income and expense
For the year ended 31 December 2007
                                                       2007           2006
                                                       £000           £000
--------------------------------------------------------------------------
Effective portion of changes in fair value of
interest rate cash flow hedges                          160            642
Deferred tax on changes in fair value of interest
rate cash flow hedges                                   (48)          (193)
Actuarial gain on defined benefits pension scheme     3,750          8,640
Deferred tax on actuarial movements on defined
benefits pension scheme                              (1,325)        (2,592)
Deferred tax on other employee benefits                (790)           218
--------------------------------------------------------------------------
Net expense recognised directly in equity             1,747          6,715
Profit for the period                                86,859         95,038
--------------------------------------------------------------------------
Total recognised income and expense for the period           
attributable to equity holders of the parent         88,606        101,753
--------------------------------------------------------------------------


Notes to the accounts

1 Basis of preparation

Bovis Homes Group PLC ('the Company') is a company domiciled in the United
Kingdom. The consolidated financial statements of the Company for the year ended
31 December 2007 comprise the Company and its subsidiaries (together referred to
as 'the Group') and the Group's interest in associates.

The consolidated financial statements were authorised for issue by the directors
on 7 March 2008. The accounts were audited by KPMG Audit Plc.

The financial information included within this statement does not constitute the
Company's statutory accounts for the year ended 31 December 2006 or 2007. The
information contained in this statement has been extracted from the statutory
accounts of Bovis Homes Group PLC for the year ended 31 December 2007, which
have not yet been filed with the Registrar of Companies, on which the auditors
have given an unqualified audit report, not containing statements under section
237(2) or (3) of the Companies Act 1985.

The consolidated financials statements have been prepared in accordance with
IFRS as adopted by the EU, and the accounting policies have been applied
consistently for all periods presented in the consolidated financial statements.

The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and reported amounts of assets and liabilities, income
and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under
the circumstances, the results of which form the basis of making judgements
about carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ from these estimates.

In 2006, the total Provisions balance of £2,114,000 as at 31 December 2006 was
disclosed on the face of the balance sheet as a non-current liability. This has
been reclassified for the 2006 comparative balance sheet in 2007, to be
consistent with the presentation of this item in 2007. The impact is to move
£602,000 from non-current into current liabilities on the face of the 2006
comparative balance sheet.

2 Basis of consolidation

The consolidated financial statements incorporate the accounts of the Company
and entities controlled by the Company (its subsidiaries) made up to 31
December. Control is achieved where the Company has the power to govern the
financial and operating policies of an entity so as to obtain benefits from its
activities. The existence and effect of potential voting rights that are
currently exercisable or convertible are considered when assessing whether the
Group controls another entity.

Associates are those entities in which the Group has significant influence, but
not control, over the financial and operating policies. The consolidated
financial statements include the Group's share of the total recognised gains and
losses of associates on an equity accounted basis, from the date that
significant influence commences until the date that significant influence
ceases.

3 Accounting policies

There have been no changes to the Group's accounting policies. These accounting
policies will be disclosed in full within the Group's forthcoming financial
statements.

4 Reconciliation of net cash flow to net debt
                                                    2007              2006
                                                    £000              £000
--------------------------------------------------------------------------
Net (decrease) / increase in net cash and cash
equivalents                                     (146,083)          148,864
(Drawdown) / repayment of borrowings              (1,000)           15,000
Fair value adjustments to interest rate swaps        160               642
Net debt at start of period                      102,681           (61,825)
--------------------------------------------------------------------------
Net debt at end of period                        (44,242)          102,681
--------------------------------------------------------------------------

Analysis of net debt:
Cash and cash equivalents                         (3,242)          142,841
Bank loans                                       (41,000)          (40,000)
Fair value of interest rate swaps                      -              (160)
--------------------------------------------------------------------------
Net debt                                         (44,242)          102,681
--------------------------------------------------------------------------

5 Income taxes

Current tax

Current tax expense is the expected tax payable on the taxable income for the
year, calculated using a corporation tax rate of 30% applied to the pre-tax
income, adjusted to take account of deferred taxation movements and any
adjustments to tax payable for previous years. Current tax for current and prior
years is classified as a current liability to the extent that it is unpaid.
Amounts paid in excess of amounts owed are classified as a current asset.

6 Reconciliation of 2006 Income statement and key performance metrics from
reported to underlying

Group Income Statement
Year ended 31           2006 Reported     Pension credit     2006 Underlying
December 2006
                                 £000               £000                £000
----------------------------------------------------------------------------
Revenue -
continuing
operations                    597,290                  -             597,290
----------------------------------------------------------------------------
Gross profit                  190,086                  -             190,086
Administrative
expenses                      (48,803)            (3,470)            (52,273)
----------------------------------------------------------------------------
Operating
profit before
financing
costs                         141,283             (3,470)            137,813
Net financing
costs                          (5,799)                 -              (5,799)
----------------------------------------------------------------------------
Profit before
tax                           135,484             (3,470)            132,014
Income tax
expense                       (40,446)             1,041             (39,405)
----------------------------------------------------------------------------
Profit for the
period                         95,038             (2,429)             92,609

Administrative
expenses ratio
to revenue                        8.2%                                   8.7%
Operating
profit margin                    23.7%                                  23.1%
Return on
capital
employed                         20.5%                                  20.0%


7 Acquisition of Elite Homes Group Ltd

On 12 October, the Group acquired Elite Homes Group Ltd. Total consideration was
£72.3 million, of which £25.7 million was paid to the shareholders of Elite,
£46.2 million related to the settlement of outstanding loans, and £0.4 million
related to directly attributable transaction costs.

                                           Pre acquisition   Fair value   Fair value
                                                             adjustment
                                                      £000         £000         £000
------------------------------------------------------------------------------------
Property, plant and
equipment                                              278            -          278
Inventory                                           69,175        2,099       71,274
Trade and other
receivables                                          1,428            -        1,428
Cash and cash
equivalents                                         (1,051)           -       (1,051)
Trade and other
payables                                           (10,269)           -      (10,269)
Current tax                                          2,025            -        2,025
Deferred tax                                             -         (608)        (608)
------------------------------------------------------------------------------------
Total                                               61,586        1,491       63,077
Goodwill                                                                       9,176
------------------------------------------------------------------------------------
Consideration                                                                 72,253
------------------------------------------------------------------------------------
Satisfied by
Cash                                                                          25,700
Assumption of debt                                                            46,154
Transaction costs                                                                399
------------------------------------------------------------------------------------
Total consideration                                                           72,253
------------------------------------------------------------------------------------

The £2,099,000 uplift to the carrying value of inventory has been recognised to
reflect the fair value of land and WIP acquired. The £608,000 deferred tax
adjustment relates to the fair value change in inventory. These fair value
adjustments are provisional, and will be confirmed within 1 year of the
transaction. Elite Homes contributed £16.7 million of revenue and £2.9 million
to gross profit for the period 12 October to 31 December 2007. Had the
acquisition been made on the first day of 2007, the combined revenue of the
Group would have been £593.5 million and the combined operating profit would
have been £125.7 million.

The goodwill balance relates to the acquisition of Elite Homes Group Ltd during
2007. Goodwill has arisen as a result of two main factors. Firstly, synergy
arising from the integration of and subsequent rationalisation of Elite Homes
with the existing Bovis Homes Northern region as a result of the overlap and
duplication of the organisational structures existing alongside each other in
the North West and Yorkshire in a highly replicated way. Secondly, the
acquisition has allowed the Group access to the expertise and contacts of the
Elite Homes buying team which the Group anticipates will offer future strategic
and consented land opportunities.

The Group has performed an impairment review on Elite Homes, and is satisfied
that its recoverable amount as determined by value-in-use calculations is in
excess of the carrying value of assets and liabilities, together with the
goodwill arising on consolidation. The key assumptions for this include a
discount rate of 7.0% based on the Group's post-tax weighted average cost of
capital, and the internal management forecasts covering the period determined by
the full utilisation of the existing consented land bank. These forecasts were
generated at the point of acquisition, using forward looking estimates and
growth rates based on market assessments made at the time of the transaction,
and have been reviewed following the first quarter's trading. For the purposes
of this review the goodwill has been allocated to the cash generation unit of
Elite Homes.





8 Dividends

The following dividends were paid by the Group.
                                                                2007      2006
                                                                £000      £000
------------------------------------------------------------------------------
Prior year final dividend per share of 20.0p (2006: 16.7p)    23,976    19,826
Current year interim dividend per share of 17.5p (2006:
10.0p)                                                        21,014    11,931
------------------------------------------------------------------------------
Dividend cost                                                 44,990    31,757
------------------------------------------------------------------------------

A final dividend in respect of 2007 of 17.5p per share, amounting to a total
dividend of £21,026,000 based on the shares in issue as at 7 March 2008, was
proposed by the Board on 7 March 2008. This final dividend will be paid subject
to approval on 23 May 2008 to shareholders on the register at the close of
business on 28 March 2008. This dividend has not been recognised as a liability
at the balance sheet date.

9 Earnings per share

Basic earnings per ordinary share for the year ended 31 December 2007 is
calculated on profit after tax of £86,859,000 (year ended 31 December 2006:
£95,038,000) over the weighted average of 119,984,811 (year ended 31 December
2006: 119,103,110) ordinary shares in issue during the period.

The impact of the 2006 one-off pension credit of £3.5 million on basic earnings
per share can be analysed as follows:
                                                              2007     2006
                                                             Pence    Pence
---------------------------------------------------------------------------
Basic earnings per share                                      72.4     79.8
Effect of one-off pension credit, net of related tax             -     (2.0)
---------------------------------------------------------------------------
Earnings per share stated before pension credit, net of
related tax                                                   72.4     77.8
---------------------------------------------------------------------------


Diluted earnings per ordinary share is calculated on profit after tax of
£86,859,000 (year ended 31 December 2006: £95,038,000) over the diluted weighted
average of 120,244,911 (year ended 31 December 2006: 119,523,151) ordinary
shares potentially in issue during the period. The average number of shares is
diluted in reference to the average number of potential ordinary shares held
under option during the period. This dilutive effect amounts to the number of
ordinary shares which would be purchased using the aggregate difference in value
between the market value of shares and the share option exercise price. The
market value of shares has been calculated using the average ordinary share
price during the period. Only share options which have met their cumulative
performance criteria have been included in the dilution calculation.

10 Circulation to shareholders

The consolidated financial statements will be sent to shareholders on or about 8
April 2008. Further copies will be available on request from the Company
Secretary, Bovis Homes Group PLC, The Manor House, North Ash Road, New Ash
Green, Longfield, Kent DA3 8HQ.

Further information on Bovis Homes Group PLC can be found on the Group's
corporate website www.bovishomes.co.uk/plc, including the slide presentation
document which will be presented at the Group's results meeting on 10 March
2008.



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