黑洞社区

A masterstroke - that was my first reaction upon hearing that under-siege Bovis had appointed Greg Fitzgerald as its new CEO.

My second thought was how has Bovis persuaded him to re-enter the fray and indeed why would Greg want to, having seen it, done it and got the t-shirt (and the retirement package) from over 30 years in the housing business?

My third thought was that this probably puts paid to Peter Truscott鈥檚 ambitions to assimilate Bovis into the Galliford Try camp 鈥� Galliford duly then announced its retreat from the bidding purportedly in the absence of any agreement with Bovis management over acceptable price.

And lastly, as the dust settled on an extraordinary day of events, my thoughts turned to how Greg will turn round what is clearly an ailing group.

There cannot be many industry figures with the experience, gravitas and respect that Greg commands

Attracting the enigmatic and no-nonsense Mr Fitzgerald out of retirement is a real coup.

There cannot be many industry figures with the experience, gravitas and respect that Greg commands that would in my opinion have wanted the challenge and be up to the task.

As to why? Well at the time of leaving Galliford Try whose housing business he effectively built up from small beginnings and overcame the setback of buying Linden pretty much at the top of the last cycle but 鈥榞ambled鈥� again to re-double the size of the housing business and radically improve its profitability, I thought he was going too early and would miss the day-to-day engagement that courses through his housing veins.

In short, I think he just misses the 鈥榗raic鈥� and has failed to find adequate alternatives to motivate or amuse him in retirement (there are only so many home bore-draws at Old Trafford that even the most ardent fan can endure!). And let鈥檚 be clear there is a big job to be done at Bovis to restore even parity to its peers.

Greg noted Bovis鈥� 鈥済reat brand, excellent people and high quality land bank鈥� in his acceptance speech but he will know that the first is horribly tarnished, the second under question from performance delivery on multi-levels (but mainly inadequate leadership, I would hope) and the third only relevant if operationally it can produce the returns consistent with its peers.

Bovis in 2016 produced profits of 拢155m on revenue of 拢1.05bn from about 4000 unit completions with margins of 15.2% and ROCE of 17%. Redrow, another to show interest but walk away due to price/value, by comparison completed 18% more completions (about 4700) than Bovis in 2015/16 producing revenues 30% higher than Bovis, profits of 拢250m over 60% higher, with margins of 18.9% and a ROCE of 24.2%. That gives a 鈥渕acro鈥� sight of the task Greg faces to restore Bovis to 鈥渘orm鈥�.

It won鈥檛 be easy and it won鈥檛 be quick but I cannot think of many better leaders able to ultimately deliver that, assuming the duration of this housing cycle remains his friend.

Kevin Cammack is an analyst for Cenkos Securities