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TWST: Could we start off with a brief overview of the Bovis Homes Group (BVS.L), including a brief historical sketch as well?

Mr. Harris: Bovis itself was established in 1885 and Bovis Homes as a dedicated housing operation was established in 1965. The whole group was purchased by P & O in 1974. Bovis Homes Group PLC was floated on the stock exchange in 1997. The Group’s brand is well recognized and respected. We operate in the UK through four regional offices: South East region, from Kent; Central Region from Coleshill, South West from Cheltenham, and the Northern region, which was established this year, from Wilmslow, near Manchester. We also have a Retirement Living operation which operates from Kent, and covers the south and the Midlands. We’re opening a new Eastern region in 2003. The Group controls all of the processes, from acquiring an interest in land, taking it through the planning process and providing infrastructure. We design the homes, procure materials, construct the properties, market the units, and are then responsible for customer care. All of the professional resources needed, from town planners, land surveyors, legal professionals, architects, civil and structure engineers, buyers, right through to interior designers and the graphic design department, are all in house, offering a very high quality service at a low unit cost. This method of operating differentiates Bovis Homes from the more traditional methods of operating. The Group is heavily involved in the use of information technology, bulk purchasing, value engineering and we have a continuous improvement program operating throughout the group. There is an extensive research and development program, with all costs being written off as incurred. All systems and methods of operating are standardized throughout the operation. An area of major strength is our long term investment strategy. We specialize in large developments in prime locations. Long term investments are made and in many cases these will not come to fruition for fifteen to twenty years. Accounting policies are very clear in that no interest is capitalized. There are no off balance sheet finances. All general overheads including sales and marketing costs are written off as incurred, which includes show-home furnishings. The group owns its own main offices, plant and equipment, and profit is taken upon legal completion and cash receipt. The culmination of all of these policies is an achievement of the highest operating margin in the mainstream house building industry in the UK. We recorded 23.8% operating margin last year and a return on capital employed of over 23%. All of our products are aimed at the need-driven sector and are positioned either within major conurbations or easy commuting distance thereto. We do not aim any of our products at investors or develop in central London. The Group’s land holdings, at 30th of June this year, were sufficient to continue trading at the current level for over four years, and strategic holdings, which is a combination of owned land, which does not currently have the benefit of planning, and options and contracts that are subject to planning, are equivalent to approximately eight years supply. The planning process is the biggest deterrent for new companies entering the market; it’s a very expensive exercise to obtain planning on medium to large sites. The cost is prohibiting a lot of companies from entering the market. The top twelve house builders, of which Bovis Homes is one, now provide approximately 50% of the UK new housing market per year.

TWST: Are there any emerging trends within the industry that have been affecting this growth potential?

Mr. Harris: I think basically what is happening is that the entry level for small to medium sized companies is becoming so prohibitive that the top twelve major home builders are taking a larger share of the market every year. And the large schemes that we specialize in are becoming more expensive to finance.

TWST: Can you talk about some of the specific moves that you’ve made over the last few years that have helped your company grow?

Mr. Harris: We have acquired a large parcel of land known as the Gloucester Trading Estate in the south west, where we expect about 1,900 houses to receive consent within the next twelve months. We’ve recently acquired Filton in Bristol for 2,200 houses, and we expect that to get consent within the next two years. We are making progress on a very large development in Wellingborough in the Midlands, which is around 3,000 houses plus 200 acres of employment, for which we expect to get consent over the next twelve months or so. We have acquired a very large holding in Cambourne in Cambridge where we’re developing out a third share of a very large major new community, which consists of three and a half thousand houses, plus 2.5 million square feet of commercial space. It’s these large schemes that are supporting the expansion of the group.

TWST: Can you give me three reasons why good investors should take a hard look at your stock?

Mr. Harris: Yes, first of all are our very strong landholdings. Market leading margins and return of capital employed. And our product range and processes.