Final Results

The Board of Bovis Homes Group PLC today announced its preliminary
results for 2002.

-- Pre tax profit increased by 30.9% to £104.7 million (2001: £80.0
million)

-- Earnings per share increased by 28.5% to 63.5p (2001: 49.4p)

-- Return on average capital employed of 25.1% (2001: 23.0%)

-- Operating margin of 23.8% (2001: 23.8%)

-- Plots with planning consent at 10,716 plots (owned:
10,243 plots/controlled: 473 plots) (2001: 10,465 plots (owned: 10,326
plots/controlled: 139 plots))

-- Strategic land holdings of 21,841 potential plots (2001: 19,847
potential plots)

-- Final dividend of 9.4p net per ordinary share making 14.0p for the
year, a 10.2% increase over the prior year (4.5 times covered)

-- Year end net cash in hand of £4.6 million (2001: net borrowings of
£57.2 million)

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

'The Group has enhanced shareholder value by delivering a record pre
tax profit, a high return on capital employed, increased land
investment and positive cash flow.

The fundamentals affecting the industry remain sound. Household
formation continues to increase above the rate of new housing supply.
High levels of employment, low interest rates and an increase in
earnings above retail price inflation provide a solid base on which
the industry can operate.

The Group has commenced 2003 with excellent landholdings, products and
processes. Reservations are in line with budget, with sales price
improvements. The market, after a quiet start, has returned to a
normal seasonal level of activity. Based upon the trading experience
to date and an ongoing stable economic environment, the Board
anticipates that 2003 will be another successful year.'

Chairman's statement

The Group has achieved a year of record performance. The good results
announced at the interim stage were followed by a strong second half
year performance, accompanied by positive cash flow and an increase in
land held for development.

Results

Profit on ordinary activities before taxation for the year ended 31
December 2002 increased by 30.9% to £104.7 million, compared with
£80.0 million in 2001. This result was achieved from total turnover of
£461.3 million, 28.7% greater than the previous year.

An expanding part of the Group's business is related to the provision
of affordable housing on land owned by third parties. This activity
provides early positive cash flow and high return on capital employed.
For the first time in the commentaries on the full year results of the
Group, the turnover associated with this element of the business, some
£8.0 million (2001: £7.0 million), has been separately identified from
housing turnover. Housing turnover stood at £445.4 million compared
with £334.5 million in 2001. This increase arose primarily from an 11%
increase in the volume of legal completions and a 20% increase in
average sales price.

For the year, the operating margin remained stable with the previous
year at 23.8% whilst return on capital employed increased to 25.1%.
Basic earnings per share improved by 28.5% to 63.5 pence per ordinary
share.

Dividend

The Board proposes a final dividend for the year ended 31 December
2002 of 9.4 pence to be paid on 23 May 2003 to shareholders on the
register at the close of business on 25 April 2003. This dividend,
when added to the interim dividend of 4.6 pence paid on 22 November
2002, totals 14.0 pence for the year and is covered 4.5 times by the
basic earnings per share of 63.5 pence. The total dividend per share
for the year represents an increase of 10.2% over the total dividend
for 2001.

Market conditions

Activity in the housing market during 2002 was strong with well
publicised increases in house prices whilst property transactions in
England and Wales increased by some 9% to 1.6 million transactions.
According to the Office of the Deputy Prime Minister ('ODPM'), new
private completions in Great Britain in 2002 increased by 7.6% to
150,800 units. Notwithstanding this increase, many forecasters are
predicting a requirement to supply new housing over the next twenty
years, in England alone, of some 225,000 homes per annum. Base
interest rates at 4.0% remained unchanged during the financial year,
and subsequent to the year end have been reduced by 25 basis points.
Although house price increases have exceeded earnings growth during
2002 and as a result affordability as measured by the house
price/earnings ratio has deteriorated, the competitive mortgage market
and low base interest rates have ensured that buying a house with a
mortgage remains approximately 39% cheaper than the average mortgage
cost over the last twenty years.

At the end of the third quarter of 2002, affordability trend
indicators reported that first year mortgage interest payments as a
percentage of average net earnings for a two income couple was 17%.
The same indicator reported 37% for 1990, the highest the indicator
has recorded in the last twenty years, coinciding with the housing
'boom' of the late 1980s. The average figure for this indicator
between 1983 and 2002 was 19.8%, some 2.8 percentage points higher
than the latest published figure.

Notwithstanding that the demand versus supply relationship and
affordability remain positive for the housing market, much of the
resilience in the economy has been fuelled through consumer confidence
which remained strong throughout 2002. Understandably, the
geopolitical uncertainties in the Middle East have raised fears that
consumer confidence may not remain so resilient.

Strategy

During 2002, the Group advanced its corporate strategy to grow the
business organically whilst retaining its strong operating margins.
This was, in part, facilitated through the launch of the Northern
region which enjoyed a successful first full year of autonomy. The
Group has now appointed a Managing Director to run its new Eastern
region which will follow the now established regional development
model pioneered by Northern. This will ensure that the Eastern region
utilises internal services provided by other regions until such time
as it reaches critical mass, thus maintaining tight cost control on
the administrative overheads of this embryonic region. The expansion
plan of the Group will involve further launches of regions,
particularly in locations where the Group has a satellite office of an
already established region. As always, this expansion will be subject
to market conditions.

The financial objectives of the Group remain consistent, focusing on
achieving strong operating profit margins, above target levels of
return on capital employed and attention to sound management of
health, safety and environmental matters. The Group has continued to
invest in product innovation and research and development into build
techniques with a view to enhancing profitability.

The Board

Further to the reconstitution of the Board on 1 February 2002,
positions on the Board have remained unchanged. During 2002, Malcolm
Harris continued to lead his executive team and Stephen Brazier became
Group Operations Director on 1 February 2002. Previously, Stephen
Brazier held the Board position of Regional Chairman. Ron Walford,
having notified the Board of his intention to retire, did so effective
from 30 June 2002. I would like to express my thanks to Ron Walford
for his 30 years' service with the Group and for his wise and
meaningful contribution to the Board. David Ritchie was appointed
Finance Director effective from 1 July 2002, having previously been
employed as the Group's Financial Controller. The three non-executive
directors remained unchanged during 2002 including myself as Chairman.

Corporate governance

The Group continues to be committed to good corporate governance and
applies the provisions of the Combined Code. After careful
consideration of the Higgs Review (Review of the role and
effectiveness of non-executive directors) issued in January 2003, the
Group is generally supportive of the re-affirmation of the principles
of best practice. However, the Board considers that certain
recommendations contained in the report are too formulaic and
prescriptive and as a result, if implemented, could lead to a control
environment which subordinates the valuable judgement of the Board and
a flexible and common sense approach to individual company
circumstances. Consequently, the Board is making representations to
the relevant authorities outlining its concerns. In raising these
concerns, the Board aims to assist in the development of a strong
corporate governance culture which in turn will assist the Group in
its aim of maximising shareholder return.

Employees

On behalf of the Board I would like to thank all of our employees. It
is only with their commitment, enthusiasm and expertise that the Group
has been able to achieve the record profits during 2002. I am pleased
that through their hard work our employees have been able to share in
the success of the Group, historically by way of the Group's Profit
Share Scheme and currently from the recently launched Share Incentive
Plan. Many of the Group's employees hold shares in the Company and the
strong take up for the Save As You Earn Share Option Scheme means that
many employees are saving monthly to acquire shares. This will enable
our employees to participate further in the future of the Company.

At the 2002 Annual General Meeting the Company passed a resolution
approving and adopting a Share Incentive Plan. This plan has been
launched and will allow the award of shares in the Company to
employees based on performance. It will also provide employees with an
opportunity to purchase shares in the Company each month.

Prospects

The housing market in 2002 witnessed a period of strong growth both in
activity and in sales prices. It is unlikely that the growth in sales
prices, reported by the Halifax for the year to December 2002 at
26.4%, will be repeated in 2003. A period of sales price growth more
in line with earnings growth is expected and would most likely return
a sense of stability to the housing market. The fundamentals of the
housing market are sound with demand in the areas in which the Group
operates exceeding supply and affordability remaining positive.
Underlying retail price inflation in 2003 is expected to be benign, at
or around the Government's target rate of 2.5%. This will support
continued interest rate stability such that the cost of mortgage
finance should not adversely affect affordability during 2003.

The Group's strategy is to offer good value housing in locations close
to large conurbations within easy commuting distance and along strong
employment corridors. The Group has no current developments in central
London and monitors closely investment levels within the M25. This
approach, established by the Group some years ago, minimises its
exposure to changes in the housing market. The Group's trading
experience to date in 2003 suggests that the housing market will be
less buoyant than in 2002 but that demand in the sectors in which the
Group specialises will remain firm and that prices will continue to
rise.

Nigel Mobbs

Chairman

Chief Executive's operational review

Trading environment

2002 witnessed a stable economic environment with the base interest
rate remaining at 4.0% throughout the year, high levels of employment
and an average increase in earnings of 3.7%. This resulted in an
improved level of consumer confidence. According to HM Land Registry,
UK total property transactions were at the highest level since 1989
and it reported average price increases for the year ended 31 December
2002 for all properties of 22.2% broken down with new homes increasing
by 13.5% and older properties increasing by 22.9%. This compared with
an average increase of 26.4% for all properties as published by the
Halifax and of 25.3% by the Nationwide. Looking over a twenty year
period the average increase in house prices, as reported by the
Halifax, was 6.8% compared with average earnings increases of 6.1%.
Taking into account the value added through home extensions, loft
conversions, refurbishment, conservatories and other value added
items, it would appear that the average increase in house prices was
broadly in line with the increase in earnings over this twenty year
period. When comparing the combination of low interest rates, earnings
growth and average sales price rises, the real cost of mortgages was
approximately 39% cheaper during 2002 than the average cost over the
last twenty years and in most areas of the country it was cheaper to
buy than to rent.

Group performance

Operating in a good housing market the Group delivered an excellent
performance with all segments of the business increasing their profit
compared with the previous year. The overall result was the
achievement of a record profit before taxation of £104.7 million, over
30% up on 2001. The return on average capital employed increased to
25.1%. Legal completion volumes improved by 10.7% to 2,556 homes. In
addition, the Group legally completed 135 dwellings constructed on
third party owned land. Positive cash flow was generated, resulting in
a small net cash in hand position at the year end, albeit that
additional investment was made in the Group's consented landholdings
which increased to 10,716 controlled plots (including 473 plots of
third party owned land). The Group also made significant further
investment in its strategic landholdings which closed the year at
21,841 potential plots.

The Group's average house sales price at £174,300 increased by 20.3%
compared with 2001. After taking account of an 11.5% increase in the
average size of unit to 1,186 square feet, sales price per square
foot, net of incentives, increased by 8.1%. The large increase in
average unit size was as a result of the additional contribution from
the Group's range of three storey townhouses and room in the roof
homes which are now an integral part of the Group's product range. By
comparison construction costs increased by 7.0% including
specification upgrades and increases in taxation relating to aggregate
tax, landfill tax and climate change levy.

Product mix and average sales price


Year ended 31 December                                       2002                  2001
                                                %  Units   Average   %  Units    Average
House type                                                  sales            sales price
                                                             price
                                                                 £                     £
----------------------------------------------------------------------------------------

Two bedroom                                   10    271   108,300  17    420     97,100
Three bedroom                                 33    887   148,100  26    636    118,600
Four bedroom                                  27    728   186,600  34    834    165,400
Five or more bedroom                          17    442   273,300   8    200    275,700
Retirement Living                              4    114   172,800   5    110    160,200

----------------------------------------------------------------------------------------
Group (exc. partnership housing)                  2,442   179,000      2,200    148,600
Partnership housing                            4    114    73,600   5    109     69,600
----------------------------------------------------------------------------------------
Group (exc. third party owned land units)         2,556   174,300      2,309    144,900
Third party owned land units                   5    135    59,300   5    120     58,700
----------------------------------------------------------------------------------------
Group                                        100  2,691   168,500 100  2,429    140,600
----------------------------------------------------------------------------------------


Regional performance

Unit completions and average sales price


Year ended 31 December                                          2002               2001
                                                  Units    Average      Units    Average
                                                       sales price           sales price
                                                                 £                     £
----------------------------------------------------------------------------------------

Central                                            660    191,900       {
                                                                         769    150,000
Northern                                           244    134,100       {
South East                                         894    185,800        839    152,500
South West                                         644    155,500        591    124,500
Retirement Living                                  114    172,800        110    160,200

----------------------------------------------------------------------------------------
Group (exc. third party owned land units)        2,556    174,300      2,309    144,900
Third party owned land units                       135     59,300        120     58,700
----------------------------------------------------------------------------------------
Group                                            2,691    168,500      2,429    140,600
----------------------------------------------------------------------------------------


All regions achieved a year on year increase in respect of volume and
profit.

The new Northern region commenced operating independently from the
Central region with effect from 1 January 2002. In its first year as a
separate business it achieved 244 legal completions which compared
with 156 legal completions reported within Central region's results in
2001.

The legal completions achieved on third party owned land were
predominantly contributed by South West region with 116 legal
completions. The balance of 19 units arose in South East region.

Operating margins


Year ended 31 December                                                  2002       2001
                                                                            %          %
----------------------------------------------------------------------------------------

Central                                                                 31.1     {
                                                                                   26.4
Northern                                                                17.5     {
South East                                                              22.2       25.1
South West                                                              18.3       16.9
Retirement Living                                                       29.5       25.6

----------------------------------------------------------------------------------------
Group                                                                   23.8       23.8
----------------------------------------------------------------------------------------


The operating margin for Northern region, shown separately for the
first time, demonstrates a good performance as the results of the
region have not been derived from selling houses on strategically
sourced land and the region has absorbed a full overhead.

The South East region's operating margin was lower in 2002 compared
with 2001 due to a reduction of legal completions arising from
strategic sourced land compared with the previous year. A number of
sites where planning consent had been delayed have now received
consent, which will provide the region with the opportunity to increase
its operating margin in 2003.

The South West region's figures included the 116 legal completions
which were built on third party owned land. The operating profit
margins from this area of the business are lower than from traditional
private sector sales. However, it provides early positive cash flow
and a high return on average capital employed.

Land and planning

Consented land bank


Total plots as at 31 December                                           2002       2001
                                                                        Plots      Plots
----------------------------------------------------------------------------------------

Central                                                                2,628     {
                                                                                  4,288
Northern                                                               1,324     {
South East                                                             3,458      3,470
South West                                                             2,514      2,200
Retirement Living                                                        319        368

----------------------------------------------------------------------------------------
Group (exc. third party owned land plots)                             10,243     10,326
Third party owned land plots
South West                                                               473        116
South East                                                                 -         23
----------------------------------------------------------------------------------------
Group                                                                 10,716     10,465
----------------------------------------------------------------------------------------

Years' supply based upon legal completions in the year (exc. third
 party owned land plots)                                                 4.0        4.5
----------------------------------------------------------------------------------------

Years' supply based upon legal completions in the year (inc. third
 party owned land plots)                                                 4.0        4.3
----------------------------------------------------------------------------------------


The cost and time period involved in processing planning applications
has again increased in 2002. The major problem that exists is with the
process rather than the planning framework. The reduction in resources
within many local authority planning and legal departments creates
delays. Hopefully this will be re-balanced following substantial
further increases in planning application costs. Despite these
difficulties the Group once again managed to increase its landholdings
with planning consent to 10,716 plots as at 31 December 2002 which
represented approximately 4 years' supply based upon 2002 legal
completion levels. The average plot cost of the consented land bank
(excluding partnership housing) was £39,000 which represented 21.8% of
the average sales price in the year of £179,000 (excluding partnership
housing). The plots held with consent as at 31 December 2002 are
anticipated to generate a high average sales price as new products are
developed in prime locations.

The strategic landholdings as at the end of the financial year
increased to 21,841 potential plots after transferring 459 plots from
strategic land to consented land during the year at an average 33%
discount to market value. A large number of strategic holdings are now
at an advanced planning stage. We are therefore hopeful of an increase
in the transfer of plots to consented land during 2003 and 2004.

Legal completions originating from strategic land contributed 39%
(2001: 52%) of the Group's development profit in the year, and 33%
(2001: 28.0%) of the legal completions in the year were built on
previously used land.

Strategic land bank


Total potential plots as at 31 December                                 2002       2001
                                                                        Plots      Plots
----------------------------------------------------------------------------------------

Central                                                                3,582     {
                                                                                  4,103
Northern                                                                 597     {
South East                                                            11,067     11,259
South West                                                             6,472      4,485
Retirement Living                                                        123          -

----------------------------------------------------------------------------------------
Group                                                                 21,841     19,847
----------------------------------------------------------------------------------------

Years' supply based upon completions in the year                         8.1        8.2
----------------------------------------------------------------------------------------


Included in strategic land holdings are 10,843 potential plots in
strategic 'growth locations'. Growth locations are areas designated
for development within draft or adopted development plans by local,
county or unitary planning authorities.

Total potential plots as at 31 December                                 2002       2001
                                                                        Plots      Plots
----------------------------------------------------------------------------------------

Central                                                                1,309     {
                                                                                  1,507
Northern                                                                 227     {
South East                                                             5,151      5,334
South West                                                             4,033      1,486
Retirement Living                                                        123          -

----------------------------------------------------------------------------------------
Group                                                                 10,843      8,327
----------------------------------------------------------------------------------------


Further to the publication of Planning Policy Guidance Note 3 (PPG3)
the Group has invested in potential re-development sites, a number of
which are allocated for residential use in current Development Plans
and on which the Group anticipates receiving planning consent in the
short to medium term.

Research and development

The Group undertakes continuous reviews of all of its activities with
an objective of achieving a safe working environment whilst maximising
efficiency and profitability. In addition to process reviews, an
extensive research and development programme is underway relating to
site based activities, the objective of which is to:

-- achieve construction in all weather conditions;

-- attain consistent high quality;

-- maximise mechanical handling and use of factory finished
components;

-- minimise waste by utilising lean, efficient construction
techniques;

-- develop multi-skilled team working and new trade sequencing;

-- achieve partnering agreements involving suppliers, skilled
tradesmen, industry bodies and Government, to develop new products and
methods of operating.

During 2002 further progress has been made by the Group through
increased usage of pre-assembled and pre-finished components. The
results are shown in the table below.



Component usage                                           Average      Target   Average
                                                             total                 total
                                                         Year 2001  Year 2002  Year 2002
----------------------------------------------------------------------------------------

Factory pre-finished, pre-glazed windows                       87%        95%        94%
Factory pre-finished soffits, fascias, barge boards            87%        95%        96%
Factory pre-assembled, pre-finished GRP porches                98%        99%        97%
Factory pre-assembled, pre-finished GRP dormers                46%        81%        85%
Factory assembled pre-glazed external steel doorsets           81%        99%        99%
Factory assembled internal doorsets                            16%        62%        65%
Factory assembled pre-glazed cassette doorsets                 71%        88%        82%
Factory assembled pre-glazed external feature doorsets         77%        92%        96%
Factory pre-finished garage doors                             100%       100%       100%
Factory pre-fabricated engineered joist sets                   62%        91%        93%
Factory finished radiators                                    100%       100%       100%
Factory pre-assembled stair parts/balusters                    98%       100%        99%
New technology snap fit plumbing                               82%        97%        99%
Factory pre-plumbed thermal store cylinders                    82%        91%        95%


Due to the above stated components now being specified in respect of
all new developments, the objective set of increased usage of
pre-assembled and pre-finished components has now been achieved.

The Group is participating in a number of research projects with the
Building Research Establishment and has recently embarked upon a
Partners In Innovation (P.I.I.) project: 'Adding Value to UK Timber'.

Bovis Homes has, during 2002, participated in the much publicised
ZETHUS project (Zone for education and training in housing using
systems) which is designed to publicly exhibit innovative technology.

Bovis Homes erected the first demonstration unit on the project campus
utilising innovative construction materials and production techniques
involving thin joint aircrete construction, brick slip cladding
systems, solid walling, 'Tilebricks' and large format storey height
aircrete wall panels and aircrete stair parts, together with a high
degree of factory pre-assembled, pre-finished components.

The unit is now nearing completion and other exhibitors are due to
commence construction on site shortly.

Partnership Developments

Bovis Homes Partnership Developments is actively involved with housing
associations, local authorities and other similar bodies providing
quality new homes at affordable prices, for either rent or shared
ownership, to communities throughout the country. The Group has total
in-house capability to handle all aspects of each project including
major regeneration schemes. In addition to design and build, there
exists expertise to provide cross subsidies from the development and
sale of open market housing and commercial buildings.

Health, safety and environment

Best practice in health, safety and environmental awareness and
management is an important element in the continuing success of the
Group. The objective is to maintain the highest practical levels of
health and safety and effective environmental policies.

The Health, Safety and Environmental Consultative Committee oversees
these important matters, formulating and promulgating policy to all
stakeholders. The Committee is chaired by a Bovis Homes Limited
director by annual rotation to ensure that fresh ideas and initiatives
are constantly introduced, assessed and, where appropriate,
implemented on a consistent basis. He is supported by a committee
comprising Group employees from numerous disciplines complemented by
the Health and Safety Director and external independent professional
advisers. He reports formally to the Board through submission of a
Health and Safety report tabled at each Board meeting.

Bovis Homes promotes all aspects of safety and environmental
management throughout its operations in the interests of all
stakeholders. Its record of success was once again recognised in 2002
with the Gold Medal Award from the Royal Society for the Prevention of
Accidents and the National Award from the British Safety Council.
Further details are available in the Group's free-standing Corporate
Social Responsibility Report.

Bovis Homes' objective is to achieve sustainable construction and
reduce environmental impact. The Group seeks to protect and, wherever
possible, improve the environment by retaining mature landscaping and
introducing new planting and habitats. It is also committed to
planning for the most efficient and effective use of development land.
The Group has introduced higher density properties with flexible
accommodation which addresses the changing lifestyles of its
customers, including the ability to work from home.

The Group has issued to employees an Environmental Management Manual
containing the Environmental Policy, Environmental Effects Document
and Best Practice Checklists. It is a comprehensive approach
consolidating policies, procedures and systems, explaining how all
employees can assist the Group in achieving its environmental aims and
make a positive contribution to the environment.

Legislation

No improvement in the planning system was witnessed during 2002. A
continuing lack of resources within many local authorities prevented
the efficient processing of applications. Despite a substantial
increase in planning application costs, which were initiated to fund
additional staffing within both the planning and legal departments of
local authorities, to date only the imposition of further costs, with
no benefits, has transpired. The Planning and Compulsory Purchase Bill
and the new Communities Bill are currently before Parliament and time
will tell as to whether improvements will emanate from such
legislation.

The housebuilding industry continues to be adversely affected by
increased taxes levied by Government.

Aggregate tax

A new levy on aggregate materials of £1.60 per tonne was introduced in
April 2002 which added considerable cost to all infrastructure, roads
and sewers as well as general construction costs.

Landfill tax

The active waste tax was increased by a further £1.00 per tonne during
2002 and further increases are proposed for 2003 and 2004.

Climate change levy

Additional taxes have been imposed on electricity, gas, liquefied
petroleum gas and solid fuels.

Stamp duty

All significant land purchases attract stamp duty at 4.0% and the
majority have a non recoverable VAT element of 17.5% added. This is in
addition to the stamp duty that purchasers pay upon legal completion
of the home.

Employee costs

Employee and employer National Insurance costs will rise from 1 April
2003 adding an additional 1.0% to the cost of employment.

Pension schemes

Historical changes in the taxation treatment of pension schemes have
imposed a considerable burden on the Group regarding contribution
rates. Further adverse tax changes for pension schemes are currently
being promulgated by the Inland Revenue which could add additional
burdens.

Group structure

A framework is in existence to enable Group expansion. The new
Northern region, based at Wilmslow, was established as a separate
operation with effect from 1 January 2002 and a new Eastern region,
operating from Cambourne, near Cambridge, was created with effect from
January 2003. Initially this new region will utilise facilities and
services available from existing regions.

Central region relocated to their new purpose built offices at
Coleshill, near Birmingham, in the summer of 2002 achieving an
improvement in operating efficiency, reduced running costs and a net
cash saving resulting from the sale proceeds of Castle Bromwich Hall
compared with the freehold cost of the new office.

Employees

Bovis Homes is a people business and I would like to thank all our
employees for their contribution during the year. It is essential that
the right individuals are recruited, trained and motivated. The
objective is to ensure that the Group employs the highest calibre of
employees who add value to the business and are sensitive to the
demands and requirements of the Group's customers whilst having the
entrepreneurial drive and flair to move the operation forward without
compromising sound corporate governance.

Outlook for 2003

The fundamentals affecting the industry remain sound. Household
formation is increasing annually above the rate of new housing supply.
High levels of employment, low interest rates and an increase in
earnings above retail price inflation provide a solid base on which
the industry can operate. The Group has commenced the new year with
good landholdings, an excellent product range, efficient processes and
a good sales position. The Group continues to be led by a capable
management team who are supported by able, experienced and
enthusiastic employees. The combined team have a clear commitment to
deliver ongoing positive results for the Group's shareholders.

Malcolm Harris

Chief Executive

Financial review

Overview

A further year of growth has delivered record earnings per share and
profits before taxation. Earnings per share increased by 28.5% to 63.5
pence per share and profit before taxation increased by 30.9% to
£104.7 million. The Group maintained its four year land bank supply
with 10,716 controlled plots with planning. These results were
achieved whilst generating positive cash flow and ending the year with
net cash in hand of £4.6 million.

The Group has adopted unchanged accounting policies for this financial
year, although adjustment has been made to reflect the adoption of
Financial Reporting Standard 19 ('FRS 19'), 'Deferred tax'.
Comparative figures have been restated for the adoption of this new
standard as necessary.

Review of results

Profit before taxation

The profit on ordinary activities before taxation for the year ended
31 December 2002 amounted to £104.7 million. This compared with £80.0
million in the previous year and represented an increase of 30.9% year
on year. There were no exceptional items during 2002 whilst 2001
included an exceptional profit of £1.2 million from the sale of one of
the Group's freehold properties.

Turnover

Total turnover achieved was £461.3 million (2001: £358.5 million).
Included within this figure was housing turnover of £445.4 million
(2001: £334.5 million). The increase in housing turnover was primarily
due to the 10.7% increase in unit legal completions to 2,556 units
compared with 2,309 legal completions in 2001 and the increase in
average sales price to £174,300 compared with £144,900 in 2001, an
increase of 20.3%. Overall, the average sales price per square foot
increased by 8.1% and the average size of unit by 11.5%.

In addition, the Group handed over 135 affordable units to housing
associations where the Group constructed houses under JCT contracts on
land owned by the housing association. This generated £8.0 million of
turnover and compared with 120 units handed over in 2001 and £7.0
million of turnover. This turnover and associated units have in
previous years been included within housing turnover. Given that the
Group intends to focus more significantly on this element of its
business, it was considered important to segregate it in this year's
disclosure of results.

Taken together, total legal completions amounted to 2,691 units (2,556
units on owned land and 135 units on third party owned land) and
compared with 2,429 legal completions in 2001 (2,309 units on owned
land and 120 units on third party owned land). Total turnover from
legal completions was £453.4 million compared with £341.5 million in
2001.

Land sales amounted to £4.4 million compared with £15.2 million in
2001 whilst other income mainly arising from sales of commercial
interests was £3.5 million compared with £1.8 million in 2001.

Operating profit

The Group achieved an operating profit of £109.6 million, an increase
of 28.6% over £85.2 million in the previous year, and achieved a
stable operating margin of 23.8%.

Land sale profits less option costs was a net cost of £1.9 million in
2002 (2001: net profit of £2.7 million).

Administrative expenses as a percentage of turnover were 7.8%, an
improvement of 0.6 percentage points compared with 8.4% in 2001.
Administrative expenses increased to £36.0 million compared with £30.0
million in the previous year. The increase included additional
headcount from the expansion of the regional structure. Average staff
numbers in 2002 were 730 compared with 693 in 2001.

Financing

Net interest payable amounted to £4.9 million (2001: £6.4 million),
and was covered 22 times by profit before interest.

Taxation

The corporation tax charge for the year amounted to £31.2 million, and
was after crediting an adjustment in respect of prior years amounting
to £0.3 million. In adopting the new accounting standard FRS 19 on
deferred tax, the Group has recognised, through a prior year
adjustment, a deferred tax asset of £0.6 million. This has increased
the brought forward reserves of the Group by the same amount. At 31
December 2002, this deferred tax asset had reduced to £0.5 million
resulting in a current year deferred tax charge of £0.1 million (2001
deferred tax charge: £0.3 million).

Dividends

Dividends paid and proposed totalled £16.4 million (2001: £14.5
million) resulting in a retained profit for the financial year of
£57.1 million. The total annual dividend was covered 4.5 times by post
tax earnings.

Review of balance sheet

Shareholders' funds

Shareholders' funds increased during the year to £397.0 million as a
result of retained earnings of £57.1 million and the issue of £4.3
million of share capital and share premium arising from the exercise
of share options by employees. The prior year shareholders' funds has
been restated given the adoption of FRS 19 on deferred taxation.

Net cash in hand

The Group ended the year with net cash in hand of £4.6 million having
started 2002 with net borrowings of £57.2 million. The Group utilised
its existing bilateral committed revolving loan facilities to varying
degrees throughout 2002 such that the average net borrowing was £61.2
million. The Group had fixed rate borrowings at 31 December 2002 of
£75.0 million, £55.0 million on five year fixed terms and £20.0
million on seven year fixed terms. Cash deposited on the money market
amounted to £81.5 million and there was a small net operating
overdraft of £1.9 million.

Working capital

Land increased from £397.9 million to £413.5 million, whilst there was
a reduction in land creditors from £102.9 million to £94.7 million.
Work in progress reduced from £143.9 million (including £23.7 million
of part exchange properties) to £127.2 million (including £14.4
million of part exchange properties).


As at 31 December                                                              Increase/
                                                               2002     2001   (decrease)
                                                                 £m       £m          £m
------------------------------------------------------------------------------------------
Land held for development                                     413.5    397.9        15.6
Land creditors                                                (94.7)  (102.9)        8.2
------------------------------------------------------------------------------------------
Net investment in land                                        318.8    295.0        23.8
Raw materials and work in progress                            112.8    120.2        (7.4)
Part exchange properties                                       14.4     23.7        (9.3)


The Group has maintained 4 years' supply of controlled land, based on
the previous year's profit unit output, with 10,243 plots of owned
land with planning consent and 473 plots of third party owned land
which the Group controls through the establishment of JCT contracts
with these third parties to construct affordable housing.

Return on average capital employed

Return on average capital employed for 2002 amounted to 25.1% based on
the operating profit of the Group of £109.6 million and average
capital employed of £436.5 million. For the fifth consecutive year,
the Group has exceeded its objective of achieving a minimum return on
average capital employed of 20%.

Cash flow and treasury

Cash flow

Cash inflow from operating activities amounted to £107.4 million
(2001: £43.9 million). The strength of the cash flow in the year
allowed the Group to reduce its net borrowings at 31 December 2001 of
£57.2 million to the zero geared net cash in hand position of £4.6
million at 31 December 2002.

Bank facilities and liquidity risk

The Group held total bank facilities of £216.0 million at 31 December
2002, including £5.0 million of overdraft facility. The balance of the
facilities were made up of bilateral committed revolving loan
facilities held with seven banks, mainly five year facilities but with
some seven year facilities. The earliest maturity date for these
facilities is 10 December 2005 in respect of £35 million of
facilities, with £124 million maturing on 9 January 2007, £20 million
on 5 February 2007, £12 million on 2 May 2007 and £20 million on 10
December 2007. This compared with £160.0 million at 31 December 2001.
During the year, two new banks were introduced to the Group through
the establishment of five year facilities for £20 million and £12
million, whilst an existing bank facility maturing on 2 November 2002
was not renewed. On 10 January 2002, £80 million of the bilateral
committed revolving loan facilities which were scheduled to mature on
2 November 2002 were cancelled early to facilitate the establishment
of new bilateral committed revolving loan facilities amounting to £124
million.

Given the Group's net cash in hand position at 31 December 2002 and
its moderate average net borrowing for 2002 of £61.2 million, the
Group believes that total bank facilities of £216.0 million are
sufficient to enable funding of foreseeable cash flows required for
the medium term plans for the Group. As bilateral revolving committed
loan facilities, of which £75.0 million are drawn down and fixed
through interest rate swaps, there is considerable flexibility
available to the Group to manage its borrowing needs.

Interest rate risk

By fixing £75.0 million of borrowings through interest rate swaps with
varying maturities, the Group has made certain its interest costs on
what is considered its core borrowing requirement. Borrowings in
addition to this core borrowing are judged on a case by case basis at
the time of drawing down the loans in terms of interest rate
flexibility and loan maturity. The Group has the ability to borrow
using its bilateral committed revolving loan facilities for as little
as a few days or up to the period through to maturity of the relevant
facility. The Group can decide with its various banks whether to fix
the interest rate of borrowing through the further use of interest
rate swaps, although care is taken to marry together the dates of draw
down and maturity of the floating rate borrowing and interest rate
swap.

Fair value

The fair value of the Group's fixed rate borrowings at 31 December
2002 exceeded its book value by £3.7 million. This reflected the
movement in long term interest rates since these financial instruments
were established. Further, the fair value of land creditors due after
more than one year (deemed financial instruments under FRS 13:
'Derivatives and Other Financial Instrument Disclosures') amounted to
£13.4 million compared with their book value of £16.1 million, derived
from the discounting of future cash flows in settling land creditors.
The fair values of the Group's other long term assets and liabilities
were not materially different from their book values.

Accounting standards

The Group has adopted the new accounting standard FRS 19: 'Deferred
tax', and has continued the stage implementation of FRS 17:
'Retirement Benefits', in accordance with the standard.

In respect of FRS 17 an independent actuary has valued the Group's
defined benefits scheme, as at 31 December 2002, on the basis defined
in the standard. The valuation shows a deficit, net of deferred tax,
on the scheme of £9.4 million, which is a disclosure item only in the
2002 Report and Accounts in accordance with the standard.

Under FRS 18: 'Accounting Policies' the Group has reviewed its
accounting policies to ensure that they remain the most appropriate to
its particular circumstances for the purpose of giving a true and fair
view.

As a result of the adoption of FRS 19, a previously unrecognised
deferred tax asset has now been recognised and accounted for by way of
a prior year adjustment increasing debtors due after more than one
year and the profit and loss account reserve in the Group balance
sheet.

David Ritchie

Finance Director

Bovis Homes Group PLC

Group profit and loss account


                                                                  Continuing operations
For the year ended 31 December 2002                                2002         2001
                                                                          Restated (see
                                                                                 note 1)
                                                                   £000         £000
----------------------------------------------------------------------------------------

Turnover                                                        461,284      358,543
Cost of sales                                                  (315,668)    (243,284)
----------------------------------------------------------------------------------------
Gross profit                                                    145,616      115,259
Administrative expenses                                         (36,025)     (30,034)
----------------------------------------------------------------------------------------
Operating profit                                                109,591       85,225
Profit on sale of freehold property                                   -        1,213
----------------------------------------------------------------------------------------
Profit before interest                                          109,591       86,438
Interest receivable and similar income                              807          172
Interest payable and similar charges                             (5,695)      (6,604)
----------------------------------------------------------------------------------------
Profit on ordinary activities before taxation                   104,703       80,006
Taxation on profit on ordinary activities                       (31,200)     (23,677)
----------------------------------------------------------------------------------------
Profit on ordinary activities after taxation                     73,503       56,329
Dividends paid and proposed                                     (16,365)     (14,549)
----------------------------------------------------------------------------------------
Retained profit for the financial year                           57,138       41,780
----------------------------------------------------------------------------------------

----------------------------------------------------------------------------------------
Basic earnings per ordinary share                                 63.5p        49.4p
----------------------------------------------------------------------------------------
Diluted earnings per ordinary share                               63.0p        48.8p
----------------------------------------------------------------------------------------


Bovis Homes Group PLC

Group statement of total recognised gains and losses


                                                                  Continuing operations
For the year ended 31 December 2002                                2002            2001
                                                                          Restated (see
                                                                                 note 1)
                                                                   £000            £000
----------------------------------------------------------------------------------------

Profit for the financial year after taxation                     73,503          56,329
----------------------------------------------------------------------------------------
Total recognised gains and losses relating to the year           73,503          56,329
Prior year adjustment to recognise deferred tax asset (see
 note 1)                                                            614               -
----------------------------------------------------------------------------------------
Total recognised gains and losses recognised since the last
 annual report                                                   74,117          56,329
----------------------------------------------------------------------------------------


Note of Group historical cost profit and losses


                                                                  Continuing operations
For the year ended 31 December 2002                                2002            2001
                                                                          Restated (see
                                                                                 note 1)
                                                                   £000            £000
----------------------------------------------------------------------------------------

Profit on ordinary activities before taxation                   104,703          80,006
Realisation of property revaluation gains of previous years           -             614
----------------------------------------------------------------------------------------
Historical cost profit on ordinary activities before taxation   104,703          80,620
----------------------------------------------------------------------------------------
Historical cost profit for the year retained after taxation
 and dividends                                                   57,138          42,394
----------------------------------------------------------------------------------------


Bovis Homes Group PLC

Group balance sheet


At 31 December 2002                                                2002         2001
                                                                          Restated (see
                                                                                 note 1)
                                                                   £000         £000
----------------------------------------------------------------------------------------

Fixed assets
Tangible assets                                                   8,215        6,844
Investments                                                       1,123        1,356
----------------------------------------------------------------------------------------
                                                                  9,338        8,200
----------------------------------------------------------------------------------------

Current assets
Stock and work in progress                                      544,496      544,000
Debtors due within one year                                      13,185       10,134
Debtors due after more than one year                              5,082        8,465
Cash and short term deposits                                     81,548        6,386
----------------------------------------------------------------------------------------
                                                                644,311      568,985
----------------------------------------------------------------------------------------

Creditors: amounts falling due within one year                 (163,224)    (128,810)
----------------------------------------------------------------------------------------
Net current assets                                              481,087      440,175
----------------------------------------------------------------------------------------

Total assets less current liabilities                           490,425      448,375
Creditors: amounts falling due after more than one year         (91,657)    (111,305)
Provisions for liabilities and charges                           (1,794)      (1,552)
----------------------------------------------------------------------------------------
Net assets                                                      396,974      335,518
----------------------------------------------------------------------------------------

Capital and reserves
Called up share capital                                          58,359       57,444
Share premium account                                           138,974      135,571
Revaluation reserve                                                 203          203
Profit and loss account                                         199,438      142,300
----------------------------------------------------------------------------------------
Equity shareholders' funds                                      396,974      335,518
----------------------------------------------------------------------------------------


Bovis Homes Group PLC

Group cash flow statement


For the year ended 31 December 2002                                2002         2001
                                                                   £000         £000
---------------------------------------------------------------------------------------

Net cash inflow from operating activities                       107,399       43,908

Returns on investments and servicing of finance
Interest received                                                   667          172
Interest paid                                                    (5,042)      (6,720)
---------------------------------------------------------------------------------------
                                                                 (4,375)      (6,548)
---------------------------------------------------------------------------------------

Taxation paid                                                   (27,612)     (23,491)
---------------------------------------------------------------------------------------

Capital expenditure and financial investment
Purchase of tangible fixed assets                                (2,706)      (3,368)
Sale of tangible fixed assets                                       327        4,797
Purchase of investments                                            (400)        (668)
Sale of fixed asset investments                                      72           36
---------------------------------------------------------------------------------------
                                                                 (2,707)        797
---------------------------------------------------------------------------------------

Equity dividends paid                                           (15,182)     (13,678)
---------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------
Cash inflow before management of liquid resources and
 financing                                                       57,523          988
Management of liquid resources and financing
Increase in short term deposits                                 (75,544)      (6,000)
Increase in borrowings                                           12,000        2,000
Issue of ordinary share capital                                   4,318        2,795
---------------------------------------------------------------------------------------
                                                                (59,226)      (1,205)
---------------------------------------------------------------------------------------
Decrease in cash                                                 (1,703)        (217)
---------------------------------------------------------------------------------------
Bovis Homes Group PLC

Group reconciliation of movements in shareholders' funds


For the year ended 31 December 2002                                2002         2001
                                                                          Restated (see
                                                                                 note 1)
                                                                   £000         £000
----------------------------------------------------------------------------------------
Opening shareholders' funds (restated to reflect recognition
 of deferred tax asset)                                         335,518      290,943
Issue of ordinary shares                                          4,318        2,795
Total recognised gains and losses for the year                   73,503       56,329
Dividends paid and proposed                                     (16,365)     (14,549)
----------------------------------------------------------------------------------------
Closing shareholders' funds                                     396,974      335,518
----------------------------------------------------------------------------------------


Group reconciliation of operating profit to operating cash flows


For the year ended 31 December 2002                                2002         2001
                                                                   £000         £000
---------------------------------------------------------------------------------------
Operating profit                                                109,591       85,225
Depreciation and amortisation                                     1,636        2,050
Profit on disposal of non property tangible fixed assets            (19)         (67)
Increase in stocks                                                 (496)     (85,415)
Decrease/(increase) in debtors                                      332       (4,430)
(Decrease)/increase in creditors                                 (3,645)      46,545
---------------------------------------------------------------------------------------
Net cash inflow from operating activities                       107,399       43,908
---------------------------------------------------------------------------------------


Group reconciliation and analysis of net debt


For the year ended 31 December 2002                                2002         2001
                                                                   £000         £000
---------------------------------------------------------------------------------------
Decrease in cash in the year                                     (1,703)        (217)
Cash outflow from change in debt                                 63,544        4,000
---------------------------------------------------------------------------------------
Change in net debt                                               61,841        3,783
Opening net debt                                                (57,228)     (61,011)
---------------------------------------------------------------------------------------
Closing net funds/(debt)                                          4,613      (57,228)
---------------------------------------------------------------------------------------
Analysis of net funds/(debt):
Cash                                                                  4          386
Short term deposits                                              81,544        6,000
Bank overdraft                                                   (1,935)        (614)
Borrowings                                                      (75,000)     (63,000)
---------------------------------------------------------------------------------------
                                                                  4,613      (57,228)
---------------------------------------------------------------------------------------


Notes to the accounts

1 Basis of preparation

The Group accounts include the accounts of the Company and its
subsidiary undertakings all of which are made up to 31 December 2002.
The financial information included within this statement does not
constitute the Company's statutory accounts for the year ended 31
December 2002 or 2001. The information contained in this statement has
been extracted from the statutory accounts of Bovis Homes Group PLC
for the year ended 31 December 2002, 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 Group has adopted the new accounting standard FRS 19: 'Deferred
tax' during the year. As a result of the implementation of this
standard a previously unrecognised deferred tax asset has now been
recognised. In the current year, a deferred tax asset of £481,000 has
been recognised and the tax charge has been adjusted to take account
of £133,000 of deferred taxation arising from the reversal of timing
differences during 2002. The opening profit and loss reserve has been
increased to reflect the opening deferred tax asset which would have
been recognised as at 31 December 2001 amounting to £614,000. The
comparative figures for the year ended 31 December 2001 have been
restated to reflect the recognition of the deferred tax asset.

The Group has implemented stage two of the transitional rules of FRS
17: 'Retirement Benefits' during the year. Required disclosures
arising from this implementation are included in the Company's
statutory accounts for the year ended 31 December 2002.

2 Earnings per ordinary share

Basic earnings per ordinary share for the year ended 31 December 2002
is calculated on profit after tax of £73,503,000 (2001: £56,329,000)
over the weighted average of 115,667,157 (2001: 113,977,097) ordinary
shares in issue during the year.

Diluted earnings per ordinary share is calculated on profit after tax
of £73,503,000 (2001: £56,329,000) over the diluted weighted average
of 116,616,844 (2001: 115,391,819) ordinary shares potentially in
issue during the year. The diluted average number of shares is
calculated in accordance with FRS 14: 'Earnings Per Share'. The
dilutive effect relates to the average number of potential ordinary
shares held under option during the year. 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 year.
Only share options which have met their cumulative performance
criteria have been included in the dilution calculation. There is no
dilutive effect on the profit after tax used in the diluted earnings
per share calculation.

The weighted average number of shares excludes shares held in employee
share trusts where dividends have been waived.

Notes to the accounts (continued)

3 Taxation

                                                              2002         2001
                                                              £000         £000
----------------------------------------------------------------------------------
Current tax for the year                                    31,403       23,728
Adjustment in respect of prior years                          (336)        (328)
----------------------------------------------------------------------------------
Total current tax                                           31,067       23,400
Deferred tax charge for reversal of timing differences         133          277
----------------------------------------------------------------------------------
                                                            31,200       23,677
----------------------------------------------------------------------------------

During the year prior year tax positions were finalised leading to the
release of a tax provision amounting to £336,000 (2001: £328,000). A
deferred tax charge of £133,000 (2001: £277,000) arose as a result of
the reversal of timing differences during the year.

4 Dividends

The proposed final dividend of 9.4 pence net per ordinary share will
be paid on 23 May 2003 to holders of ordinary shares on the register
at the close of business on 25 April 2003. The dividend when added to
the already paid interim dividend of 4.6 pence, totals 14.0 pence for
the year.

   Short Name: Bovis Homes Group
   Category Code: FR
   Sequence Number: 00002627
   Time of Receipt (offset from UTC): 20030307T150353+0000

    --30--ac/uk*

    CONTACT: Bovis Homes Group PLC

    KEYWORD: UNITED KINGDOM INTERNATIONAL EUROPE
    INDUSTRY KEYWORD: BUILDING/CONSTRUCTION REAL ESTATE EARNINGS
    SOURCE: Bovis Homes Group

ZZZZZ
#2110365