Buoyant Bovis Homes looks like a takeover target

Bovis Homes put itself in the takeover spotlight today as it flagged up better than expected profits and a first dividend payout for nearly three years.

The firm — seen as a perennial candidate to be gobbled up by a larger rival — said that profits will beat the £16.3 million pencilled in by the City after driving down costs and boosting average selling prices 4% to £160,700.

Chief executive David Ritchie said Bovis had a clear strategy for growth but added: "We recognise that our name is mentioned because we are not the biggest housebuilder and no doubt other builders have run their slide rules over us for many years.

"If someone felt obliged to make our shareholders a cracking offer so be it."

The company's shares rose 5.5p to 430.7p.

Liberum Capital analyst Charlie Campbell said: "The shares should trade at a sector premium to reflect the rising probability of further sector consolidation."

The firm has taken advantage of its stronger balance sheet to snap up land at cheaper prices, mainly in the more resilient South-East. Around two-thirds of its 14,000 plots are in the South.

Bovis suffered alongside the rest of the industry in December's snow with Ritchie adding that the whole of the month was "dead". The severe weather cost it around 50 sales, he said.