Sunday 16 December 2018

Bovis profits hit by compensation payouts and takeover defence costs

The group posted a 26% fall in pre-tax profit to £114 million in 2017 as it booked exceptional items totalling £10.3 million.

Bovis has released full-year results (Bovis/PA)
Bovis has released full-year results (Bovis/PA)

By Ravender Sembhy, Press Association City Editor

Profits at Bovis Homes tumbled last year after the house-builder was stung by a string of costs that included compensation payouts for poor- quality homes.

The group posted a 26% fall in pre-tax profit to £114 million in 2017 as it booked exceptional items totalling £10.3 million.

This took in £3.5 million in customer care provision, £4 million in restructuring costs and £2.8 million advisory fees linked to defending itself from two aborted takeover attempts from rivals Galliford Try and Redrow.

Bovis was last year dogged by complaints over unfinished homes with electrical and plumbing faults and has had to make provision for compensation payouts.

However, the firm said that, since the debacle, it has presided over a “step change” in quality and service, with customer satisfaction levels now trending above 80%.

Bovis completed 3,645 homes in 2017, 8% lower than the previous year, confirming a building slowdown as it focuses on quality.

Revenue dropped 3% to £1 billion, while the average selling price on completion increasing 7% to £272,400.

Stripping out exceptional items, operating profit was down 19% to £128 million.

Boss Greg Fitzgerald said: “I am very pleased with the level of operational progress the group has made during the year.

“We have significantly improved our customer satisfaction through a series of initiatives and controlled period ends.”

Bovis also shrugged off economic uncertainty and a weak housing market by pointing to a hefty rise in profit in 2018.

The company said strong customer demand, attractive mortgage rates and government initiatives, in particular Help to Buy, are helping drive sales.

“The group fundamentals are strong, and, with the business turning around, I am excited about future years,” said Mr Fitzgerald.

“In 2018, we will deliver a controlled increase in volume, continue to build upon our high level of customer service, drive profitability, and complete our balance sheet optimisation.”

Press Association

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