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Bovis Homes profit falls as expected, special divi announced
FTSE 250 housebuilder Bovis Homes, which saw off two takeover approaches last year, posted a drop in full-year profit on Thursday in line with expectations, as it said it has seen good demand in the first eight weeks of 2018 and that it is confident of delivering completions in line with expectations.
In the year to the end of December 2017, pre-tax profit fell 26% to £114m as total completions declined 8% to 3,645.
Bovis, which issued a profit warning last year as it was forced to compensate customers who were unhappy with the quality of its homes, said group revenue declined 3% to £103bn, while earnings per share dropped to 68p from 90.1p.
Still, the average selling price rose 7% to £272,400 and the dividend was lifted 47.5p per share from 45p. Bovis announced its first special dividend payment of £60m, equivalent to around 45p per share, expected to be paid towards the end of this year, with total special dividends of £180m or 134p to be paid over three years to FY20.
As far as current trading is concerned, Bovis said it had a strong sales position, with more than 40% of consensus FY18 revenues secured already and average sales per site in the first eight weeks up 14% to 0.5. The company said it is confident of delivering completions for FY18 in line with expectations, with a significant improvement in financial performance and profitability.
Chief executive 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. In addition, we have completed our restructuring, invested in our people, systems and processes, and comprehensively reviewed our land bank. The group fundamentals are strong, and with the business turning around I am excited about future years.
"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. We will also continue to invest in our people and systems, and I'm particularly looking forward to launching our new housing range in April."
AJ Bell investment director Russ Mould said: "Completions, revenues and profits were all down in 2017 at Bovis but the housebuilder's increase to its annual dividend and reaffirmed plans for special dividends in the next three years both suggest that chief executive Greg Fitzgerald feels the FTSE 250 firm is back on track after 2016's quality control and customer relations problems.
"Fitzgerald and team have gone the right away about it, putting the customer first and focusing on quality and timely delivery of homes to buyers, to ensure that any reputational, and therefore financial, damage could be contained."
At 0945 GMT, the shares were up 0.9% to 1,055.50p.