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Bovis reports profits up by 41% beating own H1 expectations

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  • 06/09/2018
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Volume growth and margin from its land bank delivered builder Bovis 41% growth in its profits before tax to £60.2m up from £42.7m year-on-year in H1.

 

The builder came under fire in January 2017 for offering customers £3,000 to complete on mortgages before Christmas on unfinished properties allowing it to hit target. In interim results it has said its customer satisfaction scores are now ‘well above 80%.’

The firm suggested its strategic refocus to extend its Phoenix housing range, which launched in April this year, will drive further profit.

It said the range allows the firm to ‘optimise pricing, reduce production costs and improve build efficiency, and be more competitive in the land market.’

The builder is replanning 61 of our developments with the new Phoenix Collection and are making good progress, with first completions with the Phoenix house types in Spring 2019.

For Shareholders, interim dividend increased by 27% to 19p per share to be paid in November with a first ‘special dividend’ of 45p per share allocated at the same time.

 

The figures

Total completions increased by 4% to 1,580, just 68 properties higher than H1 2017, with 1,030 private units and 550 affordable.

The higher percentage of completions from affordable homes is at 34.8% against 24.6% the previous year and will be around 30% of total completions, similar to 2017.

Private average selling price was £334,700, but total average selling prices decreased to £262,700 from £277,400, the previous year.

Help to Buy remains at a similar level to the prior year with 36% (2017: 34%) of reservations using it in the first half.

Greg Fitgerald, CEO, said: “We are making good progress against our medium term targets which we set 12 months ago to be achieved by 2020. We are on track to achieve a number of these targets as early as December 2018.”

Tom Stevenson, investment director from Fidelity Personal Investing’s share dealing service said:

“Bovis is finally putting 2016 behind it. New management has drawn a line under that year’s scandal when it paid customers to move into unfinished homes to meet demanding sales targets. We already knew that completions would be 4% ahead of last year at Bovis. Today we learned how that translated into higher profits and a growing dividend.

“The question now is whether obvious improvements in build quality and, more importantly, the way the company is run can offset the slowdown in the UK housing market. Rising interest rates, stretched prices and Brexit uncertainty are providing a difficult backdrop for the sector. And director share sales across the industry tell their own story in a business where boardroom insiders have a good track record of reading the ups and downs of the market.”

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