"The fundamentals of the business remain strong with a robust financial position and high quality land bank"
Bovis Homes experienced a 'difficult' 2016, but says that it is now focused on resetting the business.
Reporting on its results for the year ending December 31 2016, the housebuilder said that it had encountered operational challenges following a period of considerable growth. Whilst it continued to achieve strong growth in the first half of the year, it failed to deliver its expected unit sales and customer service performance in the second half, it said. By December it had a shortfall of 180 private homes.
Bovis explained that its production processes had not been robust enough to withstand its growth strategy and resource shortages across the sector.
The group will now slow its rate of production for 2017 with completion volumes expected to be around 10%-15% lower than the 3,977 homes of 2016.
Bovis conceded that its customer service standards had been “declining for some time” and, combined with production delays towards the end of the year, it entered 2017 “with a high level of customer service issues”. In 2016, the group took a one-off £7 million customer care provision to deal with the volume of customer service problems.
Bovis said that it had begun a programme “to deliver significant and urgent improvement” in underlying processes across the business. It will conduct an end-to-end review of its production process and phasing of completions, and strengthen its operational capacity.
It also announced a series of measures to “transform” its customer service provision, including the formation of a customer task force, with Bovis home owners giving the business “advice, feedback and challenges as we continuously review all aspects of our customer service”. It said it would reinforce a “customer first” culture across the business and review its complaints procedures both pre- and post-legal completion.
During 2016, Bovis’ pre-tax profit slipped 3% to £154.7 million against 2015, with revenue climbing 11% to £1,054.8 million. Its legal completions rose 1% to 3,977 homes at an average selling price of £254,900, up 10%. Despite production slippages, it said that its overall production levels increased 7% to more than 4,200 notional units of build.
Earl Sibley, who took over as interim ceo following the departure of David Ritchie in January, said: "We have a clear set of operational priorities for 2017 and are fully committed to improving our levels of customer service and delivering high quality homes this year and in the future. The fundamentals of the business remain strong with a robust financial position and high quality land bank.”