- Bovis said sales so far this year are in line with reduced building expectations
- Also said it will take a £2.8million hit from merger advisory fees
Housbuilder Bovis announced it will take a £2.8million hit after two buyout bids earlier this year failed to result in a deal.
The payout, mostly advisory fees paid to bankers, follows aborted attempts by rivals Galliford Try and Redrow to take over the housebuilder in March and April.
Last month Galliford Try pulled out of a £1.2billion attempt to buy Bovis after the two failed to agree on price, a week after another potential suitor Redrow also pulled out.
The new boss of Bovis Homes will unveil his plans to turn around the struggling housebuilder in September.
The firm said: ‘The group will incur one-off advisory fees of around £2.8million related to the merger proposals… and the group’s strategic review announced in February.’
It marks a difficult six months for Bovis, who warned on profits at the end of 2016 after it failed to build enough homes, prompting its then chief executive David Ritchie to quit.
This was followed in February by a string customer complaints over the poor quality of its properties.
The Kent-based group was dogged by complaints over homes that were sold unfinished and had electrical and plumbing faults.
It also paid £3000 ‘bribes’ to would-be buyers to move into incomplete homes and help meet City targets
But the firm said in a trading update today: ‘We have made clear progress in addressing the issues faced during 2016 and in particular have re-established a ‘customer first’ culture across the business.’
Bovis has already made a £7million provision to cover remedial work and compensation for affected customers and the group has announced a raft of measures to improve service.
This includes more staff to deal with complaints, the creation of a dedicated homebuyers’ panel and an improved quality assurance process.
Bovis also announced trading in the first four months of the year was in line with reduced building expectations.
The firm’s building programme has been scaled back this year by 10 to 15 per cent with plans to return to normal levels in 2018.
The group said its sales rate of 0.48 net private reservations per site per week is in line with its production plans and reflects a ‘controlled sales release’.
Anthony Codling, analyst at Jefferies, said: ‘Trading in the year to date has been in line with management’s expectations – a strong result in our view, in the face of a significant M&A-shaped distraction earlier in the year.’
Last month Bovis appointed Galliford Try boss Greg Fitzgerald. He is undertaking a planning a revamp of the business which will be unveiled in September.
Fitzgerald said: ‘I am confident that Bovis will return to being a leading UK housebuilder and excited by the challenge ahead.
‘The clear focus for 2017 is on improving our production processes and efficiency thereby ensuring we deliver quality homes to our customers.
‘By the end of June I will have visited all our developments and met the majority of our people; we have already identified improvements to streamline the business, provide greater focus and be more agile.’
But Shore Capital’s Robin Hardy added: ‘We are not convinced that there will be an immediate bounceback in 2018.’
Shares are up 1 per cent at 930.5p.