New boss Greg Fitzgerald says cost of dealing with snagging problems now stands at £10.5m
Bovis Homes has said the cost of dealing with the torrent of snagging complaints from buyers of its properties has gone up another £3.5m – and revealed it has sent the majority of staff on customer training programmes.
In February, the firm, which earlier this year saw off takeover attempts from rivals Redrow and Galliford Try, said it was making a “one-off £7m customer care provision” after buyers moved into newly built homes that suffered from problems including electrical and plumbing faults.
In its first trading update since hiring former Galliford Try chief executive Greg Fitzgerald (pictured) as its new boss in April, the firm said the additional money would ensure it could complete the works “as swiftly as possible whilst at the same time delivering the appropriate high level of service to our new customers”.
Fitzgerald said: “We are confident that all legacy issues are now identified and that where possible these issues will be fully dealt with and the related costs incurred during this financial year.” And he added: “I am very confident we can deliver a successful turnaround, returning Bovis Homes to being a leading UK housebuilder.”
Cenkos analyst Kevin Cammack admitted: “By any standards that’s some ‘snagging’ work needed to satisfy its 2016 new homes customer in-take.”
The new chief executive said he had spent the past 11 weeks visiting 85 sites across the UK, identifying and putting in place improvements to the firm’s operations.
The firm added: “In the first half we delivered customer service training to the majority of all of our employees and strengthened our customer service function. The delivery of our completions in the first half has been a controlled process and the homes have been finished to the high standard expected. We have made good progress addressing a high level of customer issues in the first half.”
Bovis said it had slowed its completion rate, which over the full year was likely to be down between 10 and 15%.
Its average selling price rose by 8.6% in the first half to around £277,000, driven by what it called “changes in mix and a modest increase in average underlying prices”.
The group’s first half profitability has been hit by increased build costs within its cost base brought into the year, and the cost of dealing with its legacy issues, it added.
Bovis will announces its half year results – and the outcome of its strategic review, headed by Fitzgerald – on 7 September.
In February, Bovis announced a 3% fall in annual pre-tax profit, down to £154.7m on turnover just over £1bn. Fitzgerald replaced previous chief executive David Ritchie who left at the beginning of the year.