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Bovis shares plunge after profits slide

Shares in house builder Bovis have plunged after it reported a fall in profits over a “difficult” year, took a £7m hit for customer service problems, and said it would slow the pace of building in 2017.

Bovis opened about 10% lower on the results, which come weeks after the group announced the departure of boss David Ritchie.

Profits fell 3% to £155m, short of an expected £160-170m, partly as a result of the hit to cover customer service problems.

Bovis was dogged by complaints over homes that were sold unfinished and had electrical and plumbing faults.

Chairman Ian Tyler said: “2016 was a difficult year for Bovis Homes with operational challenges following a period of ambitious growth.”

Interim chief executive Earl Sibley said: “Our customer service standards have been declining for some time and combined with the delays to production towards the year end, we have entered 2017 with a high level of customer service issues.

“Our customer service proposition has failed to ensure that all of our customers receive the expected high standard of care.”

The £7m provision will cover work to fix problems and compensation for affected customers, while there will also be new measures including more staff to deal with complaints.

Mr Sibley said Bovis achieved strong growth in the first half of the year but was unable to deliver on its planned level of completions for the second half.

He said the group was “focused on making 2017 the year when we re-set the business” as it slows the rate of completion volumes to be 10% to 15% below the 2016 level.

Average selling prices look set to increase but Bovis faces higher costs for subcontracted labour and material supplies as well as an increased level of investment.

Mr Sibley said the actions being taken this year would “inevitably” impact earnings.

The results come as new figures from Rightmove show house asking price growth slowing to the weakest pace for nearly four years.

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