Annual Financial Report

RNS Number : 9416A

Bovis Homes Group PLC

29 March 2017

 

Bovis Homes Group PLC - Annual Report and Accounts 2016

Annual Report and Accounts 2016, Notice of Annual General Meeting, Proxy Card

Copies of the above documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do

The documents are being mailed to shareholders and are available on the Company's website at www.bovishomesgroup.co.uk/annualreport2016

Annual Report and Accounts 2016 - publication required by DTR 6.3.5

The Company published its Preliminary Results for the year ended 31 December 2016 on 20 February 2017.  In order to comply with DTR 6.3.5 it is now publishing, in unedited full text, information contained in the annual financial report of a type required to be disseminated in a half-yearly financial report.  To maintain coherence, this repeats some of the information contained in the Preliminary Results announcement.

The full annual financial report is available on the Company's website at www.bovishomesgroup.co.uk/annualreport2016

 

Bovis Homes Group PLC - Annual Report and Financial Statements 2016

Chairman's statement

2016 was a difficult year for Bovis Homes with operational challenges following a period of ambitious growth. Whilst we achieved strong growth in the first half of 2016, we were unable to deliver our anticipated unit sales and customer service performance in the second half. As a result, we saw earnings fall year on year.

This shortfall in performance had two underlying causes which inevitably have their origins in preceding periods. Firstly, our production processes have not been sufficiently robust to cope with the twin pressures of our growth strategy and the resource shortages across the industry. Secondly, we have not designed and resourced our customer service proposition and processes appropriately to deliver a 'customer first' culture.

In order to address both of these we have embarked on a programme to deliver significant and urgent improvement in underlying processes across the business, focused on the delivery of the highest quality of product and service to our customers. In taking these actions we will slow the Group's rate of production for 2017 and are targeting completions volumes for the year to be c. 10% to 15% below prior year's level, before a return to normal industry production levels.

The fundamentals of the business remain strong with our market positioning reflected in our high quality southern biased land bank. The land additions executed in 2016 have further enhanced our land bank and ensured we hold over four years of owned consented land supply together with substantial further opportunity in our strategic land interests.

Given the clear need to ensure we optimise the return achieved on the Group's high quality land assets, we are undertaking a fundamental review of our structure and strategy during 2017, to include our geographic coverage, our organisation design, the basis of capital allocation to our land bank and other assets, and our medium term aspirations for growth.

The housing market

The Board closely monitors UK housing market conditions as we progress through the cycle. We believe that the key factors which supported the positive market conditions in 2016 remain in place for 2017.

The fundamental lack of supply in the UK housing market and the current strong demand from customers together provide a robust footing for the business. The positive Government support for house building was reconfirmed in the recent Housing White Paper. In particular the residential planning regime is ensuring that land supply to the market is ahead of production rates and the Help to Buy scheme provides confidence for our customers to invest in new homes.

We paused our land investment around the time of the EU referendum vote but have subsequently continued to invest in land in a disciplined manner to take advantage of the continued strength in demand in our core regional markets combined with a continuing flow of good land acquisition opportunities.

The current shortage of skilled construction labour in the industry remains a major short term operational challenge for the industry as a whole. This constraint has continued to impact our business during 2016. We are working hard to bring new people into the sector and we continue to invest in developing our own construction teams and support our subcontractors through apprenticeship schemes.

Dividends and earnings per share

The Group has retained the strength of its balance sheet during 2016 with an improved net cash position at year end. We delivered earnings per share of 90.1p with full year profits impacted by the shortfall in completions and increased costs including a one-off £7 million customer care provision. Given the strength of our balance sheet and our confidence in the future prospects of the business, a final dividend for 2016 of 30.0 pence per share will be recommended. When combined with the interim dividend this provides a total dividend of 45.0 pence for the year, an increase of 13% on 2015. The final dividend will be payable on 19 May 2017 to shareholders on the register on 24 March 2017.

Whilst there will inevitably be an impact on our earnings and cash flow from the actions we are taking in 2017, the Board intends to recommend maintaining the dividend for 2017 at the declared level for this year confirming its confidence in the future potential of the business.

People

We continue to invest in our people, and our training and development programmes will be extended further in 2017, supported by the launch of the national Bovis Homes Training Centre.

The commitment and skill shown by the Group's employees despite the difficulties faced during 2016 continues to impress me and, on behalf of the Board, I would like to thank them all for their dedication and hard work. I would also like to extend my thanks to our subcontractors and suppliers who are such a key component of our business.

The Board

I would like to thank my colleagues for another year of support and positive challenge. Nigel Keen joined the Board during the year and we have already benefitted substantially from his insight and experience. I would also like to express my thanks to David Ritchie, our previous Chief Executive, who stepped down in January 2017 after eighteen years of valued service. Earl Sibley, the Group Finance Director, has taken on the role of Interim Chief Executive and the search for a permanent Chief Executive Officer is underway.

The future

Despite the difficulties of 2016, the Board remains confident in the Group's abilities to deliver improved returns to shareholders. The process of transformation is already underway under Earl Sibley's interim leadership and I am confident the plans in place will address the operational weaknesses we have seen in our business, and focus us once again on delivering high quality product and service to our customers. Further, we will undertake a strategic and structural review of the business to ensure we meet our commitment to delivering the highest possible returns from our valuable land assets.

Ian Tyler

Chairman

Interim Chief Executive's Statement

Bovis Homes has pursued an ambitious growth strategy over the past five years with completions almost doubling over this period. This fast growth has led to progressively developing operational challenges across the business.

Whilst we achieved strong growth in the first half of the year we were unable to deliver our planned level of completions for the second half, with a shortfall of 180 private homes in December. This reflected underlying weaknesses in our production processes and resulted in higher than expected costs.

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 Group has taken a one-off £7 million customer care provision in 2016 to address this high level of customer issues. After taking this provision, the Group delivered a profit before tax of £154.7 million, below our previously stated range of £160 to £170 million.

The fundamentals of our business remain strong. We have continued to invest in our consented land bank which stands at £1,020.6 million, representing over four years of high quality land supply, and our balance sheet remains robust with increased year end net cash of £38.6 million.

Having assumed the role of Interim Chief Executive on 9 January 2017, I have established a clear set of operational priorities for 2017 and actions are already being taken. We are performing an end to end review of our production processes to ensure we develop to programme and deliver our customers the high quality homes they expect. We are fully committed to putting our customers back at the centre of everything we do and to delivering a much improved level of customer service. We will strengthen both our regional management teams and functional leadership, and continue to invest in our people to establish consistent best practice across all regions of the Group.

2017 operational priorities

The implementation of our operational priorities has commenced in the early weeks of 2017 and is focused on:

·      Developing to programme

·      Transforming customer service

·      Leadership and operational excellence

Developing to programme

The business has suffered from weakness in our production processes which has manifested in our development programmes not delivering to plan, in particular around the half year and year end periods when we have had a heavy weighting of completions.

We have commenced an end to end review of our build process from the point we acquire a development to the timing of the final completion. We will bring in external best practice to complement good internal procedures where appropriate, and will benchmark across all our regions. In particular we are focused on:

•      Adding new senior operational resource to target a reduction in build times, improve build quality and ensure we have the optimum resourcing models

•      Investment in resourcing of and training in our build management system

•      Improved communication with our supply chain, working as a collaborative partnership throughout the build process

•      Ensuring common understanding and adherence to our best practices across all regions

•      Formal cross functional development project teams to bring effective collaboration and a high level of internal customer service

Achieving better management of our build programme and developing to plan will result in a significant improvement to our build efficiency.

Transforming customer service

The Group's customer service levels have experienced a decline in recent years, as evidenced by our HBF customer satisfaction rating. At the beginning of this year we commenced a clear programme of actions to arrest this decline and to progressively return our HBF rating to the top quartile of listed housebuilders. A customer service task force has been established with its immediate priority to address outstanding concerns from customers within our two year warranty period.

We are increasing the resource across our customer service function to improve both our project management capability and our day to day operational capacity. We have additional staff dealing with customer enquiries and more operatives on the ground working in customers' homes.

We are reviewing all of our customer service procedures and controls to ensure best practice across all regions, and are already progressing with:

•      Improved customer service training for all staff

•      Enhanced quality assurance processes prior to homes being handed over, making our customers an integral part of that process

•      Improvements to our customer responsiveness and communication

•      Review of complaints procedures for the periods both pre and post legal completion

•      The formation of a Homebuyers Panel composed of customers who will provide advice and challenge as we review all aspects of our customer service in the coming months

Leadership and operational excellence

Last year we saw an increased level of investment in our people through training and development programmes and this will be extended further during 2017, supported by the opening of the Bovis Homes Training Centre.

The improvement of both external and internal customer service and the driving of a cultural change in how we operate, are at the core of our leadership development programme. Our values of quality, caring and integrity should stand at the centre of our decision making and inform how we effect operational changes.

As we commence 2017 our eight regional businesses are fully operational, having opened three new office locations in close proximity to our developments during 2016. We are focused on strengthening our regional management teams and establishing functional excellence across the Group. To further develop our functional leadership, our group commercial function introduced in 2016 will be complemented by new senior leadership positions for both customer service and development activities.

Improving capital efficiency

Alongside these operational priorities we remain focused on progressing balance sheet opportunities in 2017 to improve capital efficiency and deliver enhanced shareholder returns.  These include the sale of part or all of our shared equity assets, a reduction in part exchange assets, and the continuation of land sales where appropriate.  We are also undertaking a detailed review of the ways in which we can maximise capital efficiency on some of our larger strategic sites including Wellingborough, in particular the potential for strategic partnerships.

Land investment strategy

We continue to pursue a low risk approach to land investment targeting greenfield, traditional, two storey, family housing in Southern biased locations, sourced from both the consented land and strategic land markets.

In 2016, we acquired 27 sites following the acquisition of 35 sites in 2015, with the Group having deliberately paused its investment in land around the time of the EU referendum. We took the opportunity to increase our land acquisition hurdle rates in June to levels which have since been maintained.

Consented land bank	2016	2015
Consented plots added	3,047	6,058
Plots in consented land bank at year end	18,704	19,814
Land bank years	4.7	5.0
Land value	£1,020.6m	£1,013.7m
Sites added	27	35
Sites owned at year end	133	142
Average selling price	271,000	247,000
Average land plot cost	52,400	49,200
Proportion in south of England	78%	76%

The 3,047 plots added to the land bank in 2016 have an estimated future revenue of c. £950 million and an estimated future gross profit potential of c. £260 million based on sales prices and build costs at the point of appraisal, delivering an estimated future gross margin of 27.2%. The average return on capital employed of the land acquired based on investment appraisal at the time of acquisition is c. 30%.

The estimated gross profit potential of the Group's total consented land bank plots as at 31 December 2016, based on prevailing sales prices and build costs, has increased to c. £1,300 million with a gross margin of 25.6% (31 December 2015: £1,247 million at 25.5%).

The successful conversion of strategic land continues to be a key driver of value for the Group. New strategic land investments added 3,346 plots into the strategic land bank, giving a total of 25,494 strategic plots at the year end across 89 strategic sites. The strategic land bank reflects positively the Group's strategy of land acquisition with 67% of the strategic plots in the South of England.

During 2016, the Group converted 562 plots from the strategic land bank into the consented land bank. This was a lower number of plots than in prior years due to timings of consents but we are already seeing success early in 2017 on a number of sites including 503 additional plots at Bishops Stortford transferring into the consented land bank.

We have signed the revised s106 for our key site at Wellingborough which represents the largest single investment on our balance sheet (c. £50 million). We have progressed well with the main infrastructure road into the housing area and will commence building houses later this year. We are currently looking to identify partners for this development.

We continue to develop our key strategic site at Wokingham with the first homes legally completing during the year and a further land sale going ahead as planned. The proceeds from this land sale largely covered the latest deferred land payment for the site thereby managing the capital employed on this key scheme.

In pursuit of capital efficiency the Group completed the sale of three parcels of land during 2016, and further land sales are planned in 2017.

2016 Housing delivery

In 2016 the Group delivered 3,977 homes (2015: 3,934). Private legal completions (excluding PRS) decreased by 1% to 2,884 (2015: 2,901) reflecting the shortfall in private completions at the year end. Legal completions of social homes were 1,074 (2014: 848), representing 27% of total legal completions (2015: 22%).

Average active sales outlets of 99 were lower than the 102 in 2015, with the Group having closed more sites than previously anticipated. Despite this reduction in active sales outlets, an increase in net private reservations per site per week to 0.58 (2015: 0.56) enabled the Group to achieve 2,960 private reservations, broadly in line with the 2,986 achieved in 2015.

Our average sales price increased by 10% to £254,900 (2015: £231,600) with the average sales price of private legal completions (excluding PRS) 10% higher at £306,000 (2015: £272,100). These average prices benefitted both from the improved geographical and product mix on new sites driving higher sales prices and some modest price inflation. The increased total revenue supported an improvement in capital turn to 1.12 (2015:1.05).

Despite the slippage in production that caused difficulties towards the end of 2016, the overall production levels during the year were over 4,200 notional units of build, 7% ahead of 2015. Housing work in progress ended 2016 higher at 1,166 units worth of production (2015: 929), with work in progress turn as a result reducing to 2.8 times (2015: 3.5). Looking forward through 2017 we aim to align our production rates better with our sales rates and target a more even flow of production and completions through the year.

The Group's average construction cost per square foot in 2016 excluding the one off customer care provision was 11% higher than in 2015. We continue to see constraints on the availability of skilled labour across the sector resulting in increased market labour costs, and for the year inflationary pressures increased our total build costs by c. 5%. Product mix and the delivery of completions in higher value locations also increased our average build cost, whilst inefficiencies in our production processes and phasing, in particular the heavy weighting of completions to the year end, were also a factor.

Managing our construction cost base remains a key focus for management and delivering on our operational priority of developing to programme will result in improved build efficiency across the Group. We are focused on strengthening our relationships with key subcontractors, working in closer partnership with them throughout the production process, and will continue to optimise materials costs through Group-wide purchase agreements.

The Group recognised a one off £7 million customer care provision at the year end as a result of a much higher level of customer service issues. Customer service standards fell significantly during 2016 and homes were completed, in particular at the year end, which fell materially short of the high standard expected. We have a customer service task force in place whose absolute focus is to address these issues and the customer care provision will cover the cost of the required remedial work and appropriate compensation for affected customers.

Outlook

The Group is focused on making 2017 the year when we re-set the business and deliver on our operational priorities. Reflecting this we are slowing our rate of production and targeting completion volumes for 2017 to be c. 10% to 15% below the 2016 level, before a return to normal industry production levels. Our production rate in early January has been slowed to support our priority focus on customer service, and current production programmes have been extended to allow sufficient time to ensure each home is delivered to the high standard of quality that we and our customers expect.

The average selling price is again expected to increase reflecting the mix coming through our landbank. We continue to see market inflation impacting both the cost of subcontract labour and material supplies. To deliver on our operational priorities we will also see an increased level of investment in 2017 across the business.

We will continue to invest in high quality land opportunities that meet our minimum acquisition hurdle rates but will maintain our consented land bank at broadly current levels.

Whilst there will inevitably be an impact on our earnings and cashflow from the actions we are taking in 2017, the Board intends to recommend maintaining the dividend at the level declared for 2016, confirming its confidence in the future potential of the business.

Earl Sibley

Interim Chief Executive

Financial Review

Revenue

The Group generated total revenue of £1,054.8 million, an increase of 11% on the previous year (2015: £946.5 million). Housing revenue was £1,022.8 million, 12% ahead of the prior year (2015: £910.1 million) with our average sales price increased by 10% to £254,900 (2015: £231,600). Other revenue was £6.2 million (2015: £6.4 million) and land sales revenue, associated with three land sales, was £25.8 million in 2016, compared to four land sales achieved in 2015 with a total revenue of £30.0 million.

Gross profit

Total gross profit was £235.7 million (gross margin: 22.3%), compared with £232.3 million (gross margin: 24.5%) in 2015. The profit on land sales in 2016 was £7.7 million (2015: £8.8 million) as we continue the strategy of managing our capital base through the disposal of parcels of land on large sites.

Housing gross margin was 22.2% in 2016, below the 24.4% achieved in 2015. This was largely due to the deferral of circa 180 private completions into 2017 which resulted in an increase in the proportion of social completions in the year to 27% (2015: 22%) these having lower profit margins, as well as reflecting the one off £7.0 million customer care provision. This provision reflects additional costs expected to be incurred across the business as we conclude a higher than expected level of outstanding remedial items on homes completed in the last two years, as well as the costs to rectify a limited number of homes with more significant issues and the associated compensation costs.

During 2016, our construction costs increased by 12% per square foot, reflecting higher value site locations, the inflationary impact of labour and materials, additional costs related to delivering our production at peak times and the impact of the one off customer care provision.

Operating profit

The Group delivered an operating profit for the year ended 31 December 2016 of £160.0 million (2015: £163.5 million) at an operating profit margin of 15.2% (2015: 17.3%).

Overheads, including sales and marketing costs, increased by 10% in 2016, as we invested in our enlarged operating structure with average headcount growing 15% over the year and three new offices opening to support our eight operating regions. The overheads to revenue ratio reduced slightly to 7.1% in 2016 (2015: 7.2%) with the further efficiencies from growing the scale of the business not being realised due to the deferral of volume and therefore revenue into 2017.

Profit before tax and earnings per share

Profit before tax reduced to £154.7 million, comprising operating profit of £160.0 million, net financing charges of £5.6 million and a profit from joint ventures of £0.3 million. This compares to £160.1 million of profit before tax in 2015, which comprised £163.5 million of operating profit, £5.2 million of net financing charges and a profit from joint ventures of £1.8 million. The profit from joint ventures in 2015 included the benefits of revaluing both the Bovis Peer LLP and IIH Oak Investors LLP PRS property portfolios in the period.

Basic earnings per share for the year were 90.1p compared to 95.4p in 2015. This has resulted in a return on equity of 13% (2015: 15%).

Financing

Net financing charges during 2016 were £5.6 million (2015: £5.2 million). Net bank charges were £3.3 million (2015: £3.3 million), as a result of modestly lower net debt during 2016 than 2015 offset by a higher level of commitment fees and issue costs amortised in 2016. We incurred a £5.0 million finance charge (2015: £4.9 million charge), reflecting the imputed interest on land bought on deferred terms. The Group benefited from a finance credit of £2.4 million (2015: £2.9 million) arising from the unwinding of the discount on its available for sale financial assets during 2016 as well as other credits of £0.3 million (2015: £0.1 million).

Taxation

The Group has recognised a tax charge of £33.9 million at an effective tax rate of 21.9% (2015: tax charge of £32.1 million at an effective rate of 20.0%). The increased tax rate is driven by a prior year deferred tax adjustment relating to the transition of our subsidiaries from UK GAAP to FRS 101. The Group has a current tax liability of £13.9 million in its balance sheet as at 31 December 2016 (2015: current tax liability of £16.9 million).

Dividends

As previously communicated the Board will propose a 2016 final dividend of 30.0p per share. This dividend will be paid on 19 May 2017 to holders of ordinary shares on the register at the close of business on 24 March 2017. The dividend reinvestment plan gives shareholders the opportunity to reinvest their dividends in ordinary shares. Combined with the interim dividend paid of 15.0p, the dividend for the full year totals 45.0p and compares to a total of 40.0p for 2015, an increase of 13%.

Net assets

	2016	2015
	£m	£m
Net assets at 1 January	957.8	879.1
Profit after tax for the year	120.8	128.0
Share capital issued	0.8	0.6
Purchase of own shares	-	(2.4)
Net actuarial movement on pension scheme through reserves	(14.1)	0.2
Deferred tax on other employee benefits	2.6	-
Adjustment to reserves for share based payments and shared equity	3.4	1.5
Dividends paid to shareholders	(55.4)	(49.2)
Net assets at 31 December	1,015.9	957.8

As at 31 December 2016 net assets of £1,015.9 million were £58.1 million higher than at the start of the year. Net assets per share as at 31 December 2016 were 757p (2015: 714p).

Inventories increased during the year by £130.6 million to £1,449.2 million. The value of residential land, the key component of inventories, increased by £6.9 million, as we invested in line with usage. At the end of 2016, the remaining provision held against land carried at net realisable value was £3.0 million, after utilisation of £4.2 million during the year. Other movements in inventories were an increase in work in progress of £104.6 million driven by an increase in the underlying level of ongoing production, the deferral of c. 180 almost complete homes into 2017 and an increase in part exchange properties of £19.1 million due to the high volume of legal completions in December.

Trade and other receivables decreased by £5.2 million, primarily due to lower amounts owing from land sales. Trade and other payables totalled £582.8 million (2015: £535.2 million). Land creditors increased to £343.3 million (2015: £322.9 million) as we continue to take advantage of the opportunity to negotiate deferred payment terms with our land vendors. Trade and other creditors increased to £239.5 million (2015: £212.3 million), driven by a 7% increase in build activity over 2016 leading to a higher level of closing work in progress and an increase in the amounts we owe to subcontractors and materials suppliers.

Pensions

Taking into account the latest estimates provided by the Group's actuarial advisors, our pension scheme on an IAS19 basis had a deficit of £6.6 million at 31 December 2016 (2015: surplus of £7.1 million). The scheme's assets grew over the year to £119.0 million from £109.3 million and the scheme liabilities increased to £125.6 million from £102.2 million. The movements in the liabilities in the period are driven largely by a reduction in the discount rate applied to those liabilities as a result of changes in bond yields.

Net cash and cashflow

Having started the year with net cash of £30.0 million, the Group generated an operating cash inflow before land expenditure of £307.5 million (2015: £329.0 million), reflecting higher profitability and increased recovery of land cost attributable to legal completions net of increased construction expenditure. Net cash payments for land investment was £205.6 million (2015: £205.8 million). Non-trading cash outflow reduced to £93.3 million (2015: £98.4 million) with greater dividends offset by lower corporation tax payments and there were no special contributions to the pension scheme in the year (2015: £7.8 million). As at 31 December 2016 the Group's net cash balance was £38.6 million.

We have a committed revolving credit facility of £250 million in place which was extended for one year during 2016 and now expires in December 2021.

Earl Sibley
Group Finance Director

 

Statement of directors' responsibilities in respect of the annual report and the financial statements

The directors are responsible for preparing the Annual Report, the Directors' Remuneration Report and the financial statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group and Parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and the Company and of the profit or loss of the Group for that period.

In preparing these financial statements, the directors are required to:

·      select suitable accounting policies and then apply them consistently;

·      make judgements and accounting estimates that are reasonable and prudent;

·      state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;

·      prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The directors consider that the Annual Report and Accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess a Company's performance, business model and strategy.

Each of the directors, whose names and functions are listed on pages 48 to 49 of the Annual Report confirm that, to the best of their knowledge:

·      the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

·      the Strategic Report contained in the Annual report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces.

By Order of the Board

M T D Palmer

Group Company Secretary

20 February 2017

 

Bovis Homes Group PLC

Group income statement

For the year ended 31 December	2016	2015
	£000	£000
Revenue	1,054,804	946,504
Cost of sales	(819,123)	(714,196)
Gross profit	235,681	232,308
Administrative expenses	(75,711)	(68,778)
Operating profit before financing costs	159,970	163,530
Financial income	3,035	3,348
Financial expenses	(8,622)	(8,583)
Net financing costs	(5,587	(5,235)
Share of profit of Joint Ventures	331	1,770
Profit before tax	154,714	160,065
Income tax expense	(33,866)	(32,057)
Profit for the year attributable to equity holders of the parent	120,848	128,008
Earnings per share
Basic	90.1p	95.4p
Diluted	90.0p	95.2p

Group statement of comprehensive income

For the year ended 31 December	2016	2015
	£000	£000
Profit for the year	120,848	128,008
Other comprehensive income/(expense)
Items that will not be reclassified to profit and loss:
Remeasurements on defined benefit pension scheme	(14,107)	182
Deferred tax on remeasurements on defined benefit pension scheme	2,624	(17)
Total comprehensive income for the year attributable to equity holders of the parent	109,365	128,173

Bovis Homes Group PLC

Group balance sheet

At 31 December	2016	2015
	£000	£000
Assets
Property, plant and equipment	11,870	13,982
Investments	8,786	8,987
Restricted cash	1,444	1,451
Deferred tax assets	1,955	2,160
Trade and other receivables	5,758	1,166
Available for sale financial assets	27,804	35,303
Retirement benefit asset	-	7,117
Total non-current assets	57,617	70,166
Inventories	1,449,165	1,318,520
Trade and other receivables	84,992	94,843
Cash and cash equivalents	38,552	31,990
Total current assets	1,572,709	1,445,353
Total assets	1,630,326	1,515,519
Equity
Issued capital	67,261	67,190
Share premium	215,057	214,368
Retained earnings	733,609	676,201
Total equity attributable to equity holders of the parent	1,015,927	957,759
Liabilities
Trade and other payables	162,612	171,306
Retirement benefit obligations	6,590	-
Provisions	812	1,327
Total non-current liabilities	170,014	172,633
Bank and other loans	-	1,999
Trade and other payables	420,220	363,936
Provisions	10,280	2,245
Current tax liabilities	13,885	16,947
Total current liabilities	444,385	385,127
Total liabilities	614,399	557,760
Total equity and liabilities	1,630,326	1,515,519

These financial statements were approved by the Board of directors on 20 February 2017.

Bovis Homes Group PLC

Group statement of changes in equity

	Total	Issued	Share	Total
For the year ended 31 December	retained earnings	capital	premium
	£000	£000	£000	£000
Balance at 1 January 2015	598,154	67,114	213,850	879,118
Total comprehensive income	128,173	-	-	128,173
Issue of share capital	-	76	518	594
Deferred tax on other employee benefits	(31)	-	-	(31)
Purchase of own shares Share based payments	(2,386) 1,531	- -	- -	(2,386) 1,531
Dividends paid to shareholders	(49,240)	-	-	(49,240)
Balance at 31 December 2015	676,201	67,190	214,368	957,759
Balance at 1 January 2016	676,201	67,190	214,368	957,759
Total comprehensive income	109,365	-	-	109,365
Issue of share capital	-	71	689	760
Deferred tax on other employee benefits	48	-	-	48
Purchase of own shares	-	-	-	-
Shared equity movement re-assigned to Income statement	2,099	-	-	2,099
Share based payments	1,308	-	-	1,308
Dividends paid to shareholders	(55,412)	-	-	(55,412)
Balance at 31 December 2016	733,609	67,261	215,057	1,015,927

 

Bovis Homes Group PLC Group statement of cash flows
For the year ended 31 December	2016	2015
	£000	£000
Cash flows from operating activities Profit for the year	120,848	128,008
Depreciation	2,274	2,065
Revaluation of available for sale financial assets	1,191	67
Financial income	(3,035)	(3,348)
Financial expense	8,622	8,583
Profit on sale of property, plant and equipment	(764)	(43)
Equity-settled share-based payment expense	1,308	1,531
Income tax expense	33,866	32,057
Share of result of Joint Ventures	(331)	(1,770)
Decrease / (Increase) in trade and other receivables	15,254	(28,031)
Increase in inventories	(130,647)	(193,000)
Increase in trade and other payables	42,976	168,773
Decrease in provisions and retirement benefit obligations	7,395	(7,003)
Cash generated from operations	98,957	107,889
Interest paid	(4,010)	(2,470)
Income taxes paid	(33,142)	(28,515)
Net cash from operating activities	61,805	76,904
Cash flows from investing activities
Interest received	45	75
Acquisition of property, plant and equipment	(1,787)	(2,424)
Proceeds from sale of plant and equipment	2,389	55
Movement of investment in Joint Ventures	625	755
Dividends received from Joint Ventures	129	377
Reduction / (investment) in restricted cash	7	(25)
Net cash used in investing activities	1,408	(1,187)
Cash flows from financing activities Dividends paid	(55,412)	(49,240)
Proceeds from the issue of share capital	760	594
Purchase of own shares	-	(2,386)
Repayment of bank and other loans	(1,999)	(44,952)
Net cash from financing activities	(56,651)	(95,984)
Net increase / (decrease) in cash and cash equivalents	6,562	(20,267)
Cash and cash equivalents at 1 January	31,990	52,257
Cash and cash equivalents at 31 December	38,552	31,990

 

Notes to the financial statements

1       General information

Bovis Homes Group PLC ('the Company') is a company domiciled in the United Kingdom.  The consolidated financial statements of the Company for the year ended 31 December 2016 comprise the Company and its subsidiaries (together referred to as 'the Group') and the Group's interest in associates and joint ventures.

The consolidated financial statements were authorised for issue by the directors on 20 February 2017.  The financial statements were audited by PriceWaterhouseCoopers LLP.

The financial information set out above does not constitute the Company's statutory financial statements for the years ended 31 December 2016 or 2015 but is derived from those financial statements.  Statutory financial statements for 2015 have been delivered to the registrar of companies, and those for 2016 will be delivered in due course. The auditors have reported on those financial statements; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006.

2       Basis of accounting

The consolidated financial statements of the Company and the Group have been prepared in accordance with the International Financial Reporting Standards (IFRS) and IFRS Interpretations Committee (IFRS IC) interpretations as adopted by the European Union and Companies Act 2006 applicable to companies reporting under IFRS.

The accounting policies set out below have been applied consistently to all relevant periods presented in these consolidated financial statements. The accounting policies have been applied consistently to the Company and the Group where relevant.

The financial statements are prepared on the historical cost basis except for derivative financial instruments and available for sale financial assets.

3       Going concern

The Directors are satisfied that the Group has sufficient resources to continue in operation for the 12 months from date of approval of these financial statements. The Directors reviewed detailed financial and covenant compliance forecasts covering the period to December 2017 and summary financial forecasts for the following two years.

Having started the year with net cash of £30.0 million, the Group again generated a strong operating cash flow during 2016, increasing the net cash position to £38.6 million. As at 31 December 2016, the Group held cash and cash equivalents of £38.6 million and had no borrowings. On 3 December 2015, the Group entered into a new £250 million committed revolving credit facility that was extended for one year during 2016, now expiring in December 2021, all of which was available for drawdown at 31 December 2016.

For these reasons, the Directors consider it appropriate to prepare the financial statements of the Group on a going concern basis.

4       Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December. Control is achieved where the Company has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies. The consolidated financial statements include the Group's share of the total recognised gains and losses of associates on an equity accounted basis, from the date that significant influence commences until the date that significant influence ceases.

A joint arrangement is an arrangement over which the Group and one or more third parties have joint control. The consolidated financial statements include the Group's share of the comprehensive income and expense of Joint Ventures on an equity accounted basis, from the date that joint control commenced until joint control ceases. These joint arrangement are in turn classified as:

Joint Ventures whereby the Group has rights to the net assets of the arrangement, rather than rights to its assets and obligations for its liabilities; and

Joint operations whereby the Group has rights to the assets and obligations for the liabilities relating to the arrangement.

5       Critical accounting judgements and key sources of estimation uncertainty

The preparation of financial statements in conformity with adopted IFRSs requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of adopted IFRSs that have significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed below.

Key sources of estimation uncertainty          

Land held for development and housing work in progress

The Group holds inventories which are stated at the lower of cost and net realisable value. To assess the net realisable value of land held for development and housing work in progress, the Group completes a financial appraisal of the likely revenue which will be generated when these inventories are combined as residential properties for sale and sold. Where the financial appraisal demonstrates that the revenue will exceed the costs of the inventories and other associated costs of constructing the residential properties, the inventories are stated at cost. Where the assessed revenue is lower, the extent to which there is a shortfall is written off through the income statement leaving the inventories stated at a realisable value. To the extent that the revenues which can be generated change, or the final cost to complete for the site varies from estimates, the net realisable value of the inventories may be different.

A review taking into account estimated achievable net revenues, actual inventory and costs to complete as at 31 December 2016 has been carried out, which has identified no material net movement in the carrying value of the provision. These estimates were made by local management having regard to actual sales prices, together with competitor and marketplace evidence, and were further reviewed by Group management. Should there be a future significant decline in UK house pricing, then further write-downs of land and work in progress may be necessary. Further details on the carrying value of inventories is laid out in note 3.1 of the annual report.

Available for sale financial assets

The estimation of the fair value of available for sale financial assets requires judgement and estimation as to the quantum, timing and value of repayment of the Group's receivable, as well as to the choice of instrument-specific market-assessed interest rate used to determine a discount rate. Note 4.6 of the annual report contains a sensitivity analysis showing the impact of a change in the major judgement factors applied in the valuation of these instruments.

Defined Benefit Pension Scheme

The Group has an active Defined Benefit Pension Scheme, which is subject to estimation uncertainty. Note 5.7 of the annual report outlines the way in which this Scheme is recognised in the Group's Financial Statements, the associated risks and sensitivity analysis showing the impact of a change in key variables on the defined benefit obligation.

Customer care provision

Following legal completion, the Group provides a two year warranty that covers any defects which arise during that period. The level of provision per completion is based on actual costs incurred over the preceding twelve months. Judgement is applied in determining whether this level of provision is sufficient, or whether it should be adjusted to reflect the level of outstanding customer rectification works at the balance sheet date.

6       Segment reporting

The Chief Operating Decision Maker, which is the Board, notes that the Group's main operation is that of a housebuilder and it operates entirely within the United Kingdom, there are no separate segments, either business or geographic, to disclose, having taken into account the aggregation criteria provisions of IFRS8.

7       Impact of standards and interpretations effective for the first time

The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2015:

IFRIC21 'Levies' and Amendment to IAS 19 'Employee benefits' on defined benefit plans have both come into effect, with no significant impact on the Group.

Other changes recommended in 'Annual Improvements 2011', 'Annual Improvements 2012' and 'Annual Improvements 2013' have also been implemented with no significant impact on the Group.

8       Impact of standards and interpretations in issue but not yet effective

A number of new standards and amendments to standards and interpretations are effective for annual periods beginning after 1 January 2016, and have not been applied in preparing these financial statements. The majority are not expected to have a significant effect on the financial statements of the Group or the Company, and the full effect of the following standards will be assessed during the year ending 31 December 2017:

IFRS 15, 'Revenue from contracts with customers' replaces IAS 18 'Revenue' and IAS 11 'Construction contracts', setting out new revenue recognition criteria particularly with regard to performance obligations which may have some impact on the timing of revenue recognised by the Group on certain contracts. The standard will be effective for the period beginning 1 January 2018.

IFRS 16, 'Leases' requires lessees to recognise an asset and a liability on its balance sheet for all operating leases above thresholds for the value of the asset and the length of the lease period. The standard will be effective for the period beginning 1 January 2019.

9              Accounting Policies

Revenue

Revenue comprises the fair value of consideration received or receivable, net of value-assessed tax, rebates and discounts. Revenue does not include the value of the onward legal completion of properties accepted in part exchange against a new property. The net gain or loss arising from the legal completion of these part exchange properties is recognised in cost of sales.

Revenue is recognised once the value of the transaction can be reliably measured and the significant risks and rewards of ownership have been transferred. Revenue is recognised on house sales at legal completion. Revenue is recognised on land sales and commercial property sales from the point of unconditional exchange of contracts. For affordable housing, revenue and costs are recognised by reference to the stage of completion of contract activity at the balance sheet date. When it is probable that the total costs on a construction contract will exceed total contract revenue, the expected loss is recognised as an expense in the Income Statement immediately.

Where land is sold with material development obligations, the recognition of revenue and profit is deferred until the work is complete.

Rental income is recognised in the income statement on a straight-line basis over the term of the lease. Lease incentives granted are recognised as an integral part of the total rental income.

Inventories

Inventories are stated at the lower of cost and net realisable value. Cost comprises direct materials and, where applicable, direct labour costs and those overheads, not including any general administrative overheads, that have been incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated net selling price less estimated total costs of completion of the finished units.

Land held for development, including land in the course of development until legal completion of the sale of the asset, is initially recorded at cost along with any expected overage. Where, through deferred purchase credit terms, cost differs from the nominal amount which will actually be paid in settling the deferred purchase terms liability, an adjustment is made to the cost of the land, the difference being charged as a finance cost.

Options purchased in respect of land are capitalised initially at cost and written down on a straight-line basis over the life of the option. Should planning permission be granted and the option be exercised, the option is not amortised during that year and its carrying value is included within the cost of land purchased.

Investments in land without the benefit of planning consent, either through purchase of freehold land or non-refundable deposits paid on land purchase contracts subject to residential planning consent, are capitalised initially at cost. Regular reviews are completed for impairment in the value of these investments, and provision made to reflect any irrecoverable element. The impairment reviews consider the existing use value of the land and assesses the likelihood of achieving residential planning consent and the value thereof.

Ground rents are held at an estimate of cost based on a multiple of ground rent income, with a corresponding credit created against cost of sales, in the year in which the ground rent first becomes payable by the leasehold purchaser.

Part exchange properties are held at the lower of cost and net realisable value, and include a carrying value provision to cover the costs of management and resale.

Trade and other receivables

Trade receivables do not carry any interest and are stated at their nominal value as reduced by appropriate allowances for estimated irrecoverable amounts. Other debtors include amounts receivable from the Government in relation to the Help To Buy scheme.

Trade payables

Trade payables on normal terms are not interest bearing and are stated at their nominal value.

Trade payables on extended terms, particularly in respect of land, are recorded at their fair value at the date of acquisition of the asset to which they relate. The discount to nominal value which will be paid in settling the deferred purchase terms liability is recognised over the period of the credit term and charged to finance costs using the effective interest rate method.

Government Grants

Government grants are recognised in the income statement so as to match with the related costs that they are intended to compensate. Government grants are included within deferred income.

Bank and other loans

Interest-bearing bank loans and overdrafts are initially recorded at fair value, net of direct issue costs, and subsequently at amortised cost.

Finance charges are accounted for on an accrual basis to the income statement using the effective interest method and are added to the carrying amount of the instrument to the extent that they are not settled in the period in which they arise.

The benefit on loans with an interest rate below market is calculated as the difference between interest at a market rate and the below market interest. The benefit is treated as a Government grant.

Cash and cash equivalents

Cash and cash equivalents comprises cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purpose of the statement of cash flows.

Available for sale assets

Receivables on extended terms granted as part of a sales transaction are secured by way of a legal charge on the relevant property, categorised as an available for sale financial asset, and are stated at fair value. Gains and losses arising from changes in fair value are recognised directly in equity in retained earnings, with the exceptions of impairment losses, the impact of changes in future cash flows and interest calculated using the 'effective interest rate' method, which are recognised directly in the income statement. Where the investment is disposed of, or is determined to be impaired, the cumulative gain or loss previously recognised in equity is included in the income statement for the period. Given its materiality, this item is being disclosed separately on the face of the balance sheet.

Available for sale financial assets relate to legal completions where the Group has retained an interest through agreement to defer recovery of a percentage of the market value of the property, together with a legal charge to protect the Group's position. The Group participates in three schemes. 'Jumpstart' schemes are receivable 10 years after recognition with 3% interest charged between years 6 to 10. The 'HomeBuy Direct' and 'FirstBuy' schemes are operated together with the Government. Receivables are due 25 years after recognition with interest charged from year 6 onwards at a base value of 1.75% plus annual RPI increments. These assets are held at fair value being the present value of expected future cash flows taking into account the estimated market value of the property at the estimated date of recovery.

Net financing costs

Finance costs are included in the measurement of borrowings at their amortised cost to the extent that they are not settled in the period in which they arise.

The Group is required to capitalise borrowing costs directly attributable to the acquisition, construction and production of a qualifying asset, as part of the costs of that asset. Inventories which are produced in large quantities on a repetitive basis over a short period of time are not qualifying assets. The Group does not generally produce qualifying assets.

Equity Instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Own Shares held by ESOP trust

Transactions of the Group-sponsored ESOP trust are included in the Group financial statements. In particular, the trust's purchases of shares in the Company are debited directly to equity through an own shares held reserve.

Hedging

Derivative financial instruments are recognised at fair value.

Income Tax

Income tax comprises the sum of the tax currently payable or receivable and deferred tax. Income tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Tax assets and liabilities

The tax currently payable or receivable is based on taxable profit or loss for the year and any adjustment to tax payable or receivable in respect of previous years. Taxable profit or loss differs from net profit or loss as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability or asset for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from non-tax deductible goodwill, from the initial recognition of assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit, and from differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to reserves, in which case the deferred tax is also dealt with in reserves.

Share based payments

The Group has applied the requirements of IFRS2: "Share-based payments".

The Group issues equity-settled share-based payments to certain employees in the form of share options over shares in the Parent Company. Equity-settled share-based payments are measured at fair value at the date of grant calculated using an independent option valuation model, taking into account the terms and conditions upon which the options were granted. The fair value is expensed on a straight line basis over the vesting period, based on the Group's estimate of shares that will eventually vest, with a corresponding credit to equity except when the share-based payment is cancelled where the charge will be accelerated.

Fixed asset investments

Investments in subsidiaries are carried at cost less impairment. The Parent Company accounts for the share based payments granted to subsidiary employees as an increase in the cost of its investment in subsidiaries.

Provisions

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Employee benefits

The Group accounts for pensions and similar benefits under IAS 19 (Revised): "Employee benefits". In respect of defined benefit schemes, the net obligation is calculated by estimating the amount of future benefit that employees have earned in return for their service in the current and prior periods, such benefits measured at discounted present value, less the fair value of the scheme assets. The discount rate used to discount the benefits accrued is the yield at the balance sheet date on AA credit rated bonds that have maturity dates approximating to the terms of the Group's obligations. The calculation is performed by a qualified actuary using the projected unit method. The operating and financing costs of such plans are recognised separately in the income statement; service costs are spread systematically over the lives of employees and financing costs are recognised in the periods in which they arise. All actuarial gains and losses are recognised immediately in the Group statement of comprehensive income.

Payments to defined contribution schemes are charged as an expense as they fall due.

10     Reconciliation of net cash flow to net cash

		2016		2015
		£000		£000
Net increase / (decrease) in net cash and cash equivalents		6,562		(20,267)
Decrease in borrowings		1,999		44,952
Fair value adjustments to interest rate swaps		-		59
Net cash at start of period		29,991		5,247
Net cash at end of period		38,552		29,991
Analysis of net cash:
Cash and cash equivalents		38,552		31,990
Unsecured loans		-		(1,999)
Net cash		38,552		29,991

11     Income taxes

Current tax

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, calculated using a corporation tax rate of 20% applied to the pre-tax income or loss, adjusted to take account of deferred taxation movements and any adjustments to tax payable for previous years. 

12     Dividends

The following dividends were declared by the Group:			2016		2015
			£000		£000
Prior year final dividend per share of 26.3p (2015: 23.0p)			35,273		30,838
Current year interim dividend per share of 15.0p (2015: 13.7p)			20,139		18,402
Dividends declared			55,412		49,240

The Board has decided to propose a final dividend of 30.0p per share in respect of 2016.

13     Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 31 December 2016 was based on the profit attributable to ordinary shareholders of £120,848,000 (2015: £128,008,000) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2016 of 134,178,673 (2015: 134,194,203).

Profit attributable to ordinary shareholders

	2016		2015
	£000		£000
Profit for the period attributable to ordinary shareholders	120,848		128,008

Weighted average number of ordinary shares

	2016		2015
Weighted average number of ordinary shares at 31 December	134,178,673		134,194,203

Diluted earnings per share

The calculation of diluted earnings per share at 31 December 2016 was based on the profit attributable to ordinary shareholders of £120,848,000 (2015: £128,008,000) and a weighted average number of ordinary shares outstanding during the year ended 31 December 2016 of 134,322,449 (2015: 134,428,802).

The average number of shares is increased by reference to the average number of potential ordinary shares held under option during the period. This reflects the number of ordinary shares which would be purchased using the aggregate difference in value between the market value of shares and the share option exercise price. The market value of shares has been calculated using the average ordinary share price during the period. Only share options which have met their cumulative performance criteria have been included in the dilution calculation.

Weighted average number of ordinary shares (diluted)                                                                               

	2016	2015
Weighted average number of ordinary shares at 31 December	134,178,673	134,194,203
Effect of share options in issue which have a dilutive effect	143,776	234,599
Weighted average number of ordinary shares (diluted) at 31 December	134,322,449	134,428,802

14     Related party transactions

Transactions between fellow subsidiaries, which are related parties, have been eliminated on consolidation, as have transactions between the Company and its subsidiaries during this year.

Transactions between the Group, Company and key management personnel in the year ending 31 December 2016 were limited to those relating to remuneration, which are disclosed in the director's remuneration report (which can be found on pages 68 to 80 and in note 5.3 of the annual report).

Transactions between the Group, Company and Joint Ventures are in note 5.5 of the annual report.

Transactions with Bovis Peer LLP and IIH Oak Investors LLP

Bovis Homes Limited is contracted to provide property and letting management services to Bovis Peer LLP. Fees charged in the period, inclusive of VAT, were £157,000 (2015: £153,000). None of these fees are outstanding at 31 December 2016 (2015: nil).

In 2014, Bovis Homes Limited entered into a Joint Venture arrangement with IIH Oak Investors LLP to hold 190 homes under a private rental scheme.

As at 31 December 2016, loans of £3,503,504 (2015: £3,667,675) are outstanding with IIH Oak Investors at an interest rate of 6%. Interest charges made in respect of loans were £220,000 (2015: £249,000).

15     Post balance sheet events

On 9 January 2017, David Ritchie, the previous Chief Executive, notified the Group of his intention to leave the Company. David immediately stepped down as Chief Executive of the Group and as a Board Director but remained with the Group until 28 February 2017 to assist with the process of transition.

The Board appointed Earl Sibley, the Group's Finance Director, as Interim Chief Executive on the same date and have initiated a process to appoint a permanent successor.

 

END

 

 

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