Greg Fitzgerald, who was brought back as chief executive in April last year to help overhaul the business, said the group delivered against all of its 2017 financial and operational targets as it worked to put its faulty homes scandal behind it.
“There has been a step change in the quality of our homes delivered on completion and I'm pleased to see this reflected in our level of customer satisfaction which continues to improve," he said in the group's trading update for the year to 31 December 2017.
Shares rose 2.7% to 1,181p in morning trading.
Some customers had complained about homes being sold unfinished as well as plumbing and electrical faults in new properties.
Last year the group also defended itself from takeover bids from Galliford Try and Redrow.
As a result of fixing faulty homes, advisory fees to fight off the takeover bids and restructuring charges, Bovis had one-off costs of £10.3mln for the year.
Bovis cuts costs, leaves full year guidance unchanged
In an effort to reduce its costs, the company streamlined its operations and is on track to deliver its target of overheads at a maximum of 5% of revenue in 2018.
Profit before tax, one-off and exceptional items, for 2017 is expected to be in line with management expectations.
During the period, the company completed 3,645 homes, down from 3,977 the previous year, but the average selling price increased by 7% to £272,000 from £254,900.
Bovis to pay first special dividend in 2018
Bovis expects to raise its final dividend by 8.3% to 32.5p from 30.0p a year earlier, saying it made operational progress in 2017 and is confident of making progress towards its 2012 targets.
The group plans to hike its dividend by another 20% in 2018 and introduce its first special dividend as it targets extra cash flow of at least £180mln by December.
“We've made excellent progress with our balance sheet restructuring resulting in a year end cash position significantly ahead of expectations,” said Fitzgerald.
“Our forward order position is strong, and with robust industry fundamentals, we expect the group to deliver a significant improvement in profitability in 2018."
Bovis had total forward sales of 2,656 units worth £518mln at the end of 2017, of which £417mln is for delivery this year, representing 40% of the consensus 2018 revenue forecast for the group.
Analysts hail 'encouraging' results
“Yet more encouraging results from Bovis Homes today confirm what we always suspected - that the problems with build quality and contractors could be easily fixed and Greg Fitzgerald was the man for the job," said Neil Wilson, senior market analyst at ETX Capital.
He added:"The market could not be more favourable with low interest rates, high employment, low supply and high demand. Bovis was at risk of missing out but it seems to have caught up."
George Salmon, equity analyst at Hargreaves Lansdown, said when Bovis issues its full year results in March the numbers are likely to be weighed down by the cost of customer redress and the fact completions had been scaled back to priorities improvements.
"However, those improvements look like they’re being made, and bullish comments around future dividend growth highlight the group’s confidence in the future. With this in mind, the yield of 8.5% expected in 2018 could well turn a few heads," he said.
"While the new CEO has done an impressive job, the problem for investors is that the housing boom, fuelled by supportive government policies like Help to Buy, can’t go on forever."