Bovis Homes, the housebuilder, has slid into the red following the dramatic collapse in the housing market.
By Graham Ruddick
Last Updated: 12:07PM GMT 09 Mar 2009
The company, led by David Ritchie, posted a pre-tax loss for last year of £78.7m, compared to a £123.6m profit in 2007.
Revenue for Bovis fell 49pc to £282m as a result of falling house prices and a sharp slowdown in the number of homes sold.
The housing market has been badly affected by a lack of available mortgage finance and falling consumer confidence.
As a result of the slump, Bovis took a £75.2m hit through inventory writedowns, and a £12.2m goodwill charge in relation to its £26m acquisition of Elite Homes in 2007.
Mr Ritchie, the chief executive, said: “2008 has been an unprecedented year. Declining mortgage finance availability and poor economic conditions, allied with low consumer confidence, brought about the toughest trading environment for many years.”
The company, which struck a deal to renegotiate banking covenants with lenders amid the deteriorating market conditions, reduced its workforce from 1,039 employees to 441 employees, a reduction of around 60pc, during the year.
Many of Bovis’ rivals, including Persimmon and Barratt, have indicated a slight improvement in the market in the early stages of this year, although there has been little suggestion of a full-scale recovery.
Bovis said it has secured 772 net reservations so far in 2009, down 39pc on the same stage in 2008. However, just including private reservations and not social housing, there has been a rise of 22pc from 271 to 330.
“Looking ahead, the group expects that transaction volumes will begin to improve as lower house prices and lower mortgage interest rates feed through into the marketplace,” Mr Ritchie said.
“This pick up in activity does, however, depend on the credit market being capable of funding increased transactional growth. With improved volume, market pricing will begin to stabilise. However, visibility on the timing of these likely market developments is not good and for the present, the group is positioning itself assuming a continuation in 2009 of current market conditions.”
The Bovis boss said the company’s net debt – £100m – and significant land bank mean it is “well placed” to cope with the downturn.