House builder Bellway has made a pre-tax loss of £36 million for the year to 31 July 2009 – but has shredded its debt.
The house builder reported its first ever loss on the back of £66.3 million worth of land write downs, and turnover which shrank 39 per cent to £674.5 million.
But in a year of retrenchment and cash generation, the company significantly reduced its debt by £180.9 million, to £36.8 million, busting its own target of £117.7 million. Finance director Alistair Leitch said an unspectacular year without any writedowns forecast for 2009-2010, would put the firm back on a profitable footing.
He said: “let’s not lose sight of the fact that we made a loss for the first time. But this year we are going from hibernation and cash generation to earnings creation.
“We have seen recessions come and go, and whenever they come we run for cover and generate cash and we have repeated those lessons.”
The firm is back on the land acquisition trail having raised £45 million through a share issue in August, and has either contracted or agreed terms on land worth around £120 million since then – with scope to build 3,370 homes.
Mr Leitch said: “Our cash position is good, we are one of the few house builders who can go out a brandish a cheque book.”
He forecasts up to £300 million will be spent on land which “promises gross margins of around 20 per cent” in the south of England before the end of the financial year.
The firm paid a dividend of 17.7 pence despite the loss, and has an order book of £349.4 million as of September – equivalent to 58 per cent of its planned output for the year.
But Mr Leitch cautioned against assuming the end of the slump.
He said: “A double dip housing market is a possibility, and we have a history of talking ourselves into problems in this country.
“As long as we get through the winter we should be okay.”
A likely Tory government in Spring on next year could create its own problems then if they implement a bottom up approach to housing provision as expected, rather than a top down approach, he said.
“But overall we are in a strong position.”