The chief executive of Bovis Homes said the housebuilder planned to re-enter the land market before the end of the year
David Ritchie said Bovis wanted to take advantage of its relative financial strength compared with its rivals. He said: “We’re positioning the balance sheet to make investment choices by the end of 2009.
There are opportunities out there and few buyers, so we will take these opportunities as they arise.”
Bovis plans to reduce debt from £108m to £50m by the end of 2009 and it has a £220m overdraft.
Ritchie declined to predict whether land prices would reach bottom this year and said Berkeley Homes’ decision to raise £50m last month to finance land purchases had no implications for Bovis. “Tony Pidgley at Berkeley is in a unique position because, unlike us, he operates in the London market so it may well be that he sees opportunities before us as things recover there.”
He was speaking after the company announced a £78.7m pre-tax loss in the year to 31 December 2008 after land writedowns of £75.2m. It sold 1,817 units compared with 2,930 over the same period in 2007 – a 38% fall. Turnover fell 49% from £555.7m to £282.3m.
Last year was unprecedented. Declining mortgage finance availability and poor economic conditions, allied with low consumer confidence, brought about the toughest trading environment for many years
Despite its financial resources, Ritchie said the company would not use the recession to increase its market share from its current level of about 2%.
The announcement follows a claim by Greg Fitzgerald in January that his company, Galliford Try, would become a top-five housebuilder as other indebted housebuilders struggled in the land market.
Ritchie said: “We intend to be one of the good companies coming out of the recession, but it suits us to be relatively boutique in nature. The right way to go is to buy assets and sweat them hard rather than go for market share.”
The company described the market in 2008 as the “toughest for decades” but Ritchie said it was good news that the government was increasingly encouraging banks to lend.