The credit crunch hit the results of two small housebuilders this week.
Pre-tax profit at Yorkshire-based Strata Homes fell by nearly a third, from £9.7m in 2006 to £6.9m in 2007. Turnover dipped 2%, from £80.7m to £79.2m. The firm blamed the results on the “uncertain” economic environment.
Strata’s interest cover was down from 8.5 last year to 4. This measures earnings before interest and tax, divided by net interest paid and is a measure of a company’s ability to cover its debt. A figure of two or above is generally considered safe.
London firm Telford Homes issued a statement saying trading would be down in the year beginning 1 April and that its approach would be “cautious”.
Kevin Cammack, an analyst at Kaupthing Bank, said Telford’s statement for the year to 31 March 2008 was not as bad as feared given that the company expected to make a £13.5m pre-tax profit on turnover of £104m.
He said: “Telford is confident that its focus on east London, the Olympic factor and its relationships with housing associations will deliver growth.”