Huge write-offs push Lovell to 12m pounds loss

YJ Lovell (Holdings), the construction and property developer, has been forced to take massive write-offs for the second year running due to grim trading conditions, writes Neil Thapar.

Lovell yesterday revealed pounds 14.4m exceptional costs for the year to 30 September, pushing it into a pounds 12.2m pre-tax loss. The dividend has been passed.

However, the result marks an improvement over 1991 when it was hit by pounds 25.4m exceptional charges and a pounds 20m taxable loss.

The latest move, however, reflects a further deterioration in the property market, prompting another sharp write-down, costing pounds 9m, in the value of its land and commercial property assets.

A further pounds 2.7m has been set aside against the costs of 500 redundancies from a total workforce of 2,200, while a pounds 2.75m charge related to the renegotiation of its bank facilities.

In addition, Lovell has also taken pounds 13.2m costs below the line reflecting the closure of its property development business.

However, tight financial controls and proceeds from disposals helped the company to turn round a pounds 2.4m cash outflow in 1991 to an pounds 11.3m inflow last year.

Net debts, excluding off-balance sheet items, fell by pounds 11m to pounds 55m although shareholders' funds also dropped from pounds 70m to pounds 45m. The group's off balance sheet debts amounted to pounds 45m.