Maunders produces rise in 'atrocious' conditions

JOHN MAUNDERS, the Manchester-based housebuilder, managed a 10 per cent increase in pre- tax profits to pounds 4.01m in the year to 30 June, despite 'atrocious trading conditions'.

Turnover fell 5 per cent to pounds 51.6m as the company reduced the price of its houses to an average pounds 65,900 from pounds 78,300 a year earlier and a peak of pounds 82,000 in 1989/90. However it sold 783 units compared with 695 the previous year.

The company has acquired a further 500 plots of land since the year-end, taking its total landbank to 2,200 plots, of which 590 are in the South and the rest in the North.

Geoffrey Swarbrick, finance director, said it was still possible to make an acceptable margin on houses because of falling land prices, which have collapsed by up to 50 per cent in certain places in the South. He added that there was no sign of any return of consumer confidence, which had been badly knocked by the 5 per cent hike in interest rates on Black Wednesday.

Even with a substantial reduction in interest rates, consumer confidence would be slow to return, he said.

Operating profits fell 6 per cent to pounds 5.8m, but a reduction in interest charged to pounds 1.83m from pounds 2.59m helped boost the pre-tax result.

The company keeps its interest costs down by paying for land only when planning permission comes through. Gearing at the year-end was unchanged at 30 per cent.

Earnings per share were 10.92p against 9.81p and the total dividend was maintained at 4.95p, covered 2.2 times by earnings.

John Maunders, the chairman, said the company had exceeded its targets 'against a backdrop of worsening recession, artificially high interest rates, low purchaser confidence, increased job losses, further declining property values and a surplus of new and secondhand housing stock.'

'I do not see any improvement in the economic climate in the current year, trading conditions will continue to be difficult and we will continue to concentrate on our aggressive marketing policy, complemented by low bank borrowings,' he said.

'When market conditions improve we will be in a position to take full advantage. Our strong management team and excellent land portfolio will stand us in good stead for the future.'

The shares were unchanged at 106p.