Newspaper article The Journal (Newcastle, England)

Incentive in Every Sale Lets Builder Limit Pain

Newspaper article The Journal (Newcastle, England)

Incentive in Every Sale Lets Builder Limit Pain

Article excerpt

Byline: Graeme King

HOUSEBUILDER Bellway has revealed sales have slumped 38% in six months despite the company's strenuous efforts to tempt buyers.

But finance director Alistair Leitch said the company was relatively comfortable with its position, given the travails of its rivals, and was already half way towards its much reduced full-year home sales target.

In the year to last July, Bellway managed to sell 6,500 of its 8,000 home target - this financial year the target is a much more modest 4,000.

Bellway has been in trouble with its shareholders recently over bonuses of pounds 630,000 paid to top executives last year - despite the original targets for those bonuses not being met.

The board was defeated in a vote at the company's agm in Newcastle, but a Bellway spokesman said yesterday that no move had been made since that meeting either to have the bonuses repaid or to adjust remuneration policy.

On 2008/09 performance, Bellway said it had been using incentives such as discounts, shared equity and part-exchanges in "virtually every private sale", but warned margins could fall by more than half in the six months to last January 31. Its order book stands at pounds 296m - almost half the value a year ago - as the market struggles with a mortgage drought and plummeting confidence.

Bellway said the average price of its homes sold had fallen from pounds 174,800 to pounds 160,000, reflecting the use of incentives as well as a larger input than usual from cheaper social housing.

Mr Leitch said: "We want to make sure we can deliver on the 4,000 homes and hit our profit target. We feel we will deliver that. We are trying to position the group for when the market returns.

"We hope to be in a strong position to take Bellway forward - it's about getting banking facilities in place and making sure we are borrowing for as little as possible." Though sales figures and prices were not very impressive, Bellway did have some better news for investors, saying it was on track to reduce debts by about pounds 100m to pounds 120m by the end of July.

It was working "well within" bank facilities of pounds 402m to run from last year to 2015. …

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