Elan Homes progresses in paying down debt
THE COMPANY which rose from the collapse of North Wales construction and housebuilding group David McLean has made an operating profit of £3m on sales of £34.2m in its first year in business, but restructuring costs meant that it a £980,000 loss.
Elan Homes was set up in November 2008 by former members of David McLean’s management, including ex-finance director John Kendrick and chief executive Frank Reill in a deal that saved the jobs of 90 members of staff.
Accounts show that the management team raised £53m in bank finance from Barclays – £51.8m of which was used to buy the business and assets of the former David McLean Group from its administrator, Deloitte.
Elan Homes also spent a further £6.8m buying more sites throughout the course of its first year.
A directors’ report accompanying its inaugural accounts also shows that a significant proportion of the sales generated have been used to pay down debt by £24.2m, meaning that it finished the year with net borrowings of £34.6m.
The management team also relocated the business to new premises in Ellesmere Port. As a result, the firm incurred £1.9m worth of costs associated with its restructuring, turning a £945,000 pre-tax profit before exceptionals into a loss of £980,000 in the 53 weeks to October 31, 2009.
During the year, the company sold 246 properties at an average price of £139,000. However, an accompanying report by the directors cautioned that the overall climate for housebuilders remained tough, with mortgage availability remaining tight and a need for first-time buyers to put down sizeable deposits.
“The group has responded by rolling out a shared equity scheme, obtaining housing association and investor sales on apartments to generate turnover as well as making use of a successful part exchange offering,” it said.