Arley forecasts a rebound in its fortunes

WARRINGTON-based developer Arley Homes has said that it is line to virtually double turnover in 2012 after sales dropped by 36% to £10.7m in the year to May 31, 2011 (2010: £17m).

Recently-filed accounts for the company showed that it managed to cut its pre-tax losses in the year to £500,000, from a £2.6m loss in 2010 as well as refinancing some £35m worth of debt with its main lender, which is now due for renewal in September 2013.

Managing director John Cosgrave said that Arley Homes is currently projected to hit sales of £20m for the year ending May 2012, however, as well as generating gross profits of £4m.

He said: “It is well-documented that the recession created an incredibly difficult trading environment for the construction industry and economy as a whole, and residential housebuilders in particular. The virtual halt in mortgage lending from the banks, and understandable nervousness in the appetite from buyers who could no longer raise deposits or sell their existing home, were critical.”

Arley Homes was created in 2005 following a management buy-in of Lindon Homes’ North West operations led by Cosgrave in a £17m deal backed by Yorkshire Bank.

However, after accumulating losses in recent years, the company’s net debt crept up to £30.4m by its year end (£20.7m), and it had net liabilities of £14.1m (£13.8m).
Mr Cosgrave said that the company had managed a turnaround via a number of methods.

It stopped building apartments in 2006, and following the renewal of its banking facilities last year it “acquired one of the largest site purchases in the North West”.

This has allowed it to “continue targeting a range of sites in aspirational areas where there has been strong demand from purchasers”, he said.

The company has recently sold out schemes at Charnock Richard and Coppull, near Chorley and at Altrincham and Cheadle Hulme in Greater Manchester.

Cosgrave added that it was looking for similar sites in south Manchester, Preston and Chorley, and the company has recently appointed Andy Morgan as a land manager to pursue new opportunities. It is also now achieving an average selling price of £230,000, or £270,000 if affordable homes requirements are excluded.

“We feel this is a very creditable performance in the current climate, which is improving slightly but is by no means normal,” he added.

“We’re a relatively small regional housebuilder that has built a reputation for building traditional family homes and are proud to not only to have maintain jobs throughout the recession, but to now be increasing staffing levels.”