Bovis Homes to cut another 160 jobs

The axe is set to fall again at Bovis Homes with a further 160 jobs set to disappear before the end of March.

A year ago, Bovis had 930 employees. Since then it has already shed 400 posts but the addition 160 will mean that a total of 560 will have gone in the space of 12 months by the end of the first quarter of 2009.

In the future, Bovis will operate with just 370 employees.

In a trading update this morning, Bovis said that it ended the month of December with “modest gearing” as net debt stood at 109m which is less than 50% of its committed bank facility.

The group owns around seven years of land supply with residential planning consent and started 2009 with a good number of homes at an advanced stage of construction.

“These can be finished quickly when sold, generating strong positive cash flows” said the group.

New banking covenants “reflect more appropriately the current trading conditions, with three covenants tested semi-annually”

These include:

• a test relating to gearing
• a test relating to the net tangible worth of the group
• a test relating to cash flow cover.

There is no interest cover covenant.

“Covenant levels have been set which provide comfort for the banks,” said Bovis.

The cost of the group’s debt is “circa 6%”.

Bovis said: "Headcount at the end of the first quarter of 2009 is expected to be around 60% lower than at the start of 2008. Taken together with the previous restructuring costs, in total the group has charged around £5m of exceptional costs in 2008 relating to restructuring.

"The group sharply reduced its investment in work in progress and land through 2008."

In terms of sales performance, Bovis completed 1,800 homes during 2008 compared with 2,900 in 2007.

The average sales price fell to £151,000 (figure in previous year: £180,000).

This was partly caused by changes in mix, predominantly arising from the increase in the sales mix of social and partnership housing, which jumped from 22% to 33%.