Crosby Group in the red after £80m hit

Crosby, the UK house builder owned by Lend Lease, has dived into the red to the tune of £77m as a result of an £80m write-down on the value of its land bank and work-in-progress.

The average value of Crosby properties sold dived savagely - from £281,000 in the previous year to just £160,000.

Without the write-down hit there would have been a pre-tax profit of £4m on turnover of £130m (12 months to 30 June 2008).

In the previous year a similar turnover generated a pre-tax profit of £30m and shareholders were able to enjoy a dividend of £32m.

The headline figures fail to emphasise the staggering drop in value of properties sold by Crosby. Working from data presented by Crosby allows for calculations that show:

• 790 properties sold last year at an average price of £160,000
• 470 properties sold in the previous year at an average price of £281,000

The only comfort for Crosby was the fat it was able to lay down in the good times – the profit margin in 2007 ran to a mouth-watering 22%.

That statistic means that for every property sold for £281,000 in 2007, the property buyer was putting £62,000 straight into the builder’s pocket.

The directors report states: “The company has endured a challenging year.”

New sites were opened in Birmingham, Manchester and Leeds.

Crosby says that when it reviewed the net realisable value of its land and work-progress carrying values in light of the deterioration in the UK housing market, it had to take the axe to its existing figures.

The resulting impairment charge ran to £80m “on sites where the realisable value of the site was less than its carrying value on the balance sheet”.

The £130m-a-year turnover house builder had just 81 employees – five in administration and 76 in operational posts. The bill for wages and salaries ran to £6m.

The drop in profits triggered a cut in the pay received by the highest-paid director. He took home just £480,000 which was well down on the figure of £800,000 in the previous year.

However he made ground slightly on the pension front with a further £48,000 put into that pot – up on the £40,000 figure in 2007.

Crosby’s immediate parent is Crosby Lend Lease, part of Lend Lease Europe Holdings.

The ultimate parent is Lend Lease Corporation, an Australian property group.