Slump rocks the foundations but Mactaggart & Mickel stands firm

In the year to 20 April, turnover fell 47 per cent to 42 million and write-downs on the value of the firm's land holdings drove it 3.9m into the red.

The Glasgow-based company was forced to slash its workforce by more than a third, shedding 97 jobs. Three-quarters of its remaining staff are working a four-day week, to cut costs, until further notice. Chief executive has pledged that the last department to give up the shorter week will be the board.

In the year under review, the group sold 132 homes, down by more than half from the previous year's count of 274. But almost half of these were detached, family homes in what Monaghan said were prime locations. As a result, the average house price achieved went up from 215,000 to 282,000.

"Traditional, well-located housing is still in demand," said Monaghan. "Where people are coming back to the market, they are coming back to the well-tested and tried locations to look for homes. We have taken advantage of that."

The housebuilder has leant hard on its overdraft provided by Royal Bank of Scotland. In the year, it has dipped 19.5m into its 39.5m revolving credit facility. The bank has extended the guarantee on the facility for two years to April 2011.

"The bank has remained supportive," assured Monaghan. "We still remain a business with a very strong covenant and a healthy 130m balance sheet."

Except for a 6.2m impairment charge – mainly due to a 5.3m fall in the value of the group's landbank and other assets – the firm would have made an operating profit of 2.3m.

Mactaggart has boosted its work as contractors to the social housing sector. Monaghan admits the margins are lower for this kind of work but it allows the group to retain skilled employees. It has a pipeline of 250 units for housing associations over the next five years.

"Winning this work has allowed us to retain a lot of our key employees and to keep all our apprentices," said Monaghan.

The company has also been focusing on its research and development. In 2007, it acquired a timber frame business and has been developing modular building techniques at its factory in Coatbridge. Earlier this year, on a site in Troon, it put together a wind and watertight house unit in a day, using factory-built sections including wall panels, stair, bathroom pods and roofing.

Monaghan said the group's modular construction techniques would be used in the development of homes for the 2014 Commonwealth Games athletes' village.

In June, the group won a bid as part of a four-strong consortium to build the athletes' village in Dalmarnock. Although Monaghan says the value of the contracts has not yet been agreed with the city council, he expects it to stand Mactaggart "in good stead" when building starts in 2010.