Queens Moat Houses has issued its strongest warning yet that trading will be worse than expected this year. The warning, from chairman Richard Jewson, crucially brings into question the company's ability to fulfil its banking covenants.
At the company's annual general meeting last week, Jewson warned shareholders of the level that trading conditions had deteriorated to over the past couple of months.
On a like-for-like basis, UK yield had fallen by 5.9% in the first 17 weeks of the year, while in Germany and the Netherlands yield fell by 16.1% and 9.7% respectively, he said.
"Continuing compliance with our financing covenants remains a key objective of the group. This is, however, dependent on a range of factors, not least the trading conditions in each of the markets in which we operate.
The announcement caused a few waves in the City, with analysts pointing to the company's debt as the major cause for concern. Queens Moat Houses' debt currently stands at £632m, with net assets worth only £720m.
"The survival of Queens Moat Houses defies belief," said one analyst. "They've been tottering on against all odds for the past 10 years. They're an example of the living dead."