Housing specialist says it will withdraw from construction work for other private sector developers amid ongoing difficult conditions
Housing specialist United House is to withdraw from private sector construction work for other developers amid ongoing difficult conditions in the construction industry and ever-tightening margins, the firm has said.
In its results for the year to 31 December 2012, the firm reported turnover of 拢197m, including its share of joint ventures, down 18% from 拢239m the previous year 鈥� a fall the firm said was largely due to the timing of the completion of particular schemes.
The contractor, developer and investor reported an operating loss of 拢2.5m for the year, down from an operating profit of 拢13.7m the previous year.
The operating loss was offset by 拢4.5m in operating profit through the firm鈥檚 share of joint ventures and 拢19m in profit on the sale of the firm鈥檚 PFI assets, enabling the firm to post a pre-tax profit of 拢21.4m, up 45% on the previous year.
The firm, which works across London and the south of England, said it had been a 鈥渄ifficult year鈥�, with margins 鈥渞emaining under pressure鈥� and that it was backing away from its strategy to expand its presence in the private sector market by bidding for construction work with other developers.
United House chief executive Jeffrey Adams said: 鈥淒uring the year, the level of margin appropriate to produce a winning bid has continued to fall to, from our perspective, unacceptable levels.
鈥淲e grew our construction activity in the private sector, although this has not been as successful as we would have liked, and we have taken the decision not to continue this type of work.鈥�
鈥淭his is primarily because there is no ability for us to work in partnership creatively and adding value, as we do for our public sector clients and for our own developments.鈥�
鈥淲e will have withdrawn from this market segment by the end of 2013.鈥�
Adams said the firm鈥檚 own private sector development business remained strong, particularly in London, but this was offset by the 鈥渨eaker performance鈥� of its construction business.
He said it had a secure order book for its construction business of 拢380m, while the development arm was in 鈥渧arious stages of negotiation鈥� for the development of around 2,700 units with a value of 拢865m.
The firm shed 50 staff over the period 鈥� a fall of around 13% on the previous year.
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