Durkan turnover up 32% but tougher times ahead

Durkan has warned of a tough year in 2011 for social housing contractors, as work from housing associations tails off.

The warning came as Durkan Holdings reported a dramatic 32% rise in turnover for the year to 31 January 2009 to £179.2m.

The bulk of the rise came from Durkan Limited, Durkan Holdings' social housing arm, which saw turnover jump to £169m from £89.8m in 2008. Pre-tax profit in the division was also up sharply to £6.5m.

As a group, Durkan Holdings posted a pre-tax loss of £776,000, following £5.8m in write-downs on the value of sites held for private development.

However, Durkan Holdings chief executive Daniel Durkan indicated that the situation could soon end up in reverse, with positive signs for the firm's private development arm, and choppier waters in the social housing market.

"Looking at 2011, we are expecting a contraction within the construction side of the business which we have already budgeted for. It's fair to say that there are fewer RSLs that are actively developing right now and we think that is obviously going to impact on most companies' orderbooks," he said.

"Ironically, we've seen the first six months of this year and particularly the last four months have been very positive in terms of sales on private developments. We are trading at 40% above projections."

He said he expected group turnover to stay at around £180m-190m next year, with profits likely to increase. No more write-downs on property are expected.

Despite the change in fortunes, Durkan said that Durkan Limited would continue to focus on social housing. "We're a bit old fashioned. Stick to the knitting is the expression that people use. We may look at working for a select number of developer-type clients but that's an area where we would tread carefully."

Durkan Limited's orderbook now stands at £275m. Durkan Holdings' highest-paid director took home £125,590.