MARGINS retreated at United House last year as the social housing contractor's continued investment in IT and bidding Private Finance Initiative work took its toll.
The privately owned firm was operating to a margin of 3.4 per cent in 2003 ? well above industry average ? but margins fell to 2 per cent last year.
Group chief executive Jeff Adams said: 'The bidding process in PFI is extremely time consuming and very expensive.
'The group expects this form of procurement to remain an important part of the Government's strategy for social housing but the very long gestation period for each project is tremendously frustrating for all parties involved.' United House, where pre-tax profits were static at £1.8 million in 2004, is working with Hyde Housing Association, maintenance contractor Rydon and HBOS bank on a 30-year PFI deal to upgrade 2,344 homes in Islington.
This project ? the first PFI social housing concession ? started last year, when United House was also pricing another three similar deals in London.
Kent-based United House's turnover rose £9.9 million to £87.5 million in 2004 with 70 per cent coming from three to five-year partnering deals.
United House, which builds homes for sale privately through subsidiary Modern City Living, sold copper pipe distribution arm TubeLink for £1.6 million last year.
Tube Link had net assets o f £1.5 million and contributed £125,000 to group operating profits of £1.8 million ? down £597,000 on 2003.