Developer innovates to beat market slowdown
HUNTINGDON-based business park developer and house-builder Artisan (UK) plc has developed imaginative strategies to sustain business in a very difficult time for the industry. They helped the company remain profitable on reduced turnover, though direct co
HUNTINGDON-based business park developer and house-builder Artisan (UK) plc has developed imaginative strategies to sustain business in a very difficult time for the industry.
They helped the company remain profitable on reduced turnover, though direct comparison with the previous year is difficult because of a reporting year change in 2006.
Group turnover for the year to June reduced to £23.4million (15 months to June 2007: £41.0million), generating operating profit of £1.9million (£3.7m). Pick of the subsidiaries was the commercial division, which benefited from strong margins and from forward sale and let contracts, delivering operating profit of £1.7m (2007: £2.4m). Even the residential division was at breakeven.
Chairman Michael W Stevens told shareholders: "The group currently faces some of the toughest trading conditions in its history, particularly in respect of the residential
market, and these results need to be considered in that context. In most respects I am pleased with the results that have been achieved, and am convinced that the prudent actions taken by the board to reshape our operations to current market conditions will stand the group in good stead."
Chief executive Chris Musselle complained that levying business rates on empty properties [from April this year] was inequitable, would be a disincentive to speculative developers and could lead to a shortage of stock, driving up future prices.
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Of the house-building subsidiary, Rippon Homes, he added: "A variety of incentives have been used to persuade customers to purchase our houses. The most effective selling tool has been the ability to deal in part exchange properties. However the key competitive advantage has been the quality of its product.
"This has proved attractive to customers, many of whom are willing to purchase a Rippon Homes property even in the face of some extreme discounts offered by a number of our competitors," he said.
"We have created new innovative schemes, such as rent to buy, which on the limited scale offered have so far proved popular to customers, to compensate for the limited availability of mortgage funds.
"However, a new disincentive to sales is becoming more apparent. Valuers are very nervous of valuing properties for mortgage purposes and are downgrading agreed sales prices. In the tight mortgage market this is causing many sales to collapse.