Kinetics shuts down northern business
Published: 10 June, 2011
LONDON: Kinetics Group, the social housing contractor which closed two of its subsidiary companies, DC Group and Seaflame on Wednesday is to concentrate business in the south.
Kinetics will wind down all of its operations in the north of England and retrench into its core gas and electrical servicing business under a major restructure.
Chris Cheshire, Kinetics Group chief executive, said: "We're ceasing trading in the North. It's now so cut-throat and prices are far too low in the market for a viable business in that region. This allows us to retrench on our £70m M&E, gas servicing and solar installation business where we still have strong and profitable customers in the Midlands and the South."
Mr Cheshire said the company would hand back its remaining contracts in the north, including ending its work for Liverpool Mutual Housing Association earlier than originally planned. He said the group had been forced to write-off £4m of bad debt for contracts in the north, and the company will now exit all construction-related work.
The restructure will see turnover reduce to £70m in 2011, against a predicted £115m. Mr Cheshire said the move allowed the firm a base on which to expand into the new market for the installation of solar panels on homes for the firm's traditional housing association customers.
The move follows similar decision by contractor Renew, which closed its northern subsidiary Allenbuild in March, citing the tough northern market.
Last year Kinetics, which is backed by venture capitalist Sovereign Capital and has grown rapidly by acquisition since being set up in 2006, reported revenue of £102m.
Sovereign Capital invested a further £2m in the firm in January, to pay off third party debt in order to strengthen Kinetics' financial position.