“The new homes element of Burrington Estates is set to cease trading but the wider Burrington Estates Group, however, is unaffected, including the company’s interest in Exeter’s Winslade Park.” Complicated – Owl

South West new homes builder Burrington Estates is to cease trading after making a £14m pre-tax loss. The Exeter-headquartered company, which builds and sells houses across the West Country and Midlands, will complete the projects it is working on, sell off undeveloped sites and wind up the business.

William Telford www.devonlive.com

Directors blamed “increasingly difficult trading conditions” and an uncertain UK housing market, partly fuelled by rising interest rates. They also put the blame on the cost-of-living crisis and the war in Ukraine. The new homes element of Burrington Estates is set to cease trading but the wider Burrington Estates Group, however, is unaffected, including the company’s interest in Exeter’s Winslade Park.

David Jervis, director, said: “After looking at a range of options for the future of the business, including its ownership and markets, the directors reluctantly agreed in 2023 that the business would complete its committed project to its recognised high standard and would thereafter cease trading and commence an orderly wind down of the business. The directors would like to thank all its customers, supply chain, staff and funders for their continued support during this period.”

Burrington Estates will become the fourth major regional construction firm to cease operating in the past two years. Midas Group Ltd, Henry W Pollard and Sons Ltd and Brady Construction Services Ltd have all gone under as the construction industry continues to be hit by economic difficulties.

Burrington Estates, which employed about 70 people, was set up in 2011 by Mark Edworthy and Paul Scantlebury and has completed more than 600 homes in the region, including current schemes in Exeter, Tiverton and Bude. It purchased The Ship, Plymouth’s former home of The Herald and Western Morning News, in 2015, much of which is currently being offered for let as small business space.

It also developed landmark business sites at Sky Park and Sky Park II, in Exeter; West Park, in Wellington; Roundswell, in Barnstaple; Oak Tree, in Newton Abbot; and Plymouth’s Eurotech Park. These were transferred to ONYX Business Parks Ltd, when subsidiary Burrington Business Parks rebranded in May 2023, and appear to be unaffected by Burrington Estates’ winding up.

In 2021, Burrington Estates embarked on ambitious growth plans boosted by a £15.5m investment from main shareholder BGF Group Plc to expand its residential portfolio .In January 2022 Burrington Estates secured a £28m funding package from Paragon Development Finance to support its Winslade Park development in Exeter.

In August last year, Mr Edworthy and Mr Scantlebury stepped down and Mr Jervis became group managing director, having joined in 2019 to head the new Midlands division. Burrington Estates’ highest paid director was paid £279,333 and a pension contribution of £16,000 in 2021.22.

Plymouth’s Eurotech House and the former Good Companions site in the city centre have been put on sale. Both are still being advertised, the former for £850,000.

Newly published accounts for the 18 months from January 2021 to June 2022 show Burrington Estates sold 36 properties and had a turnover of £29,522. But it made an operating loss of £9,031,000 and a pre-tax loss of £14,345,000.

Burrington Estates Group, a holding company, is dependent on cash generated by more than 30 subsidiary companies and funding from ultimate parent company BFG, which has now recognised it won’t be repaid in full and reserved the right to amend its support. Mr Jervis said the company was hit by “increasingly difficult trading conditions”.

In his strategic report, he highlighted “increased uncertainty in the UK housing market” driven by interest rate hikes and a fall in house prices “triggered by economic uncertainty and reductions in attractive mortgage deals for buyers”. He also blamed supply chain problems and delays caused by the planning system.

He continued: “In addition, the cost of finance for the group rose significantly due to the significant and numerous increases in UK commercial lending rates.” He said this was key as the company was dependent on debt to finance its acquisition and build programme.

He said that as a result the company was unlikely to be able to settle or refinance all its loans from shareholders and would seek a “managed closure” of the business. The accounts showed about £73m was owed to creditors, most of which was loans and borrowings, and was in breach of loan covenants and had to therefore replay its main lender immediately.