John Mowlem pulls out of housebuilding

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The Independent Online
JOHN MOWLEM, the lossmaking construction company and owner of London City Airport, yesterday sold its housebuilding operation to Beazer, the recently floated builder, writes Tom Stevenson.

Mowlem had flagged the disposal in March when it announced losses of pounds 124.2m and staged a pounds 63m rights issue.

Beazer paid pounds 31m out of cash resources, which in March stood at pounds 74.5m. It bought 1,550 development plots on 23 sites with a net asset value of pounds 30.2m.

Dennis Webb, Beazer chief executive, said the acquisition was in line with the company's plan to spread its activities further south. It represented an average of pounds 18,000 a plot, on which Beazer would be building houses with an average selling price of pounds 82,000.

At the time of the rights issue John Marshall, chief executive of Mowlem, said the company could not afford to fund the working capital needed by the homes division to take advantage of improvements in the housing market.

Having put London City Airport up for sale as well, Mowlem is now focused on its core contracting and scaffolding operations.

Analysts do not expect Mowlem to make a profit until 1997. Its shares closed 1p lower at 104p.