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Developer of 2012 Olympic village condemned

The Australian construction company charged with building the Olympic Village for London 2012 has announced a 47 per cent fall in annual profits just days after walking away from a major project to redevelop the centre of Stockport.

Lend Lease, the preferred developer for the east London site which will house athletes and officials during the Games, blamed property devaluation across Britain and writedowns at its UK housing arm, Crosby Homes, for the fall. Net profit fell to £123.7m, from £232m last year.

It comes at a time when the firm is looking for a new chief executive and managing director to replace Greg Clarke, who has held both positions since 2002.

The past few months have been uncomfortable for the Sydney-based company, which had been due to stump up £450m in its capacity as the preferred developer for the Olympic Village in Stratford. On 20 June, Lend Lease said it was struggling to find the money to build the Olympic Village because of the credit crunch. The number of proposed apartments on the site has been reduced to 4,200 from 3,300.

Last week the Olympics minister Tessa Jowell said a deal with Lend Lease would be completed by Christmas, and construction on the site would begin ahead of schedule in July next year. But on 12 August, Lend Lease said it had withdrawn from the £500m plan to redevelop Stockport town centre, blaming "deteriorating and unfavourable conditions prevailing in the retail development market".

The leader of Stockport Council, Dave Goddard, said: "We were bitterly disappointed by their decision to walk away from Stockport. Obviously, there's a credit crunch going on but we hoped that they would able to ride the storm. Instead, they duck for cover the minute the wind picks up. We offered to mothball this development for 18 months or two years but still they weren't interested. I suggest the Government keeps an eye on them because if they walked away from me they could walk away from east London."

Lend Lease's action did not constitute a breach of contract. A spokesman for the company said that it and the Olympic Delivery Authority (ODA) have a short-term "development management agreement" to ensure construction continues. "It establishes a structure for Lend Lease to continue its role in overseeing and managing the construction of the Olympic Village, giving certainty of completion by 2012," he said.

David Higgins, the Australian chief executive of the ODA, was Mr Clarke's predecessor at Lend Lease.

An ODA spokesman said discussions were ongoing with Lend Lease about long-term financing of the Olympic Village and it expected to finalise these by the end of the year.