Contractor United Living is expanding further into the infrastructure market
As construction firms face significant financial pressure, diversification is an attractive option to spread business risk. This is easier said than done, of course, and is arguably more achievable by large firms with a strong capital base.
A case in point is United Living, which recorded net cash of £19m and a turnover of £534.2m in its latest accounts for the year to 31 March 2023. The results were announced five months after the company was taken over by US private equity firm Apollo Global Management last August.
Apollo retained the founding owner Neil Armstrong as chairman and chief executive. It released funds for acquisitions as part of a diversification strategy to move the group beyond its traditional focus on homebuilding and property services, as it sees significant growth in the infrastructure market where it already has an established presence.
“There’s a lot going on in the infrastructure space,” said Armstrong. “And if a fraction of it comes off, it’s going to be a busy period over the next few years.”
In April, the firm acquired engineering services firm EcoGenR8 (trading as AFECO), which operates in the water, marine and energy sectors. AFECO sits within United Living Infrastructure Services (ULIS), which in April secured an AMP8 framework extension with Yorkshire Water until April 2028.
ULIS also focuses on gas transmission pipelines and is bidding on a “multi-hundred-million” carbon capture and storage job in the North West, Armstrong added.
He also told Construction News: “Hydrogen’s been talked about for a while but will it enter the domestic market for heating houses, either as full hydrogen or blended supply? I don’t know, but I can say with confidence that it will play a major part in the industrial [and] commercial space.”
Armstrong said he anticipates tens of billions to be spent on hydrogen and carbon capture infrastructure, but how quickly depends on the government of the day following through with any commitments it makes.
“Probably you’re looking at the next 15 to 20 years,” he said. “The government would say 10 years, but I just don’t think it’s possible.”
Armstrong is sceptical about the infrastructure pipeline announcement the government made in February. “I’ve stopped listening to government soundbites about what they’re going to spend on infrastructure. A lot of it is hot air to grab votes… So much of this is dependent on other [external] investment coming to the party.”
Other divisions focus on property development and construction (United Living New Homes), maintenance (United Living Property Services) and telecommunications (United Living Connected).
Property Services remained the firm’s biggest division by turnover in 2022/23, accounting for 39 per cent of group revenue. Armstrong said the division is budgeted to turn over £300m in the next financial year out of a predicted £620m for the whole group.
He added that 75 to 80 per cent of the group’s work is in frameworks that give contractors inflationary protection. He added: “With the volatile market we have at the moment, and the way inflation went in the past two years, frameworks are a wonderful place to be.”
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