Losses deepen at Glasgow contracting JV

Glasgow-based contracting joint venture City Building has seen its losses worsen amid static turnover.

The business’s latest audited accounts for the year to 31 March 2025 showed an operating loss of £7.4m compared with a deficit of just £67,000 the year before.

Turnover fell from £154.2m to £153.3m.

In the accounts, directors blamed “several external factors” for the firm’s deeper losses, especially “financial and economic challenges impacting affordability for end customers, linked to the increased cost of living”.

They also mentioned “inflationary pressures over recent years, which have increased the cost of materials”, as well as “budgetary pressures at a local and national level, and the regulatory environment”.

City Building is a limited liability partnership JV between Glasgow City Council (GCC) and social housing company Wheatley Housing Group.

The overall profit available for division among its members rose from a restated £1.3m to £8.6m, the accounts showed.

City Building’s limited liability partnership arrangement meant that £7.9m of overall profit was distributed equally between GCC and Wheatley.

Cash at bank increased from £9.6m to £11m, and the JV held no external bank loans or overdrafts.

Overall staff headcount fell from 1,512 to 1,442 employees, including 55 apprentices recruited during the year.

The contractor’s annual wage bill totalled £61.4m, including £5.1m in redundancy payments.

City Building had been in the CN100 index of top UK contractors as recently as 2020.

Since 2017, the JV has seen £1bn of projects go through City Building, including the construction of five primary schools and four nurseries, as well as major upgrades to Mitchell Library, City Chambers, Kelvin Hall and Concert Hall.

The operating loss of £67,000 in the 12 months to 31 March 2024 was an improvement on the £14.5m decline it posted the year before. However, turnover that year dropped from £162m to £154m.

City Building said it approved a new three-year business strategy last March, built “on the ethos of partnership working and collaboration with members, board and workforce”.

The strategy reflects a “comprehensive review of governance arrangements” and “the control environment in key areas such as procurement and financial management”, the accounts added.

Construction News reported in August that a whistleblower-prompted review had uncovered “significant” issues with the JV.

An audit of its 2022-23 accounts had revealed “a significant deficiency in respect of the overall control environment within the business”, GCC said.

This prompted the council to establish a partnership steering group with Wheatley to review the firm and ensure it was “fit for purpose”.

Referring to the new three-year strategy, City Building’s latest accounts said: “With a more solid foundation now in place, the strategy provides the roadmap for the transformational change necessary to realise our vision.”