Bam Construct will target further property development opportunities after its successful commercial scheme in Glasgow boosted its profit to £13m.
Speaking to Construction News, executive director James Wimpenny (pictured) said Bam would be “constantly looking for new opportunities” through its property arm.
“One of the key contributions to profit was the sale of our scheme [Connec11ons] in Glasgow, which has been a real success,” he said.
Bam Construct 2015 results graphic
“It’s obviously quite a long cycle, so when you’re finding sites, it does take a while for those projects to be realised. But it’s part of our overall outlook as a business to be strategic about finding new opportunities that will provide those sort of profits in the future.”
Bam funded the Glasgow scheme in partnership with the Scottish government for £50m, and sold it to Deutsche AWM for £70m in September 2014. The project has since been delivered on budget and on time.
The sale of the scheme helped Bam to a pre-tax profit of £13m for the year to 31 December 2015, up from £7.1m a year earlier.
Other speculative development undertaken by Bam’s property arm include the FORE Business Park in Solihull, which houses 66,000 sq ft of office space.
Bam’s turnover rose by 1.2 per cent to reach £897.5m, up from £887.1m in its previous results. Mr Wimpenny said this year represented “a steady set of results”.
“With a lot of our competitors having ups and downs, we feel that we’ve been consistent.”
Margins at the firm improved to 1.4 per cent, up from 0.8 per cent last year, but Mr Wimpenny added that the company needed to do more to improve.
“We’re targeting, as part of the overall group strategy, to achieve a margin of 3 per cent-plus by 2020,” he said.
“We’ve got an improved margin but we’re not resting on our laurels; we want to improve further.”
He added that the firm had seen few impacts from the referendum vote so far, with the only tangible effect being that some London developers were “taking stock for a little while” in the aftermath of the vote.
“Whether that will follow through into a slowdown in the commercial market in London remains to be seen,” he said.
“Our order book is looking good for the remainder of the year and we’ve won a substantial portion of the work that we need for next year, so [up to the end of 2017] it’s difficult to see that there’ll be a substantial impact.”
However, he warned that availability of finance and public spending would need to be maintained to mitigate any potential impacts of the vote.
“It’s obviously quite key for us as a business, both in construction and for Bam Nuttall in infrastructure, that [public spending] commitments are maintained, and there are no signs [as] to where that’s [heading],” he said.
He also added that although it was “a little early to tell” what the referendum’s impact would be, maintaining access to finance was a crucial factor.
“There doesn’t seem to be a slowdown, but the key thing for a lot of the parts of our business is the availability of finance, and how [the referendum result] affects finance on some projects,” he said.