Bam’s UK construction operations saw profit quadruple in 2017 despite its Construct business reporting an overall decline for the year.
In its results for the year to 31 December 2017, Bam Construct reported a year-on-year fall in pre-tax profit of 26 per cent to £19.3m.
However, its Bam Construction arm, which accounts for more than 90 per cent of the Construct division’s turnover, recorded a pre-tax profit of £20.8m for 2017, up from £5.3m in 2016.
Losses in other areas of Bam Construct’s operations, such as property and FM, contributed to the overall fall in profit, which left Construct with a pre-tax margin of 2 per cent in 2017.
A spokesman for Bam Construct explained the fall in overall UK profit was also partly due to an exceptional pension-related gain in the previous year’s results.
“Underlying profit for 2017 increased because of improved business performance,” he said.
“The balance sheet, however, reflects [2016’s] exceptional one-off gain from winding up a previous pension scheme.
“This inflated our profit [in 2016]. Removing that item reveals that Bam is in very sound shape and has performed well.”
Overall revenue at Bam Construct fell 10.7 per cent to £957.5m last year, within which Bam Construction’s revenue was down 8.5 per cent to £903.6m.
The company said the 10.7 per cent fall was a result of a focus on winning “value-added projects”.
Bam Construction completed 34 projects in the year and secured 33 new schemes in 2017. The division is aiming to attract repeat business and secured 65 per cent of its work for the year with returning customers.
Bam Construct’s order book declined slightly from £1.65bn in its previous results to £1.62bn at the end of 2017, which the firm attributed to a selective tendering strategy as well as UK economic uncertainty.
The company said investment on a project in Glasgow was a factor in its property arm recording a £2m loss for the year, while its FM business lost £0.2m.
Bam Construct’s results recorded no debt in the business and a year-end cashflow of £82.3m (2016: £116.6m).
Looking ahead, Bam said it would maintain a flexible operating model to cope with any potential changes to the market caused by Brexit.
Chief executive James Wimpenny said: “Bam Construct UK has been consistently profitable for more than a decade. We operate in a high-risk, low-margin industry.
“We believe our stability and predictable performance is attractive to clients and our supply chain and is one of the reasons why much of our work is repeat business. “
“Bam’s strategy will continue to be founded on operating efficiently and managing cash effectively. We aim to stay at the forefront of digital construction and data management.
“We are able to offer an integrated range of services across the lifecycle of a building and we will maintain our focus on competing for complex, high-value work with clients who appreciate quality over price and value a collaborative approach.”
Last month, Bam was confirmed as the main contractor for a £90m office in King’s Cross, London (pictured).