Shepherd Building Group grew turnover by 11 per cent in the year to June 2013 but profits dipped through a combination of restructuring costs, “a small number of challenging contracts” and its exit from a loss-making business.
Group turnover hit £748m, 11.4 per cent up from the £671.6m in the year to June 2012.
Both operating and pre-tax profit more than halved over the year, with pre-tax profit dropping 52.9 per cent to £13m and operating profit down 59.2 per cent to £10.2m.
Each of the group’s divisions – Shepherd Group Built Environment, Shepherd Group Engineering and Portakabin Group – grew their turnover in the year.
Shepherd’s built environment division, which includes Shepherd Construction and Shepherd Engineering Services, grew profits overall by 15 per cent, though Shepherd Construction’s profit was at a lower level than in 2012.
Shepherd group chairman Alan Fletcher said its construction division was affected by a “small number of challenging contracts”.
The group said that in the construction business, margins remained healthy but that strong earnings in the south of the country were in part offset by weaker performances in other regions.
The division completed the restructure of its professional team, while Shepherd Engineering Services’ earnings grew “significantly”.
The facilities management business saw a 30 per cent increase in revenue and profits, and Shepherd Homes was said to have made “significant progress” on margins.
Shepherd sold its Homeseeker business in May 2013, which incurred an operating loss of £2.1m during the year. The disposal resulted in an impact of £3.7m on group profits.
Net cash stood at £111m, up from £89.2m in 2012. Shepherd had secured a £50m funding package at the start of the year, but the facility has not yet been used.
Mr Fletcher said: “While there have been some recent signs of the beginnings of a slow economic recovery, it is too early to say with certainty that a corner has been turned in each of the group’s key markets.
“The outlook remains uncertain and there is a continuing need for caution concerning the short to medium term.”
He insisted that despite the difficulties that contributed to lower profit in the year, the group’s board was confident on achieving its growth strategy.
“Strong management, quality product offerings and actions taken to improve efficiencies and control cash, together with the clear strategic direction, continue to give a high level of confidence in the group’s resilience in the current economic and market conditions and in its potential for growth,” he said.