Construction groups keep head above water despite property woe

Published on Thursday 26 August 2010 15:12

TWO of Scotland's largest construction firms stayed in profit last year despite falling revenues during the continued downturn in the property market.

Glasgow-based Morris & Spottiswood yesterday reported an 18 per cent drop in turnover in 2009 to 99.9 million after its office-fitting operation was hit by the recession in the retail and banking sectors.

The drop-off in business had a knock-on effect for its under-lying pre-tax profits, which fell from 3.1m in 2008 to 1.5m last year.

When exceptional items of 1.2m were taken into account - which related to cutting its workforce from some 500 to 400 and writing-down the value of land - profits dropped to 300,000. But the family-owned firm said that the cost-cutting had helped to increase its net cash from 5.7m to 8.9m, with no borrowing.

Chief executive Chris Saxton said: "2009 was a very difficult time for the banking, retail and construction sectors and this is reflected in our performance, but it does not convey the very substantial effort of our team.

"During this time, we have benefited from the fact that we are cash positive, without borrowings or external investment."

The company - which also has bases in Edinburgh and Warrington - said work undertaken in 2009 included a 32m contract to build 140 homes for Queens Cross Housing Association, in Glasgow, and 10m of historic building restoration work at Stirling Castle and the Briggait, a 19th-century former fish market in the heart of Glasgow's Merchant City.

Contracts won included a 6m office fit-out for insurer Aegon UK at Lytham St Annes and a 3m refurbishment for Primark in Telford, Shropshire.

New framework deals were also secured with Lloyds Banking Group, Royal Mail and the Co-operative Group.

Meanwhile, accounts filed at Companies House showed that revenues at Prestwick-based Dawn Group fell to 83.5m in the year to 31 January from 93.7m in the previous 12 months.

But pre-tax profits rose from 945,000 to 2.1m after the company's exceptional items were reduced from 5.2m to 4.4m.

A dividend of 990,000 was paid during the year to the group's parent company - whose directors are listed as Dawn Group chairman Allan Gillies and directors Barry MacDonald and Stewart Rough - but no final dividend was proposed.

Dawn Construction, the group's building contractor business, reported a pre-tax profit of 5.9m, down 2.7m from the previous year. But the directors said the contracting arm had "good visibility of both budgeted sales and profits" for this year.