25/11/2011

Profit rise shows Shepherd Group strength and potential

Shepherd Group made a pre-tax profit of £31.5m in the year ending 30 June 2011, almost doubling the total for the previous year (£16m in 2010). The marked improvement was driven by a 16% increase in turnover to £611m (£526.7m) and the efficiency measures implemented in recent years.

The success of the Group's cash management strategy is reflected in cash flow from operating activities rising to £70.8m (£44.4m) and the resulting net cash position of £45.8m. All external debt was repaid in the year, reducing the modest 0.9% 2010 gearing to nil.

The principal contributor to Group profits was, once again, the Industrial Division - where Portakabin this year celebrated its 50th anniversary - which saw its operating profits rise to £26.6m (£24.1m).

There was also a considerable improvement in the profitability of the Group's Built Environment Division where all its businesses achieved significant increases in turnover despite difficult marketing conditions. Shepherd Construction recorded an increase in turnover to £251.3m compared with £185.2m in 2010 and achieved the highest level of operating profit in its history of £4m compared with a loss of £2.1m in 2010.

Whilst activity levels in the property development sector remained generally subdued, higher sales at Shepherd Developments contributed to a breakeven operating performance. In contrast Shepherd Homes and Homeseeker Park & Leisure Homes, which comprise the Group's businesses exposed to the continuing adverse conditions in the market for new homes, recorded operating losses.

Commenting on the results, the Group chairman, Alan Fletcher said: "The quality of the management teams, the excellence of the product offerings, the swift action taken to improve efficiencies and sound cash management have combined to drive improved profit performance and build the Group's financial strength.

"These are encouraging results which provide firm evidence of the Group's resilience in the face of challenging markets and demonstrate its ability to continue to withstand the current market pressures."

He added: "While the continuing general economic uncertainty points to a need for caution in the short to medium term, the considerable improvement in the Group's profitability and its sound financial performance give confidence in the underlying strength and future potential of the business."