Shepherd Group Revenue Grows to £748 million

Shepherd Group achieved an 11% growth in revenue to £748 million (2012: £672m) for the year ending 30 June 2013 and once again retained a nil gearing (no debt) position.

Despite the downward pressure on key market sectors caused by a background of prolonged global economic uncertainty, each Group division - Shepherd Group Built Environment, Shepherd Group Engineering and Portakabin Group - achieved higher turnover for the year.

The strength of the Group’s cash position is shown in net cash of £111m at the year end (2012: £89m).

Operating profit from continuing operations was £16m (2012: £25m). The results were influenced by the Group taking action to exit the loss making Homeseeker business, with this unit incurring an operating loss of £2.1m in the year and the disposal having a one-off impact of £3.7m on Group profits.

Portakabin Group

Portakabin Group posted a level of turnover and gross margin consistent with the previous year against a market struggling for volume and without the margin contribution of prior years from the London Olympics. The diversification of the Hire client base in a range of end markets continues to underpin revenue and provides a high quality of earnings.

Recent research and development, focusing on a new product (Yorkon Building Systems) for the Sales business is expected to assist performance from 2013 onwards. The first project using the new product, Carr Manor School in Leeds, opened on time and on budget in September. A major hospital project in North Middlesex also uses the new product.

During the year, Portakabin Group released new performance figures showing that it has successfully delivered 99.7 per cent of projects on time and on budget in the past year – and every year since 2003.

Shepherd Group Built Environment

Shepherd Group Built Environment completed the complex restructuring of the divisional professional services team in the year and met the objective of optimising all support services. A strong focus on quality of earnings, management data and controls and strategic positioning led to a 15% increase in profits, a third successive annual increase.

Shepherd Construction grew revenues on a number of key contracts. Market leading projects in the energy/power and infrastructure sectors, such as the award winning NAREC and the on-going Drax developments, serve to underpin a focus on complex technical projects.

Earnings have grown significantly at Shepherd Engineering Services, following on from strong growth in 2012. Projects such as the internationally renowned Pirbright Laboratory demonstrate this company’s growing reputation for design and technical authority and project delivery. It is now ranked in the top five M&E companies in the United Kingdom.

Shepherd FM grew revenues and profits by over 30% in the year, demonstrating that this relatively new business continues to make encouraging progress, notably maintaining 98% customer retention overall, including in a number of ‘business critical related’ service contracts.

Shepherd Homes made significant progress on margins. There are promising signs of recovery in the house building market following recent initiatives introduced by the Government and the business is fully engaged in these.

Shepherd Group Engineering

This is the Group’s youngest division, having been established in 2012 from the Portastor and Portasilo businesses. Despite a very challenging start, the business has strong potential and the prospect of delivering higher margin, international engineering projects into growth sectors remains attractive.

The businesses are increasingly focusing on larger and more complex projects where better margins can be secured and on global activity which helps to mitigate the cyclical nature of key market sectors.

Commenting on the results, the Group chairman, Alan Fletcher, said:”Despite the challenges that contributed to lower profit performance in the year, the Group Board remains confident in the execution of its strategy which focuses on improving the quality and mix of Group earnings, with each division taking actions to broaden their markets in sectors with attractive margins.”

“At Portakabin, for example, an important strategic step was taken by acquiring Oecon Mobilraum GmbH in Germany just after the year end. This acquisition is a key part of expanding the presence of Portakabin in Europe in countries with high GDP.”

“Strong management, quality products and services and the decisive actions taken to improve efficiencies and control cash 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.”