Clugston's busiest year doesn't deliver a profit - despite 49 per cent revenue rise

By Scunthorpe Telegraph | Posted: 2 Aug 2018

Scunthorpe construction giant Clugston Group recorded its largest ever turnover in 2017, shrugging off a “small loss” as it restructured to cope with the astounding growth, ensuring a sustainable future.

Revenues were up 49 per cent to £175.3 million at the major employer, however it made a £469,000 pre-tax loss against last year’s £1 million profit. There had been mid-year predictions of breaking the £200 million mark, but delays have hampered expectations.

The biggest hit was in the construction sector, £529,000 in the red in the year to January 31, 2017, against a £1.2 million profit for 2016. Logistics, also up on turnover, also saw profits reverse by more than £400,000 to a loss of £204,000 – mainly attributed to a bad debt of the largest bulk food customer who went into administration - while the property arm saw a half a million increase to £613,000.

Bob Vickers, chief executive, said the results reflected the challenge of dealing with the highest ever turnover, and the introduction of a new structure at St Vincent House to “set the group up for further sustainable growth”. 

Of the results of his first full year, he said: “Following the restructuring we are better placed to deal with some of the issues we experienced this year in which we saw our turnover increase by 49 per cent. Our teams are focused on delivering better outcomes in what will be an exciting, productive and busy year ahead.”

The largest ever building contract, the £30 million Sheffield Ikea store was delivered, and a 15th energy from waste plant was secured. 

MORE: Meeting Bob Vickers, the new man at the helm of Clugston Group

Mr Vickers said: Whilst activity within the construction business picked up as anticipated, increasing to £158 million - the busiest year in our history - the market was, without doubt, the most challenging in recent years. Several project commencement dates have been delayed because of clients’ concerns around economic uncertainty, and this has impacted on our operating plan targets.

“Profit fell to the lowest level since 2011, however, it was in a year when many other construction businesses also reported losses and others fell by the wayside.”

The failure of his former employer, Carillion, dominated early year headlines, having joined from there in February 2017, following long-serving chief Stephen Martin’s appointment as director general of the Institute of Directors.

In the report, he stated that “specific challenges experienced during the year resulted in a small loss after tax, however from a strategic perspective, the business has made real progress in building the foundations for sustainable growth and profitability”.

The leadership team has been enhanced, with HR director, IT director, divisional lead for the logistics division, and most recently a strategic lead for the facilities management division all brought on board. Marketing and business development is also to be group-wide.

The construction division is to be split into three profit centres too, Regional and National Construction, Facilities Management and Energy from Waste, with each to have dedicated management teams. 

“This will enable controlled growth, better governance and control of risks,” Mr Vickers said.

He added: “The group has maintained a strong balance sheet with strong cash reserves (£30 million) and no debt. The order book within the construction business is at a record level and the pipeline of developments within property will deliver sustainable profits for the group.

“With the recent organisational changes, strong financial position and committed management team, the board is confident that the business can deliver its chosen strategy which will

result in improved group performance both in the near and long term. 

“Our focus is to build resilience into the organisation, manage risks robustly and ensure we continue to have, and demonstrate, our uncompromising approach to health and safety in all that we do.”

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