Bancon posts profit slip despite record activity
Bancon Group, the Aberdeenshire housebuilder, saw underlying profits slip despite a record year of activity and a 16% increase in turnover for the 12 months to the end of March 2023.
Revenue rose to £132m from £114m in the previous year, but cost inflation meant operating profits fell to £4.6 million from £4.85m.
Pre-tax profits came in sharply lower at £1.8m against £2.7m as a result of writing down the value of a long-held development.
A record level of activity in the year for Bancon Homes delivered turnover of £68.4m compared with £51.3m previously.
This is attributed partly to the resilience of the markets in which it operates, it said in a statement. During the period it brought forward phases of its developments in Aberdeen and Aberdeenshire and began work on two developments in the Central Belt.
Turnover at Bancon Construction was £35.5m, 18% ahead of the previous year and profits before tax were the highest reported since 2007. This has been achieved through structural changes and tight margin control. Bancon Construction has a strong order book with turnover in excess of £40m secured in the current financial year.
Meanwhile, despite an overall slowdown in the market in the second-half of the financial year, Deeside Timberframe maintained activity at a similar level to the previous year with turnover down to £28m from £32.6m.
The business is investing in facilities and production efficiencies to counter the sharp rise in the cost of raw materials and deliver a step-change in growth across Scotland and England.
The group reports a positive outlook for 2023-2024 and has renewed its banking facilities with Santander for a further three years to December 2026.
Commenting on the strong results, chief executive Kevin McColgan who joined the group in September this year, described the figures as “robust”, with a second consecutive year of increased homes sales. He said that combined with the renewal of the banking facility, the results demonstrate the success of its current strategies “and the confidence in our future prospects”.
He added” “Our strong financial position, positive sales performance in the current financial year and strong forward orders means we are exceptionally well-placed to invest in and deliver our growth ambitions even against the backdrop of the rising costs of raw materials and the wider economic uncertainties.”