Simons Construction makes 1.5% margin on turnover of £220m

Simons Construction enjoyed a 34% jump in turnover last year to £220m. It delivered a pre-tax profit of £3.3m, representing a profit margin of 1.5%.

Simons Group had a total turnover figure (12 months to 31 March 2007) of £260m. The balance of turnover came from its two other operations: developments and design.

These two might be small by turnover, compared with Simons’ construction operation, but they punched well above their weight, delivering the bulk of the group’s total £8.3m pre-tax profit.

Simons Construction’s strategy continues to be focused on repeat business negotiated with key customers. They now make up 83% of total construction activity.

The key area of growth was retail and distribution partnering for the group’s own development operation as well as for WalMart, both with its Asda supermarket chain and its property arm, Gazeley.

Simons works with Boots, Sainsbury’s, HSBC and Vodafone as one of a limited number of framework contractors used by each of them, while in the case of B&Q, Simons is that client’s sole partnering contractor for its freehold schemes.

At the other end of the spectrum, Simons’ maintenance operation delivers 23,500 orders a year to the Royal Bank of Scotland under a term reactive maintenance contract which covers central England.

The group’s exit from local building works continued with the sale of the trades-based electrical and plumbing operations, closure of operations in Grimsby and Hull, and the end of the subsidiary Wrights Construction (Lincoln).

Simons Construction paid a dividend of £4m to its two shareholders.

Its 501 employees had £890,000 put into their pension scheme.

The dividend paid by Simons Group ran to a further £2m.

The group ended the year with a cash figure of £41m, almost double the figure of £21m at the end of the previous year.

The group’s pension scheme came under pressure. After closing it to new members in 2001, the directors said “it was with no little regret that the scheme was finally closed in 2006 in order to address the ever-widening scheme deficit.”

The group’s highest paid director received £366,000.

Three of the group’s seven directors kept their hands on their defined benefit pension scheme.