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The contractor鈥檚 pre-tax profit was 拢2.2m in the year to 31 December 2009, a sharp drop from the previous year鈥檚 拢3.6m as the downturn continues to ravage industry earnings.

Against a backdrop of increased competition for fewer contracts, profit margins also took a hammering, falling to 3% last year from more than 4% in 2008.

prices are tough and clients are demanding more. But there is more opportunity now

Chris Chivers, Killby & Gayford

Turnover fell 15% to 拢73.8m from 拢86.8m the previous year. In accounts filed with Companies House, the group also warned that increased competition among contractors was heightening the risk of losing competitive bids, which could lead to a reduction in Killby & Gayford鈥檚 market share.

But Chivers said he was cautiously optimistic about the future of the market.

He said: 鈥淚t鈥檚 tough in terms of bidding, prices are tough and clients are demanding more. But there is more opportunity out there now. The capital spend for schools is less because of
the cuts to 好色先生TV Schools for the Future, but there is still school work out there, it鈥檚 just more geared towards refurbishment.

鈥淲e were always a tier-two contractor and that鈥檚 where more of the spending is going to be based now. The same is true for the NHS as well.鈥�

The accounts, audited by Deloitte, also reveal that the group has cleared all its external debt after it repaid the 拢700,000 balance of an outstanding loan from HBOS, which is now part of Lloyds Banking Group.

The report adds that Killby & Gayford has an overdraft facility of 拢3m, which the group says is adequate for its requirements.

Group debt is now held by Growth Capital Partners, a structured finance group, which Chivers said remained a 鈥渕edium to long-term investor鈥� in the company.

The salary of the highest paid director was slashed by 47% to 拢128,071 last year, compared with 拢243,938 in 2008.