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Shepherd Construction has returned to profit with record figures after two of testing years in the red, the annual accounts from parent company Shepherd Group reveal.

The construction arm of the contractor posted record profit of 拢4m for the year to 30 June 2011.

Last year, Shepherd Construction made a 拢2.1m loss and in the year to 30 June 2009 it posted a loss of 拢10.5m.

This year鈥檚 profit came despite what the group called 鈥渟trong competitive pressure on margins鈥� and the fact that Shepherd Construction and building services division SES underwent a restructuring process, which cost the company 拢2.8m.

Parent company Shepherd Group nearly doubled its annual pre-tax profit this year, posting a profit of 拢31.5m for the year, up from 拢16m last year. Its turnover also increased from 拢526.7m last year to 拢611m.

Group chairman Alan Fletcher said: 鈥淭he quality of the management teams, the excellence of the product offerings, the swift action taken to improve efficiencies and
sound cash management have combined to drive improved profit performance and build the group鈥檚 financial strength.鈥�

The group鈥檚 strongest component was its industrial division which had an operating profit of 拢26.6m. Within this its Portakabin Hire business continued to be the primary source of profit.

The new homes branch of the group, which includes Shepherd Homes, Homeseeker Park and Leisure Homes, recorded losses which the group blamed on poor market conditions.

Shepherd added that higher turnover, reduced losses and improvements to the specification of its houses put it in a good place to capitalise when the market returns to normal.

鈥淲hile the continuing general economic uncertainty points to a need for caution in the short to medium term, the considerable improvement in the group鈥檚 profitability and its sound financial performance give confidence in the underlying strength and future potential of the business,鈥� Fletcher said.

Following the increase in profit Shepherd plans to pay dividends of 拢8 per share, up from 拢7.59 last year.