Firm takes a Strategic view on the future

Competition and staffing costs meant pre-tax profits for the Castleford firm dipped from 715,252 to 654,783, according to its accounts for the year to March 31, which were published yesterday.

Turnover rose by 5.4 per cent, to 36.46m, however, as it expanded across northern England and picked up work in the local authority and rail sectors.

Charles Tweed, one of three men who set up the business 10 years ago, said: "We have a full order book through to February 2011, so we are relatively optimistic, (although) we are very conscious of the Comprehensive Spending Review."

Mr Tweed, business development director, said Strategic Team Group (STG) had picked up work in the rail sector and had won station contracts in Wales and the South-West, such as at Swansea, Truro and Exeter.

"The transport system still needs a good investment in services – our area of expertise is the fabric of the buildings and we are stretching our geographical reach on that."

The construction sector has been battered by the slump in housebuilding with about 700 staff at the Leeds-based arm of Connaught made redundant last week after the social housing repairs giant collapsed.

STG's profits were hit by competitive pressure and spending more on staff in order to deal with extra business inquiries.

The size of the STG board has expanded, however, to seven, with the addition of a construction director and a sales director, who has been asked to increase STG's northern presence, particularly in the North-West. The firm now has more than 200 staff in total.

Social housing work made up nearly 29 per cent of the firm's turnover and Mr Tweed also said Britain could continue to invest in this area, despite the climate of austerity brought in by the emergency Budget.

"There is still a massive shortage of social housing. Somebody has got to fill that."

Andrew Watson, managing director of the firm, which he set up with Mr Tweed and Gary Taylor, said it had been a "challenging and unstable" year for the construction industry.

In his statement, he said there will be more pressure on margins.

"We believe a return to better profit margins is still some 12 to 18 months away; suppliers are expected to increase their prices during 2010-11 while clients are still looking for exceptional value for money."

STG, whose private sector clients included discount retailer Matalan, Argos, Homebase and TUI Travel, wants to increase turnover to 42m next year to develop a service which involves taking private money into the public sector, although Mr Tweed said it was too early to reveal more details.

The firm also wants to make at lease one strategic acquisition. Mr Tweed said they considered deals to buy social housing construction firms in Scotland and northern England over the last 12 months but they had not come to fruition.

Since the year-end the firm has enjoyed its best two months in the education sector, Mr Tweed added.

12,000 orders completed

Strategic Team Group worked on several high-profile projects despite Britain still being in the grip of recession for much of the year.

It completed the country's first Cyclepoint scheme at Leeds railway station, for Northern Rail, and built 18 cycle stores and Southport Cyclepoint for Merseyrail.

In total, STG completed more than 12,000 work orders and said it had also introduced a "no-blame" culture across the business in order to improve its health and safey record.