NG Bailey hurt by nosedive in the market

The Ilkley-based company reported sales of £422m for the year to March 2013 compared to £464m the year before.

It made an underlying profit of £1m but an overall group loss, after tax, of £6.9m, which was partly due to exceptional restructuring costs, including a 10 per cent reduction in jobs in the North of England and Scotland.

Chief executive David Hurcomb said: “This time last year the building market took a significant nosedive which was not predicted by the experts.

“We have been selective in the type of work we take on. A bit more cautious. We probably turned down work we otherwise would have accepted.”

Mr Hurcomb added that the market has now flattened out. “Consultants, architects and PQS (private quantity surveyor) firms are quite optimistic,” he said. “They are seeing a significant increase in their work. In previous recessions, that has tended to be a good indicator that output will pick up.”

The group has diversified in recent years to reduce its reliance on the building market.

It now has five divisions: engineering, offsite manufacture, IT services, facilities services and rail.

The company’s performance in the rail sector saw sales double during the period. It also won Network Rail’s Supplier of the Year award for 2013.

The division has expanded to a £50m business, working on projects including Birmingham New Street, the largest refurbishment of its type in Europe.

New chairman Kevin Whiteman said: “The diversification allows the business to weather the storm of recession and when construction comes back, it will have ‘more than one bolt in its quiver’.”

He highlighted the group’s “world-class” projects at Walkie-Talkie in London, Heathrow and Birmingham New Street.

Over the last 12 months, NG Bailey has invested over £6m in new sector development and employee training, including its apprenticeship programme.

NG Bailey’s services businesses increased sales by 10 per cent and operating profitability by 69 per cent.

Its facilities services division has long-term contracts with Land Securities and Arla.

It is also focusing on the data centre market and is in talks with companies about developing new centres. Mr Hurcomb said: “We can design data centres, we can build them, and then operate and maintain them for long periods of time.”

He added: “Once financial markets come back a lot of bigger banks have to invest in infrastructure.”

The group employs 2,500 staff across the country, including close to 800 people in the North East and Yorkshire.

Mr Hurcomb said: “We are a strong Yorkshire company. We have a lot of Yorkshire folk working in the South. The whole team building the Arla Dairy came from Yorkshire. We are exporting Yorkshire folk down South to some very prestigious projects.”

He added there is “froth” around residential housing, which is driving positive construction figures, caused by “Government subsidising the housing market”.

Although the building market remains tough, Mr Hurcomb said the key was to make sure foreign investment in London trickled down to the rest of the country. “The trick for everyone is to make that trickle down happen faster,” he said.

He added: “We’re not alone in experiencing challenging times, but what’s different about us is that our foundations are very solid. We don’t rely on borrowings – instead we have a strong bank balance, considerable net assets, a £700m order book and backing from shareholders who are dedicated to the long-term future of the business.”

Mr Whiteman, who was chief executive of Yorkshire Water and parent Kelda Group for eight years, during its listing on the FTSE-250 and subsequent sale to a consortium of international investors, said: “Having worked in plc and private equity-type environments a family business has a different dynamic. The strength is the ability to look long term and weather short-term shocks and recessions.

“We have seen a number of competitors in our sector go to the wall over the last two years because of the depth of the recession. We have a strong balance sheet and are conservatively financed which means we can have a long-term view. ”

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