CLARK Contracts has revealed a near-40 per cent hike in profits as it continues to defy bleak conditions across the Scottish construction sector.

Managing director Gordon Cunningham hailed the positive impact brought to the Paisley-based firm by a high level of repeat custom as it reported a pre-tax profit of £1.9 million in the year ended October 31, up from £1.4m the year before. Turnover surged to nearly £72m from £56.2m, accounts due to be filed at Companies House this week show.

Mr Cunningham, who led a management buyout of Clark from its previous owner in 2014, noted that 85% of the work secured by the firm is repeat business from existing customers, with the company now on its 250th job for the University of Glasgow.

And he said the 40-year-old company continues to benefit from multiple revenue streams, having successfully diversified from construction into the retail, higher education and hotel sectors. A move into social and private housing is under consideration.

Asked why Clark Contracts has been able to grow in a climate which has seen several Scottish construction firms recently go bust, Mr Cunningham said: “We’ve got a good base, and the new sectors we have brought in widen that. It spreads the risk among sectors and customer groups – that is very much on purpose.”

Mr Cunningham also observed that some of the companies which have gone under this year, including Crummock, are sub-contractors. Such companies are exposed to the “vagaries of the all main contractors they are working for”.

Mr Cunningham said: “It is well known contracting carries a high amount of risk for a relatively low margin. Structurally the industry takes on that risk and tries to pass it down. That’s what happens. That could be the reason [companies have gone bust].”

But he added: “There hasn’t been as many [failures] as everybody thinks. I think the Carillion one shocked everybody, because they were deemed too big to fail, and there is a ripple effect on that through the supply chain.”

Although successive surveys have shown that construction has been one of the weakest-performing parts of the UK economy in recent months, Mr Cunningham said the firm has detected no change in the frequency or average size of the enquiries it receives. However, he said that it is still hard to get on to tender lists, and to ultimately win contracts.

Clark is currently working for its eighth unit for Lidl and counts B&M Home Bargains as a client, while a recent foray into the hotel sector has seen it pick up work with Moxy, the Dutch hotel group, in the UK, on sites near Edinburgh Airport and Southampton.

Mr Cunningham said the model favoured by Clark is to develop discrete business units which “allows the people in that unit to develop, rather than it being the large super-tanker”.

He emphasised the investment made by the company in its own academy, which equips employees with the skills they need to develop their careers at the firm, both as trades people and managers. The company now offers a bespoke masters degree, which it runs in partnership with Glasgow Caledonian University

Currently, some 29 members of staff are in training at the academy, which Mr Cunningham says plays a key role in fostering staff retention. This is especially useful in light of the ongoing skills shortages across the construction sector, which he believes to be the biggest challenge facing the industry. According to the accounts, the firm employed an average of 262 staff in its most recent financial year, of which 112 were tradespeople, up from 217 the year before.

“There is still an under-supply of skills, and then talent, versus the amount of work that is out there,” Mr Cunningham said.