TURNOVER and profits at Perth civil engineering firm I&H Brown plummeted in the year to September 2018 as a combination of uncertainty in the onshore wind sector and a poor performance in its Warrington base took their toll on the business.

Having already seen revenues slide by 25 per cent in the previous reporting period, the family-run firm reported a further 28% reduction to £39.5 million while pre-tax profits fell by 88% to £277,000.

The profitability figure would have tipped into a loss had the firm not recorded a £524,000 unrealised gain in the value of its investment properties and a £392,000 unrealised gain in the value of investments in companies including Serco Group and private bank Hampden & Co.

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According to I&H Brown managing director Scott Brown, whose father Hardie Brown and late uncle Ian Brown founded the firm in 1964, the business was hit during 2017/18 by its civil engineering division being “less busy” as a result of a reduction in onshore wind energy projects. This was particularly noticeable in the first half of the year, when the impact of lucrative subsidies being cut during the previous year was still being felt.

In addition, he said “a number of contracts” in its Warrington base, which generates around half the firm’s civil engineering workload, “performed badly in the period”.

As a result, the firm’s civil engineering division, which on its own generated revenues of £72.5m in 2015/16, turned over less than half that figure - £34.5m - last year.

Despite this, Mr Brown said the division’s workload had already picked up in the current financial year, with the recent opening of a base in Exeter expected to help push revenues back up to their 2016/17 level in 2018/19. Overall, he said firmwide turnover is expected to be in the region of £55m for the period ending in September.

“In particular, we have been successful in securing infrastructure projects for large housing schemes,” Mr Brown said.

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“The past year has seen us secure such projects at major housing developments including Kingdom Park in Kirkcaldy with Murray Estates, Blindwells New Town with Hargreaves Land and we have just commenced our first package of work at Winchburgh for Winchburgh Developments Limited. With the housing market remaining buoyant we feel this will be a strong source of work for us.

“In England, our Warrington regional office has seen a number of management changes with more control being taken back to head office.

“Our workload in England is satisfactory and we are pleased to be starting three projects for a new client, Suez, a French-based utility company.”

Elsewhere, the firm’s much smaller property development arm fared better than its civil engineering one, with turnover falling by 12% from £3.4m to £3m.

Mr Brown said the division, which had grown significantly in the previous year, is poised to return to growth this year, with a number of developments set to get off the ground.

“The development division completed the servicing of ground at Dunfermline for the first phase of 300 houses and secured the second phase of a sale to Persimmon,” he said.

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"Further significant additions were made to the company’s consented land portfolio, with planning consent being achieved for 900 houses at Kelty and planning consent for residential development on 45 hectares of land at Luncarty in conjunction with a development partner.”

Despite the more positive outlook, the firm, which had cleared much of its debt during 2016/17, increased its borrowings in 2017/18. It took out a £3.4m bank loan and also increased its overdraft facility from just over £86,000 to £1.1m. In addition, the firm borrowed close to £2m from the directors’ retirement funds.

That resulted in its loan interest payments increasing from £5,338 to £46,857 while bank interest rose from £8,462 to £49,513.