Surgo Construction aims for £30m turnover having already grown sales despite delays

Sales rose more than 7% at the Newcastle firm in latest accounts - and that was despite some lengthy delays in contracts coming to fruition.

Jeff Alexander, a Surgo board director, has recently celebrated a milestone of long-service
Jeff Alexander, a Surgo board director, has recently celebrated a milestone of long-service

Surgo Construction is on course for turnover of £30m this year as delays in contracts are finally lifted.

The Newcastle firm increased sales by 7.6% in the year to August 31 2014, from £20.87m to £22.46m, a rise the directors said marked a move in the right direction, in tandem with confidence rising in the construction market.

Operating profit also rose from £321,431 to £362,282, an increase of 12.7%.

This financial year the firm is targeting sales of £30m, a lift of 33.6%, and the company said the building bricks are already in place for 85% of this year’s budgeted turnover thanks to orders in hand.

And the company, which deals with both new build and renovation projects for both public and private sector clients, said the turnover posted in latest accounts could have been much higher, but that many contracts were subjected to lengthy delays – one by as long as two years.

Company director Jeff Alexander said: “Projects weren’t put on hold but they were delayed, and that has been a difficulty. Turnover has gone up a reasonable amount but it would have been higher if projects had got going.

“These projects are now, however, coming on to site. There’s a lot more confidence in the market and we’ve certainly seen a big improvement, so we think we’ll do about £30m this year.”

While the firm carries out public and private sector work, a reduction in public expenditure on capital projects has led to the firm to diversify and focus on other areas, and many are faring well at the moment.

Mr Alexander said: “It’s right across the board. I think there’s definitely a trend away from traditional public sector work.

“As a regional contractor you can’t get onto those frameworks so we made a conscious effort to get in on other sectors, and we are now going university work, new nursing home work has just started and we’re also working down at HMS Calliope, so we’ve had a gradual change to a more balanced range of sectors we are involved.”

During the accounts period the average headcount dropped from 96 to 87 but Mr Alexander said the decline was due to natural wastage.

Since the end of the financial year, at least 12 new roles have been filled and further recruitment is expected this year, including the appointment of two apprentices.

However, finding suitable applicants can be tricky, he said.

“We’ve taken on three contract managers, four site managers and about half a dozen labourers and bricklayers, which is definitely a move in the right direction.

“If we are as successful in procurement as we have been we’ll be looking to recruit more this year too. But it’s getting more difficult – there is a lot of competition for people now.”

In a strategic report accompanying the accounts, managing director James Walker said the firm’s turnover mirrored a marked improvement in economic conditions within the construction sector.

He added: “Whilst securing attractive procurement opportunities will always present a challenge, our significant successes in recent months coupled with a good pipeline of future enquiries gives us increasing confidence that this improvement is sustainable.”

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