FIFE-based builder and property developer Muir Group has suffered a fall in annual profits after incurring a hefty charge for a potential bad debt but said housebuilding has remained a growth area.

The family-owned group made £2.55 million profit before tax in the year to February 3, compared with £3.26m in the preceding year.

Read more: Miller Homes flags 'robust' demand in uncertain market 

The privately-owned group said the fall in profits mainly reflected a £1.6m provision the company made in respect of a potential bad debt in its contracting arm.

The division made a loss of £523,000 compared to £818,000 profit in the preceding year.

In a statement the group noted it maintained total turnover at around £65m in the latest year, adding: “Key growth areas have been private housing, property development and timber kit manufacture.”

Housing turnover increased to £32m from £29.5m. The group sold 157 homes at an average £206,000. It sold 152 homes at an average £194,000 in the preceding year.

Read more: Housebuilding giant buys Scots timber frame group

Contracting turnover fell to £24m from £30m.

Chairman John Muir said the group had achieved a positive set of results given the challenging conditions the construction industry is facing. He added: “Looking forward, the Group is well positioned, with a strong debt free balance sheet and returns are expected to show a significant improvement in the current financial year.” The group said it has a robust pipeline of activity.

It is building a warehouse and blend facility in East Kilbride for Distell, which bought the Burn Stewart whisky business in 2013.

Muir Group is also working with prospective tenants for developments at Glasgow Business Park by the M8.