Briggs & Forrester’s profit has halved due to the impact of fixed-price contracts and inflation.
The firm, the fifth largest M&E specialist in the UK and ranked 58th in the CN100 list of top contractors in 2022, saw its pre-tax profit fall from £3.2m to £1.6m in the year to 31 October 2022.
Turnover decreased slightly to £229.2m, from £234.2m the previous year.
Group chair and chief executive Paul Burton said in a statement issued alongside the accounts: “It has been a particularly difficult year with [the] high levels of inflation experienced impacting on the profitability of some of our fixed-price contracts.
“We also experienced some significant project delays where we have not always been able to recover all of our staff costs.”
The worst-hit part of the business was its Engineering Services arm, which posted an operating loss of £1.6m.
Referring to this, Burton said: “The financial result was clearly disappointing, impacted significantly by inflation on fixed-price contracts that were secured prior to the war in Ukraine and the resulting high inflation.
“There were also some significant project delays, initially caused by Covid disruption early in the year and then latterly due to supply issues from other trades where our additional costs could not always be recovered.”
Burton did not specify which projects were delayed, but said that “inflationary protection measures” were now in place for most of its contracts and that it was starting to see inflation ease in the market.
Briggs & Forrester reduced its cash at bank and in hand to £7m during the period, down from £18.9m in its 2021 financial year. The company said it used its bank facility to support working capital at times during the second half of the year until the end of October 2022.
In its results statement, the firm added that it had since secured a new, ongoing £4m trade loan facility.
Average staff headcount reduced to 874 during the period, down from 897. The company said it expects to increase its workforce again as volumes increase towards the end of 2023.
“We continue to maintain a highly skilled and experienced workforce and are very proud of our enviable record in respect of staff retention,” Burton added.
In early 2021, the firm was one of a spate of contractors that became employee-owned trusts. It was the second-largest contractor to move to the model, incentivised through the tax system, between 2020 and 2022.