Briggs & Forrester’s profit has been halved due to the impact of fixed price contracts and inflation.
The firm, the the UK’s fifth largest M&E specialist and ranked 58th in the CN100 list of the best contractors in 2022saw its pre-tax profit rise from £3.2m to £1.6m in the year to 31 October 2022.
Turnover fell slightly to £229.2m from £234.2m the previous year.
Group chairman and chief executive Paul Burton said in a statement issued alongside the accounts: “It has been a particularly challenging year with [the] The high levels of inflation experienced affected the profitability of some of our fixed price contracts.
“We also experienced some significant project delays where we were not always able to recoup all of our personnel costs.”
The hardest 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, significantly affected by the inflation of fixed price contracts that were secured before the war in Ukraine and the resulting high inflation.
“There were also some significant delays to the project, initially caused by the Covid disruption earlier this year and then more recently due to supply issues from other trades where our additional costs could not always be recouped “.
Burton did not specify which projects were delayed, but said there were now “inflation protection measures” in place for most of its contracts and that it was starting to see a reduction in inflation in the market.
Briggs & Forrester reduced its cash in the bank and on hand to £7m in the period, down from £18.9m in the 2021 financial year. The company said it used its bank facility to support the working capital sometimes during the second half of the year until the end of October 2022.
In its earnings statement, the company added that it had since secured a new £4m commercial loan facility under way.
Average headcount fell to 874 in the period, down from 897. The company said it expects to increase headcount again as volumes pick up towards the end of 2023.
“We continue to maintain a highly skilled and experienced workforce and are very proud of our enviable record of staff retention,” Burton added.
In early 2021, the company was part of a series of contractors that became employee-owned trusts. It was the second largest contractor move to the model, incentivized through the tax system, between 2020 and 2022.
