Covid woes and failed subbies push Buckingham towards £11m loss

Buckingham Group Contracting have built the new Riverside Stand at Craven Cottage, home of Fulham FC
Buckingham Group Contracting have built the new Riverside Stand at Craven Cottage, home of Fulham FC

In the year to 31st In December 2021, Buckingham Group Contracting saw its turnover increase by 14% to a new high of £665m, compared to £584.5m in 2020 and £485.7m in 2019 .

But while it made a pre-tax profit of around £10m and £8m in 2019 and 2020, in 2021 it went to a pre-tax loss of £10.7m.

On the plus side, he still had zero gearing and £77m in the bank at the end of the year.

The loss was attributed to a £14.2m shortfall on a single major stadium deal – reportedly the new Riverside stand at Fulham Football Club’s Craven Cottage ground – of which more than half the loss was due to “the very significant impact on costs caused by the financial failure of a major and critical subcontractor”. This provider finally went into voluntary liquidation in February 2022.

Buckingham also struggled in 2021 with the second year of the covid pandemic. The annual report states: “While the company’s site procedures had been very successfully and safely adapted through 2020 to manage the covid challenge, the third lockdown period which followed soon after similar restrictions in November and December 2020, had a more severe impact on resource availability. .

“It was not just while the lockdowns were in place, but also after restrictions were lifted and the vaccination program expanded, when building activity levels in the UK surged. The supply of materials has further tightened and the ability of our specialist subcontractors to secure internal trades such as mechanical and electrical fitters, partitions and cladding has deteriorated markedly. These activities have historically relied to some extent on a mobile specialist workforce that operates across the UK.

“The pandemic has also triggered a reduction in the available workforce, with evidence from the ONS suggesting that many construction workers based in Europe have not returned to the UK after the 2020 Christmas holidays. Additionally, traveling crews were particularly vulnerable to transmission of the more virulent “Kent variant” strain of covid in early 2021, and the “Omicrom variant” later in the year.

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At the same time, the supply of materials has also been significantly disrupted throughout 2021, with supply shortages leading to steep price increases and delivery delays for many products throughout the year.

Chairman Mike Kempley said: “As we reflect on 2021, the most significant event for the company has been the execution of a well-planned transition to employee ownership. [See Buckingham Group sold to employee trust.]

While this form of share transfer facilitated a seamless transition for our key stakeholders, the carefully planned change marked a significant turning point in the evolution of Buckingham ownership.

”The £665 million in sales in 2021 represents a new record for the business with annual growth of 14% from 2020. Measured over the last three years, the annualized growth is 9.5%, at the upper end of the board’s medium-term objective. . This increase in sales, which is set to repeat itself in 2022, before surpassing £700m in turnover in 2023, provides further evidence of Buckingham’s strength and depth. The determination of our staff and managers, combined with the diversity of our business and our regular business customers, have supported this continued organic growth. Since the beginning of the company, this has been achieved without any mergers or acquisitions.

Highlighting strong underlying earnings performance, the Board can report a pre-adjusted profit margin of 1.8% in 2021 which reflects excellent delivery and positive business results across all of Buckingham’s major operating segments , except one. However, a combination of covid-19 related cost impacts across the business and a significant one-time loss in 2021 on a major stadium contract, unfortunately depressed overall performance. Along with a considerable change of customer, the failure of a major subcontractor in February 2022 was a significant factor in the commercial performance of this major project, which was priced and planned before the pandemic.

He concluded: “It is undeniable that we are disappointed with the 2021 result which is only the second annual pre-tax loss in the last 22 years of trading, producing a net loss of £7.6 million after tax. . However, putting that into perspective, the unexpected and unusual loss follows five consecutive years of positive trading results, which collectively generated a pre-tax profit of £57million. ”

The one-time outlay for the transition to EOT ownership was £1.0m in 2021, including “for the payment of a celebratory staff bonus”.

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