Accounts for the year ended 31st July 2022 show that family-owned Higgins Group increased turnover by 39% £210m (2021: £151m).
But with the cost of sales escalating, gross profit barely improved – £15.9m up from £15.5m the previous year. With increased administrative overheads of £16.5m and a £4.75m provision, the result was a £4.5m operating loss.
The bottom-line pre-tax loss was £5.4m (2021: £203,000 profit). It was the third year out of four that Higgins has posted a pre-tax loss.
The provision of £4.75m was for the rectification of building safety faults that have come to light post Grenfell Fire investigations.
Or as chairman Richard Higgins put it: “During the period it has become clear that some of the historic projects of the group were not built in accordance with the current interpretation of building regulations.”
He added: “In all cases we have sought to cooperate with the clients to agree a strategy for rectification.”
Higgins Partnerships, the contracting arm of the group increased turnover by 44% in the year.
Finance director Mark Francis, the only one of the seven main board directors not called Higgins, said: “Turnover benefited by a strong order book as a result of increasing bidding activity in the previous years. Underlying operating profit was largely unchanged year-on-year. Higgins Partnership is forecasting another increase to turnover as it continues to benefit from increased bidding activity, strong relationships with the sector and a staller reputation.”
The group’s other trading arm, housing developer Higgins Homes, started the current financial year with 285 units under construction across three sites.
Despite the year being the third out of the past four that Higgins Group has made a pre-tax loss, the group continues to operate “well within its banking facilities,” said Francis. “All of our principal bankers, HSBC, RBS, Investec and Close Brothers, have shown a willingness to increase facilities and amend terms when required.”
The company ended the year with cash balances of £30.4m and debt of £12.2m.