Keltbray profit slips but orders rocket

Keltbray has dropped back into the red, partly due to ongoing costs related to its case against the Competition and Markets Authority (CMA) over the level of its fine for colluding over tender prices between 2013 and 2018.

The multidisciplinary specialist swung to a pre-tax loss of £1.2m in the year to 31 October 2023, down from a pre-tax profit of £3.4m in the prior 12 months, though it pointed to a big rise in revenue and more than doubling of its order book as signs of a strong future.

The Surrey-headquartered firm said its bottom line was hit by two exceptional items totalling £2.7m.

It said these related to legal costs in its dispute with the CMA over the size of its penalty in the cover bidding case, and a one-off refinancing cost of its funding facilities with its banking partners.

The firm’s newly released annual report, which stated the figures, does not break down the costs relating to each of the items.

Keltbray also made a £6.25m provision for the amount it expects to pay in fines to the CMA, a similar figure it used in the previous two years, the report shows.

The CMA has announced that a fine of £20m is due. However, Keltbray argued at a tribunal in April and May that the regulator made an error by calculating its penalty on the basis of all of its demolition and asbestos-removal turnover, saying it should have been based just on its highly specialised and complex turnover.

It was initially due to have its fine reduced to £16m due to its cooperation with the probe, but the discount was revoked by the CMA after the firm launched its legal challenge.

When only operations are taken into account, Keltbray’s profit dropped slightly from £5.3m to £4.2m.

It cited the high cost of sales as operating costs rose to support its revenue growth.

Meanwhile its revenue rose by 31 per cent – to £689m from £527.9m – in the year.

The report said this happened despite some delays to project starts near the end of the financial year as clients reviewed plans due to inflationary pressures.

It also had its margin growth constrained by the continuing high cost of raw materials and labour “in a highly competitive marketplace for construction engineering services”, it added.

The company is eyeing further growth, with 120 per cent order book growth secured at the end of the financial year, worth £1.1bn, with 75 per cent of the work due in the 2023/24 financial year.

Chief financial officer Peter Burnside said: “By building internal capability in our highly specialised engineering businesses while continuing to invest in our proven integrated service offering to clients, we remain confident that our growth plans are realistic and achievable.

“The main board remains confident in the resilience of the business and its leadership due to its proven track record against a challenging market backdrop.”

Its cash and cash equivalents stood at £33.6m at the end of the year, a £522,000 increase.

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