Sir Robert McAlpine has reported a substantial pre-tax loss, attributed to economic challenges and contract devaluations.
- In 2023, SRM faced a £102.6m pre-tax loss, contrasting starkly with the previous year’s £9.3m profit.
- Key factors include high inflation, supply chain disruptions, and an energy price shock, leading to reevaluation of major contracts.
- SRM’s strategic review has tightened business priorities, impacting turnover, which fell below £1bn for the first time since 2019/20.
- The company is exploring the financial impact of a fire at its Station Hill project, potentially further affecting its financial standing.
In a turbulent financial year, Sir Robert McAlpine (SRM) recorded a £102.6 million pre-tax loss for the year ending October 2023. The company cited a challenging economic environment within the UK construction industry, which was exacerbated by high inflation, supply chain shortages, and the unprecedented energy price shock. These factors together compelled SRM to re-evaluate the financial viability of four major contracts.
According to the firm’s accounts, performance issues with supply chain partners and legacy projects misaligned with SRM’s strategic direction led to the necessary financial reassessments. The overall margin dropped to -12.5% from a modest 0.4% the previous year, and turnover decreased significantly to £880.6 million from the prior year’s £1.1 billion.
Neil Martin, who stepped in as chief executive following Paul Hamer’s departure, described 2023 as a “challenging financial year.” Despite these setbacks, Martin reported a positive shift in performance by mid-2024, focusing on client value and operational excellence to mitigate risks. SRM’s strategic refined focus on profitable delivery and key client relationships was reaffirmed.
The accounts also reveal that SRM invested £7.8 million in actions stemming from the strategic review recommendations, anticipating annual savings of around £20 million through organisational restructuring. Furthermore, SRM increased provisions for remediation and high-cost issues to £25.9 million, a notable rise from £19.9 million the preceding year. This includes an increase in remedial provisions for completed contract work.
Additionally, SRM has set aside £12.7 million to cover anticipated losses on certain ongoing contracts. The financial implications of a fire at the £750 million Station Hill redevelopment in Reading last November are currently under scrutiny. This incident, marked by a dramatic rescue operation, has reportedly delayed the project, and its cost effects remain under evaluation.
Sir Robert McAlpine is navigating through significant financial challenges while focusing on strategic realignment and risk mitigation.
