McGee profit increases despite material price inflation

McGee’s pre-tax profit has slightly increased despite a dip in turnover, with the specialist engineering group hailing its success in navigating material price hikes.

While turnover at the firm slipped from £92.2m to £83.3m in its financial year to 30 November 2022, its pre-tax profit rose slightly from £6m to £6.1m. Its profit margin therefore grew from 6.5 to 7.4 per cent.

In its financial statement, the engineering contractor said its performance was built on an ability to anticipate and mitigate risks.

“Material price volatility was identified early, and the impact on the business was minimised by having mature discussions with clients about how [to] manage the risk best,” it said. “This has helped build the trust and confidence of clients and stakeholders and delivered certainty in financial performance.”

McGee, one of the 10 firms fined a combined £60m earlier this year for their involvement in a bid-rigging scandal, also sought to draw a line under the saga, noting that the investigation by the Competition and Markets Authority (CMA) had concluded.

“McGee fully cooperated with the investigation and was granted leniency by the CMA, which led to the agreement of a reduced penalty for the historical wrongdoing,” it said. “The fine was fully provided for in previous accounting periods and has been paid in full, meaning that this matter is now closed.”

Elsewhere in the financial statement, the firm reported no borrowing and a cash position that was almost unchanged on the previous year at £10.3m.

Directors’ remuneration fell slightly from £1.7m to £1.5m, with the highest-paid director receiving £334,000 – down from £348,000 the year before.

An employee ownership bonus of £558,000 was paid after year-end.

Group managing director Seb Fossey said the firm prioritised profitable performance “as opposed to an obsession with scale”, with a focus on large, complex projects in central London, such as demolition and enabling works on a new office development at 7 Millbank.

“Our team of engaged employee-owners have once again delivered a solid set of financial results, and the outlook for the business is very positive as we continue to focus on securing technically challenging opportunities,” he said.

“Having secured some of the largest and most prestigious specialist engineering packages in London, we are inevitably now anticipating that our revenue will exceed pre-Covid levels in [this financial year] and beyond into [our next financial year] while retaining our operational effectiveness.”

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