Contractor admits it paid out staff bonus in November 2021, expecting to make profit
A bust subcontractor and a client which kept changing its mind on a stadium contract helped send Buckingham nosediving to only its second annual pre-tax loss in more than two decades of business.
The firm said it racked up a £14.2m loss on the unnamed stadium job – thought to be its scheme to build a new stand at Fulham’s Craven Cottage ground – bringing to an end five successive years of profit with a pre-tax loss of £10.7m for 2021.
And in accounts filed at Companies House just before Christmas, the firm admitted it paid out a profit-related bonus in November 2021 because it was still forecasting to be in the black for the year. “This is the first year when the final results have reversed so sharply from this stage,” it said.
Buckingham, which beat Sir Robert McAlpine to the Fulham contract four years ago, said a supplier went into administration on the scheme in February last year.
It added: “More than 50% of this contract loss relates to the very significant cost impact caused by the financial failure of a major and critical subcontractor.”
Roofing firm Kaicer, which was installing an aluminium standing seam roofing system on the new Riverside stand, sank 11 months ago with the pandemic being blamed for its collapse.
But Buckingham also said the job, designed by Populous, the third architect to work on the scheme, was hit by a “significant degree of client change”. It added: “The contract is now substantially completed but is the subject of ongoing contractual negotiations.”
The lower tier of the stand, which will take the ground’s capacity up from 25,700 to 29,600, was opened last summer with the remainder due to open this summer.
Buckingham said its numbers were further wrecked by a £7.4m bill for the cost of dealing with covid-19 on top of the £5.3m it shelled out the year before. The £7.4m figure included “the cost of unrecoverable project delay impacts”, it added.
And it said it spent £1m on the transfer to an employee ownership trust, including the “celebration” staff bonus, with the firm, which employed 660 people at the end of 2021, adding it has splashed out £12m on bonuses to staff between 2017 and 2021.
The costs meant Buckingham sank to a £10.7m pre-tax loss in the year to December 2021 from an £8.6m profit last time. Turnover was up 14% to £665m.
It said its order book was around £1.1bn with income for 2022 set to be close to the £665m it posted in 2021, with the figure expected to rise to £700m for 2023. It added that it had £77m of cash in the bank at the end of 2021.
Buckingham did not say whether it would return to profit when it files its 2022 accounts later this year but flagged increases in energy, material, labour, fuel and plant costs as among the issues it was dealing with.
And it warned that its logistics business, which includes building warehouses and distribution hubs for clients including Prologis and Panattoni, would be hit by reduced margins because deals had been agreed before the war in Ukraine started last February.
It admitted: “With more than 80% of 2022 logistics projects in contract by the time the conflict commenced, there will inevitably be an adverse impact on 2022 margins.”
Its biggest business by turnover remains building with an income of £260m while its HS2 business, set up in 2020, was 25% above target with revenue of £56m.
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