M&E specialist restructures as turnover falls

Mechanical & electrical (M&E) contractor Enerveo has recorded a £22m fall in turnover and a £10.2m pre-tax loss, according to its latest accounts.

The firm posted revenue of £256.7m for the year ending 31 March 2023, with a profit margin of -4 per cent. Turnover fell by 8 per cent year on year compared with the 2021/22 total of £278.9m.

However, a business realignment and an accompanying restructuring programme launched in August 2022 – which led to a decrease in average monthly staff headcount from 1,731 to 1,444 – helped Enerveo to narrow its pre-tax loss by £16.6m compared to a year earlier and reduce its cost of sales by £24m to £201.7m.

In the strategic report accompanying the latest accounts, chief executive Zak Houlahan and director Luca Warnke said that the firm managed to “achieve a break-even position within the final quarter of FY23” and they expected to achieve a profit in 2023/24.

The report described a “strategic realignment that involved exiting unprofitable projects and emphasising projects with higher gross profit potential”.

Redundancy costs almost quintupled from £1.3m to £5.4m as the firm reduced its full-year wage bill by £6.8m to £64m.

Cash at bank eroded from £11.1m the previous year to £1.1m. Current liabilities assumed in the year included an £8.3m debtor-backed facility.

No dividends were paid out in the year.

In their strategic report, Houlahan and Warnke said that in the current financial year, the firm expanded its restructuring programme “so as to improve profitability” by reducing annual overheads by £15m.

The executives said that “project governance was improved by a more stringent gate and review process, helping to identify challenging contracts early, thereby mitigating the impact of their poor performance on Enerveo’s profitability”.

Enerveo fell six places to 60th in the CN100 2023 table of top contractors, with turnover of £278.9m. Its accounts for the year ending 31 March 2022 included a pre-tax loss of £26.8m, which the firm partly attributed to the cost of rebranding and establishing new systems after its acquisition by Aurelius Antelope from SSE in 2021.

Additional separation costs of £3.9m were incurred in 2022/23 as Enerveo set up standalone back-office functions.

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