GMI Construction has bounced back to a profit after applying stronger risk tests around taking on large building projects.
The contractor said its stronger focus on the risk of larger projects was a “critical factor” in it scoring a pre-tax profit of £916,000 for the year to 30 September 2023, in comparison with a loss of £2.3m the year before.
It also pointed to a policy of “controlled consolidation”, which allowed for a dip in turnover but focused on moving the company back into profit.
“A critical factor in GMI’s increased profitability, and continuing forecasts of future profits, was the decision to apply tough stress tests relating to the financial risks of larger projects,” GMI said in its accounts.
“Our pricing will always be realistic and we are watching the respected economic forecasts with great care to ensure we can accommodate wider economic factors when triaging new work to establish the value/cost and risk elements.”
Turnover was down at £328.5m, compared with £360.3m the previous year. But GMI’s new turnover was still head and shoulders above the £120.7m it reported in the year to 30 September 2021.
The contractor also highlighted a push for “sustainable profitability”, which involved focusing on “risk-averse investments” and selecting projects with “robust business partners”.
In particular, it noted a £1.9m investment it made last year into technology and “responsible business practices” as it prepared for new legislation that was set to come in at the end of the year around the Building Safety Act and the golden thread, and the impact it would have on business.
GMI also highlighted a number of IT investments that improved productivity. “[The new IT also] is making a real impact into the cost control of major projects, by providing real-time information on material and manpower to project leaders,” it added.
GMI’s cash position was £10.2m at the end of the year, compared with £33.7m the previous year. It also remained debt free.
Looking ahead, the firm said it had already secured £232m worth of turnover, and that it had a “robust pipeline” of work in sectors including student accommodation, hotel, build-to-rent, and the industrial and commercial sectors.
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Joshua Stein