An HS2 tunnel boring machine
The government’s decision to scale back the High Speed 2 (HS2) rail project has hit Kilnbridge’s bottom line, the specialist contractor has revealed in its latest accounts.
The East London-based building and civils contractor posted turnover of £85.9m for the 12 months to 30 June 2024.
This was down 28 per cent from the prior year’s £120.1m, when turnover grew by 23 per cent.
Kilnbridge executive chairman Dermot McDermott said the business was “impacted somewhat by the cancellation of the Northern and the Euston leg of HS2”.
Then-prime minister Rishi Sunak announced the cancellation of the Birmingham to Manchester leg of HS2 in October 2023.
The Conservative government planned Old Oak Common as a temporary London terminus for the line before it would have made a final decision whether to terminate at Euston, as originally planned.
But last October, Labour chancellor Rachel Reeves confirmed HS2 would reach Euston.
Kilnbridge finished ninth in last year’s CN Specialists Index for concrete contractors and became an employee-owned trust in March 2021.
Its latest accounts showed its pre-tax profit more than halved from £3.8m to £1.5m.
As a result, the firm’s margin narrowed from 3.2 per cent the previous year to 1.7 per cent.
But McDermott said that “prudent financial management ensured we maintained a strong balance sheet, positioning us well to pursue tender opportunities”.
He added that the firm’s secured order book reached a record £200m at the end of its financial year.
And it increased its cash holdings by £3m to £10.4m, while remaining free of bank loan debt.
However, the firm paid out dividends of just £1.8m last year compared with £6m the year before.
McDermott said the year to 30 June 2024 had been “transformative” for Kilnbridge.
“We announced a significant transition in our leadership team in May [2024],” he added.
McDermott himself stepped back from the chief executive role, 33 years after founding the company, to be replaced by Owen Dannatt, former chief operating officer at Shard developer Sellar.
At the same time, Tom Sullivan was appointed as chief operating officer and executive board director, responsible for managing risk and all internal operations.
“Since Owen joined we have been reviewing the company’s structure and making changes that affect how our business is governed,” said McDermott in a report accompanying the latest results. “This work is still in progress.”
The contractor’s average monthly headcount dipped slightly from 353 to 343 employees in the most recent period.
Its annual wage bill also fell from £25.6m to £25.2m.
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Greg Pitcher