Higgins Group has bounced back to profit after it “robustly” performed in the face of higher inflation and interest rates, and building safety costs.
The Essex-based contractor also confirmed legal provisions of £10m for building safety, including for an unspecified claim around water ingress and fire safety regulations.
It recorded a pre-tax profit of £278,000 in the year to 31 July 2024, a year after it slumped to a pre-tax loss of £25.8m, which it blamed on “project viability issues”.
But Higgins said it had “performed well” in the most recent year, pointing to its “robust management of working capital”.
Turnover was also up at £208.3m from £171.9m, due to the firm achieving “robust sales” and also because it had “sensibly managed” the impact of inflation and increased interest rates.
The contractor acknowledged that inflation and interest rates “affected consumer demand resulting in a slowed sales rate and adding further pressure to project viabilities”.
Over the course of the year, it completed 530 homes across eight projects.
But Higgins Group also confirmed spent £4m in the year on building-safety-related rectification works – and also confirmed legal provisions of £10.0m.
Some of that figure relates to a single claim regarding one site “with a number of defects relating to water ingress and compliance with fire safety regulations”.
But Higgins said it believed it has a “very strong defence” against the claim.
“[There is also the] likelihood of being able to recover any settlements through counter claims against the supply chain and through insurance,” it added.
Higgins expects to pay out the provisions within two years.
In September, the Grenfell inquiry published its final report.
The report said: “[The findings] do not have a direct impact on Higgins Group as the company remains committed to its approach of co-operation with clients to agree a remediation strategy.”
The contractor said that the requirements of the Building Safety Regulator, and a “challenging planning system” have led to uncertainty and delayed project starts, particularly in London.
Higgins also detailed a “contingent liability” faced by one of its joint ventures – Myatts Field Development – which its subsidiary Higgins Homes has a 50 per cent stake in.
The JV – established to regenerate an estate in the Oval area of London – owed an additional payment to Lambeth Council, which it exchanged documents on after the end of the financial year.
Looking ahead, Higgins detailed an order book and development pipeline in excess of £1bn, and said it scooped spots on six frameworks during the year, and four individual projects.
Its return to profit follows a restructure, with job cuts, in June 2023, when its chairman and director retired.
Brothers Declan (pictured left) and Dominic Higgins (pictured centre) became chief executive and chief operating officer respectively, while their cousin William Higgins (pictured right) became group executive director.
All three are grandsons of Derek Higgins, who founded the business in 1961.
