Mulalley has reported a pre-tax profit of £566,000 after inflation and building safety costs damaged its margin.
The Essex-based contractor and housing developer saw its turnover drop by £20.8m to £172.6, in the year to 31 March 2024, while pre-tax profit fell by 72 per cent and profit margin fell from 1.6 to 0.3 per cent.
In a strategic report accompanying the latest accounts, director Eamon O’Malley said the construction sector had faced “extraordinary challenges” during the reporting period, adding that a high rate of inflation continued “affecting our costs, our clients’ costs and our supply chain costs”.
He added that “interest and mortgage rates remained stubbornly high through the year, impacting market sales and eroding margins”, while the effects of this on viability had “led many of our public sector and housing association clients to defer or cancel plans”.
O’Malley also said the new Building Safety Act “has resulted in increased risk for contractors and will also require considerable additional costs and time to implement”. This will “further impair the viability of schemes”.
A crux issue for the firm during the year, he said, had been that “time and time again” previously accepted construction solutions had been assessed as non-compliant because they did not meet new interpretations of existing standards.
To counter these issues, the contractor had agreed to only build new schemes when risks are minimised or share with clients. However, O’Malley said this policy had “led to a sizeable reduction in the number of schemes secured and is reflected in our reduced turnover”.
Despite the difficulties, the firm said it was “pleased to report our resilient performance” adding that its “strategic actions enabled the company to navigate these turbulent times in a positive manner”.
O’Malley highlighted the company’s growing maintenance and residential refurbishment workload, which includes “major long-term project wins for many public sector organisations”.
Mulalley’s average number of staff fell from 529 to 505 during the financial year, while directors’ remuneration increased marginally to £667,000, with the best-paid director receiving a package worth £226,000.
