Directors at a family-owned mechanical and electrical specialist are pumping in £4m after legacy projects and inflation created losses.
In its accounts for the 17 months to 31 December 2023, HE Simm revealed its family owners were putting their own cash into the firm and have implemented a new business strategy after its engineering division was hit by inflation on fixed-price contracts, including unnamed London projects.
Chief executive Gareth Simm said: “This has undoubtedly been one of the most difficult trading periods in our history. Rigorous management reviews have been undertaken to ensure any operational performance issues have been recognised.
“We have implemented a newly focused corporate strategy to ensure a strong foundation is in place that is aligned to a return to profitability and excellence in project delivery.”
The accounts for 2023 from the Liverpool-based firm revealed a pre-tax loss of £10.4m.
The previous accounts for the 12-month period to 31 July 2022 showed a profit of £900,000. The firm then changed its accounting period to cover a 17-month period.
The latest accounts revealed turnover was £118.3m. HE Simm had cash at hand of £2.7m and no bank debt. No dividends were paid.
As well as the £4m injection, the firm’s operating model has been overhauled.
Actions taken include a strategic restructuring with streamlined management structures, according to the accounts. The firm also said it was now taking “a more strategic approach to tendering” and rigorous management reviews that include working capital management.
Among ongoing projects projects being delivered by HE Simm are Sisk’s NE02/03 Wembley Park scheme.
Its forward order book stands at £150m and several major projects are due to be completed this year. The firm also forecast a return to profit by the end of 2024.
HE Simm’s future strategy includes targeting “quality work winning opportunities, with customers who we trust and have long-term relations with”.
Gareth Simm said: “Our review has reaffirmed that our focus needs to be on key – trusted – client and supply chain relationships, risk management and profitability, in sectors where we have a competitive advantage and a proven track record.
“The actions we have taken during the reporting period, which was extended to 17 months to accommodate the strategic restructuring, mean that we are already forecasting a return to profitability for the current financial year with operating margins that have recovered to an acceptable level.”
