Read our UK Construction Report

MHA UK Construction Report 2018

Our MHA Construction and Real Estate team looked at operating and accounts data from 1,708 construction companies with operations across Great Britain. By splitting the data into six turnover brackets, you can benchmark your financial and nonfinancial data against similar sized businesses.

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2018 trends

It is clear from our analysis of UK construction companies with a turnover of up to £200m that, regardless of how companies may operate, there are a number of common trends:

  • The sector has seen turnover rise, gross profit margins hold steady (for now at least), and PBT continues to improve. This reflects the growing pressure of the prevailing workload and other supply-side factors.
  • Surprisingly, growth has been evenly spread across all sizes of business.
  • Highest gross profit margin was within £5m-10m and £10m-25m T/O.
  • Sales growth year on year is slowing down, reflecting concerns over Brexit no doubt.
  • Profitability is helping to improve working capital ratios.
  • Profits are being retained, but there is no obvious strategy of increasing retentions above historic levels. When the downturn comes, which it always does, it may cause commercial failures.
  • London reports a significant downturn in capital expenditure which must be a concern as it suggests companies are not investing in plant and technology.

Regional Analysis: South East

The South East’s performance has in general been in line with the overall trends identified on a national level, with the larger companies enjoying the benefits of greater profits. Over the past three years, the sector in the South East has experienced overall growth of 7.8% in activity terms. Sector employment in the region has also increased.

Maximising Opportunities

The current year will be another challenging year for the sector. Risk management will be more important than ever, ensuring that the contracts construction companies enter into are properly costed and fully understood, with parties they can rely on and who will pay. Carillion has to leave its mark surely.

The key for business owners is to continually appraise their business, in order to maximise the opportunities available and avoid potential pitfalls. Tax can play a significant part in those opportunities. Some of the potential areas of opportunity we are working with our clients on include R&D tax relief, capital allowances, SDLT, VAT and Land Remediation Relief.

 

Please get in touch on 01293 227670 if you would like to discuss the findings of the report in the context of your own business.