Willmott Dixon reports loss after supplier collapse cost £13m

Willmott Dixon has suffered a second successive loss after the collapse of a major mechanical and electrical (M&E) subcontractor cost it £12.8m.

Willmott Dixon did not name the subcontractor but said it had been completing works on two unnamed projects when it went under last year, adding that the insolvency caused “significant additional costs”.

“[Those costs were] due to inflation, the associated cost impact on other trades, time implications and the loss of amounts that were expected to be recovered following an adjudication,” Willmott Dixon said in its annual accounts for the year to 31 December 2023.

The losses associated with the two jobs pushed Willmott Dixon to an overall pre-tax loss of £14.4m, an increase from the £8.7m loss it made the year before.

The group’s turnover crept up from £1.15bn to £1.17bn.

The collapsed M&E subcontractor was one of a “small number of significant supply chain partners” that went under, causing substantial price hikes on some projects.

That “more than eroded underlying profits”, Willmott Dixon chief executive Graham Dundas said in the report.

Combined with the inflation and the impact of the Building Safety Act, the firm faced “enormous pressure on customer budgets and the viability of new schemes, often adversely affecting start dates and, in certain cases, the ability to convert preconstruction appointments into full build contracts on acceptable terms”, the firm said.

Willmott Dixon has long complained about the impact of the act on the industry. Rick Willmott (pictured, right), the firm’s current chairman and former chief executive, called the Building Safety Act a “travesty of justice” back in July 2022, saying that the sector had been “thrown under the proverbial bus”.

In the most recent accounts, Willmott Dixon tabled an additional £4.3m increase in costs and legal fees on one residential cladding scheme it had to remediate under the act. Dundas said Willmott Dixon first provided costs for the project remediation back in 2021.

But the contractor also secured £6.6m from subcontractors and other suppliers for remediation works over the course of the year.

“With active mediation and legal processes continuing, we still expect substantially more third-party recoveries against these provisions in future years,” Dundas said.

The contractor also highlighted its work in the net-zero sector, pointing to 23 projects worth more than £500m in total that it worked on in 2023. These included student accommodation at the University of Oxford, net-zero schools in Leicestershire and Preston, and homes in Solihull and Caerphilly.

On top of that, the contractor said it was growing its pipeline of work in the further education, transport and hotel sectors.

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