Wed, 09 Oct 2024 | ADMINISTRATION
Hampshire-based mechanical and electrical (M&E) specialist HBS Group Southern has collapsed into administration after more than 70 years of trading.
HBS Group Southern was founded in 1950 by Harry Bull, initially operating as a plumbing and heating contractor providing services across Hampshire. The company had remained family-run since it was founded, with Charles Bull taking over from his father Kevin Bull as Managing Director three years ago, becoming the third generation to run the group.
The company had expanded to become a major M&E specialist in the south of England, providing specialist services throughout the region and working with most of the major housing developers on projects across the area.
Despite being such a well-established business in the south, the group had been hit by a number of headwinds impacting the wider construction industry over recent years, as reflected in recent financial accounts.
In reports filed with Companies House earlier this year, for the year ending March 31 2023, the group reported turnover of £15.5 million, down from £16.4 million a year earlier, while its gross profit margin decreased to 11 per cent, compared to 14 per cent in 2022 and pre-tax losses widened from just under £1 million to £1.1 million.
In a directors’ report attached to these accounts, the company stated that the “main contributing factor” to its drop in gross profit margin was “the increasing cost of materials and labour”, with regular, volatile increases in material costs as a result of supply chain disruption, as well as “rising inflation having a direct impact on manufacturing costs.”
According to directors, HBS had “a strong pipeline of work” coming out of the COVID-19 pandemic, but “exceptional” material price increases occurring “almost on a monthly basis” meant that these did not deliver profits.
In addition to the impact of material cost increases, the company also cited “a significant slowdown in developers decision making process” amid the rise of flexible work post-COVID, which impacted its ability to win work.
Meanwhile, it stated that labour costs increased as a result of “a number of emerging small subcontractors with significant smaller overheads, who were able to submit considerably lower bids”. According to the company, “developers were eager to take advantage” of this, in order to increase profits, creating higher demand for skilled labour and ultimately increasing costs.
At the time, HBS Group Southern’s fixed assets were valued at £1.17 million and current assets at approximately £7.6 million, with net assets amounting to £4.1 million, down from £5.36 million a year earlier.
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