Simm family injects £4m after losses from old contracts and inflation

Directors of a family-owned mechanical and electrical specialist are pumping in £4m after losses from old projects and inflation.

In its accounts for the 17 months to 31 December 2023, HE Simm revealed that the family owners had invested their own cash into the firm and were implementing a new business strategy after the 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 conducted to ensure that operational performance issues are detected.

“We have implemented a newly focused corporate strategy to ensure a strong foundation is in place for a return to profitability and excellence in project delivery.”

The Liverpool-based firm’s 2023 accounts revealed a pre-tax loss of £10.4 million.

Previous accounts for the 12 months to 31 July 2022 showed a profit of £900,000. The firm later changed the accounting period to cover a 17-month period.

Final accounts revealed turnover was £118.3 million. HE Simm had £2.7 million in cash and no bank debt. No dividend payments were made.

In addition to the £4 million injection, the company’s business model has also been overhauled.

According to accounts, the measures taken include a strategic restructuring with modernized management structures. The firm also said it was now taking a “more strategic approach to tenders” and rigorous management reviews, including working capital management.

Ongoing projects delivered by HE Simm include: Sisk’s NE02/03 Wembley Park scheme.

The forward order book stands at £150 million and many major projects are expected to be completed this year. The firm also predicts a return to profits by the end of 2024.

HE Simm’s future strategy includes targeting “opportunities to win quality business with customers we trust and with whom we have long-term relationships”.

Gareth Simm said: “Our review reaffirmed that in sectors where we have a competitive advantage and a proven track record, our focus must be on key – trusted – customer and supply chain relationships, risk management and profitability.

“The actions we have taken during the reporting period, which has been extended to 17 months to accommodate the strategic restructuring, mean that we now anticipate a return to profitability for the current financial year, with operating margins recovering to an acceptable level.”