Profits take a dive at Northern Ireland engineering firm
NI projects hit by crisis at Stormont, claims group
Mechanical and electrical engineering business Harvey Group plc has said Stormont instability is affecting future projects.
The Newtownabbey-based company also announced a loss of £326,000 connected with the acquisition of a company in England in its annual report and financial statements.
But the group, which includes Solmatix Renewables, said it was still confident about the coming months after a disappointing year. Its projects have included the Waterfront Hall, Titanic Belfast and Kingspan Stadium, as well as hospitals and universities in England.
A strategic report filed with the results said: "Government instability has created uncertainty regarding the commencement of capital projects in Northern Ireland. There is a reduction in government support for renewables."
For the year to August 31, 2016, Harvey Group reported turnover of £32.2m compared to £34.3m the previous 12 months.
It also made a pre-tax loss of £326,434 after last year's £766,039 profit.
The strategic report said: "The company has encountered problems associated with the acquisition of Blair Electrical Ltd, which have been addressed.
"This has resulted in profits being lower than expected."
The group's operating loss was £528,225, compared with operating profit of £513,953 a year before. The loss followed a charitable donation of £341,850, and amortisation and write-downs relating to acquisitions of £561,933.
Within the group, the firm said Harvey Group plc had operating profits of £631,000, while Blair Electrical, based in Dunstable, suffered an operating loss of £239,000, and Solmatix lost £18,000. There was goodwill of £562,000 written off, leading to a total operating loss of £528,000.
It said the availability of key employees and site operatives was challenging, adding: "The group has been experiencing lower margins in Northern Ireland due to difficult market conditions and strong competition. The group's competitiveness is subject to ongoing review by the directors."
It said stability at the firm was dependent on monitoring the financial well-being of its main contractors.
A directors' report said: "The markets within which the group and company operates can be challenging, and in particular, future plans may at times be subject to factors outside the group and company's control.
"Notwithstanding this, the directors' expectations are that the group's and the company's financial performance will continue to be satisfactory for the foreseeable future upon review of current forecasts."
Job numbers at the firm grew from 106 to 138 in the year ending August 31, 2016.
Looking ahead, the company said: "Financial projections and management accounts for the year to August 31, 2017, show the company and the group trading profitably."
And it said the firm had secured further contracts and small works with customers based on long-standing relationships during the year.
"The company and group continue to actively seek new work in Northern Ireland and Great Britain, and continue to explore opportunities in the Republic of Ireland."
Overall, the company said: "The market has been difficult and lower margins have been experienced in Northern Ireland. There has been growth in the market in Great Britain.
"However, our acquisition of Blair Electrical Ltd had not been a success and has adversely impacted our profitability."
The group opened a new office in Dunstable, where Blair Electrical is based, last year. It acquired Solmatix in August 2015.