Inflation and high labour costs in residential construction did not stop a Lincoln-based contractor from increasing revenue and profit last year.
Lindum Group recorded a slight increase in turnover to £186.2m, up from £185.1m the year before, its accounts for the year to 30 November 2023 show.
Pre-tax profit also rose to £8.1m, from £7.8m the year before, with margin up from 4.2 to 4.4 per cent.
Even so, in the strategic report accompanying the accounts, directors lamented the government’s “seemingly much-reduced focus” on the supply of housing as the sector struggled with high labour costs and inflation.
Overheads increased in the year by £1.4m, which Lindum attributed mainly to higher staffing costs, “as well as the inflationary effect in particular on insurance and IT costs”.
The firm noted the slight increases in turnover and profit came despite lower sales in the housing market. It warned the sector had been hit by “political uncertainty” across the board with the general election looming.
“Specifically to the construction sector, spending plans [were] altered in terms of large infrastructure projects, green targets and a seemingly much-reduced focus on the supply of UK housing (affordably or market) by the current government,” it said.
It said inflation was the “dominant factor for 2023”, adding that the uncertainty hit larger projects in particular.
“Demand in the construction sector was reasonably resilient, although higher underlying prices and more expensive funding costs meant that more caution was naturally applied to viability, affecting commencement of larger projects in particular.
“Conditions also meant that work by property developers across the wider construction sector reduced significantly, as did housebuilder activity.”
Lindum also noted a reduction in price volatility and inflation as 2022/23 progressed, which “allow[ed] for better cost control for our contracting work”.
The firm was ranked 80th in the CN100 table of top contractors last year. It employed a monthly average of 631 staff in 2022/23 and paid out a £1.4m dividend to shareholders.
Lindum was active mainly in the industrial, commercial, social housing and education sectors last year. The contractor described “sensible job selection”, which allowed it to avoid too much exposure to cost increases and inflation.
In its outlook for the year ahead, Lindum warned of “tough trading conditions” with inflation, high interest rates and UK political uncertainty all playing their part.
However, the firm is debt-free and reported a cash position of £61.9m, up from £56m the previous year.
Lindum’s then-chairman David Chambers (pictured on right), said: “Our current balance sheet shows a £63.9m net asset value, with no borrowing, giving confidence to customers that we are in a position to carry out what we promised.”
Chambers, the son of Lindum founder John Chambers, has now stepped back from the role of company chairman to become a non-executive director. His sons, Freddie and Edward Chambers, replaced him as co-chairs from 2 April this year.
