Turnover and profit each fell last year at offsite manufacturer Merit Group Services, although the firm hopes to see long-term growth from its investments in research and development (R&D) and automation.
The Northumberland firm posted turnover of £79.8m for the 12 months ending 30 June 2024.
This was down 10 per cent from the previous year’s £88.4m, while the group’s pre-tax profit fell 24 per cent from £7.6m to £5.8m.
Merit said political uncertainty had caused project delays and deferments but added that its pipeline of opportunities was “greater than ever” and the size of potential deals had “risen significantly”.
The firm said it had made “significant” investment in R&D, including “almost £8m in new intellectual property (IP)”.
The group also invested £5.7m in fixed assets, including advanced automation to enhance efficiency and shorten project timelines.
It added that additional preassembled modules and prefabricated offsite development subproducts had been designed over the financial year to “further enhance our offering”.
Merit Group Services’ cash at hand fell from £6.9m at the start of its latest financial year to £2.8m by the end of it.
It had £2.8m of cash in the bank at the end of the year – down from £6.9m at the start of it – but this total included a £2.6m overdraft.
The accounts said: “This balance is expected to rise as further profits are retained in the business for future investment in facilities, capital equipment and people.”
The firm had £5.7m in bank loan debt repayable within 12 months, up from £898,645 the previous year.
It also owed £5.4m in loans to be repaid in more than one year, an increase on the previous year’s £4.7m.
The firm’s average number of employees rose from 305 to 357 in the latest year. Its annual wage bill rose from £14.9m to £18.7m.
Merit Group Services said it was in a “net current liabilities position” last June but that was “expected to reverse during 2025“.
Subsidiary Merit Holdings earlier this month insisted its future was “tremendously exciting” despite a huge drop in pre-tax profit in its own full-year results.
Merit Holdings said a “significant” expansion to its second Northumberland factory had been approved, “which will increase our capability to deliver annual turnover to around £450m”.
Merit Holdings added that earnings before interest, tax, depreciation and amortisation – another measure of corporate profitability – had been affected by a change in accounting processes within the wider group, “which has resulted in profits being reduced in subsidiaries and now shown in [parent company] Merit Group Services’ own results”.
Construction News understands Merit Group Services now charges Merit Holdings and fellow subsidiary Merit Health a licence fee for use of its IP.