Running a construction company can sometimes seem like a game of snakes and ladders. Take regional contractor Beard, for instance. No sooner does it climb a ladder with healthier turnover and profit in its latest annual results, than a new financial snake appears: the increase in employers\u2019 National Insurance contributions (NIC).<\/p>\n
The Swindon-based firm is now staring down the hefty hit, which is putting pressure on hiring plans and future investment. \u201cWhen we did the budget for 2025 based on having full [staffing] capacity \u2013 \u2018bums on seats\u2019 \u2013 we worked out that [the NIC increase] could cost us close to half a million pounds a year,\u201d financial director Fraser Johns tells Construction News<\/em>. \u201cThat is cash out the door every year that can\u2019t then be spent on hiring and other things.\u201d<\/p>\n \u201cWe don\u2019t want to over-recruit if things become challenging in 2026\u201d<\/p>\n Johns says family-owned Beard has already been reviewing recruitment plans, and the NIC increase could result in a more cautious approach. \u201cWe are probably holding back a little bit on recruitment,\u201d he says. \u201cBut I\u2019d say it\u2019s more because we don\u2019t want to over-recruit if things become challenging in 2026.\u201d<\/p>\n The new cost pressure came shortly after Beard reported a rise in annual profit following a 10 per cent increase in turnover during the 2024 calendar year. The Swindon-based firm recorded revenue of \u00a3198.4m last year, up from \u00a3179.4m the year before. This led to a pre-tax profit of \u00a35.2m compared with \u00a34.3m in 2023.<\/p>\n Beard finished 89th in the most recent CN100 index of top contractors, based on its 2023 turnover. It aims to achieve \u00a3200m by 2025 so the firm almost reached this target a year early, Johns remarks.<\/p>\n Group operations director Mike Hedges attributes Beard\u2019s improved performance not just to an increased workload, but also to overcoming pandemic-era problems.<\/p>\n \u201cWe had a large number of challenging jobs as a result of Covid in 2021\/22, but we have an awful lot less of them now, which really does help the bottom line.<\/p>\n \u201cWe\u2019ve really doubled down on getting the basics right,\u201d he says. \u201cIf we make sure we\u2019ve got the correct checks and balances, we deliver well for customers and avoid challenging projects. If you really focus on the delivery aspect, then good news \u2013 profit \u2013 normally follows.\u201d<\/p>\n Beard has benefited from favourable trading conditions and a tailwind from interest income on cash reserves, which rose from \u00a333.9m to \u00a345.8m last year. \u201cWe had a few hundred thousand pounds additional profit purely from cash in the bank,\u201d Johns says. \u201cBut I\u2019d rather interest rates came down and the industry picked up \u2013 even if it means our interest income goes down.\u201d<\/p>\n The firm\u2019s cost of sales increased by 10.3 per cent but Johns notes this was in line with revenue growth, adding: \u201cIn fact, we did a slightly decent job of upping our margins slightly.\u201d<\/p>\n But the NIC rise and increases in the National Living Wage (up 6.7 per cent to \u00a312.21 per hour) are expected to push subcontractor prices higher. \u201cI\u2019d be very surprised if we don\u2019t see that,\u201d says Johns. \u201cWe\u2019re seeing it directly with our own staff, so we\u2019re going to be seeing it via our supply chain as well.\u201d<\/p>\n Fixed-price contracts account for most of the contractor\u2019s 63 live projects. The firm prefers two-stage tendering as a means of managing the cost and delay risks associated with fixed-price jobs. \u201cThat helps us get closer to our supply chain and understand risk collaboratively,\u201d says Hedges.<\/p>\n While Beard has a broad portfolio of projects \u2013 \u201cfrom changing a tap washer to complex design-and-build jobs\u201d, as Hedges describes it \u2013 the firm targets projects worth up to \u00a330m.\u00a0 Its portfolio of completed jobs includes a \u00a338m renovation and expansion of Rhodes House, the headquarters of the Rhodes Trust in Oxford, and a \u00a315.8m Porsche showroom in Newport, Wales.<\/p>\n Hedges adds that the contractor is noticing more activity in decarbonisation and small-scale retrofits \u2013 \u201cpeople investing in their own assets rather than building from scratch\u201d.<\/p>\n Beard met its target of a 10 per cent annual reduction in carbon intensity from 2019-24 with initiatives such as procuring electric vehicles for staff and installing solar panels across its offices in Bristol, Guildford, Oxford, Southampton and Swindon.\u00a0 \u201cWe\u2019re trying to [implement carbon-reduction measures] ahead of any legislation coming down the line,\u201d says Hedges. \u201cWe\u2019re embedding ESG for the right reasons,\u201d he adds, while also calling for more consistency in how carbon emissions are measured across the sector. \u201cOur emissions measurements are validated by an external expert but I\u2019d suggest that many contractors and firms in the [construction] industry measure things in a different way,\u201d he says.<\/p>\n Hedges adds that Beard is considering signing up to the PAS 2080 carbon management standard.<\/p>\n Beard has embraced a selective approach to technology, as part of its decarbonisation agenda and also to improve efficiency. \u201cWe\u2019ve invested in tablets for site managers, digitalised safety and quality proformas, and launched a pre-induction system that saves 15\u201320 minutes per operative,\u201d says Hedges.<\/p>\n A data capture tool offering Google Street View-style walkthroughs of sites is also in the pipeline. \u201cWe\u2019re not chasing first-mover advantage, but we stay close enough to adopt what works,\u201d Johns adds.<\/p>\n","protected":false},"excerpt":{"rendered":" Running a construction company can sometimes seem like a game of snakes and ladders. Take regional contractor Beard, for instance. No sooner does it climb a ladder with healthier turnover and profit in its latest annual results, than a new financial snake appears: the increase in employers\u2019 National Insurance contributions (NIC). The Swindon-based firm is …<\/p>\n","protected":false},"author":135716,"featured_media":475975,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"ep_exclude_from_search":false,"footnotes":""},"categories":[570,559],"tags":[],"class_list":["post-522847","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-interviews","category-long-reads"],"yoast_head":"\nFraser Johns, Beard<\/h4>\n<\/blockquote>\n