IN Brief:
- McGee reported a £2.8m pre-tax loss after recognising a £3.6m bad debt linked to an insolvent London hotel client.
- Turnover fell 11% to £134m and reported EBITDA margin dropped to 1.2%, although underlying margin was 6.5%.
- The contractor ended the year with £13.3m cash and expects delayed projects and recent awards to support recovery.
McGee has reported a £2.8m pre-tax loss after recognising a £3.6m bad debt arising from the insolvency of a client on a major London hotel project. The exceptional charge reversed the specialist contractor’s £5.3m profit in the previous year.
Turnover fell 11% from £151m to £134m in the year to November 2025. Reported EBITDA margin dropped to 1.2%, although McGee said the underlying margin before the hotel bad debt was 6.5%, slightly above the 6.3% recorded a year earlier.
The results were also affected by delays to several project starts. McGee operates substantial engineering, plant, haulage, and central support functions, so postponed mobilisation does more than defer revenue: resources remain available while the projects expected to absorb their cost have not yet begun.
That reduced utilisation during the year and left the business under-recovering part of its fixed cost base. The effect shows why a strong order book does not automatically translate into healthy contractor accounts when start dates continue to move.
McGee finished the year with £13.3m in cash, compared with £16m previously. The company said it remained free of conventional debt apart from normal equipment finance and reported a 98% on-time supplier-payment record.
The balance sheet gives it more room to manage delayed workload than a heavily leveraged contractor would have, but the £3.6m bad debt demonstrates the concentration risk that can exist on individual construction projects. A specialist can have labour, plant, design, materials, and subcontract commitments tied to work for which payment becomes uncertain when a client or counterparty fails.
That exposure can remain after work has been completed or certified. Unpaid valuations, retentions, variations, and final-account positions can all survive into an insolvency process, leaving the contractor to absorb a cash shortfall while continuing to fund its wider business.
For specialist contractors, the problem is particularly acute where individual projects account for a large share of annual turnover. One bad debt can distort the result for an otherwise profitable operation, as McGee’s underlying EBITDA figure indicates in this case.
The business expects performance to improve as delayed projects move into construction and recent awards begin generating revenue. Current workload includes projects at Heathrow Airport and 50 Baker Street, alongside data-centre work and a large unnamed West End scheme involving complex basement and below-ground structures.
Those awards sit within McGee’s core market for technically difficult enabling, demolition, logistics, groundworks, and structural construction. The contractor is also using its McGee Consult engineering operation earlier in projects to address buildability, logistics, planning, temporary works, and construction methodology before packages are fully fixed.
Earlier engagement can improve visibility of future work and allow a specialist to influence design decisions that affect its eventual construction risk. On constrained London schemes, excavation sequence, basement design, temporary works, vehicle movements, lifting strategy, and interfaces with neighbouring buildings can all influence programme and cost long before physical work begins.
It does not remove the risk of delayed mobilisation. A contractor can commit substantial pre-construction engineering resource while planning, funding, procurement, or client decisions continue to move the start date. Businesses with specialist plant and directly employed teams then face the additional problem of keeping that capacity productive elsewhere.
That makes project selection and programme visibility as important as headline order-book value. Turning down poorly priced or excessively risky work can protect margin, but a specialist with significant fixed resources still needs sufficient live projects to recover its overhead.
McGee’s latest result reflects both sides of that equation. The underlying operation remained profitable before the exceptional hotel debt, yet delayed starts still weakened utilisation and contributed to lower turnover.
The contractor’s cash position and new awards provide a base for recovery, but the next reporting period will depend on whether those schemes mobilise when expected. After a year dominated by one insolvent client and several delayed starts, predictable project timing and payment will matter more than another increase in nominal pipeline value.
