Underlying pre-profits at industrial services firm Hertel have fallen by 10%, the firm reported.
The Middlesbrough-based maintenance and project services outfit reported a fall in underlying pre-tax profit from £11.3m to £10.1m in 2013, the year immediately after the loss of a major contract at Ineos’ Grangemouth oil refinery.
Hertel said turnover had fallen from £162.6m in 2012 to £147.6m in 2013 as it cut its workforce by 452 during the period.
In accounts filed at Companies House, the firm said its directors were “very happy” with the overall performance during 2013, which had brought strong competition in the market.
It expected 2014 to be challenging with results similar to those in 2013.
Hertel highlighted concerns about the potential impact of a legal case that found against the company in February 2014.
The case initially involved 10 employees claiming for under payment of holiday pay, and has now been appealed to the Employment Appeal Tribunal (EAT).
If the EAT is lost, it is still unclear how the holiday pay would be calculated or the period that would need to be review. Hertel said that while it was unlikely to lose the appeal, further costs in the event that it lost could range anywhere between £1m to £4m, or even escalate higher.
The firm said it has raised the issue with the CBI to flag up to the Government the consequence of recent decisions and the potential impact on the private sector.
In its strategic report, Hertel director David Hall said the directors had continued a program of “very tight” working capital management.
He added: “2013 saw the continuation of strong competition in the market, with clients very active in their management of supplier margins. Directors of Hertel (UK) Limited were very happy with the overall performance of the company in 2013.”
Commenting on the loss of the firm’s Ineos Grangemouth contract, he added: “Whilst this was a significant loss to the company and has undoubtedly impacted on the results for 2013, it is a testament to the hard work and perseverance of all the company employees that the overall normal trading results for the company in 2013 were ahead of expectations.
“This is due to the award of other contracts to the company during late 2012 and 2013.”