Bad debt on London hotel job hits McGee for more than £3.5m and sends firm into red

McGee said a bad debt on a London hotel job hit the firm for more than £3.5m last year and helped send it tumbling to a pre-tax loss.

In accounts filed at Companies House, the demolition and groundworks specialist said it was forced to book an exceptional item of £3.6m which it said was a “client bad debt arising from an insolvency on a major London hotel development”.

The job is not named but is understood to be a scheme in the West End.

Earlier this year, John F Hunt revealed it took a £5.1m hit on a another hotel job near Holborn Viaduct after the developer collapsed last year.

McGee said the bad debt and delays to jobs starting sent it to a £2.8m pre-tax loss in the year to November 2025 from a £5.3m profit last time. Turnover was down 11.5% to £134m.

In a note accompanying the accounts, the firm said: “These delays resulted in underrecovery of support costs and reduced operational efficiency across plant, haulage and central functions. Despite these challenges, the underlying performance of McGee’s contract portfolio remained strong, the business retains a robust order book and a substantial pipeline of opportunities.”

It added: “Project selection discipline has been maintained, commercial controls remain robust and client led demand for our engineering-led approach remains strong.”

McGee said cash at the year-end fell to just over £13m from £16m last time with 98% of suppliers’ invoices paid on time. The number of staff at the business at the year-end dropped 8% to 386.

The accounts were signed off in March by outgoing managing director Seb Fossey who was replaced by operations director Bernard O’Reilly in the spring. Fossey is due to formally leave the firm this autumn.

McGee’s current jobs include work at Heathrow Airport and the 50 Baker Street office scheme in London where it has been carrying out demolition and enabling works for Derwent. Main contractor on the project is Multiplex.