Turnover rises but profit falls at HW Coates

Leicester-based packaged chemicals logistics provider HW Coates Holdings has declared another rise in turnover for its last financial year but a significant decline in profits.

In the year to 31 December, the group – which includes haulage and warehousing firm HW Coates, a majority stake in The Hazchem Network, and recently acquired document storage specialist Whitefoot Forward - raised overall turnover by 7% to £40.49m (2013: £37.84m). Pre-tax profit, however, fell just under 27% to £7.13m (2013: £9.76m).

The rise in revenue follows two years of substantial growth: in 2012, the firm recorded a 4% rise in turnover and a 34% increase in profit; while in 2013, turnover rose a further 10% with a near 20% increase in profit.

Commenting on the group’s 2014 results, MD Tom Coates said the fall in profit was down to driver wages and compliance costs.

“Our topline growth was pleasing. Our margin decline was down to increased drivers’ wages and a dramatic increase in compliance costs at our chemical warehouses. There will necessarily be a lag as market prices rise to recover this investment,” he said.

Wages and salaries at the group rose by over £1m during the year, based in part on an increase in drivers and warehouse staff from 199 to 217.

“Capital expenditure was up at over £5m invested in 2014,” added Coates. “We plan to maintain this level of investment for the foreseeable future as we extend our leadership position in COMAH warehousing and keep expanding The Hazchem Network.”

Coates declined to comment on the acquisition of Whitefoot Forward during the year.  The accounts show, however, that the 25 year-old firm, based near Kidderminster, was acquired for a consideration of £3.1m on 31 October. It provides document storage and records management, including collection and delivery of records, water- and fireproof storage and a secure destruction service.

Separate accounts for subsidiary HW Coates showed it generated the vast majority of turnover for the group in 2014 at £32.68m (2013: £29.06m), with profit before tax of £7.01m (2013: £8.26m). After tax, HW Coates provided a £5.8m profit for the group, while The Hazchem Network provided £207,000 and Whitefoot-Forward £378,000.

The accounts also showed that HW Coates subsidiary Coates Scotland, which in 2012 returned an aggregate loss of £48,000, ceased trading on 1 October 2013 with all assets and liabilities transferred to HW Coates.