The financial year is one month old and June is closed in Xero, so before the forward look here is where it leaves us. Revenue landed at £171,468, within £1,424 of what the May forecast expected, but gross profit came in at 22.2% against the 32% the jobs are priced at, and that lost margin runs straight down to a net result of (£6,742). The sections below show exactly where it went.
The year needs about £47,500 of gross profit a month to cover overheads and the directors' charge, so £47,500 over 1 month. The closed month banked £38,088, which leaves it £9,412 behind pace. That shortfall folds into the rest of the year rather than being a hole to claw back on its own, but it means the front half has no cushion to give.
The closed month came in at 22.2% gross against the 32% the jobs are priced at. Each bar starts from the gross profit the month should have made at its priced margin and shows where the rest went. The table beside it walks the same month all the way down to the net result.
| Revenue | £171,468 |
| Direct costs | (£133,381) |
| Gross profit · 22.2% | £38,088 |
| Overheads | (£34,070) |
| Operating result | £4,018 |
| Finance · directors' charge | (£10,760) |
| Net result | (£6,742) |
The margin lost on delivery was mainly Staveley electrical labour and materials running over their estimate, and a small operating profit still survived before the directors’ charge.
Below the gross profit line, the other cost block is overheads. Across the closed month they ran £264 over a £33,806 budget. The run rate is broadly on budget. What is worth naming is the mix.
| Overhead line | Budget /mo | Jun | Read |
|---|---|---|---|
| Business insurance | £2,060 | £2,978 | Over in June; the excess is Vitality health, budgeted as cancelled |
| Vehicle fuel | £2,400 | £2,824 | Over, on top of the £900 a month already added to the budget |
| Digital marketing | £245 | £1,004 | Higher by design, and the directors are aware of it |
| Vehicle hire | £2,830 | £1,353 | Running under; a saving of about £1,250 a month if it holds |
Business insurance ran £918 over budget in June because it still carries Vitality health at about £1,020 a month, against a budget that assumed it cancelled. Either the budget line moves up or the policy goes; it should not sit as a standing variance.
Each closed month measured against what the forecast prepared the month before expected for it. The pattern is worth naming: revenue ran ahead of the forecast in the month, so the pipeline is converting. The gap was margin, not a shortfall of work.
Revenue came in almost bang on. The whole miss was margin: the forecast expected a low thirties gross, the month delivered 22%, and that lost gross profit runs straight down to the net result.
Revenue of £171,468 was within £1,424 of the forecast, so the pipeline is converting into work on site. Sales is not the problem one month in; what that work earns is.
June delivered 22.2% gross against a 32% priced margin, and the largest single cause is Staveley electrical labour and materials running over their estimate. £16,782 of margin was given up on delivery, which is more than the £9,412 the month finished short of break even pace. Every point recovered here is worth more than the same revenue won elsewhere.
A single closed month sets a marker rather than a trend. July will show whether the margin recovers, and the year to date review builds from there a month at a time.
June is an official actual from Xero, restated to the official performance with the dividend halved for the May timing slip. The finance line is the flat directors' charge used in the model, not a bank cost, so the operating result is the truer read of trading.