One of the largest privately-owned contractors in the North of England has posted a 50 per cent increase in pre-tax profit for 2023 as its robust business model continues to yield results.
While the construction industry continued to wrestle with a range of challenges during the year, Esh Group reported pre-tax profits of £3.1 million, up from £2 million the previous year.
The firm’s portfolio centres on work for local authorities, utility and environmental companies, registered affordable housing providers, as well as the private housing sector, and Chief Executive Andy Radcliffe is looking to the future with the largest forward order book in its 25-year history on the horizon.
He said: “Our strategically designed business model stands out for its inbuilt resilience. At its core is the ability to even out the peaks and troughs of the construction industry’s demand profile over the economic cycle – this design has proven a success and seen us through the challenging times that the industry has experienced over the last few years.
“Our headline order book figure is substantial, and crucially it provides over 10 years of pipeline visibility for the group. Having invested heavily in capacity, resources and technology, we are equipped to execute our strategic growth plans and are actively seeking further opportunities within our core markets, and so expect to see both turnover growth and margin expansion over the coming years. Despite the broader economic picture demonstrating a degree of volatility, we remain optimistic about the future.”
Esh Group continued its focus on driving capital efficiency across all operations, leading to an increase in liquidity to £23 million, up £4 million from the previous year, whilst remaining debt free with nothing drawn on its £6 million credit line.
Whilst turnover remained at £261 million, improvements in both its contracting and development performance resulted in the reported increase in pre-tax profits.
Radcliffe added: “During the year, we concluded a wide range of projects that were heavily impacted by post-pandemic supply chain and inflationary pressures, which was no mean feat and a major milestone which gives rise to a more favourable back drop for 2024. These negative factors were more than offset by stronger performances on newer contracts, which were supported by considerable improvements in operational execution.
“Coupled with the inflationary environment remaining relatively benign, we are continuing to see buoyancy in our target sectors. The desire to rebalance economic prosperity across the country is driving funding for major infrastructure and regeneration schemes, whilst the ongoing demand for new social housing stock and retrofitting of existing stock in line with decarbonisation targets has continued to fuel growth.
“We are also confident that the core policy agendas for the new Government will provide a favourable back drop for our chosen market segments, and therefore see only positives for our business on the back of the election result.”
Esh Group’s forward order book across its civil engineering, affordable housing, commercial build, and private housebuilding divisions has seen a remarkable increase in the year. The investment programmes for improving wastewater and flood management infrastructure have skyrocketed – the AMP 8 period will be the biggest programme of work the sector has seen – and Esh has secured its place on five capital delivery frameworks with Northumbrian Water Group and the Environment Agency.
The 750-strong contractor has seen considerable market share growth within the affordable housing sector, most notably the Seaham Garden Village development where work has begun on the first phase of 750 affordable homes in partnership with Karbon Homes. The pivot towards increasing land led developments is also paying dividends, with Esh having the largest pipeline of this route-to-market since embarking on the strategy.
In the private housing market, Esh’s private housebuilding division, Homes by Esh, is on course to nearly double its number of live developments in the North East before the end of 2024.
Flagship schemes including the landmark restoration of the Tyne Bridge – one of the most complex and challenging engineering projects the North East has seen in recent years – and the ‘transformational’ Stockton Waterfront Urban Park feature in Esh’s civil engineering major projects portfolio.
Radcliffe concluded: “We will strive to become the trusted expert for our clients, with a laser focus on quality, health and safety, dependability, and innovation, whilst continuing to deliver one of the most comprehensive social value offerings in the industry.
“In April this year, we held an event which brought the whole group together to learn about our overarching strategy and divisional business plans. We did this because we are a business of many parts, specialities and expertise, and a key factor in delivering the next stage of our strategy is our team of highly skilled and dedicated colleagues, each of whom have a part to play in this exciting journey – and as always, we are enormously grateful to our valued clients and our loyal supply chains for their continued support.”
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