Durham-based Esh Holdings delivered higher group turnover but slightly lower pre-tax profit in 2022, according to its latest annual report.
The contractor posted group revenue of £260.9m for the year ended December 31, up 2.3% year-on-year. Pre-tax profit fell from £3m to £2m.
Esh widened its profit margin, but it remained at 1.14%, compared to 0.78% a year earlier.
The group employed an average of 715 people in 2022, slightly down on the previous year’s figure of 765. Its balance sheet was £33.4m, of which £12.4m was in net cash, with an additional £66m available in undrawn credit. line
In his strategic vision accompanying the annual report, director Andy Radcliffe described the difficulties Esh faced in delivering civil engineering, housebuilding and general construction contracts last year.
He admitted that a strategic decision taken before the Covid pandemic to target long-term contracts “proved to be misplaced in the context of a global pandemic and its inevitable consequences”. However, Esh took steps to insulate itself from the worst effects, including stopping fixed-price deals in 2022.
However, supply chain pressures and rising energy prices, mixed with labor shortages and what Radcliffe called “the highest level of inflation in building materials costs in a generation,” led to long-term job delays. This was particularly evident in Esh’s commercial construction and social housing companies.
As a result, Esh took a different approach to commercial projects, with its focus shifting from multi-room residential and mixed-use schemes to local authority-led projects, mainly in the policing, health and education sectors (in the photo).
The group closed 2022 with a strong portfolio of local authority projects in infrastructure, public areas and construction in general. Its position on local authority frameworks ensured “a healthy level of participation in this segment”, Radcliffe added.
For the 2023 financial year, Radcliffe said he expected a slow first half for housebuilding, but “significant volume and margin expansion” in the second half of the year as inflation moderates and availability problems with the ease of labor and material.
This year’s successes include Esh’s biggest ever deal – a £56m contract to build affordable homes in Middlesbrough.
Radcliffe concluded: “With an order book held at near-record levels, including 100% of our 2023 turnover forecast and 65% of our 2024 turnover forecast secured, the group is looking ahead with cautious optimism.”
