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Esh Group reports £7m loss amid restructure

Esh Group’s restructure was behind its £6.9m pre-tax loss, the firm has announced in its financial results to 31 December 2018.

The restructure has seen its operating divisions cut from 17 to six while it is exiting “non-core operations” to simplify its business. In 2017 it made a pre-tax profit of £395,000.

Chief executive Andy Radcliffe said: “Many organisations would not have been able to bear the cost of such an exercise without fundamentally challenging their solvency.”

He said the group had “reached a size and scale that was becoming a challenge to manage” after several years of growth.

Mr Radcliffe said the group was able to make such changes because of its financial strength and “years of prudent financial management”.

He added that all the losses in 2018 came from operations that have now been discontinued.

The firm also announced that it is pulling out of Scotland and Cumbria to concentrate on the “North-east, Teesside and Yorkshire”.

Esh chairman Michael Hogan added that the board sees the restructuring of the firm as an “investment for the future”.

Looking ahead, Mr Radcliffe said the company was already seeing profitability through 2019, with what he says is Esh’s largest and most high-quality order book in its history.

Last year also saw turnover decline, dropping to £208.4m from £220m the previous year. In 2016, the firm’s turnover stood at £242m.

Mr Radcliffe said the group’s technology and management structures became outdated and its client base became “confused”.

“We had to change, creating a more balanced business model with a leaner cost base,” he added.

“We now have a more focused management team with clearer accountabilities and have reduced the amount of cash absorbed in working capital and on long-term strategic land projects.”

Since 2016, Esh has invested £8m in technology upgrades to bring “greater control and improved efficiency” to the group.

The group ended 2018 with net assets of £36m and cash reserves of £13m. Mr Radcliffe said that the firm is forecast to be debt-free by year-end.

This year’s CN100 revealed that more of the UK’s largest contractors are cutting overhead costs and narrowing the work they bid for, in an attempt to become financially stronger and more resilient.

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