Ever since economic growth returned in 2012, pundits have been warning of a false dawn, pointing out that while activity has been increasing, productivity has stagnated. On several occasions in this very publication we have reported a guarded appraisal of positive business trends, often with the caveat that a slowdown is likely to be just around the corner.
No such hedge-betting is required when assessing the state of the demolition industry, though. Last year鈥檚 summary of the performance of the UK鈥檚 top 20 demolition contractors showed robust business across the board, despite some mild misgivings concerning the low price of scrap 鈥� an essential string to any demolition specialist鈥檚 bow.
Back then we recorded a near 25% increase in collective turnover for the top 20 demolition firms in the year 2015/16. This year it鈥檚 the same story: revenue earned by the 20 biggest contractors once again rose by almost 23% and broke through the 拢1bn barrier for the first time.
And they鈥檙e not just a bunch of busy fools, either. Overall profitability has improved immensely, up 74% with average margins of 7.9% (2016: 5.6%).
As ever, some companies have performed extremely well; others less so. Six of the 20 firms have seen turnover fall while seven recorded a reduction in pre-tax profits. However, only two actually made a pre-tax loss.
All the figures reproduced here are taken from each company鈥檚 most recent annual results filed at Companies House and cover a trading period from June 2015 to November 2016.
Most of the annual reports have something to say about the impact of the Brexit vote in June 2016, many of them noting a slowdown in orders during the build-up to the referendum and a tentative return of confidence in the months following the result. Not surprisingly, given the agonising progress of ongoing Brexit negotiations, some uncertainty remains on this score.
Keltbray remains at the top of the list with a substantial lead over its nearest competitors. Group turnover for the year to 31st October 2016 was up 35.7% to 拢369.4m and pre-tax profit surged ahead to 拢23.6m, a more than 125% increase on 2015鈥檚 figure of 拢10.4m.
The secret of Keltbray鈥檚 recent success appears to be its strategic diversification into new sectors. Since its acquisition by chief executive Brendan Kerr in 2003, the company has grown from a 拢22m demolition company into a 拢370m leading specialist, providing engineering, construction, demolition, decommissioning, remediation, rail and environmental services across the country.
Keltbray has recently branched out into contract lifting services and has greatly increased its piling activities. In August 2016 the company became a significant player in the concrete structures sector, having acquired the assets of Dunne Building & Civil Engineering, a major reinforced concrete specialist.
Keltbray now comprises four divisions: demolition & civils, rail, environmental materials management, and services. Even when the latter three divisions are factored-out, the demolition & civils division remains the dominant UK demolition contractor with 拢248m of revenue in 2016.
Trailing Keltbray in second place is Erith which also put in a sold performance in 2016. Turnover increased by more than 30% (to 拢134.5m) and Erith made pre-tax profit of 拢8.2m, a margin of 6.1%. Company secretary Steve Darsey commented that the market for demolition remains highly competitive with smaller businesses fostering strong local reputations and larger PLCs competing on price.
Although McGee rose one place in the rankings this year 鈥� pushing John F Hunt into fourth position 鈥� 2016 was not a good year for the business. Turnover actually fell slightly, to 拢70m from 拢74.8m in 2015, and McGee was one of only two companies in the top 20 this year to make a pre-tax loss.
While the parent company, McGee Group Holdings, reported record results for the year (turnover up almost 25% to 拢125m and profit doubling) the demolition division put in a decidedly lacklustre performance, making a pre-tax loss of 拢2.2m on its reduced turnover.
Brexit remains an unknown quantity for the McGee board, which said: 鈥淥n the one hand there is evidence of a reduced flow of projects as clients reappraise their plans in the context of Brexit, whilst on the other a weakened currency increases the attractiveness of sterling investments鈥�.
John F Hunt, meanwhile, might have slipped a place in the rankings this year, but it still managed to increase revenues by more than 40% to 拢68.1m. Profitability suffered somewhat, falling 30%, but Hunt was still in the black with a pre-tax profit of 拢5.3m.
The company says that the Brexit vote temporarily put a brake on business enquiries but that the directors are 鈥渃onfident that
with the expansion of activities both by discipline and geographical location the UK construction sector will provide significant opportunities for the group.鈥�
Birmingham-based DSM Demolition had a very good 2016, almost doubling turnover to 拢68.1m (2015: 拢24.9m) and boosting pre-tax profits by 158%. In fact, DSM鈥檚 拢23m pre-tax profit is the largest of our entire selection with the exception of Keltbray鈥檚 拢23.6m 鈥� and on little more than one-eighth of the latter鈥檚 turnover. These results take DSM up the table to fifth place from number 11 last year.
Just one month after DSM filed its annual report it was announced that the Kelly family, which owned the business, had sold out to a management team backed by investor Metric Capital Partners.
The business has now been merged with brownfield land developer St Francis Group. The new owners believe that the combined businesses have a 鈥渃lear competitive edge鈥�, with DSM鈥檚 technical remediation capability and St Francis鈥� planning expertise combining to allow the group to 鈥渦nlock the value of purchased land assets鈥�.
In contrast to DSM鈥檚 sparkling performance, Storefield Group, Wooldridge Ecotec and Bagnall languish at the bottom of the table with significant reductions in both turnover and profit margin.
Storefield recorded turnover down just over 13% but managed to scrape a pre-tax profit of half a million (from 拢2.3m last year). Bagnall broke even on a turnover down 33% to 拢8.5m from 拢12.7m last year. And Wooldridge 鈥� the only other loss-maker apart from McGee this year 鈥� lost 拢387,248 before tax on a turnover of just under 拢14m. The previous year the company had made a pre-tax profit of 拢600,000 on revenues of over 拢17.5m.
Meanwhile, sitting in the middle of the table at number 10, Squibb Group congratulated itself on 鈥渁 robust set of results鈥� that saw it deliver 拢4.5m of pre-tax profit 鈥� up from less than 拢1m the previous year 鈥� on a reduced turnover of 拢33.4m (2015: 拢43.5m).
The company might have slipped five places on our table, but in terms of financial security, Squibb is looking very comfortable. 鈥淭ight cost control鈥� has been a priority, say the directors, and has been instrumental in the improved profit figure.
Squibb says it started the current financial year with 鈥渁 strong pipeline of projects and contractual entitlements to scrap with a value of in excess of circa 拢10m鈥�. In this, the company is typical of the sector. Even those that saw turnover and profits falter in 2016 seem undaunted and nearly all report a very healthy volume of work for the current financial year.
This article was first published in the April 2018 issue of 今日看料 magazine, which you can read for free at
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