Employee-owned contractors are gaining popularity in the business world, offering a fresh and innovative approach to company management. One noteworthy contractor making waves with a remarkable 40% increase in earnings is Neilcott Constructing. This success story underscores the advantages of employee ownership and its positive impact on financial performance. In this article, we will explore the details of Neilcott’s impressive achievement and analyze how employee ownership can drive growth and success in the corporate landscape.
Neilcott Constructing, an employee-owned business, experienced a substantial increase in turnover and pre-tax earnings in the previous year. The company’s 2023 financial records, recently filed with Companies House, revealed a revenue of £138.9m, a significant rise from £100.3m in the preceding year. While pre-tax earnings saw a more modest growth from £2.6m to £2.9m, it still represented a 12.7% year-on-year increase.
David Huxley, the managing director, described the company’s performance as commendable, considering the challenges posed by inflation throughout most of 2023. Neilcott transitioned to an employee-owned trust in 2021, and its improved financial results enabled the distribution of a total of £250,040 to eligible employees. Progress has been made in restructuring the board since the shift to employee ownership, with plans for further changes in mid-2024 to facilitate the departure of three current board members.
Notably, Neilcott operates without any bank loans and reported a £4.7m boost in cash reserves, closing 2023 with £17.8m in the bank. The company’s headcount slightly increased from 152 in 2022 to 159 in 2023, with an annual wage bill of £13.7m. With 75 active projects, Neilcott’s scope of work includes office fit-out projects like the one on Tottenham Court Road in London, alongside modern building and refurbishment solutions.
In his strategic report accompanying the annual accounts, Huxley highlighted that Neilcott’s turnover only represents a fraction of the potential workload available in their immediate market. By maintaining flexibility and high delivery standards, the company aims to navigate market fluctuations effectively. Neilcott expanded its reach by opening a new regional office in Hemel Hempstead in 2023, complementing its existing offices in Orpington and Winchester to enhance project delivery in northern London and the surrounding areas.
Looking ahead to 2024, Huxley anticipates a similar turnover to 2023 as the market stabilizes. He projects an improvement in overall gross margin towards historical levels, with accelerated capital contributions stemming from the transition to employee ownership. However, he remains cautious about trade risks associated with geopolitical issues, particularly those related to the Suez Canal and the ongoing Middle East conflict.
