Despite the unprecedented economic events of 2008, north east construction company Esh Group has succeeded in delivering an underlying profit and has preserved balance sheet strength in a difficult year.  The Group’s operations span commercial build, civil engineering, social housing, facilities management, house building and construction support including fencing and landscaping.

Turnover was £156.7 million; an increase of 3.1% on 2007.  Contracting profits were strong, producing over £6m pre-tax profit, outperforming most in this sector.  However, overall the Group made a loss of £6.4m due to housing division losses.  Dunelm Homes, which is ring fenced from the main Group, sustained £3.4m in trading losses and a further exceptional loss of £8.3m from land stock write downs.  Having undergone a restructuring, the business is now performing well in a difficult market.  Esh Group Chairman, Austin Donohoe explained:
“The losses sustained in 2008 were offset by a successful rights issue which raised £4.4m and by utilising tax losses.  As a result the underlying picture of the Group is strong and reflected in the balance sheet which shows an increase in net worth overall.

“There’s no denying that 2008 was tough and a real test for our business model.  The spread of specialism within the Group proved stabilising and helped to balance performance across the trading businesses.  We took difficult decisions quickly and although some aspects of the business were badly affected the underlying business is very strong and continues to perform.

“Going forward Esh Group is in an excellent position to support Dunelm Homes although this need is not anticipated as the business has secured its position within recently restructured banking facilities and covenants in line with current markets.

“Our focus at Esh Group is to continue to meet our clients’ needs across our span of operations. There is no doubt that good business is out there and can be done; we optimistic about the future and the long term development of the business.”

In the year highlights included:

• A long term study carried out by Durham Business School proving Esh Group’s significant economic benefit to the region – around £350m annually - as a result of its regional procurement strategy
• John Walker, previously Chief Executive of government regeneration agency, English Partnerships,
  joined the Board as non-executive director
• Announcement of plans to establish a northern Headquarters at Cramlington in Northumberland to include offices, workshops and yard facilities from which Lumsden & Carroll Construction, Stephen Easten, Wilkinson Facilities Services and Mechplant will serve their broad client base