Just over 10 months ago, Construction News published the CN100 ranking of the largest UK contractors, and work is well under way on the 2018 instalment.
When it comes to changes in the list, it’s normally who’s up and who’s down that grabs the attention. But this year it’s who’s out that will draw much of the focus.
Carillion, which had been the second largest UK contractor by turnover for the previous five years, will not be on the list.
Lagan Construction Group (number 62 in 2017) put four of its biggest construction businesses into administration in February, meaning its turnover will likely miss the threshold for entry into the top 100.
We will also be without Lakesmere, which was a new entry at 99 in 2017 but collapsed in October last year.
Looking back at the 2017 CN100, it’s interesting to note that all three firms had reported making a profit for the year.
This provides a stark reminder, if one were needed, that you need to look beyond turnover and profit to understand the health of a business and an industry.
That’s why this year we will be digging into company balance sheets.
We’ll give you a snapshot of the asset and liability positions for the 100 biggest contractors, including one of the big talking points of 2018: debt.
We also plan to start tracking how long contractors take to pay their suppliers – another of the other major issues in 2018.
Turnover and profit are still likely to provide the headline findings, with the former telling us how much firms are growing and the latter revealing how tough the market has been.
But by adding company asset bases, debt levels and payment duration, we will get a much clearer picture of the true health of the biggest firms.
Dwindling net assets and lengthening payment terms could point to firms facing fundamental problems, while growing cash piles can shed light on those firms primed for expansion.
In CN100 2018 this data will provide a fascinating insight into how the top companies are faring, along with the state of the contracting sector as a whole.
The headline finding from last year’s CN100 was that the average pre-tax margin of the top 10 contractors was -0.5 per cent.
This shocking stat took on a wider significance in January when Carillion collapsed, with general publications like The Economist presenting the figure as emblematic of problems at the heart of the contracting business model.
We will soon find out whether that margin has improved in the past year, but we may also be presented with other, bigger surprises as we dig further into the finances of top 100 contractors.
In last year’s CN100, the 100th-placed contractor had a turnover of £118m. If your company is operating around that level – or has grown rapidly in the past 12 months – then I want to hear from you. Get in touch at David.Price@emap.com