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Clugston Construction sees record results with estimating team 'flat out'

Clugston Construction’s managing director has said the firm’s decision to “hang in there” in the energy-from-waste market has paid dividends, after the company released strong results for 2013/14.

The contractor increased turnover by 40 per cent to £136.7m in 2013/14 from £97.5m, while pre-tax profit rose from £5.4m to £7.4m.

The Clugston Group announced the best turnover in its 77-year history, up 26 per cent to £231.2m from £183m in the year to 14 January 2014.

Clugston Construction’s Energy from Waste work is worth around 60 per cent of its overall revenue. It has a joint venture with French process specialist CNIM, which also has a JV with Lagan Construction Group.

During the year the company started work on facilities in Leeds and the North-east.

Managing director Steve Radcliffe said: “We will be building [domestic household waste EfW projects] for another year and a half…local authorities are trying to reduce their waste to landfill.

“That’s nearly at an end, but there’s still the rest of the market, like commercial and industrial markets and individual businesses looking to deal with their waste in a different way.

“It will be a different market, but we have two or three jobs that I think will happen in the next 18 months.”

Takeover target

The M&A market is picking up again, with Miller’s construction arm and Keepmoat being the latest firms to be linked with sale or takeover.

Clugston has been the subject of approaches in the past and is moving into the West Midlands home of Thomas Vale, a firm that had greater turnover and became part of the Bouygues group in 2012.

Asked whether the firm’s performance would bring it to the attention of firms seeking acquisitions, Mr Radcliffe said: “I don’t know. People often ask us that. We have been approached before, but we’re still here and a family business.”


Clugston has expanded from its heartland in the east of the UK into the West Midlands, opening an office in Bromsgrove.

“There are plants to be built in all of those geographies and more than a handful of clients who think they’ve got a scheme,” Mr Radcliffe said.

“They won’t all work, but some will, and the clever thing is spotting the ones that have more chance of success.”

After Clugston finished an EfW plant in Sheffield in 2006, it had to wait five years for its next project in the sector. Mr Radcliffe admitted other contractors were getting frustrated with the market but said: “We have hung in there and it’s paid off for us.”

The business has taken on 50 staff in the last year and now employs more than 400. Mr Radcliffe expects turnover in the coming year to be at a similar level, with profits reduced as “overheads will have caught up a little bit” and supply chain prices continue to rise.

He expects the firm to make between 3 and 5 per cent pre-tax profit in the coming year, which based on this year’s turnover would be between £4.1m and £6.8m.

“We’re turning tenders down at the moment. Our estimating team is flat out, but it could be even more flat out,” he said. The firm has around £120m revenue secured for the coming year.

Around 5 per cent of the business is in FM. The contractor is shortlisted for two lots of the £5bn Regional Framework for the Education Funding Agency after it missed out on the £4bn Contractors’ Framework earlier this year.

Competition

Mr Radcliffe said the EfW market was competitive, but it judges on technology and process as well as price, which was an advantage, ahead of traditional build jobs.

“It’s not as competitively driven as putting up a big shed where anyone can go to get the steelwork and cladder and go and chase the price. That market is still fierce.”

He said the firm had been “close” when it lost out to Bam Construction on Airedale International’s £25m Yorkshire factory this month.

“Some people are struggling to get six on a tender list now. Where there was a mad chase in 2010 and 20111 where everyone was diving into every market, you can see the results of that when you look at some of the bigger guys’ results.”


“We got onto the tender list but didn’t make it [which] was a disappointment. If the regional one hadn’t come behind it, it would have been even more disappointing, but I think the regional one may suit us more.

“The national framework was about bundling schemes together and we’re probably not big enough to do that.”

The firm is tendering the North-east (£500m) and East of England (£750m) lots of the Regional Framework. It looked at the West Midlands lot (£875m) but Mr Radcliffe said it “didn’t have the track record, so wouldn’t have scored enough points to get there”.

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