黑洞社区

It is hard to cast your mind back to life before the recession. The innocent heady days when Gordon Brown was still trumpeting 60-plus quarters of uninterrupted economic growth, before both the phrase sub-prime housing market was emblazoned into everyone鈥檚 subconscious, and we鈥檇 all signed up to Robert Peston鈥檚 twitter feed in order to find out which global financial institution was going to go to the wall next.

A lot has happened to the construction industry in the intervening six years. And for the top 20 contractors, it has been a period of wildly differing fortunes, with their position today determined by a host of decisions made as the financial crisis broke. Over the course of this week we will chart these alternative courses by comparing where some of these individual firms were back in our 2008 top contractors鈥� guide - and where they are now, according to their latest published figures. And we鈥檝e got the first installement today - looking at the three firms from the school of 2008 that haven鈥檛 made it into today鈥檚 top 20 list.

For the top 20 contractors, it has been a period of wildly differing fortunes, with their position today determined by a host of decisions made as the financial crisis broke

But there are also a raft of general conclusions to be drawn from looking at the performance of the top 20 contractors overall. Profit margins, as you would expect, have significantly contracted over the period. In the latest results, the top 20 produced just 拢683m of pre-tax profit from almost 拢40bn of turnover, a profit margin of just 1.7%. As a margin, this is a fall of a third from the situation recorded in the 2008 survey - a decline that is unlikely to surprise anyone.

However, what may be more unexpected is that the current top 20 are now turning over, at 拢39.85bn, 2% more than the 2008 edition. This in a period where, according to the Office of National Statistics (ONS), overall output is running 11% lower than it was then. Therefore as a whole the biggest contractors - whatever their problems - have seriously outperformed the market, some by expanding overseas businesses, and some by diversifying at home. Tony Williams, chief executive of analyst 黑洞社区 Value, says: 鈥淚n this market if you鈥檙e a 100% UK contractor you should have seen a reduction in turnover or margin, and if you haven鈥檛, you鈥檙e doing something very good.鈥�

Part of this is down to consolidation, although there are only a few firms benefitting seriously from acquisition growth in the period, for example Keepmoat - which was outside the top 20 in 2008 - Vinci, and Balfour Beatty. Although the figures cannot be directly compared, because top 20 contractors get a proportion of their revenue overseas, the interesting implication of this rise is that they are taking a greater share of UK construction from their smaller rivals. In 2008 the turnover of the top 20 was equivalent to just under 31% of total UK construction output; today it accounts for 35.7%.

Of course within this wider picture is a raft of individual stories - some positive, and many less so. Today鈥檚 focus is on those companies that have dropped off the 2008 list, displayed below. The updated figures will be revealed later in the week and in full in this week鈥檚 edition of 黑洞社区 - so watch out for further installments.

2008 Top 20 main contractors by total turnover *

Whatever happened to鈥�?

There are four firms on the 2008 top 20 list that don鈥檛 appear in 2014. The biggest, Taylor Wimpey, doesn鈥檛 appear simply because it sold its contracting business to Vinci UK in 2008.

The second absentee is Rok, which collapsed in spectacular fashion in 2010. Rok was a patchwork 鈥渓ocal鈥� firm built up of acquisitions during the boom time by chief executive, Garvis Snook, that was hit by financial jitters when the market turned. After profit warnings and the departure of the firm鈥檚 finance director, fears snowballed as one of its largest rivals, Connaught, collapsed, triggering concerned customers to walk away. It finally called in the administrators on 8 November, and remains the biggest casualty of the whole recession.

Another absentee is Bowmer & Kirkland, the family-run Derbyshire-based contractor, which was ranked 18th largest in the 2008 tables. However, the 21% decline in turnover since then to 拢662m is not dramatic in the context of the huge contraction in the regional construction market. And its healthy pre-tax profit margin for the year to August 2013 of over 3.5% speaks of a firm that has been willing to sacrifice turnover in order to focus on profitable work.

The final name to disappear from the top 20, Lend Lease, has, in contrast, experienced a spectacular fall-off in work in the period, the largest of any firm in the 2008 top 20. Then called Bovis Lend Lease, in 2008 it was still the 10th biggest in the UK, turning over 拢1.38bn. But since then turnover at its UK businesses has fallen by 61% to just 拢543m, and it reported a pre-tax loss in the most recent year, to 30 June 2013, of 拢16.3m.

This decline follows a period of turmoil in the firm鈥檚 senior management in the UK and Europe, with five different people running the construction business over the period. During the recession the contractor picked up little work, amid claims from some inside the business that its Australian parent company was setting unrealistic restrictions on what it could bid for.

But it may be that with more stable leadership in the shape of Dan Labbad (at the European level) and Neil Martin (for the UK construction business), the firm is finally about to reverse its downward trajectory. One source, who works with the business, says: 鈥淟end Lease as we knew it almost disappeared. But the vibe now is they鈥檙e on the up, they鈥檝e decided how to run construction next to the developments business.鈥�

* Data source for tables: 黑洞社区 magazine Top 150 Contractors and housebuilders 2008. This was based on the most recent published data at the time of printing in June 2008, which for most contractors covered the 2007 financial year. All other figures in the text are from most recent published accounts. The figures for  Bovis Lend Lease and Lend Lease refer to UK operations only, Skanska results refer to Skanska UK, and the VolkerWessels figures include Fitzpatrick.