Equans Regeneration is exiting the new-build housing market after it reported a £135.6m loss for 2022.
In its first published accounts since being acquired by Bouygues in October 2022, the group admitted that higher turnover failed to prevent a plunge into the red in 2022 amid “particular pressure in the new-build sector”.
The firm – ranked 23rd in the CN100 2023 list of top contractors based on its 2021 figures – saw revenue rise from £869.8m that year to £926m in the 12 months ending 31 December 2022.
But the cost of sales also soared from £811.2m to £981.2m, which played a major role in turning its £62.6m pre-tax profit in 2021 into a loss of £135.6m in 2022.
In his strategic report accompanying the latest accounts, Equans director Colin Macpherson revealed that the company decided to stop building new homes, apart from student homes, in October 2023.
Macpherson noted that 2022 saw “particular pressure in the new-build sector due to a combination of cost increases, supply-chain insolvency, legislative changes (particularly the impact of the Building Safety Act 2022) and unsustainably low levels of return across the industry”.
He said the decision to quit new-build housing work was “in order to reposition our business and focus our construction activities exclusively within the student-accommodation market.
“By the end of 2025, we will no longer be present in the new-build market sector, but we remain fully committed to our existing commitments and projects currently underway.”
Macpherson said the company is now focusing on “ a disciplined, more selective approach when bidding for contracts”.
He added that Equans’ underlying performance was strong apart from the new-build sector, saying that a “high-quality order book” is in place for 2024.
Equans was acquired by Bouygues from Engie in October 2022. The change of ownership involved what Equans directors called “remeasurements” of some assets and liabilities, such as £99.4m in non-recurring costs incurred from new-build contracts, £3.5m in net contract liabilities, and £14.2m attributed directly to the impact of Building Safety Act legislation.
Overall, provisions for liabilities soared from £15.7m in 2021 to £78m the following year, according to Equans’ latest accounts.
The firm ended 2022 with just £869,000 cash in the bank compared with £6.2m in 2021, while debts due to be repaid within 12 months surged by 29 per cent to £302.7m. Long-term debt decreased from £19.6m to £15.4m.
Equans employed a monthly average of 3,030 staff in 2022, up from 2,746 the previous year.
It paid out no dividends, compared with £91m in 2021.
Wins in 2022 included a a £160m two-year deal with Birmingham City Council to provide repair, maintenance and refurbishment services for more than 40,000 council-owned properties.
Equans also continues to provide fire-remediation services for housing association Optivo under a £120m deal sealed in 2021, and it won a £30m-per-year contract from London & Quadrant, which covers specialist fire-safety works among other services.
