Family-owned contractor trebles profit

Repeat business and new housing developer clients have helped Applebridge Construction to treble its pre-tax profit, the firm said in its latest annual accounts.

The family-owned contractor generated a profit of £21.9m for the year to 30 April 2025 from turnover of £119.6m, as it began to implement a new three-year strategic plan.

Turnover was up by 44 per cent on the previous year’s £82.9m, when Applebridge logged a £7.2m pre-tax profit.

The Middlesbrough-based contractor operates in the North East, North West and Midlands.

Its clients include a mixture of regional and national housebuilders, regional housing associations, tier one and tier two commercial contractors, private developers, statutory authorities and utility providers.

In its accounts, Applebridge attributed its improved financial performance to three factors: new client revenue from “regional partnership housing developers”; targeted commercial contracting that ensured revenue streams remained “diverse and balanced”; and strong repeat business, which accounted for about 80 per cent of turnover.

The firm’s profit margin broadened from 9 per cent to 18 per cent.

“We credit this increase to the continued review and challenge of commercial strategies and controls which are implemented from the outset of a new project,” Applebridge managing director Chris Brown said in his strategic report published with the accounts.

“In addition, the introduction of various quality control systems and processes has seen a significant reduction in remedial costs in the period.”

The three-year business plan for 2024-27 envisages “increasing our geographical coverage into the North West of England and ensuring our revenue streams remain diverse and balanced”, Applebridge said.

“In addition, the company will continue to implement the long-term strategy of selective tendering with trusted clients, at sustainable margins.”

The firm said it was targeting “a sustainable margin within all successful tenders”, while also taking steps to insure against client insolvencies.

“Where this is not possible, project bank accounts or advanced payment bonds are to be utilised,” the accounts added.

The cost of sales rose from £70.6m to £96.9m, due partly to increased investment in IT systems, including new financial management software.

“The company has invested heavily in the latest IT hardware and software for its staff, ensuring the business can continue to ‘punch above its weight’ in terms of competence and capability,” Brown said.

Applebridge’s wage bill more than doubled from £2.4m to £5.5m, although the firm’s headcount decreased slightly from a monthly average of 125 employees to 117.

The contractor paid out no dividends and it had £17.1m in cash at hand at the end of the financial year, up from £10.5m.

No shareholder dividends were paid out.

While the firm’s short-term repayable bank loan and overdraft debt rose from £222,474 to £313,154, its long-term bank debt halved from £817,676 to £413,126.

Applebridge’s directors are looking ahead to the 2025/26 financial year with “cautious optimism”, said Brown.

He cited government commitments to social and affordable housing targets, “improved planning policies” and investment in infrastructure as three positive factors.

“However, geopolitical tensions, market nervousness, and difficulties bringing inflation under control dictate a risk-adverse approach to business,” Brown added.