WET News

4 LEADERS 2018 THE LEADERS 2018 Top contractors driven by efficiency The Leaders 2018 exclusive index reveals that contractors' productivity continues to increase, driving improved turnover result of overreach, mounting debts and its reliance on increasingly unprofitable public contracts, means it has been excluded from the top tens, although its results for the last available year still contribute to the overall totals. The firm's utility division was not responsible for the company's woes but, nevertheless, Carillion's collapse is a salutary warning of how quickly things can go wrong in the construction and contracting sector. Net assets for firms in the database have declined for the second consecutive year – from £5.8 billion in 2015/16 to £4.7 billion in 2016/17. This may reflect the uncertainty that firms will now be feeling as they approach the later stages of the AMP cycle and hold back on investment. On a more positive note, sales per employee has continued to increase for a fiŠh consecutive year, showing how the sector has made itself more productive and reaped the benefit of headcount reductions and other efficiencies earlier in the economic cycle. The ratio of £245k sales per employee achieved by firms in the database – up 11 per cent on last year – is a good headline number for any sector. Productivity and profitability AECOM's ratio of £710.6k per employee placed it as the most productive company, although this has to be considered in the light of the company's strategy of concentrating on consultancy work in AMP6 and its selective approach to projects. Among other firms, Dawnus, Mace, Interserve and Morgan Sindall can all celebrate productivity figures of more than £400k sales per employee. Kier Group emerged as the most profitable company, as measured by operating profit, with £48.2 million; although Morgan Sindall were not far behind with £47.4 million. On other measures of profitability, Amec Foster Wheeler had the highest gross profit (£588 million), while Mott Macdonald could boast the biggest pre-tax profits (£47 million). In terms of margin, J. Murphy & Sons (50.5 per cent) was the clear winner on a gross margin basis, while Stonbury had the most impressive operating margin (11.7 per cent) and Stantec (7.8 per cent) the best net margin. A new name in the Leaders database, Stantec's acquisition of MWH was perhaps the highest profile example of M&A during the year, with the North American multi- sector giant gaining an instant presence in the UK water sector as a result. The low value of the pound in the aŠermath of the Brexit vote has certainly made UK companies attractive prospects for international corporations to snap up, and the deal shows that the UK water sector is C ontracting work for the UK water industry has traditionally been characterised by peaks and troughs, as the five-year AMP cycle dictates the flow of projects coming on stream and working their way to completion. So it is perhaps no surprise in the third year of AMP6 to find the water contracting landscape a hive of activity. When all the companies in the Leaders database are combined, total sales are up 4 per cent to £35.3 billion. The top ten largest companies by turnover retained their positions from last year, with construction giant Balfour Beatty the biggest company, clocking up an impressive annual revenue of £6.9 billion. The biggest corporate event of the year in the field was undoubtedly the insolvency of Carillion, which had a turnover of £258 million in 2016. Its demise, which was the

• Cover