A steel fabricator in Kent has become the latest construction firm to make the transition to an employee ownership trust (EOT).
The move took place last Tuesday (29 October), Hythe-based Nusteel Structures Ltd announced in a LinkedIn post three days later.
The firm said that becoming an EOT was necessary to achieve the “next stage in our progression as a steel fabricator”.
It added: “The current board of directors will remain in place and will have full control of strategy and business decisions.”
Nusteel specialises in steel fabrication for bridges, roads and rail infrastructure.
Its client base includes tier one contractors such as Costain, Balfour Beatty and Graham.
Nusteel turned over £12.6m in its latest accounts for the year to 31 October 2023, up slightly on the previous year’s £12.5m.
A pre-tax profit of £246,000 meant the firm had a margin of 2 per cent, and was about eight times the £37,202 recorded in 2021/22.
The firm’s cash at hand more than doubled from £1.7m to £4.1m. There was no short-term or long-term bank loan debt.
Nusteel employed a monthly average of 89 staff, including 67 in production. Turnover per production employee of £187,700 was down slightly on the previous year’s £191,800, the accounts said.
The EOT model has been adopted by dozens of construction firms, most recently in October when demolition contractor John F Hunt announced its transfer to employee ownership.
But some well-known contractors that have adopted the EOT model have gone out of business in the past two years. Examples include Michael J Lonsdale, Buckingham Group and Readie Construction.
EOT rules stipulate that shareholders pay no capital gains tax on money received from a sale and trusts hold shares on behalf of employees. It can pay each of them an income-tax-free bonus of up to £3,600 from its annual profits.
Trusts usually pay an initial sum to the former owners for their share, then pay off the remainder of the valuation in subsequent years.
