Eric Wright Group looks to replace public sector work

ERIC Wright Group, the Preston-based construction and property development firm, is attempting to diversify in a bid to replace public sector work.

Parent group Henmead’s newly-filed accounts for 2010 show that group turnover dropped by 3% to £124m (2009: £128m), although pre-tax profits increased by £300,000 to £3.9m even after a payout of £2.1m to settle a long-running legal dispute relating to a land remediation contract carried out by the firm eight years ago.

Notes to the accounts prepared by the company’s eponymous owner state that the year was “characterised by the changes in the political landscape and the resulting impact on some of our key workstreams”.

“The austerity measures implemented by the Coalition Government both before, and as a result of, the Comprehensive Spending Review were far reaching and contributed to an already challenging business environment,” he said.

In particular, Mr Wright argued that the cancellation of phase six of the Building Schools for the Future programme had impacted as Eric Wright Group had previously been named as chosen partner for £140m worth of development contracts for eight new schools in Blackpool.

Although two of these were allowed to proceed, the remaining six have been shelved. Similarly, the announcement that NHS Trusts are to be reformed has meant Primary Care Trusts have halted capital spending programmes.

Group managing director Jeremy Hartley told TheBusinessDesk.com that the full impact of the cuts was unlikely to be felt until 2012 once many of its existing public sector projects ended.

“Trading for 2011 is in line with projections and we expect to see an improvement on the figures we managed in 2010,” he said.

The company currently has an order book of more than £80m and has developed relationships with public and private sector clients that he said would outlast short-term funding issues.

“The key is what goes on when the cuts take full effect. But we’ve spent a lot of time and effort looking to build our pipeline.”

Hartley said that the company had already made progress in building alternative revenue streams in busier private sector areas such as student accommodation, foodstore development and budget hotels – it recently completed a Premier Inn outlet in Burnley, for instance.

“We’re fortunate to have a broad base of businesses and clients, which will enable us to get through a difficult time.”

Moreover, he added that its property development arm, which had to write down the carrying value of its completed projects by £1.1m in 2010, had been busily investing in a bank of potential retail sites which it can develop over the next few years – potentially through a joint venture with Preston-based family-owned supermarket chain Booths.

Last month, Booths announced that it plans to use £37m of a £93m refinancing deal to fund a programme of new store openings.

“We’re fortunate to have a strong relationship with them,” said Hartley.