Gilbert-Ash agrees sale to employee trust

Contractor Gilbert-Ash will be sold to an employee-ownership trust (EOT), the Belfast-headquartered contractor and fit-out specialist has announced.

Financial details of the transaction have not been disclosed. The firm had a book value (net assets) of £26m as of 31 December 2023, the date covered in its latest published accounts.

In an EOT process, shareholders pay no capital gains tax on the money received from a sale, and the trust holding shares on behalf of employees can pay each worker an income-tax-free bonus of up to £3,600 each from a share of its profit.

The trust normally pays an initial sum to former owners, then pays off the remainder of the valuation in the following years.

Gilbert-Ash’s turnover grew slightly to £267m in 2023, while its pre-tax profit fell by almost two-thirds, from £4.5m to £1.5m, with inflation blamed for the drop.

It employed a monthly average of 200 people during the period.

The firm was ranked 64th in the CN100 2024 table of top contractors.

In a statement yesterday (16 April) about the sale, managing director Ray Hutchinson said moving to an EOT would replace the existing “narrow shareholding” with a structure designed to benefit all employees.

He added: “We are confident that the transition to an EOT is firmly in the best interests of our people, the future success of our business, and retains our roots as an employee-owned company.

“This restructure will give our people a greater say in the future growth and direction of Gilbert-Ash.”

Last year, the refurbishment of the National Portrait Gallery in London, delivered by the contractor, was nominated for the prestigious Stirling Prize.

Ongoing refurbishment projects in its order book include the Tate Liverpool art gallery and Theatr Clwyd, near Mold, Flintshire.

Gilbert-Ash has been advised by PwC on “EOT best practice”, said Hutchinson.

A number of contractors, worth a combined turnover of more than £1.9bn, have become EOTs since 2020. However, since 2022, EOT-owned firms worth a combined revenue of £1.3bn have gone out of business.

The collapses of Michael J Lonsdale, Buckingham Group and Readie Construction prompted Construction News to examine in May last year whether the costs of becoming an EOT had contributed to their troubles. 

The sums paid to their former owners outstripped their aggregate profit in the years before their respective administrations.