Readie becomes largest employee-owned contractor
Readie has become the largest construction company in the UK to be sold to its employees.
Owners of the Essex-headquartered firm, which turned over £195.9m in its last financial year, have agreed to sell their entire shareholding to an employee ownership trust (EOT). Payments to the former owners will come out of future profit and the company said it had not taken on any debt to fund the sale.
Readie has not revealed how much the owners will receive for their shares. Parent company Readie Management had a net asset value of £19m according to its last set of accounts for the year to 31 March 2020. The balance sheet also contained £26.6m of goodwill.
The firm’s shares are divided into two categories: a higher one known as class B and a lower one known as class A.
Both classes have the same voting and dividend entitlements, but the class B shares grant the holders a greater proportions of any proceeds from a sale of the company.
Main shareholders executive chairman Stuart Read and managing director Paul Stephens own 84 per cent and 16 per cent of the company’s class B shares respectively. These entitle them to all proceeds of any business sale up to £21m and a proportion of proceeds in excess of that, according to the company’s latest confirmation statement. The lower-ranked class A shares are owned by Stephens and eight other senior members of staff, including finance director Jessica McCarthy and pre-construction managing director David Stephens. Owners of the class A shares are only entitled to proceeds in excess of £21m.
Executive chairman Read, who was also the company’s founder, said: “Many of the staff have been with Readie throughout our rapid growth and the transition to employee ownership was the logical next step in the development of the company. The creation of an EOT enables us to preserve the legacy of the Readie brand and will help cement our status as a leading contractor in the industrial and logistics sector.”
Readie Construction, which was founded in 2007, has grown rapidly in recent years thanks to its work in the logistics and warehouse market. Between March 2016 and March 2020 revenue jumped from £92.2m to £195.9m. Pre-tax profit grew from £3.5m to £7.3m over the same period.
Parent company Readie Management paid its shareholders a dividend of £4.9m in 2020, up from £2.3m in 2019. The company had net cash of £1.8m at 31 March 2020, which included borrowings of £3.9m.
Readie is the latest in a string of construction firms to be sold by the owners to EOTs. McGee moved to employee ownership in April 2020 and earlier this month utilities specialist Falco Construction did the same. EOTs allow owners to sell businesses without incurring capital gains tax. Employees can receive tax-free bonuses of up to £3,600 from such trusts.
The owners of former contractor Shaylor sold 55 per cent of the business to an EOT in October 2018, nine months before it collapsed into administration. Unlike the Readie arrangement, the Shaylor deal was financed by the company taking on a £14.5m loan from a bank with the directors being paid an immediate lump-sum for their shareholding.
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