Last updated 7 February 2023
Tarmac Trading
Founded in 1901 after the discovery of the substance that gave the business its name, Tarmac floated on the stock exchange in 1922 and built Britain’s first motorway and a swathe of other roads projects for Margaret Thatcher’s government.
Anglo American bought Tarmac in 1999 for £1.2bn in 1999, and the contracting operation demerged as Carillion with the materials operation retained. Later acquired then offloaded by Lafarge, Tarmac is now owned by Irish materials conglomerate CRH, and builds, surfaces and maintains around 30,000-km of roads annually.
Tarmac exposure to contracting has grown to turnover of more than £400 million recently through its own operations and the acquisitions of JB Riney and Alun Griffiths.
Financials
In the latest available accounts, which cover 2021, turnover at Tarmac Trading rose to £2,136.2 million (2020: £1,828.7 million) and the business returned to profit. Before tax, the group posted a profit of £263.1 million (2020: £129.8 million loss) and at an operating level a profit of £76.4 million was returned (2020: £133.4 million loss).
To view the financials for Tarmac Trading, visit Companies House and use Company ID 00453791. For Alun Griffiths use Company ID 01493003 and for JB Riney use Company ID 01386085.
Operations
Tarmac
In 2015, CRH acquired Lafarge Tarmac, which had been formed through the merger of Anglo American’s Tarmac business in the United Kingdom and Lafarge’s UK operations. Though predominantly a materials business, Tarmac Contracting operates as single provider providing highways maintenance services and surfacing work and also owns specialist contractor National Road Planing.
Tarmac is on a number of major long-term agreements including Transport for London’s Surface Transport Infrastructure Construction Framework (Project ID: 20056714) and National Highways £1.3 billion Pavement Delivery Framework (Project ID: 21270175).
In 2021, revenue from contracting at Tarmac Trading slipped marginally to £441.9 million (2020: £446.4 million). This contracting revenue includes contributions from Alun Griffiths and JB Riney. The group also generated £11.1 million from land development (2020: £1.1 million). The rest of the turnover is derived from the sale of materials
Alun Griffiths
Founded in 1968 by Alun Griffiths the company that bears his name works on predominantly as a civil engineering contractor. The group is working on major schemes such as the £32 million A487 Dyfi Bridge job (Project ID: 14343800) and on long-term frameworks, including the latest edition of Network Rail’s Wales & Western Rail Framework CP7, which is expected to see spending of £2 billion between 2024 and 2029 (Project ID: 22123595).
In the most recent available accounts for 2021, turnover rose to £279.8 million (2020: £226.8 million), and but the business posted an operating loss of £37.8 million (2020: £11.4 million loss).
JB Riney & Co
JB Riney was founded in 1978 and provides civil engineering and highway services through London for local boroughs including Bromley, Newham,. Tower Hamlets and Waltham Forest. The business is on a number of long-term frameworks. In 2019, JB Riney replaced Kier as Harrow Council’s maintenance contractor in a £110m five-year deal (Project ID: 18363153) and in 2022 won a £80 million five-year agreement with the London Borough of Waltham Forest (Project ID: 20476965).
In 2021, JB Riney turned over £79.7 million (2020: £68.9 million) and made an operating profit of £1.4 million (2020: £0.2 million).
Glenigan Data
In 2022, Tarmac Trading won 35 contracts valued at £250,000 or more (2021: 57). The total value of these contracts was £129.4 million (2021: £348.4 million). This total, which excludes framework agreements, this ranked Tarmac in 67th position in Glenigan’s rankings of the construction industry’s top 100 contractors (2021: 33rd).
The group is not ranked among the top 10 contractors in any of the UK’s dozen economic regions.
The group has a heavy presence in the roads sector. In 2022, Tarmac won highways-related work, including shares of framework agreements, totalling £495.3 million (2021: £528.3 million). This total ranked Tarmac in fifth position in Glenigan’s ranking of the UK’s top roads contractors (2021: fourth).
Conclusion: Contracting ambitions to slow?
Despite the impacts of the Covid-19 virus continuing to dog the industry to a certain degree in 2021, turnover recovered to pre-pandemic levels and the business returned to the black.
Tarmac had slipped into the red in 2019 as a consequence of political and economic uncertainty, which undermined the aggregates and asphalt business rather than the contracting operations. As losses subsequently deepened, the group sought to cut costs in the wake of acquisitions of Alun Griffiths and JB Riney,
The workforce has been cut in successive years. After a 5% cut in the previous year, the workforce was reduced by another 4% in 2021 to an average number of 2,437 employees (2020: 2,537 employees). Despite these latest cut, the wage bill rose to £111.4 million (2020: £104.5 million).
This comes amid signs of the order book weakening. Tarmac’s burgeoning roads order book had taken the group to the top of Glenigan’s rankings of the top 20 highways contractors. This surge had come partly through a major increase in term maintenance agreements and frameworks, and as a result of Alun Griffiths winning major roads projects such as the £513.6 million A465 Howlais to Dowlais with Roadbridge and Spanish contractor FCC (Project ID: 10089661).
Historically, the focus has been mainly on term maintenance work and smaller jobs, particularly at the core Tarmac Contracting operation, which keeps the risk profile low. In 2022, the average size of contract award won by Tarmac fell to £3.7 million (2021: £5.9 million). This had been pushed up by taking on larger roads jobs, which are typically riskier, and in 2022 the value of the average roads contract won rose to back to £13.4 million (2021: £8.9 million).
While Alun Griffiths will still take on major projects, the shift towards smaller jobs has led to a fall in orders but the group is working on a number of major long-term agreements. These include the new edition of the London Highways Alliance, where the group is working in joint venture with Kier on a framework expected to see spending of £1.4 billion (Project ID: 18161356) over an initial eight year period.
Public investment in infrastructure and roads looks set to be a key cornerstone in driving the post-pandemic economic recovery, particularly in the construction industry, and Tarmac is well-placed to benefit. Although net current liabilities have increased to £176.2 million (2021: £167.2 million), net assets have strengthened to £793.0 million (2020: £547.6 million).
Further contracting expansion is likely to be organic as, after the acquisition in May 2017 of JB Riney was followed by the takeover of contractor Alun Griffiths, the Competition & Markets Authority subsequently launched an investigation into the latter acquisition. This was cleared but served as a warning.
Contracting remains only a minor part in the CRH firmament and the bulk of the income at Tarmac Trading comes from sales of materials, but in the longer-term contracting work appears likely to grow as a percentage (albeit a little recognized one) of the CRH’s many activities.
Winning work with Tarmac’s contracting operations
Details on Tarmac’s supply chain can be found here. JB Riney and Alun Griffiths continue to operate as standalone contracting businesses under the Tarmac/CRH umbrella. The procurement policy at Alun Griffiths can be read here.
Key Procurement Contacts for Tarmac Trading”s contracting activities
Tarmac head of category management (Indirects) – Lee Green, tel 0121-787-5001
Tarmac head of category management (Directs) – Kevin Dick, tel 0121-787-5001
Alun Griffiths senior estimator – Andrew Rees, tel 01873-857211
JB Riney contracts director – Luke McFarlane, tel 020-8983-0077
JB Riney procurement manager – David Griffiths, tel 020-8983-0077