A steel manufacturer in Kent has become the latest construction firm to make the transition to an Employee Ownership Trust (EOT).

The move took place last Tuesday (October 29), Hythe-based Nusteel Structures Ltd announced in a LinkedIn post three days later.

The firm said becoming an EOT was necessary to reach “the next stage of our progress as a steelmaker”.

It added: “The current board will remain in place and have full control over strategy and business decisions.”

Nusteel specializes in the manufacture of steel for bridges, roads and railway infrastructure.

Its client base includes first-tier contractors such as Costain, Balfour Beatty and Graham.

Nusteel brought in more than £12.6m in its latest accounts for the year to 31 October 2023, up slightly from £12.5m the previous year.

A pre-tax profit of £246,000 meant the firm had a margin of 2 per cent and was around eight times higher than the £37,202 recorded in 2021/22.

The company’s cash on hand doubled from £1.7m to £4.1m. There was no short or long term bank loan debt.

Nusteel employed a monthly average of 89 employees, of which 67 were in production. Turnover per production employee of £187,700 was down slightly from £191,800 the previous year, the accounts showed.

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 entrepreneurs who adopted the EOT model have gone out of business in the last two years. Examples include Michael J Lonsdale, Buckingham Group and Readie Construction.

The EOT rules state that shareholders pay no capital gains tax on money received from a sale, and trusts hold shares on behalf of employees. He can pay each of them an income tax-free bonus of up to £3,600 from his annual profits.

Trusts typically pay an initial sum to the former owners for their share, then pay the remainder of the assessment in subsequent years.