Exclusive: Drop in war zone demand no barrier to Hesco's strength

A DECLINE in demand from the world's war zones led to a fall in turnover last year at the Leeds-based manufacturer of Hesco security barriers.

Hesco Bastion Limited saw turnover fall by 43 per cent to 111m, according to annual accounts. But the privately-owned business remains highly profitable, posting pre-tax profits of 27.17m, a gross margin of 31 per cent.

The company manufactures and exports Concertainer units – made of collapsible wire mesh containers with fabric lining – which are used for military fortification and flood defence.

Forces including the US Army, the MoD, NATO and the UN have used the rapidly deployable barriers to protect their troops in every major conflict area since the 1991 Gulf war.

Hesco barriers are said to be used on nearly all the US Army bases in Iraq and are found acr-oss NATO bases in Afghanistan.

The company was founded by entrepreneur Jimi Heselden OBE, a former miner from Halton who rarely gives interviews. A company spokeswoman yesterday declined to comment on the accounts for the year ending January 31 2009, which were filed last month.

In his annual report, Mr Heselden said he remains "optimistic" about the future of the company. He said: "During the year the company's turnover decreased by 43 per cent to 111m, compared to 196m in the previous year.

"The 2008 year represented an exceptional year and turnover was expected to fall in 2009. However the turnover still remains higher than for the 2005 to 2007 years (105m, 74m and 81m respectively]."

Sales in the UK and Europe were relatively flat last year, but sales to the rest of the world plummeted from 177.2m in 2008 to 93.5m in 2009.

Mr Heselden said profit margins were hit by higher raw material prices, in some cases resulting from the weak pound.

The principal risks and uncertainties facing Hesco Bastion "relate to a significant proportion of the company's turnover arising from a limited number of customers and the related spending and circumstances of those customers", said Mr Heselden.

"While sales remain at good levels there is a risk that turnover levels could reduce at relatively short notice and that production would have to be curtailed."

The company has net assets of 85.2m, no external borrowings and has continued to invest in its production facilities as well as land and buildings, according to the report.

It continuously improves waste control, energy efficiency and the use of recycled and recyclable materials, the report added.

Mr Heselden, 61, who paid himself 25.21m in 2008, took home 143,853 last year, according to the accounts. The company also paid a dividend of 2m.

Hesco Bastion had 240 around employees in 2009, compared to 308 in 2008, and operates from the Cross Green Industrial Estate.

The company markets the Concertainer units as the most significant development in field fortification since the Second World War. Once erected, they are filled with locally available material.

They are regarded as a faster and safer alternative to the sandbag and used to safeguard personnel, vehicles, equipment, facilities and other critical assets in military, peacekeeping, humanitarian and civilian operations. They are able to withstand attacks from a wide variety of weapons and have been rigorously tested by world authorities in blast mitigation.

Giving millions to the local community

Hesco Bastion prides itself on its charitable work and last year donated 3m to its Hesco Bastion Fund.

The company established the fund – which is managed by the Leeds Community Foundation – during the previous year with a 10m donation.

This year Hesco also donated 50,000 to the Heroes' Ball 2008 and 1,000 to Little Sisters of the Poor.

The company sponsored the Hesco garden at the Chelsea Flower Show last March and said: "Hesco is a strong supporter of both community and business initiatives in Leeds."

Mr Heselden, speaking about the Hesco Bastion Fund last November, said: "What's most important to me is knowing that so far I've been able to help out 61 good projects in parts of Leeds that mean something to me and knowing the money I've got banked in the foundation means I can carry on giving something back by supporting many more local projects in the future."

He added: "I'm a self-made entrepreneur and I believe that if someone makes it in business they should donate something to charities and people in need."

Mr Heselden is worth 214m, according to the Sunday Times Rich List .