In 2012 Severfield-Rowen’s revenues slipped 4% to £256.6m (2011: £267.8m) and it made an underlying pre-tax loss of £19.6m (2011: £10.1m profit).
The proceeds of the rights issue, which remains subject to shareholder approval, will be used to reduce debt and strengthen the balance sheet. Net financial debt stands at £44.0m, of which £44.2m is outstanding under the existing banking facilities.
As previously reported, the company has booked a £9.9m loss for the year on its 122 Leadenhall Street contract (‘the Cheesgrater’), identified £2.9m of cost overruns on three other contracts and downgraded the value of a further five by £7.3m in total.
Now under the leadership of former Kier chief executive John Dodds, Severfield-Rowen is being restructured. Trading businesses Severfield-Rowen Structures, Watson Steel Structures and the Steelcraft erection business have been merged into a single new entity, Severfield-Watson Structures. In what is an ongoing process, more than half of the anticipated overhead savings of £2m have now been realised and the programme will be largely complete by 30 June 2013.
Mr Dodds said: “On a positive note, while trading conditions remain difficult, the group's order book has remained strong at £209m and I have been encouraged by the continued support of our major customers. The order book contains a broad mix of London commercial offices, industrial, warehousing, waste to energy projects, transport including airports, health, education and leisure projects. In India, our joint venture continues to build a solid foundation for future growth.”
He added: “The events that led to the rights issue related to an unacceptable level of performance on a small number of contracts. Positive action is in hand to address these issues and improve performance."
Got a story? Email news@theconstructionindex.co.uk
