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For the year to 31st March 2020, underlying profit before tax at Severfield was up 16% to £28.6m (2019: £24.7m), putting it firmly ahead of its strategic 2020 profit target of £26m.
Actual profit before tax was also close to that figure, at £25.8m (2019: £24.7m). Revenue was up 19% to £327.4m (2019: £274.9m).
The numbers were boosted by the acquisition of Harry Peers in October 2019 for £18.9m (with a potential additional £7m payable in the year ahead).
The addition of Harry Peers’ workload in the nuclear, process industries and power generation sectors added revenue of £14.4m and underlying operating profit of £1.3m for the six months since its date of acquisition.
Projects during the year included the new Google Headquarters at King’s Cross, together with other commercial office developments in London and the regions. There were also several big sheds across the UK and Ireland, large data centres in Finland and Ireland, ongoing projects at Heathrow and Manchester airports, and a scientific research facility in Sweden.
Significant UK orders include a new stand at Fulham Football Club for Buckingham Group (the old stand has now been demolished and the new one will soon be coming out of the ground), and the redevelopment of the Compton and Edrich stands at Lord’s Cricket Ground for ISG.
Severfield chief executive Alan Dunsmore said: “The strong set of results that we are reporting today reflects the further operational and strategic progress that we have made in 2020. Our balance sheet and cash position remain strong, we have continued to drive our ‘Smarter, Safer, more Sustainable’ initiatives with an increased focus on manufacturing efficiency, and we have entered new UK markets through the acquisition of Harry Peers.”
However, the outlook changed dramatically as the financial year came to an end, with the UK being put into lockdown, many construction sites closing their gates and investments put on ice.
“Unfortunately, after such an encouraging year in 2020, since the year-end we have been focussing on the challenges which have resulted from the spread of Covid-19,” Alan Dunsmore said. “In managing our response to the pandemic, the primary focus has been on the health, safety and wellbeing of all employees, clients and the wider public, together with protecting the financial strength of the group. To date we have coped well with the challenges presented by Covid-19. The group’s factories are operational and, after some temporary interruptions, all of our construction sites in the UK and Europe remain open. Strict precautions are in place for both the factories and the sites including enhanced levels of cleaning, additional hygiene facilities and social distancing.
“At this early point in our financial year it is impossible to predict the full extent of the financial impact of Covid-19 on the 2021 outturn. Despite this, we have a strong balance sheet and are confident that we have sufficient cash and committed funding in place during this unprecedented period of uncertainty.”
He said that “precautionary actions have been implemented”, including “the deferral of all non-essential and uncommitted capital expenditure, together with restrictions on discretionary operating expenditure, tight management of working capital and the deferral of tax payments (PAYE, NIC and VAT) and quarterly term loan repayments (due in March and June). Furthermore, prior to the year-end, we fully drew down all available amounts under our revolving credit facility (£15m) to provide control over our own cash resources.”
He concluded: “Despite the ongoing uncertainty of Covid-19, we remain well placed to win work in the diverse range of market sectors and geographies in which we operate. This allows us to target a good pipeline of opportunities and provides us with the extra resilience and ability to increase our market share. With our teams on site and operational, we are in a good position to service our clients and manage the potentially challenging market ahead.’
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