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Cheesegrater drags Severfield-Rowen deep into the red

4 Jun 13 Cost overruns on its 122 Leadenhall Street contract have pulled down structural steel contractor Severfield-Rowen into heavy losses.

122 Leadenhall Street
122 Leadenhall Street

Problems with the building, informally known as the Cheesegrater because of its shape, have already cost chief executive Tom Haughey his job. He was ousted in January.

The full cost of the problems now emerges in Severfield-Rowen’s preliminary results for the 15 month period ended 31 March 2013. On flat revenues of £318.3m, the company made an underlying operating loss of £19.2m and reported a pre-tax loss of £28.9m. This compares to a £5.8m pre-tax profit for the year to 31 December 2011.

The financial impact of the Cheesegrater cost overruns required a rights issue, which raised £44.8m net, giving the directors confidence that the business is back on a safe footing.

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The UK order book stands at £197m and contains a mix of London commercial offices, industrial buildings, warehousing, waste to energy and transport projects. The pipeline of future potential projects is also considered to be “encouraging”.

Executive Chairman John Dodds, who took over day-to-day running of the company after Mr Haughey left, said: "The 15 month period to 31 March 2013 has been extremely challenging for the group with problems on its 122 Leadenhall Street contract being the most significant of several contract issues which contributed to the financial loss for the period.

“Management and organisational changes have already been made and further changes are in process.  Meanwhile the group retains its core strengths, a strong market position and the continued support of its major customers.  This, together with the shareholder support for the refinancing completed on 5 April, gives me confidence that the group will improve financial performance in the near term and deliver returns commensurate with its strong market position in the longer term."

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