Manufacturing giant reports ‘one-off’ pre-tax losses of £16.4m
Manufacturing giant Sheffield Forgemasters International is accelerating the depreciation of its asset base, resulting in a ‘one-off’ pre-tax loss of £16.4m in its latest set of published accounts; while its revenue rose 4% to £76.1m.
Today publishing results for the year ended 31 December 2017, the firm – which has appointed a whole new executive team this year – said it had taken a decision to accelerate the depreciation of the asset base of the company, resulting in a one-off pre-tax loss of £16.4m (loss of £900,000 in FY16). Prior to the accounting change, the company recorded at pre-tax profit of £200,000 on revenue of £76.1m (up 4% since 2016), a consolidation of underlying performance since the downturn in the oil & gas sector of 2014/15.
During 2017, Sheffield Forgemasters International Ltd (SFIL) continued its investment strategy with a £10m investment into new plant, including a £2m upgrade to its electric arc furnace and a £6.5m investment into state-of-the-art BOST machining centres, which provides the company with machining capabilities that are unmatched in the UK. In 2018, SFIL also committed to a record intake of 33 apprentices and now employs 670 staff.
Sheffield Forgemasters International Ltd (SFIL), the heavy engineering specialist, announced its first set of financial results since the arrival of a new executive team over the summer. It reported a current order book of £140m.
David Bond joined as the new CEO in August, following in the footsteps of Dr Graham Honeyman who stepped down from the board in July. Bond has been joined by Steve Hammell as CFO and Paul Cahill as COO. In addition, the company has just appointed a new Chairman, Colin Smith, a veteran of Rolls-Royce, to complete the formation of the new top team.
David Bond, CEO, said: “The company has successfully won an increased volume of new defence contracts in 2018 and is now in a position to take advantage of a buoyant order book, currently sat at £140m, and improving margins from higher value sectors. Accordingly, we have adjusted our depreciation policy for plant and machinery to match our peers in the engineering sector. The net effect of this change is that the reported results show a significant, one-off correction in 2017.
“The new team is expecting a return to stronger levels of profitability in 2018 with the delivery of high specification UK and US defence products. We are also focussed on expanding our customer base for premium products and design consultancy in complex engineering applications, to drive future margins and profitability.”
Bond added: “Making prudent financial decisions does not detract from the necessity of running a business which needs to succeed in a fiercely competitive global marketplace. So our technical capability and reputation for innovation is a key market differentiator and demands we maintain our skill base through our apprenticeship programme, research and development efforts and investment in the latest manufacturing technology, enhancing our competitive edge.
“Looking ahead, we will be increasing the amount of investment into plant and equipment in 2019 as we work to maintain the highest delivery and quality standards and drive continuous improvement in our health & safety performance, key priorities for the new team.”
To support these developments, the company also announces that it has extended its asset based lending facilities with Wells Fargo to 30 April 2020, with the debt ceiling reduced from £45m to £40m.
Steve Hammell, CFO, commented: “SFIL has seen it debt levels increase over the last 3 years and we are determined to reverse this trend to deliver a long-term sustainable business. The £5m reduction in the lending facility is a step in the right direction and we will continue to reduce our borrowings over the coming years. We are pleased to have negotiated this extension and provide the financial scope to drive the business forward in 2019.”
Bond concluded: “I am confident that the team leading Forgemasters is united in building a long-term future for the business in a fiercely competitive market. We are all proud to be a part of this iconic company and enthusiastic about the opportunity to make a positive impact for our employees, stakeholders and customers.”
SFIL is a world leader in supplying engineering solutions to the most demanding applications, supplying global markets including Defence, Civil Nuclear, Oil & Gas, Petrochemicals, Power Generation and Steel Processing. It manufactures ultra-heavy bespoke engineered products including castings of up to 350 tonnes and forgings of up to 170 tonnes.
