‘Material uncertainty’ hangs over engineering group’s improvement
Engineering group Doncasters increased sales and narrowed losses last year, but was unable to shake off a “material uncertainty” about its future prospects because of its debt issues.
The group, which specialises in the aerospace, automotive and energy sectors, incurred pre-tax losses of £92.1m after sales increased 10% to £721.8m.
Accounts just published show that at the end of 2017, Doncasters had £1.2bn of debt of which £430m was shareholder loans from its owner, Dubai International Capital (DIC). Debt facilities held by DIC matured in 2016 but remain unpaid.
Auditor David Teager, from PwC, said: “There is uncertainty concerning the group’s ability to continue as a going concern as there is uncertainty over actions that may be taken by the lenders to the majority owner of the group, where there is debt that has matured but remains unpaid, in the event that a formal debt restructuring cannot be agreed.”
The directors of Doncasters believe the group’s operational performance will improve again this year and that it has sufficient headroom to “manage a number of reasonable down side sensitivities”.
In this financial year it has sold Nelson Fastener Systems business to Stanley Black & Decker for £340m. At the time it said the deal would enable the group “to pay down some existing debt as well as provide necessary capital to further invest in these markets”.
Exceptional costs of £28.0m were incurred during the year, which included redundancy and restructuring costs, write-down of stock, and an impairment charge for one of its Power Systems businesses based on a forecast reduction of sales.
Doncasters was founded in the late 18th century, making it one of the country’s oldest manufacturers.
It employs 5,000 people across the group, which is headquartered in Burton-upon-Trent and has its R&D facility in Droitwich.