Severfield Rowen launch rights issue to offset losses (From The Northern Echo)
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Severfield Rowen launch rights issue to offset losses
10:47am Thursday 28th February 2013 in Business News
By Andy Richardson
Severfield Rowen has been hit by cost overruns on some of its major building projects
BRITAIN'S biggest structural steel firm Severfield Rowen is aiming to raise £47.9m through a rights issue after reporting a £23.3m pre-tax loss.
The company based in Dalton, near Thirsk, North Yorkshire has been hit by losses on some ot its major contracts including work to build the Shard and Cheesegrater skyscrapers in London.
The rights issue is designed to enable Severfield to protect and enhance shareholder value through a more robust capital structure but bosses admitted the latest results were disappointing.
Last month, the company launched an inquiry after warning its profits would be hit by budget overruns on construction of 122 Leadenhall, London, commonly known as the Cheesegrater building. The inquiry looked at all of the firm's major works and found eight problem contracts, leading to a warning of a major losses. Today, Severfield reported a pre-tax loss of £23.3m on sales of £256m – down from £267m in 2011.
"These results are clearly disappointing and are primarily a consequence of an unacceptable level of performance on a small number of contracts," said executive chairman John Dodds.
"The issues leading to this performance have been identified and positive action is in hand to effect improvement. It is extremely encouraging that our shareholders, our lenders and our clients have shown strong support for the business, endorsing the group's market leadership, longevity and underlying potential.
"With the balance sheet strengthened, we are confident that the group will move forward positively from here to achieve its long term growth objectives, both in the UK and India."
Severfield, which employs about 600 workers in the North, gained an international reputation after it helped to build London's Shard, Europe's tallest building, as well as the main London Olympics stadium, velodrome and Arcelor Mittal Orbit viewing platform. It also played a part in Arsenal FC's Emirates Stadium, Wimbledon's retractable Centre Court roof and Heathrow's Terminal Five and Terminal Two developments.
