Severfield warns Cheesegrater bolt failures to cost £6m

Aaron Morby 7 years ago
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Steelwork contractor Severfield has warned that the defective bolt replacement programme on the Cheesegrater tower in London could cost £6m.

The firm said the programme of remedial works involving the replacement of all bolts at risk of failure being undertaken with British Land, Laing O’Rourke and Arup would continue to the end of this year.

Chief executive Ian Lawson said discussions with the 122 Leadenhall building’s project team had still failed to resolve where the liability for the costs of the programme should rest.

Reporting a pre-tax of just £100,000 in the year to March 2015 this morning, Severfield said it had already incurred costs of £1m on the replacement programme during the financial year.

Lawson warned the best estimate of the remaining cost to the group had now soared to £6m.

Bolts cheesegraterBolts at risk of failure have been fixed with temporary connectors

The firms were left in limbo following the collapse into administration of original bolt supplier Andrews Fastners.

Not taking into account the Cheesgrater provision, underlying pre-tax profits doubled to £8.3m as operating margins at the firm were restored to around 4.5% from 3.3% in the previous year.

Losses from Severfield’s Indian joint venture were down to £200,000 from £3m last time, reflecting higher production levels and operational improvements.

Lawson said: “We are very pleased with the continued good progress made across the business, both in the UK and India, operationally and financially.

“Margin improvement is being sustained, we have a very solid order book and pipeline and we are particularly pleased that we have recommended the reintroduction of a final dividend.”

Severfield’s decision to improve margins saw UK revenue slide 13% to £201.5m.

New contracts won during the year, which remain in the £194m order book, include London commercial office developments at Principal Place and Angel Court, the Anfield stadium redevelopment for Liverpool Football Club and the Ordsall Chord link bridge between Manchester’s Victoria and Piccadilly stations.

Lawson added that the recruitment of significant numbers of staff from Mabey Bridge would support upport stronger growth in bridge building and infrastructure in the coming years.

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