Sheffield Forgemasters has now revealed a pre-tax loss of £16.4m for the year ending 31 December 2017, compared to a £900,000 loss the year before. This was the result of decision to accelerate the depreciation of the asset base of the company. Prior to this accounting change, the company recorded a pre-tax profit of £200,000 on revenue of £76.1m, up 4 per cent on the previous year.
The new executive team at Sheffield Forgemasters International has said that the engineering giant’s “buoyant order book” puts it in a position to achieve stronger levels of profitability in the future. However, an accounting change has resulted in a £16m pre-tax loss in its latest set of accounts. David Bond became the new chief executive in August 2018, succeeding Dr Graham Honeyman, who stepped down from the board in July. Bond has been joined by Steve Hammell as chief financial officer and Paul Cahill as chief operating officer. In addition, the company has just appointed a new chairman, Colin Smith, a veteran of Rolls-Royce. Sheffield Forgemasters has now revealed a pre-tax loss of £16.4m for the year ending 31 December 2017, compared to a £900,000 loss the year before. This was the result of decision to accelerate the depreciation of the asset base of the company. Prior to this accounting change, the company recorded a pre-tax profit of £200,000 on revenue of £76.1m, up 4 per cent on the previous year.
David Bond, chief executive of Sheffield Forgemasters International, 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.”
Sheffield Forgemasters invested £10m into new plant in 2017, including a £2m upgrade to its electric arc furnace and a £6.5m investment into BOST machining centres. It has also committed to a record intake of 33 apprentices and now employs 670 staff.
David Bond added: “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 its plans, the company has extended its asset based lending facilities with Wells Fargo to 30 April 2020, with the debt ceiling reduced from £45m to £40m.