Spencer Group 'trading profitably' despite £8.9m loss last year
Spencer Group chief executive Charlie Spencer with a model of the Energy Works development
By Hull Daily Mail | Posted: 27 Dec 2018
Hull engineering firm Spencer Group has stressed it is currently trading profitably, despite recording an £8.9m loss last year.
The business said it had more than £100m of work lined up in the current financial year, with major recent projects including Hull’s £200m Energy Works and the iconic Humber Bridge.
Recently filed accounts revealed however that a project in the 2017/18 year overran in both time and costs, leaving Spencer Group with losses of more than £14m.
Despite losing £8.9m across the last financial year – having made £5.3m profits in 2016/17 – the major engineering firm remained optimistic for the future.
Charlie Spencer, executive chairman at Spencer Group, said: “The group enters the new financial year to March 31, 2019 with secured work in hand of £108m, and a pipeline of £367m from which to draw its opportunities.
“The group is trading profitably, as at the date of this report, with overall gross margins at levels previously seen on core contracts.
The £200m Energy Works complex in Hull. (Hull Daily Mail)
“The directors see this profitability as being sustainable given the levels and mix of both secured work and the future pipeline.”
Spencer Group said a significant materials handling project in 2017/18 – for a non-related client – had “seriously impacted” its trading results.
In the previous year, the same project had seen the firm earn more than £3m of profit.
However, last year, problems encountered with cost and time saw Spencer Group incur losses of £14.5m.
A statement from Spencer Group said: "The loss recorded in our latest accounts relates entirely to a single project, which incurred significant losses due to shortcomings in commercial controls.
"We have completed a thorough analysis of the root causes of these issues and we have taken rigorous corrective action to avoid any repetition.
"Excluding the impact of the loss-making project, all other activities would have produced a pre-tax profit of £4.3m in the year."
Brexit also featured in the firm’s annual report, released on Christmas Eve.
Spencer Group said despite uncertainty, it was hopeful of taking advantage of any opportunities that may arise.
Spencer Group CEO Charlie Spencer. (Simon Renilson)
Mr Spencer said: “Looking forward, the group has identified a number of European-based business sectors that have interest in taking advantage of skills that UK-based engineering specialists can offer.
“The group is actively seeking to take advantage of any opportunities to which its engineering skills can be applied.”
Turnover last year fell to £75m – down from £112.4m in 2016/17.
Spencer Group recently hit the headlines when it announced it had teamed up with train builder Hitachi to bid for a £500m metro contract in the north east.
Watch: Hull's £200m Energy Works is under construction
The business, headquartered at Humber Quays in Hull, is hoping to win the contract to build new trains and a depot for the Tyne and Wear Metro.
Spencer Group already has a proven track record in the north east, having completed work on Newcastle Station, a biomass facility at the Port of Tyne, and Hitachi’s depot in Newcastle.