Royal Bam has set it sights on doing more work in the UK despite revealing mixed results for 2020.
Its civil engineering operation, Bam Nuttall, made an adjusted pre-tax profit of €12.3m (£10.7m) according to new accounts for the Royal Bam group, published this morning. The results for the year ending 31 December 2020 was almost half the €23m (£19.9m) it reported in 2019 and was affected by a provision the company made on an unnamed project in the second half of the year. Revenue for the business was up almost €100m (£86.6m) to reach €974m (£843.3m) and its order book jumped by €800m (£692.7m) thanks to its work on HS2 and the smart motorways programme.
Bam Construct suffered a £3.3m (£2.9m) adjusted pre-tax loss in 2020, which it blamed on technical problems on a project under construction in the first half of the year. The business performed well in the second half of 2020 and its order book grew “slightly” in the year, although the group warned competition had increased.
Earlier this year, Bam Construct published its 2019 accounts, which included a £26.7m provision on a project for the University of Sheffield where a concrete frame had to be partially demolished in early 2020 after piling faults were found.
In spite of the mixed results, Royal Bam has set out plans to grow its business in the country as part of a new strategy published this morning. Over the next three years it will focus on expanding operations in the UK, the Netherlands and Ireland, while its German and Belgian businesses are set to shrink as the firm targets less risky projects, and could be sold off. The group announced last year that it would wind up its Bam International business, which works primarily in the Middle East.
The company said: “The new strategy for 2021-2023 will lead to a smaller but profitable and predictable company, while creating a sustainable platform for future growth.” By 2023, Royal Bam’s turnover will be around €5.5bn (£4.76bn) compared to €6.8bn (£5.89bn) in 2020, it has forecast.
It has chosen the UK as one of its prime markets, having averaged a margin of 3 per cent in the country over the past three years. It favours the use of lower-risk contracting through frameworks in the UK and believes it can use its expertise in sustainable building and modern methods of construction to stand out in the market. The group said there had been “minimal” operational disruption since the UK officially left the EU on 1 January.
This morning’s full-year results showed the group made a €236.9m (£205.1m) pre-tax loss compared to a profit of €23.4m (£20.3m) in 2019. Its Bam International division, which has two costly problem projects in the Middle East, was responsible for €110.3m (£95.5m) of the loss. Its German construction and civils operations accounted for a further €66.3m (£57.4m) loss. In its half-year result, the company put the direct cost of COVID-19 to the group at €50m (£43.3m). It has not provided a full-year figure.
Revenue for the group stood at €6.81bn (£5.9bn) for the year, down from the €7.21bn (£6.24bn) it reported in 2019. The onset of the COVID-19 pandemic in the first half of 2020 saw revenue plunge 19 per cent compared to its 2019 level; a recovery since then has seen its revenue for the second half of the year just 1 per cent down on 2019’s level.
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Bam plots UK expansion despite mixed 2020 results – David Price – 2021-02-18 14:00:17