In the year to 31st March 2020, Stepnell made an operating loss of £5m (2019: £363k loss) but accounts for the year to 31st March 2021 will show a return to profit of £1m and a strong order book.
The 154-year-old family business operates across central and southern England but has scaled back its ambitions in the past couple of years, with 2019’s £164m turnover being reduced to just over £100m in 2020, to avoid unprofitable contracts.
Joint managing director Tom Wakeford said that the operational loss of £5m had been offset with support of parent company Stepnell Holdings, resulting in a profit in the year.
“It goes without saying that 2020 was a challenging year for the construction industry,” he said. “Many in the industry struggled through the Covid pandemic and despite working continuously through the various shut-downs, Stepnell was not immune to the increased costs of working and the delays in delivering projects.
“In 2019, we were impacted by onerous ground conditions on our largest project, which has proved expensive to remedy. We have taken a prudent position in our accounts, allowing our team to focus on the financial recovery on the project. March 2020 saw a write down of legacy contracts due to Covid-19 which had a profound effect on our clients and our sector as a whole.
“Therefore, 2019 and 2020 were difficult years for different reasons. The 2019 losses are now more than two years old and Stepnell looks very different, in a very positive way, in 2021, with an anticipated rise in profit to around £1m.”
He added: “Our balance sheet is more than £15m which is really strong. Our group has a property portfolio of more than £40m, giving us a strong base. We are in a good position, having invested more than £10m in the development of our new business park at Lawford Road, Rugby which has let well. We have a good workload secured for the new financial year to March 2022.”
Fellow joint managing director Mark Wakeford, Tom’s brother, said: “We remain cautiously optimistic that our revised business model, with a focus on early engagement and client and supply chain partnership, on lower risk terms and conditions, will hold us in good stead. Stepnell has a more diversified range of projects than ever before and this positions us well to withstand market risks.
“Strategically, Stepnell sees 2019/20 as a year of consolidation, carefully reviewing our customer base to be in line with our resources and the skills of our supply chain. We continue to refine project selectivity this year, being cautious and only signing up on the right commercial terms.”
Stepnell manages framework projects for National Grid, Oxford Brookes University, Worcester University, Crown Construction, New Forest and Dorset County Council. It has also recently secured places on two new frameworks, the Public Sector Construction Works Framework, managed by NHS Shared Business Services, and Procure Partnerships Framework.
“Because of the stability of Stepnell and the parent company, we know we have a robust future, despite the difficult climate. Our underlying performance is improving and our future is bright,” Mark Wakeford said.