Middlesbrough-based Sembcorp to restructure following major loss

Teesside firm Sembcorp has reported a loss for the financial year of £28.3m compared to £237,000 in 2012

Wilton International in Middlesbrough
Wilton International in Middlesbrough where Sembcorp is based

Industrial solutions company Sembcorp Utilities (UK) says it is confident about its future, despite reporting major losses for 2013.

Financial statements for the year ended December 31 show a loss of £28.3m, compared to £237,000 in 2012.

The business, which saw turnover rise from £168.6m to £174.1m in the period, said it had been hit by difficult trading conditions, but would benefit from efficiency improvements, restructuring and customer supply initiatives aimed at improving flexibility and reliability.

Based at Wilton International in Middlesbrough, Sembcorp operates through three integrated business streams - renewable energy, traditional energy and utility supply, and onsite logistics, in which it supports a number of development projects and companies to grow uptake of development land at Wilton.

A directors’ report said: “Difficult trading conditions in the UK energy sector have continued throughout 2013.

“The biomass plant, Wilton 10, had a planned five week outage for tube replacement and treatment to provide greater reliability and availability of the asset moving forward.

“Customers’ heat and power demands have been similar to 2012. However, a major customer has since closed its plant in early 2014.

“A large impairment has significantly impacted profitability but reduced the asset base to a level more commensurate with the size and scale of customer demand moving forward. In addition, to get the business on a more sustainable footing, the company is midway through a significant strategy business restructuring process, including a redundancy exercise.”

The report said the restructuring was intended to achieve a more sustainable cost base in the current climate, allowing the business to focus on its core activities of green energy production, conventional energy supply and industrial utilities.

Sembcorp had reviewed options for its asset protection business, including a potential sale.

The report added: “Although the company recorded a loss for the year, the balance sheet at December 31, 2013, demonstrates that the financial position of the company remains strong with net assets of £107.2m, compared to £153.7m in 2012.”

The principal risks now included potential exposure to movements in commodity prices, legislative risks and the response of Sembcorp’s customers on the Wilton site to the recession.

“Due to the general difficult economic conditions being experienced throughout the global chemical sector, any restructuring or reduction in output by customers will impact the company’s future performance and results,” the report said.

“This reliance has been reduced in part over the past five years with investment into assets such as the Wilton 10 biomass project and the recent 50MW condensing turbine. While the current economic conditions create an element of uncertainty, the company’s forecasts and projections show that it well placed to manage its business risks successfully.”

Journalists

David Whetstone
Culture Editor
Graeme Whitfield
Business Editor
Mark Douglas
Newcastle United Editor
Stuart Rayner
Sports Writer