Demolition deal helping to build up profits at Silverdell

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DECOMMISSIONING group Silverdell said newly-acquired demolition contractor EDS is performing ahead of plan and has been fully integrated, helping it to surging annual profits.

The group bought Sheffield-based EDS in June for £18.6m in a deal it called “transformational”.

Silverdell yesterday said revenues grew 38 per cent to £82.5m in the year to the end of September. This included organic growth of seven per cent with EDS contributing £18.9m. Adjusted pre-tax profits surged 43 per cent to £4.3m and Silverdell declared a maiden dividend of 0.175p.

EDS specialises in demolition and decommissioning, and worked on the former Chapelcross nuclear plant in Scotland. Originally called Euro Dismantling Services, it also has sites in Australia and Canada, where it is seeing strong growth.

At the time of the deal EDS employed about 200 staff, with 130 of them based in Sheffield, but has since doubled this to about 400. EDS managing director Darren Palin stayed on as MD of the decommissioning division.

“It (the integration) has gone fully to plan and if anything it’s exceeded expectations,” said chief executive Sean Nutley. “It’s a really good business and having a great run.”

Silverdell and EDS were recently appointed joint contractors by Magnox on a £304m contract to remove asbestos from 10 former UK power stations. That contract has started, albeit late, with an initial order for works worth £3.2m.

Silverdell has three divisions – remediation, decommissioning and consulting. Decommissioning remains strong despite the weak economy, said Mr Nutley, with a counter-cyclical effect from closing industrial facilities, such as the Coryton refinery in Essex.

But the non-decommissioning side, such as asbestos, insulation and scaffolding, is tougher. “Economic conditions are challenging and are expected to remain so, as clients increasingly seek more value for growth,” said the company.

“The UK is a challenging market for us still,” said Mr Nutley. “Having said that, we’re seeing signs of opportunity going forward.”

The group said its order book more than doubled over the year to £219m at the end of October. Of this, £97m is scheduled to fall in 2013.

It won contracts during the period including scaffolding and thermal insulation at a gas terminal in the North West, a contract at an oil refinery in South Wales and scaffolding for a cement manufacturer in the Midlands.

Analysts at FinnCap stockbrokers said: “The full-year result is slightly better than our recently reduced forecast, with existing forecasts maintained for the current year. The results have been significantly boosted by the acquisition of EDS which contributed to three months of the year and has helped to transform the group in scale and customer offering.”