Exclusive: Profits up at Sewell in spite of damage to sales

Sewell Group, a Hull-based retail, investments, and facilities management company set up when Disraeli was in Downing Street, raised profits fourfold last year. It warned, however, that sharp swings in fuel prices had hit its service station business in 2010 and since the year-end.

Sewell, which built Britain’s first private finance initiative (PFI) school in its home city, increased pre-tax profits to £2.17m, up from £452,000, even as turnover fell to £68.5m, down from £72.32m.

The firm, set up in 1876, has built schools, health and community centres in Hull in recent years and is run by Paul Sewell, a cheerleader for a city which has long faced economic problems.

It built Victoria Dock Primary, Britain’s first PFI school, in the city in 1999 before “leasing” it to the local education authority for the next 25 years.

Sewell hopes to take turnover to £100m this year as more education projects help construction revenues to bounce back.

Finance director Simon Davison said Sewell had escaped the worst of the spending cuts, which including the scrapping of school rebuilding projects in the region worth at least £1bn and led to fierce criticism of Michael Gove, the Education Secretary.

Mr Davison said: “We have been very, very fortunate in terms of BSF in Hull. It is one of the few which have continued. We have had to deal with some significant cuts within those schemes. Three were well on with being designed and developed when the Government made those cuts.”

Hull City Council’s £400m BSF programme will see secondary and special schools in the city rebuilt or remodelled through the local Esteem Consortium, made up of Sewell, Morgan Sindall Investments and Robertsons Capital Projects.

Sewell is onsite for three projects – a new academy in north Hull, a major remodelling of Malet Lambert Language College and the redevelopment of Endike Primary School – which will bring in revenue of £50m. They are all due to open in September of next year.

Two other schemes – of Newland School for Girls and special educational needs school Frederick Holmes – are worth a total of £18m for the group. They are at the design stage and are due to open in 2013.

Under PFI schemes the private sector pays for construction of a centre and then services and maintains it for up to 30 years in return for an annual payment.

Sewell’s sales from construction and development are expected to increase from £10m to about £50m this year. Its service station business, which contributed nearly £53m last year, will dip slightly to the “high forties” as motorists make fewer non-essential journeys, Mr Davison said.

“The two parts of the business are very different from one another,” Mr Davison said.

“They have complemented each other over the years where if one struggles because of external factors the other does quite well and vice versa.”

The bulk of Sewell’s 2010 revenues came from its service station business, which hit turnover of £52.64m last year, up from £49.1m in 2009. Now it is looking to expand the business, according to the directors’ report.

“Trading conditions have been difficult for our service stations business with unprecedented volatility over fuel prices.

“While these conditions have continued into 2011 the business is well positioned to strengthen its portfolio of sites in the Hull and East Yorkshire area.”

The firm was also commended for its staff engagement in a national survey last year.

In the chair since 1978

Paul Sewell took over construction company F Sewell & Son with business partner Dennis Sewell – no relation – in 1978.

The businessman also created Humber Business Week and won an Institute of Directors award for Overall Contribution to the Yorkshire Economy in 2007.

Sewell Group, which with more than 300 staff is one of Hull’s largest private sector employers, built the first healthy-living centre for older people for Age Concern but is best-known for its work in education.

It has also built eight purpose-built health and community centres across Hull.