Bridge repair works to cost Severfield more than £20m

Having to repair 12 bridges because of welding problems will cost Severfield more than £20m, the country’s biggest steelwork contractor announced in its half year results this morning.

But the firm admitted the cost could rise further as the liability for four of the bridges had not yet been worked out.

The firm, which declined to name which bridges have been affected but has been carrying out major work on HS2, said so far it will spend £20.4m on testing and fixing the bridges. It added that all 12 were “either ongoing or were completed over the past four years”.

It said: “The issues all arise out of a particular bridge specification and related sub-optimal choices of welding procedures, exacerbated by limitations in the specified weld testing regime for these projects.

“Whilst the precise nature of the overall remedial work required for all affected bridge structures has not yet been fully determined, the group has incurred costs of £7.1m relating to testing and remedial works undertaken during H1 and for eight bridge projects, where the group is able to estimate with sufficient reliability the remaining testing and remedial costs, a further liability of £13.3m has been assessed.”

It added: “A comprehensive review is currently being undertaken by the group, in conjunction with its affected clients, relevant industry authorities and insurers to fully understand the extent of the actions required to resolve the issue, which has not affected the safety of any operational bridges.

“Notwithstanding this, we are continuing our work on ongoing road and rail bridges for a variety of clients, which we are confident will meet the required specification.”

It said that on four of the bridges the cost of repairs was still being worked through. “The group is not able to estimate with sufficient reliability the cost of its obligation for the four remaining bridge projects where either the results of the ongoing testing are not yet known or a rectification solution has not yet been agreed with the client, as any estimate is subject to a number of unknown factors.

“These include what the proposed rectification solution is (if any is required), sequencing, timeline and consequential disruption. Furthermore, the group is also not able to estimate with sufficient reliability any possible consequential costs (if any) from third parties as these are not yet known.”

The news meant the firm slumped into the red with a pre-tax loss of £5.8m in the six months to 28 September from an £11m profit last time. Revenue was up 17% to £252m. It said its order book at 1 November was £410m, down from £460m at 1 July, but its order book from its India operation was at a record £197m, up from £181m at the start of July.

It also said it was hoping to reach a deal with HMRC by next summer over how much tax is due on historic dispute over income tax and National Insurance.

Severfield booked a £4.4m charge in its 2024 results in a case which centres on whether site staff working away from home should be taxed on accommodation and subsistence.

In its interim results this morning, the firm said: “The group is disputing this assessment but since HMRC issued formal determinations for the amounts it considers are due, a charge was recognised in the FY24 results. Discussions are ongoing with HMRC to attempt to reach a final settlement and we expect this matter to be concluded by the end of FY25.”