Croydon-based distributor IFSE is expecting a more positive 2021 after Covid impacted the fourth quarter of its latest financial year.
In its just-published annual report for the 12 months to 31 March 2020, turnover was cut by 30%, from £10.6m in 2018-19 to £7.4m last year. Accordingly, operating profit was sliced by 82%, from £695k to £123k.
Group MD Andrew Fordyce revealed in the report that the firm was unable to install and invoice many projects due for March and therefore its turnover dropped by 13.4% in that period compared to the previous year.
He detailed: “The first three quarters of the year were on target for our 2019-2020 business plan despite the market softening due to the uncertainties around Brexit. This all changed in the fourth quarter with news of the Covid-19 virus outbreak in China. There was an immediate effect on business confidence in our sector. Many new projects were put on hold or cancelled.
“IFSE and [sister servicing company] Romann immediately purchased and distributed the best PPE we could find to protect all our colleagues that were visiting customers or sites. The construction industry received guidelines about the social distancing and mask wearing measures they needed to implement to ensure that work continued in this area.”
However, Fordyce explained: “While we implemented the recommendations and guidelines immediately there was a delay in implementation across the sector. As a consequence, we had to suspend a significant number of installations because even though our colleagues obeyed the rules this approach was not adopted by other parties and we perceived the risk to our employees to be too great. This was compounded by the building supply chain for materials from bricks to plasterboard drying up causing serious delays to site programmes.”
Furthermore, as soon as the Chancellor announced his business support package on 17 March, IFSE started an application for a CBIL loan and was among the first 10,000 companies in the UK to have it approved. The distributor also put into action a plan to furlough as many staff as possible from 1 April.
Fordyce underlined: “We have taken full advantage of every support package the government offered during the crisis. Other measures in March included cutting back on company vehicles and extending the working life of those that remained plus negotiating loan interest holidays and other deferrals. We also commenced negotiations with our landlord to significantly reduce our rent on the premises when the current lease came to an end in July 2020.”
Nevertheless, he told Catering Insight that subsequently to the reporting period, since September, IFSE’s sales have recovered to the prior year’s levels. “We are stacked out with new enquiries and jobs, most staff are back from full time furlough and we are reasonably optimistic that the industry is heading towards recovery,” Fordyce concluded.