Interim Results
30 September 2020
Severfield Interim Results
Alan Dunsmore
Chief Executive Officer
September 2020 | 2 |
Severfield Interim Results
Highlights
- Revenue up 40% at £186.0m
- Underlying profit before tax up 3% at £8.4m - despite the impact of COVID-19
- Good cash generation resulting in net funds of £19.5m, including outstanding acquisition loan of £10.5m for Harry Peers
- UK and Europe order book of £287m
- Share of loss from India of £0.7m reflecting COVID-19 related disruption to operations
- India order book is stable at £98m
- Underlying basic EPS of 2.2p
- Interim dividend maintained at 1.1p per share
September 2020 | 3 |
Severfield Interim Results
COVID-19
- UK and Europe - factories are fully operational, all construction sites are open, underlying operations performing well
- Strong balance sheet and cash position, sufficient committed funding in place until 2023 and cash generative business model
- Tendering and pipeline activity remain very encouraging
- Pricing is more competitive and some client investment decisions taking longer than normal
- Additional resilience provided by our market sector, geographical and client diversity
- India - economy opening up slowly, JSSL well placed to win more work once improved market clarity returns
- No claims made under government support packages - including furlough scheme
- Optimistic in our outlook for FY21 and beyond
September 2020 | 4 |
Severfield Full Year Results
Adam Semple
Group Finance Director
September 2020 | 5 |
Severfield Interim Results
Group income statement
£m
Revenue
Underlying operating profit (before JVs and associates)
Results of JVs and associates
Net finance expense
Underlying profit before tax
Tax
Underlying profit after tax
6 months to | 6 months to | |
30 Sept 2020 | 30 Sept 2019 | |
186.0 | 131.7 | |
9.5 | 7.0 | |
(0.6) | 1.5 | |
(0.4) | (0.3) | |
8.4 | 8.2 | |
(1.7) | (1.3) | |
6.7 | 6.9 | |
- Improved visibility of second half and full year outturn
- Market guidance reinstated (assuming no material impact from further lockdowns)
September 2020 | 6 |
Severfield Interim Results
India income statement
£m | 6 months to | 6 months to | 12 months to | |
30 Sept 2020 | 30 Sept 2019 | 31 Mar 2020 | ||
Revenue | 23.1 | 56.3 | 109.3 | |
Operating profit | - | 4.8 | 9.3 | |
- | 8.5% | 8.5% | ||
Finance expense | (1.6) | (1.3) | (2.9) | |
(Loss) / profit before tax | (1.6) | 3.5 | 6.4 | |
Tax | 0.3 | (0.9) | (1.9) | |
Profit after tax | (1.3) | 2.6 | 4.5 | |
Group share after tax (50%) | (0.7) | 1.3 | 2.2 | |
- India order book of £98m (June 2020: £110m)
- Production of 18,000 tonnes (H1 2019: 50,000 tonnes)
September 2020 | 7 |
Severfield Interim Results
Balance sheet
£m
Non-current assets
Current assets | Inventories |
Trade and other receivables | |
Cash and cash equivalents | |
Current tax asset | |
Total assets | |
Liabilities | Current liabilities |
Borrowings (includes IFRS 16 leases) | |
Retirement benefit obligations | |
Deferred tax liabilities | |
Total liabilities | |
Net assets |
30 Sept 2020 | 31 Mar 2020 |
200.7 | 203.8 |
6.1 | 6.9 |
68.3 | 74.6 |
29.8 | 44.3 |
2.0 | 1.6 |
106.2 | 127.4 |
306.9 | 331.2 |
(81.2) | (85.4) |
(21.1) | (39.4) |
(23.0) | (18.7) |
(2.8) | (4.0) |
(128.1) | (147.5) |
178.8 | 183.7 |
September 2020 | 8 |
Severfield Interim Results
Cash flow
Net funds bridge - period ended 30 September 2020
£ million
35.0 | |||||||||||||||||
30.0 | 3.1 | (1.7) | (5.5) | ||||||||||||||
25.0 | 11.8 | (2.4) | |||||||||||||||
20.0 | (2.2) | ||||||||||||||||
15.0 | Working capital as a %age of | ||||||||||||||||
sales was 2% at the period-end | |||||||||||||||||
10.0 | (below target range of 4 - 6%). | 19.5 | |||||||||||||||
16.4 | |||||||||||||||||
5.0 | |||||||||||||||||
- | |||||||||||||||||
Net funds | Operating cash flow | Working capital | Net capex | Dividends paid | Taxation | Other | Net funds | ||||||||||
- Mar 2020 | movement | - Sept 2020 |
September 2020 | 9 |
Severfield Interim Results
Alan Dunsmore
Chief Executive Officer
September 2020 | 10 |
Severfield Interim Results
Group strategy
Growth | India |
• Both organic and through selective acquisitions | |
• Growth and creating value in JSSL | |
- European business - new geographies and markets
- Severfield (Products & Processing) - new product ranges including 'Severstor' and 'Seversilo'
- Harry Peers - nuclear, process industries and power sectors
- modular steel offerings
- CMF - expansion underway - more cold rolled steel products
Operational improvements
- Manufacturing efficiency
- Innovation
- Digital transformation, including systems
- People
- Risk management, control, health and safety
September 2020 | 11 |
Severfield Interim Results
Responding to the 'new normal'
Our capability and agility to respond to the post COVID- 19 market dynamics is greater than it has ever been before
Government
policy
Market | Our |
sectors | clients |
September 2020 | 12 |
Severfield Interim Results
Market sectors
Power and energy | Stadia and leisure | Health and education | Industrial and distribution | Nuclear |
Retail | Commercial | Transport | Data centre and other | Process industries |
September 2020 | 13 |
Severfield Interim Results
High quality UK and Europe order book
£m
350 | 323 | |||||
313 | ||||||
295 | ||||||
300 | 287 | |||||
271 | ||||||
256 | ||||||
237 | 243 | 245 | ||||
250 | 230 | |||||
200 | 200 | 183 | ||||
150
100
50
0
Jun-18 | Nov-18 | Jun-19 | Nov-19 | Jun-20 | Nov-20 |
Order book (total) | Order book (<12 months) |
September 2020 | 14 |
Severfield Interim Results
Current major projects
Endorsing Severfield's leading market position
Google Headquarters King's Cross London | Lord's Cricket Ground London | Argyle Street Glasgow |
Fulham Football Club Riverside Stand Development London
One Sherwood Street London
September 2020 | 15 |
Severfield Interim Results
Current major projects
Endorsing Severfield's leading market position
Distribution Centre Swindon | ESS Lund Sweden | Logistics Operations Centre Solihull |
Data Centre Dublin | Bankside Yards London |
September 2020 | 16 |
Severfield Interim Results
UK and Europe order book
Sector | Nov 2020 | Jun 2020 | Future Trend |
£287m | £271m | ||
Industrial and distribution | 36% | 45% | |
Commercial offices | 27% | 24% | |
Nuclear | 17% | 4% | |
Data centres and other | 11% | 15% | |
Transport | 5% | 4% | |
Stadia and leisure | 3% | 5% | |
Process industries | 1% | 1% | |
Power and energy | - | 1% | |
Retail | - | 1% | |
Health and education | - | - | |
UK | 68% | 54% | |
Europe and Republic of Ireland | 32% | 46% | |
September 2020 | 17 |
Severfield Interim Results
HS2 - a decade of infrastructure investment
Phase 1 | Status | Opportunity | ||
Underway | Four main stations | |||
• | London Euston | |||
London to | Consortia | • | Old Oak Common | |
• | BBV (Balfour Beatty, Vinci) | • | Birmingham Interchange | |
Birmingham | ||||
• | SCS (Skanska, Costain, Strabag) | • | Birmingham Curzon Street | |
• | EK (Eiffage Genie, Kier) | Bridges | ||
• | Align (Bouyges, VolkerFitzpatrick, SRA) | • | Around 70 structures |
Phase 2 | Status | Opportunity |
Birmingham to | 2022+ | Stations and bridges |
Crewe | ||
Phase 3 | Status | Opportunity |
Manchester and | ||
Leeds (under | - | - |
government | ||
review)
September 2020 | 18 |
Severfield Interim Results
India - overview
- COVID-19continues to disrupt operations
- First half share of loss reflects lower activity levels and impact of site closures and remobilisation
- All projects remain ongoing but opening up of economy from lockdown is progressing slowly
- Slower pipeline conversion and some delayed decision making from clients
- Order book is stable at £98m, close to pre-pandemic levels
- Good order pipeline which includes a number of commercial projects for key developers and established clients
- Key initiatives include development of strategic alliances with clients (nominated steelwork contractor) for commercial, data centre and healthcare projects
- Share of steel in construction remains well below other developing countries
- We remain positive about the long-term development of the Indian market and value creation potential of JSSL
September 2020 | 19 |
Severfield Interim Results
India order book
140 | 124 | 134 | 134 | |||
120 | 106 | 110 | ||||
98 | ||||||
100 | 52 | 79 | ||||
27 | ||||||
94 | ||||||
80 | ||||||
60 | 90 | 78 | ||||
40 | 79 | 72 | ||||
20 | 55 | |||||
40 | ||||||
20 | 20 | |||||
0 | ||||||
Jun-18 | Nov-18 | Jun-19 | Nov-19 | Jun-20 | Nov-20 |
Commercial work | Industrial work | ||
September 2020 | 20 |
Severfield Interim Results
Current major projects - India
Phoenix Business | Sattva Knowledge Park Hyderabad |
HUB Hyderabad | |
Phoenix Centaurus Hyderabad
Data Centre Navi Mumbai
JSW Conveyors Dolvi | IKEA Bengaluru |
September 2020 | 21 |
Severfield Interim Results
India - target sectors
Offices
Commercial | Hospitals |
Data and
distribution centres
Sectors Industrial
Power
Infrastructure | Airports |
Bridges
Work from home (WFH) affecting the growth
Pandemic has highlighted the lack of infrastructure in this sector - improving demand foreseen
WFH, lockdown and internet-based buying has increased demand for data and distribution storage facilities
Steel | Currently steady. Longer |
term should be positive | |
Oil and gas | Steady demand |
Cement | Dip in demand |
Steady demand |
Post pandemic international travelling has reduced
Currently steady - longer term should be positive
September 2020 | 22 |
Severfield Interim Results
Summary and outlook
- Strong H1 despite the disruptive impact of COVID-19
- Revenue up 40%, underlying profit before tax up 3%
- Strong cash position allows us to make the right long-term decisions
- Continued progress with 'SSS' operational improvement initiatives
- Harry Peers integrating well
- Interim dividend maintained
- High quality UK and Europe order book of £287m of which £245m is for delivery over next twelve months
- India order book of £98m, close to pre-pandemic levels
- Tendering and pipeline activity remain very encouraging despite more competitive pricing and some client investment decisions taking longer than normal
- Additional resilience provided by market sector, geographical and client diversity
- Improved visibility of H2 and full year outturn - assumes no material impact from further lockdowns
September 2020 | 23 |
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Severfield plc published this content on 24 November 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 November 2020 13:10:04 UTC