Severfield annual results announced - 21 March 2020

Strategic 2020 profit target achieved, good cash generation and strong balance sheet, UK and Europe order book of £271m

Highlights

• Revenue up 19% to £327.4m (2019: £274.9m)
• Underlying* profit before tax up 16% to £28.6m (2019: £24.7m), ahead of strategic 2020 profit target of £26m
• Underlying* basic earnings per share up 15% at 7.7p (2019: 6.7p)
• Acquisition of Harry Peers for net initial cash consideration of £18.9m, contingent consideration of up to £7m payable in 2021 financial year
• Good cash generation resulting in year-end net funds (excluding IFRS 16 lease liabilities**) of £16.4m (2019: £25.1m), including the outstanding acquisition loan of £13.1m for Harry Peers
• Over 100 projects undertaken during the year in the UK, Ireland and continental Europe in diverse market sectors including industrial and distribution, data centres, commercial offices (both in London and the UK regions) and transport infrastructure
• UK and Europe order book of £271m at 1 June 2020 (1 November 2019: £323m), including £17m for Harry Peers – the expected reduction reflects revenue recognised in H2 on several large ongoing contracts
• Share of profit from Indian joint venture (‘JSSL’) up 80% at £2.2m (2019: £1.2m), reflecting both revenue growth and margin improvement
• India order book of £110m at 1 June 2020 (1 November 2019: £134m), expansion of the Bellary facility is now complete

COVID-19

• Factories are operational and all of our UK and European construction sites remain open
• Tendering and pipeline activity remains encouraging but some investment decisions being delayed by clients
• Strong balance sheet and cash position, sufficient committed funding in place until 2023 and cash generative business model
• Additional resilience provided by our market sector, geographical and client diversity
• Future market outlook remains uncertain – dividend payment decisions deferred until greater visibility over the impact of COVID-19

Alan Dunsmore, Chief Executive Officer commented:

‘The strong set of results that we are reporting today reflects the further operational and strategic progress that we have made in 2020. Our balance sheet and cash position remain strong, we have continued to drive our ‘Smarter, Safer, more Sustainable’ initiatives with an increased focus on manufacturing efficiency, and we have entered new UK markets through the acquisition of Harry Peers.

Despite the ongoing uncertainty of COVID-19, we remain well placed to win work in the diverse range of market sectors and geographies in which we operate. This allows us to target a good pipeline of opportunities and provides us with the extra resilience and ability to increase our market share. With our teams on site and operational, we are in a good position to service our clients and manage the potentially challenging market ahead.’

See the full press release on our RNS feed for Severfield annual results announced – 31 March 2020