RNS Number:2047Q
Severfield-Rowen PLC
26 September 2003
26 September 2003
SEVERFIELD-ROWEN PLC
2003 Half Year Results
Severfield-Rowen Plc, the market leading structural steel group, announces its
half-year results to 30 June 2003.
Overview
* Group performing ahead of budget for the full year.
* Dividend increased to 6.25p covered 2.06 times by earnings.
* Strong order book totalling #205m of which #140m comprises the three year
Heathrow Terminal 5 contract for BAA, the largest in the Group's history.
* Capacity to service our existing and new clients not affected by the large
order book and the securing of Heathrow Terminal 5 contract.
* Work on Heathrow Terminal 5 project has commenced and is progressing well.
* Turnover resilient at #75.57m (2002 : #79.59m).
* Operating profit (after rationalisation costs of #640,000) at #3.84m up
53% on the #2.51m achieved in the second half of 2002 (2002 : first half
#5.18m).
* Profit before tax up 54% on second half of 2002 at #3.75m (2002 : first
half #5.09m - second half #2.43m).
* Operating margin up 57% at 5.08% compared with 3.23% achieved in the
second half of 2002.
* No gearing with cash balances of #3.30m.
* Re-focusing of Rowen Structures successfully completed.
* Plate and intumescent paint lines continue to demonstrate good
profitability. Second paint line currently under construction.
* All core companies of Group returning profits.
* Directors confident in the Company's future prospects.
Commenting on the results, Peter Levine, Chairman, said:
"Whilst lower than the comparable period for last year the half year results
demonstrate a material improvement in operating profit and operating margin over
those achieved during the second half of 2002.
"All core companies are trading profitably and the Group is performing ahead of
our budgets for the full year. This is particularly satisfying in the present
challenging conditions which affect our sector. The re-focusing of Rowen
Structures has been successfully completed on time and on budget.
"Work has commenced at Heathrow Terminal 5 and is progressing well. This
contract is the largest single project in the Group's history involving over
65,000 tonnes of steelwork and is the most significant steel construction
project carried out in the UK in recent times.
"The remarkable record order book totalling #205m in aggregate (including the
Heathrow Terminal 5 Project comprising #140m) gives the Group a solid bedrock of
work through to 2006 and strengthens the Group's financial prospects and
security.
"The Directors look forward to a year of sustained progress and continued
enhancement of the Group's market leading position in the industry which will,
it is believed, provide a springboard for material growth in the following
years."
Enquiries
Severfield-Rowen Plc
Peter Levine, Chairman 0113 246 9993
Peter Davison, Finance Director 01845 577 896
Financial Dynamics
Peter Otero 020 7269 7291
INTERIM STATEMENT 2003
INTRODUCTION
The Group has turned in a significantly improved performance over that achieved
in the second half of 2002 resulting in an increase of 53% in operating profit
and 57% in operating margin in comparison to that period. This is despite the
difficult trading conditions affecting the Group's sector and the one off costs
of re-focusing Rowen Structures, including rationalisation costs of
approximately #640,000.
Whilst the results are lower than in the comparable period last year most
importantly the Group is performing ahead of our budgets for the full year.
A significant indicator of the future financial prosperity and security of the
Group is the remarkable strength of our order book which currently totals #205m.
As I stated in last year's Annual Report we have been awarded the main
steelwork contract for the new Terminal 5 at Heathrow for BAA. This is the
largest single contract award in the Group's history representing, on current
estimations, in excess of 65,000 tonnes of steelwork with a remaining contract
value of #140 m, running through to 2006. It is the most significant steel
construction project to be carried out in the UK in recent times.
However, as this project will extend over the next three years and provide an
excellent base load for the Group during that period, the resources and
flexibility of the Group are such that there is still sufficient capacity
available within its three production facilities to enable it to continue to
service fully the demands of its existing and new clients.
The Group's improving results underpin and reinforce its market leadership
within the industry. With the Group's broad range of services and products,
combined with its financial strength, Severfield-Rowen is in a position of great
advantage in its market place, particularly in dealing with large and complex
contracts.
The re-focusing of Rowen Structures has been successfully completed and the
Company, in its restructured form, is in line to produce a very good performance
this year. The two other core businesses of the Group, Severfield-Reeve
Structures and Watson Steel Structures, as expected, also produced very good
performances. The plate and intumescent paint lines at Dalton maintained their
profitable progress and, due to the orders already secured for 2004, a second
paint line is currently under construction at Dalton and is due for completion
later this year.
Finance
Turnover in the period was #75.57m (2002 : #79.59m) producing an operating
profit of #3.84m (2002 : #5.18m).
Group margins at the operating level were 5.08%.
Profit before tax was #3.75m (2002 : #5.09m) after net interest payable of
#36,000 (2002 : interest payable of #93,000).
Assuming a tax charge of 30.5% (2002 : 30.5%) basic earnings per share were
12.89p (2002 : 17.78 p)
During the first 6 months of the year capital expenditure amounted to
approximately #1m.
Although trading in the first six months of the year resulted in an increase in
the amount of cash tied up in working capital of almost #7.5m the period ended
with the Group having a positive cash balance of #3.30m. This figure is also
after having paid out almost #4m in taxation and dividends, together with the
aforementioned #1m of capital expenditure.
Borrowings, represented primarily by amounts due on hire purchase contracts,
amounted to #1.79m leaving the group with a net fund surplus of #1.51m and,
therefore, no gearing.
Share Buy-Back
Whilst the Company has the power to buy back its own shares, none were purchased
in the reporting period.
The Directors continue to monitor the situation and will not hesitate to
exercise such power as and when it is appropriate taking into account the cash
position of the Company and the Directors' view of the medium to long-term
prospects of the Group.
Dividend
As a result of the Group's strong order book, and the Directors' view as to its
future prospects and strong financial position, the Board is pleased to increase
the interim dividend to 6.25p per share (2002 : 5.25p) which is covered 2.06
times by earnings (2002 : 3.38 times). The interim dividend will be paid on 24
October 2003 to shareholders on the register on 10 October 2003.
Operations
The principal business of the Group is carried out by Severfield-Reeve
Structures, Watson Steel Structures and Rowen Structures.
Throughout the trading period the Group's market leading position has been
enhanced and its production facilities, technology and broad range of structural
steel services remain unparalleled in the industry. Carefully planned
investment, which has always been the cornerstone of Severfield-Rowen's success,
continues. Margins remain significantly above what is generally considered to
be average in the continued depressed UK steel fabrication sector.
Each of the core businesses of the Group are trading profitably. It is
particularly pleasing to note that the re-focusing of Rowen Structures has taken
place successfully, on budget and on time. It is still expected to make a
positive contribution to the Group this year. The change in Watson Steel
Structures since we acquired this business has been dramatic. It has world
class expertise in specialist steel work projects and, with its radically
upgraded production facility, is a very important and profitable member of the
Group. Severfield-Reeve Structures, the company around which the Group has been
forged, remains in the forefront of the industry in terms of capacity,
efficiencies and use of technology. The Fabsec beams manufactured in the plate
line are increasingly in demand to the extent that a further welding machine has
been added to cope with orders. The intumescent paint line has also proved a
success and demand, extending through 2004 and beyond, has led to the
construction of a second paint line at Dalton due to be completed in the second
half of the year.
Projects carried out in the first six months include:
* Rolls-Royce building in Glasgow for the manufacture of turbine blades
* Marks and Spencer retail outlet in Gateshead
* Two large office developments in Manchester - Hardman Boulevard and
Spinningfields
* Tattersalls building at Cheltenham racecourse
* New Sainsbury's store in Belfast, Northern Ireland
* Extension to St Pancras station roof - for the Channel Tunnel Rail Link
* Office development in Belgravia
* Second phase of the multi-functional retail/leisure complex in Croydon
* New warehouse for Pirelli Tyres, Carlisle
* New waste treatment facility at Arsenal, North London
* Residential flats development in Sweet Street, Leeds
* Overbridge at Kings Cross Station for the Channel Tunnel Rail Link
* Elevated access roadway at the Port of Dover
* Pedestrian bridge link to Selfridges at the Bull Ring, Birmingham
General market prices remain sensitive but, nevertheless, the Group's strong
financial position means that it is increasingly in demand to undertake the
larger and more complicated projects in which it excels in terms of costs,
efficiency and expertise. The Board continues to monitor overheads and expenses
and is dedicated to improving margins further in the future.
Senior Independent Non-Executive Director
In anticipation of the implementation of the new Combined Code which will come
into effect shortly, it is announced that Keith Elliott, a non-executive
Director since October 1988 has been appointed as the Senior Independent
Non-Executive Director of the Group in place of John Featherstone who remains an
important and valued member of the Board.
Outlook
The Group has successfully progressed from the reduced level of operating profit
and operating margins achieved during the second half of 2002 and trading for
2003 is ahead of our budgets for the full year.
The morale of our workforce is excellent. The credibility and status of our
Group is unchallenged in our market place and the remarkable order book
extending through 2006 speaks for itself as a tribute to our workforce and the
profile of Severfield-Rowen in the market place it serves.
The Directors look forward to a year of sustained progress and continued
enhancement of the Group's market leading position in the industry which will,
it is believed, provide a springboard for material growth in the following
years.
PETER LEVINE
CHAIRMAN
26 September 2003
Severfield-Rowen Plc
Consolidated Profit and Loss Account
Six Months to Six Months to Year to
30 June 2003 30 June 2002 31 December 2002
Unaudited Unaudited Audited
#000 #000 #000
Turnover 75,573 79,594 157,418
---------- ---------- ----------
Group operating profit 3,837 5,181 7,690
Share of associates' operating loss (56) - (164)
---------- ---------- ----------
3,781 5,181 7,526
Net interest (36) (93) (7)
---------- ---------- ----------
Profit on ordinary activities before
taxation 3,745 5,088 7,519
Taxation on profit on ordinary activities (1,142) (1,550) (2,496)
---------- ---------- ----------
Profit on ordinary activities after
taxation for the period 2,603 3,538 5,023
Dividends payable to equity shareholders (1,252) (1,043) (2,817)
---------- ---------- ----------
Profit retained, transferred to reserves 1,351 2,495 2,206
---------- ---------- ----------
Basic earnings per share 12.89p 17.78p 25.08p
---------- ---------- ----------
Diluted earnings per share 12.88p 17.71p 25.05p
---------- ---------- ----------
Dividends per share 6.25p 5.25p 14.00p
Severfield-Rowen Plc
Consolidated Balance Sheet
At 30 June At 30 June At 31 December
2003 2002 2002
Unaudited Unaudited Audited
#000 #000 #000
Fixed Assets:
Tangible assets 28,023 22,311 28,069
Investments 648 722 629
Intangible assets 180 112 180
---------- ---------- ----------
28,851 23,145 28,878
---------- ---------- ----------
Current Assets:
Stocks 5,412 5,215 5,742
Debtors 33,424 49,344 32,571
Cash at bank and in hand 3,300 9,232 11,417
---------- ---------- ----------
42,136 63,791 49,730
Current Liabilities:
Creditors due within one year (28,979) (45,668) (37,613)
---------- ---------- ----------
Net current assets 13,157 18,123 12,117
---------- ---------- ----------
Total assets less current liabilities 42,008 41,268 40,995
Creditors due after more than one year (901) (1,552) (1,240)
Provision for liabilities and charges (2,021) (1,736) (2,021)
---------- ---------- ----------
39,086 37,980 37,734
---------- ---------- ----------
Capital and Reserves:
Called up share capital 2,019 2,012 2,018
Share premium account 9,231 9,194 9,231
Other reserves 139 139 139
Profit and loss account 27,697 26,635 26,346
---------- ---------- ----------
39,086 37,980 37,734
---------- ---------- ----------
Severfield-Rowen Plc
Consolidated Cash Flow Statement
Six Months to Six Months to Year to
30 June 2003 30 June 2002 31 December 2002
Unaudited Unaudited Audited
#000 #000 #000
Net cash flow from
operating activities (2,637) 4,919 16,304
Returns on investments and servicing
of finance (30) (87) 6
Taxation (2,209) (1,927) (2,467)
Capital expenditure and financial
investment (929) (1,833) (8,141)
Acquisitions and disposals (75) 271 (647)
Equity dividends paid (1,774) (1,760) (2,784)
---------- ---------- ----------
Cash (outflow)/inflow before use of
liquid resources and financing (7,654) (417) 2,271
Financing (463) (3,769) (4,272)
---------- ---------- ----------
Decrease in cash in the period (8,117) (4,186) (2,001)
---------- ---------- ----------
Reconciliation of net cash flow to movement in net funds
Six Months to Six Months to Year to
30 June 2003 30 June 2002 31 December 2002
Unaudited Unaudited Audited
#000 #000 #000
Decrease in cash in the period (8,117) (4,186) (2,001)
Cash flow from movement in loans and
hire-purchase contracts 464 4,448 4,994
---------- ---------- ----------
Change in net funds from cash flows (7,653) 262 2,993
Loan acquired with subsidiary - - (107)
New borrowings - - (288)
New hire-purchase contracts - (313) (313)
---------- ---------- ----------
Movement in net funds in the period (7,653) (51) 2,285
Net funds at beginning of period 9,159 6,874 6,874
---------- ---------- ----------
Net funds at end of period 1,506 6,823 9,159
---------- ---------- ----------
Notes:
1) The interim financial statements, which are neither audited nor reviewed by
the auditors, have been prepared on the basis of the accounting policies
set out in the company's 2002 statutory accounts.
2) Taxation for the six months to 30 June 2003 has been shown at the rate
estimated to be applicable for the full year.
3) The interim dividend of 6.25p per share (2002: 5.25p) will be paid on 24
October 2003 to shareholders on the register on 10 October 2003. The
ex-dividend date will be 8 October 2003.
4) The basic earnings per share figure for the six months ended 30 June 2003
is based on the profit after taxation of #2,603,000 (2002: #3,538,000) and
20,186,245 (2002: 19,897,289) ordinary shares, being the weighted average
of the number of shares in issue during the period.
The calculation of diluted earnings per share is based on the profit after
taxation of #2,603,000 (2002: #3,538,000) and 20,210,540 (2002: 19,977,276)
ordinary shares, being the weighted average of the number of shares in
issue during the year, allowing for the dilutive effect of share options.
5) The results for the year to 31 December 2002 are an abridged version of the
company's full accounts which carry an unqualified auditors' report and
have been filed with the Registrar of Companies.
6) The interim report will be posted to shareholders. Copies are available
from the Secretary, Severfield-Rowen Plc, Dalton Airfield Industrial
Estate, Dalton, Thirsk, North Yorkshire YO7 3JN.
7) Reconciliation of movement of shareholders' funds
#000
At January 2003 37,734
Retained profit for the period 1,351
Issue of share capital under share option scheme 1
---------
At 30 June 2003 39,086
---------
8) Reconciliation of group operating profit to operating cash flow
Six Months to Six Months to Year to
30 June 2003 30 June 2002 31 December 2002
#000 #000 #000
Group operating profit 3,837 5,181 7,690
Depreciation, amortisation and
profit/loss on disposal of assets 975 950 2,220
Working capital (increase)/decrease (7,449) (1,212) 6,394
---------- ---------- ----------
Net cash flow from
operating activities (2,637) 4,919 16,304
---------- ---------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
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