17
April 2024
Severfield
plc
('the Company' or 'the
Group')
Pre-close trading update and
announcement of share buyback programme
Results slightly ahead of
expectations, record UK and Europe order book, outlook is
positive
Severfield plc, the market leading
structural steel group, today issues the following trading update
for the year ended 30 March 2024, ahead of the announcement of its
annual financial results on Wednesday 19 June, and announces its
intention to commence a share buyback
programme to return £10m to shareholders.
FY24 results ahead of our previous
expectations
The Group has made good progress in
the second half of the 2024 financial year and we now expect to
deliver a full year result which is slightly above our previous
expectations. The financial position of the Group remains strong
and year-end net debt (on a pre IFRS 16 basis) was c.£10m, also
ahead of our previous expectations, reflecting an improvement in
underlying working capital and an increase in advance
payments.
Operational and trading update
UK and
Europe
In the second half of the year, we
have continued to secure a significant value of new work, resulting
in a record UK and Europe order book of £511m at 1 April 2024 (1
November 2023: £482m), of which £397m is for delivery over the next
12 months. The order book remains well-diversified and contains a
good mix of projects across the Group's key market sectors. The
growth in the order book reflects the continued strengthening of
our market position in Europe, supported by the acquisition of
Voortman ('VSCH'), and 32 per cent of the order book now represents
projects in continental Europe and Ireland (1 November 2023: 13 per
cent).
We continue to see large project
opportunities in both our Commercial and Industrial division and
Nuclear and Infrastructure division, in the UK, continental Europe
and Ireland. These include projects in support of a low-carbon
economy such as battery plants, energy efficient buildings,
manufacturing facilities for renewable energy and offshore wind
projects. Furthermore, the Group remains well-placed to meet an
ongoing demand for infrastructure investment, including a growing
focus on major projects which can mitigate the impacts of climate
change and deliver energy security. This includes nuclear (such as
Sizewell C and small nuclear reactors), carbon capture and hydrogen
production, together with HS2 and Northern Powerhouse
Rail.
In our Modular Solutions division,
we have maintained our focus on growing our Severstor product
ranges, which attract higher margins, and on developing our growing
pipeline of opportunities, including in growth areas such as
renewable energy and data storage. We continue to make good
progress in growing our revenues and client base and expect this
division to report a small profit for the 2024 financial
year.
India
The Indian joint venture ('JSSL')
performed well in the second half of the year and is expected to
deliver another step up in profitability in 2024. JSSL's total
output for 2024 is likely to exceed 100,000 tonnes, including
sub-contracted work, for the second year running. The order book
was £142m at 1 April 2024 (1 November 2023: £165m). With an
improving pipeline of potential orders and numerous identified
growth opportunities, including those in new and existing market
sectors, and with the land in Gujarat for future expansion now
secured, JSSL is well positioned to take advantage of a very
encouraging outlook for the Indian economy and a strong underlying
demand for structural steel in construction.
Launch of £10m share buyback programme
Our well-established growth strategy
is unchanged and is underpinned by our disciplined capital
allocation policy. The Group's capital allocation priorities are to
support its ongoing operational requirements and profitable organic
growth opportunities, to pay sustainable core dividends to
shareholders, to fund strategic growth opportunities, and to make
further returns of capital to shareholders as appropriate, whilst
maintaining a strong balance sheet. Consistent with this policy and
given the highly cash generative nature of the business, the Group
today announces that it intends to commence a £10m share buyback
programme, subject to market conditions.
The purpose of this buyback
programme is to return surplus capital to shareholders and reduce
the Group's share capital, whilst maintaining the financial
flexibility to invest in the ongoing execution of our strategy to
deliver sustainable growth and attractive returns.
Board change
As referenced in a separate
announcement today, we are pleased to announce the appointment of
Charlie Cornish as non-executive Chair and director of the Company.
Charlie will join the Company's Board on 1 May 2024 and will take
over as Chair after the AGM on 30 July 2024 when Kevin Whiteman
steps down from the Board, having completed his nine-year
tenure.
Outlook
The Group is performing well, the
outlook is positive and our businesses are well-positioned in
markets with excellent long-term growth opportunities. Whilst there
remains some uncertainty in the wider economy, we are seeing an
improvement in market conditions which, together with our
high-quality order books, diversified activities and operational
delivery capabilities, provides us with confidence for the year
ahead.
For
further information, please contact:
Severfield
Alan Dunsmore
01845 577
896
Chief Executive Officer
Adam Semple
01845 577 896
Chief Financial Officer
Jefferies International
Will Soutar
020 7029 8000
Shaam Vora
020 7029
8000
Liberum
Capital
Nicholas
How
020 3100 2000
Satbir Kler
020
3100 2000
Camarco
severfield@camarco.co.uk
Ginny Pulbrook
+44 7961 315
138
Tom Huddart
+44
7967 521 573
Notes:
About Severfield
Severfield is the UK's market leader
in the design, fabrication and construction of structural steel,
with a total capacity of c.150,000 tonnes of steel per annum. The
Group has seven sites, c.1,800 employees and expertise in large,
complex projects across a broad range of sectors. The Group also
has an established presence in the expanding Indian market through
its joint venture partnership with JSW Steel (India's largest steel
producer).
Inside information
The information relating to the
proposed share buyback programme in this announcement constitutes
inside information as stipulated under the Market Abuse Regulation
(EU) No.596/2014 (as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018). On the publication of
this announcement via a Regulatory Information Service, such
information is now considered to be in the public domain. The
person responsible for arranging for the release of this
announcement on behalf of Severfield is Adam Semple, Chief
Financial Officer.
Share buyback programme
The Group has today announced its
intention to commence a share buyback programme, subject to market
conditions, to purchase ordinary shares of 2.5 pence each in the
Company ('Ordinary Shares') for a maximum aggregate consideration
of £10m (excluding stamp duty and expenses) from the date of this
announcement (the 'Buyback').
The Company has entered into an
irrevocable non-discretionary agreement with Liberum Capital
Limited ('Liberum'), pursuant to which Liberum shall purchase
Ordinary Shares as riskless principal (and not as agent of
Severfield) for the subsequent sale on to, and purchase by,
Severfield, up to the maximum aggregate consideration of £10m.
Liberum will make its trading decisions in relation to the Ordinary
Shares independently of, and uninfluenced by, the Company, within
the programme terms and certain pre-set parameters.
Any purchase of Ordinary Shares
under the Buyback will take place in open market transactions and
may be made from time to time depending on market conditions, share
price and trading volumes. The Buyback will be effected under the
general authority to repurchase Ordinary Shares granted by the
Company's shareholders at the 2023 annual general meeting and to be
sought at the 2024 annual general meeting and in accordance with
Chapter 12 of the UK Financial Conduct Authority's Listing Rules,
and Regulation (EU) No 596/2014 and Commission Delegated Regulation
(EU) No 2016/1052 (both as they form part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018), including
where relevant pursuant to the UK Market Abuse
Regulation.
Due to the limited liquidity in the
Ordinary Shares, a buy-back of Ordinary Shares on any trading day
may represent a significant proportion of the daily trading volume
in the Ordinary Shares and may exceed the 25 per cent of the
average daily trading volume specified in the provisions of the UK
Market Abuse Regulation dealing with buyback programmes and
accordingly the Company may not benefit from the exemption
contained in Article 5(1) of that regulation.
Any purchase of Ordinary Shares
pursuant to the Buyback will be announced by not later than 07:30
on the business day following the calendar day on which the
purchase occurred. Any Ordinary Shares purchased by the Company
will be cancelled and the number of Ordinary Shares in issue
reduced accordingly.