REG - Severfield PLC - Final Results
24/07/2025 07:00
For best results when printing this announcement, please click on link below:
https://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20250724:nRSX2957Sa&default-theme=true
RNS Number : 2957S Severfield PLC 24 July 2025
24 July 2025
Results for the year ended 29 March 2025
Diversified order book of £444m supports unchanged expectations for FY26,
well-positioned in markets with positive long-term growth trends
Severfield plc, the market leading structural steel group, announces its
results for the year ended 29 March 2025.
£m Year ended(3) Year ended(3) Change
29 March 2025 30 March 2024
Revenue 450.9 463.5 -3%
Underlying(1) operating profit 21.7 37.7 -42%
(before JVs and associates)
Underlying(1) operating margin 4.8% 8.1% -330 bps
(before JVs and associates)
Operating (loss) / profit (13.7) 26.4 -152%
Operating margin (3.0)% 5.7% -870 bps
Underlying(1) profit before tax 18.1 36.5 -50%
(Loss) / profit before tax (17.5) 23.0 -176%
Underlying(1) basic earnings per share 4.3p 8.9p -52%
Basic (loss) / earnings per share (4.7)p 5.2p -190%
Underlying(1) return on capital employed ('ROCE') 9.3% 17.5% -820 bps
Headlines
§ Revenue of £450.9m (2024: £463.5m)
§ Underlying(1) profit before tax of £18.1m (2024: £36.5m) reflects
tougher market conditions
§ Underlying(1) basic earnings per share of 4.3p (2024: 8.9p)
§ Net debt (on a pre-IFRS-16 basis(2)) of £43.1m (2024: £9.4m), includes
amortising term loans of £13.8m, year-end leverage (on a pre-IFRS-16
basis(2)) of 1.2x
§ Non-underlying items of £35.6m include estimated bridge testing and
remedial costs (net of insurance recoveries) of £23.4m - bridge insurance
settlement now agreed
§ Diversified UK and Europe order book of £444m at 1 July 2025 (1 November
2024: £410m), of which £324m is for delivery over the next 12 months,
includes new industrial, data centre, infrastructure, energy and commercial
office orders
§ Continued strategic progress in India - record JSSL order book of £240m
at 1 July 2025 (1 November 2024: £197m), new production facilities in Gujarat
expected to be operational in FY26
§ Successful extension of £60m revolving credit facility to December 2027
Outlook
§ UK and Europe:
- Market for structural steelwork remains subdued
- Tighter prices continue to impact our profitability in the short-term
and some projects are not being awarded or progressing within normal
timescales
- Anticipated recovery in some sectors has been slower than expected
albeit tendering activity has improved recently
- We continue to see some good projects coming to market, particularly
for FY27
§ India: despite lower profits in FY25 due to lower output, we are
well-positioned to take advantage of significant growth opportunities, with
new markets being targeted, and a very encouraging outlook for structural
steel
§ Our position as the UK's largest and most diverse structural steelwork
specialist provides a strong competitive advantage
§ Our businesses remain well-positioned to win work in markets with
excellent longer-term growth opportunities including those which are driving
the green energy transition - our strategic growth targets remain unchanged
§ Our expectations for FY26 are unchanged from those communicated at the
time of the trading update on 3 March
Charlie Cornish, Non-Executive Chairman commented:
"After many years of strong profit growth, FY25 was a difficult year for the
Group. Whilst we performed well operationally, delivering a diverse range of
projects for clients across many of our key market sectors, tough market
conditions in the UK and Europe, combined with the ongoing bridge remedial
works programme, contributed to weaker financial results. In response to these
challenges, we have taken and continue to take appropriate cost reduction and
cash conservation measures. Despite the current market backdrop, we have
secured a strong baseload of work for FY26 and into FY27, and we continue to
see some good projects coming to market. Supported by our stronger financial
position and proven track record of delivery, we are well placed to benefit
from the anticipated market recovery.
Looking further ahead, we have a prominent position in market sectors with
strong growth potential and are well-positioned to win projects in markets
with positive long-term growth trends including those which are driving the
green energy transition. We welcome the UK Government's commitments in the
recent spending review and 10 Year Infrastructure Strategy to stimulating
economic growth through maintaining, improving and expanding UK infrastructure
and its commitment to invest in energy, transport and critical national
infrastructure projects. Our positioning and prospects in these markets
underpin the Board's confidence in the Group's ability to deliver attractive
shareholder returns in the future and provides us with a strong platform to
fulfil our strategic growth aspirations."
For further information, please contact:
Severfield Charlie Cornish 01845 577 896
Non-Executive Chairman
Adam Semple 01845 577 896
Chief Financial Officer
Camarco severfield@camarco.co.uk (mailto:severfield@camarco.co.uk)
Ginny Pulbrook 07961 315 138
Tom Huddart 07967 521 573
Jefferies International Sam Barnett 020 7029 8000
Panmure Liberum Nicholas How 020 3100 2000
Notes to financials:
(1) stated before non-underlying items of £35.6m (2024: £13.5m) including
estimated bridge testing and remedial costs (net of insurance recoveries) of
£23.4m (2024: £nil), other bridge-related costs of £9.1m (2024: £nil), the
amortisation of acquired intangible assets of £2.6m (2024: £5.4m) and other
non-underlying costs of £2.9m (2024: £nil). These costs have been offset by
a legacy employment tax credit of £1.4m (2024: charge of £4.4m) and a net
acquisition-related credit of £1.0m (2024: £0.8m). Non-underlying items have
been separately identified by virtue of their magnitude or nature to enable a
full understanding of the Group's financial performance and to make
year-on-year comparisons. They are excluded by management for planning,
budgeting and reporting purposes and for the internal assessment of operating
performance across the Group and are normally excluded by investors, analysts
and brokers when making investment and other decisions (see note 8).
(2) the Group excludes IFRS 16 lease liabilities from its measure of net funds
/ debt as they are excluded from the definition of net debt as set out in the
Group's borrowing facilities (see note 8).
(3) except as otherwise stated '2024 and FY24' and '2025 and FY25' refer to
the 53-week period ended 30 March 2024 and the 52-week period ended 29 March
2025, respectively. '2026 and FY26' and '2027 and FY27' refer to the 52-week
periods ending 28 March 2026 and 27 March 2027, respectively. The Group's
accounts are made up to an appropriate weekend date around 31 March each year.
(4) a reconciliation of the Group's underlying results to its statutory
results is provided in the Alternative Performance Measures ('APMs') section
(see note 8).
Notes to editors:
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).
INTRODUCTION
After many years of strong profit growth, FY25 was a difficult year for the
Group. Whilst we performed well operationally, delivering a diverse range of
projects for clients across many of our key market sectors, tough market
conditions in the UK and Europe, particularly in H2, combined with the ongoing
bridge remedial works programme, contributed to weaker financial results.
Despite this market backdrop, we have recently secured some significant new
projects, which are reflected in our diversified UK and Europe order book of
£444m, providing us with a good volume of future work, of which £324m is for
delivery over the next 12 months.
In the UK and Europe, we continue to experience challenging market conditions,
with project opportunities being delayed and pricing remaining at tighter than
expected levels in a competitive market. In FY25, whilst the Group sought to
mitigate the effects of these prevailing market conditions through new project
awards, our normal contract execution improvements and cost reductions, it was
not possible to secure sufficient work to fully offset the non-recovery of
factory overheads, particularly in Q4 when the expected award of the Agratas
battery gigafactory was delayed at short notice until early FY26. These
factors resulted in a lower underlying profit before tax for the year of
£18.1m (2024: £36.5m).
In light of the trading pressures that the Group is currently facing, we
continue to take appropriate cost reduction actions. In March, we completed a
headcount review which has resulted in a reduction in Group headcount of c.6
per cent through a combination of redundancies and the non-recruitment of
approved vacancies. In addition, there is an enhanced focus on cash generation
and conservation. This includes careful working capital management, the
acceleration of certain tax refunds from HMRC, a reduction in planned capital
expenditure, taking into account the significant investment in the asset base
over recent years, the disposal of certain non-core assets, and other ongoing
cost reduction actions in support of a stronger balance sheet and our
objective of improving ROCE. Net debt (pre-IFRS-16 basis(2)) at the year-end
was £43.1m, which represented RCF drawings of £29.3m and amortising term
loans of £13.8m, providing facility headroom of c.£30m.
In July 2025, the Group successfully negotiated an amendment and extension to
its existing £60m Revolving Credit Facility ('RCF') with its lenders, HSBC
Bank and Virgin Money. The facility's maturity has been extended to December
2027, providing the Group with enhanced liquidity and financial flexibility,
during this current period of challenging trading conditions. The Group
remains committed to maintaining a strong financial position and, following
this extension, confirms it has sufficient liquidity to meet its current and
anticipated funding requirements.
Furthermore, on 18 July 2025, the Group entered into a share purchase option
agreement with JSW Steel, its partner in the Indian joint venture, JSSL (in
which the Group and JSW each currently hold a 50 per cent interest), granting
it the right, but not the obligation, to dispose of an interest of up to 24.9
per cent in JSSL for up to £20m, exercisable, at its sole discretion, at any
time on or before 31 March 2026. The option reflects the Board's prudent
approach to strategic planning and provides the Group with additional
financial flexibility. The Board confirms there is no current intention to
exercise the option and any decision to do so, and to dispose of any of its
shareholding in JSSL, would only be made following a rigorous business case
assessment. JSSL remains a strategically important venture for the Group and
the Board continues to believe in its long-term value creation potential
within the Indian market and remains committed to its successful partnership
with JSW.
As a result of the ongoing challenging market conditions, the board has made
the prudent decision to suspend the final dividend for the financial year
ended 29 March 2025. This measure is in line with our commitment to
maintaining a strong balance sheet and ensuring the Group's long-term
financial stability. The board remains confident in the Group's strategic
direction and financial resilience. The board recognises the importance of the
dividend to many shareholders and is committed to resuming dividend payments
promptly, as soon as it is prudent to do so.
BRIDGE REMEDIAL WORKS
As reported in the half year results announcement, the Group identified some
bridge structures which were not in compliance with the client's weld
specification requirements, predominantly relating to 12 bridge projects that
are either ongoing or were completed over the past four years. The issues all
arise out of a particular bridge specification and related sub-optimal choices
of welding procedures, exacerbated by limitations in the specified weld
testing regime for these projects. The programme of testing and remedial work
to resolve the issue is progressing as expected. In FY25, a net non-underlying
charge of £23.4m was recognised, representing estimated testing and remedial
costs of £43.4m for all the affected bridge projects noted above, offset by
insurance recoveries of £20.0m which have been agreed with the Group's
professional indemnity ('PI') insurers. The Group has incurred testing and
remedial cash costs of £19.0m in FY25 and the remaining cash costs are
expected to be incurred in FY26 and FY27. The insurance recoveries are
expected to be received in H1 FY26.
These welding issues have not affected the safety of any operational bridges.
We are pleased to confirm that we have recently secured several new bridge
projects and we are continuing our work on ongoing road and rail bridges for a
variety of clients in accordance with the required specification.
OUTLOOK
Whilst the market backdrop in the UK and Europe remains challenging, given the
Group's strong competitive position, we are continuing to see a good pipeline
of project opportunities, particularly for FY27, and we are encouraged by a
recent increase in tendering activity. However, the overall reduction in
industry demand is contributing to pricing remaining at tighter than expected
levels in a competitive market and some projects, including some 'anchor'
projects, not being awarded or progressing within normal timescales, all of
which is consistent with the current lower level of business confidence in the
UK economy as a whole. As noted above, the Group continues to seek to mitigate
the ongoing impact of these market conditions through ongoing cost reduction
and cash conservation actions in support of a strong balance sheet position.
Our expectations for FY26 are unchanged from those communicated at the time of
the trading update on 3 March, and we anticipate that the results for FY26
will be significantly more second half weighted, reflecting the profit phasing
of ongoing contracts already secured in the order book.
The Group does not anticipate any material direct impact from the recently
imposed US tariffs on steel, owing to the contractual mechanisms in place
which provide protection against input cost volatility. As steel remains
largely a pass-through cost for the Group, any associated price increases are
expected to be absorbed within client contracts without affecting margins.
Looking further ahead, we have already secured some attractive large projects
for FY27, and we are also seeing significant future opportunities in sectors
such as manufacturing (industrial), commercial offices, including the
emergence of several planned large developments in London, and data centres,
driven by Artificial Intelligence ('AI') applications which are driving even
greater dependence on data centre infrastructure. Many of our chosen markets
continue to have a favourable long-term outlook - we have a prominent position
in market sectors with strong growth potential and are well-positioned to win
projects in support of a low-carbon economy and to deliver energy security.
Supported by the commitments in the recent spending review and 10 Year
Infrastructure Strategy, we welcome the UK Government's focus on stimulating
economic growth through maintaining, improving and expanding UK infrastructure
and its commitment to invest in energy, transport and critical national
infrastructure projects to achieve this goal. Our prospects across these
markets provide the board with confidence that the Group will deliver
attractive shareholder returns in the future and our strategic growth targets
remain unchanged.
STRATEGY
Our strategic focus is on growth and diversification (both organic and through
selective acquisitions), driving operational improvements and building further
value in JSSL which, in combination, will deliver strong EPS growth. Whilst we
believe our strategic direction is the right one, we also recognise the need
to adapt to the conditions we face hence our current focus on cash generation
and conservation, and cost reduction actions. We have also recently launched a
review of our business development, project delivery, and manufacturing
operations, with the objective of improving operational efficiency and order
conversion rates. Whilst still at an early stage, these initiatives underpin
our commitment to continuous improvement and aim to position us well to
deliver sustainable growth in the years ahead.
The Group delivers steel superstructures through its Core Construction
Operations, separated operationally into a Commercial and Industrial division
(bringing together the Group's strong capabilities in the industrial and
distribution, commercial offices, stadia and leisure, data centres, retail,
and health and education market sectors) in the UK and Europe, and a Nuclear
and Infrastructure division (encompassing the Group's market-leading positions
in the nuclear, power and energy, transport (road and rail) and process
industries sectors). The Group's Modular Solutions division consists of the
growing product ranges of Severfield Modular Solutions ('SMS') and of
Construction Metal Forming ('CMF'), our specialist cold rolled steel joint
venture business.
RESULTS OVERVIEW
2025 (£m) Revenue UOP* UPBT*
Core Construction Operations 435.4 21.3 21.3
Modular Solutions 24.2 0.4 0.4
India - - 0.1
Central items / eliminations (8.7) - (3.7)
Group 450.9 21.7 18.1
Underlying operating margin - 4.8% -
2024 (£m) Revenue UOP* UPBT*
Core Construction Operations 449.2 37.4 37.4
Modular Solutions 21.5 0.3 0.3
India - - 1.9
Central items / eliminations (7.2) - (3.1)
Group 463.5 37.7 36.5
Underlying operating margin - 8.1% -
*The references to underlying operating profit (before JVs and associates) and
underlying profit before tax are set out on page 2. A reconciliation of the
Group's underlying results to its statutory results is provided in the
Alternative Performance Measures ('APMs') section (see note 8).
Revenue of £450.9m (2024: £463.5m) represents a decrease of £12.6m (3 per
cent) compared to the prior year. This reflects a decrease in revenue from our
Core Construction Operations, mainly representing lower production activity in
the year.
Underlying operating profit (before JVs and associates) of £21.7m (2024:
£37.7m) represents a decrease of £16.0m (42 per cent) over the prior year.
This is due to lower profit from our Core Construction Operations of £16.1m,
reflecting the impact of the current challenging market conditions, which
particularly affected the Group in the second half of the year. The statutory
operating loss, which includes the non-underlying costs associated with the
bridge remedial works and other non-underlying items, was £13.7m (2024:
profit of £26.4m).
The share of profit from the Indian joint venture in the year was £0.1m
(2024: £1.9m), reflecting delays to existing and expected projects which have
resulted in lower output in the year. This was also a function of an order
book which, whilst at record levels during the year, contained a small number
of large projects, meaning that the impact of this slippage was more
pronounced.
The Group's underlying profit before tax was £18.1m (2024: £36.5m) and the
statutory loss before tax was £17.5m (2024: profit of £23.0m).
Non-underlying items
Non-underlying items for the year of £35.6m (2024: £13.5m) consisted of the
following:
£m 2025 2024
Bridge testing and remedial costs (net of insurance recoveries) 23.4 -
Other bridge-related costs 9.1 -
Amortisation of acquired intangible assets 2.6 5.4
Other non-underlying costs 2.9 -
Legacy employment tax (credit) / charge (1.4) 4.4
Acquisition-related credits (1.0) (0.8)
Asset impairment charge - 4.5
Non-underlying items 35.6 13.5
The costs of £23.4m represent estimated bridge testing and remedial costs of
£43.4m, offset by agreed insurance recoveries of £20.0m.
Other bridge-related costs of £9.1m include a reversal of revenue for certain
variation orders, following delays in payment and increased uncertainty over
their recoverability, together with provisions for third-party consequential
costs and claims. Whilst the Group continues to actively pursue full recovery
of the outstanding receivables and is contesting elements of the claims, it
has conservatively made a provision for these items. Both the receivables and
the third-party items remain subject to ongoing dialogue and legal process and
the Group will provide further updates as appropriate. In the absence of
notification of any further consequential claims and noting that, in certain
cases, such claims may be limited by contractual liability caps, the Group's
current assumption is that any further costs will remain with the respective
parties. In addition to the PI insurance recoveries already agreed, the Group
will also be pursuing all other potential avenues of recovery including
further possible insurance recoveries and contributions to our costs by third
parties. However, no amounts have been recognised in respect of these further
potential recoveries at this stage as these are not yet certain.
The amortisation of acquired intangible assets of £2.6m represents the
non-cash amortisation of customer relationships and order books which are
being amortised over a period of 12 months to five years. Other non-underlying
costs of £2.9m include redundancy and severance costs which consisted of
costs incurred as part of a headcount reduction programme in March aimed at
improving operational efficiency and the severance costs for the outgoing CEO,
Alan Dunsmore.
In the prior year, the Group recorded a charge of £4.4m for a legacy
employment tax issue, which related to an assessment from HMRC for historical
income tax and national insurance liabilities. The Group disputed this
assessment but, after HMRC issued official determinations, the charge was
recorded in the FY24 results. In FY25, the Group reached a final settlement
with HMRC reducing the liability to £3.0m and recorded a credit of £1.4m
related to this settlement. Acquisition-related credits of £1.0m include the
unwinding of the discount on and movements in the contingent consideration for
DAM Structures which is payable over a five-year period.
OPERATIONAL REVIEW
UK AND EUROPE
Maintaining contract selectivity and bidding discipline to ensure there
remains an appropriate balance of risk in the order book is of critical
importance to the future success of the Group. Almost all of our work
continues to be derived through either negotiated, framework or two-stage
bidding procurement processes, in line with our established approach to strong
risk management, commercial discipline and careful contract selection. The
Group is pleased with the volume of work secured in the UK and Europe order
book which stands at £444m at 1 July (1 November: £410m), of which £324m 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
including in Europe, with 22 per cent of the order book representing projects
in continental Europe and Ireland (1 November: 29 per cent), reflecting our
established access to growing market sectors and our prominent market position
in Europe.
In the second half of the year, despite the absence of large 'anchor' projects
coming to market, we continued to secure a significant value of new work
(c.£260m) in both the UK and Europe, albeit some of these projects were
secured at lower margins than we have historically seen, reflecting a
competitive pricing environment and an overall market for structural steelwork
which remains subdued.
Looking further ahead, we welcome the UK Government's focus on stimulating
economic growth through maintaining, improving and expanding UK infrastructure
and its commitment to invest in energy, transport and critical national
infrastructure projects to achieve this goal. This commitment was reaffirmed
in the Government's multi-year spending review and 10 Year Infrastructure
Strategy which were announced in June. Many of our chosen markets continue to
have a favourable long-term outlook - the Group has a prominent position in
market sectors with strong growth potential and is well-positioned to win
projects in support of a low-carbon economy and to deliver energy security.
These include opportunities in both Commercial and Industrial and Nuclear and
Infrastructure, such as battery plants, energy efficient buildings,
manufacturing facilities for renewable energy and offshore wind projects
together with work in the transport, nuclear and power and energy sectors
given our capability to deliver major infrastructure projects.
Project Horizon
As part of Project Horizon, our digital transformation project, we continue to
make good progress with drawing and design automation which includes automated
connection design and planning tools. In addition, we are working on the use
of 'digital twins' to integrate production and site information into 3D design
models to provide real-time insights into project performance and facilitate
more informed decision-making. The rollout of barcoding technology for steel
across our factories is progressing well and is already delivering
improvements in stock control and traceability. This technology is being
extended to our paint processes to improve reporting and reduce waste. Other
projects either being worked on or completed recently include a digital time
recording system to facilitate improved monitoring of factory processes,
together with ongoing work on artificial intelligence to improve
administrative processing times.
To date, based on the original plan, we have successfully completed 29
projects, and a further 21 of the 59 projects that we have classified as short
to medium term are currently on-going. Our dedicated project team is currently
self-funded through annual savings, with further benefits being tracked as
more of the identified projects and initiatives are implemented.
Core Construction Operations
£m 2025 2024 Change
Revenue 435.4 449.2 -3%
Underlying operating profit (before JVs and associates) 21.3 37.4 -43%
Underlying profit before tax 21.3 37.4 -43%
Revenue:
Commercial and Industrial 349.6 361.8 -3%
Nuclear and Infrastructure 85.9 87.4 -2%
Revenue of £435.4m (2024: £449.2m) has decreased by £13.8m (3 per cent)
year-on-year, due to slightly lower levels of production activity. Underlying
operating profit of £21.3m was down 43 per cent on the prior year (2024:
£37.4m), reflecting the impact of the current challenging market conditions,
including a prolonged period of tighter pricing and delays to project
opportunities, which particularly affected the second half of the year. Whilst
the Group sought to mitigate the effects of this through new project awards,
our normal contract execution improvements and cost reductions, it was not
possible to secure sufficient work to fully offset the non-recovery of factory
overheads, particularly in Q4 when the expected award of the Agratas battery
gigafactory was delayed at short notice until early FY26.
Commercial and Industrial
Revenue has decreased by 3 per cent to £349.6m (2024: £361.8m), reflecting
the impact of the lower levels of demand in the industry as a whole and the
client-driven delay to the Agratas gigafactory highlighted above, for which
production was expected to commence in January - the prior year was also
adversely impacted by a pause in construction at the Sunset Studios project in
July 2023, for which the Group received a contractual payment in the prior
year to compensate for a element of the lost profitability.
During the year, work progressed on the SeAH Wind monopile manufacturing
facility in Teesside and the AESC UK (Envision) battery plant in Sunderland,
both of which are nearly complete, together with a manufacturing facility for
BAE in Scotland, an Energy from Waste facility in London and a petrochemical
project for Ineos in Belgium. We have also worked on a number of data centre
projects including two for Google in Belgium and the Netherlands, one in
Dublin and a package of data centres in Sweden, together with various
mid-sized office developments, both in London and Ireland (including Harcourt
Square in Dublin and Salisbury Square, 334 Oxford Street and 105 Victoria, in
London).
The Commercial and Industrial order book at 1 July was £214m (1 November:
£202m). This includes projects secured in recent months such as new
industrial facilities, commercial offices, data centres and distribution
centres. We have now secured the full order for the new state-of-the-art
battery gigafactory for Agratas in Somerset, which will initially supply
batteries for Jaguar Land Rover and Tata Motors. This facility, for which
production commenced in early FY26, is set to be the largest of its kind in
the UK once it is fully operational, and by the early 2030s could provide 40
per cent of the batteries needed by the domestic car industry.
We have already secured some attractive large projects for FY27 and we
continue to see opportunities in markets which are driving the green energy
transition such as energy efficient buildings, manufacturing facilities for
renewable energy and offshore wind projects, together with new battery
gigafactories in the UK and Europe. The Group's manufacturing scale, speed of
construction and on-time delivery capabilities, leaves us well-positioned to
win work from such projects, the majority of which are likely to be designed
in steel. Demand for data centres in the UK and Europe remains strong and we
are also seeing the emergence of several large commercial office opportunities
in London. We are currently supporting clients on some of these office
projects with cost planning and buildability advice.
Strategic targets are unchanged: to grow revenues in line with GDP, enhanced
by our European operations, with margins of 8-10 per cent.
Nuclear and Infrastructure
Revenue has remained broadly flat at £85.9m (2024: £87.4m). During the year,
despite the bridge weld issues, we continued our work on road and rail bridges
for a variety of clients. From a nuclear perspective, ongoing contracts
include work at Hinkley Point and some large projects at Sellafield. In FY25,
our nuclear operations were awarded the ISO 19443:2018 certification, making
us only the twelfth company in the UK to achieve this accreditation, which
sets strict requirements for quality management systems, ensuring compliance
with stringent statutory and regulatory requirements. This achievement also
creates new opportunities for the Group in the UK and Europe as a Tier-1
supplier in the nuclear industry.
The N&I order book at 1 July was £224m (1 November: £201m) of which 48
per cent (1 November: 44 per cent) represents transport infrastructure, 42 per
cent (1 November: 56 per cent) represents power and energy (including nuclear)
and 10 per cent (1 November: nil) represents process industries projects.
Recent orders include a large energy project in the Netherlands, a process
industries project in Hull, and a growing scope of nuclear work at Hinkley
Point. We have also recently secured a large offshore wind contract with
Ørsted for the Hornsea 3 project, which represents another major step into
the renewables market for the Group. As part of the UK Government's strategy
to meet climate and clean energy targets, Hornsea 3 is expected to deliver 2.9
GW of green energy and will have an important role in enhancing the UK's
energy security. When completed, the project will feature up to 231 offshore
wind turbines, contributing to the world's largest offshore wind farm.
The outlook for the markets in which we operate remains positive through the
medium term. In the UK, multi year investment in infrastructure is both a
priority and a necessity for the government and will be crucial in achieving
the country's growth aspirations and clean and domestically generated energy
goals. As part of its broad investment plans, the government has addressed
this requirement for additional investment in Severfield's growth areas of
energy and transport infrastructure, both key components of the green energy
transition. The government has also committed to the leveraging of private
investment, delivering planning reforms, especially for renewable energy
projects, and upskilling the UK's workforce as key components of their plans.
These commitments were reaffirmed in June in the Government's multi-year
spending review and 10 Year Infrastructure Strategy, which committed to at
least £750 billion in infrastructure funding over the next decade.
In the UK energy sector, the essential long-term upgrade to the UK's energy
infrastructure is well underway, driving improvements in energy security and
facilitating the green energy transition, with significant and timely
investment in both generation and network infrastructure. We are also seeing
an increased volume of opportunities in areas such as new nuclear, including
Sizewell C, small nuclear reactors and fusion energy, to which the government
has allocated funding of c.£20 billion, together with onshore and offshore
wind, solar, carbon capture and hydrogen production. In the UK defence sector,
government plans to strengthen national security and modernise defence
infrastructure are bringing new opportunities to market, including investment
in munitions factories, the majority of which are likely to be designed in
steel. Investment in UK transport is also an important part of the
government's growth plans and is essential to address ageing infrastructure,
Net Zero targets and domestic and international connectivity. Government
funding of c.£47 billion has been allocated to update rail networks,
including projects such as HS2 (Birmingham to Euston), the East-West Rail
Link, the TransPennine Route Upgrade and the Midlands Rail Hub. We continue to
make good progress with HS2 station opportunities in the pipeline including at
Birmingham Interchange and, given our end-to-end capabilities and complex
infrastructure project experience, together with our previous experience in
delivering major airport and rail projects, we remain well-positioned to
capitalise on these opportunities when they arise.
Similar to the UK, the outlook in Europe remains positive, with the green
energy transition also driving public investment in new infrastructure
projects such as transport infrastructure and energy, where the volume of
power transmission and distribution projects being brought to market is
increasing substantially.
Strategic targets are unchanged: to grow revenues to over £125m, with margins
of 8-10 per cent.
Modular Solutions
£m 2025 2024 Change
Revenue 24.2 21.5 +13%
Underlying operating profit (before JVs and associates) 0.4 0.3 +0.1
Share of results of CMF* - 0.1 -0.1
Underlying profit before tax 0.4 0.3 +0.1
*In 2025, CMF reported revenue of £26.8m (2024: £29.1m) and a break-even
profit position (2024: profit of £0.2m).
Modular Solutions consists of the growing modular product ranges of SMS and of
CMF, our cold rolled steel joint venture business. We continue to be the only
hot rolled steel fabricator in the UK to have a cold rolled manufacturing
capability. The division has been awarded 'Fit for Nuclear' and certain
Network Rail accreditations which, together with an expanding client base and
our previous record in modular construction, we believe will help us to
achieve our future organic growth aspirations. The division consists of three
main business areas:
§ Severstor - specialist equipment housings for critical electrical equipment
and switchgear,
§ Supply chain (steel components for modular homes and buildings) - raw
material fabrication and modular systems including steel cassettes and
framing, and
§ Bulk handling solutions - a high-performance silo discharge system for the
bulk handling of materials such as paints and other dispersible solids (of
which Rotoflo is the premium product).
Revenue of £24.2m (2024: £21.5m) represents an increase of £2.7m compared
to the prior year and underlying operating profit has grown by £0.1m over the
same period. Divisional underlying PBT of £0.4m (2024: £0.3m) also includes
the post-tax share of profit of CMF of £nil (2024: £0.1m). The lower
profitability at CMF reflected lower volumes in the year, particularly in Q4,
as a result of the delay to the Agratas gigafactory which adversely impacted
the Group's Core Construction Operations, as this project also contained a
significant metal decking package, which will now be delivered in FY26.
Despite the modest profit growth, 2025 was another year of progress for the
division. The SMS business has seen further growth in its client base for
Severstor and for steel framing solutions for modular building manufacturers,
which is evident in its growing order book and pipeline of opportunities. For
Severstor, we are seeing future opportunities in growth markets such as
renewables and data centres, alongside work in areas such as power, rail and
oil and gas, and we now have visibility of some large projects in the pipeline
(>£5m), several of which we are aiming to convert to orders in FY26. For
steel framing solutions, we have recently secured some high-quality orders and
we are seeing opportunities for future growth, supported by our expanding
customer base, and by CMF's significant cold rolled manufacturing capacity.
Strategic targets are unchanged: to grow combined SMS and CMF revenues to
between £75m and £100m, with margins of greater than 10 per cent. In FY25,
the Modular Solutions division delivered revenue of £51.0m (SMS: £24.2m and
CMF: £26.8m).
INDIA
£m 2025 2024 Change
Revenue 103.3 130.8 -21%
EBITDA 7.1 13.2 -46%
Operating profit 4.5 10.5 -57%
Operating margin 4.3% 8.0% -370 bps
Finance expense (4.2) (5.5) +24%
Profit before tax 0.3 5.0 -94%
Tax (0.1) (1.2) +£1.1m
Profit after tax 0.2 3.8 -95%
Group share of profit after tax (50%) 0.1 1.9 -95%
In 2025, JSSL recorded an output of 64,000 tonnes, including sub-contracted
work, 36,000 tonnes lower than the prior year output of 100,000 tonnes. This
position is evident in JSSL's revenue of £103.3m, £27.5m lower than in the
prior year. The lower revenue reflected some short-term delays to existing and
expected projects in the run up to and immediately following the Indian
elections in June 2024. Notably, this led to the delay of a large project
secured in FY25 which JSSL will start delivering in FY26. Despite the
lower-than-expected activity levels in FY25, output in FY26 is expected to
increase significantly, reflecting the volume of work in JSSL's record order
book.
JSSL has reported a reduced operating profit of £4.5m (2024: £10.5m),
reflecting the project delays noted above, together with a sub-optimal mix of
sub-contracted work, which resulted in some production gaps at the Bellary
factory. Financing expenses of £4.2m (2024: £5.5m) are £1.3m lower than the
previous year, reflecting a reduction in borrowings, and result in a profit
before tax of £0.3m (2024: £5.0m).
Despite the underwhelming results in FY25, India's construction sector, and
the use of steel within construction, continues to grow strongly, supported by
public and private sector investment in manufacturing and energy projects, and
government investment to improve and expand transport infrastructure. This
position is evident in a record order book at 1 July of £240m (1 November:
£197m), which contains a strong mix of higher margin commercial work of 86
per cent (1 November: 77 per cent). This includes two major commercial
developments in Delhi for DLF India, one of JSSL's key strategic clients, and
work for other significant clients such as Webwerks, CtrlS and the Multi-Modal
Transport Hub in Ahmedabad. The expanding market picture is reflected in an
improving pipeline of potential orders and in numerous growth opportunities in
target markets, including commercial real estate, data centres, warehouses,
infrastructure and in manufacturing sectors such as steel, cement and
speciality chemicals. JSSL is also targeting opportunities for growth markets
in new sectors and export markets including in Saudi Arabia, building on its
brand and reputation for delivering high-quality steel solutions.
To support this expected market growth, in H2, we increased the factory
capacity at the Bellary site from c.100,000 to c.114,000 tonnes (c.164,000
tonnes including sub-contracted work). The development of the new 55-acre site
at Gujarat also commenced in H2, with new open yard and factory production
facilities expected to be completed and ready for operation in FY26, further
increasing JSSL's in-house production capacity from c.114,000 tonnes to
c.184,000 tonnes. Further expansion work at Gujarat is expected in future
years which, once complete, will result in JSSL's combined factory capacity
(Bellary and Gujarat) increasing to c.266,000 tonnes (c.366,000 tonnes
including sub-contracted work). The majority of this investment will be
financed by debt, provided directly to JSSL by Indian lenders.
Value continues to build in JSSL and the business is well positioned to take
advantage of an encouraging outlook for the Indian economy and a strong
underlying demand for structural steel. We remain very positive about the
long-term trajectory of the market and of the value creation potential of
JSSL.
ESG
Safety
At Severfield, the safety of our people is fundamental to operational
excellence and long-term success. Our safety statistics continue to be
industry-leading and this year we have seen a further reduction in our injury
rates, resulting in an injury frequency rate ('IFR') of 1.23, compared to 1.30
in 2024, and an accident frequency rate ('AFR'), which is based solely on the
level of RIDDORS (reportable accidents), of 0.08, compared to 0.11 in 2024.
Notwithstanding this, we continue to evaluate new safety solutions and, during
the year, we have implemented a new process to improve the management and
control of critical safety risks. This approach focuses on three pillars -
Leading with Care, Effective Controls, and Engaging with Employees - to better
manage safety critical risks, strengthen engagement with colleagues, and
support long-term value creation. To bring this strategy to life, we have
refreshed our approach to critical control management on key projects and
invested in learning teams across our manufacturing operations. We have also
continued to adopt positive leading indicators to drive preventative
behaviours in our workforce, moving beyond a reliance on accident and incident
data as measures of safety performance.
Sustainability
In 2025, the Group maintained its ESG rating of 'AAA' from MSCI for a fourth
consecutive year and achieved an 'A' score for leadership on climate change
mitigation from CDP for the second year running. We were also included in the
Financial Times (FT) listing of Europe's climate leaders for the fifth year in
a row, ranking fourth in the UK construction and building materials category.
Other highlights in 2025 include:
§ Maintaining our third-party verification and accreditation as carbon
neutral for Scopes 1, 2 and operational Scope 3 GHG emissions for our
manufacturing, office and construction operations.
§ Continuing to procure 100 per cent of our energy from renewable sources
at all our owned facilities in the UK and, the first time in FY25, our owned
facilities in Europe.
§ Maintaining our BES 6001 responsible sourcing accreditation.
§ Making further progress against our verified SBTi (Science Based Targets
initiative) Net Zero targets, including the use of new hybrid machinery to
reduce emissions, trialling electric forklift trucks and the continued
transition to LED lighting in our factories to improve energy efficiency.
We have continued to explore partnerships to help support delivery of our
social value commitments. During the year, social value was delivered by a
wide range of activities, including supporting local supply chain partners,
fundraising and volunteering schemes. We developed new partnerships around
literacy and digital inclusion, for the benefit of our local communities. We
have also maintained our gold membership of 'The 5% Club', including
increasing our intake of annual apprentices and graduates in 2025,
demonstrating our commitment to 'earning and learning'
FINANCIAL REVIEW
£m 2025 2024 Change
Revenue 450.9 463.5 -3%
Underlying* operating profit (before JVs and associates) 21.7 37.7 -42%
Underlying* operating margin (before JVs and associates) 4.8% 8.1% -330 bps
Underlying* profit before tax 18.1 36.5 -50%
Underlying* basic earnings per share 4.3p 8.9p -52%
Operating (loss) / profit (13.7) 26.4 -152%
Operating margin (3.0)% 5.7% -870 bps
(Loss) / profit before tax (17.5) 23.0 -176%
Basic (loss) / earnings per share (4.7)p 5.2p -190%
Underlying return on capital employed ('ROCE') 9.3% 17.5% -820 bps
* The basis for stating results on an underlying basis is set out on
page 3. A reconciliation of the Group's underlying results to its statutory
results is provided in the Alternative Performance Measures ('APMs') section
(see note 8).
Revenue of £450.9m (2024: £463.5m) was c.3 per cent lower than the prior
year, due to a decrease in revenue from our Core Construction Operations,
mainly representing slightly lower production activity in the year. This
reflects lower levels of demand in the industry as a whole and the delay, at
short notice, to the Agratas gigafactory. This compared to a prior year which
was also adversely impacted by a pause in construction at the Sunset Studios
project in July 2023.
Underlying operating profit (before JVs and associates) of £21.7m was 42 per
cent lower than the prior year, mainly due to the impact of the current
challenging market conditions, including a prolonged period of tighter pricing
and delays to project opportunities, which particularly affected the second
half of the year. The statutory operating loss, which includes non-underlying
items, was £13.7m (2024: profit of £26.4m).
Underlying profit before tax, which is management's primary measure of Group
profitability, was £18.1m (2024: £36.5m), 50 per cent lower than the prior
year. The statutory loss before tax was £17.5m (2024: profit of £23.0m). The
underlying tax charge for the year was £5.2m (2024: £9.1m), which represents
an effective tax rate of 28.8 per cent (2024: 26.2 per cent). This rate is
approximately 3 percentage points higher than the statutory rates in the UK
and the Netherlands, mainly due to differences in the timing and amount of tax
relief on certain remuneration-related expenses. The total tax credit of
£3.4m (2024: charge of £7.1m) includes a non-underlying tax credit of £8.6m
(2024: £2.0m).
Underlying basic earnings per share decreased by 52 per cent to 4.3p (2024:
8.9p) based on the weighted average number of shares in issue of 302.5m (2024:
307.1m). Basic loss per share was 4.7p (2024: earnings per share of 5.2p),
reflecting the lower underlying profit after tax and an increase in
non-underlying items. Diluted loss per share, which includes the effect of the
performance share plan, was 4.7p (2024: earnings per share of 5.1p).
Cash flow and financing
£m 2025 2024
Cash (used in) / generated from operations (6.1) 52.4
Capital expenditure (net of disposal proceeds) (6.9) (10.9)
Operating cash conversion -60% 110%
Net debt (pre-IFRS-16 basis)** (43.1) (9.4)
Net debt (63.6) (28.4)
** The Group excludes IFRS 16 lease liabilities from its measure of net
funds / debt as they are excluded from the definition of net debt as set out
in the Group's borrowing facilities. A reconciliation of the Group's
underlying results to its statutory results is provided in the APMs section
(see note 8).
Net debt (pre-IFRS-16 basis(**)) at the year-end was £43.1m, which
represented RCF drawings of £29.3m and amortising term loans of £13.8m,
providing facility headroom of c.£30m. Year-end leverage (pre-IFRS-16 basis)
was 1.2x. In light of the trading pressures that the Group is currently
facing, there is an enhanced focus on cash generation and conservation. This
includes careful working capital management, the acceleration of certain tax
refunds from HMRC, a reduction in planned capital expenditure, taking into
account the significant investment in the asset base over recent years, the
disposal of certain non-core assets, and other ongoing cost reduction actions
in support of a stronger balance sheet and our objective of improving ROCE.
Cash used in operations was £6.1m (2024: generated from operations of
£52.4m). The reduction in cash generation over the prior year mainly
reflected the decrease in underlying operating profit (before JVs and
associates) of £16.0m, bridge testing and remedial cash costs of £19.0m and
a working capital outflow of £15.6m. The increase in net working capital
during the year mainly reflected the unwinding of advance payments held on the
balance sheet at 30 March 2024. Excluding advance payments, period-end net
working capital represented approximately six per cent of revenue, within our
normal range of four to six per cent. Net capital expenditure of £6.9m (2024:
£10.9m) represents the continuation of the Group's capital investment
programme, which has been scaled back given our focus on cash conservation.
This compares to annual depreciation of £9.9m (2024: £9.2m), of which £2.7m
(2024: £2.7m) relates to right-of-use assets under IFRS 16.
In April 2024, before the emergence of the bridge weld issues, the Group
announced a share buyback programme to repurchase up to £10m of ordinary
shares. This buyback programme ended on 3 March 2025, with a total of 13.4m
shares purchased and cancelled at a cost of £9.3m.
Post year-end, the Group successfully negotiated an amendment and extension to
its existing £60m Revolving Credit Facility ('RCF') with its lenders, HSBC
Bank and Virgin Money. The facility's maturity has been extended to December
2027, providing the Group with enhanced liquidity and financial flexibility,
during this current period of challenging trading conditions.
Pensions
The Group's net defined benefit pension liability at 29 March 2025 was £6.9m
(scheme liabilities of £29.6m offset by scheme assets of £22.7m), a decrease
of £4.6m from the 2024 liability of £11.5m. The deficit has reduced as a
result of a higher discount rate, reflecting an increase in bond yields, and
employer deficit contributions during the year. All other pension arrangements
in the Group are of a defined contribution nature.
Dividends and capital allocation
Funding flexibility is maintained to ensure there are sufficient cash
resources to fund the Group's requirements. In this context, the board has
established the following disciplined capital allocation policy:
§ To support the Group's ongoing operational requirements, and to fund
profitable organic growth opportunities where these meet the Group's
investment criteria,
§ To support steady growth in the core dividend as the Group's profits
increase,
§ To finance strategic opportunities that meet the Group's investment
criteria, and
§ To return excess cash to shareholders in the most appropriate way, whilst
maintaining a strong balance sheet position.
As a result of the ongoing challenging market conditions, the board has made
the prudent decision to suspend the final dividend for the financial year
ended 29 March 2025. This measure is in line with our commitment to
maintaining a strong balance sheet and ensuring the Group's long-term
financial stability. The board remains confident in the Group's strategic
direction and financial resilience. The board recognises the importance of the
dividend to many shareholders and is committed to resuming dividend payments
promptly, as soon as it is prudent to do so.
Charlie
Cornish
Adam Semple
Non-Executive Chairman Chief
Financial Officer
24 July 2025
Consolidated income statement
For the year ended 29 March 2025
2023 00 3 2022
Year ended 29 March 2025 Year ended 30 March 2024
Non-underlying Non-underlying
Underlying 2025 Total Underlying 2024 Total
2025 £000 2025 2024 £000 2024
£000 £000 £000 £000
Revenue 450,913 - 450,913 463,465 - 463,465
Operating costs (429,260) (35,475) (464,735) (425,775) (13,225) (439,000)
Operating profit/(loss) before share of results of JVs and associates 21,653 (35,475) (13,822) 37,690 (13,225) 24,465
Share of results of JVs and associates 101 - 101 1,950 - 1,950
Operating profit/(loss) 21,754 (35,475) (13,721) 39,640 (13,225) 26,415
Net finance expense (3,621) (170) (3,791) (3,095) (300) (3,395)
Profit/(loss) before tax 18,133 (35,645) (17,512) 36,545 (13,525) 23,020
Tax (5,195) 8,620 3,425 (9,076) 1,957 (7,119)
Profit/(loss) for the year attributable to the equity holders of the parent 12,938 (27,025) (14,087) 27,469 (11,568) 15,901
Earnings per share:
Basic 4.28p (8.92)p (4.66)p 8.94p (3.76)p 5.18p
Diluted 4.28p (8.92)p (4.66)p 8.85p (3.72)p 5.13p
Further details of 2025 non-underlying items are disclosed in note 3. A
reconciliation of the Group's underlying results to its statutory results is
disclosed in note 8.
Consolidated statement of comprehensive income
For the year ended 29 March 2025
Year ended Year ended
29 March 2025 30 March 2024
£000 £000
Items that will not be reclassified to profit and loss:
Actuarial gain/(loss) on defined benefit 2,313 (745)
pension scheme
Share of other comprehensive income of JVs and associates accounted for using - 869
the equity method
Tax relating to components that will not be reclassified (578) 186
1,735 310
Items that may be reclassified to profit and loss:
Gains taken to equity on cash flow hedges 809 1,239
Reclassification adjustments on cash flow hedges (1,529) (314)
Exchange difference on foreign operations (5,663) (264)
Tax relating to components that may be reclassified 175 (398)
(6,208) 263
Other comprehensive income/(expense) for the year (4,473) 573
Profit/(loss) for the year from continuing operations (14,087) 15,901
Total comprehensive income/(expense) for the (18,560) 16,474
year attributable to equity holders of the parent
Consolidated balance sheet
As at 29 March 2025
As at As at
29 March 30 March
2025 2024
£000 £000
ASSETS
Non-current assets
Goodwill 97,587 98,469
Other intangible assets 2,809 5,508
Property, plant and equipment 96,699 96,434
Right-of-use assets 20,051 18,651
Interests in JVs and associates 32,936 37,364
Deferred tax assets 1,584 1,828
Contract assets, trade and other receivables 2,618 1,050
254,284 259,304
Current assets
Inventories 11,809 11,648
Contract assets, trade and other receivables 116,393 88,334
Derivative financial instruments 103 675
Current tax assets 2,793 4,646
Cash and cash equivalents 15,520 13,803
146,618 119,106
Total assets 400,902 378,410
LIABILITIES
Current liabilities
Bank overdrafts - (3,409)
Trade and other payables (82,092) (78,934)
Provisions (30,508) (11,819)
Financial liabilities - borrowings (6,200) (6,200)
Financial liabilities - leases (4,097) (2,931)
(122,897) (103,293)
Non-current liabilities
Trade and other payables (130) (1,095)
Provisions (7,581) -
Retirement benefit obligations (6,855) (11,464)
Financial liabilities - borrowings (52,600) (13,800)
Financial liabilities - leases (16,364) (16,142)
Deferred tax liabilities (11,515) (11,865)
(95,045) (54,366)
Total liabilities (217,942) (157,659)
NET ASSETS 182,960 220,751
EQUITY
Share capital 7,405 7,739
Share premium 88,522 88,522
Other reserves (924) 4,728
Retained earnings 87,957 119,762
TOTAL EQUITY 182,960 220,751
Consolidated statement of changes in equity
For the year ended 29 March 2025
Share Share Other Retained Total
capital premium reserves earnings equity
£000 £000 £000 £000 £000
At 31 March 2024 7,739 88,522 4,728 119,762 220,751
Total comprehensive income for the year - - (6,383) (12,177) (18,560)
Equity settled share-based payments - - (920) 2,115 1,195
Purchase of owned shares - - (9,262) - (9,262)
Cancellation of own shares (334) - 9,596 (9,262) -
Allocation of owned shares - - 1,317 (1,317) -
Dividend paid - - - (11,164) (11,164)
At 29 March 2025 7,405 88,522 (924) 87,957 182,960
Share Share Other Retained Total
capital premium reserves earnings equity
£000 £000 £000 £000 £000
At 26 March 2023 7,739 88,522 5,959 115,498 217,718
Total comprehensive income for the year - - 1,530 1,944 16,474
Equity settled share-based payments - - (1,234) 3,007 1,773
Purchase of owned shares - - (4,500) - (4,500)
Allocation of owned shares - - 2,973 (2,973) -
Dividend paid - - - (10,714) (10,714)
At 30 March 2024 7,739 88,522 4,728 119,762 220,751
Consolidated cash flow statement
For the year ended 29 March 2025
Year ended Year ended
29 March 2025 30 March 2024
£000 £000
Net cash flow (used in)/from operating activities (522) 45,136
Cash flows from investing activities
Proceeds on disposal of other property, plant and equipment 909 408
Purchases of land and buildings (32) (410)
Purchases of other property, plant and equipment (7,796) (10,911)
Acquisition of subsidiary, net of cash acquired - (22,551)
Investment in JVs and associates - (2,801)
Payment of deferred and contingent consideration (120) (1,183)
Net cash used in investing activities (7,039) (37,448)
Cash flows from financing activities
Interest paid (3,185) (3,220)
Dividends paid (11,164) (10,714)
Purchase of owned shares (net of SAYE cash received) (8,556) (3,120)
Proceeds from borrowing 45,000 19,000
Repayment of borrowings (6,200) (7,950)
Repayment of obligations under finance leases (3,208) (2,628)
Net cash from/(used in) financing activities 12,687 (8,632)
Net increase/(decrease) in cash and cash equivalents 5,126 (944)
Cash and cash equivalents at beginning of year 10,394 11,338
Cash and cash equivalents at end of year 15,520 10,394
1) Basis of preparation
The preliminary announcement has been prepared on the basis of accounting
policies as set out in the statutory accounts for the year ended 29 March
2025. The consolidated financial statements have been prepared on the
historical cost convention, except for the revaluation of financial
instruments. The financial statements are prepared in accordance with
UK-adopted International Accounting Standards and in conformity with the
Companies Act 2006.
The preliminary announcement is made up to an appropriate Saturday around 31
March each year. For 2025, trading is shown for the 52-week period ended on 29
March 2025 (2024: 53-week period ended on 30 March 2024).
The financial statements of the Group's joint venture, JSSL, are made up to
the year ended 31 March 2025 (2024: year ended 31 March 2024).
The preliminary announcement does not constitute the statutory financial
statements of the Group within the meaning of Section 434 of the Companies Act
2006. The statutory financial statements for the year ended 30 March 2024 have
been filed with the Registrar of Companies. The auditor has reported on those
financial statements and on the statutory financial statements for the year
ended 29 March 2025, which will be filed with the Registrar of Companies
following the annual general meeting. Both the audit reports were unqualified,
did not draw attention to any emphasis of matter, without qualifying their
report, and did not contain any statements under Section 498(2) or (3) of the
Companies Act 2006.
The preliminary announcement has been agreed with the Company's auditor for
release.
2) Segment reporting
In line with the requirements of IFRS 8, operating segments are identified on
the basis of the information that is regularly reported and reviewed by the
chief operating decision maker ('CODM'). The Group's CODM is deemed to be the
Executive Committee, who are primarily responsible for the allocation of
resources and the assessment of performance of the segments. Consistent with
previous periods, management continues to identify multiple operating
segments, primarily at an individual statutory entity level, which are
reported and reviewed by the CODM. For the purpose of presentation under IFRS
8, the individual operating segments meet the aggregation criteria that allows
them to be aggregated and presented as one reportable segment for the Group.
However, in the current year, management consider it appropriate to disclose
two operating segments as described below.
§ Core Construction Operations - comprising the combined results of the
Commercial and Industrial ('C&I') and Nuclear and Infrastructure
('N&I') divisions, including the results of Severfield Europe Holdings
('SEH').
§ Modular Solutions - comprising Severfield Modular Solutions ('SMS') and
the Group's share of profit (50 per cent) from the joint venture company,
Construction Metal Forming Limited ('CMF').
The constituent operating segments that make up 'Core Construction Operations'
have been aggregated because the nature of the products across the businesses,
whilst serving different market sectors, are consistent in that they relate to
the design, fabrication and erection of steel products. They have similar
production processes and facilities, types of customers, methods of
distribution, regulatory environments and economic characteristics. This is
reinforced through the use of shared production facilities across the Group.
The C&I and N&I divisions presented in the operational review of the
preliminary announcement were established in April 2022 to provide better
client service and increased organisational clarity, both internally and
externally. These still meet the aggregation criteria to be presented as one
reportable segment under IFRS 8 and are therefore presented as such within
Core Construction Operations.
Segment assets and liabilities are not presented as these are not reported to
the CODM.
Core Construction Operations Modular Solutions JSSL Central costs/ eliminations Total
Year ended 29 March 2025: £000 £000 £000 £000 £000
Revenue 435,448 24,152 - (8,687) 450,913
Underlying operating profit 21,285 368 - - 21,653
Underlying operating profit margin 4.9% 1.5% 4.8%
Result from joint ventures
- Bouwcombinatie Van Wijnen 6 - - - 6
- CMF - 8 - - 8
- JSSL - - 87 - 87
Finance costs - - - (3,621) (3,621)
Underlying profit before tax 21,291 376 87 (3,621) 18,133
Non-underlying items (note 3) (36,610) - - 965 (35,645)
Profit/(loss) before tax (15,319) 376 87 (2,656) (17,512)
Other material items of income and expense:
- Depreciation of owned property, plant and equipment (7,028) (189) - - (7,217)
- Depreciation of right-of-use assets (2,709) (42) - - (2,751)
- Other operating income 2,557 344 - - 2,901
Core Construction Operations Modular Solutions JSSL Central costs/ eliminations Total
Year ended 30 March 2024: £000 £000 £000 £000 £000
Revenue 449,168 21,489 - (7,192) 463,465
Underlying operating profit 37,430 260 - - 37,690
Underlying operating profit margin 8.3% 1.2% 8.1%
Result from joint ventures
- CMF - 92 - - 92
- JSSL - - 1,858 - 1,858
Finance costs - - - (3,095) (3,095)
Underlying profit before tax 37,430 352 1,858 (3,095) 36,545
Non-underlying items (note 3) (14,270) (115) - 860 (13,525)
Profit before tax 23,160 237 1,858 (2,235) 23,020
Other material items of income and expense:
- Depreciation of owned property, plant and equipment (6,317) (163) - - (6,480)
- Depreciation of right-of-use assets (2,644) (39) - - (2,683)
- Other operating income 1,625 245 - - 1,870
Revenue
All revenue is derived from construction contracts and related assets.
Additional disclosures are made under IFRS 15 to enable users to understand
the relative size of the divisions. An analysis of the Group's revenue is as
follows:
2025
2024
£000 £000
Commercial and Industrial 349,588 361,734
Nuclear and Infrastructure 85,860 87,434
Core Construction Operations 435,448 449,168
Modular Solutions 24,152 21,489
Elimination of inter-segment revenue (Modular Solutions) (8,687) (7,192)
Total Group revenue 450,913 463,465
Geographical information
The following table presents revenue according to the primary geographical
markets in which the Group operates. This disaggregation of revenue is
presented for the Group's two operating segments described above.
2025
2024
Core Construction Operations - revenue by destination £'000 £'000
United Kingdom 265,300 367,127
Republic of Ireland and continental Europe 170,148 82,041
435,448 449,168
2025
Modular Solutions - revenue by destination 2024
£'000 £'000
United Kingdom 23,007 17,486
Republic of Ireland and continental Europe 1,145 4,003
24,152 21,489
Elimination of intercompany revenue (UK) (8,687) (7,192)
15,465 14,297
All revenue is derived from construction contracts and related assets. Group
revenue includes revenue of £50,262,000 (2024: £100,189,000), relating to
one major client (2024: one major client), who individually contributed more
than 10 per cent of Group revenue in the year ended 29 March 2025.
3) Non-underlying items
2025 2024
£000 £000
Amortisation of acquired intangible assets 2,609 5,399
Bridge remedial and testing costs 43,367 -
Insurance recovery (20,000) -
Other bridge related costs 9,159 -
Legacy employment tax charge (1,373) 4,413
Other non-underlying costs 2,848 -
Asset impairment charges - 4,543
Acquisition-related credits (965) (830)
Non-underlying items before tax 35,645 13,525
Tax on non-underlying items (8,620) (1,957)
Non-underlying items after tax 27,025 11,568
The amortisation of acquired intangible assets of £2,609,000 (2024:
£5,399,000) represents the amortisation of customer relationships, order
books and brand name, which were identified on the acquisitions of Harry
Peers, DAM Structures and VSCH in 2020, 2021 and 2023, respectively.
The bridge testing and remedial costs of £43,367,000 relate to the ongoing
programme of bridge remedial work and represent works undertaken during FY25
and an estimate of remaining testing and remedial costs for all affected
bridge projects. The Group has recognised an insurance receivable in respect
of the bridge testing and remedial costs, in accordance with IAS 37
(Provisions, Contingent Liabilities and Contingent Assets) and IFRS 9
(Financial Instruments). The receivable has been recognised as the recovery is
considered virtually certain and the amount can be reliably measured. It is
presented as a current asset within trade and other receivables.
Other bridge related costs of £9,159,000 include £4,200,000 in relation to
the reversal of previously recognised variation orders, due to delays in
payment and increased uncertainty over their recoverability, and £4,959,000
in respect of provisions for third-party claims. The overall contract value
has been reduced by £9,159,000 to reflect a decrease in variable
consideration. The impact in FY25 is to reduce revenue by £5,626,000 based on
the associated stage of completion, with the remaining balance recognised as a
loss provision through cost of sales. The full amount of £9,159,000 has been
presented as a single non-underlying expense as the directors believe
presenting an underlying result which excludes the effect of bridge remedial
works to be meaningful and useful information and facilitates analysis of the
impact of the remedial programme. In the absence of notification of any
further consequential claims and noting that, in certain cases, such claims
may be limited by contractual liability caps, the Group's current assumption
is that any further costs will remain with the respective parties.
Other non-underlying costs include £1,342,000 in redundancy and severance
costs associated with a headcount reduction programme aimed at improving
operational efficiency, as well as severance costs relating to the departure
of the former CEO. In addition, legal and other costs of £1,506,000 were
incurred in connection with the bridge testing and remedial programme.
Costs related to the bridge weld issue, along with the associated insurance
recovery income, and redundancies have been separately identified and
presented as non-underlying items, reflecting their one-off and material
nature.
During the prior year, HMRC issued an assessment for historical income tax and
National Insurance Contributions ('NIC'). While the Group initially disputed
the charge, official determinations were subsequently issued by HMRC, and a
liability of £4,413,000 was recognised in the 2024 financial results. During
the current year, the Group reached a final settlement with HMRC, resulting in
a reduction of the liability. Consequently, a credit of £1,373,000 was
recognised within non-underlying items. The separate presentation within
non-underlying items reflects the one-off and material nature of the costs in
the prior year and the associated credit in the current year.
The prior year impairment charge of £4,543,000 related to the write-down of
assets at the Group's leasehold facility in Sherburn, following notification
of the landlord's intention to terminate the lease. As a result, an impairment
review of property, plant and equipment was undertaken, leading to a non-cash
charge.
A corresponding corporation tax charge or credit applies to all of the above
non-underlying items, except for amortisation costs, which attract a deferred
tax credit, and the DAM acquisition costs, which are non-deductible for tax
purposes. For tax on non-underlying items in the year a credit of £8,620,000
has been recognised, comprising a tax credit on non-underlying items of
£9,213,000, offset by a charge of £593,000 relating to prior year
adjustments.
Non-underlying items have been separately identified by virtue of their
magnitude or nature to enable a full understanding of the Group's financial
performance and to make year-on-year comparisons. They are excluded by
management for planning, budgeting and reporting purposes and for the internal
assessment of operating performance across the Group and are normally excluded
by investors, analysts and brokers when making investment and other decisions.
For an item to be considered as non-underlying, it must satisfy at least one
of the following criteria:
§ A significant item, which may span more than one accounting period.
§ An item directly incurred as a result of either a business combination,
disposal, or related to a major business change or restructuring programme,
and
§ An item which is unusual in nature (outside the normal course of
business).
4) Taxation
The taxation charge comprises:
2025 2024
£000 £000
Current tax
Corporation tax charge 3,945 (5,649)
Foreign tax relief / other relief 445 70
Foreign tax suffered (445) (70)
Adjustments to prior years' provisions (1,088) 136
2,857 (5,513)
Deferred tax
Current year charge 73 (973)
Adjustments to prior years' provisions 495 (633)
568 (1,606)
Total tax charge 3,425 (7,119)
5) Dividends
2025 2024
£000 £000
Amounts recognised as distributions to equity holders in the year:
2024 final - 2.3p per share (2024: 2.1p per share) 7,013 6,423
2025 interim - 1.4p per share (2024: 1.4p per share) 4,151 4,291
11,164 10,714
The directors have made the decision to suspend the final dividend (2024: 2.3p
per share).
6) Earnings per share
Earnings per share is calculated as follows:
2025 2024
£000 £000
Earnings for the purposes of basic earnings per share being net profit (14,087) 15,901
attributable to equity holders of the parent company
Earnings for the purposes of underlying basic earnings per share being 12,938 27,469
underlying net profit attributable to equity holders of the parent company
Number of shares Number Number
Weighted average number of ordinary shares for the purposes of basic earnings 302,512,024 307,131,912
per share
Effect of dilutive potential ordinary shares - 3,093,177
Weighted average number of ordinary shares for the purposes of diluted 302,512,024 310,225,089
earnings per share
Basic earnings per share (4.66)p 5.18p
Underlying basic earnings per share 4.28p 8.94p
Diluted earnings per share (4.66)p 5.13p
Underlying diluted earnings per share 4.28p 8.85p
Basic earnings per share is calculated by dividing the profit after tax
attributable to the equity holders of the parent by the weighted average
number of ordinary shares in issue during the year, excluding shares held in
employee benefit trusts. These shares are treated as cancelled for the purpose
of the calculation, as dividend rights have been waived other than for a
nominal amount.
For the purposes of diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to reflect the potential dilutive effect
of outstanding share awards. However, as the Group incurred a loss for the
year, no such adjustment has been made, in accordance with IAS 33, since the
inclusion of potentially dilutive shares would be anti-dilutive.
Underlying earnings per share are also presented to provide a more
representative measure of the Group's underlying financial performance,
excluding the impact of non-underlying items.
7) Net cash flow from operating activities
2025 2024
£000 £000
Profit/(loss) before tax (17,512) 23,020
Adjustments:
Net finance expense 3,791 3,395
Depreciation - property, plant and equipment 7,217 6,480
Depreciation - right-of-use assets 2,729 2,683
Fixed asset impairments - 4,543
Gain on disposal of other property, plant and equipment (413) (92)
Amortisation of intangible assets 2,699 5,489
Movements in pension scheme (2,296) (2,152)
Share of results of JVs and associates (101) (1,950)
Exchange adjustments 100 (373)
Share-based payments 489 392
Operating cash flows before movements (3,297) 41,435
in working capital
(Increase)/decrease in inventories (161) 1,729
(Increase)/decrease in receivables (30,597) 31,232
Increase/(decrease) in payables 27,999 (21,962)
Movements in working capital (2,759) 10,999
Cash (used in)/generated from operations (6,056) 52,434
Tax paid 5,534 (7,298)
Net cash flow from operating activities (522) 45,136
Net debt
The Group's net debt are as follows:
2025 2024
£000 £000
Borrowings (13,800) (20,000)
Cash and cash equivalents 15,520 10,394
Rolling credit facility (45,000) -
Unamortised debt arrangement fees 150 235
Net debt (pre-IFRS 16) (43,130) (9,371)
IFRS 16 lease liabilities (20,461) (19,073)
Net debt (post-IFRS 16) (63,591) (28,444)
The Group excludes IFRS 16 lease liabilities from its measure of net funds /
debt as they are excluded from the definition of net debt as set out in the
Group's borrowing facilities. A reconciliation of the Group's underlying
results to its statutory results is disclosed in note 8.
8) Alternative Performance Measures
Our Alternative Performance Measures ('APMs') present useful information which
supplements the preliminary announcement. These measures are not defined under
IFRS and may not be directly comparable with APMs for other companies. The
APMs represent important measures for how management monitors the Group and
its underlying business performance. In addition, APMs enhance the
comparability of information between reporting periods by adjusting for
non-underlying items. The APMs are not intended to be a substitute for, or
superior to, any IFRS measures of performance.
In order to facilitate understanding of the APMs used by the Group, and their
relationship to reported IFRS measures, definitions and numerical
reconciliations are set out below.
Alternative performance measure ('APM') Definition Rationale
Underlying operating profit (before JVs and associates) Operating profit before non-underlying items and the results of JVs and Profit measure reflecting underlying trading performance of wholly owned
associates. subsidiaries.
Underlying profit before tax Profit before tax before non-underlying items. Profit measure widely used by investors and analysts.
Underlying basic earnings per share ('EPS') Underlying profit after tax divided by the weighted average number of shares Underlying EPS reflects the Group's operational performance per ordinary share
in issue during the year. outstanding.
Net funds / (debt) Balance drawn down on the Group's revolving credit facility, with unamortised Measure of the Group's cash indebtedness before IFRS-16 lease liabilities,
debt arrangement costs added back, less cash and cash equivalents (including which are excluded from the definition of net funds / (debt) in the Group's
(pre-IFRS 16) bank overdrafts) before IFRS-16 lease liabilities. borrowing facilities. This measure supports the assessment of available
liquidity and cash flow generation in the reporting period.
Operating cash conversion Cash generated from operations after net capital expenditure (before interest Measure of how successful we are in converting profit to cash through
and tax) expressed as a percentage of underlying operating profit (before JVs management of working capital and capital expenditure. Widely used by
and associates). investors and analysts.
Underlying return on capital employed Underlying operating profit divided by the average of opening and closing Measures the return generated on the capital we have invested in the business
capital employed. and reflects our ability to add shareholder value over the long term. We have
an asset-intensive business model and ROCE reflects how productively we deploy
Capital employed is defined as shareholders' equity excluding retirement those capital resources.
benefit obligations (net of tax), acquired intangible assets and net funds.
Reconciliations to IFRS measures
2025 2024
A. Underlying operating profit (before JVs and associates) £000 £000
Underlying operating profit (before JVs and associates) 21,653 37,690
Non-underlying operating items (35,475) (13,225)
Share of results of JVs and associates 101 1,950
Operating profit/(loss) (13,721) 26,415
2025 2024
B. Underlying profit before tax £000 £000
Underlying profit before tax 18,133 36,545
Non-underlying items (35,645) (13,525)
Profit/(loss) before tax (17,512) 23,020
2025 2024
C. Underlying basic EPS £000 £000
Underlying net profit attributable to equity holders of the parent Company 12,938 27,469
Non-underlying items after tax (27,025) (11,568)
Net profit attributable to equity holders of the parent Company (14,087) 15,901
Weighted average number of ordinary shares 302,512,024 307,131,912
Underlying basic earnings per share 4.28p 8.94p
Basic earnings per share (4.66)p 5.18p
2025 2024
D. Net debt (pre-IFRS 16) £000 £000
Borrowings (13,800) (20,000)
Cash and cash equivalents 15,520 10,394
Revolving credit facility (45,000) -
Unamortised debt arrangement costs 150 235
Net debt (pre-IFRS 16) (43,130) (9,371)
IFRS 16 lease liabilities (20,461) (19,073)
Net debt (post-IFRS 16) (63,591) (28,444)
2025 2024
E. Operating cash conversion £000 £000
Cash generated from operations (6,056) 52,434
Proceeds on disposal of other property, plant and equipment 909 408
Purchases of land and buildings (32) (410)
Purchases of other property, plant and equipment (7,796) (10,911)
(12,975) 41,521
Underlying operating profit (before JVs and associates) 21,653 37,690
Operating cash conversion (60)% 110%
Reconciliations to IFRS measures
2025 2024
F. Underlying return on capital employed £000 £000
Underlying operating profit
Underlying operating profit (before JVs and associates) 21,653 37,690
Share of results from JVs and associates 101 1,950
Underlying operating profit 21,754 39,640
Capital employed
Shareholders' equity 187,454 220,751
Cash and cash equivalents (net of overdraft) (15,520) (10,394)
Borrowings 58,800 20,000
Net debt (for ROCE purposes) 43,280 9,606
Acquired intangible assets (2,606) (5,215)
Retirement benefit obligation 5,140 8,599
(net of deferred tax)
233,268 233,741
Average capital employed 233,505 226,007
Underlying return on capital employed 9.3% 17.5%
Principal risks and uncertainties
The board has conducted a robust assessment of the principal risks and
uncertainties which have the potential to impact the Group's profitability and
ability to achieve its strategic objectives. This list is not intended to be
exhaustive. Additional risks and uncertainties not presently known to
management or deemed to be less significant at the date of this report may
also have the potential to have an adverse effect on the Group. Risk
management processes are put in place to assess, manage and control these on
an ongoing basis. Our principal risks are set out below:
1 Health and safety
Movement: Description
No change The Group works on significant, complex and potentially hazardous projects,
which require continuous monitoring and management of health and safety risks
Scoring: High so as to avoid serious injury, death and damage to property or equipment.
Impact
A serious health and safety incident could lead to the potential for legal
proceedings, regulatory intervention, project delays, potential loss of
reputation and ultimately exclusion from future business.
Mitigation
• Embedded protocols covering safety systems, site visits, safety
audits, training, monitoring and reporting, and detailed health and safety
policies and procedures.
• Director-led safety leadership teams established to bring
innovative solutions and to engage with all stakeholders.
• Regular reporting of, and investigation and root cause analysis of
accidents and near misses with lessons learned analysis with a focus on
preventative measures.
• Ongoing bespoke behavioural safety cultural change programme.
• Occupational health and wellbeing programme including mental
health alongside health surveillance, safety critical medicals and night
worker assessments.
• Achievement of challenging leading and lagging health and safety
performance targets is a key element of management remuneration.
• Scheduled Director leadership tours.
• Supply chain engagement with safety performance embedding
Severfield working practice and procedures.
• Externally verified and audited management systems and processes.
2 Supply chain
Movement: Description
No change The Group is reliant on certain key supply chain partners for the successful
operational delivery of contracts to meet client expectations. The failure of
Scoring: Medium a key supplier, a breakdown in relationships with a key supplier or the
failure of a key supplier to meet its contractual obligations could
potentially result in some short to medium-term price increases and other
short-term delay and disruption to the Group's projects and operations.
Impact
Interruption of supply or poor performance by a supply chain partner could
impact the Group's execution of existing contracts (including the costs of
finding replacement supply), its ability to bid for future contracts and its
reputation, thereby adversely impacting financial performance.
Mitigation
• Process in place to select supply chain partners that match our
expectations in terms of quality, sustainability and commitment to client
service - new sources of supply are quality controlled.
• Ongoing reassessment of the strategic value of supply
relationships and the potential to utilise alternative arrangements, including
for steel supply.
• Contingency plans developed to address supplier and subcontractor
issues (including the failure of a supplier or subcontractor).
• Strong relationships maintained with key suppliers, including a
programme of regular meetings and reviews.
• Implementation of best practice improvement initiatives, including
automated supplier accreditation processes.
• Key supplier audits are performed within projects to ensure they
can deliver consistently against requirements.
3 People
Movement: Description
No change The ability to identify, attract, develop and retain talent is crucial to
satisfy the current and future needs of the business. Skills shortages in the
Scoring: Medium construction industry are likely to remain an issue for the foreseeable
future. This has been exacerbated in recent years due to macroeconomic factors
such as the impact of inflation and shortages of labour.
Impact
Loss of key people could adversely impact the Group's existing market position
and reputation. Insufficient growth and development of its people and skill
sets could adversely affect its ability to deliver its strategic objectives.
A high level of staff turnover or low employee engagement could result in a
decrease of confidence in the business within the market, customer
relationships being lost and an inability to focus on business improvements.
Mitigation
• Training and development schemes to build skills and experience,
such as our successful graduate, trainee and apprenticeship programmes.
• Detailed talent identification and succession planning for future
leaders across the business.
• Attractive working environments, remuneration packages, technology
tools and wellbeing initiatives to help improve employees' working lives.
• Annual appraisal process providing two-way feedback on
performance.
• Robust people strategy focused on culture, and continually
enhancing all aspects of our approach to performance, development, careers,
recruitment and reward.
• Maintained our approach to flexible working practices and hybrid
working.
• Widening the geographical outreach of our recruitment programme.
4 Commercial and market environment
Movement: Description
No change Changes in government and client spending or other external factors could lead
to programme and contract delays or cancellations, or changes in market
Scoring: High growth. External factors include national or market trends, political or
regulatory change, the impact of geopolitical events.
Impact
A significant fall in construction activity and higher costs could adversely
impact revenues, profits, ability to recover overheads and cash generation.
Mitigation
• Regular reviews of market trends performed (as part of the Group's
annual strategic planning and market review process) to ensure actual and
anticipated impacts from macroeconomic risks are minimised and managed
effectively.
• Regular monitoring and reporting of financial performance, orders
secured, prospects and the conversion rate of the pipeline of opportunities
and marshalling of market opportunities is undertaken on a co-ordinated
Group-wide basis.
• Selection of opportunities that will provide sustainable margins
and repeat business.
• Strategic planning is undertaken to identify and focus on the
addressable market (including new overseas and domestic opportunities).
• Monitoring our pipeline of opportunities in continental Europe and
in the Republic of Ireland, supported by our European operations.
• Maintenance and establishment of supply chain in mainland Europe.
• Continuing use of credit insurance to minimise impact of customer
failure.
• Recent acquisitions have broadened our reach and cross-selling
opportunities, resulting in improved market resilience.
5 Mispricing a contract (at tender)
Movement: Description
No change Failure to accurately estimate and evaluate the contract risks, costs to
complete, contract duration and the impact of price increases could result in
Scoring: Medium a contract being mispriced. Execution failure on a high-profile contract could
result in reputational damage.
Impact
If a contract is incorrectly priced, particularly on complex contracts, this
could lead to loss of profitability, adverse business performance and missed
performance targets.
This could also damage relationships with clients and the supply chain.
Mitigation
• Estimating processes are in place with approvals by appropriate
levels of management.
• Tender settlement processes are in place to give senior management
regular visibility of major tenders. Use of the tender review process to
mitigate the impact of rising supply chain costs.
• Work performed under minimum standard terms (to mitigate onerous
contract terms) where possible.
• Use of Group authorisation policy to ensure appropriate contract
tendering and acceptance.
• Adoption of Group-wide project risk management framework ('PRMF')
brings greater consistency and embeds good practice in identifying and
managing contract risk.
6 Cyber security
Movement: Description
No change A cyber attack could lead to IT disruption with resultant loss of data, loss
of system functionality and business interruption.
Scoring: High
The Group's core IT systems must be managed effectively, to keep pace with new
technologies and respond to threats to data and security.
Impact
Prolonged or major failure of IT systems could result in business
interruption, financial losses, loss of confidential data, negative
reputational impact and breaches of regulations.
Mitigation
• IT is the responsibility of a central function, which manages the
majority of the systems across the Group. Other IT systems are managed locally
by experienced IT personnel.
• Significant investments in IT systems, which are subject to board
approval, including anti-virus software, off-site and on-site backups, storage
area networks, software maintenance agreements and virtualisation of the IT
environment.
• Specific software has been acquired to combat the risk of
ransomware attacks.
• Robust business continuity plans are in place and disaster
recovery and penetration testing are undertaken on a systematic basis. A
Group-wide cyber attack simulation exercise was undertaken in 2024 by the
executive committee and IT DR plans are regularly tested.
• Data protection and information security policies are in place
across the Group.
• ISO 27001 and Cyber Essentials accreditation achieved for the
Group's information security environment and regular employee engagement
undertaken to reinforce key messages.
• Insurance covers certain losses and is reviewed annually to
establish further opportunities for affordable risk transfer to reduce the
financial impact of this risk.
7 Failure to mitigate onerous contract terms
Movement: Description
No change Given the highly competitive environment in which we operate, contract terms
need to reflect the risks arising from the nature or the work to be performed.
Scoring: Medium Failure to appropriately assess those contractual terms or the acceptance of a
contract with unfavourable terms could, unless properly mitigated, result in
poor contract delivery, poor understanding of contract risks and legal
disputes.
Impact
Loss of profitability on contracts as costs incurred may not be recovered, and
potential reputational damage for the Group.
Mitigation
• The Group has identified minimum standard terms, which mitigate
contract risk.
• Robust tendering process with detailed legal and commercial review
and approval of proposed contractual terms at a senior level (including the
risk committee) are required before contract acceptance so that onerous terms
are challenged, removed or mitigated as appropriate.
• Regular contract audits are performed to ensure contract
acceptance and approval procedures have been adhered to.
• Through regular project reviews and lessons learned reviews we
capture early those occasions where onerous terms could have an adverse impact
and are able to implement appropriate mitigating action at the earliest stage.
8. Industrial relations
Movement: Description
No change The Group (and the industry in general) has a significant number of employees
who are members of trade unions. Industrial action taken by employees could
Scoring: Medium impact on the ability of the Group to maintain effective levels of production.
Impact
Interruption to production by industrial action could impact both the Group's
performance on existing contracts, its ability to bid for future contracts and
its reputation, thereby adversely impacting its financial performance.
Mitigation
• Employee and union engagement takes place on a regular basis.
• The Group has seven main production facilities so interruption at
one facility could to some extent be absorbed by increasing capacity at a
sister facility.
• Processes are in place to mitigate disruptions as a result of
industrial action.
9 Product risk
Movement: Description
New risk The Group operates in infrastructure markets where it is critical that its
products meet customer and legislative requirements and where the consequences
Scoring: Medium of failure in manufactured steel parts are potentially significant.
Impact
Defects or warranty issues may require remediation including replacement or
repair, resulting in direct financial costs to the Group and/or wider
reputational risk.
Mitigation
• Each manufacturing facility has a robust quality management system
with regular audits undertaken by quality staff, industry bodies and clients.
• There are strict terms and conditions associated with the supply
of services to clients and potential liabilities are carefully managed.
• Improvement plans implemented in response to the bridge welding
issue.
• Group Quality Director appointed to oversee and implement systemic
change.
• Independent quality assurance testers are deployed in each
facility and independent experts are appointed to advise on best practice
improvements in quality control and assurance.
• Quality control procedures are adopted for suppliers and
subcontractors including visits to third party facilities, audits and
performance management.
• Certain potential damages resulting from this risk are fully or
partially covered through the Group's various insurance policies.
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR DZGZNKFZGKZMRecent news on Severfield
See all newsRCS - Severfield PLC - Progressive publishes new research
AnnouncementREG - Severfield PLC - Final Results
AnnouncementREG - Severfield PLC Perpetual Limited - Holding(s) in Company
AnnouncementREG - Severfield PLC - JSW Severfield Structures Limited Option Agreement
AnnouncementREG - Severfield PLC - Notice of Results
Announcement