REG - Severfield PLC - Interim Results
26/11/2024 07:00
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RNS Number : 5898N Severfield PLC 26 November 2024
26 November 2024
Interim results for the period ended 28 September 2024
Revenue and underlying profit growth, diversified order books, challenging
market backdrop but remain well-positioned in markets with positive long-term
growth trends
Severfield plc, the market-leading structural steel group, announces its
results for the six-month period ended 28 September 2024.
£m H1 2025 H1 2024 Change
(unaudited) (unaudited)
Revenue 252.3 215.3 +17%
Underlying(1) operating profit 17.2 14.8 +16%
(before JVs and associates)
Operating (loss) / profit (before JVs and associates) (4.6) 11.9 (16.5)
Underlying(1) profit before tax 16.1 14.2 +14%
(Loss) / profit before tax (5.8) 11.0 (16.8)
Underlying(1) basic earnings per share 4.0p 3.5p +14%
Basic (loss) / earnings per share (1.4p) 2.7p (4.1p)
Interim dividend per share 1.4p 1.4p -
Headlines
§ Revenue up 17% to £252.3m (H1 2024: £215.3m)
§ Underlying(1) profit before tax up 14% to £16.1m (H1 2024: £14.2m)
§ Period-end net debt (on a pre-IFRS 16 basis(2)) of £11.6m (30 March 2024:
£9.4m), includes acquisition loans of £16.9m, and reflects a stable working
capital position
§ Results include non-underlying cost of £20.4m for bridge remedial works
programme, excludes potential recoveries from third parties, assessment of any
further remedial costs remains ongoing
§ Diversified UK and Europe order book of £410m at 1 November 2024 (1 July
2024: £460m), includes new industrial, data centre, infrastructure, energy
and commercial office orders
§ Continued strategic progress in India - expansion plans have been
accelerated, new production facilities expected to be operational in FY26
§ Record India order book of £197m at 1 November 2024 (1 July 2024: £181m)
§ Interim dividend of 1.4p per share (H1 2024: 1.4p per share)
§ Additional capital returns through ongoing £10m share buyback programme
Outlook
§ UK and Europe:
- wider market backdrop is challenging
- previously anticipated recovery in some sectors has been slower than
expected and tighter prices are continuing to impact our profitability in the
short-term
- some large project opportunities for FY25 and FY26 have been either
delayed or cancelled and increased risk of delay to expected orders in the
short-term
- continued progress in growing European market sectors
§ India: well-positioned to take advantage of significant growth
opportunities, new markets being targeted, expansion plans have been
accelerated
§ Underlying profits for FY25 are now expected to be below our previous
expectations
§ Our businesses remain well-positioned in markets with excellent longer-term
growth opportunities and our medium-term growth targets remain unchanged
Alan Dunsmore, Chief Executive Officer commented:
"In the first half of the year, we have delivered further underlying profit
growth and have secured some attractive projects which are reflected in our
diversified order books. We continue to see some good projects coming to
market however, the predicted recovery in certain sectors has been slower than
previously anticipated, and pricing has remained tighter for longer than
expected. In addition, a number of large project opportunities for FY25 and
FY26 have been either delayed or cancelled and, given the current market
backdrop, we remain vigilant to the increased risk of delay to expected orders
in the short-term. Although the wider market backdrop continues to be
challenging, our successful track record and diversified activities give us
confidence in delivering the targets we have set for the medium-term.
Looking further ahead, we welcome the new government's budget which
established a National Wealth Fund to invest in energy, transport projects and
critical national infrastructure. 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 in support of a
low-carbon economy and those which are driving the green energy transition,
providing us with a strong platform to fulfil our strategic growth
aspirations."
For further information, please contact:
Severfield Alan Dunsmore 01845 577 896
Chief Executive Officer
Adam Semple 01845 577 896
Chief Financial Officer
Camarco severfield@camarco.co.uk
Ginny Pulbrook 07961 315 138
Tom Huddart 07967 521 573
Jefferies International Will Soutar 020 7029 8000
Panmure Liberum Nick How 020 3100 2000
Notes to financials:
(1) Stated before non-underlying items of £21.9m (H1 2024: £3.1m) including
bridge testing and remedial costs of £20.4m (H1 2024: £nil), the
amortisation of acquired intangible assets of £1.3m (H1 2024: £2.8m) and
other expenses of £0.2m (H1 2024: £0.3m). 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 7).
(2) The Group excludes IFRS 16 lease liabilities from its measure of net
funds/debt as they are excluded from the definition of net funds/debt as set
out in the Group's borrowing facilities (see note 13).
(3) Except as otherwise stated '2023 and FY23' and '2024 and FY24' refer to
the 52-week period ended 25 March 2023 and the 53-week period ended 30 March
2024. '2025 and FY25' and '2026 and FY26' refer to the 52-week periods ending
29 March 2025 and 28 March 2026. The Group's accounts are made up to an
appropriate weekend date around 31 March each year.
A reconciliation of the Group's underlying results to its statutory results is
provided in the Alternative Performance Measures ('APMs') section (see note
17).
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.1,900 employees and expertise in
large, complex projects across a broad range of sectors. The Group also has an
established presence in the expanding Indian market through its joint venture
partnership with JSW Steel (India's largest steel producer).
Inside information
This announcement contains inside information as stipulated under the Market
Abuse Regulation (EU) No.596/2014 (as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018) and is disclosed in
accordance with the Company's obligations under Article 17 of those
Regulations. On the publication of this announcement via a Regulatory
Information Service, such information is now considered to be in the public
domain. The person responsible for arranging for the release of this
announcement on behalf of Severfield is Adam Semple, Chief Financial Officer.
INTERIM STATEMENT
INTRODUCTION
The Group has reported a good underlying performance in the first half, with
revenue and underlying profit before tax both showing growth in the period. We
have secured some attractive projects in the period which are reflected in our
diversified order books of £410m in the UK and Europe and £197m in India,
providing us with a good volume of work for the remainder of FY25 and beyond.
In the UK and Europe, the current market backdrop remains challenging. Whilst
we continue to see some good projects coming to market, the predicted recovery
in certain sectors, particularly for our shorter cycle businesses such as
distribution, has been slower than previously anticipated, and pricing has
remained at tighter levels for longer than expected for some projects. In
addition, some large project opportunities for FY25 and FY26 have been either
delayed or cancelled and, given the current market backdrop, we remain
vigilant to the increased risk of delay to expected orders in the short-term.
Looking further ahead, our businesses remain well-positioned to win work in
markets with positive long-term growth trends including those which are
driving the green energy transition, providing us with a strong platform to
fulfil our strategic growth aspirations.
Our balance sheet, supported by our strong cash position, has enabled us to
focus on making the right capital allocation decisions to drive growth over
the longer-term, including through our ongoing capital investment programme,
while also supporting the returns to shareholders, through the interim
dividend and our ongoing share buyback programme.
In India, despite the lower first half profits, which have been driven by
short-term delays to existing and expected projects in the run up to and
immediately following the Indian elections in June 2024, we remain very
positive about the long-term trajectory of the market and of the value
creation potential of JSSL. To support this expected market growth, we have
agreed with our joint venture partner, JSW, to accelerate expansion plans for
the business, with some new factory capacity increases expected to be
completed in H2 and a new production facility expected to be operational in
FY26.
Bridge remedial works programme
Since the publication of the 2024 results, the Group identified some bridge
structures which were not in compliance with the client's weld specification
requirements, predominantly relating to twelve 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. A comprehensive review is currently being
undertaken by the Group, in conjunction with its affected clients, relevant
industry authorities and insurers to fully understand the extent of the
actions required to resolve the issue, which has not affected the safety of
any operational bridges. Notwithstanding this, we are continuing our work on
ongoing road and rail bridges for a variety of clients, which we are confident
will meet the required specification.
Whilst the precise nature of the overall remedial work required for all
affected bridge structures has not yet been fully determined, the Group has
incurred costs of £7.1m relating to testing and remedial works undertaken
during H1 and for eight bridge projects, where the Group is able to estimate
with sufficient reliability the remaining testing and remedial costs, a
further liability of £13.3m has been assessed. A non-underlying charge of
£20.4m has therefore been recognised for these costs as at 28 September 2024.
All amounts will be kept under review until our assessment of all affected
structures has been concluded. The Group will be pursuing all potential
recoveries from third parties, including insurance, with preliminary
indications suggesting a good prospect of insurance recovery, albeit not yet
with the level of certainty required for such recovery to be recognised under
accounting standards.
At this stage, the Group is not able to estimate with sufficient reliability
the cost of its obligation for the four remaining bridge projects where either
the results of the ongoing testing are not yet known or a rectification
solution has not yet been agreed with the client, as any estimate is subject
to a number of unknown factors. These include what the proposed rectification
solution is (if any is required), sequencing, timeline and consequential
disruption. Furthermore, the Group is also not able to estimate with
sufficient reliability any possible consequential costs (if any) from third
parties as these are not yet known. As such there is a range of potential
outcomes in these specific cases and since the Group is unable to quantify the
possible exposure based on current information, a contingent liability has
been disclosed.
STRATEGY
The Group's well-established strategy is unchanged, focused on growth and
diversification (both organic and through selective acquisitions), operational
improvements and building further value in JSSL which, in combination, is
expected to deliver strong EPS growth in the medium term. Our clear focus on
balance sheet strength and cash generation enables us to continue making the
right capital allocation decisions for the long-term, to maximise our
competitive advantage and to best position us in our chosen markets for
long-term growth.
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), which includes our European
operations, 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.
OUTLOOK
In the UK and Europe, the market backdrop is currently challenging. The
previously anticipated recovery in some sectors has been slower than expected
and tighter prices are continuing to impact our profitability in the
short-term. In addition, some large project opportunities for FY25 and FY26
have been either delayed or cancelled and, given the current market backdrop,
we remain vigilant to the increased risk of delay to expected orders in the
short-term. As such, the Group now expects underlying profits for the full
year to be below our previous expectations. The increase in employer national
insurance rates announced by the UK Government in the October budget will
impact our business from FY26 onwards. We estimate the combination of lowering
the earnings threshold at which employers start paying national insurance
contributions together with the increase in rate will in aggregate increase
our employment costs by c.£2m per annum before any possible mitigation.
Underpinned by a strong balance sheet, the Group remains in a strong financial
position with a successful track record and, looking further ahead, the
longer-term outlook for the Group remains very encouraging. Our businesses
remain well-positioned to win work in markets with positive long-term growth
trends including those which are driving the green energy transition in both
Europe and the UK, with the new government reinforcing commitments to critical
national infrastructure. Our prospects across these markets provide the board
with confidence that the Group will continue to deliver significant and
attractive shareholder returns in the coming years and our medium-term growth
targets remain unchanged.
FINANCIAL REVIEW
H1 2025 (£m) Revenue UOP* UPBT*
Core Construction Operations 247.2 17.1 17.1
Modular Solutions 9.8 0.1 0.4
India - - 0.1
Central items / eliminations (4.7) - (1.5)
Group 252.3 17.2 16.1
H1 2024 (£m) Revenue UOP* UPBT*
Core Construction Operations 208.0 14.7 14.7
Modular Solutions 10.7 0.1 0.2
India - - 0.6
Central items / eliminations (3.4) - (1.3)
Group 215.3 14.8 14.2
*The references to underlying operating profit (before JVs and associates) and
underlying profit before tax are defined in the 'notes to financials' and
reconciled to the statutory measures in note 17.
Revenue of £252.3m (H1 2024: £215.3m) represents an increase of £37.0m (17
per cent) compared to the prior period. This reflects an increase in revenue
from our Core Construction Operations, mainly representing an increase in
production activity in the period.
Underlying operating profit (before JVs and associates) of £17.2m (H1 2024:
£14.8m) represents an increase of £2.4m (16 per cent) over the prior period.
This reflects the increase in revenue and final account upsides, which helped
to offset the impact of some tighter pricing in certain market sectors. The
statutory operating loss (before JVs and associates), which includes the
non-underlying costs associated with the programme of bridge remedial works
and other non-underlying items, was £4.6m (H1 2024: profit of £11.9m), a
reduction in profit of £16.5m over the prior period.
The share of profit from the Indian joint venture in the period was £0.1m (H1
2024: £0.6m). The lower H1 profits have been driven by short-term delays to
existing and expected projects before and after the Indian elections in June
2024.
The Group's underlying profit before tax was £16.1m (H1 2024: £14.2m), an
increase of 14 per cent compared to the previous period. The statutory loss
before tax was £5.8m (H1 2024: profit of £11.0m), a reduction in profit of
£16.8m over the prior period.
An underlying tax charge of £3.9m is shown for the period (H1 2024: £3.4m).
This tax charge is recognised based upon the best estimate of the average
effective tax rate on profit before tax for the full financial year and
equates to the statutory rate in the UK and the Netherlands of c.25 per cent
(H1 2024: statutory rate of c.25 per cent). The total tax credit of £1.5m (H1
2024: charge of £2.7m) also includes a non-underlying tax credit of £5.4m
(H1 2024: credit of £0.7m).
Underlying basic earnings per share is 4.0p (H1 2024: 3.5p). This calculation
is based on the underlying profit after tax of £12.2m (H1 2024: £10.8m) and
307,188,953 shares (H1 2024: 309,538,321 shares) being the weighted average
number of shares in issue during the period. Basic loss per share, which is
based on the statutory loss after tax, is 1.4p (H1 2024: earning per share of
2.7p).
Non-underlying items
Non-underlying items for the period of £21.9m (H1 2024: £3.1m) consisted of
the following:
£m H1 2025 H1 2024
Bridge testing and remedial costs 20.4 -
Amortisation of acquired intangible assets 1.3 2.8
Other expenses 0.2 0.3
Non-underlying items 21.9 3.1
The costs of £20.4m relate to a programme of remedial work that is
predominantly affecting twelve bridge structures and represent works
undertaken during H1 and the remaining testing and remedial costs for eight
bridge projects where management is able to reliably estimate the cost to the
Group. The possible liability of the Group for the four remaining bridge
projects and for any possible consequential costs from third parties has not
yet been determined and has been disclosed as a contingent liability. In
addition, no possible recoveries from third parties have been recognised in
H1, including insurance as, although preliminary indications suggest a good
prospect of insurance recovery, these cannot yet be recognised under IFRS.
The amortisation of acquired intangible assets of £1.3m represents the
non-cash amortisation of customer relationships and order books which are
being amortised over a period of 12 months to five years. Acquisition-related
expenses of £0.2m include the unwinding of the discount on the contingent
consideration for DAM Structures which is payable over a five-year period.
In H2 of the prior year, the Group recorded a non-underlying legacy employment
tax charge of £4.4m relating to an assessment raised by HMRC for historical
income tax and national insurance ('NIC') liabilities. The Group is disputing
this assessment but since HMRC issued formal determinations for the amounts it
considers are due, a charge was recognised in the FY24 results. Discussions
are ongoing with HMRC to attempt to reach a final settlement and we expect
this matter to be concluded by the end of FY25.
Cash flow and financing
Net debt (pre-IFRS 16 basis) at 28 September 2024 was £11.6m (30 March 2024:
£9.4m). This included net cash balances of £5.1m (30 March 2024: £10.8m)
and outstanding acquisition-related term loans of £16.9m (30 March 2024:
£20.0m). Operating cash flow for the period before working capital movements
was £20.8m (H1 2024: £19.0m), the reduction over the prior period mainly
reflects bridge testing and remedial cash costs of £3.0m incurred in H1. Net
working capital has increased by £8.4m during the period mainly reflecting
the unwinding of advance payments held on the balance sheet at 30 March 2024.
Excluding advance payments, period-end net working capital represented
approximately five per cent of revenue, within our normal range of four to six
per cent (net working capital including advance payments was three per cent of
revenue).
Capital expenditure of £3.1m (H1 2024: £5.4m) represents the continuation of
the Group's capital investment programme. Depreciation in the period was
£4.8m (H1 2024: £4.4m), of which £1.3m (H1 2024: £1.2m) relates to
right-of-use assets under IFRS 16.
The Group has a £60m revolving credit facility ('RCF') with HSBC Bank and
Virgin Money, which matures in December 2026. This provides the Group with
long-term financing to help support its growth strategy. The RCF is subject to
three financial covenants, namely interest cover, net debt to EBITDA and debt
service (cash flow) cover. In addition to the RCF, which was undrawn at 28
September 2024, amortising term loans have been used to fund previous
acquisitions, of which £16.9m remained outstanding at 28 September 2024.
Share buyback programme update
In April 2024, the Group announced a share buyback programme to repurchase up
to £10m of ordinary shares, subject to market conditions. The board is
satisfied with the progress of this buyback programme, with a total of
8,611,558 shares purchased and cancelled to date, at a cost of £6.8m.
Pensions
The Group's net defined benefit pension liability at 28 September 2024 was
£9.1m (scheme liabilities of £32.5m offset by scheme assets of £23.4m), a
decrease of £2.4m from the year-end position of £11.5m. The deficit has
reduced as a result of a higher discount rate, reflecting an increase in bond
yields, lower inflation assumptions and employer deficit contributions over
the period.
OPERATIONAL REVIEW
UK AND EUROPE
Maintaining contract selectivity and bidding discipline to ensure there
remains the appropriate risk balance 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 £410m at 1 November (1 July: £460m, 1 June:
£478m), of which £307m 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 29 per cent of the order
book representing projects in continental Europe and Ireland (1 June: 32 per
cent). This reflects our greater access to growing European market sectors and
our stronger market position in Europe, facilitated by the acquisition of
Voortman ('VSCH') in the previous financial year. Notwithstanding this, the
current market backdrop remains challenging and whilst we continue to see some
good projects coming to market in the UK and in Europe, the predicted recovery
in certain market sectors, particularly for our shorter cycle businesses such
as distribution, has been slower than previously anticipated, and pricing has
remained at tighter levels for longer than expected for some projects. In
addition, some large project opportunities for FY25 and FY26 have been either
delayed or cancelled and, given the current market backdrop, we remain
vigilant to the increased risk of delay to expected orders in the short-term.
Looking further ahead, we welcome the new UK government's budget which
established a National Wealth Fund to invest in energy, transport projects and
critical national infrastructure. 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. Other projects either being worked on or
completed recently include a new estimating system (part of an overall project
to integrate pricing, design and production databases to drive production and
planning processes), a digital time recording system to facilitate improved
monitoring of factory processes, the use of barcoding for steel to improve
traceability and for paint to reduce waste, the creation of 'digital twins' to
provide real-time insights into project performance, together with ongoing
work on artificial intelligence to improve administrative processing times.
To date, based on the original plan, we have successfully completed 24
projects, and a further 25 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 H1 2025 H1 2024 Change
Revenue 247.2 208.0 +19%
Underlying operating profit (before JVs and associates) 17.1 14.7 +16%
Underlying profit before tax 17.1 14.7 +16%
Revenue:
Commercial and Industrial 205.0 166.5 +23%
Nuclear and Infrastructure 42.2 41.5 +2%
Revenue of £247.2m (H1 2024: £208.0m) represents an increase of £39.2m (19
per cent) compared to the prior period, reflects higher activity levels in the
current period. Underlying operating profit of £17.1m was up 16 per cent on
the prior period (H1 2024: £14.7m), which reflects the increase in revenue
and final account upsides which have helped offset the impact of some tighter
pricing in certain market sectors, particularly in distribution and short
cycle infrastructure.
Commercial and Industrial
Revenue has increased by 23 per cent to £205.0m (HY 2024: £166.5m), mainly
due to an increase in production activity over the comparable period which was
adversely impacted by the pause in construction at Sunset Studios in July
2023. During the period, work progressed on the SeAH Wind monopile
manufacturing facility in Teeside, the AESC UK (Envision) battery plant in
Sunderland, a manufacturing facility for BAE in Scotland, an Energy from Waste
facility based near the River Thames 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 November was £202m (1 June:
£312m). This includes projects secured in recent months such as new
industrial facilities, commercial offices, data centres and distribution
centres. Whilst not yet included in the order book, we have also recently
received the client recommendation for 'Building One' of the new
state-of-the-art battery cell manufacturing facility for Agratas in Somerset,
which will initially supply batteries for Jaguar Land Rover and Tata Motors.
This gigafactory, for which production is expected to commence in Q4 of FY25,
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 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. We are also seeing strong continued demand for data centres in the
UK and Europe, driven by cloud computing, 5G and Artificial Intelligence
('AI') applications which are driving even greater dependence on data centre
infrastructure.
Strategic targets: we are targeting future revenue growth 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 £42.2m (HY 2024: £41.5m). During the
period, 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.
Our nuclear operations have recently been 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 November was £201m (1 June: £160m) of which 44
per cent represents transport infrastructure (1 June: 54 per cent) and 56 per
cent represents power and energy (including nuclear) projects (1 June: 41 per
cent). Recent orders include a recycling infrastructure project in Scotland, a
large energy project in the Netherlands and a growing scope of nuclear work at
Hinkley Point and also at Sellafield as part of the long-term Programme and
Project Partners ('PPP') framework. We are also seeing some near-term
opportunities for offshore wind projects, which would represent another major
step into the renewables market for the Group.
In the 2024 full year results announcement, we highlighted that the markets in
which we operate are showing signs of continued growth supported by state
backed spending on clean and domestically generated energy and improved
transport infrastructure, both key components of the green energy transition.
Our outlook for these markets remains encouraging, driven by a combination of
bidding activity and improved economic and political stability, particularly
in the UK. The new Labour government has committed to grow the UK economy and
has highlighted proposed investment in energy and transport infrastructure,
the leveraging of private investment, planning reform and upskilling the UK's
workforce as key components of their plan to achieve this.
In the UK energy sector, we are seeing an increased volume of attractive
opportunities including from the strengthening and upgrading of the power
transmission network, for which the demand for engineering and construction
expertise continues to outweigh supply, together with areas such as offshore
wind, carbon capture, nuclear (including small modular reactors and Sizewell
C) and hydrogen production. In the UK transport sector, we continue to make
good progress with HS2 station opportunities in the pipeline including at
Birmingham Interchange and we welcome the UK government's commitment to
improving connectivity across cities in the north of England and giving more
power to devolved regions to deliver their own transport solutions, all of
which align to our transport expertise. We remain well-positioned to win work
from these structural opportunities given our end-to-end capabilities and
complex infrastructure project experience.
Strategic targets: our medium-term target is to grow revenues to over £125m,
representing a doubling of FY22 revenues, with margins of 8-10 per cent.
Modular Solutions
£m H1 2025 H1 2024 Change
Revenue 9.8 10.7 -8%
Underlying operating profit (before JVs and associates) 0.1 0.1 -
Share of results of CMF 0.3 0.1 +0.2
Underlying profit before tax 0.4 0.2 +0.2
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).
Although revenue of £9.8m (H1 2024: £10.7m) represents a slight decrease
compared to the prior period, overall profitability has remained broadly
unchanged. The lack of growth in H1 reflects some delays to higher-margin
Severstor orders which are now expected to be delivered in H2. Divisional
underlying PBT of £0.4m (H1 2024: £0.2m) also includes the post-tax share of
profit of CMF of £0.3m (H1 2024: £0.1m). The increased profitability at CMF
reflected better volumes in the period, as the business continues the ramp up
of its expanded manufacturing operations in Wales.
We have made further progress in growing our client base for Severstor and for
steel framing solutions for modular building manufacturers, which is evident
in SMS's 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). We are
also encouraged by the pipeline of opportunities in steel framing solutions,
supported by our expanding customer base, and by CMF's growing product range
and its recently enlarged cold rolled manufacturing capacity.
Strategic targets: our medium-term target is to grow combined SMS and CMF
revenues to between £75m and £100m, with margins of greater than 10 per
cent. In FY24, the Modular Solutions division delivered revenue of £50.6m
(SMS: £21.5m and CMF: £29.1m).
INDIA
£m H1 2025 H1 2024 Change
Revenue 49.3 51.7 -5%
EBITDA 3.8 5.0 -24%
Operating profit 2.5 3.9 -36%
Operating margin 5.1% 7.5% -240 bps
Finance expense (2.5) (2.5) -
Profit before tax - 1.4 (1.4)
Tax 0.2 (0.2) +0.4
Profit after tax 0.2 1.2 (1.0)
Group share of profit after tax (50%) 0.1 0.6 (0.5)
In the first half of 2025, JSSL recorded an output of 31,000 tonnes, broadly
in line with the 32,000 tonnes achieved in the prior period. This position is
evident in JSSL's revenue of £49.3m, also broadly unchanged from the prior
period. Despite the lower than expected activity levels in H1, output in H2 is
expected to increase, reflecting the volume of work in JSSL's record order
book.
JSSL has reported a reduced operating profit of £2.5m (H1 2024: £3.9m),
which has been driven by short-term delays to existing and expected projects
in the run up to and immediately following the Indian elections in June 2024,
together with a sub-optimal mix of sub-contracted work, which has resulted in
some production gaps at the Bellary factory. Financing expenses of £2.5m (H1
2024: £2.5m) are unchanged from the previous period and result in JSSL's
operating profit reducing to a break-even position (H1 2024: profit before tax
of £1.4m).
Despite the lower first half profits, 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 November of £197m (1 July:
£181m, 1 June: £181m), which contains a mix of higher margin commercial work
of 77 per cent (1 June: 71 per cent). 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 conjunction with our joint venture
partner, JSW, we are accelerating the expansion plans for the business. Work
is already underway on some of these expansion projects, which are expected to
be completed by the end of H2, increasing factory capacity at the Bellary site
to c.110,000 tonnes (c.160,000 tonnes including sub-contracted work). The
development of the new site at Gujarat is also already underway, 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.110,000 tonnes to c.180,000 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.250,000 tonnes
(c.350,000 tonnes including sub-contracted work). The majority of this
investment will be financed by debt, provided directly to JSSL by Indian
lenders. JSSL is also in the process of strengthening its sales and estimating
teams, bringing people with new skills into the business and enhancing its
supply chain partnerships to support the expansion of the business and to
provide a springboard to deliver future profitable growth.
Value continues to build in JSSL and the business is well positioned to take
advantage of a very 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
The Group's top priority remains the health, safety and wellbeing of all our
stakeholders and we have maintained our unrelenting focus on safety through a
number of initiatives, ensuring that our safety statistics remain industry
leading. During the period we continued to roll out our Safer@Severfield
behavioural safety programme and are in the process of implementing a new risk
management process, to improve the management and control of critical safety
risks, further enhancing our safety processes.
Sustainability and ESG
During the period, we have continued to make good progress against our near
and long-term carbon emissions targets, which were validated by the
Science-Based Target initiative ('SBTi') in the previous year. We also
achieved ESOS (Energy Savings Opportunity Scheme) Phase 3 compliance ahead of
schedule, demonstrating our effectiveness in reducing energy demand and
improving efficiency.
We have continued to maintain our focus on social value, exploring key
partnerships to help support delivery of our social value commitments. During
the period, we have partnered with Chapter One, an organisation that provides
one-to-one reading support to young children who need help with their reading
skills. This initiative is fully supported by our new Group volunteering
policy, which supports initiatives which make a positive impact in our
communities. We continue to monitor how much value we deliver annually in line
with the National TOMs methodology framework.
BOARD CHANGES
As previously announced, Cynthia Gordon, Janice Crawford and Ian McAulay have
all recently joined the board as non-executive directors. Cynthia has become
Chair of the Remuneration Committee and Ian has assumed the responsibilities
of workforce engagement director, taking over from Louise Hardy, who stepped
down from the board in October. Their considerable combined strategic,
financial, operational and commercial expertise and their knowledge and
experience gained in global organisations will be highly beneficial to the
Group as it continues to grow and diversify.
Furthermore, as part of our ongoing board succession and retirement process,
Derek Randall will retire from his position on the Severfield plc board at the
end of the current financial year. Derek has recently transitioned from his
previous position of Managing Director to Non-Executive Chair of JSSL, and he
will continue to represent the Group in this capacity on JSSL's board in
India, together with Alan Dunsmore. Derek will also continue in his role as
Chair of JSWSMD, the Indian joint venture metal decking business.
Alan
Dunsmore
Adam Semple
Chief Executive
Officer
Chief Financial Officer
Condensed consolidated interim financial statements
Consolidated income statement
Six months ended Six months ended Year ended
28 September 2024 (unaudited) 23 September 2023 (unaudited) 30 March 2024 (audited)
Non-underlying Non-underlying Non-underlying
Underlying £000 Total Underlying £000 Total Underlying£000 £000 Total
£000 £000 £000 £000 £000
Revenue 252,253 - 252,253 215,256 - 215,256 463,465 - 463,465
Operating costs (235,102) (21,769) (256,871) (200,490) (2,853) (203,343) (425,775) (13,225) (439,000)
Operating profit/(loss) before share of results of JVs and associates 17,151 (21,769) (4,618) 14,766 (2,853) 11,913 37,690 (13,225) 24,465
Share of results of JVs and associates 402 - 402 800 - 800 1,950 - 1,950
Operating profit/(loss) 17,553 (21,769) (4,216) 15,566 (2,853) 12,713 39,640 (13,225) 26,415
Net finance expense (1,465) (85) (1,550) (1,408) (289) (1,697) (3,095) (300) (3,395)
Profit/(loss) before tax 16,088 (21,854) (5,766) 14,158 (3,142) 11,016 36,545 (13,525) 23,020
Taxation (3,928) 5,442 1,514 (3,371) 713 (2,658) (9,076) 1,957 (7,119)
Profit/(loss) for the period 12,160 (16,412) (4,252) 10,787 (2,429) 8,358 27,469 (11,568) 15,901
Earnings/(loss) per share:
Basic 3.96p (5.34)p (1.38)p 3.48p (0.78)p 2.70p 8.94p (3.76)p 5.18p
Diluted 3.92p (5.29)p (1.37)p 3.40p (0.77)p 2.63p 8.85p (3.72)p 5.13p
Further details of non-underlying items are disclosed in note 7 to the
condensed consolidated financial statements.
Consolidated statement of comprehensive income
Six months Six months Year
ended ended ended
28 September 2024 23 September 2023 30 March 2024
(unaudited) (unaudited) (audited)
£000 £000 £000
Items that will not be reclassified to income statement:
Actuarial gain/(loss) on defined benefit pension scheme 1,170 737 (745)
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 (293) (183) 186
877 554 310
Items that are or may be reclassified to income statement:
Cash flow hedges - reclassified to income statement (647) (165) (314)
Exchange difference on foreign operations (269) (122) (264)
Tax relating to components that may be reclassified 69 - (398)
Gains taken to equity on cash flow hedges 374 78 1,239
(473) (209) 263
Other comprehensive income 404 345 573
for the period
(Loss)/profit for the period from continuing operations (4,252) 8,358 15,901
Total comprehensive (expense)/income for the period attributable to equity (3,848) 8,703 16,474
shareholders of the parent
Consolidated balance sheet
At At At
28 September 2024 23 September 2023 30 March 2024
(unaudited) (unaudited) (audited)
£000 £000 £000
ASSETS
Non-current assets
Goodwill 98,469 98,510 98,469
Other intangible assets 4,159 8,100 5,508
Property, plant and equipment 95,815 99,421 96,434
Right-of-use assets 18,078 18,040 18,651
Interests in JVs and associates 37,763 32,580 37,364
Deferred tax assets 1,828 - 1,828
Contract assets, trade and other receivables 3,236 2,805 1,050
259,348 259,456 259,304
Current assets
Inventories 10,872 12,823 11,648
Contract assets, trade and other receivables 100,582 77,997 88,334
Current tax asset 7,028 1,235 4,646
Derivative financial instruments 669 254 675
Cash and cash equivalents 9,422 25,664 13,803
128,573 117,973 119,106
Total assets 387,921 377,429 378,410
LIABILITIES
Current liabilities
Overdraft (4,307) - (3,409)
Trade and other payables (96,322) (94,413) (78,934)
Provisions (23,860) - (11,819)
Financial liabilities - borrowings (6,200) (8,625) (6,200)
Financial liabilities - leases (2,616) (2,572) (2,931)
(133,305) (105,610) (103,293)
Non-current liabilities
Trade and other payables (540) (1,483) (1,095)
Retirement benefit obligations (9,145) (11,155) (11,464)
Financial liabilities - borrowings (10,700) (16,900) (13,800)
Financial liabilities - leases (15,754) (16,076) (16,142)
Deferred tax liabilities (11,825) (7,948) (11,865)
(47,964) (53,562) (54,366)
Total liabilities (181,269) (159,172) (157,659)
NET ASSETS 206,652 218,257 220,751
EQUITY
Share capital 7,639 7,739 7,739
Share premium 85,590 88,522 88,522
Other reserves 3,435 3,530 4,728
Retained earnings 109,988 118,466 119,762
TOTAL EQUITY 206,652 218,257 220,751
Consolidated statement of changes in equity
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 expense for the period - - (542) (3,306) (3,848)
Equity settled share-based payments - - (920) 1,808 888
Purchase of shares - - (4,128) - (4,128)
Allocation of owned shares - - 1,265 (1,265) -
Shares cancelled (100) (2,932) 3,032 - -
Dividend provided for or paid* - - - (7,011) (7,011)
At 28 September 2024 (unaudited) 7,639 85,590 3,435 109,988 206,652
*The 2024 final dividend of £7.0m was paid to shareholders on 11 October
2024.
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 period - - (209) 8,912 8,703
Equity settled share-based payments - - 433 478 911
Purchase of shares - - (2,653) - (2,653)
Dividend provided for or paid* - - - (6,422) (6,422)
At 23 September 2023 (unaudited) 7,739 88,522 3,530 118,466 218,257
*The 2023 final dividend of £6.4m was paid to shareholders on 11 October 2023
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 14,944 16,474
Equity settled share-based payments - - (1,234) 3,007 1,773
Purchase of shares - - (4,500) - (4,500)
Allocation of owned shares - - 2,973 (2,973) -
Dividend provided for or paid - - - (10,714) (10,714)
At 30 March 2024 (audited) 7,739 88,522 4,728 119,762 220,751
Consolidated cash flow statement
Six months ended Six months ended Year
28 September 2024 23 September 2023 ended
(unaudited) (unaudited) 30 March
£000 £000 2024
(audited)
£000
Net cash flow from operating activities 6,817 31,390 45,136
Cash flows from investing activities
Proceeds on disposal of property, plant and equipment 242 94 408
Purchases of land and buildings - (240) (410)
Purchases of other property, plant and equipment (3,109) (5,127) (10,911)
Investments in JVs and associates - - (2,801)
Payment of deferred and contingent consideration (120) (1,183) (1,183)
Investment in subsidiary entity, net of cash acquired - (22,554) (22,551)
Net cash used in investing activities (2,987) (29,010) (37,448)
Cash flows from financing activities
Interest paid (1,115) (1,106) (3,220)
Dividends paid - - (10,714)
Proceeds from borrowings - 19,000 19,000
Repayment of borrowings (3,100) (2,425) (7,950)
Repayment of lease liabilities (1,399) (870) (2,628)
Purchase of shares (net of SAYE cash received) (3,495) (2,653) (3,120)
Net cash (used in)/generated from financing activities (9,109) 11,946 (8,632)
Net (decrease)/increase in cash and cash equivalents (5,279) 14,326 (944)
Cash and cash equivalents at beginning 10,394 11,338 11,338
of period
Cash and cash equivalents at end of period 5,115 25,664 10,394
Notes to the condensed consolidated interim financial information
1) General information
Severfield plc ('the Company') is a company incorporated and domiciled in the
UK. The address of its registered office is Severs House, Dalton Airfield
Industrial Estate, Dalton, Thirsk, North Yorkshire, YO7 3JN. The Company is
listed on the London Stock Exchange.
The condensed consolidated interim financial information does not constitute
the statutory financial statements of the Group within the meaning of section
435 of the Companies Act 2006. The statutory financial statements for the year
ended 30 March 2024 were approved by the board of directors on 19 June 2024
and have been delivered to the registrar of companies. The report of the
auditors on those financial statements was unqualified, did not draw attention
to any matters by way of emphasis and did not contain any statement under
section 498 of the Companies Act 2006.
The condensed consolidated interim financial information for the six months
ended 28 September 2024 has been reviewed, not audited, and was approved for
issue by the board of directors on 25 November 2024.
2) Basis of preparation
The condensed consolidated interim financial statements for the six months
ended 28 September 2024 has been prepared in accordance with the UK-adopted
international accounting standard 34 'Interim Financial Reporting' as adopted
for use in the UK and the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority. The condensed consolidated interim financial
statements have been prepared applying the accounting policies and
presentation that were applied in the preparation of the statutory financial
statements for year ended 30 March 2024, which were prepared in accordance
with UK-adopted international accounting standards (IFRS) and the requirements
of the companies Act 2006. The condensed consolidated financial statements
have also been prepared in accordance with UK-adopted financial reporting
standards.
Going concern
Net debt (pre-IFRS 16 basis) at 28 September 2024 was £11.6m, representing
cash (net of overdrafts) of £5.1m and the outstanding term loans of £16.9m,
net of debt arrangement costs of £0.2m. The Group has a £60m revolving
credit facility ('RCF') with HSBC and Virgin Money that matures in December
2026. The RCF, of which £15m is available as an overdraft facility, includes
an additional facility of £45m, which allows the Group to increase the
aggregate available borrowings to £60m. Throughout the period, the Group has
maintained significant amounts of headroom in its financing facilities and
associated covenants.
The directors have reviewed the Group's forecasts and projections for the
remainder of the 2025 financial year and up to 12 months from the date of
approval of the interim financial statements, including sensitivity analysis
to assess the Group's resilience to potential adverse outcomes including a
'severe but plausible' scenario. This scenario is based on the combined impact
of securing only 25 per cent of forecast uncontracted orders for the next 12
months, one-off contract losses, a deterioration of market conditions, a
significant one-off event (including the possibility of the Group incurring
further bridge remedial costs) and other downside factors. The scenario also
takes into account likely mitigating actions, including the reduction of any
non-essential or committed capital expenditure, operating expenditure and
dividend payments.
Given the Group's diversified operations, successful track record and previous
strong performance during periods of challenging market conditions, this
'severe but plausible' scenario was modelled to stress test our strong
financial position and demonstrates that the Group will operate within its
existing facilities and pass covenants tests.
Having also made appropriate enquiries, the directors consider it reasonable
to assume that the Group has adequate resources to be able to operate within
the terms and conditions of its financing facilities for at least 12 months
from the approval of the condensed Group financial statements. For this
reason, the directors continue to adopt the going concern basis in preparing
the condensed consolidated interim financial information.
3) Accounting policies
Except as described below, the accounting policies applied and judgments and
estimates considered in preparing the condensed consolidated interim financial
statements are consistent with those used in preparing the statutory financial
statements for the year ended 30 March 2024.
Taxes on profits in interim periods are accrued using the tax rate that is
expected to be applicable to total earning for the full year based on enacted
rates at the interim date.
New and amended standards and interpretations need to be adopted in the first
interim financial statements issued after their effective date (or date of
early adoption).
There are no new accounting standards that are effective for the first time
for the six months ended 28 September 2024 which have a material impact on the
Group.
Critical accounting judgements and estimates
Provisions and contingent liabilities
The Group has identified some bridge structures which were not in compliance
with the client's weld specification requirements predominantly relating to
twelve bridge projects. For eight of the bridge projects identified,
management is able to estimate with sufficient reliability the remaining
testing and remedial costs and have recognised a provision - see note 12 for
further details. Management is not able to estimate with sufficient
reliability the cost (if any) of its remaining obligation for four further
bridge projects and has therefore disclosed a contingent liability - see note
16 for further details.
A provision is recognised when (i) the Group has a present legal or
constructive obligation as a result of a past event, (ii) it is probable that
an outflow of resources will be required to settle the obligation; and (iii)
the amount of the obligation can be estimated reliably. If a reliable estimate
of a potential outflow of resources cannot be made due to uncertainties
surrounding future events, the obligation is disclosed as a contingent
liability. Contingent liabilities represent possible obligations where the
timing and amount of any outflow is subject to significant uncertainty. These
liabilities are not recognised on the balance sheet but are disclosed unless
the likelihood of an outflow is deemed remote. If a contingent liability
becomes probable and can be reliably measured, it is reclassified and
recognised as a provision.
Management applies judgement to determine whether the criteria for recognising
a provision are satisfied or, alternatively, if disclosure of a contingent
liability is more appropriate. The recognition of provisions also involves a
degree of estimation. In forming these estimates, management makes an
assessment of the costs likely to be incurred after consulting with relevant
experts and legal advisers where appropriate. Both judgements and estimates
are subject to change based on new information, future developments, or
changes in circumstances. Management continually assesses any changes to
ensure the financial statements reflect the most up to date information
available.
4) Risks and uncertainties
The principal risks and uncertainties which could have a material impact upon
the Group's performance over the remaining six months of the year ending 29
March 2025, other than as disclosed below, have not changed from those
disclosed on pages 92 to 104 of the strategic report included in the annual
report for the year ended 30 March 2024. The annual report is available on the
Company's website www.severfield.com. These risks and uncertainties include,
but are not limited to:
· Health and safety
· Supply chain
· People
· Commercial and market environment
· Mispricing a contract (at tender)
· Cyber security
· Failure to mitigate onerous contract terms
· Industrial relations
· Meeting bridge specifications (new risk to reflect recent bridge
weld issue)
The preparation of the condensed consolidated interim financial statements
under IFRS requires management to make judgements, assumptions and estimates
that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expense. Assumptions and estimates are
reviewed on an ongoing basis and any revisions to them are recognised in the
period in which they are revised. The Group's critical accounting judgements
and estimates have not changed significantly from those disclosed on pages 187
and 188 of the annual report for the year ended 30 March 2024.
Revenue and profit recognition
Recognition of revenue and profit is based on judgements made in respect of
the ultimate profitability of a contract. Such judgements are arrived at
through the use of estimates in relation to the costs and value of work
performed to date and to be performed in bringing contracts to completion.
These estimates are made by reference to recovery of pre-contract costs,
surveys of progress against the construction programme, changes in design and
work scope, the contractual terms and site conditions under which the work is
being performed, delays, costs incurred, claims received by the Group,
external certification of the work performed and the recoverability of any
unagreed income from claims and variations.
Management continually reviews the estimated final outturn on contracts and
makes adjustments where necessary. Based on the above, management believes it
is reasonably possible, on the basis of existing knowledge, that outcomes
within the next financial year that are different from these assumptions could
require a material adjustment. However, due to the level of uncertainty,
combination of cost and income variables and timing across a large portfolio
of contracts at different stages of their contract life, it is impracticable
to provide a quantitative analysis of the aggregated judgements that are
applied at a portfolio level.
Within this portfolio, there are a limited number of long-term contracts where
the Group has incorporated significant judgements over revenue and profit,
which have been recognised at a level that is considered highly probable not
to significantly reverse. However, there are a host of factors affecting
potential outcomes in respect of these entitlements which could result in a
range of reasonably possible outcomes on these contracts in the following
financial year, ranging from a gain of £12,000,000 to a loss of £7,000,000.
Management has assessed the range of reasonably possible outcomes on these
limited number of contracts based on facts and circumstances that were present
and known at the balance sheet date. As with any contract applying long-term
contract accounting, these contracts are also affected by a variety of
uncertainties that depend on future events, and so often need to be revised as
contracts progress. The range excludes any uncertainties associated with the
ongoing programme of bridge remedial work.
The Group has appropriate internal control procedures over the determination
of each of the above variables to ensure that profit recognised as at the
balance sheet date and the extent of future costs to contract completion are
reasonably and consistently determined and subject to appropriate review and
authorisation.
At the balance sheet date, amounts due from construction contract customers,
included in contract assets, trade and other receivables was £52,064,000 (30
March 2024: £36,800,000).
5) Segmental analysis
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.
§ 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 our European operations.
§ 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 interim statement 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.
Segment assets and liabilities are not presented as these are not reported to
the CODM.
Segmental results
Core Construction Operations Modular Solutions JSSL Central costs/ elimination Total
Period ended 28 September 2024: £000 £000 £000 £000 £000
Revenue 247,171 9,794 - (4,712) 252,253
Underlying operating profit 17,137 14 - - 17,151
Underlying operating profit margin 6.9% 0.1% 6.8%
Result from joint ventures
- CMF - 351 - - 351
- JSSL - - 51 51
Finance costs - - - (1,465) (1,465)
Underlying profit before tax 17,137 365 51 (1,465) 16,088
Non-underlying items (note 7) (21,769) - - (85) (21,854)
(Loss)/profit before tax (4,632) 365 51 (1,550) (5,766)
Other material items of income and expense:
- Depreciation of owned property, plant and equipment (3,442) (78) - - (3,520)
- Depreciation of right-of-use assets (1,248) (21) - - (1,269)
- Other operating income 1,512 251 - - 1,763
Core Construction Operations Modular Solutions JSSL Central costs/ elimination Total
Period ended 23 September 2023: £000 £000 £000 £000 £000
Revenue 207,986 10,726 - (3,456) 215,256
Underlying operating profit 14,716 50 - - 14,766
Underlying operating profit margin 7.1% 0.5% 6.9%
Result from joint ventures
- CMF - 191 - - 191
- JSSL - - 609 - 609
Finance costs - - - (1,408) (1,408)
Underlying profit before tax 14,716 241 609 (1,408) 14,158
Non-underlying items (note 7) (2,853) - - (289) (3,142)
Profit before tax 11,863 241 609 (1,697) 11,016
Other material items of income and expense:
- Depreciation of owned property, plant and equipment (3,162) (77) - - (3,239)
- Depreciation of right-of-use assets (1,145) (17) - - (1,162)
- Other operating income 788 56 - - 844
Core Construction Operations Modular Solutions JSSL Central costs/ elimination Total
53 week 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 7) (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:
Half year Year ended 30 March 2024
2025 2024
£000 £000 £000
Construction contracts:
- Commercial and Industrial 205,016 166,468 361,734
- Nuclear and Infrastructure 42,155 41,518 87,434
Core Construction Operations 247,171 207,986 449,168
Modular Solutions 9,794 10,726 21,489
Elimination of inter-segment revenue (4,712) (3,456) (7,192)
Total Group revenue 252,253 215,256 463,465
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.
Half year Year ended 30 March 2024
2025 2024
Core Construction Operations - revenue by destination £'000 £'000 £'000
United Kingdom 157,411 171,210 367,127
Republic of Ireland and continental Europe 89,760 36,776 82,041
247,171 207,986 449,168
Half year Year ended 30 March 2024
Modular Solutions - revenue by destination 2025 2024
£'000 £'000 £'000
United Kingdom 9,135 10,726 17,486
Republic of Ireland and continental Europe 659 - 4,003
9,794 10,726 21,489
Elimination of intercompany revenue (UK) (4,712) (3,456) (7,192)
5,082 7,270 14,297
6) Seasonality
There are no seasonal variations which impact the split of revenue between the
first and second half of the financial year. Underlying movements in contract
timing and phasing, which are an ongoing feature of the business, will
continue to drive moderate fluctuations in half yearly revenues.
7) Non-underlying items
March
2
At At At
28 September 2024 23 September 2023 30 March
£000 £000 2024
£000
Operating costs (21,769) (2,853) (13,225)
Finance expense (85) (289) (300)
Non-underlying items before tax (21,854) (3,142) (13,525)
Tax on non-underlying items 5,442 713 1,957
Non-underlying items after tax (16,412) (2,429) (11,568)
1
Non-underlying items before tax consist of: At At At
28 September 2024 23 September 2023 30 March
£000 £000 2024
£000
Amortisation of acquired intangible assets (1,305) (2,853) (5,399)
Bridge testing and remedial costs (20,364) - -
Legacy employment tax charge (100) - (4,413)
Asset impairment charges - - (4,543)
Unwinding of discount on contingent consideration (85) (289) (300)
FV adjustment to contingent consideration - - 1,130
Non-underlying items before tax (21,854) (3,142) (13,525)
Amortisation of acquired intangible assets represents the amortisation of
customer relationships, order books and brand name, which were identified on
the acquisition of Harry Peers, DAM Structures and the Voortman Steel
Construction Group.
Bridge testing and remedial costs relate to the ongoing programme of bridge
remedial work and represent works undertaken during H1 and the remaining
testing and remedial costs for bridge projects where management is able to
reliably estimate the remaining costs to the Group.
In the prior year, the Group recorded a non-underlying legacy employment tax
charge of £4.4m relating to an assessment raised by HMRC for historical
income tax and national insurance ('NIC') liabilities. The Group is disputing
this assessment but since HMRC issued formal determinations for the amounts it
considers are due, a charge was recognised within the FY24 results.
Discussions are ongoing with HMRC to attempt to reach a final settlement and
we expect this matter to be concluded by the end of FY25.
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).
Non-underlying items are presented as a separate column within their related
consolidated income statement category on a consistent basis for each half
year and full year results. The exclusion of non-underlying items may result
in underlying earnings being materially higher or lower than total earnings.
Accordingly, certain alternative performance measures ('APMs') have been used
throughout this report to supplement rather than replace the measure provided
under IFRS, see note 17 for further details.
8) Taxation
The corporation tax expense reflects the estimated effective tax rate of 25
per cent on the profit/loss before taxation for the Group for the period
ending 28 September 2024.
9) Dividends
March 2022
Six months ended Six months ended Year
28 September 2024 23 September 2023 ended
£000 £000 30 March 2024
£000
2023 final - 2.1p per share - (6,422) (6,422)
2024 interim - 1.4p per share - - (4,292)
2024 final - 2.3p per share (7,011) - -
(7,011) (6,422) (10,714)
The 2024 final dividend of £7,011,000 was paid to shareholders on 11 October
2024.
The directors have declared an interim dividend in respect of the six months
ended 28 September 2024 of 1.4p per share (H1 2024: 1.4p per share) which will
amount to an estimated dividend payment of £4,200,000 (H1 2024: £4,292,000).
This dividend is not reflected in the balance sheet as it was declared and
will be paid after the balance sheet date, on 7 February to shareholders on
the register at the close of business on 10 January.
10) Earnings per share
Earnings per share is calculated as follows:
Six months ended Six months ended Year
28 September 2024 23 September 2023 ended
£000 £000 30 March
2024
£000
Earnings for the purposes of basic earnings per share being net (loss)/profit (4,252) 8,358 15,901
attributable to equity holders of the parent company
Earnings for the purposes of underlying basic earnings per share being 12,160 10,787 27,469
underlying net profit attributable to equity holders of the parent company
Number of shares Number Number Number
Weighted average number of ordinary shares for the purposes of basic earnings 307,188,953 309,538,321 307,131,912
per share
Effect of dilutive potential ordinary shares and under share plans 3,030,768 7,670,171 3,093,177
Weighted average number of ordinary shares for the purposes of diluted 310,219,721 317,208,492 310,225,089
earnings per share
Basic (loss)/earnings per share (1.38)p 2.70p 5.18p
Underlying basic earnings per share 3.96p 3.48p 8.94p
Diluted (loss)/earnings per share (1.37)p 2.63p 5.13p
Underlying diluted earnings per share 3.92p 3.40p 8.85p
11) Property, plant and equipment
During the period, the Group acquired land and buildings of £nil (H1 2024:
£240,000) and other property, plant and equipment of £3,109,000 (H1 2024:
£5,127,000). The Group also disposed of other property, plant and equipment
for £242,000 (H1 2024: £94,000) resulting in a gain on disposal of £134,000
(H1 2024: loss of £5,000).
12) Provisions
1
1
Legacy employment taxes Bridge testing and remedial costs Loss provisions
£000 £000 £000 Total
£000
Balance at 30 March 2024 3,373 - 8,446 11,819
Provisions made during the year 100 13,266 3,087 16,453
Provisions used during the year - - (4,412) (4,412)
Balance at 28 September 2024 3,473 13,266 7,121 23,860
For all provisions, the resulting cash outflows are expected to occur within
12 months.
The provision for testing and remedial costs relates to the ongoing programme
of bridge remedial work, predominantly for eight bridge projects where
management can reliably estimate the remaining costs to the Group.
Provisions are recognised and measured based on management's best estimate of
the expenditure required to settle the obligation, considering relevant risks
and uncertainties. These estimates may change in response to new information,
future developments, or changes in circumstances. Bridge testing and remedial
costs will be kept under review until our assessment of all affected
structures has been concluded.
The potential cost to the Group for four further bridge projects and for any
possible consequential costs from third parties has not yet been determined
and has been disclosed as a contingent liability. In addition, no possible
recoveries from third parties have been recognised in H1, including insurance
as, although preliminary indications suggest a good prospect of insurance
recovery, these are not virtually certain and therefore cannot yet be
recognised under IFRS.
13) Net debt
1
1
At At At
28 September 2024 23 September 2023 30 March
£000 £000 2024
£000
Borrowings (16,900) (25,525) (20,000)
Cash and cash equivalents 5,115 25,664 10,394
Unamortised debt arrangement costs 193 278 235
Net (debt)/funds (pre-IFRS 16) (11,592) 417 (9,371)
IFRS 16 lease liabilities (18,370) (18,648) (19,073)
Net debt (post-IFRS 16) (29,962) (18,231) (28,444)
The Group also presents net debt/funds on a pre-IFRS 16 basis as lease
liabilities are excluded from the definition of net debt/funds as set out in
the Group's borrowing facilities.
14) Net cash flow from operating activities
March
2
Six months ended Six months ended Year
28 September 2024 23 September 2023 ended
£000 £000 30 March
2024
£000
Operating (loss)/profit from continuing operations (4,216) 12,713 26,415
Adjustments:
Depreciation of property, plant and equipment 3,520 3,239 6,480
Right-of-use asset depreciation 1,269 1,162 2,683
(Gain)/loss on disposal of other property, plant and equipment (134) 5 (92)
Asset impairment charges - - 4,543
Amortisation of intangible assets 1,350 2,898 5,489
Movements in pension scheme liabilities (1,149) (1,066) (2,152)
Share of results of JVs and associates (402) (800) (1,950)
FX movements (82) (86) (373)
Share-based payments 256 911 392
Operating cash flows before movements in working capital 412 18,976 41,435
Decrease in inventories 776 554 1,729
(Increase)/decrease in receivables (13,310) 41,298 31,232
Increase/(decrease) in payables 21,548 (26,248) (21,962)
Cash generated from operations 9,426 34,580 52,434
Tax paid (2,609) (3,190) (7,298)
Net cash flow from operating activities 6,817 31,390 45,136
15) Related party transactions
There have been no changes in the nature of related party transactions as
described in note 31 on page 217 of the annual report for year ended 30 March
2024 and there have been no new related party transactions which have had a
material effect on the financial position or performance of the Group in the
six months ended 28 September 2024, except as stated below.
During the period, the Group provided services in the ordinary course of
business to its Indian joint venture, JSW Severfield Structures ('JSSL') and
in the ordinary course of business contracted with and purchased services from
its UK joint venture, Construction Metal Forming Limited ('CMF'). The Group's
share of the retained profit in JVs and associates of £402,000 (H1 2024:
£800,000) for the period reflects a profit from JSSL of £51,000 (H1 2024:
£608,000) and a profit from CMF of £351,000 (H1 2024: £192,000).
During the period, the Group has sold services to its Indian joint venture
('JSSL') of £274,000 (H1 2024: £128,000). The amount due from JSSL at 28
September 2024 was £421,000 (30 March 2024: £132,000).
During the period, the Group has purchased services from CMF of £6,381,000
(H1 2024: £5,226,000). The amounts due to CMF at 28 September 2024 was £nil
(30 March 2024: £2,126,000).
16) Contingent assets and liabilities
Liabilities have been recorded for the directors' best estimate of uncertain
contract positions, known legal claims, legal actions in progress and
circumstances that could give rise to claims or actions. The Group takes legal
advice as to the likelihood of the success of and the likely value of such
claims and actions and no liability is recorded where the directors consider,
based on that advice, that the claim or action is unlikely to succeed, or that
the Group cannot make a sufficiently reliable estimate of the potential
obligation or liability arising out of such claim or action.
Since the publication of the 2024 results, the Group identified some bridge
structures which were not in compliance with the client's weld specification
requirements, predominantly relating to twelve 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.
Whilst the precise nature of the overall remedial work required for all
affected bridge structures has not yet been fully determined, the Group has
incurred costs of £7.1m relating to testing and remedial works undertaken
during H1 and for eight bridge projects, where the Group is able to estimate
with sufficient reliability the remaining testing and remedial costs, a
further liability of £13.3m has been assessed. A non-underlying charge of
£20.4m has therefore been recognised for these costs as at 28 September 2024.
The Group is not able to estimate with sufficient reliability the cost (if
any) of its remaining obligation for four further bridge projects where either
the results of the ongoing testing are not yet known or a rectification
solution has not yet been agreed with the client, as any estimate is subject
to a number of unknown factors including what the proposed rectification
solution is (if any is required), sequencing, timeline and consequential
disruption. Furthermore, the Group is also not able to estimate with
sufficient reliability any possible consequential costs (if any) from third
parties as these are not yet known. As such there is a range of potential
outcomes in these specific cases and since the Group is unable to quantify the
possible exposure based on current information, a contingent liability has
been disclosed.
All amounts will be kept under review until our assessment of all affected
structures has been concluded. The Group will be pursuing all potential
recoveries from third parties, including insurance, with preliminary
indications suggesting a good prospect of insurance recovery, albeit not yet
with the level of certainty required for such recovery to be recognised under
accounting standards.
The Company and its subsidiaries have provided unlimited multilateral
guarantees to secure any bank overdrafts and loans of all other Group
companies. At 28 September 2024 this amounted to £nil (30 March 2024: £nil).
The Group has also given performance bonds in the normal course of trade.
17) Alternative performance measures
Our alternative performance measures ('APM's) present useful information,
which supplements the financial statements. 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.
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) (pre-IFRS 16) 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
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.
Reconciliations to IFRS measures
Six months Six months Year
ended ended ended
28 September 2024 23 September 2023 30 March 2024
(unaudited) (unaudited) (audited)
Underlying operating profit/(loss) (before JVs and associates) £000 £000 £000
Underlying operating profit (before JVs and associates) 17,151 14,766 37,690
Non-underlying operating items (21,769) (2,853) (13,225)
Share of results of JVs and associates 402 800 1,950
Operating (loss)/profit (4,216) 12,713 26,415
Six months Six months Year
ended ended ended
28 September 2024 23 September 2023 30 March 2024
(unaudited) (unaudited) (audited)
Underlying profit/(loss) before tax £000 £000 £000
Underlying profit before tax 16,088 14,158 36,545
Non-underlying items (21,854) (3,142) (13,525)
(Loss)/profit before tax (5,766) 11,016 23,020
Six months Six months Year
ended ended ended
28 September 2024 23 September 2023 30 March 2024
(unaudited) (unaudited) (audited)
Underlying basic earnings per share £000 £000 £000
Underlying net profit attributable to equity holders of the parent Company 12,160 10,787 27,469
Non-underlying items after tax (16,412) (2,429) (11,568)
Net (loss)/profit attributable to equity holders of the parent Company (4,252) 8,358 15,901
Weighted average number of ordinary shares 307,188,953 309,538,321 307,131,912
Underlying basic earnings per share 3.96p 3.48p 8.94p
Basic (loss)/earnings per share (1.38)p 2.70p 5.18p
Six months Six months Year
ended ended ended
28 September 2024 23 September 2023 30 March 2024
(unaudited) (unaudited) (audited)
Net debt £000 £000 £000
Borrowings (16,900) (25,525) (20,000)
Cash and cash equivalents 5,115 25,664 10,394
Unamortised debt arrangement costs 193 278 235
Net (debt)/funds (pre-IFRS 16) (11,592) 417 (9,371)
IFRS 16 lease liabilities (18,370) (18,648) (19,073)
Net debt (post-IFRS 16) (29,962) (18,231) (28,444)
18) Cautionary statement
The condensed interim financial statements (interim report) have been prepared
solely to provide additional information to shareholders to assess the Group's
strategies and the potential for those strategies to succeed. The IMR should
not be relied on by any other party or for any other purpose.
The interim report contains certain forward-looking statements. These
statements are made by the directors in good faith based on the information
available to them up to the time of their approval of this report but such
statements should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying any such
forward-looking information.
19) Statement of directors' responsibilities
The directors confirm that, to the best of their knowledge, the condensed
consolidated interim financial information has been prepared in accordance
with IAS 34 as adopted for use in the UK, and that the interim report includes
a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R,
namely:
· An indication of important events that have occurred during the
first six months of the financial year and their impact on the condensed
consolidated interim financial information, and a description of the principal
risks and uncertainties for the remaining six months of the financial year;
and
· Material related party transactions that have occurred in the
first six months of the financial year and any material changes in the related
party transactions described in the last annual report and financial
statements.
The maintenance and integrity of the Severfield plc website is the
responsibility of the directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept
no responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
By order of the board
Alan Dunsmore Adam Semple
Chief Executive Officer Chief Financial Officer
25 November 2024 25 November 2024
INDEPENDENT REVIEW REPORT TO SEVERFIELD PLC
Conclusion
We have been engaged by Severfield PLC "the Company" to review the condensed
set of financial statements in the half-yearly financial report for the six
months ended 28 September 2024 which comprises the consolidated income
statement, consolidated statement of comprehensive income, consolidated
balance sheet, consolidated statement of changes in equity, consolidated cash
flow statement, and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 28 September 2024 is not prepared,
in all material respects, in accordance with IAS 34 Interim Financial
Reporting as adopted for use in the UK and the Disclosure Guidance and
Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the
UK FCA").
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410 Review of Interim Financial Information Performed by the
Independent Auditor of the Entity ("ISRE (UK) 2410") issued for use in the UK.
A review of interim financial information consists of making enquiries,
primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. We read the other information
contained in the half-yearly financial report and consider whether it contains
any apparent misstatements or material inconsistencies with the information in
the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and consequently does not enable
us to obtain assurance that we would become aware of all significant matters
that might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention that causes us to believe that the directors
have inappropriately adopted the going concern basis of accounting, or that
the directors have identified material uncertainties relating to going concern
that have not been appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410. However, future events or conditions may cause the Group to
cease to continue as a going concern, and the above conclusions are not a
guarantee that the Group will continue in operation.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been
approved by, the directors. The directors are responsible for preparing the
half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the Group are
prepared in accordance with UK-adopted international accounting standards.
The directors are responsible for preparing the condensed set of financial
statements included in the half-yearly financial report in accordance with IAS
34 as adopted for use in the UK.
In preparing the condensed set of financial statements, the directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review. Our conclusion, including our conclusions relating to going concern,
are based on procedures that are less extensive than audit procedures, as
described in the Basis for conclusion section of this report.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the DTR of the
UK FCA. Our review has been undertaken so that we might state to the Company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the Company for our review work, for this
report, or for the conclusions we have reached.
Craig Parkin
for and on behalf of KPMG LLP
Chartered Accountants
1 Sovereign Square Sovereign Street
Leeds LS1 4DA
United Kingdom
26 November 2024
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