REG - Severfield PLC - Trading Statement

SeverfieldAnnouncement

17/04/2024 07:01

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RNS Number : 8736K  Severfield PLC  17 April 2024

17 April 2024

Severfield plc

('the Company' or 'the Group')

Pre-close trading update and announcement of share buyback programme

 

Results slightly ahead of expectations, record UK and Europe order book,
outlook is positive

 

Severfield plc, the market leading structural steel group, today issues the
following trading update for the year ended 30 March 2024, ahead of the
announcement of its annual financial results on Wednesday 19 June, and
announces its intention to commence a share buyback programme to return £10m
to shareholders.

 

FY24 results ahead of our previous expectations

The Group has made good progress in the second half of the 2024 financial year
and we now expect to deliver a full year result which is slightly above our
previous expectations. The financial position of the Group remains strong and
year-end net debt (on a pre IFRS 16 basis) was c.£10m, also ahead of our
previous expectations, reflecting an improvement in underlying working capital
and an increase in advance payments.

 

Operational and trading update

UK and Europe

In the second half of the year, we have continued to secure a significant
value of new work, resulting in a record UK and Europe order book of £511m at
1 April 2024 (1 November 2023: £482m), of which £397m is for delivery over
the next 12 months. The order book remains well-diversified and contains a
good mix of projects across the Group's key market sectors. The growth in the
order book reflects the continued strengthening of our market position in
Europe, supported by the acquisition of Voortman ('VSCH'), and 32 per cent of
the order book now represents projects in continental Europe and Ireland (1
November 2023: 13 per cent).

 

We continue to see large project opportunities in both our Commercial and
Industrial division and Nuclear and Infrastructure division, in the UK,
continental Europe and Ireland. These include projects in support of a
low-carbon economy such as battery plants, energy efficient buildings,
manufacturing facilities for renewable energy and offshore wind projects.
Furthermore, the Group remains well-placed to meet an ongoing demand for
infrastructure investment, including a growing focus on major projects which
can mitigate the impacts of climate change and deliver energy security. This
includes nuclear (such as Sizewell C and small nuclear reactors), carbon
capture and hydrogen production, together with HS2 and Northern Powerhouse
Rail.

 

In our Modular Solutions division, we have maintained our focus on growing our
Severstor product ranges, which attract higher margins, and on developing our
growing pipeline of opportunities, including in growth areas such as renewable
energy and data storage. We continue to make good progress in growing our
revenues and client base and expect this division to report a small profit for
the 2024 financial year.

 

India

The Indian joint venture ('JSSL') performed well in the second half of the
year and is expected to deliver another step up in profitability in 2024.
JSSL's total output for 2024 is likely to exceed 100,000 tonnes, including
sub-contracted work, for the second year running. The order book was £142m at
1 April 2024 (1 November 2023: £165m). With an improving pipeline of
potential orders and numerous identified growth opportunities, including those
in new and existing market sectors, and with the land in Gujarat for future
expansion now secured, JSSL is well positioned to take advantage of a very
encouraging outlook for the Indian economy and a strong underlying demand for
structural steel in construction.

Launch of £10m share buyback programme

Our well-established growth strategy is unchanged and is underpinned by our
disciplined capital allocation policy. The Group's capital allocation
priorities are to support its ongoing operational requirements and profitable
organic growth opportunities, to pay sustainable core dividends to
shareholders, to fund strategic growth opportunities, and to make further
returns of capital to shareholders as appropriate, whilst maintaining a strong
balance sheet. Consistent with this policy and given the highly cash
generative nature of the business, the Group today announces that it intends
to commence a £10m share buyback programme, subject to market conditions.

 

The purpose of this buyback programme is to return surplus capital to
shareholders and reduce the Group's share capital, whilst maintaining the
financial flexibility to invest in the ongoing execution of our strategy to
deliver sustainable growth and attractive returns.

 

Board change

As referenced in a separate announcement today, we are pleased to announce the
appointment of Charlie Cornish as non-executive Chair and director of the
Company. Charlie will join the Company's Board on 1 May 2024 and will take
over as Chair after the AGM on 30 July 2024 when Kevin Whiteman steps down
from the Board, having completed his nine-year tenure.

 

Outlook

The Group is performing well, the outlook is positive and our businesses are
well-positioned in markets with excellent long-term growth opportunities.
Whilst there remains some uncertainty in the wider economy, we are seeing an
improvement in market conditions which, together with our high-quality order
books, diversified activities and operational delivery capabilities, provides
us with confidence for the year ahead.

 

 

For further information, please contact:

 

Severfield                                    Alan Dunsmore
                                    01845 577 896

Chief Executive Officer

 

Adam Semple                                     01845 577
896

Chief Financial Officer

 

Jefferies International                 Will Soutar
                               020 7029 8000

Shaam Vora                                        020 7029
8000

 

Liberum Capital                         Nicholas
How
020 3100 2000

 
Satbir Kler
    020 3100 2000

 

Camarco
 
severfield@camarco.co.uk

Ginny Pulbrook                                      +44
7961 315 138

Tom Huddart                                          +44
7967 521 573

 

 

 

Notes:

About Severfield

Severfield is the UK's market leader in the design, fabrication and
construction of structural steel, with a total capacity of c.150,000 tonnes of
steel per annum. The Group has seven sites, c.1,800 employees and expertise in
large, complex projects across a broad range of sectors. The Group also has an
established presence in the expanding Indian market through its joint venture
partnership with JSW Steel (India's largest steel producer).

Inside information

The information relating to the proposed share buyback programme in this
announcement constitutes inside information as stipulated under the Market
Abuse Regulation (EU) No.596/2014 (as it forms part of UK domestic law by
virtue of the European Union (Withdrawal) Act 2018). On the publication of
this announcement via a Regulatory Information Service, such information is
now considered to be in the public domain. The person responsible for
arranging for the release of this announcement on behalf of Severfield is Adam
Semple, Chief Financial Officer.

 

Share buyback programme

The Group has today announced its intention to commence a share buyback
programme, subject to market conditions, to purchase ordinary shares of 2.5
pence each in the Company ('Ordinary Shares') for a maximum aggregate
consideration of £10m (excluding stamp duty and expenses) from the date of
this announcement (the 'Buyback').

 

The Company has entered into an irrevocable non-discretionary agreement with
Liberum Capital Limited ('Liberum'), pursuant to which Liberum shall purchase
Ordinary Shares as riskless principal (and not as agent of Severfield) for the
subsequent sale on to, and purchase by, Severfield, up to the maximum
aggregate consideration of £10m. Liberum will make its trading decisions in
relation to the Ordinary Shares independently of, and uninfluenced by, the
Company, within the programme terms and certain pre-set parameters.

 

Any purchase of Ordinary Shares under the Buyback will take place in open
market transactions and may be made from time to time depending on market
conditions, share price and trading volumes. The Buyback will be effected
under the general authority to repurchase Ordinary Shares granted by the
Company's shareholders at the 2023 annual general meeting and to be sought at
the 2024 annual general meeting and in accordance with Chapter 12 of the UK
Financial Conduct Authority's Listing Rules, and Regulation (EU) No 596/2014
and Commission Delegated Regulation (EU) No 2016/1052 (both as they form part
of UK domestic law by virtue of the European Union (Withdrawal) Act 2018),
including where relevant pursuant to the UK Market Abuse Regulation.

 

Due to the limited liquidity in the Ordinary Shares, a buy-back of Ordinary
Shares on any trading day may represent a significant proportion of the daily
trading volume in the Ordinary Shares and may exceed the 25 per cent of the
average daily trading volume specified in the provisions of the UK Market
Abuse Regulation dealing with buyback programmes and accordingly the Company
may not benefit from the exemption contained in Article 5(1) of that
regulation.

 

Any purchase of Ordinary Shares pursuant to the Buyback will be announced by
not later than 07:30 on the business day following the calendar day on which
the purchase occurred. Any Ordinary Shares purchased by the Company will be
cancelled and the number of Ordinary Shares in issue reduced accordingly.

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