Severfield plc Full year results for 12 months to 31 March 2014 1 - PowerPoint PPT Presentation

Severfield plc Full year results for 12 months to 31 March 2014 1 1

Ian Lawson Chief executive officer 2 Severfield-Rowen Plc March 2011

Overview • Margin progression in line with expectations • New UK structure delivering operational efficiencies • Improved management of risk and governance • Strong balance sheet and net cash • Solid order book • Indian JV business disappointing • Strategy for future growth now in place • Clear vision and new branding 3 3

Alan Dunsmore Finance director 4 Severfield-Rowen Plc March 2011

Income statement (£m) 12 months to 15 months to 31 Mar 2014 31 Mar 2013 Revenue 231.3 318.3 Underlying Group operating profit (Pre-JVs and associates) 7.6 (19.2) 3.3% (6.0%) Results of JVs and associates (3.0) (0.3) Net finance charges (0.6) (2.0) Underlying profit/(loss) before tax 4.0 (21.5) Tax (1.4) 3.0 Underlying profit/(loss) after tax 2.6 (18.5) 5 5 Severfield-Rowen Plc March 2011

Revenue and margin * Margin recovery on track * Pro-forma 12-month numbers 6 6 6 6

Balance sheet (£m) 31 Mar 2014 31 Mar 2013 Non-current assets 147.7 154.9 Current assets: Inventories 5.8 8.2 Trade & other receivables 60.8 71.6 Cash & cash equivalents 5.5 0.7 72.1 80.5 Total assets 219.8 235.4 Less: Current liabilities (52.7) (70.9) Borrowings (5.2) (41.9) Retirement benefit obligations (12.5) (11.8) Deferred tax liabilities (5.9) (8.4) Total liabilities (76.4) (133.0) Net assets 143.4 102.4 7 Severfield-Rowen Plc March 2011

Cash flow Net debt bridge – year ended March 2014 7.5 (8.3) 15.0 (5.3) 8.4 (2.1) 5.0 (3.5) 0.3 (5.0) £ million Outflow on trade creditors Equipment for construction mainly represents reversion sites and general to 30 day payment terms for replacements. (15.0) 44.8 TATA (c£4m). (41.2) (25.0) (35.0) (45.0) Net debt - Mar 13 Rights issue EBITDA Contract debtors Trade creditors Other working capital Capex India equity Net funds - Mar 14 • The Group has a £35m banking facility with RBS and National Australia Bank in place until November 2016. 8 8 8 8

Statutory profit reconciliation 12 months to 15 months to (£m) Mar 2014 31 Mar 2013 Underlying profit/(loss) after tax 2.6 (18.5) Restructuring and redundancy costs (2.6) (0.8) Amortisation of acquired intangible assets (2.7) (3.4) Retirement of acquired intangible asset (2.4) - Impairment of investment in associates (0.4) - All costs associated with amendment of banking facilities - (2.1) Contract legal costs and provision movements - (1.1) Movements in value of derivative financial instruments - 0.1 Tax on non-underlying items 2.8 2.7 Statutory loss after tax (2.6) (23.1) Underlying EPS* 0.88p (10.78p) EPS (0.89p) (13.49p) Dividend per share nil 1.5p *There is no difference between basic and diluted EPS in both years. Comparative EPS has been restated to reflect the new shares issued in the rights issue 9 9 Severfield-Rowen Plc March 2011

Contract costs Individual Cost Fixed / Variable % Comment Breakdown Costs Steel and Other 35% FIXED Pricing fixed for the duration of contracts Materials Factory Direct 15% FIXED Pay awards annually in July Labour Tightly controlled – any inflation currently offset by efficiency Overheads 20% FIXED improvements, pay awards annually in July 3 year fixed contract now in place with Stobart, fuel surcharge only Transport 3% VARIABLE variable Sub-contractors 12% VARIABLE Negotiated for each contract – back-to-back with tenders Site Construction 15% FIXED Mainly directly employed, pay awards annually in July Labour 10 Severfield-Rowen Plc March 2011

India - Summary of investment and results to date (£m) (£m) Equity invested by Severfield since 2009 - 12.0 (Matched by JSW) Severfield share of losses at 31 March 2013 (5.7) - Severfield share of losses for 2013/14 (3.0) (8.7) Severfield net investment at 31 March 2014 3.3 • Equity invested has financed one third of factory cost and trading losses to date • Factory cost : £26m • Debt within JV : £22m, including £15m term debt for factory build and £7m of working capital debt 11 Severfield-Rowen Plc March 2011

Ian Lawson Chief executive officer 12 Severfield-Rowen Plc March 2011

The UK market (2013) • Current estimated UK capacity – 1,000,000 tonnes • Total UK production of constructional steelwork – 848,000 tonnes • Our current addressable market – 500,000 tonnes • Our current share of UK market – 90,000 tonnes • Our potential capacity – 150,000 tonnes Source: BCSA 13

Current tonnage outputs (2013) Top 12 companies Top 12 BCSA Membership – current UK market outputs 90,000 80,000 70,000 Output (tonnes) 60,000 50,000 40,000 30,000 20,000 10,000 0 BCSA Member # William Hare includes output from UAE factory Source: BCSA 14

Consistent and quality order book Order book values (£m) 250 209 197 200 178 172 168 150 100 50 0 Dec-12 May-13 Aug-13 Nov-13 May-14 15

UK order book Sector November 2013 May 2014 Future £172m £168m Trend Commercial Offices 27% 31% Transport 22% 18% Stadia & Leisure 5% 18% Industrial 16% 11% Power & Energy 12% 7% Data Centres & Other 5% 6% Retail 6% 4% Bridges 3% 3% Health 3% 2% Education 1% - 16 Severfield-Rowen Plc March 2011

Current major projects • London Bridge Station Canopies • Glasgow Smartbridge • Data Centre, Amsterdam • Manchester Victoria Station • Nova, Victoria • Essex Waste Handling Plant • Birmingham New Street Station • Smurfitt Kappa Paper Mill, Snodland 5 Broadgate, London Essex Waste • 5 Broadgate • Old Livestock Market, Hereford Smurfitt Kappa Paper Mill, Snodland Manchester Victoria Station London Bridge Station Canopies 17 17 17

Pipeline/prospects Data Centres • Here East, London 1 1 2 • Telehouse North2, London Transport / Warehousing • Ordsall CT, Manchester • Project Thunderbird, Kettering Distribution Centres for Gazeley • 3 Stadia • Liverpool FC 2 • Tottenham Hotspur FC Commercial Offices • One Lime Street, London • London Wall Place 3 18 • One Angel Court, London 18 18

Our sectors Sector Market tonnage in 2013 SFR market share (000s) (estimated) Industrial & Warehousing 350 42% 5-10% Commercial Offices 88 10% 30-40% Education 88 10% <5% Power & Energy 37 4% 20-30% Agriculture 35 4% 0% Healthcare 31 4% 5-10% Leisure 31 4% 20-30% Bridges 25 3% <5% Retail 20 2% 40-50% Other 53 6% 5-10% Exports 90 11% <5% 848 100% 19

India – Work in progress • Factory capacity 60,000 tonnes • Current order book - £41m • Challenging market • Election outcomes • Views in the market OPG Power Station • Our partner JSW • Current strategy: 1. Self help 2. Business development 3. Debt reduction / interest mitigation JSSL Facility, Bellary 20

Proud of our past: Positioning for our future Our Vision: To be leaders in structural steel, creating a legacy for future generations through world class engineering and design excellence • Simpler, market-facing structure • Clearer differentiation of the company in our market • A dynamic brand and new website Our Values: • Safety • Integrity • Customer Focus • Commitment 21

Our strategy Strategy Results Margin improvement (0-3 yrs) Operating margin 5-6% (0-2yrs) Prove India is a sustainable business (0-1yr) Profit growth Increase UK market share (1-3yrs) Increased revenue (1-5yrs) Enter new market sectors (1-3yrs) Positive cash flow Build from existing European Net capital investment £4-5m/pa opportunities (1-5yrs) Return to dividend Improved technology (0-5yrs) Capitalise on improving economy 22

A strong platform for growth • The business is in a much improved state from 12 months ago • We have unrivalled capabilities which puts us in prime position as the economy starts to improve • Our facilities are the best in the UK and possibly Europe • In the UK there are areas and sectors of the market where our market share can possibly be improved • There are potential opportunities for growth in Europe • We have a very skilled and dedicated workforce • We have appointed a new SHE director • We have appointed new NEDs to make us both compliant and to inject fresh ideas and support into the business Strong differentiating brand and clear purpose and direction for the company • UK markets showing signs of growth • A Clear Strategy 23

For more information: Ian Lawson – Chief executive officer Alan Dunsmore – Finance director +44 (0) 1845 577 896 Dalton Airfield Industrial Estate, Dalton, Thirsk, North Yorkshire, YO7 3JN, UK www.severfield.com Thank you. Questions 24

Appendices 25

What we are • Severfield is the UK's premier structural steel company • We are the largest structural steel business in the UK and one of the biggest in Europe • We are a business built on the pride, passion, and quality of our people • We have an enviable track record in designing, fabricating and erecting steel structures 26

Where we are Dalton, Thirsk Lostock, Bolton Sherburn, Scarborough Enniskillen, N. Ireland Bellary, India 27