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Annual report and accounts for the year ended 26 March 2022

Metal sparks

OUR BALANCED AND RESILIENT BUSINESS

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Annual report

Severfield is the largest specialist structural steelwork group in the UK, with a growing presence in India and Europe and a reputation for performance and innovation.

Sustainable
growth
in numbers

Revenue

revenue

UK and Europe order book

uk-and-europe
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Our year
in review

Revenue

£403.6m

Revenue

Underlying* profit before tax

£27.1m

Underlying profit before tax

Profit before tax

£21.0m

AProfit before tax

Underlying* operating margin

6.7%

Underlying operating margin

Operating margin

5.3%

Operating margin

Underlying* basic earnings
per share

7.2p

Underlying basic earnings per share

Basic earnings per share

5.1p

Basic earnings per share

Greenhouse gas intensity**

19.9 CO2/£m

Greenhouse gas intensity**

See note 32 for APM definitions.

Record order book, good earnings visibility through 2023, inflationary pressures being well managed.

  • Revenue up 11% to £403.6m (2021:£363.3m)
  • Underlying1 profit before tax up 11% to £27.1m (2021: £24.3m), demonstrates resilience of the Group in challenging market conditions
  • Underlying1 basic earnings per share up 12% at 7.2p (2021: 6.4p)
  • Total dividend increased by 7% to 3.1p per share (2021: 2.9p per share), includes proposed final dividend of 1.9p per share (2021: 1.8p per share)
  • Year-end net debt (on a pre-IFRS-16 basis1) of £18.4m (2021: net funds of £4.4m), reflects higher steel purchases to meet production needs in 2023 and the impact of steel price rises
  • Record UK and Europe order book of £486m at 1 June 2022 (1 November 2021: £393m), includes new industrial and distribution, film studio, commercial office and bridge orders and the new stadium for Everton F.C.
  • Share of profit from Indian joint venture (‘JSSL’) of £0.8m (2021: loss of £0.7m), reflecting revenue growth and margin improvement following the disruptive impact of COVID-19 in 2021
  • India order book of £158m at 1 June 2022 (1 November 2021: £140m), reflects strong underlying demand for structural steel in India
  • Successful completion of new £50m revolving credit facility maturing in December 2026
  • New simplified divisional structure implemented for UK and Europe operations from 1 April 2022 – creating three new divisions aligned with our chosen market sectors

ESG

  • Certified by the Carbon Trust as carbon neutral, CDP ‘A-’ rating for leadership on climate change
  • Top UK construction business in the 2022 Financial Times listing of Europe’s climate leaders
  • Net zero carbon target established for 2040
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Our structural
framework

Our strong
foundations

How our strong foundations continue to deliver sustainable growth

South bank tower
Our foundations diagram

01

Our Purpose

is to develop better ways to build, for a world of changing demands.

As the world of work and industry evolves, the buildings we use and the things we demand from them change constantly. Our response is to stay habitually innovative. We are instinctively driven towards better ways of building. Our engineers are known for their remarkable ingenuity, consistently pushing boundaries to create better buildings.

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02

Our strategy

revolves around five main elements to enable us to deliver sustainable long-term value creation. This is aided by our business improvement programme.

Growth

Clients

India

Operational excellence

People

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03

Our values

Safety
Integrity
Customer focus
Commitment
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man with glasses

Chairman's
view

2022 has been another year of strong progress for the group against its strategic and financial objectives
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Our operating performance

We are delighted to be reporting a resilient and strong performance despite the ongoing market challenges
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Our financial performance

Our record order book and strong balance sheet underpin our ambitions to deliver sustainable growth.
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Construction worker with machinery

OUR COMPELLING INVESTMENT CASE

We are continuing to drive sustainable growth to create long-term value for all stakeholders

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01

A balanced and resilient business – provided by ten market sectors and geographical and client diversity.

02

Aligned to sectors with strong growth potential, including infrastructure.

03

A record order book and strong pipeline – good earnings visibility into 2024.

04

Emerging market credentials – significant opportunity to grow profits in India.

05

Strong cash generation and progressive dividend policy – Severfield typically converts c.90 per cent of profits into cash.

06

A well invested business – over £60m capital expenditure over last seven years.

07

High return on capital employed – with through cycle target of 10 per cent, achieving an average of over 15 per cent over the last five years.

08

Continued good momentum with our operational improvement initiatives – with much more to come.

09

Quality of earnings demonstrated by successful navigation of Brexit, COVID-19 pandemic and current inflationary pressures.

10

Strong Environmental, Social and Governance (’ESG’) credentials – initiatives to speed up transition to net zero steel industry and included in Financial Times’ listing of Europe’s climate change leaders for two years running.

our diversified
portfolio

As the UK’s market-leading structural steel company, we serve people every day, whether for work, leisure or travel, or to provide essential services, including power and energy, health and education.

We have extensive experience in multiple market sectors, which supports the business through changes in spending patterns and fluctuations in macroeconomic conditions. In other words, we have a balanced portfolio with market sector, geographical and client diversification.

Market sectors

We have extensive experience in multiple market sectors, which supports the business through changes in spending patterns and fluctuations in macroeconomic conditions. In other words, we have a balanced portfolio with market sector, geographical and client diversification.

Order book balance

The Group’s growth strategy has delivered a record UK and Europe order book with a broad diversity of sectors, geographies and clients, providing us with good earnings visibility through 2023 and beyond.

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Commercial offices

Transport

Industrial and distribution

Stadia and leisure

Data centres and other

Nuclear

timeline

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more

Steel contruction indoors

How we deliver sustainable value

Severfield is the UK's market-leading structural steel company, respected for delivering world-class engineering and design excellence.

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Steel soldering

Being a responsible and sustainable business

Our Group's purpose is to develop better ways to build, for a world of changing demands. To achieve this, we are committed to motivating and enabling our people and our supply chain to deliver high quality, innovative buildings in a sustainable and efficient way.

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Steel construction indoors

The markets we serve

Our purpose is to develop better ways to build, for a world of changing demands and as the UK's largest specialist structural steelwork group, our balanced business model with market sector, geographical and client diversity provides the platform to further grow our market share in our chosen sectors.

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