Last checked at 17 Nov 2008 07:03
17 November 2008
INTERIM MANAGEMENT STATEMENT
Severfield-Rowen Plc, the market leading structural steel group, issues this Interim Management Statement covering the period to 17 November 2008.
Current Trading
Trading performance since the half year has continued to be in line with management expectations, with good levels of production, supporting high levels of customer satisfaction and we expect this level of performance to continue for the remainder of 2008.
Orders
Order intake has been supported by success in the Power Stations, Health and Education sectors, together with work in the traditional sectors some of which continue to slow. The order book stands at £414 million which represents over 12 months' activity.
Investment
We are very pleased to announce that earlier today, a formal agreement was signed in India with JSW Building Systems Ltd (a subsidiary of JSW Steel Ltd of India), to jointly create a structural steelwork business based in Bellary and Mumbai, India.
JSW Steel Ltd is part of the US$8 billion OP Jindal Group, the third largest steel company in India, with a capacity of about 5 million tonnes and plans to expand to 32 million tonnes by 2020. It is headquartered in Mumbai and has a presence in United States, United Kingdom, Mozambique and Chile.
JSW Group is one of the fastest growing business conglomerates in India, with interests in steel, energy, minerals and mining, aluminium, infrastructure and logistics, cement and information technology.
The core operations of the new company, which will be called JSW Severfield Structures Ltd, will be based adjacent to JSW Steel's Vijayanagar works in Bellary District, 220 miles south of Bangalore and some 390 miles south-east of Mumbai.
The business will be involved in the design, fabrication and erection of structural steelwork to principally service the Indian markets.
The total investment cost of the 50/50 joint venture is estimated at circa £30 million and will be funded through a mixture of approximately two thirds debt and one third equity, with the debt element raised from banks based in India and the UK. Initial revenues from the new business are expected in 2011.
Severfield-Rowen is delighted to be establishing a business in India with a partner such as JSW Steel, and is confident that it will provide the Group with a platform for significant growth in an area with large and growing infrastructure and construction markets.
Dividend
Following consultation with shareholders, the Board has decided to adopt a prudent dividend policy designed to support a more sustainable dividend across the economic cycle, whilst also delivering a progressive dividend during periods of growth.
It is the Company's intention to maintain a total dividend of 20.00p for the full year of 2008, which is the same as was paid to shareholders for 2007.
Outlook
Severfield-Rowen's balance sheet and general financial position remains strong with cash generation continuing to be robust and on target to substantially reduce debt levels at the end of 2008 and 2009. Cost and spending controls are now in place, or are being implemented, to ensure that the Company's competitive advantages are maintained.
The UK economic conditions are expected to be difficult in 2009, particularly for some sectors of the construction market. The Company remains in good shape with a significant order book, a competitive cost base and increasing export capability. In support of the Company's export ambitions, a new branch office will be opened in Abu Dhabi early in 2009. The Company is confident it will produce good relative results beyond 2008.
For further information, please contact:
Severfield-Rowen Plc Toby Hayward 01845 577896
Chairman
Tom Haughey 01845 577896
Chief Executive Officer
Peter Davison 01845 577896
Finance Director
RBS Hoare Govett Ltd John MacGowan 020 7678 8000
Stephen Bowler 020 7678 8000
Pelham PR Alex Walters 020 3170 7435
Charles Goodwin 020 3159 4399