Severfield Regulatory News (SFR)

26 Sep 2006 07:01

Severfield-Rowen PLC26 September 2006 26 September 2006 SEVERFIELD-ROWEN - RECORD RESULTS 2006 Half Year Results Severfield-Rowen Plc, the market leading structural steel group, announces itshalf year results to 30 June 2006. 2006 2005 Change Half year Half year Revenue £130.77m £112.03m +17%Profit from operations £ 11.39m £7.20m +58%Profit before tax £11.81m £7.34m +61%Basic earnings per share 39.95p 24.92p +60%Dividend per share 20.00p 12.50p +60% Highlights • Operating margin increased to 8.7% (2005: 6.4%) • Net margin increased to 9.0% (2005: 6.6%) • Strong order book totalling £218m (2005: £158m) • Cash balance of £27.10m (2005: £15.28m) • All core businesses currently performing ahead of management's expectations Commenting, Peter Levine, Chairman, said: "Severfield-Rowen has delivered another set of record half year results, withprofits, earnings per share, cash balances and dividends all increasingsignificantly. We are particularly pleased with the increase in both operatingand net margins. "The Group continues to make significant progress, with current trading ahead ofmanagement's expectations. "Our excellent order book gives us good visibility and we are operating in abuoyant market which is experiencing a high demand for large scale projects.With strong demand for the Group's products and services, group-wide productionefficiencies enhancing margins and with every group subsidiary contributingprofitably, we are confident in the Group's prospects for the second half andbeyond." Enquiries Severfield-Rowen PlcPeter Levine, Chairman +44 (0) 7802 312249Peter Davison, Finance Director +44 (0)1845 577 896 Financial DynamicsSusanne Walker +44 (0) 20 7269 7121 INTERIM STATEMENT 2006 INTRODUCTION The Group produced a record performance in the first half of 2006. Revenueincreased 17%, and profit before tax grew 61% Earnings per share increased 60%to 39.9p and the Group's cash balance stood at £27.1m at the period end. We areparticularly pleased to report a notable increase in the Group's operatingmargin which moved up from 6.4% in 2005 to 8.7%; net margins were alsosubstantially ahead at 9.0%. These results reflect the strong financial and market leading position of theGroup with every Severfield-Rowen company contributing to profits and producingresults ahead of expectations. Severfield-Rowen's performance is an example to the industry, not just in the UKbut throughout the world, as we set new standards in the construction andengineering industries. FINANCIALS Revenue in the period was £130.77m (2005: £112.03m) and operating profit was£11.39m (2005: £7.20m) which produced an increased operating margin of 8.71%(2005: 6.42%). Profit before tax increased 60.9% to £11.81m (2005: £7.34m) producing a netmargin of 9.03% (2005: 6.55%). After a tax charge of £3.66m (2005: £2.27m)profit after tax also increased 60.9% to £8.15m (2005: £5.06m). Basic earnings per share increased by 60.3% to 39.95p (2005: 24.92p). During the first six months of the year capital expenditure amounted toapproximately £4.6m (2005: £2.1m). The period ended with the Group having a cash balance of £27.1m (2005: £15.28m).Cash inflow from operating activities was £8.73m (2005: inflow £13.03m).Significant cash outflows in the period included dividends paid of £5.00m,corporation tax paid of £2.59m and net expenditure on assets of £4.06m. Borrowings, representing amounts due on hire purchase contracts, amounted toonly £0.23m, leaving the Group with a net funds surplus of £26.87m. Dividend Reflecting the Group's performance in the first half, its strong financialposition and the Directors' confidence in the future prospects for the Group,the Board is recommending a 60% increase in the dividend to a record 20.0p pershare (2005: 12.5p). This maintains the Board's policy of having the dividendcovered approximately 2.0 times by earnings at the interim stage (2005: 1.99times). The interim dividend will be paid on 27 October 2006 to shareholders onthe register on 6 October 2006. BOARD APPOINTMENT & EMPLOYEES The Group continues to take considerable strides forward and credit for this isdown to our tremendous workforce of whom the directors are very proud. I am pleased to welcome Geoff Wright who has been appointed to the Board as anindependent non-executive Director, with immediate effect. Geoff, aged 63, is awell-known figure in the construction industry. He retired this summer as theDirector of Construction at Hammerson Plc where he worked for the previous 37years. He is also non-executive Director with English Partnerships. Geoff'sextensive experience in the development and construction sector will be asignificant asset for the Group as it moves forward. No other information fallsto be disclosed under Listing Rule 9.6.13. The Board is also pleased to confirm the appointment of Peter Ellison as theGroup's Operations Director. OPERATIONS Group overview The principal business of the Group is carried out by its four main operatingcompanies: Severfield-Reeve Structures, Watson Steel Structures, RowenStructures and Atlas Ward Structures. The Group is the clear market leader in its sector and its productionfacilities, technology and broad range of structural steel services areunparalleled in the industry. Sustained investment preserves the Group'sadvantage in the industry. Margins received constant attention and have shownsignificant improvement in the first six months of 2006. The core businesses of the Group, each trading profitably and ahead ofexpectations, reflect a balanced and comprehensive approach to the varieddemands of the structural steel market: • Severfield-Reeve Structures, the single largest production unit in the UK in terms of capacity and an industry leader in efficiency and use of technology; • Watson Steel Structures, a world leader in specialist steel work used in stadia and bridges; • Rowen Structures, an expert in complex projects such as airports and office blocks; • Atlas Ward Structures, reinvigorated through membership of the Group has in the short time since its acquisition in 2005 attained leadership of the shed and portal frame market. The broad range of capabilities reflected, together with the Group's financialstrength and excellence of its workforce, enable Severfield-Rowen to benefitfrom, and be resilient to, the ever changing and evolving market place. Contracts Projects carried out by the Group in the first six months of the year include: • Ongoing retail development opposite BBC Television Centre, White City, London • Office development at No.1 Coleman Street, London • Redevelopment and enlargement of the Pollok retail centre in Glasgow • Retail and residential development in the Princesshay area of Exeter • Retail development at the Grand Arcade, Wigan • Development of a new plaster calcination and milling facility for British Gypsum at East Leake, Leicestershire • New printing facility for News International in Broxbourne, Hertfordshire • Retail and leisure development at the Eagle Centre, Derby • Office and retail development at Piccadilly, London • Ongoing works at Heathrow Airport Terminal 5 for BAA plc • Arena and Conference Centre, Kings Waterfront, Liverpool • Two grandstands, Aintree Racecourse • Steelwork for O2 Arena and Waterfront • Finnieston Bridge arching the river Clyde, Glasgow • New Ikea store at Ashton-under-Lyme near Manchester • Next Directory distribution centre in Rotherham • Lex Autos car components distribution centre in Chorley • Rebuilding of a TNT distribution centre in Lutterworth OUTLOOK The Group continues to make significant progress, with current trading ahead ofmanagement's expectations. Our excellent order book gives us good visibility and we are operating in abuoyant market which is experiencing a high demand for large scale projects.With strong demand for the Group's products and services, group-wide productionefficiencies enhancing margins and with every group subsidiary contributingprofitably, we are confident in the Group's prospects for the second half andbeyond. PETER LEVINECHAIRMAN 26 September 2006 Consolidated Income Statement Six months ended Six months ended Year ended 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £000 £000 £000 Revenue 130,766 112,029 236,722Cost of sales (116,989) (102,502) (212,100)Gross profit 13,777 9,527 24,622 Other operating income 17 45 63Distribution costs (590) (551) (784)Administrative expenses (1,821) (1,827) (4,597)Share of results of associates 5 3 (1)Profit from operations 11,388 7,197 19,303 Investment income 498 197 459Finance costs (77) (56) (110)Profit before tax 11,809 7,338 19,652 Tax (3,659) (2,274) (6,137)Profit for the period 8,150 5,064 13,515 Earnings per share:Basic 39.95p 24.92p 66.39pDiluted 39.95p 24.92p 66.39p Consolidated Statement of Recognised Income and Expense Six months ended Six months ended Year ended 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £000 £000 £000 Actuarial loss on defined benefit pension scheme - - (745)Tax on items taken directly to equity - - 224Net expense recognised directly in equity - - (521) Profit for the period from continuing operations 8,150 5,064 13,515Total recognised income and expense for the 8,150 5,064 12,994period attributable to equity shareholders Consolidated Balance Sheet At At At 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £000 £000 £000 ASSETS Non-current assets Goodwill 6,732 6,661 6,732 Other intangible assets 1,308 - 1,008 Property, plant and equipment 39,098 36,882 36,784 Interests in associates 41 583 36 47,179 44,126 44,560Current assets Inventories 2,945 5,916 7,318 Trade and other receivables 46,519 34,927 32,419 Cash and cash equivalents 27,100 15,278 30,132 76,564 56,121 69,869 Total assets 123,743 100,247 114,429 LIABILITIES Current liabilities Trade and other payables 53,516 41,121 48,221 Tax liabilities 4,319 2,726 3,251 Obligations under finance leases 228 455 363 58,063 44,302 51,835Non-current liabilities Retirement benefit obligations 6,384 4,721 6,384 Deferred tax liabilities 943 1,204 943 Obligations under finance leases - 227 66 7,327 6,152 7,393 Total liabilities 65,390 50,454 59,228 NET ASSETS 58,353 49,793 55,201 EQUITY Share capital 2,040 2,039 2,040Share premium 9,770 9,743 9,770Other reserves 139 139 139Retained earnings 46,404 37,872 43,252TOTAL EQUITY 58,353 49,793 55,201 Consolidated Cash Flow Six months ended Six months ended Year ended 30 June 2006 30 June 2005 31 December 2005 (unaudited) (unaudited) (audited) £000 £000 £000 Cash flows from operating activitiesCash generated from operations 8,732 13,032 35,543Interest paid (77) (56) (139)Tax paid (2,591) (3,324) (5,824)Net cash from operating activities 6,064 9,652 29,580 Cash flows from investing activitiesProceeds from sale of property, plant and 563 93 648equipmentInterest received 465 192 456Acquisition of subsidiary, including costs - (1,424) (1,396)Overdraft acquired with subsidiary - (3,592) (3,592)Purchases of property, plant and equipment (4,625) (2,134) (4,216)Purchases of intangible fixed assets (300) - (1,008)Net cash used in investing activities (3,897) (6,837) (9,136) Cash flows from financing activitiesProceeds from the issue of share capital - 340 368Repayment of borrowings - (2,453) (2,453)Payment of finance lease liabilities (201) (363) (616)Dividends paid (4,998) (2,906) (5,456)Net cash used in financing activities (5,199) (5,382) (8,157) Net (decrease)/increase in cash and cash (3,032) (2,567) 12,287equivalentsCash and cash equivalents at beginning of period 30,132 17,845 17,845Cash and cash equivalents at end of period 27,100 15,278 30,132 Notes to Interim Report 1) Basis of preparation The interim financial information has been prepared in accordance withInternational Financial Reporting Standards ("IFRS") as adopted for use in theEuropean Union and in accordance with the accounting policies included in theAnnual Report for the year ended 31 December 2005, which have been appliedconsistently throughout the current and preceding periods. The interim financial information does not constitute statutory accounts withinthe meaning of Section 240 of the Companies Act 1985. The interim results to 30June 2006 and 2005 are neither audited nor reviewed by the auditors. Thefinancial information of the full preceding year is based on the statutoryaccounts for the financial year ended 31 December 2005. Those accounts, uponwhich the auditors issued an unqualified opinion, have been delivered to theRegistrar of Companies. 2) Taxation Taxation for the six months to 30 June 2006 has been shown at the rate estimatedto be applicable for the full year. 3) Dividends payable to equity shareholders Six months ended Six months ended Year ended 30 June 2006 30 June 2005 31 December 2005 £000 £000 £000 Ordinary dividend paid 4,998 2,906 5,456 ______ ______ ______ In addition to the above, an interim dividend of 20.00p per ordinary share(2005: 12.50p) will be paid on 27 October 2006 to shareholders on the registeron 6 October 2006. The ex-dividend date will be 4 October 2006. 4) Earnings per share Earnings per share is calculated as follows: Six months Six months ended Year ended ended 30 June 2005 31 December 2005 30 June 2006 £000 £000 £000 Profit for the period 8,150 5,064 13,515 ______ ______ ______ Weighted average of number of shares 20,401,969 20,317,908 20,358,229in issue Weighted average of number of shares 20,401,969 20,322,872 20,358,229in issue, allowing for dilutiveeffect of share options Basic earnings per share 39.95p 24.92p 66.39p Diluted earnings per share 39.95p 24.92p 66.39p 5) Reconciliation of movement in total equity At At At 30 June 2006 30 June 2005 31 December 2005 £000 £000 £000 Opening total equity 55,201 47,295 47,295Profit for the period 8,150 5,064 13,515Dividends paid in period (4,998) (2,906) (5,456)Issue of share capital - 340 368Actuarial loss on defined benefit - - (745)pension schemeDeferred income taxes on pension - - 224benefitClosing total equity 58,353 49,793 55,201 6) Analysis of net funds At At At 30 June 2006 30 June 2005 31 December 2005 £000 £000 £000 Cash in hand 27,100 15,278 30,132Finance leases (228) (682) (429)Closing net funds 26,872 14,596 29,703 7) Reconciliations of group profit from operations to cash generated from operations Six months ended Six months ended Year ended 30 June 2006 30 June 2005 31 December 2005 £000 £000 £000 Profit from operations 11,388 7,197 19,303 Adjustments for: Depreciation of property, plant and 1,668 1,113 2,719equipmentLoss on disposal of property, plant 80 37 56and equipmentShare of results of associated (5) (3) 1companiesProvision against loan from - - 543associated companyOperating cash flows before changes 13,131 8,344 22,622in working capital Decrease in inventories 4,373 7,893 6,491(Increase)/decrease in receivables 2,849 5,729 (14,067)Increase/(decrease) in payables 5,295 (6,054) 701Cash generated from operations 8,732 13,032 35,543 This information is provided by RNS The company news service from the London Stock Exchange