In the eyes of Severfield (SFR) chief Ian Lawson, these results reflect significant progress after some very tough years for the steel supplier. Strip out exceptional costs of £8.5m - including £6m spent on replacing bolts at the Leadenhall or the 'Cheesegrater' building in the City of London - and pre-tax profits more than doubled to £8.3m.
A more disciplined approach to bidding for work and a focus on efficiency helped boost Severfield's underlying operating margin by 1.2 percentage points to 4.5 per cent. On the flip side, weeding out unprofitable contracts meant revenues slid 13 per cent.
Mr Lawson plans to invest in further efficiency improvements, which he's confident will drive margins towards the group's medium-term target of between 8 and 10 per cent. He's also bullish about revenues picking up, citing a raft of new contracts in the UK, including one to redevelop Liverpool's Anfield football stadium.
But the outlook isn't as promising in India. Reducing overheads and improving facilities did help losses in the country narrow by £2.8m to £0.2m, but Mr Lawson claims the government has yet to keep its promise of higher infrastructure investment.
Broker Canaccord Genuity expects adjusted EPS of 3.4p in the year to March 2016, rising to 4.3p in full-year 2017 (from 2.2p in full-year 2015).
| SEVERFIELD (SFR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 70p | MARKET VALUE: | £208m | |
| TOUCH: | 69-70p | 12-MONTH HIGH: | 72p | LOW: 54p |
| DIVIDEND YIELD: | 0.7% | PE RATIO: | na | |
| NET ASSET VALUE: | 47p* | NET CASH: | £6.9m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 268 | 6.8 | 6.5 | 5.0 |
| Year to 31 Mar | ||||
| 2013† | 318 | -28.9 | -13.5 | 1.5 |
| 2014 | 231 | -4.1 | -0.9 | nil |
| 2015 | 202 | -0.2 | 0.1 | 0.5 |
| % change | - | - | - | - |
Ex-div: 13 Aug Payment: 11 Sep *Includes intangible assets of £61.8m, or 21p a share | ||||
