Severfield H2 2026 Earnings Report

Severfield EPS Results

• Actual EPS: -GBX 12.03
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Severfield Revenue Results

• Actual Revenue: $454.25 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Severfield Announcement Details

• Quarter: H2 2026
• Date: 6/24/2026
• Time: After Market Closes
• Conference Call Date: Friday, June 26, 2026
• Conference Call Time: 4:30AM ET

Severfield (LON:SFR) 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. Operating on an international scale, Severfield is widely recognised for its iconic structures, engineering excellence, and unparalleled customer service. We have the design, experience and engineering skills to serve a diverse range of market sectors, from education and hospitals to bridges and commercial offices. We approach every project, from the highly technical to basic structural work, with the same level of safety, professionalism, commitment, care and customer service. Our people make Severfield the success story it is today. Thanks to the dedication, expertise and experience of our workforce, we offer more skills and variety than any other UK steel contractor. We in turn strive to offer the best possible career prospects in a rewarding working environment and are committed to matters of health and safety, ethics and staff engagement. As part of our wider corporate responsibility activities, Severfield is committed to ensuring our impact on the environment and surrounding communities is wholly positive.

Severfield H2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Severfield said FY 2026 performance was resilient and in line with expectations, with underlying PBT of £10.5 million and cash significantly ahead of expectations. Net debt improved to £28 million, or 1.2x leverage, which management said leaves the balance sheet in a good position.
• Negative Sentiment: The company acknowledged a tough market backdrop, especially in the U.K., where macro uncertainty, cost inflation, high interest rates, and pricing pressure hurt margins. Underlying operating margin fell to 2.8% from 4.8% last year.
• Positive Sentiment: Management is refreshing strategy to focus on higher-margin, more selective work, with less reliance on volume and more emphasis on cash generation, project quality, and partnerships. The company is also exiting non-core activities like Modular Solutions and simplifying its operating model.
• Positive Sentiment: India is becoming a material growth driver, with JSSL delivering record output of 125,000 tons, over £14 million of EBITDA, and £3 million of profit contribution to Severfield. The India order book hit a record £344 million, with further growth expected in data centers, commercial offices, and infrastructure.
• Neutral Sentiment: FY 2027 is being framed as a transition year, with underlying PBT guidance of £12 million-£15 million. Longer term, management targets £40 million-£50 million of PBT, 7%-8% operating margin, and a return to dividends when sustainable cash generation supports it.

Presentation

[Paul McNerney, CEO at Severfield]

Good morning, everyone, and thank you for joining us here in London this morning. Just as a reminder, I'm Paul McNerney, Chief Executive of Severfield. I'm pleased to be presenting our first full year results, having joined the business last November. I'm here with Andrew Page, our CFO, who joined me in February of this year. Let me briefly run you through what we'll cover today. I'll start with our financial highlights, commenting on how we've performed in what has been a challenging market, and describe our plans for how we wish to take this business forward over the medium term. I'll then hand over to Andrew again, who will take you through the financials in more detail. After that, I'll come back and lay out our refresh strategy and describe how that responds to the prevailing market conditions and indeed how that will drive our medium-term ambitions.

[Paul McNerney, CEO at Severfield]

At the end, we will open up for some questions. Let me start with the year in review and my initial observations, having joined the business six months ago. I've spent that time really getting to know the business, and I've been very encouraged by the engineering excellence pedigree of the firm and our client confidence, which we never have and never will take for granted. We are the leading structural steel group in the U.K., Europe, and India, with an unparalleled reputation for delivering complex, high-quality projects and structures. That differentiation comes from our engineering expertise, our scale, and our delivery experience. Across our three main geographies, we're well-positioned in sectors with both positive long-term growth and counter-cyclical drivers, including defense and energy and data centers.

[Paul McNerney, CEO at Severfield]

As a new leadership team, we've intervened to drive efficiency and improve productivity. Indeed, we've taken early action to address our cost base. What is clear to me is that we need to sharpen our focus on quality of earnings, prioritizing margin, cash generation, and therefore shareholder value. This requires a refresh of our strategy, which will bring less reliance on volume, more discipline in project selection, and a focus on the right geographies, sectors, and clients. And making greater use of partnerships to improve our agility and capital efficiency. Before I talk about our performance, I did want to comment on a few operational highlights. In Bridgwater, Somerset, on the left, we worked with Sir Robert McAlpine to deliver the Agratas major battery factory.

[Paul McNerney, CEO at Severfield]

Over 22,000 tons of steel delivered in just 26 weeks, representing the latest example in a long track record of massive scale, highly engineered structures that we've delivered. On the right, at the EUR 4.5 billion Project ONE in Belgium, we're working for INEOS, demonstrating our ability to deliver efficiently, fabricate in Europe, and control multi-country logistics to deliver program reliability. Both projects are a good example of the type of work we're increasingly focused on. Larger, more complex schemes where our engineering capability and delivery track record are valued and where we can be selective. They also showcase the integrated U.K. and European manufacturing capability. We expect to secure projects of a similar scale and nature to this in the coming months. In India, we are seeing increasing exposure to higher margin sectors, with data centers and commercial property particularly increasing.

[Paul McNerney, CEO at Severfield]

Two of our current projects include, on the left, 14,000 ton hyperscale data center in Navi Mumbai. On the right, 15,000 ton project that we're delivering for the government in Amaravati. These projects demonstrate our ability to secure and deliver large, critical projects in India in attractive high-growth sectors. Combined with a strong order book, expanding capacity, partners, and client sentiment. This reinforces our confidence in India and that it will be an increasingly important part of the group as we move forward. Turning to our performance in FY 2026. Having walked in the door in November last year, we immediately set to work on ensuring our market commitments were met. Despite a challenging backdrop, we have delivered a resilient performance in line with expectations. As such, our underlying profit before tax was GBP 10.5 million, and our cash was significantly ahead of expectations.

[Paul McNerney, CEO at Severfield]

As of today, our order book is GBP 507 million, close to peak levels for this organization. In India, our joint venture, JSSL, delivered a record performance with an output of 125,000 tons in the year. This reflects the high levels of economic growth and investment being seen across India, together with increasing demand for steel in preference to concrete, owing to its delivery and program certainty. We brought a laser focus to cash generation and working capital discipline. I was pleased that we were able to reduce net debt and strengthen our balance sheet. This will remain a key feature of this leadership team. Importantly, the actions that we've taken during the year position the group well to improve margin, quality, and performance as we move into FY 2027 and beyond.

[Paul McNerney, CEO at Severfield]

The previous few years have been challenging in terms of market conditions and a number of significant headwinds, particularly in the U.K., have bitten. We've seen ongoing macroeconomic and geopolitical uncertainty, including the impact of the Middle East war. More broadly, cost inflation and high interest rates have led to weaker traditional construction market output in the U.K. This has led to pricing pressure and has impacted upon margins in the period. In the U.K., we've seen increasing competition. The size of available market has contracted. Whilst in Europe, our presence is becoming established. In India, our position is growing as we keep pace with the growth of that geography. In response, we have refreshed our strategy to acknowledge and deal with the changed and evolving nature of our industry.

[Paul McNerney, CEO at Severfield]

We will be leaning into a broad geographic footprint and diversified sector approach, allowing us to be more selective, prioritizing work with better margin and cash, while reducing exposure to lower quality volume. This will position the business for improved performance as market conditions evolve. In the first six months, we focused on delivering this FY 2026 result, launched a strategic refresh. At the same time, we've taken decisive action to strengthen the business with a clear focus on productivity and performance. We've acted with pace and clarity, making a series of important interventions while continuing to operate the business effectively and drive the order book with the right type of work for future periods.

[Paul McNerney, CEO at Severfield]

We are strengthening our leadership and commercial focus with new executive hires and established a clients and markets function. To deepen our client relationships, strengthen our market positions in our chosen sectors, and drive early engagement. We are seeing early successes, such as our increased number of Pre-Construction Services Agreements, PCSAs, and the recent signing of an MoU with Global Engineering Group. Alongside this, you can see from the slide, we have simplified our portfolio and operating model, reorganizing our structure to suit, and have moved to action in exiting non-core activities such as Modular Solutions. We are also driving greater discipline through our operational and cost actions with a sharper focus across the business in how we execute and perform with the introduction of our weekly business plan review.

[Paul McNerney, CEO at Severfield]

Taken together, these actions are creating a simpler and more agile business, providing a strong platform for improved performance and returns. Later, you will hear more from Andrew on the actions that have been taken around the balance sheet and cash. Our program to become match fit has real momentum. We have more planned, and we will continue through FY 2027. I would now like to hand over to Andrew to talk through the financial performance.

[Andrew Page, CFO at Severfield]

Thanks. Well, thank you, Paul, and good morning, everyone. Let us start with a summary of the results for FY 2026. Revenue was broadly flat year-on-year at GBP 454 million. Underlying PBT was down from the prior year at GBP 10.5 million, in line with expectations. ROCE was similarly lower at 7.3%. Cash conversion was strong, as Paul has outlined, benefiting from a tight focus on cash collection, which remains a key priority in everything we do. Net debt was much improved at GBP 28 million, representing leverage of 1.2x, well within our target range. We will come on to talk about this later. The U.K. and Europe order book now stands at GBP 507 million, giving good visibility of activity levels for FY 2027 and beyond.

[Andrew Page, CFO at Severfield]

In India, JSSL achieved record performance, both in terms of output and profitability, delivering a material contribution to the group's results in FY 2026, with continued growth expected going forward. We will come back to each of these over the next few slides. Looking at revenue in a little more detail. Overall, revenue was broadly flat with a strong performance in H2 as a result of the actions we have been taking, despite the challenging market backdrop. Revenues from our nuclear and infrastructure division increased, driven by higher activity on several nuclear projects, including Hinkley Point C and Sellafield, continued progress on a number of significant bridge projects, and ongoing work for Ørsted. This more than offset the decline in commercial and industrial revenue, where volumes were impacted by macro uncertainty and the resulting delays to major project awards.

[Andrew Page, CFO at Severfield]

We also saw lower revenue from Modular Solutions at GBP 12 million versus GBP 16 million in the prior year following the decision to discontinue the business. Note that this will be classified as discontinued in FY 2027 once the business is fully closed. Turning to underlying PBT. Here you can see the component parts of the year-on-year movement, which shows a reduction from GBP 18.1 million to GBP 10.5 million overall. Despite broadly flat revenue, underlying operating margin declined from 4.8% in the prior year to 2.8% in FY 2026, reflecting the challenging market backdrop and previous volume-led strategy. Results for the modular business have been treated as non-underlying following the decision to discontinue the business. Leading to the year-on-year decline compared to the small profit recognized last year.

[Andrew Page, CFO at Severfield]

Partially offsetting this was the strong performance from JSSL, which made a record GBP 3 million contribution from our 50% share, up from broadly break even last year. We recorded around GBP 50 million of non-underlying costs in the year, generating a statutory loss before tax of GBP 39.9 million. The key items are listed here in the table. GBP 22.2 million related to non-cash impairments of the goodwill on our infrastructure business and our investment in the CMF joint venture, following a prudent review of the carrying values for these businesses. GBP 12.6 million was recorded in respect of the Modular Solutions exit, including closure-related costs and an onerous lease provision. A further GBP 8.3 million was recorded in relation to the bridge remedial works program, which is net of the GBP 7.5 million insurance recovery received in the year.

[Andrew Page, CFO at Severfield]

We expect to complete the factory-based remediation work by the end of July and to have substantially completed all works by the end of FY 2027. The balance relates to other one-off restructuring related items. Turning next to the U.K. and Europe order book, which as we've seen, currently stands at GBP 507 million. Whilst the progressive roll-off of older, lower margin projects will continue to create a headwind in FY 2027. Tendering activity remains encouraging and there is an attractive pipeline of large scale, higher margin opportunities, particularly for FY 2028 and beyond. The sectors showing the strongest growth in the order book are in transport and infrastructure, including the Old Oak Common Station project for HS2 and data centers across a broad range of geographies.

[Andrew Page, CFO at Severfield]

It's also encouraging to see a strong pipeline of high-quality commercial office developments coming through. And we are currently engaged in Pre-Construction Service Agreements across a number of large projects representing more than GBP 100 million of potential future project value should these opportunities progress to contract award. In India, JSSL has performed particularly well, as Paul outlined, with new record levels of output and performance. With output reaching a record 125,000 tons in FY 2026. JSSL has now achieved material levels of profitability, generating over GBP 14 million of EBITDA and GBP 7 million PBT on a gross basis, and contributing GBP 3 million of profit for our share of the JV after tax. The order book has also stepped up considerably, now standing at a new record of GBP 344 million, with particularly strong growth in higher margin commercial offices and data centers.

[Andrew Page, CFO at Severfield]

Overall, we see significant opportunity for further growth in JSSL, which Paul will speak more about in a moment. Looking next at our cash flow for FY 2026. The chart shows the key components split between recurring and non-recurring cash flow items and the resulting movement in net debt over the year. As shown on the left-hand side of the chart, working capital movements had a significant positive impact. Reflecting the unwind of previous contract positions and also the strong focus on cash collection, as mentioned previously. CapEx was GBP 2.1 million, which is lower than our typical maintenance CapEx level of around GBP 8 million per annum, and we expect to return towards these higher levels going forward. Taxes were, of course, low given the loss-making position.

[Andrew Page, CFO at Severfield]

On the right-hand side are the non-recurring items, namely a GBP 11 million outflow relating to exceptional items and a GBP 3 million cash inflow relating to the sale of the previously mothballed former Harry Peers nuclear factory in Bolton. Overall, net debt reduced by GBP 15.1 million over the course of the year. Bringing this all together, the balance sheet is in a good position. The reduction in net debt means that our year-end leverage of 1.2x is well within our 1.0x-1.5x target range, and this in turn is significantly below the 3x limit set under our facility covenants. Earlier this month, we were pleased to secure a three-year extension to our banking facilities on improved terms and with two one-year extension options. The facility also has a GBP 30 million accordion facility, providing further financial flexibility.

[Andrew Page, CFO at Severfield]

We no longer have a requirement for the JSSL option agreement that was previously in place. Therefore, when the option agreement expired earlier this year, it has not been replaced. Most importantly, our strong focus on cash and working capital continues. Note that we expect cash outflows in FY 2027 of around GBP 20 million relating to the non-underlying provisions recognized in FY 2026, the vast majority relating to the bridge remedial work, as the year-end provision flows into cash flow in the coming year. These will be partially offset by a GBP 10 million contract advance payment that we've already secured. We will continue to actively manage working capital and other cash opportunities. This supports our objective of maintaining net debt at broadly similar levels to the end of FY 2026 and keeping leverage within our target range.

[Andrew Page, CFO at Severfield]

This slide summarizes our capital allocation framework, illustrated by looking at sources and uses of funds for the group. The level of operating cash flow recorded in FY 2026, before working capital movements, is sufficient to cover the underlying cash flow requirements of the group: maintenance CapEx, financing costs, lease payments, and tax. It would also cover the repayments on our term loan facility, which continue through FY 2027 and FY 2028. Incremental cash flow from growth in the business underpins future capacity for both growth CapEx and dividends, as well as creating incremental debt capacity under our financing facilities. It is our intention to reinstate the dividend when it is appropriate to do so, underpinned by sustainable cash generation of the business. We recognize that the dividend is an important component of the overall return for shareholders.

[Andrew Page, CFO at Severfield]

This all needs to fall within our financial framework with a target leverage range that is well within the limits set out in our covenants and with a clear requirement for any growth CapEx to be value accretive. In addition, as Paul will outline shortly, our strategy is designed to minimize capital requirements both through tight working capital management and the use of strategic partnerships to underpin growth. In summary, in FY 2026, we demonstrated resilient performance in line with expectations. Our strong cash generation, improved liquidity, and extended banking facilities provide long-term financial flexibility. India is now making a material contribution to the group with further significant growth opportunities to come. The order book and pipeline provide further confidence for the medium-term outlook. However, we continue to operate against a subdued U.K. market backdrop and are unwinding previously secured low-margin projects. FY 2027 is therefore a transition year.

[Andrew Page, CFO at Severfield]

In line with guidance, we expect to deliver GBP 12 million-GBP 15 million of underlying PBT. Our medium-term ambition is to improve profitability in excess of the peak levels seen in recent years, but in a more controlled manner and less susceptible to individual market weaknesses. I will now hand back to Paul, who will outline how we intend to do this.

[Paul McNerney, CEO at Severfield]

Well done. Thank you, Andrew. Given that context, I will now set out our strategy refresh, describe how that responds to what we have heard so far, and confirm those medium-term ambitions for the firm. As we said we would, we have refreshed the strategy, and we have reset the plan with a clear focus on creating reliable shareholder returns and delivering growth. At its core, our strategy is built around four goals. The first of those is delivering profitable growth and improved margin with disciplined project selection and strong cash conversion. Secondly, harnessing our recognized leading engineering partner status for complex high-value projects. Thirdly, building a high-performance culture within the business where our people are safe, engaged, and accountable for operational excellence. Finally, doing good and building communities. Underlying this is a fundamental shift on how we think about this business.

[Paul McNerney, CEO at Severfield]

Historically, we have operated more as a linear left to right value chain, creating singular value through manufacturing to delivery. From today, following client demand and discussion, we are building from our core strengths, our engineering expertise, our experience, our delivery capability to enable us to move further up the value chain. This will involve earlier engagement in projects through areas like FEED, front-end engineering and design, and the use of increasing PCSAs, Pre-Construction Service Agreements, and deepening our project presence upstream into project integration and management to focus more on our clients' needs. We are also much clearer on where we are focusing. We are prioritizing on three core geographies: the U.K., Europe, and India, each with distinct economic characteristics and opportunity. The U.K. is clearly our established base. However, it remains subdued. Europe provides significant scaling opportunity, particularly in major projects and local country presence.

[Paul McNerney, CEO at Severfield]

In India, we can see substantial growth opportunity. Delivery of this strategy is being driven through four transformation projects. Clients and markets, Manufacture 360, engineering excellence, and performance and productivity. Taken together, these programs are fundamentally about how work comes into this business, how we execute it, and how we continue to strengthen our capability. We're refreshing our manufacturing approach, we're doubling down on engineering, and we're improving overall performance and productivity across all aspects of the group. The actions we've taken so far have built momentum. We are now focused on harnessing this energy to accelerate the pace of this transformation through FY 2027. The next step in describing our strategy is to explain how that translates into how we will operate.

[Paul McNerney, CEO at Severfield]

As touched on earlier, at the core of this is an evolution in our operating model in response to our clients' needs and their requests for us to evolve beyond the traditional linear manufacturing to delivery approach. This client-led approach will see us engage earlier, stay involved for longer, and ultimately capture more value across the life cycle of projects. This is structured across four service quadrants, which can be taken individually or as a group. They combine to give us more flexibility and optionality in how we deliver for our clients and how we allocate our capital. At the top of the diagram, project management, we are moving further up the value chain. Taking on a more holistic approach and earlier stage roles such as project integration. This gives us a higher return, lower risk opportunities, stronger client engagement, and evolves the positioning of the business.

[Paul McNerney, CEO at Severfield]

We're doing this more through a partnered and collaborative basis. In design and engineering, we intend to grow our design offering for both clients and partners to support and strengthen our engineering excellence offering, both in early-stage project definition and in delivery. In manufacturing, we are seeking agility and flexibility in how we operate. We will focus on higher value add fabrication, optimizing our footprint, and leveraging partnerships to improve efficiency without being constrained by fixed capacity. In delivery, we will enhance our offering in project execution, plant and equipment, complex lifting, logistics, and marshaling. Importantly, this model allows us to decouple growth from full utilization of our own facilities, reducing the reliance on volume-driven, low-margin work and instead focusing on value. Ultimately, this is all supporting margin progression, stronger cash generation, and a more capital efficient, less leveraged operating model. Turning to U.K. and Europe.

[Paul McNerney, CEO at Severfield]

We have a leading structural steel position in the U.K. and an expanding footprint in Europe. The focus now is on how to evolve this in a more strategic manner. In the U.K., the emphasis firmly on margin and quality of earnings. We're focusing on higher growth, higher margin sectors, particularly where projects are complex and engineering-led, because that is where our capability differentiates most strongly. Examples would be defense and energy. In Europe, the opportunity is different. Today, we are an emerging presence in that geography. Therefore, the focus is on major projects such as Project ONE and hyperscale data centers, and expanding our presence in a disciplined, capital-light way, country by country, where the opportunity exists and building off our established presence in the Netherlands. Across both, the common thread is discipline, not chasing volume, and focusing on opportunities aligned with our capabilities and for stronger returns.

[Paul McNerney, CEO at Severfield]

In India, we have on offer a very specific opportunity. As I said at the top of this presentation, JSSL is now acting as a significant growth platform for the group. The market itself is compelling, with a GDP growth of circa 8% per annum, a massive uptick in demand for infrastructure and buildings, an increasing national skill shortage, and a recognition of the benefits of steel versus traditional approaches. Our partner, JSW Steel, continues to expand at an accelerating rate with a total steel production likely to exceed 62 million tons per annum by 2032. Against that backdrop, our order book and delivered tonnages are scaling rapidly. We are seeing increasing exposure to high-margin sectors such as commercial buildings, data centers, advanced manufacturing, and transport infrastructure, all of which create opportunity to unpack our engineering capability.

[Paul McNerney, CEO at Severfield]

Our growth is being delivered in a capital-efficient way with our second facility at Gujarat now online and a contract manufacturing model being deployed to flexibly support growth and avoid overloading fixed capacity. Overall, India has reached a tipping point. It has always represented a significant long-term growth opportunity. We are now seeing that come forward, and therefore it figures so firmly and squarely in our strategy. Our medium-term ambition is to grow underlying profit before tax from the GBP 10.5 million of today to between GBP 40 million and GBP 50 million in the medium term. That step change will be driven by the coordinated delivery of the strategy I've just outlined, and the steps to close that gap can be broadly grouped as follows, from left to right.

[Paul McNerney, CEO at Severfield]

Through improved efficiency and productivity across the business, particularly as we optimize factory utilization and embed the changes we've already started. Through more disciplined project selection and better sector mix as we focus increasingly on higher margin work. By leveraging a more flexible capital-light delivery model, allowing us to scale without being constrained by fixed capacity or capital intensity, and enacting our four quadrants. Finally, through continued growth in India. This is not one single lever. It's the combination of these to bring cash generative growth. In summary, and to conclude, we're building on our core strengths while sharpening where we play and how we deliver through greater selectivity, a more flexible capital-light model, and continued expansion in geographies like India and Europe. That underpins a clear set of medium-term ambitions.

[Paul McNerney, CEO at Severfield]

A business of GBP 500 million-GBP 550 million of revenue, 7%-8% of operating margin, a step change in profitability from GBP 40 million-GBP 50 million, including India, cash conversion above 90%, leverage in the 1.0x-1.5x range, and a ROCE above 15%. We are setting out how we plan to improve profitability in excess of the peak levels seen in recent years. Importantly, in a more controlled manner, with less susceptibility to individual market weaknesses. This will deliver stronger, more consistent returns with greater capital efficiency over the medium term.

[Operator]

Obviously, they can be submitted during the Q&A. Our first question is, the order book still looks strong, but how much of that is actually firm? And how much could realistically slip or be delayed if the economy softens?

[Andrew Page, CFO at Severfield]

Okay. Shall I take that one? Yes.

[Paul McNerney, CEO at Severfield]

Please.

[Andrew Page, CFO at Severfield]

Well, first of all, good morning, everyone. Just to introduce myself briefly, I'm Andrew Page, the CFO at Severfield. Just to say thank you very much for joining us this morning. To pick up that question about the order book. As we said, our U.K. and Europe order book, GBP 507 million. We're really pleased with how the order book is progressing. Obviously that large number, that GBP 507 million, gives us good coverage as we look at FY 2027 and beyond in terms of the total volume. Albeit, as we've said, it's a mix between some of the previously contracted lower margin work and then some of the newer work that we've contracted more recently coming through, and all of that will progress through as we deliver. To your specific question about how firm is it, I think actually it looks good.

[Andrew Page, CFO at Severfield]

The key points I think to pull out would be a number of our really big contracts that are coming up are just about to start. If you think of the Vista Commercial Development in London, that is really not far away now. Old Oak Common for HS2, that was actually previously delayed, which I guess is partly behind the question. Actually, that's now had its slippage, and that is also just ready to go. The third example I'd probably give you is data centers. These ones, there are by definition, there's a decision point. Once the project goes ahead and materials get purchased, it really is full steam ahead to get the data center built and underway. I think for all of those reasons, those are just examples.

[Andrew Page, CFO at Severfield]

It does feel that there is strong momentum that will mean that these projects just that we get on with it. Pleased with how it's developing. More to come, and yeah, we're in a good position right now as we head into FY 2027.

[Operator]

Thank you, Andrew. Our next question is, can you give a bit more color on how competitive the market feels right now? Are you having to bid more aggressively to win work?

[Andrew Page, CFO at Severfield]

Sure. Let me take that one as well, and then we'll make sure Paul gets a word in edgeways on the next one. Right. How competitive is the market? I think, look, the answer is the market is competitive, and this is something that has been developing over the last few years. Fair and square, it's a competitive market. However, that competition principally is the toughest, the tightest in the typically lower-margin areas of work. I think you'll have picked up from our strategy that that's not where we want to compete. Making a conscious decision not to be competing against others down in that low-margin work. Where we want to differentiate ourselves is in the higher quality, high-margin work, which by definition is where you see less competition, or rather more suited to our skills and what we can bring to those projects.

[Andrew Page, CFO at Severfield]

That's really how we'd encourage you to think about it.

[Operator]

Thank you. Our next question is, the U.K. construction market has been patchy. Are you relying more on certain sectors or customers that you were a couple of years ago? On the international side, particularly India, how confident are you in the long-term opportunity there? And what are the main risks we should keep in mind?

[Paul McNerney, CEO at Severfield]

Great. Thanks, Evie. Just to echo Andrew's comments, thank you to everyone that's dialed in this morning and/or indeed interfaces with the business. We do appreciate your interest and indeed, your support. I am Paul McNerney, Chief Exec of the business, joined last November. It's been an extremely fast-paced six months as we get to grips with the business. In terms of sectors and customers, hopefully from that presentation that you've just watched. You can see this sense of a business that's looking to not leave its roots in the U.K., completely lean in actually to the experience, the history, the brand. It's our license to operate. At the same time, a business that is responding to the fact that, as the question suggests, this is a market that has contracted.

[Paul McNerney, CEO at Severfield]

It's a market where it is at the vagaries of low capital budget, both private and public sector. Therefore, the potential for growth and higher margin extraction is that bit more difficult. Two comments to make. We can see more than enough pipeline and opportunity in those sectors that suit our expertise. Commercial in London still has a life. There are a couple of major towers in the market today. Similarly, stadia building, there's three or four of those opportunities in the market today. As we move forward and actually has already happened over the past six months or so. A real focus and discipline leaning into those sectors that we see to be a little more through-cycle, counter-cyclical. Defense, nuclear, whether that's new build or working in existing facilities. As we've said in the presentation, a flex towards different geographies.

[Paul McNerney, CEO at Severfield]

If we do just touch on India, as the question has requested of us, a peak output of 125,000 ton in the year just gone. The year that we're within, we see significant growth on that figure, and that trajectory will continue, and we have very strong confidence that it will continue to grow for several factors. The economy's growing at 8% in India. There's a government-led ambition to reach developed nation status by 2047. That's driving infrastructure, it's driving industrial build-out programs. Our own partner is growing at a rapid rate, an expanding rate, actually. Therefore, all of that is creating this velocity and momentum in that business. What should we look out for as risks, as both investors and those that are running the business? As we scale, can we keep hold of the quality and the discipline that's needed to be successful in that area?

[Paul McNerney, CEO at Severfield]

The response to that is we have plans in place. We will be hiring additional support, particularly operationally. That's one lens. I think the other lens that we've looked at this through is as we keep pace with the growth. We don't want to be gearing the business into 100% leverage of own facilities. We absolutely will take this opportunity to bring forward a franchise contract fabricating approach, whereby we have partners that can help us take the peak out of the markets and therefore have a more balanced approach. Thanks, Evie.

[Operator]

Thank you, Paul. Just as a reminder, for anyone who would like to ask a question today, please type them into the Q&A box situated on the right-hand side of your screen. Our next question is, how should we think about dividends? Is there scope to grow them steadily? Or will they stay more linked to the cycle?

[Andrew Page, CFO at Severfield]

Okay, great question. Dividends, first of all, just to say, the dividend is a really important part of our return for shareholders. Particularly for the retail shareholder base within that. We've given, as you've seen in the announcement, a commitment to recommence the dividend, of course, it was put on hold a year or so ago, to restart when it is supported by the cash flow of the business. It's all about cash flow. I think the key as well is you look at our strategy, which is very much a growth strategy. As we see the growth coming through in earnings, you'll also see the growth coming through in cash flow, which will support the return to turning that dividend back on and indeed for ongoing growth in the dividend.

[Andrew Page, CFO at Severfield]

Maybe the second point to add, which is really directly to the question, is that our strategy by its nature, which takes us really to say rather than being predominantly focused with a U.K. focus on the business and then smaller amounts elsewhere. We already are and are progressively moving towards more of a three geography model across the U.K., Europe, and India. Means that we're not at the mercy of any one economic backdrop in one country. You have all three. Because of the targeted strategy of going for those higher margin areas with sectors that give us higher margins, and indeed some of which are counter-cyclical, if you think of things like nuclear, defense, energy.

[Andrew Page, CFO at Severfield]

All of those should be developing us into a business that's got a more stable stream of, or rather less volatility in the earnings growth and therefore in the cash flows. In other words, long way of saying growth in earnings, growth in cash flows, growth in the dividend is what we are setting out to achieve.

[Operator]

Thank you, Andrew. Next we have, if we look two to three years out, do you expect the competitive landscape to consolidate or stay fragmented?

[Paul McNerney, CEO at Severfield]

Great. I think I'll take that one. Look, it's an interesting point observation. I think all sectors as they mature and as they become more sophisticated, there's a degree of consolidation. Can I foresee it in steel fabrication? I think I probably can actually. The U.K. environment is one in which we have always been and remain the largest, most capable organization in the industry, outside of a couple of our key competitors that you then get into a very long tail. I think we can all see some of the pressures that are facing businesses in the U.K., cost of employment, cost of energy, cost of doing business, increase in tax base. Would we be surprised if we saw a degree of consolidation? Probably not.

[Paul McNerney, CEO at Severfield]

Some of that has been factored into the strategy that we bring forward here, which is to create a business with much more breadth and much more diversification.

[Operator]

Thank you, Paul. We have quite a long one next. It's clear the team has taken some decisive actions this year to simplify the business and exit the modular division, which I think many of us support. Given that management has identified FY 2027 as a transition year. What are the most critical internal KPIs that you are tracking month to month to ensure that the new higher margin project strategy is actually gaining traction? How will you signal to us as retail investors that this transition is firmly on the right track?

[Paul McNerney, CEO at Severfield]

Great. Fulsome, but a great question. In answering it, I might just come at that through a few different angles. First and foremost, the point about gaining traction. Just one second. Apologies, that was an unscheduled fire alarm. It's all about being able to be dexterous. Yeah, the success of embedding any strategy in a business, for me, is about being able to articulate that through the organization and really clearly link up for all of our people and indeed those connected with the business. What is the strategic intent? How are we going to get there? What's the plan? What's my role in this organization, and how can I impact and have influence on that plan? That's a piece that we have spent a lot of time considering and putting steps in place.

[Paul McNerney, CEO at Severfield]

From that, fall out a whole series of KPIs that we can then use to track and manage both the delivery of the business and the shift in strategy. The question asks, what's the monthly cadence? Actually, I would play back the cadence is weekly. We sit at three different points in the working week to look specifically at clients and markets, therefore size of pipeline, near-term opportunities. What are we doing to be able to get in early with customers? How are we shaping and building our relationships? We have a separate moment in the week where we drill into projects, every project in the U.K. on a dashboard, red, amber, green. If anything is moving into that amber position, how can we use the resources of the business to deal with that?

[Paul McNerney, CEO at Severfield]

Towards the end of the week, we then have a similar cadence where we are monitoring in each of the transformation programs. The steps and actions that we've agreed to take, how we're progressing and have they embedded. There's a real momentum and a real discipline to how this is being rolled out and embedded in the business. How can you see that and how will we keep you briefed? We really like the style of what we're doing today. We'd like to do more of this, and indeed, in the early autumn, we intend to do a specific topic-based webinar. I think we're going to choose India is our suggestion. Maybe you could feed back through Camarco if there are any other areas that you'd like to see us deep dive on in the business.

[Paul McNerney, CEO at Severfield]

The intent is that we want to start creating more cadence and more transparency. Some of the KPIs I've referred to around transformation, we will report out. We will do that in our normal reporting rhythm, but we will also use the RNS system to signpost and describe some of the successes that we're having on the way to embedding this strategy. Thank you, Evie.

[Operator]

Thank you, Paul. Our next question is, you've highlighted data centers and complex infrastructure as higher margin sectors. As these projects become a larger proportion of the order book, should investors expect a structurally higher group operating margin than Severfield has historically achieved? Or are the benefits mainly improved resilience and project quality rather than materially higher margins?

[Andrew Page, CFO at Severfield]

Shall I tell you?

[Paul McNerney, CEO at Severfield]

Yep, great.

[Andrew Page, CFO at Severfield]

Higher margins, yes, versus what we've recently delivered. If you think in FY 2026, just gone 2.8% margin, that is clearly not what we're targeting. We're targeting instead 7%-8% margins. Is that higher than what's been done historically? Actually, no, it isn't. As we think about that overall target of us reaching GBP 40 million-GBP 50 million of underlying PBT, that compares to a recent peak of underlying PBT of GBP 36 million, which was recorded just a couple of years ago. And if you take the five-year average, that recent five-year average, it's about GBP 28 million or GBP 29 million. The sorts of numbers, and actually the margins at that time were similar. They were, from memory, around 7% or 8% at that time.

[Andrew Page, CFO at Severfield]

It's a level that has been seen, actually quite recently, albeit the market's moved on, but then so has our focus, which will enable us to get back there. Indeed, as you look at the total, and particularly thinking about India as well, that would be additional PBT on top of that, all as part of the overall package that we've set out.

[Paul McNerney, CEO at Severfield]

I think, Evie, if I might just add a comment to that. I think the way for those dialed in this morning to think about this, GBP 40 million-GBP 50 million as a medium-term ambition does indeed take us back to and beyond the previous peak of GBP 36 million. Obviously, the upper end of that range takes us significantly beyond. There's a very fundamental difference in how that PBT is being made up. Three different geographies, multiple different sectors. A number of those are through cycle or counter-cyclical, so defense, nuclear in particular, and therefore, this is a business that is being set up to be far more resilient to, and less impacted by, individual market economic cycles.

[Paul McNerney, CEO at Severfield]

I think all of those that have followed the Severfield story over the medium to long term will recognize that this has previously been a very U.K.-dominated, and therefore quite cyclical, profit returning organization. I think that's just an important point for people to understand. That's where we're coming at this from.

[Operator]

Thank you, both. Next we have, given the current valuation, how are you thinking about capital allocation between debt reduction, investment in growth, and potential shareholder returns?

[Andrew Page, CFO at Severfield]

Yeah. Great question. You recall that the slide that we included in the presentation pack is a topic that I was really keen to cover, and I think is important. First of all of the hard work that was done earlier this year in terms of our really focused, really laser focused, on working capital and getting cash in, meant that we finished last year, as you saw, with net debt down at GBP 28 million. That's a leverage of 1.2x if you look at it net debt to EBITDA, which is just nicely within our range of 1.0x-1.5x. We've already got it down in terms of that leverage position, and it is our firm intention to continue the laser focus on cash and working capital and to maintain the relatively low levels of debt, both in FY 2027 and beyond.

[Andrew Page, CFO at Severfield]

That's the sort of very clear baseline to everything we do. In order then of what happens next, again, as the business grows, both in earnings and cash flow, that opens up the opportunity to give us additional cash flows. Which we can then put to work in terms of growth CapEx and dividends, and very much we'd like to do both of those. It's not either/or. Clearly, there'll be choices to make along the way as to the exact timing and quantum of each, but it's the intent to do both, but really still keeping us with those lower levels of leverage. I think probably one final point to add, which is super important, is for us to achieve those medium-term ambitions that we set out. Is that it doesn't require a lot of new capital to be deployed.

[Andrew Page, CFO at Severfield]

That's really, really key. A lot of what we're saying, you'll see the usage of word Capital-light. What do we mean by that? Well, that's really us using more of subcontract partnerships. I'm deliberately using the word partnerships because it's a real high-quality relationship. Which means that you can take on additional work without us necessarily having to own more capacity on the ground. I think historically there was a very close linkage, pretty much one-to-one linkage, between the volumes we could do and the capacity that we own. Going forward, we can use this much more capital light approach to help us through that journey. Which again, lends itself to maintaining the lower levels of leverage, and making best use of the resources available. Anything else to add there, Paul, or it was great?

[Paul McNerney, CEO at Severfield]

I think you covered it.

[Operator]

Thank you. Our next question is, how much of Severfield's long-term growth do you expect India to contribute relative to the U.K. business? And could India eventually become a major profit driver for the group?

[Andrew Page, CFO at Severfield]

Yes is the answer, is the quick answer. We're really excited about the opportunity that India presents. In our targets there, you'll have seen that we're saying that India could generate GBP 10 million of underlying PBT. Just again, for reference, that compares to GBP 3 million in FY 2026, just gone, significant growth from GBP 3 million-GBP 10million. Indeed, that GBP 3 million in FY 2026 is really the first year that India has made a material contribution. Previously, it was about GBP 1 million. It's been 10 years in the making of the JV agreement. It's now got the critical mass, the critical scale, and indeed, the trajectory that is growing at pace already. We have strong conviction behind that GBP 10 million target. That therefore does become a bigger part of the group. I would say it's not the only source of growth.

[Andrew Page, CFO at Severfield]

We expect the rest of U.K. and Europe to deliver growth as well. I think in terms of the, just to help underpin some of that growth trajectory for India, if you look at the order book, in round numbers, it's about 340,000 tons worth in the order book. Last year we did 125,000 tons. You're looking for significant growth again, but you can immediately see that that growth aspiration is already supported by really big, sizable, chunky contracts at good margins in the order book. It's off to a really good start with a expectation of plenty more to come.

[Operator]

Thank you. We are now moving on to our final question for today. If you have any further questions, please email severfield@camarco.co.uk and the team will respond to any questions that weren't covered this morning. Our final question is, as a long-term shareholder, I've seen the share price weaken significantly despite Severfield retaining market leadership. What evidence should I look for over the next 12 months-24 months that would demonstrate the business is genuinely turning a corner?

[Paul McNerney, CEO at Severfield]

Yeah, great question. I suppose there are many levels to this. The first of which would be the strategy reveal itself. The fact that the business is deliberately focusing on being more diversified, more shielded from individual market vagrancies, as I've said. Therefore, I think your first reference point is, do you recognize that cyclical nature of the U.K. and feel that that's impacted the share price? If you do, then looking to this strategy and plan should give you a very high degree of confidence that the future will have a different feel to it. The signposts as to how successful being in delivering that, order book is a good sign, particularly in each of the geographies.

[Paul McNerney, CEO at Severfield]

We're going to be very deliberate and intentional in keeping the market briefed as to significant wins and progress being made in specific sectors and geographies so that you can see that this rollout of program is gaining traction. I think that's one place to look. I think listening hard whenever we're updating around the transformation programs. How is that driving efficiency in the business? How is that improving delivery capability? Then I think the final point would be, obviously keeping a very close watch on where PBT is moving year-on-year. The sources and locations of where that PBT is coming from, and if that continues to look like it's a broad and diversified geography that that's coming from, I think that should give some real confidence.

[Paul McNerney, CEO at Severfield]

I think the final point I'd make is, we as the incoming leadership team, are very aware, conscious that the bridge issue in particular, created real harm, particularly for the longer-standing investors or even those that came just before. We're very cognizant that that is a difficult period that this business needs to now move beyond. I'm very clear as Chief Executive of this business, that for an engineering-led project delivery organization, that should never have happened and will absolutely not happen again in the future. We've taken some significant steps in the background around engineering control and discipline rigor to ensure that that is indeed the case.

[Operator]

Thank you, Paul. That's all the questions that we have time for today, I'll hand back over to you both for any closing remarks.

[Paul McNerney, CEO at Severfield]

Yeah. Andrew, do you want to say some words?

[Andrew Page, CFO at Severfield]

Yep. First of all, thank you all for joining. It's a really exciting time for the business. Certainly, for me coming in fresh, it's genuinely an exciting time that builds on all the great strength and capabilities that Severfield has to offer. Takes it through with a really refocused strategy that I think gives us a more stable, resilient, yet exciting growth trajectory for the business ahead. From my perspective, thank you for your interest. Thank you for the really good questions today, we'll look forward to doing more of these events in the future.

[Paul McNerney, CEO at Severfield]

Great. Thanks, Andrew. I would echo that comment of thanks to people for being investors, also being active in these types of forums. We appreciate it helps set the tone of the business, it helps us course correct and refine our plans as we move forward. I think I will just leave you with two comments really. The first is, I made a very active and deliberate choice to join this business. I wanted to be here. I wanted to take all of that experience and network that I have from my previous 27 years in the industry, and use that to drive this business forward. Severfield was a customer of mine for many, many years, and I had huge confidence and admiration in the business, and that has increased since I have stepped in.

[Paul McNerney, CEO at Severfield]

The other thing I would like to do is call out, in particular, our people. This is a very human business. We build the infrastructure that society relies upon. We do it with a workforce and professional teams, many of whom are very long-standing. They are here because they care. They are proud of who they work for and what they do. They are massively committed. Actually, it is those people that create the returns that we are talking about today. I wanted to call out our people, and I wanted to shine that light on them on your behalf to understand just how much effort and commitment and passion goes into an organization for us to be able to talk to you about it in this manner. Thank you for dialing in. Stay cool. This is probably the hottest webinar we will ever do.

[Paul McNerney, CEO at Severfield]

Have a great weekend, and thank you for your attention.

[Operator]

Thank you to Paul and Andrew for joining us today. That concludes the Severfield Retail Investor Webinar. Please take a moment to complete a short survey following this event. A recording of this presentation will be made available on Engage Investor. I hope you enjoyed today's webinar.

Participants

Executives

• Andrew Page, CFO
• Paul McNerney, CEO