Billington Holdings Plc (LON:BILN), one of the UK’s leading structural steel and construction safety solutions specialists, has announced its audited results for the year ended 31 December 2023.
Highlights
| 31 December 2023 | 31 December 2022 | Change | |
| Revenue | £132.5m | £86.6m | +53.0% |
| EBITDA* | £15.5m | £8.0m | +93.8% |
| Profit before tax | £13.4m | £5.8m | +131.0% |
| Profit for the year | £10.3m | £4.7m | +119.1% |
| Cash and cash equivalents | £22.1m | £11.6m | +90.5% |
| Earnings per share | 84.4p | 39.1p | +115.9% |
| Dividend per share | 33.0p | 15.5p | +112.9% |
| Return on Capital Employed (ROCE)** | 57.4% | 29.7% | +93.3% |
* Earnings before interest, tax, depreciation and amortization
** Operating profit divided by total equity less the net defined benefit pension surplus and net cash
| • | Billington delivered a record performance in 2023 with strong trading across the Group |
| • | Revenue increased by 53.0% to £132.5 million (2022: £86.6 million) |
| • | The Group achieved a significant increase in profits, with profit before tax of £13.4 million (2022: £5.8 million) |
| • | Strong cash balance of £22.1 million at year end (31 December 2022: £11.6 million) and the Group is now debt free |
| • | Dividend recommended of 33 pence per share, which should be seen as an ordinary dividend of 20 pence per share and as an additional exceptional amount of 13 pence per share, reflective of the outstanding performance of the Group in the year (2022: 15.5 pence per share, all relating to an ordinary dividend) |
Mark Smith, Chief Executive Officer, commented:
“2023 was an exceptional year for Billington, with an excellent trading performance across the Group, despite continuing macroeconomic challenges and against the backdrop of demand for structural steel in the UK remaining at a similar level to 2022. I believe Billington is increasingly being seen as the steel work contractor of choice and the growth in Billington’s market share in 2023 is particularly noteworthy. Whilst there inevitably remain further challenges ahead and market uncertainties are likely to remain for some time, the Group has made significant investments for the future and currently has a record order book. I am therefore confident that with our strong balance sheet and order book Billington will continue to perform well and in line with current market expectations.”
Chairman’s Statement
2023 was an exceptional year for Billington, with an excellent trading performance across the Group.
In 2023 revenue increased by 53.0 per cent to £132.5 million (2022: £86.6 million) with profit before tax increasing to £13.4 million (2022: £5.8 million), reflecting strong trading across the Group and the benefit of improved manufacturing efficiencies from our capital investment programme across all the Group’s production facilities. This is combined with the successful delivery of a number of high quality contracts. The Basic Earnings Per Share (“EPS”) for the year amounted to 84.4 pence compared with 39.1 pence in 2022. Our balance sheet strengthened further with Net Assets of £47.8 million at 31 December 2023 (2022: £34.3 million), with a strong gross cash balance of £22.1 million at 31 December 2023 (31 December 2022: £11.6 million), as working capital unwound from the middle of the year, as expected.
Billington Structures performed exceptionally in 2023, driven by a number of high value contracts across a variety of sectors including high tech manufacturing, data centres, energy from waste, distribution and commercial office developments. The business also benefited from the Group’s capital investment strategy and focus on efficiency improvements enabling increased capacity and higher margins. The business is well set for the future with steel prices softening to nearer long-term average rates and more market stability being experienced. As announced on 22 March 2024, the Group has recently won contracts with a combined value of approximately £90 million, to be delivered over the next 24 months, providing further confidence for the future.
Peter Marshall Steel Stairs continued the strong performance seen over the past three years, recording record revenues for the year. Whilst the business continued to face challenging market conditions, it retained robust margins by focusing on contracts where a profitable performance could be achieved. The Company currently enjoys a strong order book both for projects being undertaken by Billington Structures and third parties, with significant prospects to secure further business.
The Easi-Edge perimeter edge protection and fall prevention business faced a challenging period in 2023, although it remained a significant contributor to Group profits. Significant investment has been made in the business, with additional staff added and a product refurbishment and product development programme being undertaken. Easi-Edge remains a profitable market leader and is well placed for the future.
Hoard-it enjoyed a record year in 2023, as it continued to expand and diversify its offerings. The business is increasingly being seen as the specialist hoarding supplier of choice and it is now established as one of the leading suppliers in its markets. With the expanded Brand-it offering complementing Hoard-it, the business is well placed for the future and has made a good start to 2024.
Specialist Protective Coatings (SPC), formed in March 2022, has proved to be an excellent addition to the Group, focused on surface preparation and the application of protective coatings for products across a variety of sectors. The significant capital expenditure programme undertaken to ensure the business had the ability to thrive and grow was completed in 2023. SPC’s performance was ahead of management’s expectations in 2023 and the Company enjoyed its first year of profitability. With SPC operating at full capacity for the foreseeable future we expect it to continue to deliver a strong performance.
The Group has secured a number of significant contracts for 2024, and beyond, and is well placed to take advantage of the wide-ranging further opportunities within our strong pipeline.
Dividend
In the first half of 2023 Billington declared a final dividend in relation to the year ended 31 December 2022 of 15.5 pence per share amounting to £1.9 million, which was 2.52 times covered by 2022 earnings.
The Board feels it is appropriate for Billington to continue to be dividend paying at a level that reflects underlying earnings whilst continuing to maintain a robust balance sheet. The Board is therefore pleased to be recommending an increased final dividend of 33.0 pence per share for 2023, which is covered 2.56 times by earnings. The dividend should be seen as an ordinary dividend of 20 pence per share and an additional exceptional amount of 13 pence per share due to the outstanding performance of the Group in the year.
The dividend will be paid on 2 July 2024, subject to shareholder approval at the Company’s AGM expected to be held on 4 June 2024. The associated ex-dividend date will be 6 June 2024 with a record date of 7 June 2024. No interim dividend for 2023 was declared (2022: nil), a policy consistent with prior years.
Board
John Gordon retired as an Independent Non-Executive Director of Billington at the AGM in June 2023. John had been a Non-executive Director since 2007 and I, on behalf of the Board, would like to thank John for his substantial contribution to Billington and we wish him well in his future endeavours.
Lyndsey Scott was appointed as an independent Non-Executive Director with effect from 1 September 2023. Lyndsey has brought a wealth of HR and people management experience to the Group and has previously worked across a range of sectors, both in the UK and internationally. Lyndsey has experience as a Non-Executive Director as well as being a member of remuneration, audit and nomination committees with James Cropper Plc, an AIM traded company. Lyndsey has assumed the chair of the Company’s Remuneration Committee since her appointment.
Our People
The key to Billington’s continued success is the hard work and dedication of its workforce, and I would like to place on record my thanks to the whole Billington team for their contribution in 2023.
The Group continues to work hard to address the industry wide challenges in recruiting sufficient skilled labour. In 2023 the Group expanded its partnership with Betterweld, a specialist training provider, together with working in partnership with other local education providers. However, as stated in the last annual report it became necessary for the Group to recruit from overseas to have sufficient skilled labour to ensure productive capacity is increased and profitability maximised. The overseas recruitment programme was concluded in 2023, at least for now, with an additional 25 staff members joining during the year. The new employees have already provided a valuable contribution to the Group’s capabilities and are allowing us to service the demand we are seeing.
The Group remains committed to supporting its employees, particularly in a time when increases in the cost of living are being experienced and continues to actively promote its apprenticeship and graduate schemes.
ESG
Billington believes that operating in a sustainable and responsible manner is key to the growth and success of the Group. The Group has an established Environmental, Social and Governance (“ESG”) committee to identify, develop and implement carbon reduction projects, together with ensuring the Group’s social impact is maximised through the delivery of a wide range of social projects.
In September 2023, the Company’s largest subsidiary, Billington Structures, was certified as ‘carbon neutral’ for its operations, by Carbon Neutral Britain, following their audit of Billington Structures’ emissions and carbon dioxide offsetting programme. Following carbon reduction initiatives across the Group, I am pleased to report that all of the Group’s businesses are now certified as carbon neutral. Billington is committed to achieving, as a minimum, the goal set by SBTi (Science Based Targets Initiative), of a 50% carbon emissions reduction by 2030 and net zero by 2050. There is a significant global initiative to ensure ‘clean steel’ and Billington are proud to be a member of SteelZero, a global standards and certification initiative designed to deliver environmentally responsible production of steel and speed up the transition to a net zero steel industry.
During 2023 the Group moved to using electricity procured from 100 per cent green energy with a REGO accredited zero per cent emissions factor. The vehicle fleet is increasingly electric, reducing carbon emissions by approximately 15% annually, and further planned reduction activities include the introduction of Biofuel (HVO) across factories and site-based activities. Additionally, 1,770 tonnes of CO₂e emissions have been offset via the Woodland Fund™ portfolio of verified carbon offsetting projects. Billington also maintains the ‘Gold Standard’ awarded by the British Constructional Steel Association for meeting the requirements of the ‘Steel Construction Sustainability Charter’.
Economic Outlook
During the year a degree of stability returned on the supply side and the Group experienced none of the supply issues seen over the last few years. There was some softening in steel prices, which has assisted margins in the short term and energy costs were lower than anticipated at the start of the year. This stability is expected to remain during 2024.
The Group continues to benefit from significant projects in energy from waste, high-tech manufacturing, infrastructure and data centre facilities, where activity has returned to, or exceeded, pre-Covid-19 pandemic levels. However, some of the markets in which Billington operates continue to see reduced levels of activity from historic levels, particularly large office developments, and industrial warehousing development, with less speculative development being undertaken.
The overall consumption of structural steelwork in the UK in 2023 remained at a similar level to 2022. However, certain markets were more buoyant than others, with the consumption of structural steelwork in industrial buildings falling by 2.2 per cent and for commercial offices rising by 6.8 per cent. The overall market is expected to see a reduction in demand in 2024 of approximately 5 per cent, before stabilising and returning to growth in 2026. Sector market forecasts continue to be subject to revision as the impact of wider macroeconomic factors are assessed, with potential reductions in interest rates expected to have a positive impact on demand.
We are conscious that many of the main construction contractors continue to operate under significant pressure, with a number ceasing business in 2023, and the Group has experienced deferred and cancelled contracts. The Group insures its exposures with the maximum available cover, in an increasingly difficult credit insurance market, and focuses on projects with the more robust larger contractors that can deliver an appropriate margin. We have a comprehensive process in place to assess the risks associated with individual projects on a case-by-case basis to reduce and mitigate these associated risks where possible.
Current trading and outlook
Billington enjoyed an exceptional year in 2023 with strong trading across the Group and benefits being seen from the Group’s capital investment programme and innovative approach. Whilst there inevitably remain further challenges ahead and macroeconomic uncertainties are likely to remain for some time, we are seeing a consistent stream of opportunities at sustainable margins, and with a strong balance sheet and a record order book, I believe Billington is well placed to deliver a strong performance again in 2024.
In closing, I would like to thank Billington’s Board, employees, shareholders and all stakeholders for their continued support.
Ian Lawson
Non-Executive Chairman
15 April 2024
