Billington Holdings Plc (LON:BILN), one of the UK’s leading structural steel and construction safety solutions specialists, has announced its unaudited interim results for the six months ended 30 June 2021.
Highlights
| Unaudited six months to 30 June 2021 | Unaudited six months to 30 June 2020 | Percentage Movement | |
| Revenue | £37.73m | £32.78m | 15.1% |
| EBITDA | £1.73m | £1.59m | 8.8% |
| Profit before tax | £0.76m | £0.61m | 24.6% |
| Cash and cash equivalents | £13.19m | £17.48m | (24.5)% |
| Earnings per share (EPS) | 5.1p | 4.1p | 24.4% |
• Revenue increased by 15.1 per cent to £37.73 million (H1 2020: £32.78 million) following some noted recovery from the worst effects of the Covid-19 pandemic
• Profit before tax increased 24.6 per cent to £0.76 million (H1 2020: £0.61 million)
• Cash and cash equivalents decreased by 24.5 per cent to £13.19 million at 30 June 2021 (30 June 2020: £17.48 million and 31 December 2020: £15.13 million) with inventories and work in progress increasing to £14.38 million (30 June 2020: £7.25 million). The average cash balance during the period was £16.19 million (H1 2020: £14.68 million)
• The Group has seen an improvement in opportunities during the period, but trading conditions, including pressure on margins as a result of raw material price inflation, delays to project starts and supply constraints remain across the industry
• The Group has a strong current order book and pipeline of opportunities providing a solid foundation for the second half of 2021 and into 2022
Mark Smith, Chief Executive Officer of Billington, commented:
“The first half of the year saw the continuation of the recovery experienced in the later part of 2020 as the market recovered from the worst effects of the Covid-19 pandemic. The Group continued to face challenges, both from the impact of the Covid-19 pandemic and raw material price increases, together with supply constraints for certain materials and labour. However, whilst the overall market is challenging, the Directors believe the outlook for Billington is encouraging. The order book is at a consistently high level, comprising both delayed and new projects and the Group has good visibility of significant future prospects. We anticipate a further improvement in Group financial performance in the second half of the year, although the precise outturn for the year will be dependent on the timing of certain contracts, combined with any effects from continuing material price inflation and supply constraints. Whilst market conditions remain challenging, I remain confident in the long term prospects for the Group.”
Chief Executive Statement
Introduction
Following 2020, a year that was dominated by the impact of the Covid-19 pandemic, we saw the recovery evident in the later part of 2020 continue into the first half of 2021. Whilst the Covid-19 pandemic will continue to impact the demand for certain products and services for some time, revenues recovered by 15.1% to £37.73 million for the period.
Margin pressure remains across the industry and raw material price increases and the availability of certain products has been evident throughout the period although the signs are encouraging that these pressures have started to subside. However, we anticipate a further improvement in performance in the second half, whilst mindful of the continuing impact of the Covid-19 pandemic, particularly regarding the on-going delays to certain types of projects.
Billington remains a robust and profitable business, supported by a healthy balance sheet and committed workforce. The Group is well placed to take advantage of the significant number of opportunities at improving margin levels that are currently being presented.
Group Companies
Billington Structures and Shafton Steel Services
Billington Structures is one of the UK’s leading structural steelwork contractors with a highly experienced workforce capable of delivering projects from simple building frames to complex structures in excess of 15,000 tonnes. With facilities in Barnsley and Bristol and a heritage dating back over 70 years, the business is well recognised and respected in the industry with the capacity of processing over 50,000 tonnes of steel per annum.
The Shafton facility operates in two distinct business areas. The first undertakes activities for Billington Structures. The second, Shafton Steel Services offers a complete range of steel profiling services to many diverse external engineering and construction companies, providing further opportunities to increase the capacity of the business as well as allowing for the supply of value added, complementary products and services to enhance the comprehensive offering of the Group.
During the first half of the year the Group’s structural steel business operated at near full capacity for much of the period, sub-contracting production as required to the longstanding, approved Group supply chain. Many of the projects undertaken were in areas not significantly impacted by the Covid-19 pandemic, such as large distribution warehouses, which have a larger steel content per man hour than more complex projects such as commercial offices, and as such attracted a lower, all be it positive margin. This work has enabled the efficient operation of the facilities and for the business to be well positioned for the future, particularly as projects in other sectors that have been delayed by the pandemic are restarted.
Billington Structures has a strong order book for the remainder of the year and is seeing significant future project opportunities. This includes a number of more complex projects at improving margin levels. Whilst the detailed timing of certain projects remains uncertain, the future prospects for Billington Structures are encouraging.
Peter Marshall Steel Stairs
Based in Leeds, Peter Marshall Steel Stairs is a specialist designer, fabricator and installer of bespoke steel staircases, balustrade systems and secondary steelwork. It has the capability to deliver stair structures for the largest construction projects and operates in sectors spanning retail, data, commercial offices, education, healthcare, rail and many more.
Peter Marshall Steel Stairs continued the strong performance seen in 2020 into the first half of the year, recording record revenues for a six-month period, with robust margins that have not been as heavily impacted as the Group’s other structural steel businesses.
As one of the largest companies in its sector, during the period the company received its biggest single order, and enjoys a robust market position, particularly when viewed against its smaller competitors, in what is a fragmented market. It has a strong order book for the remainder of 2021 and into 2022.
easi-edge
easi-edge is a leading site safety solutions provider of perimeter edge protection and fall prevention systems for hire within the construction industry. Health and safety is at the core of the business which operates in a legislation driven market.
In the first half of 2021, the business continued to suffer from Covid-19 related delays to the start of projects and a subdued commercial office market, although it remained a significant contributor to Group profits. The reduction in commercial office developments, in particular has a significant impact on easi-edge as these types of projects require a greater amount of product when compared to most other types of project, such as distribution warehouses, undertaken by the business.
However, easi-edge continues to see good opportunities, with utilisation forecast to increase throughout the remainder of 2021, although this is not expected to return to historic levels in the short to medium term.
hoard-it
hoard-it produces a unique range of re-usable temporary hoarding solutions which are environmentally sustainable and available on both a hire and sale basis tailored to the requirements of its customers.
hoard-it enjoyed a strong first half of 2021 as projects resumed following the delays experienced in 2020 due to the Covid-19 pandemic. Projects were undertaken for both existing and new customers, as the client base expanded in line with the goal of ensuring the product is the number one choice for main contractors and developers in the construction industry, particularly in the residential construction market, where hoard-it’s range of printed boards and panels are proving attractive to developers looking for a professional and promotional site image. hoard-it also continued to add to its product offering and an expanded graphics capability was introduced in the first half, which is being utilised on both hoard-it’s own products and on those produced by others.
Financial Results
Revenue and Profit Before Tax
Group revenue increased by 15.1 per cent in the period to £37.73 million (H1 2020: £32.78 million) as the worst impacts of the Covid-19 pandemic receded and some previously delayed projects started and new business was secured.
Despite the continuing challenging market and operating conditions, the Group remained profitable and profit before tax for the period was £0.76 million (H1 2020: £0.61 million), an increase of 24.6 per cent.
Earnings per Share
Earnings per share for continued operations for the first half of the year increased by 24.4 per cent to 5.1 pence (H1 2020: 4.1 pence).
Liquidity and Capital Resources
The Group’s gross cash and cash equivalents as at 30 June 2021 was £13.19 million, approximately a £2 million reduction in the balance as at 31 December 2020 of £15.13 million. The cash balance at 30 June 2021 reflected good cash collection and certain modest customer pre-payments, offset by an increase in inventories and work in progress to £14.38 million (30 June 2020 £7.25 million, 31 December 2020 £5.08 million).
Capital Expenditure
Following the restriction of capital expenditure in 2020 to primarily essential repairs and renewals to ensure reliable production and to maintain quality, a number of larger capital expenditure programmes have been completed or initiated in the first half of 2021. These include the replacement of a current obsolete machine at our Yate facility and the installation of additional equipment to expand the current service offering of the Group at the Shafton facility. Additionally, major works have commenced at Billington Structures’ facility in Wombwell, Barnsley to improve efficiency and enable a larger amount of steel to be stocked, if appropriate, taking advantage of any beneficial price fluctuations. The Group will continue to actively invest in appropriate areas.
Dividend
In the first half of 2021 Billington resumed the payment of dividends with the declaration of a final dividend in relation to the year ended 31 December 2021 of 4.25 pence per share amounting to £550,000, which was 2.66 times covered by 2020 earnings. No final dividend was declared in the first half of 2020 in relation to the year ended 31 December 2019 as the dividend was suspended to preserve the Company’s cash resources. No interim dividend for 2021 has been declared (2020: nil), a policy consistent with prior years.
Corporate Social Responsibility
Throughout the Covid-19 pandemic the focus has been on the welfare and protection of our dedicated workforce. At the outset of the pandemic the Company committed to ensuring that appropriate measures were implemented at all our facilities in a timely manner and in adherence to UK Government guidance, ensuring that social distancing can be maintained.
At the peak of the pandemic in 2020, 46 per cent of the workforce were placed on furlough leave. During the later part of 2020 and into the first half of 2021 all of those previously on furlough returned to work. However, the Group does continue to experience some Covid-19 related disruptions to its operations with staff required to isolate, presenting some operational challenges, particularly post period end.
The Company took the decision to not claim any further furlough monies from the UK Government from 1 January 2021.
Market and Economic Outlook
Over the past year iron ore prices have more than doubled with a consequential similar impact on steel prices. Whilst the Group operates many fixed price supply contracts and has arrangements in place to mitigate some of the increases, we have suffered escalation in consumables and ancillary products that we have not been able to pass on. Prices appear to be stabilising, however, government infrastructure based stimulus packages across the globe and the development of HS2 in the UK are providing further demand led inflationary pressures and are restricting the supply of certain steel products.
Many of the markets in which Billington operates remain constrained, with a number of the main construction contractors continuing under significant pressure as they deliver contracts that were tendered for some time ago before the current inflationary pressures have materialised. However, the Group continues to focus on projects with the more robust larger contractors that can deliver an appropriate margin and we assess the risks associated with individual projects on a case-by-case basis.
Following the completion of the takeover of British Steel by Jingye in March 2020 we saw some stability return to the UK steel supply market. However, the Group continues to face an escalation in the price of steel, although it looks to mitigate the risk associated with price escalation as far as possible using a number of mechanisms, including the forward purchasing of steel where appropriate, this is having an impact on cash usage as noted above. The Group is also looking at its longer-term steel procurement strategy in order to reduce its reliance on any one supplier.
Prospects and Outlook
The Group continued to face challenges in first half of the year, both from the continuing impact of the Covid-19 pandemic and raw material price increases, together with supply constraints for certain materials and labour. However, whilst the overall market continues to be challenging, the Directors believe the outlook for Billington is encouraging.
We remain in a financially robust position and well placed for the future. I believe we have weathered the worst of the pandemic well and as the market returns to more normal operating conditions we are well placed. A number of our competitors and supply companies have suffered to a much greater extent than Billington, with a number ceasing to trade in the period. This, in time will aid margin improvement across the industry and shall create opportunities to secure new business.
The order book continues to grow, comprising both delayed and new projects and the Group has significant future order prospects at improving margins. There are many larger, more complex projects in prospect, and the number and quality of enquires continues to improve. We are seeing opportunities in all sectors, particularly large retail distribution warehouses, data centres, ‘Gigafactories’, food processing developments, public sector works, rail infrastructure, together with a return of some commercial office development projects. We anticipate a further improvement in Group financial performance in the second half of the year, although the precise outturn for the year will be dependent on the timing of certain key contracts, combined with any effects from continuing material price inflation and supply constraints. The Directors monitor the timing of contracts and the impact that has on our financial results closely, and we will update the market as to any material impact on market expectations when they become clear.
In closing, I would like to thank Billington’s Board, employees, shareholders and all stakeholders for their continued support. Despite the market headwinds I look forward with optimism that the partial recovery seen in the first half will continue to gain traction in the remainder of the second half of the year and into 2022.
