Capital Markets Day 21 April 2016 Capital Markets Day Capital - - PowerPoint PPT Presentation

Capital Markets Day

21 April 2016

2

Capital Markets Day

Introduction

Capital Markets Day

Ian Lawson Chief Executive Officer

Ian Cochrane

Chief Operating Director

Gary Wintersgill

Managing Director, Severfield (UK) Ltd

Ian Dawson

Design Associate Director

Martin Kelly

Strategic Business Development Director

Kevin Campbell

Business Improvement Associate Director

Capital Markets Day Introduction

Presenting In attendance

Alan Dunsmore

Group Finance Director

Wayne Barron

Production Director

Capital Markets Day Agenda

• Composite Metal Flooring (CMF)
• Adding value for our customers
• Operational and IT improvements
• Lunch
• Introduction to factory tour
• Factory tour
• Q & A
• Transport to station at 4:15pm

• UK steel remains an important part of our supply chain and is now being

supported by UK Government in public procurement projects

• Severfield procures three main steel types; sections, plate and tube
• Sections are supplied by TATA Long Products, which is being acquired by

Greybull Capital

• Plate is supplied by UK mills; Spartan in Newcastle and European mills;

Voestalpine, Dan Steel, Dillinger

• Tube is supplied through a distributor; the supply is a mix of TATA in the UK and

European mills

• Whilst Severfield seeks to support UK steel, approximately only 40%1 of the steel

used in construction is originally sourced from the UK

• Trading agreements are in place with all the alternative providers who currently

supply the UK such as Arcelor Mittal, Saltzgitter, Celsa

We remain well positioned to manage any change in UK steel supply

1 BCSA estimate

Capital Markets Day Steel industry update

6

Capital Markets Day Capital Markets Day

Composite Metal Flooring (CMF)

Ian Cochrane Chief Operating Officer

The deal

• Deal completed on the 16 November 2015
• Severfield plc acquired 50% of the share capital of CMF Limited
• Consideration £4.0 million
• Plus additional consideration of £2.5 million based on the performance of the

business Capital Markets Day Composite Metal Flooring (CMF)

Capital Markets Day Composite Metal Flooring (CMF)

The product

Shear Stud connectors

Severfield annual requirement: Decking – 0.5 million m2 Shear Studs – 2.0 million Current market, approximately: Decking – 4.0 million m2 Shear Studs – 12.0 million CMF volumes before Severfield: Decking – 1.0 million m2 Shear Studs – 5.0 million Capital Markets Day Composite Metal Flooring (CMF)

Business rationale

Capital Markets Day Composite Metal Flooring (CMF)

CMF Stud Welders Limited Severfield plc 1,000,000 m² User and installer 500,000 m² User and installer

Third party fabricators Main Contractors Medium to small projects Severfield Commercial Projects Large projects Additional usage improving profit margin Existing usage 50% 50%

2,000,000 m² Capacity

Shared ownership allows the business to segment the market and keeps competitive factors to a minimum

Largest independent manufacturer of metal decking and shear stud connectors in the UK. Combined business

Capital Markets Day Composite Metal Flooring (CMF)

Video

12

Ian Dawson Associate Design Director

Capital Markets Day

Gary Wintersgill Managing Director, Severfield (UK) Ltd

Capital Markets Day

Adding value for our customers

13

Project and Risk Management

Value Engineering

Design

Fabrication Construction Performance and Repeat Business

Early Contractor Involvement (ECI)

Tender Stage

Capital Markets Day Adding value for our customers

Increase plate thicknesses to reduce amount

• f stiffening in crane beams

Increase span of gantry flooring

Capital Markets Day Adding value for our customers

Early Contractor Involvement (ECI)

Early Contractor Involvement

Capital Markets Day Adding value for our customers

• Budgets
• Commercial
• Design
• Interface

Project risks

Tender Stage

Capital Markets Day Adding value for our customers

Buildability

Tender Stage

Capital Markets Day Adding value for our customers

Buildability

Tender Stage

Capital Markets Day Adding value for our customers Design primarily encompasses the following:

• Permanent works design
• Connection design
• Temporary stability analysis
• Temporary works design
• Specialist lifting equipment design
• Tender stage design/value engineering

What we can provide

Design

Capital Markets Day Adding value for our customers

How Severfield engineers create value

• New ideas and solutions
• Specialist knowledge as structural engineers
• Provide a commercial edge
• Repeat order business based on trust

Value engineering Permanent works Fire engineering Finite element analysis Temporary works Connection design Behaviour steel in a fire ‘Intumescent paint’ 3D analysis and design using specialist software Erection complex steel frames; bridge launches Saving hours in factory, simplification Complex analysis to provide solutions

Design

Capital Markets Day Adding value for our customers

• Value engineering steel floor beams
• Intumescent paint – expands and protects the steel

Fabsec design

• Minimise steel and the

amount of paint

• How does the steel react in a fire - we do add va

value Steel in a fire Special paint?

• Sometimes increase

steel weight to reduce the paint

Fire engineering

Design

Capital Markets Day Adding value for our customers Design and Build projects

• Economic steel frame

analysis and design

• Designed to suit our

fabrication process and facilities

• Competitive Tender

best design solution secures the project Permanent works design

Design

Capital Markets Day Adding value for our customers Building The Shard

Complex temporary works and connection design

Design

Capital Markets Day Adding value for our customers Connection from primary truss to support towers is a true pin Allows rotation

Connection design

Design

Capital Markets Day Adding value for our customers Tennison Road Bridge live launch

Specialist temporary works

Design

Capital Markets Day Adding value for our customers Liverpool Football Club, Anfield Stadium 670 tonne tandem lift

Specialist lifts

Design

26

Capital Markets Day Adding value for our customers

Volumetric and specialist

Fabrication

Capital Markets Day Adding value for our customers

Sublime to the ridiculous

Construction

28

Operational and IT improvements

Martin Kelly

Strategic Business Development Director Kevin Campbell Business Improvement Associate Director

Capital Markets Day

Capital Markets Day Operational improvements

Current industry wide challenges

Design

• Complexity that comes from ‘engineered to order’ projects – every steel assembly

is unique Manufacturing

• Balancing lines for maximum throughput
• Pockets of underutilisation within lines and facilities
• Configuration of our facilities – how to layout for constant change
• Specialist equipment required for certain products

Info form rmatio ation n flow

• Huge amounts of data available but across different systems and formats

Capital Markets Day Operational improvements

Current position

Concept design Detailed design Connection design Fabrication drawing Steel procurement Logistics inward Semi automated saw drill blast Manual fabrication Manual paint Logistics

• utbound

Steel nesting Rolling programme CNC data transfer Fabrication drawings Site erection

Manufacturing process Information flow

Cost data received Cost data received Cost data received

Design process

Cost data received Cost data received

Complex process with numerous information sources

Planning

Phases

Capital Markets Day Operational improvements

Why are we doing this?

• More with the same

The skills shortage is real, and we need to enable our skilled staff and allow them to increase productivity levels

• Remove pockets of underutilisation/inefficiency
• Reduce costs per tonne and increase margin
• Keep ahead of the competition

www.severfield.com

Questions