Costain Group PLC · LSE:COST
Costain — FY2023 Earnings Presentation
33 slides from Costain's earnings presentation, March 2024
Slide 1: Results presentation
Results presentation For the year ended 31 December 2023 Improving people’s lives. 1
Slide 2: Operating Review
Operating Review Alex Vaughan Chief Executive Officer Improving people’s lives. 2
Slide 3: Highlights
Highlights Strong financial and operating performance Full year 2023 (FY 23) financial performance • Revenue of £1,332.0m • Adjusted operating profit(1) of £40.1m up 10.5% • Adjusted operating margin of 3.0% • Strong adjusted free cashflow(2) of £72.0m • Adjusted EPS 12.2p (FY 22: 9.9p) up 23.2% • P
Slide 4: Transportation
Transportation Resilient margin with rephasing and rescoping of projects Adjusted Revenue1 Adjusted operating margin2 3.0% (FY 22: 3.0%) £943.1m Resilient performance with growth in Rail and rephasing and rescoping in Road (FY 22: £1,046.3m) Road Adjusted Revenue1 Current Road schemes on A1, M1, M6
Slide 5: Natural Resources
Natural Resources Margin expansion with growth in Defence and Nuclear Energy, and Water Adjusted Revenue1 Adjusted operating margin2 5.6% (FY 22: 4.0%) £388.9m Continued improved operational and margin performance (FY 22: £375.1m) Water Adjusted Revenue1 Leading provider of broad range of services t
Slide 6: Financial Review
Financial Review Helen Willis Chief Financial Officer Improving people’s lives. 6
Slide 7: Headline financial results
Headline financial results FY 23 FY 22 Change Financial Summary £m £m % • Adjusted operating profit up (1) 10% to £40.1m on increased Adjusted revenue 1,332.0 1,421.4 -6% Natural Resources volumes Reported revenue 1,332.0 1,421.4 -6% and margin, a resilient Transportation performance, Adjusted opera
Slide 8: Revenue walk
Revenue walk Growth in Natural Resources and a resilient operating performance in Transportation Transport Natural Resources £943.1m -10% £388.9m +4% Group £1,332.0m -6% 1. Adjusted Revenue is an adjusted metric and excludes the impact of contract adjustments totalling £nil (FY 22: £nil). 2. Defence
Slide 9: Operating profit walk
Operating profit walk Growth and increased margin in Natural Resources, benefits from our Transformation programme, and a consistent margin performance in Transportation Group £40.1m +10% 1. Adjusted operating profit is an adjusted metric and excludes the impact of contract adjustments and other ite
Slide 10: Adjusting items
Adjusting items £m FY 23 FY 22 Contract Other Contract Other Adjustm ents Adjustm ents Adjustm ents Adjustm ents Transformation and restructuring costs 0.0 8.0 0.0 5.7 Impairment of development intangible asset 0.0 5.3 0.0 0.0 Insurance recovery on P&H settlement 0.0 0.0 0.0 (5.2) Profit on sale of
Slide 11: Finance income/(expense)
Finance income/(expense) Net finance income reflecting mainly interest income from bank deposits and interest on pension scheme net assets • £4.8m of interest income from bank deposits, Finance Incom e / (Expense) FY 23 FY 22 higher than FY22 of £0.5m on increased cash £m £m placed on deposit at hig
Slide 12: Balance sheet
Balance sheet FY 23 FY 22 (as restated) Consolidated statem ent of financial position £m £m • Net assets position strengthened at Assets £219.4m Retirement benefit asset 53.5 60.2 • Strong net cash position of £164.4m Other non-current assets 90.6 106.6 Total non-current assets 144.1 166.8 • Retirem
Slide 13: FY 23 cash walk
FY 23 cash walk Continued strong adjusted free cash flow • Continued strong adjusted free cash flow of £72.0m, driven by growth in adjusted operating profit, increased financial income and positive working capital movements. • Strong closing net cash position of £164.4m • We expect our FY 24 year-en
Slide 14: Cash and banking facilities
Cash and banking facilities Net Cash £m FY 23 FY 22 • No drawdown of RCF Cash 105.2 67.3 Cash held at joint ventures 59.2 56.5 • Average month-end net cash balance during the Loans 0.0 0.0 year was £141.4m, higher than FY 22 of £101.9m. 164.4 123.8 Average month end net cash 141.4 101.9 • Average we
Slide 15: Strength of secured workload
Strength of secured workload Well positioned to deliver further progress in FY 24 Order & Preferred Bidder Books Secured Revenue Holistic view of our forward visibility is increasingly relevant, and we anticipate a 1.2 shift towards the preferred bidder book away from the order book as we continue t
Slide 16: Transforming the business
Transforming the business Effective risk management driving predictability and margin Risk management process Risk category Safety, Health & Environment Markets, Customers & Partners Contract Technical Investment Information security 161 Results Presentation: Year ended 31 December 2023 1616
Slide 17: Dividend
Dividend • Dividend payments were resumed in FY 23 with an interim dividend of 0.4p per share for the six months ended 30 June 2023. • The Board is proposing a final dividend of 0.8p per share • Within pension scheme “dividend parity” arrangements • Potential dividends increase above “dividend parit
Slide 18: Further progress in 2024
Further progress in 2024 • We remain mindful of macro-economic uncertainties • We have an increasingly broad customer base and have already secured >£1bn of revenue for 2024 • We expect our FY 24 year-end net cash position to be broadly similar to that at the end of FY 23 • With further improvements
Slide 19: Strategy & Outlook
Strategy & Outlook Alex Vaughan Chief Executive Officer Improving people’s lives. 19 1
Slide 20: Resilient investment in critical national needs
Resilient investment in critical national needs Megatrends Balancing and enabling Climate change and Resource, environmental and Need for transformation and economic growth and social net zero imperative economic resilience affordability change UK Government sets out ten-year plan for investment of
Slide 21: Strong infrastructure investment
Strong infrastructure investment Most customers procure against five-year investment plans Committed Investment 2023 2024 2025 2026 2027 2028 2029 2030 investment period National Highways £27bn 2020-2025 RIS2 RIS3 High Speed Rail £45-54bn 2018–2030 Phase 1 (London – West Midlands) Integrated Rail Pl
Slide 22: Water – AMP8
Water – AMP8 Significant investment needed to meet regulatory requirements Ofwat demands a step change in performance and investment • AMP8 requirements for cleaner rivers and seas, and meeting the challenges of climate change • New cycle will start in 2025 through to 2030 • Capital spend AMP8 expec
Slide 23: Supporting our customers across their full ecosystems
Supporting our customers across their full ecosystems Rethinking the approach to infrastructure. Enhancing and maintaining existing assets to Developing strategic solutions designed to ensure safe, efficient and cost-effective optimise value and reduce risk. operations. Extending asset life or repur
Slide 24: Improving people's lives
Improving people’s lives Increasing relevance in today’s world Science-based target approved UK’s 1st Highways project to use Delivering biodiversity net gain Outstanding ‘Prompt payment’ Shaping industry standards for 3D printed concrete performance lifting operations Our people rate us a very good
Slide 25: Further progress expected in FY 24 and beyond
Further progress expected in FY 24 and beyond • FY 23 a strong platform for FY 24 • £1bn+ revenue secured for FY 24 • Order book and preferred bidder book at around three times FY 23 revenue • High level of ongoing tendering and significant pipeline • On track for FY 24 and FY 25 margin targets Resu
Slide 26: Q&A
Q&A Improving people’s lives. 26 2
Slide 27: Appendices
Appendices Improving people’s lives. 27 2
Slide 28: Cash flow
Cash flow Consolidated cash flow statem ent FY 23 FY 22 £m £m Cash from operations before changes in w orking capital and provisions 48.1 52.6 Changes in w orking capital 14.2 13.1 Movement in provisions and employee benefits (6.8) (49.0) Interest and tax paid 0.2 (2.6) Net cash from operating activ
Slide 29: Adjusted to reported reconciliation
Adjusted to reported reconciliation £m FY 23 FY 22 Reported Contract Other Adjusted Reported Contract Other Adjusted Adjustm ents Adjustm ents Adjustm ents Adjustm ents Group Revenue 1,332.0 0.0 0.0 1,332.0 1,421.4 0.0 0.0 1,421.4 Cost of sales (1,227.2) 0.0 0.0 (1,227.2) (1,328.7) 0.0 0.0 (1,328.7)
Slide 30: Adjusted free cash flow
Adjusted free cash flow Adjusted free cash flow FY 23 FY 22 £m £m Cash from operations 55.5 16.7 Add back cash flow on adjusting items 9.2 46.4 Add back pension deficit contributions 8.1 10.8 Less taxation (0.7) (0.5) Adjusted cash from operating activities 72.1 73.4 Capital expenditure (0.1) (0.5)
Slide 31: FY 23 IFRS 16 impact
FY 23 IFRS 16 impact Incom e statem ent im pact £m Decrease in operating costs 14.1 Profit on disposal of assets 2.2 Increase in depreciation (13.9) Increase in finance costs (1.5) Net im pact on incom e statem ent 0.9 Fixed Assets im pact £m Fixed assets opening position (as restated) 30.7 Addition
Slide 32: Current engagement in the Water sector
Yorkshire Water Current engagement in the • Contract: H&S Assurance; Tech Services; Enterprise Level Client Advisory Services Water sector • Type: NEC3 • Scope: auditing H&S performance of capital delivery framework partners; various technical/engineering support Anglian Water (including process saf
Slide 33: Cautionary forward-looking statements
Cautionary forward-looking statements This presentation contains certain statements that are forward-looking statements based on current expectations and reasonable assumptions. Various known and unknown risks, uncertainties and other factors may cause actual results to differ from any future result