Costain Group PLC · LSE:COST
Costain — H1 2017 Earnings Presentation
27 slides from Costain's earnings presentation, 2017
Slide 1: Engineering tomorrow
Engineering tomorrow Result s for the half-year ended 30 June 2017
Slide 2: Welcome
Result s for the half-year ended 30 June 2017 2 Welcome Dr Paul Golby CBE Chairman
Slide 3: Summary and outlook
Result s for the half-year ended 30 June 2017 3 Summary and outlook – Continued strong performance – Focused and unique strategy delivering results – Transforming into the UK’s leading smart infrastructure solutions company – On course to deliver results for the year in line with the Board’s expecta
Slide 4: Financial Review
Result s for the half-year ended 30 June 2017 4 Financial Review Tony Bickerstaff Chief Financial Officer
Slide 5: Continued strong performance in H1 2017
Result s for the half-year ended 30 June 2017 5 Continued strong performance in H1 2017 Revenue – including share of joint Underlying1 operating profit Underlying1 profit before tax ventures and associates £874.5m £21.2m (HY2016: £791.4m) (HY2016: £15.8m) £18.3m (HY2016: £14.1m) Underlying1 basic ea
Slide 6: Focused strategy and robust business management system delivering results
Result s for the half-year ended 30 June 2017 6 Focused strategy and robust business management system delivering results Focus on blue chip clients through long-term strategic relationships Rigorous approach ‘One Costain’ to contract philosophy selection and management Effective risk Over 90% targe
Slide 7: Track record of increasing profitability
Result s for the half-year ended 30 June 2017 7 Track record of increasing profitability Group underlying operating profit (£m)1 40 30 25.3 20.1 20 17.5 16.7 10 21.2 H2 13.1 15.8 10.7 11.2 0 H1 2013 2014 2015 2016 2017 Note: 1. Before other items; amortisation of acquired intangible assets and emplo
Slide 8: Revenue growth reflects 'One Costain' philosophy
Result s for the half-year ended 30 June 2017 8 Revenue growth reflects ‘One Costain’ philosophy philosophy Revenue split by market (£m) Rail Highways HY 2017 Water Nuclear HY 2016 Power Oil and Gas 0 200 400 600 800 1000 Other ‘One Costain’ philosophy ensures resource focused on most attractive opp
Slide 9: Segmental income statement reflects targeted resource allocation
Result s For for the T he half-year Half-Year ended Ended 30 30 June June 2017 2017 9 Segmental income statement reflects targeted resource allocation HY 2017 HY 2016 FY 2016 Underlying Underlying Underlying Operating Operating Operating Revenue1 Profit Revenue1 Profit Revenue1 Profit £m £m Margin £
Slide 10: Update on post 30 June 2017 events
Result s For for the T he half-year Half-Year ended Ended 30 30 June June 2017 2017 10 Update on post 30 June 2017 events Order book changes – Addition of HS2 main works contracts (£600m) – Cessation of involvement in Hinkley Point C marine works as we were unable to agree terms and conditions for t
Slide 11: Strong net cash position
Result s for the half-year ended 30 June 2017 11 Strong net cash position HY 2017 HY 2016 FY 2016 £m £m £m – Reversal of £60m year- end positive timing Net cash at beginning of period 140.2 108.2 108.2 – Further growth in target Cash from operations 23.7 17.8 49.6 cost, cost reimbursable Changes in
Slide 12: Increased financial strength
Result s for the half-year ended 30 June 2017 12 Increased financial strength Balance sheet 30 June 2017 30 June 2016 31 December 2016 £m £m £m Assets Non current assets 113.0 104.6 119.3 (excluding pension deficit deferred tax) Trade and other receivables 347.5 350.5 302.7 Cash and cash equivalents
Slide 13: 10% increase in interim dividend
Result s for the half-year ended 30 June 2017 13 10% increase in interim dividend Total value of dividend pay-out (£ million) – Progressive dividend policy, targeting ongoing dividend cover of around 14 2 x underlying earnings 12 – Interim dividend of 4.75 pence per 10 share (HY2016: 4.3 pence per s
Slide 14: Transforming into the UK's leading smart infrastructure solutions company
Result s for the half-year ended 30 June 2017 14 Transforming into the UK’s leading smart infrastructure solutions company Andrew Wyllie CBE Chief Executive
Slide 15: Our unique strategy is transforming Costain into the UK's leading smart infrastructure solutions company
Result s for the half-year ended 30 June 2017 15 Our unique strategy is transforming Costain into the UK’s leading smart infrastructure solutions company National needs Blue chip clients Capacity ENERGY Service Security WATER Efficiency TRANSPORTATION Our purpose is to improve people’s lives by enha
Slide 16: Rapid move towards smart infrastructure
Result s for the half-year ended 30 June 2017 16 Rapid move towards smart infrastructure Increase capacity of existing networks + Improve consumer service + Ensure security of supply No extra money These imperatives are driven by legislation and regulation
Slide 17: Resulting in radical change in nature of multi £billion spend
Result s for the half-year ended 30 June 2017 17 Resulting in radical change in nature of multi £billion spend – Our clients are spending circa £20 billion per annum However, the way they are spending is changing: – Revolution in the use of technology – Consolidation of supply chain – Larger, long-t
Slide 18: Transforming our integrated service offering
Result s for the half-year ended 30 June 2017 18 Transforming our integrated service offering Integrated contract examples: National Grid: Peterborough and Consultancy Huntingdon Helping to influence, shape and deliver solutions through High Speed 2: Multiple contracts Asset leading concept, design
Slide 19: Enhancing every element of our business model
Result s for the half-year ended 30 June 2017 19 Enhancing every element of our business model Unique customer – Over 90% repeat business focus – Now over 25% of our employees are chartered professionals Reputation, Skills and values and experience responsibility of team – Full integration of SSL –
Slide 20: Smart thinking delivering smart solutions
Result s for the half-year ended 30 June 2017 20 Smart thinking delivering smart solutions Reading Cardiff Sheffield Cambridge Loughborough – Headcount of over 4,000 people, 16% growth in last three years – Now over 1,300 in consultancy and technology roles, up 300% in three years Katie McCausland G
Slide 21: Strategy delivering high quality new business
Result s for the half-year ended 30 June 2017 21 Strategy delivering high quality new business New work Work delivered and Order secured in H1 secured for 2017 book +£600m £1.5bn+ £3.7bn Collaborative, Work secured for Tendering target cost contracts 2018 levels 90%+ £0.9bn+ High Order book providin
Slide 22: Summary and outlook
Result s for the half-year ended 30 June 2017 22 Summary and outlook – Continued strong performance – Focused and unique strategy delivering results – Transforming into the UK’s leading smart infrastructure solutions company – On course to deliver results for the year in line with the Board’s expect
Slide 23: Engineering tomorrow
Engineering tomorrow Result s for the half-year ended 30 June 2017
Slide 24: Appendix
Result s for the half-year ended 30 June 2017 24 Appendix
Slide 25: Alcaidesa
Result s for the half-year ended 30 June 2017 25 Alcaidesa – From July 2015, terminated land development JV with Santander in Spain – Assets split equally between the parties by mutual consent – Costain has 100% ownership of leisure-based assets with significantly reduced exposure to land developmen
Slide 26: Managing legacy pension obligation
Result s for the half-year ended 30 June 2017 26 Managing legacy pension obligation 30 June 31 Dec 30 June 2017 2016 2016 £m £m £m – Reduction in net deficit primarily due to positive asset returns, Fair value of scheme assets 762.4 754.0 704.9 favourable experience against Present value of defined
Slide 27: Order book breakdown
Result s for the half-year ended 30 June 2017 27 Order book breakdown 2017 2016 2018 2017 High quality order book 2019+ 2018+ Preferred bidder £3.7bn £3.9bn June ‘17 June ‘16 £m 0 500 1,000 1,500 2,000 2,500 June 2017 June 2016 June 2017 June 2016