Costain Group PLC · LSE:COST
Costain — FY2021 Earnings Presentation
30 slides from Costain's earnings presentation, March 2022
Slide 1: Results presentation
Results presentation For the year ended 31 December 2021 Improving people’s lives. 1
Slide 2: Introduction
Introduction Alex Vaughan Chief Executive Officer Improving people’s lives. 2
Slide 3: Reflections
HS2 Logistics Hub Reflections • Delivering strong operational performance • Drawn a line under legacy issues • Stronger and more resilient business • Diverse expert leadership team • Clear differentiated strategy • A new kind of company to meet our clients’ changing needs • Confidence in future deli
Slide 4: Strong profit growth and cash generation, well positioned to deliver further progress this year
Strong profit growth and cash generation, well positioned to deliver further progress this year • Adjusted profits increased by 67% to £30.1m, in line with expectations • Good cash generation • Drawn a line under legacy contracts • Completed strategy update • Leadership in place to deliver growth •
Slide 5: 2021 Financial Results
2021 Financial Results Helen Willis Chief Financial Officer Improving people’s lives. 5
Slide 6: Headline financial results
Headline financial results FY21 FY20 Change Financial Summary £m £m % • Adjusted Revenue up Adjusted Revenue 1 1,178.6 1,070.5 10% 10% reflecting strong growth in Transportation Reported Revenue 1,135.2 978.4 16% from National Highways and HS2 Adjusted operating profit 2 30.1 18.0 67% 2 • Adjusted o
Slide 7: Revenue walk
Revenue walk Transportation Natural Resources £864m +19% £314m -9% £m Group £1,179m +10% 1. Adjusted Revenue is an adjusted metric and excludes the impact of contract adjustments totalling £43.4m (FY20: £92.1m). See appendix for a reconciliation of reported to adjusted measures. 7
Slide 8: Operating profit walk
Operating profit walk £m Group £30m +67% (1) 1. Adjusted operating profit and adjusted operating profit margin are adjusted metrics and exclude the impact of contract adjustments and other items totalling £39.6m (FY20: £110.0m). See appendix for a reconciliation of reported to adjusted measures. 8
Slide 9: Transportation
Transportation Adjusted Revenue1 Adjusted Operating margin2 4.8% (FY20: 2.8%) +19.3% Improvement driven by growth and more effective contract management Adjusted operating profit2 Road Strategic partner for National Highways £41.4m (FY20: £20.1m) Rail Growth from HS2 Main Works and Gatwick Airport S
Slide 10: Natural Resources
Natural Resources Adjusted Revenue1 Adjusted Operating margin2 -0.8% (FY20: 1.7%) -8.9% Reflecting the lower revenue and increased costs particularly within the water sector Adjusted operating (loss)2 Water (£2.6m) Lower volumes in AMP7 due to COVID-19 (FY20: £5.7m profit) Energy FY22 secured revenu
Slide 11: Balance sheet
Balance sheet FY21 FY20 Consolidated statement of financial position • Net assets increased to £m £m £199.0m Assets Retirement benefit asset 67.1 0.0 Other non-current assets 105.8 119.5 • Strong net cash of £119.4m up Total non-current assets 172.9 119.5 from £102.9m Current assets Trade receivable
Slide 12: 2021 cash bridge
2021 cash bridge • Strong free cash flow of £38.9m, up 23%, driven by efficient working capital management • Strong closing net cash position of £119.4m Free Cash Flow(2) £39m +23% • Supplier payments in line with prompt payment code • Payment to settle Peterborough & Huntingdon contract made after
Slide 13: Cash and banking facilities
Cash and banking facilities Net Cash £m FY21 FY20 • No drawdown of RCF Cash 101.3 89.8 Cash held at joint ventures 58.1 61.1 Loans (40.0) (48.0) • Average month end net cash of £107.0m, 119.4 102.9 higher than FY20 of £73.8m. Consistent Average month end net cash 107.0 73.8 throughout FY21 2021 Mont
Slide 14: Strength of secured workload
Strength of secured workload Well positioned to deliver further progress this year Strong forward workload • Order book of £3.4 billion, more than 3x annual revenue • 90% are repeat orders • £430 million of new contract awards and extensions and framework positions confirmed in 2021 (compared to c£2
Slide 15: Further progress in 2022
Further progress in 2022 • Mindful of macro-economic uncertainties • Secured more than £1bn of Group revenue for FY22 • Started the year with good momentum • Expect to deliver further progress in FY22 • Confident in Group strategy and longer-term prospects 15
Slide 16: Strategy update
Strategy update Alex Vaughan Chief Executive Officer Improving people’s lives. 16 1
Slide 17: Strategically positioned to benefit from market developments
Strategically positioned to benefit from market developments Megatrends Climate change & resource scarcity Digitisation Demographic & social change UK Government plans investment of £650bn in next ten years Transportation Water Energy Defence 17
Slide 18: Differentiating Costain
Differentiating Costain A truly strategic partner Complex programme delivery Consulting Digital services 18
Slide 19: Risk management
Risk management Strengthened contract governance Work winning Contract duration Contract Independent Enhanced Operational Financial Senior management selection review legal process excellence model oversight review 19
Slide 20: Levers to deliver growth
Levers to deliver growth Core business strength • Long-term investment programmes and frameworks • Positioned in key markets • Positioned on 50 consulting and digital frameworks • Recognised as a leading management consultant Growth market opportunities • Network Rail through CP7 programmes • Energy
Slide 21: In Summary
HS2 Logistics Hub In Summary • Delivering strong operational performance • Drawn a line under legacy issues • Stronger and more resilient business • Diverse expert leadership team • Clear differentiated strategy • A new kind of company to meet our client’s changing needs • Confidence in future deliv
Slide 22: Q&A
Q&A Improving people’s lives. 22 2
Slide 23: Appendices
Appendices Improving people’s lives. 23 2
Slide 24: KPI Scorecard
KPI Scorecard FY21 FY20 Target Status Double digit Adjusted operating £30.1m £18.0m compound growth profit in the medium term Adjusted Group Group medium term operating profit 2.6% 1.7% ambition of 5-6% margin Adjusted diluted Growth in line with 10.1p 5.8p EPS operating profit £38.9m £32.6m Cash co
Slide 25: Cash flow
Cash flow Consolidated cash flow statem ent FY21 FY20 £m £m Cash from /(used by) operations before changes in w orking capital and provisions 5.4 (66.7) Changes in w orking capital 38.2 26.3 Pension deficit contributions (10.4) (10.6) Interest and tax paid (3.7) 4.0 Net cash from /(used by) operatin
Slide 26: Adjusted to Reported Reconciliation
Adjusted to Reported Reconciliation £m£m FY21 FY21 FY20 FY20 Reported Reported Contract Contract Other Other Adjusted Adjusted Reported Reported Contract Contract Other Other Adjusted Adjusted Adjustments Adjustm ents Adjustments Adjustm ents Adjustments Adjustm ents Adjustments Adjustm ents GroupRe
Slide 27: Adjusting items
Adjusting items £m FY21 FY20 Contract Other Contract Other Adjustments Adjustments Adjustments Adjustments Peterborough & Huntingdon 43.4 0.0 42.0 0.0 A465 0.0 0.0 50.1 0.0 ASF South 0.0 0.0 0.0 0.0 Total Revenue adjustments 43.4 0.0 92.1 0.0 Peterborough & Huntingdon 47.6 0.0 49.3 0.0 A465 (8.4) 0.
Slide 28: Free Cash Flow
Free Cash Flow Free Cash Flow FY21 FY20 £m £m Net cash from/(used by) operating activities 29.5 (47.0) Add back cash flow on adjusting items 11.6 82.7 Capital expenditure (2.2) (4.1) Free Cash Flow 38.9 31.6 28
Slide 29: FY21 IFRS 16 impact
FY21 IFRS 16 impact Income statement impact £m Decrease in operating costs 11.2 Increase in depreciation (10.1) Increase in finance costs (0.9) Net impact on income statement 0.2 Fixed Assets impact £m Fixed assets opening position 32.7 Additions 18.0 Disposals (13.7) Depreciation (10.5) Fixed asset
Slide 30: 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