Costain Group PLC · LSE:COST
Costain — FY2022 Earnings Presentation
32 slides from Costain's earnings presentation, 2023
Slide 1: Results presentation
Results presentation For the year ended 31 December 2022 Improving people’s lives. 1
Slide 2: Introduction
Introduction Alex Vaughan Chief Executive Officer Improving people’s lives. 2
Slide 3: Highlights
Highlights Strong financial performance Strong full year 2022 (FY22) operating performance • Adjusted revenue(1) up 20.6% year-on-year • Adjusted operating profit(2) up year-on-year 20.6% to £36.3m • Strong adjusted free cashflow(3) of £72.9m • Period end net cash of £123.8m, well ahead of expectati
Slide 4: Transportation
Transportation Adjusted revenue(1) Adjusted operating margin(2) 3.0% (FY21: 4.8%) £1,046.3m Following 2021 outperformance, in line with normal expectations, and (FY21: £864.2m) reflecting inflation and increased bidding costs Adjusted revenue(1) Road +21.1% Highway schemes on A1, M1, M6 and A30. Key
Slide 5: Natural Resources
Natural Resources Adjusted revenue(1) Adjusted operating margin(2) 4.0% (FY21: 0.8% loss) £375.1m Improved operational performance (FY21: £314.4m) Water Revenue increased by 19.1% with good Adjusted revenue(1) visibility across AMP7 working with major water companies. Engaging with +19.3% customers
Slide 6: 2022 Financial Results
2022 Financial Results Helen Willis Chief Financial Officer Improving people’s lives. 6
Slide 7: Headline financial results
Headline financial results FY 22 FY 21 Change Financial Summary £m £m % Adjusted revenue (1) 1,421.4 1,178.6 21% • Adjusted Revenue up 21% reflecting strong Reported revenue 1,421.4 1,135.2 25% growth in both divisions Adjusted operating profit(2) 36.3 30.1 21% • Adjusted operating profit up 21% to
Slide 8: Revenue walk
Revenue walk Strong growth in both divisions Natural Resources Transport £375.1m +19% £1,046.3m +21% Group £1,421.4m +21% 1. Adjusted Revenue is an adjusted metric and excludes the impact of contract adjustments totalling £nil (FY 21: £43.4m). See slides 29 to 30 for a reconciliation of reported to
Slide 9: Operating profit walk
Operating profit walk Growth and operational improvements more than offset inflation Group £36.3m +21% 1. Adjusted operating profit is an adjusted metric and excludes the impact of contract adjustments and other items totalling £1.4m (FY 21: £39.6m). See slides 29 to 30 for a reconciliation of repor
Slide 10: Balance sheet
Balance sheet FY 22 FY 21 Consolidated statem ent of financial position £m £m Assets • Net assets position strengthened Retirement benefit asset 60.2 67.1 at £211.2m Other non-current assets 101.2 105.8 Total non-current assets 161.4 172.9 • Strong net cash £123.8m after Current assets P&H final set
Slide 11: FY22 Cash walk
FY 22 Cash walk Continued growth in free cash flow • Strong free cash flow of £72.9m, driven by efficient working capital management. • Payment to settle Peterborough & Huntingdon contract made early in year of £43.4m, partially offset by £5.2m insurance receipt received in December. Free Cash Flow(
Slide 12: Cash and banking facilities
Cash and banking facilities Net Cash £m FY 22 FY 21 Cash 67.3 101.3 Cash held at joint ventures 56.5 58.1 Loans 0.0 (40.0) • No drawdown of RCF 123.8 119.4 Average month end net cash 99.2 107.0 • Average month end net cash £99.2m, lower 2022 Month End Net Cash (£m) than FY21 of £107.0m, but after £4
Slide 13: Strength of secured workload
Strength of secured workload Well positioned to deliver further progress this year Order & Preferred Bidder Book Secured Revenue 1.200 5.0 4.3bn 4.4bn 4.0 1.000 3.0 0.800 2.0 0.600 1.0 0.400 0.0 FY21 FY22 0.200 Orderbook Preferred Bidder 0.000 2023 2024 2025 beyond • Order book of £2.8bn at the end
Slide 14: Risk management
Risk management Strengthened contract governance to underpin margin progression Work winning Contract duration Contract Independent Enhanced legal Operational Financial Senior management selection review process excellence model oversight review Margin milestones: adjusted operating margin run-rate
Slide 15: Further progress in 2023
Further progress in 2023 • Mindful of macro-economic uncertainties • Making improvements to operational performance, a strong cash position and clear strategic priorities • Broad customer focus - already secured >£1bn of revenue - c80% of expected revenue for FY23 • Expect to increase net cash posit
Slide 16: Strategy & Outlook
Strategy & Outlook Alex Vaughan Chief Executive Officer Improving people’s lives. 16 1
Slide 17: 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 plans for investment of £600bn b
Slide 18: Strong infrastructure investment
Strong infrastructure investment Most customers procure against five-year investment plans Current business 2022 2023 2024 2025 2026 2027 2028 2029 2030 plan investment National £27bn RIS2 RIS3 Highways High Speed S1 & S2 c.£45bn 2A Rail DDP & M&E & Power Integrated £54bn IRP Rail Plan Network £53bn
Slide 19: Supporting our customers across their full ecosystem
Supporting our customers across their full ecosystem Digital services Consulting Complex programme delivery 19
Slide 20: Solutions through complex programme delivery
Solutions through complex programme delivery • A leading capital delivery partner for complex infrastructure • Design, build and maintain expertise • Serving blue-chip customers Thames Tideway A30 HS2 Preston Western Distributor Road Gatwick Station Finham STW Results Presentation: Year ended 31 Dec
Slide 21: Through consultancy
Through consultancy Delivery Partner • Leveraging our core expertise in programme delivery • A leading Delivery Partner AWE Cadent Devonport A303 Heathrow T2 Baggage overseeing our customers’ major infrastructure programmes Solution Design/Project Controls • A growing design and Project Controls/P3M
Slide 22: Through digital solutions
Through digital solutions • Our value is the combination of our customer relationships, intimate infrastructure insight, technology expertise and know- how, and strategic digital partnerships. • Our focus is on improving and Asset Optimisation – Digital Twin Security – Systems Integration transformi
Slide 23: Benefitting from our ESG actions
Benefitting from our ESG actions • Net zero carbon by 2035 • Eliminating waste through circular thinking Reduction in scope Lost Time Injury of our spend • Enhancing bio diversity and natural capital 1 emissions Rate (LTIR) with SMEs community £ investment (sum of charitable Outstanding giving and e
Slide 24: Further progress expected through 2023 and beyond
Further progress expected through 2023 and beyond • Performing strongly • Continued commitment to significant infrastructure investment • New contracts won at margins and risk profile we aspire to • Forward workload maintained at high levels • Clear milestones for margin progression • Mindful of mac
Slide 25: Q&A
Q&A Improving people’s lives. 25 2
Slide 26: 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
Slide 27: Appendices
Appendices Improving people’s lives. 27 2
Slide 28: Cash flow
Cash flow Consolidated cash flow statem ent FY 22 FY 21 £m £m Cash from operations before changes in w orking capital and provisions 52.6 5.4 Changes in w orking capital 13.1 (11.9) Movement in provisions and employee benefits (49.0) 39.7 Interest and tax paid (2.6) (3.7) Net cash from operating act
Slide 29: Adjusted to Reported Reconciliation
Adjusted to Reported Reconciliation £m FY 22 FY 21 Reported Contract Other Adjusted Reported Contract Other Adjusted Adjustm ents Adjustm ents Adjustm ents Adjustm ents Group Revenue 1,421.4 0.0 0.0 1,421.4 1,135.2 43.4 0.0 1,178.6 Cost of sales (1,328.7) 0.0 0.0 (1,328.7) (1,095.0) (4.2) 0.0 (1,099
Slide 30: Adjusting items
Adjusting items £m FY 22 FY 21 Contract Other Contract Other Adjustm ents Adjustm ents Adjustm ents Adjustm ents Peterborough & Huntingdon 0.0 0.0 43.4 0.0 Total Revenue adjustm ents 0.0 0.0 43.4 0.0 Peterborough & Huntingdon 0.0 0.0 47.6 0.0 A465 0.0 0.0 (8.4) 0.0 Amortisation of acquired intangibl
Slide 31: Free Cash Flow
Free Cash Flow Adjusted free cash flow FY 22 FY 21 £m £m Cash from operations 16.7 33.2 Add back cash flow on adjusting items 46.4 11.6 Add back pension deficit contributions 10.8 10.4 Less taxation (0.5) 0.1 Adjusted cash from operating activities 73.4 55.3 Capital expenditure (0.5) (2.2) Adjusted
Slide 32: FY22 IFRS 16 impact
FY 22 IFRS 16 impact Incom e statem ent im pact £m Decrease in operating costs 6.4 Increase in depreciation (3.8) Increase in finance costs (1.2) Net im pact on incom e statem ent 1.4 Fixed Assets im pact £m Fixed assets opening position 26.5 Additions 16.7 Disposals (11.0) Depreciation (7.0) Fixed