Costain Group PLC · LSE:COST
Costain — H1 2010 Earnings Presentation
29 slides from Costain's earnings presentation, Aug 25, 2010
Slide 1: Results for the half year ended 30 June 2010
Results for the half year ended 30 June 2010 Analyst presentation 25 August 2010 ‘Choosing Costain’
Slide 2: Tony Bickerstaff, Finance Director
Tony Bickerstaff, Finance Director ‘Choosing Costain’ 1
Slide 3: Overview
Overview • Another strong performance, in line with expectations • Key contract wins in target markets • Successfully implementing „Choosing Costain‟ strategy • Clear strategic focus aligned with the economic needs of our customers • Meeting increasing demand for innovative and cost effective soluti
Slide 4: H1 2010 financial highlights
H1 2010 financial highlights • Profit from operations up 6% to £8.8m (H1 2009: £8.3m) • Profit before tax up 19% to £8.2m (H1 2009: £6.9m) • High quality order book maintained at £2.5bn (H1 2009: £2.5bn) – Over £0.4bn of new work secured in the period • Strong net cash position of £133.9m (H1 2009:
Slide 5: Revenue growth
Revenue growth Group increased overall 5% 1200 1,061 996 1000 877 H2 800 553 529 £m 447 H1 600 400 467 508 533.4 200 430 0 2007 2008 2009 2010 Infrastructure Environment* Energy & Process increased 36% decreased 18% increased 47% 250 223.8 350 301.1 80 62.4 200 300 246.7 164.0 60 250 42.5 £m 150 £m
Slide 6: High quality order book maintained at £2.5 billion
High quality order book maintained at £2.5 billion 30 June 2010: £2.5 billion • Major contract awards in first half include: – Managed Motorways framework, MAC 14 Energy & Process maintenance, Welsh Water AMP5, Crossrail 6% portals • Repeat business at over 80% Infrastructure 41% • In addition, pref
Slide 7: C. 70% of order book regulated or maintenance related
C. 70% of order book regulated or maintenance related Maintenance: 14% Public: 26% Public Regulated: 9% Private: 5% Private Regulated: 46% Order Book as at 30 June 2010 ‘Choosing Costain’ 6
Slide 8: Increasing long-term visibility of earnings
Increasing long-term visibility of earnings 2009 Order Book @ 30 June 2009: £2.5bn 2010 2011+ Preferred Bidder 2010 Order Book @ 2011 30 June 2010: £2.5bn 2012+ Preferred Bidder 0 200 400 600 800 1000 1200 1400 1600 £m Secured £570 million of 2011 revenue at 30 June 2010 (June 2009: £690 million for
Slide 9: Growth in profit from operations
Growth in profit from operations Group increased overall 6% 25 20.8 20 18.3 16.5 H2 15 12.5 10.8 H1 £m 9.9 10 5 8.8 7.5 8.3 6.6 0 2007 2008 2009 2010 Infrastructure Environment* Energy & Process 5 5 10 8.0 6.8 3.1 2.6 2.7 £m 5 £m £m 1.2 0 0 0 H1 2009 H1 2010 H1 2009 H1 2010 H1 2009 H1 2010 (*Reflect
Slide 10: Segmental income statement
Segmental income statement Half year ended 30 June H1 H1 Full Year 2010 2009 2009 £m Margin £m Margin £m Margin Environment 1.2 0.5% 2.6 0.9% 3.3 0.6% Infrastructure 8.0 3.6% 6.8 4.1% 16.9 4.6% Energy & Process 3.1 5.0% 2.7 6.4% 9.3 9.2% Land Development (0.5) (0.7) (2.6) Central costs (3.0) (3.1) (
Slide 11: Net finance expense
Net finance expense H1 H1 Full Year 2010 2009 2009 £m £m £m Net Bank Deposit/Loan interest 0.4 1.1 2.1 IAS19 Pension Scheme interest: Expected return on scheme assets 14.8 11.7 23.4 Interest Cost on present value of obligations (15.8) (14.2) (28.2) IAS19 Pension Scheme net interest (1.0) (2.5) (4.8)
Slide 12: Tax
Tax • H1 tax rate at 22% of PBT • Includes benefit from non taxable gains • Normalised rate expected to be 24%-26% on non JV profit ‘Choosing Costain’ 11
Slide 13: Cash flow reconciliation
Cash flow reconciliation Half year ended 30 June H1 H1 Full Year 2010 2009 2009 £m £m £m Cash and cash equivalents at beginning of period 120.5 146.9 146.9 Cash flow from / (used by) operating activities 18.7 (18.6) (16.5) Cash flow used by investing activities (1.9) (5.7) (4.2) Dividends / financin
Slide 14: Balance sheet
Balance sheet Half year ended 30 June 30 June 2010 30 June 2009 31 December 2009 £m £m £m Non Current Assets (excluding pension deficit deferred tax) 73.2 69.1 74.6 Trade and other receivables 196.6 176.4 204.3 Cash 134.7 119.8 120.8 Current Assets 331.3 296.2 325.1 Total Assets 404.5 365.3 399.7 Cu
Slide 15: Pension
Pension • Net Deficit reduced to £56.3m (June 2009: £75.7m) due to company contributions and improved market conditions. • Ongoing actions to manage the obligations – Scheme closed to future accrual from 30th September 2009 – All current employees now only have defined contribution scheme option – O
Slide 16: PFI equity portfolio
PFI equity portfolio Invested Committed Estimated Status Capital Capital Valuation Valuation of Current Portfolio Bridgend Sold 55.00 Kings Sold Sirhowy Sold Kent Schools Sold 50.00 Ealing Schools Sold Shropshire Sold Estimated Valuation (£m) Kent Elderly Sold 45.00 Kingston Operations 1.3 - 3.6 Aqu
Slide 17: Land Development
Land Development • Land development business – 50:50 joint venture with Santander Bank • Difficult land market conditions – Cost base reduced • 1st Phase of marina development (600 berths) completed – Opened in August 2010 – First sales and rental achieved • Intention to maximise shareholder value w
Slide 18: Dividend
Dividend • Interim dividend increased to 3.00p (2009: 2.75p) • Payment on 29 October 2010 to shareholders on the register as at 24 September 2010 • Option to take shares in lieu ‘Choosing Costain’ 17
Slide 19: Andrew Wyllie, Chief Executive
Andrew Wyllie, Chief Executive ‘Choosing Costain’ ‘Choosing Costain’ 18
Slide 20: Delivering results
Delivering results • Successfully implementing „Choosing Costain‟ strategy • Clear strategic focus aligned with the economic needs of our customers • Meeting increasing demand for innovative and cost effective solutions • Strong market positions providing opportunity and resilience ‘Choosing Costain
Slide 21: Vital decisions are being made for UK infrastructure
Vital decisions are being made for UK infrastructure ‘Choosing Costain’ 20
Slide 22: Focus on organisations with committed spending plans
Focus on organisations with committed spending plans ‘Choosing Costain’ 21
Slide 23: Focus on organisations with committed spending plans
Focus on organisations with committed spending plans ‘Choosing Costain’ 22
Slide 24: Meeting our customers' changing needs
Meeting our customers’ changing needs • Our customers want an enhanced service at a lower cost… • …and are consolidating requirements into larger, longer-term bundled contracts • Few contractors have requisite skills, scale and resources • Costain is one of a few tier-1 organisations able to provide
Slide 25: 'Choosing Costain'
‘Choosing Costain’ • “…is a strategy based on established success and provides an ambitious vision for the further development of the Costain Group” • “Our vision is to be one of the UK‟s top solutions providers, with the scale and resources to meet successfully the increasingly complex and challeng
Slide 26: Strategy to meet key market trends
Strategy to meet key market trends Changing Revenue Profile* Consulting Construction Care 2006 2010 2014 ‘Being Number One’ 2006 Infrastructure Highways, Rail, Airports 2008 Environment 2010 ‘Choosing Costain’ Water and Waste 2012 Energy and Process Nuclear, Power, and Hydrocarbons & Chemical 2014 1
Slide 27: Contractor of the Decade
Contractor of the Decade Costain has been named ‘Contractor of the Decade’ at the New Civil Engineer magazine's annual awards. “And today it is very much a company on the up." ‘Choosing Costain’ 26
Slide 28: Summary
Summary • Strong first half performance • Economic environment expected to remain challenging for foreseeable future • Successfully implementing „Choosing Costain‟ strategy • Clear strategic focus aligned with the economic needs of our customers • Meeting increasing demand for innovative and cost ef
Slide 29: Results for the half year ended 30 June 2010
Results for the half year ended 30 June 2010 Analyst presentation 25 August 2010 ‘Choosing Costain’ 28