Costain Group Plc · LSE:COST
Costain — H1 2013 Earnings Presentation
26 slides from Costain's earnings presentation, Aug 22, 2013
Slide 1: Results for the half-year ended 30 June 2013
Results for the half-year ended 30 June 2013 22 August 2013
Slide 2: Introduction and welcome
Introduction and welcome > An encouraging start to the year > Increase in underlying operating profit > 20% increase in order book to £2.9 billion > Key to continuing success is provision of innovative integrated service solutions > Increase in interim dividend Results for the half-year ended 30 Jun
Slide 3: Financial Review
Financial Review Tony Bickerstaff, Finance Director
Slide 4: Key financials
Key financials > Revenue1 £462.9m (H1 2012: £477.9m) > Underlying3 operating profit up 3% to £10.7m (H1 20122: £10.4m) > Adjusted4 profit before tax £8.4m (H1 20122: £16.3m) > Adjusted4 basic earnings per share 10.6p (H1 20122: 22.2p) > Net cash balance £64.3m (H1 2012: £131.5m) > Forward order book
Slide 5: Increasing earnings
Increasing earnings Group adj. profit from operations* £m 35 30 £7.8m † 25 £11.2m H1 20 £2.0m £13.3m H2 £2.7m £14.2m 15 £9.4m PFI Sales £11.6m £9.7m 10 23.6 20.6 £9.4m £9.8m £10.0m £8.8m 5 £7.2m £5.9m 0 2008 2009 2010 2011 2012 2013 * Results stated before amortisation of acquired intangible assets
Slide 6: Segmental income statement
Segmental income statement 6 Months to 30 June 2013 6 Months to June 2012 Full Year 2012 Underlying Underlying Underlying Operating Operating Operating Revenue* Profit Revenue* Profit Revenue* Profit £m £m Margin £m £m Margin £m £m Margin Infrastructure 262.8 14.4 5.5% 246.2 9.6 3.9% 494.9 23.5 4.7%
Slide 7: Net finance expense
Net finance expense H1 2013 H1 2012 FY 2012 Restated Restated £m £m £m Net bank deposit/loan interest/bank fees (0.5) (0.5) (0.8) IAS19 Pension Scheme Interest (1.1) (0.8) (1.9) Net finance expense (1.6) (1.3) (2.7) Change to 2012 of accounting for revised IAS19 Employee benefits H1 FY 2012 2012 £m
Slide 8: Net cash position
Net cash position Impact on net cash due to…. June ‘13 June ‘12 FY 2012 • Changing profile of business £m £m £m − Increased level of support Net cash at beginning of period 105.7 140.1 140.1 services activities Cash used by operating activities (33.3) (2.5) (23.1) − c. 90% of customers now use Cash
Slide 9: Transition to target cost based contracts
Transition to target cost based contracts June ‘13 Cash % Target cost based balance contracts Advance payment £m Significantly cash Fixed price, lump sum contracts positive • Suitable for well defined low complexity 90% projects, eg PFI schools, offices • Higher risk, can lead to confrontation Profi
Slide 10: Increased banking and bonding facilities
Increased banking and bonding facilities > Banking and bonding facilities increased to £495m > Including increase in debt facility from £45m to £95m > Extended maturity date to 30 June 2017 Results for the half-year ended 30 June 2013 9
Slide 11: Increased dividend
Increased dividend > 7% increase in interim dividend to 3.75p per share > Sixth successive year of increase > Payment on 25 October 2013 to shareholders on the register as at 20 September 2013 > Option to take shares in lieu Pence 12 10.75p 10.00p 10 9.25p 8.25p 7.25p Final 8 6.75p 6.25p Interim 6 5
Slide 12: Business Review
Business Review Andrew Wyllie, Chief Executive
Slide 13: Customers are demanding increasingly innovative solutions
“Customers are demanding increasingly innovative solutions. “Through our ‘Engineering Tomorrow’ strategy, Costain is generating and delivering innovative, value-driven solutions to meet major national needs.” Results for the half-year ended 30 June 2013 12
Slide 14: Costain's business model
Costain’s business model Our strategy is focused on major customers addressing national needs Sector ‘unique’ Infrastructure Natural Resources customer aligned divisional structure Delivered through longer- term, larger contracts and extensions, incorporating a Over 90% repeat orders broader range o
Slide 15: One Costain
One Costain Providing a range of integrated services across the whole asset life cycle Advisory & Design Programme Delivery Operations & Maintenance Pre-investment advisory Programme leadership Infrastructure network management Complex programme advisory Sustainable delivery Asset management and Ope
Slide 16: Collaboration key to success
Collaboration key to success June ‘13 June '11 > Our blue chip customers demand % Support % Support long-term strategic relationships 14% services 30% services related related > We provide a range of innovative secured for year secured for year services across life cycle of asset > Demonstrating res
Slide 17: 'Engineering Tomorrow' delivering record order book
‘Engineering Tomorrow’ delivering record order book > Forward order book up over 20% to £2.9 billion (June 2012: £2.4 billion) > In excess of 90% from repeat orders > £900 million new contracts and extensions secured in the first half > Over £850m of revenue secured for FY 2013 as at 30 June 2013 >
Slide 18: £900m of new work secured, including:
£900m of new work secured, including: Oil and Gas market A leading supplier in - Doubled size of Highways ClerkMaxwell - Area 7 MAC contract - Follow-on work for extended Centrica; FEED for Barrow - Hammersmith Flyover Broadening services for UK Power Networks Network Rail - Awarded first framework
Slide 19: Increased visibility
Increased visibility Group Order Book June 2013 2013 (June ‘13) Group Order Book June 2012 2012 (June ‘12) 2014 (June ‘13) 2013 (June ‘12) 2015+ (June ‘13) 2014+ (June ‘12) Preferred bidder June ‘13 June ‘12 0 200 400 600 800 1000 1200 1400 1600 1800 2000 £m Results for the half-year ended 30 June 2
Slide 20: Acquisition of EPC Offshore
Acquisition of EPC Offshore > EPC Offshore: specialist oil & gas project management services company > 75 professional staff > field development and project management specialist with programme management expertise > Acquisition expected to be earnings enhancing in first full year > Formation of Cos
Slide 21: Summary
Summary > An encouraging start to the year > 20% increase in order book to £2.9 billion > Increase in underlying operating profit > Costain continuing to secure major contracts through provision of innovative integrated service solutions > On course to deliver results for the year in line with expec
Slide 22: Appendix
Appendix
Slide 23: Balance sheet
Balance sheet 30 June 2013 30 June 2012 31 December 2012 £m £m £m Assets Non current assets (excluding pension deficit deferred tax) 94.6 101.2 91.2 Trade and other receivables 193.5 184.7 183.2 Cash 75.3 133.2 107.4 Current assets 268.8 317.9 290.6 Total assets 363.4 419.1 381.8 Current liabilities
Slide 24: Other items and tax
Other items and tax Other Items > Amortisation of acquired intangible assets – H1 2013: £0.6m (H1 2012: £0.7m, FY 2012: £1.7m) > Amortised from date of acquisition (ClerkMaxwell - April 2011 & Promanex - August 2011) > Employment related deferred consideration – H1 2013: £1.0m (H1 2012: £0.9m, FY 20
Slide 25: Legacy pension obligation
Legacy pension obligation > Reduced pension deficit as a result of company contributions and improved financial returns > Legacy defined benefit scheme > Closed to new entrants in 2005 > Closed fully to future accrual in 2009, all employees on defined contributions only > Actions taken to manage obl
Slide 26: Results for the half-year ended 30 June 2013
Results for the half-year ended 30 June 2013 22 August 2013