Costain Group PLC · LSE:COST
Costain — FY2015 Earnings Presentation
28 slides from Costain's earnings presentation, Mar 2, 2016
Slide 1: Accelerating Growth: Results for the Year Ended 31 December 2015
ACCELERATING GROWTH RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 2 MARCH 2016 Meeting national needs through people and innovation Costain Group PLC - Results for year ended 31 December 2015
Slide 2: Accelerating growth
Accelerating growth • Strong trading performance delivering 16% growth in profit • Customer focussed strategy generating record order book • Acquisition of Rhead Group enhancing capability • Good visibility giving confidence in the future Costain Group PLC - Results for year ended 31 December 2015 2
Slide 3: Financial Review
FINANCIAL REVIEW TONY BICKERSTAFF FINANCE DIRECTOR Meeting national needs through people and innovation Costain Group PLC - Results for year ended 31 December 2015
Slide 4: Strong trading performance
Strong trading performance • Revenue1 of £1,316.5m (2014: £1,122.5m) • Underlying2 operating profit up 16% to £33.2m (2014: £28.7m) • Adjusted profit before tax of £29.9m (2014: £28.5m) • Adjusted basic earnings per share of 25.1p (2014: 27.8p3) • £108.2m year-end net cash balance (2014: £148.5m) •
Slide 5: Customer focussed strategy generating strong performance
Customer focussed strategy generating strong performance December 2011 • Focus on blue chip customers through long-term strategic relationships • Ability to deliver a broad range of £2.4bn 50% integrated services % Target cost based contracts • 90% target cost based contracts • longer term, sustaina
Slide 6: 17% growth in revenue
17% growth in revenue Revenue split by sector (£m) Rail Highways 2015 Power Water Nuclear 2014 Oil and Gas 0 200 400 600 800 1000 1200 1400 Other • Securing growth through targeted allocation of resources • Significant growth in Rail and Highways through long-term frameworks • Seeing growth in Water
Slide 7: Increasing profitability
Increasing profitability Group underlying operating profit (£m)1 Group adjusted profit from operations (£m) 1 40 40 35.0 33.1 30.8 31.4 30 30 9.1 4.0 33.2 7.7 † 23.6 33.1 20 27.4 28.7 20 27.4 24.1 24.5 25.9 23.1 23.6 10 10 0 0 2011 2012 2013 2014 2015 2011 2012 2013 2014 2015 PFI & Investments Sales
Slide 8: Segmental income statement
Segmental income statement 2015 2014 Underlying Underlying Revenue1 Operating Profit Revenue1 Operating Profit £m £m Margin £m £m Margin Infrastructure 996.1 50.9 5.1% 765.8 34.4 4.5% Natural Resources 317.6 (11.1) (3.5)% 354.4 0.4 0.1% Alcaidesa (From 1/7/15) 1.9 (0.5) - Central Costs (6.1) (6.1) U
Slide 9: Strong net cash position
Strong net cash position 2015 2014 £m £m Net cash at beginning of period 148.5 57.7 Cash from operations 38.2 31.3 Net cash movements due to: Changes in working capital (excluding pension deficit contributions) (10.4) 12.3 • Good operating cash flow Cash flow from operating activities 27.8 43.6 • Co
Slide 10: Balance sheet and banking facilities
Balance sheet and banking facilities 31 December 2015 31 December 2014 £m £m Assets Non current assets (excluding pension deficit deferred tax) 103.7 101.2 Trade and other receivables 274.7 198.4 Cash 146.7 148.5 Current assets 421.4 346.9 Total assets 525.1 448.1 Current liabilities (372.2) (299.3)
Slide 11: 16% increase in recommended final dividend
16% increase in recommended final dividend • Progressive dividend policy, targeting ongoing dividend cover of c. 2 x underlying earnings • Recommended final dividend of 7.25 pence per share (2014: 6.25 pence per share) • Would represent a 16% increase in the total dividend for the year to 11.0 pence
Slide 12: Accelerating Growth
ACCELERATING GROWTH ANDREW WYLLIE CBE C H I E F E XE C U TI V E Meeting national needs through people and innovation Costain Group PLC - Results for year ended 31 December 2015
Slide 13: Accelerating growth
Accelerating growth • Unique customer-focused strategy delivered 16% growth in profit • £ billions being invested to meet national needs • Growing our skills and capabilities organically and by acquisition • Record order book underpinning future growth Costain Group PLC - Results for year ended 31 D
Slide 14: Unique customer focused strategy
Unique customer focused strategy Why our major blue chip customers choose Costain: Infrastructure Securing a future energy supply… …maintaining a safe and reliable water supply Natural Resources …upgrading the transport infrastructure Costain Group PLC - Results for year ended 31 December 2015 14
Slide 15: Rapidly changing and dynamic market
Rapidly changing and dynamic market: - significant investment across target sectors • Total spend in target sectors estimated at c. £90 billion per annum with c. £20 billion per annum addressable to Costain • Majority of spend non-discretionary: underpinned by regulation and legislation • Defined by
Slide 16: Developing the best team in the industry
Developing the best team in the industry • 16% growth in headcount to over 4,100 • Broadening range of skills and capabilities • Now have 1,000+ people in consulting, advisory and design service roles • 218 graduates on award winning programme, a 69% increase over last 3 years • 107 apprentices, up
Slide 17: Driving innovation in our services
Driving innovation in our services • Ability to develop and offer innovative solutions is essential and is a competitive advantage • Numerous innovations in 2015 including: • deployment of robotic drilling machinery and automated equipment: accelerating delivery at Crossrail • live-trialling ‘self-h
Slide 18: People and innovation delivering leading market positions
People and innovation delivering leading market positions • As an example, we are a leading supplier of services in Highways across England and Wales • Comprehensive capability to meet all customer requirements • Examples of current contracts across the asset life-cycle include: • Advisory and conce
Slide 19: People and innovation delivering value for customers
People and innovation delivering value for customers • Completion in 2015 of Dimlington Terminal Freon Replacement Upgrade contract for Perenco • Contract secured as a result of innovative conceptual study by Costain • Delivered ahead of deadline set by new EU legislation • Improved terminal energy
Slide 20: Record order book and increased visibility
Record order book and increased visibility 2016 (Dec ‘15) • Forward order book up 11% to £3.9bn (December 2014: £3.5bn) 2015 (Dec ‘14) • Over £1.7bn of new contracts and extensions 2017 (Dec ‘15) secured in 2015 2016 (Dec ‘14) • Over £1.1bn of work already secured for 2016 2018+ (Dec ‘15) 2017+ (Dec
Slide 21: Long term strategic customer relationships underpinning growth
Long term strategic customer relationships underpinning growth • Changing nature and increasing complexity of customers’ requirements fundamentally changing market dynamics Order book by value remaining • Larger, longer term contracts – our average contract duration now over four years 8% 6% • Requi
Slide 22: Summary and outlook
Summary and outlook • Strong trading performance • Unique customer-focused strategy • Record forward order book • Continuing to accelerate growth • Good visibility giving confidence for the future Costain Group PLC - Results for year ended 31 December 2015 22
Slide 23: Accelerating Growth: Results for the Year Ended 31 December 2015
ACCELERATING GROWTH RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015 2 MARCH 2016 Meeting national needs through people and innovation Costain Group PLC - Results for year ended 31 December 2015
Slide 24: Appendix
APPENDIX Meeting national needs through people and innovation Costain Group PLC - Results for year ended 31 December 2015
Slide 25: Costain financial overview
Costain financial overview Key historic financial information (£m) Revenue (£m) 1400 Year end December, £m FY11 FY12* FY13 FY14 FY15 Revenue 986.3 934.5 960.0 1,122.5 1,316.5 1200 Underlying operating profit 24.1 24.5 27.4 28.7 33.2 1000 margin 2.4% 2.6% 2.9% 2.6% 2.5% 800 986.3 934.5 960.0 1,122.5
Slide 26: Other items and tax
Other items and tax Other Items • Amortisation of acquired intangible assets – £3.2m (2014: £3.0m) • Employment related and other deferred consideration – £0.4m (2014: £2.2m) • Accounting standards require any consideration related to employment to be expensed over the required service period and an
Slide 27: Re-organisation of Alcaidesa
Re-organisation of Alcaidesa • Terminated land development JV with Santander in Spain • Assets split equally between the parties by mutual consent • From July 2015, Costain has 100% ownership of leisure-based assets with significantly reduced exposure to land development • Costain’s assets are now:
Slide 28: Legacy pension obligation
Legacy pension obligation • Agreed full actuarial valuation as at 31 March 2013 and updated recovery plan • Contributions at £7m per annum increasing with inflation plus a top-up for total contributions to match annual dividend payments • Decrease in accounting net deficit due to increase in discoun