Costain Group PLC · LSE:COST
Costain — H1 2009 Earnings Presentation
27 slides from Costain's earnings presentation, Aug 26, 2009
Slide 1: Results for the half year ended 30 June 2009
Results for the half year ended 30 June 2009 Analyst presentation 26 August 2009 The value of Costain
Slide 2: Tony Bickerstaff, Finance Director
Tony Bickerstaff, Finance Director The value of Costain
Slide 3: Overview
Overview • Strong interim performance overall delivered through focus on major customers with large investment programmes of strategic national importance • Profit from operations up 11% to £8.3m (2008: £7.5m) • Profit before tax of £6.9m impacted by anticipated reduction in net financing income (20
Slide 4: New reporting segmentation
New reporting segmentation • Reflects Group’s strategy, customer focus and organisational structure Costain Group PLC Environment Infrastructure Energy & Process (Water, Waste and Marine) (Highways, Airports, Rail and Nuclear) Community Land Development (Health, Education and Retail) The value of Co
Slide 5: Revenue analysis
Revenue analysis Environment Infrastructure increased 27% increased 53% Group increased overall 9% 250 223 200 164 200 175 150 150 107 1200 996 100 1000 877 100 800 50 529 50 600 447 H2 0 0 400 467 508 2008 2009 2008 2009 200 430 H1 0 2007 2008 2009 Energy & Process Community increased 14% reduced 4
Slide 6: Segmental income statement
Segmental income statement Half year ended 30 June H1 H1 Full Year 2009 2008 2008 £m Margin £m Margin £m Margin Environment 7.8 3.5% 3.7 2.1% 11.6 2.8% Infrastructure 6.8 4.1% 8.1 7.6% 14.4 6.9% Community (5.2) -6.7% (2.6) -1.8% (5.2) -1.8% Energy & Process 2.7 6.4% 1.8 4.8% 5.5 6.6% Land Developmen
Slide 7: Net financing income
Net financing income H1 H1 Full Year 2009 2008 2008 £m £m £m Net Bank Deposit interest 0.4 2.8 4.9 Interest on loans to JVs 0.7 0.3 0.9 IAS19 Pension Scheme interest: (Non Cash) Expected return on assets 11.7 14.2 28.3 Interest Cost on present value of obligations (14.2) (14.7) (29.3) IAS19 Pension
Slide 8: Tax
Tax • H1 tax rate at 20.3% of PBT • Includes benefit from non taxable gains • Normalised rate expected to be 25%-27% on non JV profit The value of Costain 7
Slide 9: Cash flow reconciliation
Cash flow reconciliation Half year ended 30 June H1 H1 Full Year 2009 2008 2008 £m £m £m Cash and cash equivalents at beginning of period 146.9 133.4 133.4 Cash flow (used by)/from operating activities (17.6) 8.9 29.1 Cash flow used by investing activities (6.7) (6.0) (11.9) Dividends / financing (3
Slide 10: Balance sheet
Balance sheet Half year ended 30 June 30 June 2009 30 June 2008 31 December 2008 £m £m £m Non Current Assets (excluding pension deficit deferred tax) 69.1 66.4 63.0 Trade and other receivables 176.4 162.5 181.9 Cash 119.8 133.5 147.3 Current Assets 296.2 296.0 329.2 Total Assets 365.3 362.4 392.2 Cu
Slide 11: Pension
Pension • Net deficit in defined benefit pension scheme increased to £75.7m (2008: £48.4m) due to increased inflation rate and reduced discount rate (bond yields) • Plan to manage pension obligations and reduce volatility – Contribution plan agreed with scheme Trustee, next formal actuarial valuatio
Slide 12: Estimated Valuation (£m)
Enhanced value of PFI equity portfolio Invested Committed Estimated Status Capital Capital Valuation Bridgend Sold Kings Sold Valuation of Current Portfolio Sirhowy Sold Kent Schools Sold 50 Ealing Schools Sold Shropshire Sold Kingston Operations 1.3 0.0 3.6 45 Estimated Valuation (£m) Aquatrine Ope
Slide 13: Dividend
Dividend • Interim dividend increased by 10% to 0.275p (2008: 0.25p) • Payment on 30 October 2009 to shareholders on the register as at 25 September 2009 • Option to take shares in lieu The value of Costain 12
Slide 14: Andrew Wyllie, Chief Executive
Andrew Wyllie, Chief Executive The value of Costain
Slide 15: Strategy & scale enabling profitable growth
Strategy & scale enabling profitable growth • Continuing to focus on large blue chip customers with major spending plans underpinned by strategic national priorities – eg energy, water, waste, infrastructure • One of few organisations with scale and capability to deliver complex solutions to major c
Slide 16: Record, high quality order book
Record, high quality order book 30 June 2009: £2.5 billion • Order book up 25% to £2.5 billion Energy & • Major contract awards in year include: Process Community 5% – Severn Trent, Greater Manchester Waste, 6% 5-Year MAC Highways Agency contract • Repeat business at 80% • In addition, preferred bid
Slide 17: Longer-term visibility of earnings
Longer-term visibility of earnings Order Book @ 30 June 2008: £2.0bn Order Book @ 30 June 2009: £2.5bn Secured £690 million of 2010 revenue at 30 June 2009 (2008: £495 million for 2009) The value of Costain 16
Slide 18: Order book analysis
Order book analysis Order book growth 3 Private 9% 2.5 Public 33% 2 £bn 1.5 1 0.5 0 June 2007 June 2008 June 2009 Regulated 58% Order Book as at 30 June 2009 The value of Costain 17
Slide 19: Focus on customers with committed spending plans
Focus on customers with committed spending plans The value of Costain 18
Slide 20: Environment
Environment Environment Order Book: Market Opportunity Costain’s Position £1.3 billion Water • £20.8 billion AMP5 • Leading player successfully programme, 2010 - 2015 delivering 6 AMP4 contracts • Regulatory pressure to • Southern Water 4D improve performance and extended to 2015 standards • Severn
Slide 21: Infrastructure
Infrastructure Market Opportunity Costain’s Position Highways • • Infrastructure Order Book: £6 billion investment in strategic schemes by Top position in UK Highways and working on numerous major £0.9 billion Highways Agency capital projects • Lane widening and • Building major presence in (includi
Slide 22: Community
Community Community Order Book: Market Opportunity Costain’s Position £0.15 billion Education • £37 billion Building • A leading player having Schools for the Future secured 10-year BSF (“BSF”) now into fourth frameworks at Lewisham and wave Bradford Community • £9.3 billion BSF • Delivering schemes
Slide 23: Energy & Process
Energy & Process Market Opportunity Costain’s Position Energy & Process Order Book: £0.13 billion Nuclear • NDA budget c. £2.8 • Delivering innovative engineering billion per annum to modularised process 2012 solutions Energy & • Government • Front end engineering for Process commitment to new EVAP
Slide 24: Land Development
Land Development • Long-term strategic land development business Land Development – 50:50 joint venture with Santander Bank • Difficult market conditions: no significant land sales in the year – Cost base reduced • No market improvement expected in 2009 • Development of 800-berth marina underway – M
Slide 25: “Being Number One”
“Being Number One” • New Civil Engineer: Major Contractor of the Year 2009 - awarded for the second consecutive year • Construction News: Quality in Construction, Supreme Award The value of Costain 24
Slide 26: Summary
Summary • Strong first half performance overall • Strategy delivering operational growth despite economic environment • Significant opportunities in new business areas • Record order book, robust finances and net cash balance in excess of £100 million • Costain well placed to capitalise on current o
Slide 27: Results for the half year ended 30 June 2009
Results for the half year ended 30 June 2009 Analyst presentation 26 August 2009 The value of Costain 26