Transcript Slide 1

Preliminary Results Presentation
Year to 30th June 2006
Preliminary Results Presentation – September 2006
Disclaimer
This presentation is being made only to and is directed at (a) persons who have professional
experience in matters relating to investments falling within Article 19(1) of the Financial
Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (b) any
other persons to who it may otherwise lawfully be communicated, falling within Article 49(2) of
the Order (all such persons being referred to as “relevant persons”).
Any person who is not a relevant person should not act or rely on this presentation or any of
its comments.
The financial information set out in this document does not constitute the Company’s statutory
accounts. Statutory accounts for 2005, which received an auditors’ report that was unqualified
and did not contain any statement concerning accounting records or failure to obtain
necessary information and explanations, have been filed with the Registrar of Companies.
Preliminary Results Presentation – September 2006
Agenda
• Overview & Acquisitions
Greg Fitzgerald
• Financial Review
Frank Nelson
• Building
Andy Sturgess
• Infrastructure
Ken Gillespie
• Investments
Frank Nelson
• Housebuilding
Greg Fitzgerald
• Summary & Outlook
Greg Fitzgerald
Preliminary Results Presentation – September 2006
Overview & Acquisitions
Greg Fitzgerald – Chief Executive
Preliminary Results Presentation – September 2006
Overview & Acquisitions
Key Highlights
• Record profits & cash levels
• Successful acquisition and integration of Chartdale & Morrison
• Industry leading Health, Safety and Environmental performance
• Building – full UK coverage
• Infrastructure – increased expertise & sector coverage
• Housebuilding – record completions & land bank
• Excellent platform for further growth
Preliminary Results Presentation – September 2006
Overview & Acquisitions
New Structure
Preliminary Results Presentation – September 2006
Overview & Acquisitions
Update
• Chartdale Homes - February
• Morrison Construction - March
• Successful integration
• Greater synergy savings
• Year end profit targets achieved
• Significant opportunities being generated
Preliminary Results Presentation – September 2006
Financial Overview
Frank Nelson – Finance Director
Preliminary Results Presentation – September 2006
Financial Overview
Highlights
• Group revenue £851m up 19%
• Profit before tax
• Pre exceptional £32.5m up 19%
• Post exceptional £34.5m up 26%
• Earnings per share
• Pre exceptional 9.7p up 13%*
• Post exceptional 10.8p up 26%
• Dividend 2.5p up 19%
• Net cash £16m – strong construction performance
• Profit from operations (excl acquisition) up by 14%
• Return on average shareholders’ funds of 48%
• Tax charge reduced to 26%
* Tax credit allocated to exceptional profit
Preliminary Results Presentation – September 2006
Financial Overview
Profit and Loss (including Joint Ventures)
2006
2005
£’m
£’m
Revenue
854.1
726.2
Profit from operations
38.2
31.3
JV interest and tax
(0.2)
(0.3)
Profit before finance costs, amortisation and
exceptionals
38.0
31.0
Intangibles amortisation
(0.5)
-
Profit before exceptionals
37.5
31.0
3.9
-
(1.9)
-
Profit before finance costs
39.5
31.0
Net finance costs
(5.0)
(3.6)
Profit before tax
34.5
27.4
Exceptional items
- profit on sale and leaseback
- restructuring costs
Preliminary Results Presentation – September 2006
Financial Overview
Segmental Analysis to 30th June 2006 (including Joint Ventures)
Revenue
£’m
2006
2005
537.7
13.2
9.1
-
(1.6)
(1.2)
223.8
188.0
32.0
27.9
0.6
0.5
(5.4)
(4.5)
854.1
726.2
38.2*
31.3*
(0.5)
-
2.0
-
2006
Construction
PPP Investments
Housebuilding
Group
Intangibles amortisation
Exceptional items
Profit / (Loss)
£’m
628.8
0.9
2005
Less JV interest and tax
(0.2)
(0.3)
Net interest payable
(5.0)
(3.6)
Profit before tax
34.5
27.4
* Profit from operations
Preliminary Results Presentation – September 2006
Financial Overview
Net Interest payable
2006
2005
£’000
£’000
- On bank borrowings
2.3
2.2
- On unwinding of discount on creditors
2.4
1.3
- Net return on asset of pension fund
0.7
0.8
- Other
0.2
0.1
5.6
4.4
(0.6)
(0.8)
5.0
3.6
Interest Payable
Interest Receivable
Net Interest
Preliminary Results Presentation – September 2006
Financial Overview
Balance Sheet Highlights
2006
2005
120.1*
53.7*
Net cash / (debt) (£’m)
16.0
(12.4)
Gearing
N/A
23%
8x
8x
17 x
14 x
208.5
140.8
74.1
64.1
Land Creditors (£’m)
(56.6)
(47.6)
Deferred payment – Chartdale (£’m)
(36.5)
-
Shareholders’ funds (£’m)
Interest cover – total (IFRS)
- bank
Land (£’m)
Work in progress (£’m)
* Includes £33m net pension deficit (2005: £32.2m)
Preliminary Results Presentation – September 2006
Financial Overview
Cash Flow Summary
2006
£’m
2005
£’m
18.2
15.6
(19.8)
(15.6)
Net proceeds from issue of shares
48.8
0.2
Acquisitions (net of cash acquired)*
(24.9)
-
Proceeds from sale and leaseback
11.2
-
Capital expenditure and investments
(1.9)
(3.8)
Other
(3.2)
3.5
Net cash flow
28.4
(0.1)
(12.4)
(12.3)
16.0
(12.4)
Operating cash flow
Interest, tax and dividends
Opening net debt
Closing net cash/(debt)
* Morrison acquired on a normalised working capital basis. Cash on acquisition £30.2m
unwinding post acquisition.
Preliminary Results Presentation – September 2006
Financial Overview
Acquisitions
Turnover
£’m
Operating Profit *
£’m
Pentland
2.1
0.1
Chartdale
9.8
1.5
Morrison
90.8
1.0
102.7
2.6
Pre acquisition
£’m
Fair value
£’m
Morrison Fair Value
Intangibles
-
2.8
Fixed Assets
1.2
0.8
Debtors
83.4
81.8
Cash
30.2
30.2
(130.5)
(132.5)
(15.7)
(16.9)
Goodwill
-
56.6
Consideration
-
39.7
Trade Creditors
Net Assets Acquired
Note: Goodwill payment on Pentland £0.6m, Chartdale nil
* Before interest and amortisation
Preliminary Results Presentation – September 2006
Building
Andy Sturgess – Managing Director
Preliminary Results Presentation – September 2006
Building
Key Highlights
• New structure working well
• National coverage
• Market remains strong in key sectors
• Development opportunities in Affordable Housing
• Maintained strong order book
Preliminary Results Presentation – September 2006
Building
Education
• Acknowledged as educational specialist
• PFI Schemes
– Caludon Castle, Coventry, Phase 2
– Northampton, 41 schools
– Highlands, 11 schools
• Three City Academies underway
• Opportunities through traditional
procurement
Hampton Vale School, Peterborough
Preliminary Results Presentation – September 2006
Building
Commercial
• Market is in recovery
• Early involvement
• Design management key
• Value driven clients
• Repeat business
George Street, London
Preliminary Results Presentation – September 2006
Building
Affordable Housing & Regeneration
• Significant opportunities - English
Partnerships
• High levels of expertise
• Increase in Mixed Tenure Development
• Partnering Framework agreements with 21
Affordable Housing Providers
• Substantial growth potential
Leytonstone High Road, London E15
Preliminary Results Presentation – September 2006
Building
Forward Order Book
Forward Order Book £’m
Sector
Total
Health
173.8
173.5
Education
363.9
320.4
Prisons
187.7
187.7
Commercial
163.6
135.9
32.1
32.0
126.7
100.2
88.6
73.6
1,136.4
1,023.3
Interiors
Affordable Housing
Other
NPC*
* Secured on Non Price Competitive Basis
Preliminary Results Presentation – September 2006
Building
Summary & Outlook
• Expansion set to continue
• Sector focus still applies
• Strength & quality of order book
• Performance underpinned by cash
• Potential for further profit growth
Preliminary Results Presentation – September 2006
Infrastructure
Ken Gillespie – Managing Director
Preliminary Results Presentation – September 2006
Infrastructure
Key Highlights
• Order Book at record levels
• Excellent contract wins in chosen sectors
• Long-term frameworks success
• Strong customer satisfaction
• Delivering upper quartile returns
Preliminary Results Presentation – September 2006
Infrastructure
Water
• Leading contractor in the Water Sector
• Frameworks held with most of the regulated
mainland UK water companies
• Secured further frameworks with Scottish
Water and Anglian Water
• Top KPI performance
Gorad Pumping Station, Holyhead
Preliminary Results Presentation – September 2006
Infrastructure
Highways and Rail
• Highways
• Long tradition and substantial
capability
• Roads output will continue to grow
• Developing opportunities in both new
capital schemes and maintenance
• Rail
• Business continues to grow
• Extended frameworks with Network
Rail
• Opportunities through traditional
procurement
A80 Auckenkilns, Scotland
Preliminary Results Presentation – September 2006
Infrastructure
Renewable Energy & Remediation
• Renewable Energy
• Good reputation and track record
• Key clients include Scottish Power
• A number of opportunities with a
major award anticipated in the next 6
months
• Remediation
• Over 180 sites remediated
• Business synergies
• Appointed framework contractor for
Olympic Park
Coldham Wind Farm
Preliminary Results Presentation – September 2006
Infrastructure
Forward Order Book
Forward Order Book £’m
Sectors
Total
NPC*
Water
702.1
673.9
Highways
269.6
227.1
Flood Alleviation
78.9
78.0
Rail
52.6
49.9
Waterways
29.9
29.5
Remediation
8.8
8.8
Communications
4.5
0.0
Renewable Energy
2.0
0.2
Ground Engineering
2.7
0.0
1,151.1
1,067.4
* Secured on Non Price Competitive Basis
Preliminary Results Presentation – September 2006
Infrastructure
Summary & Outlook
• Continue to build on our significant presence in key sectors
• Substantial forward order book with over 90% in
frameworks with key clients
• Strong expertise and management capability
• Buoyant markets with excellent growth prospects
Preliminary Results Presentation – September 2006
Investments
Frank Nelson – Finance Director
Preliminary Results Presentation – September 2006
Investments
Overview
• Market position in Education,
MOD Housing & LIFT
• Financial close of three projects £351m
• Northampton Schools PFI
• DHE Portsmouth
• Highland Schools PFI
• Preferred bidder South East Essex
LIFT - £100m
Vale Drive, North London LIFT
Preliminary Results Presentation – September 2006
Investments
Future Prospects
• LIFT – future tranches on existing schemes
• ITN Stage
• South East Midlands LIFT
• St Andrews Community Hospital
• Building Schools for the Future programme
• Scotland - Education PFI’s & HUB
Preliminary Results Presentation – September 2006
Housebuilding
Greg Fitzgerald – Chief Executive
Preliminary Results Presentation – September 2006
Housebuilding
Housing Highlights
• Record Year
• Profits
• Carry forward position
• Land bank
• Acquisition of Chartdale
• Strong customer satisfaction levels
maintained
• Planning permissions secured for
current year
• National Awards
• Stable market conditions
Gunwharf, Plymouth – CABE Award Winner
Preliminary Results Presentation – September 2006
Housebuilding
Key Statistics (including Joint Ventures)
12 months to June 2006
2006
2005
Increase %
1,054
853
23.6
Average Selling Price £’000
212
208
1.9
Income per Sq. Ft £
226
222
1.8
Turnover £m
224
188
19.1
Operating Profit £m
32.0
27.9
14.7
Margin %
14.3
14.8
(3.4)
ROCE %
20.8
22.3
(6.7)
Sales in hand August 06 £m
122.0
100.4
21.5
Land bank August 06 units
4,115
2,605
58.0
625
695
(10.1)
Units
Strategic land August 06 acres
Preliminary Results Presentation – September 2006
Housebuilding
Market Conditions and Focus
•
Incentive levels reduced
•
Competitive land market
•
Modest house price inflation
•
Cost base reduction
•
Planning process remains challenging
•
Reduction in exposure to apartments
•
Differentiation through design and
complexity of development
•
Regeneration & Affordable Housing
opportunities
Denovo, Country Gate, New Barnet
Preliminary Results Presentation – September 2006
Housebuilding
Regional Businesses
•
Coverage across South & East of England
•
Strong regional brands
•
Brownfield and conversion 75%
•
Land bank
• Houses 78%
• Apartments 22%
•
Customer satisfaction 91%
•
Potential in Scotland
Fairfield Park, Letchworth
Preliminary Results Presentation – September 2006
Housebuilding
Chartdale Acquisition
•
Business exceeding expectations
•
Land bank of 1350 units
•
Delivering synergies
•
Critical mass in Eastern Counties
•
Scope for growth
Hurds Farm, Worlaby
Preliminary Results Presentation – September 2006
Housebuilding
Summary & Outlook
•
All business units performing well
•
Improved sales mix
•
Market conditions improved
•
Successful business model
•
Confident of further expansion
Preliminary Results Presentation – September 2006
Summary and Outlook
Greg Fitzgerald – Chief Executive
Preliminary Results Presentation – September 2006
Summary and Outlook
Platform for Growth
• Very strong financial position
• Complete Integration Plan
• All divisions performing
• Industry leading Health, Safety and Environmental performance
• Maximise business synergies
• Major focus on Regeneration and Affordable Housing
• Confidence in growth plan
Preliminary Results Presentation – September 2006
Preliminary Results Presentation
Year to 30th June 2006
Preliminary Results Presentation – September 2006