full year results adrian ringrose, chief executive g, twelve … · 2015-03-10 · tim haywood,...
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Full-year resultsyTwelve months ended 31st December 2012
Adrian Ringrose, Chief ExecutiveFull year resultsg ,Tim Haywood, Group Finance Director
Full-year resultsTwelve months ended 31 December 2012
27th February 201331 December 2012
Adrian Ringrose, Chief ExecutiveTi H d G Fi DiTim Haywood, Group Finance Director
27 February 2013
Delivering our strategy
Strategy Outcomes FY 2012 results
Building Strong Core businesses
Revenue +6%Revenue and profit growthbusinesses
Headline pre-tax profit +8%
growth
Capturing related expansion opportunities Strong three-year cash
conversion (117%)
Strong Cash Conversion
E d I i ll
£6.3bn future workload
F W kl d G hExpand Internationally Dividend +8%Future Workload Growth
Tim Haywood
Income statement£ million 2012 2011
Revenue 1,958.4 1,847.5 +6%
Total operating profit 80.4 73.8 +9%p g p
Interest (2.0) (1.0)
Headline profit 78.4 72.8 +8%
Amortisation of intangible assets (6.4) (5.7)
Exceptional items 110.9 -
Profit before taxation 182 9 67 1 +173%Profit before taxation 182.9 67.1 +173%
Taxation (11.2) (6.5)
Profit after taxation 171.7 60.6 +183%
Underlying Headline EPS 47.2p 43.7p +8%
d d h 8%Dividend per share 20.5p 19.0p +8%
Segmental analysisg y2012 2011 % growth
£ illi R TOP* M i R TOP* M i i TOP*£ million Revenue TOP* Margin Revenue TOP* Margin in TOP*
Support Services- UK 1,118.1 44.3 4.0% 1,007.3 36.4 3.6% +22%
- International** - 3.7 12.8% - 3.6 15.1% +6%
Construction – UK 737.2 14.6 2.0% 731.1 18.0 2.5% -19%
– International** 14.3 6.5% - 16.6 8.4% -15%
Equipment Services 167.5 16.0 9.6% 154.3 13.6 8.8% +18%
Investments - 6.6 - 6.0 +10%
Group Services (64.4) (19.1) (45.2) (20.4)p ( ) ( ) ( ) ( )
1,958.4 80.4 4.1% 1,847.5 73.8 4.0% +9%
JVs and associates 411.2 472.1
2 369 6 2 319 62,369.6 2,319.6
* Total Operating Profit** International margins are pre‐tax
Group interest chargep g
£ million 2012 2011£ million 2012 2011
Group net interest payable (6.6) (6.3)
Investments sub-debt interest receivable 5.4 4.0
Pension finance (charge)/credit (0.8) 1.3
Net interest (2.0) (1.0)
Stable cost of Group debtInvestments sub-debt interest increased reflecting operational maturityInvestments sub-debt interest increased reflecting operational maturity
Pension finance cost increase – lower expected return on assets
Balance sheet summary
£ million 2012 2011
Goodwill and intangible assets 265.8 221.2
Property, plant and equipment 137.8 139.7Property, plant and equipment 137.8 139.7
Joint ventures and associates 84.2 180.5
Assets held for sale 51 2Assets held for sale 51.2 -
Working capital (153.0) (148.5)
Taxation (3.2) (5.7)
Pension obligation (net of tax) (77.8) (42.2)
Cash / (net debt) 25.8 (44.2)
Net assets 330.8 300.8
Debt capacity and covenants
Previous £250m facility replaced with:• 5 year £150m syndicated facility until February 2017
• 4 year bilateral of £25m until February 2016
• 4 year bilateral of €25m until February 2016• 4 year bilateral of €25m until February 2016
• Further £50m for 3 years with options to extend
• Additional £49m of other uncommitted debt facilities
Covenants as previously:• Net debt : EBITDA < 3.0x2012: n/a2012: n/a
• Interest cover > 3.5x2012: 38x
£215 million undrawn facility at 31 December 2012
Significant headroom/capacity to drive growth
Movement in net debt / cash£80.0m
£40 0
£60.0m
£20.0m
£40.0m
£0.0m
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Free cash flow generation of £33m
Cash flow£ million 2012 2011
GJVs and A TOTAL TOTALGroup Assocs TOTAL TOTAL
Operating profit 55.0 25.4 80.4 73.8Other exceptional Items (4.0) - (4.0) -Depreciation & amortisation 29.3 - 29.3 29.9pNet capital expenditure (14.9) - (14.9) (5.5)Less: associates and JVs profits - (25.4) (25.4) (27.9)Dividends from associates - 19.8 19.8 20.6Oth h (10 0) (10 0) (13 2)Other non-cash (10.0) - (10.0) (13.2)Working capital movement 0.2 - 0.2 9.5Operating cash flow 55.6 19.8 75.4 87.2Pension deficit payments (30.8) - (30.8) (27.0)p y ( ) ( ) ( )Tax paid (10.7) - (10.7) (3.2)Other (1.4) - (1.4) (2.6)Free cash flow 12.7 19.8 32.5 54.4Dividends (27 0) (27 0) (25 5)Dividends (27.0) - (27.0) (25.5)Acquisition and investments 63.0 - 63.0 (19.3)Other non-recurring 1.5 - 1.5 -Movement in net debt 50.2 19.8 70.0 9.6
Operating cash flow conversion % 101% 78% 94% 118%
IAS 19 Pensions
£ million 2012 2011
Defined benefit obligations 799 3 695 0Defined benefit obligations 799.3 695.0
Scheme assets (698.2) (638.8)
Deferred tax thereon (23.3) (14.0)Deferred tax thereon (23.3) (14.0)
Net deficit 77.8 42.2
Movement in IAS 19 retirement benefit obligation (net of tax)benefit obligation (net of tax)
£0
£30.8m£42.2m-£20m
£0m
Current yearservice cost
Cashcontributions
Increase inliabilities
Return onassets
Tax impact ofmovements
£5.8m £5.8m£77.8m
-£60m
-£40m
£125.4m
£9.3m
-£100m
-£80m
£49.7m
-£140m
-£120m
-£160m
Further reduced subsequent to balance sheet date by £55m of PFI assets
Pension actuarial valuation
• Deficit valuation at 31 December 2011 agreed at £150m
• Subsequent PFI asset contribution of £55m
• Deficit cash contributions reduced by £11m pa to £12m pa
• Increases available free cash flow
PFI Investment portfolio
Addiewell Prison Justice £3.0mAddiewell Prison Justice £3.0m
West Yorkshire Police Justice £4.3m
Invested £7.3m
Remaining commitment -
Committed £7.3m
Alder Hey (preferred bidder) Health £3 3mAlder Hey (preferred bidder) Health £3.3m
Total commitment including
preferred bidder £10.6m
Acquisitions and disposals
Cash Headline Pension
EPS funding
Disposals £119m £55m3.5p
Acquisitions No change£67m 3.5p
Net t
No change£52m £55mmovementg£52m £55m
Summary• Strong trading performance
o Continued margin progression at UK Support Services
o Strategic progress in International Support Services
o Stable volumes at UK Construction
o Competitive pressures in International Construction
o Return to full year growth at Equipment Services with increased volumes and enhanced margins
• Robust balance sheeto Continued strong cash generation
o Realisation of £174m of value from PFI portfolio: £119m cash and £55m into pension scheme
o Reduced ongoing pension deficit contribution payments by £11m pa
o Programme of reinvestment started with 3 acquisitions totalling £67m
o Successful refinancing secured finances
Full-year dividend increased 8% to 20.5pps
Adrian Ringrose
Our Vision:
Redefining the future for people and places
Our Brand:
Sustainability:
Support Services UKpp
Rehab Jobfit, South WalesAlder Hey, Liverpool
Support Services UKpp
• Good work winning mitigating client expenditure pressures
• Won ~£1.8bn of new work
• Division’s future workload +16%
(FY 2012: ~£5.2bn, FY 2011: ~£4.5bn)
• Revenues +11% at £1,118.1m
(FY 2011: £1,007.3m)
Alliance Boots, UK
4.5%Operating margin (%)
• Strong FY margin performance (+0.4% vs FY 2011)
• Margin improvement programme2.5%
3.0%
3.5%
4.0%
• Procurement
• Cost efficiencies 2.4%
3.6% 4.0%
0.5%
1.0%
1.5%
2.0%
• Volume growth0.0%
0.5%
2010 2011 2012
FY
Support Services UK – Work winning in FY 2012winning in FY 2012
New public sector clients:New public sector clients:• West Yorkshire Police Authority• Alder Hey Hospital• Leicester, Leicestershire and Rutland NHS Trust• East Thames• London borough of Southwark• Department of EducationDepartment of Education
New private sector clients:• Scottish Power• University of OxfordUniversity of Oxford• Carphone Warehouse
Client development:• Sainsbury’sSainsbury s• Alliance Boots• Defence Infrastructure Organisation
Support Services Internationalpp
Madina, Qatar How United Services, Qatar
Support Services International
Good work winning across range of sectors
• Revenues +21% at £31 3m (FY 2011: • Revenues +21% at £31.3m (FY 2011: £25.9m)
Strong FY margin performance at 12.8% (FY 2011: 15 1%)(FY 2011: 15.1%)
• Margin development as expected in FY with good visibility of demand for 2013
Madina, Qatar
12.0%
14.0%
16.0%Operating margin (%)
2013
15.2% 15.1%12.8%
4.0%
6.0%
8.0%
10.0%
In January 2013 we expanded our oil and gas services offering through acquisition of TOCO
0.0%
2.0%
2010 2011 2012
Support Services International -Work winning in FY 2012Work winning in FY 2012• Education
• Doha College• Doha College• Compass international Schools of Doha• Sri Lankan school of Doha• British School Muscat• American School of DohaAmerican School of Doha
• Qatar Petroleum• Refinery Mesaieed, 3-year offshore shutdown • Construction and installation of 6 plant change requests, mechanical,
engineering and installation work engineering and installation work
• Qatar Shell GTL• Plant Change Construction Services framework• Shutdown of Liquid processing units and utilities
• Punj Lloyd Limited: Fabrication pipe work pre-commissioning on a • Punj Lloyd Limited: Fabrication, pipe work, pre-commissioning on a polysilicon plant
• Doha International Airport• Engineering, procurement, installation and commissioning for diesel storage
tankstanks
• Military training college: Gatehouse, airframe and vehicle maintenance workshop
• Specialist Training: Oman Emergency Response Team and Oman LNGT i D l t & I t t C (TDIC) F ll FM • Tourism Development & Investment Company (TDIC): Full FM –buildings and infrastructure, Manarat Al Saadiyat
Support Services - medium term outlookoutlook
UKUK• Future workload of £4.5bn • Sustainable margin of 5% in the medium term• Organic growth through structural market expansion opportunity• Continuing client efficiency imperatives• Adding reach and capabilityAdding reach and capability
InternationalF kl d f £51 • Future workload of £51m
• Sustainable margin of 13% in the medium term• Safety critical operating environmentsy p g• Young, fast-growing building services markets• Skills shortages
Construction UK
Advocates Close, Edinburgh Energy from waste plant, Westbury
Construction – UK
• Stable future workload of £0.9bn (FY 2011: £0.9bn)
• Well-positioned in health, education and infrastructureeducation and infrastructureLeeds East Primary School, UK
3.5%Operating margin (%)
• New markets, e.g. energy-from-waste
3 2%
2.0%
2.5%
3.0%
3.2%
2.5%2.0%
0.5%
1.0%
1.5%
0.0%2010 2011 2012
Construction UK work winning in FY 2012FY 2012
• New clientsNew clients• Jaguar Land Rover
• National Grid framework agreement
• Client development• NHS Wales
• St Luke’s Hospice
• Christie Hospital NHS Trust
• Northumbrian Water
• Corby A43
• Ministry of Justice
• New business streams• Waste to energy: Westbury, Glasgow,
Peterborough
• Conservation: English Heritage
Construction International
Jumeirah beach resort, Dubai Bionest waste treatment plant, Qatar
Construction – International
• Resilient future workload: FY 2012 £0.2 bn (FY 2011: £0.2 bn)
• Dubai showing early signs of commercial g y gdevelopment
• Well positioned – focus on infrastructure, roads, rail, port schemes, power, water and drainageS i li t fit t b i f i g ll • Specialist fit-out businesses performing well (joinery, steelwork and specialist temporary buildings)
• Resilient margin, trending towards medium-term guidance
Operating margin (%)
6 0%7.0%8.0%9.0%
10.0%
Doha International Airport, Qatar8.7% 8.4%6.5%
2.0%3.0%4.0%5.0%6.0%
0.0%1.0%
2010 2011 2012
Construction International - Work winning in FY 2012winning in FY 2012
• Industry/Infrastructurey• Hyosung Corporation – GIS substations • Qatar Steel – foundations and Civil works• DP World – Gate 8 Jebel AliDP World Gate 8 Jebel Ali• Road & transport Authority, UAE
• Education• British School Muscat• British School, Muscat
• Commercial• Bank Nisswa branch and head office fit-out
B b Al B h H l fi Aj• Bab Al Bahr Hotel fit-out, Ajman• Emirates engine maintenance facility, Dubai
• Government• UAE Prime Ministers Office fit-out, Emirates
Towers, Dubai• Military Technical Office, Oman • Royal Omani Police, Al Sukri• Engineers Office, Dubai
Construction - medium term outlook
UK• On going demand challenge through 2013• On-going demand challenge through 2013• Medium term margin of 1.5 - 2.0%E i di t d i• Encouraging medium-term drivers• Demographics, infrastructure investment, proactive government policy
InternationalE i di t d i • Encouraging medium-term drivers • Demographics, infrastructure investment
• Medium-term margin of 6.0%
Equipment Services q p
Falsework at Mecca Mosque, Saudi ArabiaRMD at the Sphinx c.1950
Equipment Servicesq p• Continued growth in FY 2012 – revenues
+9% to £167.5m (FY 2011: £154.3m)9% to £167.5m (FY 2011: £154.3m)
• Changing geographic mix:
- Far East/Middle East strong and - Far East/Middle East strong and Australasia good (74% of division revenues)
- Saudi Arabia was largest Middle East Cruise ship terminal, Hong Kong
12.0%
Operating margin (%)
Saudi Arabia was largest Middle East market by revenues in FY 2012 (48%; FY 2011: 46%)
- Expansion into Colombia, Chile and
8.0%
10.0%
.0% Expansion into Colombia, Chile and Panama
- North America stabilising- Retrenchment in Europe
10.3%8.8% 9.6%
4.0%
6.0%
p
0.0%
2.0%
2010 2011 2012
Equipment Services - medium q pterm outlook
• Cyclical recovery in worldwide construction markets
• Selective geographic expansion
• Export growth from Middle East and EuropeExport growth from Middle East and Europe
• Return to medium term margin target of 15.0%
Summaryy
• Strong full year performance in mixed market conditions
Sig ifi t t t gi d li• Significant strategic delivery
• Confident in Group’s prospectsConfident in Group s prospects
• Strong balance sheetg
• Further increase in the dividend (+8%)
Questions
Appendix
Substantial future workload
2 500
3,000
2,000
2,500
1,000
1,500£m
0
500
02013 2014 2015 2016 2017 2018+
Support Services UK Construction UK Share of Associates
Strong near-term revenue gvisibility
2014
Forward Order BookForward Order Book
Pipeline
2013
0.0 500.0 1,000.0 1,500.0 2,000.0£m
Strong platform for growthg p gGroup revenue mix by typeGroup revenue mix by sector
EducationJustice
Health
Defence
EducationPrivate
Industry
Central /
Commerce
Public & privatised
Segmental operating profit - by activity Segmental operating profit – by geography
Local Government
Infrastructure
Rest ofEquipment Services
Rest of World
Support Services (UK)Construction
(Int'l)
UK
MENA
Support Services (Intl)
Construction (UK)
Divisional revenue analysis yRevenue mix by sector – Support Services UK
Revenue mix by sector –Construction UK
EducationJustice
l hJustice
Health
DefenceCommerce
Education Health
Defence
Industry
Education
Defence
Industry
Central / Local
Infrastructure
Industry
Central / Local GovernmentCommerce
Revenue mix by sector – Equipment Services
IndustryGovernment Infrastructure
Health Defence
IndustryEducation
Justice
Central / Local GovernmentCommerce
Infrastructure
Interserve Working Futuresg• Formerly known as Business
Employment Services Training Ltd (BEST Ltd)
Key acquisition facts
Acquisition date 4th May 2012
Ltd)
• Offers a range of welfare-to-work programmes including, but not limited to the Work Programme
Consideration Up to £18.25m
Revenue c£18m
Profit c£3m
to, the Work Programme
Profit c£3m
Multiple of Profit 6x
Intangible assets acquired (customer relationships) £7.7m
Anticipated current year revenue
Work Programme - Prime ( )
Amortised over 6 years / £1.3m pa (full year)
Work Programme - Sub1
Work Programme - Sub2
Work Choice
ERDF
Mandatory Work Activity
The Families Contract
Other
Advantage Healthcareg• Leading UK provider of healthcare at
home
Key acquisition facts
Acquisition date 17th December 2012
• Expands our public sector service proposition in the UK
• Access to £10bn community healthcare 2012
Consideration £26.5m
Revenue c£40m
ymarket
• Build upon existing relationships with NHS Primary Care Trusts
Profit c£3m
Multiple of Profit 9x
Intangible assets acquired ( t l ti hi ) £16.5m
y
Anticipated current year revenue
(customer relationships)
Amortised over10 years /
£1.6m pa (full year)
Staffing Homecareg
TOCO/Willbros Middle East Ltd
Oil d i b i Key acquisition facts
Acquisition date 7th January 2013
• Oil and gas maintenance business
• Expands our operational footprint in the oil and gas services business into Oman
Consideration $41.3m
Revenue C$75m
Profit (our share) C$6m
• 85% purchased by Interserve
• 15% purchased by our existing Omani partner
Multiple of Profit 7x
Approximate annual amortisation £2m pa
partner
