Interim Results 2007

Transcription

1 Interim Results 2007

2 Introduction Overview and Highlights Trading and Outlook by Division Financial Summary Acquisition Outlook and Prospects John Morgan Paul Smith David Mulligan John Morgan John Morgan 2

3 Overview Highlights Record interim results with profit before tax up 18% to 25.2m (2006: 21.3m) Completed acquisition of AMEC Developments (ADL) and AMEC Design and Project Services (DPS) on 27 July Rebranded Muse Developments and Morgan Ashurst Earnings up 16% to 41.1p (2006: 35.4p), dividend increased by 25% to 10.0p Improved average level of cash of 39m (2006: 15m): cash at end of June of 62m (2006: 20m) Order book increased by 24% to 4.1bn (2006: 3.4bn) which includes 0.6bn relating to the acquisition 3

4 Overview Financial History m Revenue Profit before tax 1, % 1, % % % * 2000* % * 2000* * 1995 and 2000 figures are on UK GAAP basis 4

5 Overview Segmental Profit Analysis m June 2007 June 2006 Fit Out % Construction % Infrastructure Services % Affordable Housing % % Group Activities (6.0) (3.6) Joint Ventures (0.4) (0.1) OPERATING PROFIT % Interest PBT % 5

6 Overview Corporate Structure Fit Out UK s leading office fit out business comprising Overbury, Morgan Lovell and Vivid Interiors. Construction National construction business with sector expertise in education, defence, healthcare, industrial, commercial and retail construction. Infrastructure Services A leading UK provider specialising in civil engineering and utilities services in the water, gas, electricity, defence and transport sectors. Affordable Housing UK s leading provider of affordable housing. Specialises in mixed tenure developments. Development UK urban regeneration business which specialises in delivering complex mixed use schemes. 6

7 Overview Order Book Profile m 1,400 1,200 1, * Affordable Housing Infrastructure Services Construction Fit Out Note: Order book excludes Muse Developments pipeline of 3.7bn * 2 nd half order book for

8 Fit Out 8

9 Fit Out Market & Trading Highlights 2.3bn market: continues to experience buoyant market conditions Fit Out market leader with key competitors ISG, Wates, Mace and Structuretone Strength of the market supported by activity in financial service, professional service and public sectors Operating profit increased 21% to 12.4m Margin steady at 5.5% (2006: 5.6%) 9

10 Fit Out Financial History m Revenue Operating Profit % % %

11 Fit Out Projects Client: Birkbeck College Project: 48 week refurbishment and fit out Contract value: 1m Location: London Client: BBC Radio Theatre Project: Refurbishment of Grade I listed theatre Contract value: 2.9m Location: London Other key projects: Foreign & Commonwealth Office ( 2.8m), Gravesham Borough Council ( 5.8m), Hotel du Vin ( 4m) 11

12 Fit Out Prospects Continued strong market anticipated into 2008 driven by new space becoming available Develop further quality offering and focus on client experience Continue to drive expansion into retail sector Order book increased to 206m (2006: 165m) 12

13 Construction 13

14 Construction Market & Trading Highlights Buoyant market driven by commercial and public sectors Morgan Ashurst, combining Bluestone and DPS construction activities, now a market leader with key competitors Kier, Galliford Try and Wates Operating profit of Bluestone for half year of 2.2m (2006: 1.6m) Margin of 1.1% (2006: 0.9%) Success in financial closing two PFI/PPP schemes Bury, Tameside and Glossop NHS LIFT Dorset Emergency Services and Police Initiative (DESPI) PFI Perfect Delivery quality programme extended 14

15 Construction Financial History m Revenue Operating Profit % % %

16 Construction Projects Client: University of Southampton Project: Construction of new Development Origins of Health and Disease (DOHaD) Building Contract value: 6m Location: Southampton Client: Community Solutions for Schools Project: Construction of a new 2-form entry primary school, nursery and children s centre Contract value: 7m Location: Islington, London Other key projects: Bideford College ( 36m), Bracknell & Wokingham College ( 26m), Bury Tameside Glossop LIFT ( 11m), South Lanarkshire Schools ( 320m over four years) 16

17 Construction Prospects Outlook positive with further market growth Broader construction expertise with impact of DPS acquisition Extended geographic coverage into Scotland, Morgan Ashurst a national business Expanded sector coverage into retail and defence Order book of 891m (2006: 487m), including 398m in relation to DPS construction activities 17

18 Infrastructure Services 18

19 Infrastructure Services Market & Trading Highlights Infrastructure market continuing to improve Morgan Est a market leader following acquisition of DPS, particularly in bridges, tunnelling, water and utilities Key competitors: Balfour Beatty, Carillion, Costain and Skanska Operating profit increased to 4.0m (2006: 2.7m) due to increased revenue Margin at 1.8% (2006: 1.9%) Growth driven by: Increase in civil engineering projects, in particular tunnelling Expansion of utilities 19

20 Infrastructure Services Financial History m Revenue Operating Profit % % %

21 Infrastructure Services Projects Client: Transport Scotland Project: Kincardine Bridge Contract value: 50m Location: Fife Client: Yorkshire Water Project: Upgrade of Esholt sewage treatment works Contract value: 39m Location: Bradford and North Leeds Other key projects: BAA framework ( 9.5bn over ten years), EDF Energy ( 48m over four years), Severn Trent Water framework ( 120m over five years) 21

22 Infrastructure Services Prospects Market outlook continues to be positive DPS civil engineering projects merged with existing activity Acquisition strengthens market position in the tunnelling, water and transport sectors Division expected to return to previous margin levels in 2008 Order book at 1.5bn (2006: 1.3bn), including 187m relating to DPS civil engineering activities 22

23 Affordable Housing 23

24 Affordable Housing Market & Trading Highlights Growth in operating profit, up 13% at 11.5m (2006: 10.2m) Lovell market leader: key competitors Keepmoat, Connaught, Mears, Kier Improvement in margin to 6.0% (2006: 5.5%) First social housing PFI secured at Miles Platting, Manchester Success in delivering mixed tenure opportunities Further Decent Homes opportunities secured 24

25 Affordable Housing Financial History m Revenue Operating Profit % 4.8% %

26 Affordable Housing Projects Client: Renaissance Consortium Project: Miles Platting neighbourhood (PFI) Contract value: 200m Location: Manchester Client: Bromford Housing Group Project: Housing regeneration scheme Contract value: 34m Location: Rea Valley Other key projects: Homes for Haringey ( 60m over four years), Renew North Staffordshire ( 55m over five years), Somer Community Housing Trust ( 40m over three years) 26

27 Affordable Housing Prospects Market leading position in long term growth market Growth driven by mixed tenure urban regeneration schemes Muse Developments and Lovell will seek joint opportunities in regeneration projects Order book progressed to 1.5bn (2006: 1.4bn) 27

28 Financials Summary Balance sheet and cash flow 28

29 Financials Summary m Six months to Six months to June 2007 June 2006 Revenue Profit before tax Effective tax rate 31% 30% Tax charge Profit after tax Net assets EPS 41.1p 35.4p Dividend per share 10.0p 8.0p 29

30 Financials Balance Sheet and Cash Flow Balance sheet Interest in joint ventures increase due to change in hedge reserve and new investments Inventories increased slightly on last year at 93m (2006: 87m) Cash flow Cash of 62m at period end (2006: 20m) Average cash during the period of 39m (2006: 15m) Operating cash utilisation at half year less pronounced than previous years at 16m (2006: 31m) 30

31 Acquisition 31

32 Acquisition Summary Acquired two businesses, ADL and DPS ADL renamed Muse Developments Muse Developments regeneration business with interests in 3.7bn pipeline of projects on own account and through partnerships DPS design, construction and civil engineering businesses with 0.6bn forward order book Provisional consideration of 34m, assumed net liabilities of 21m giving goodwill of 55m, subject to final agreement of acquisition balance sheet Provisional net cash outflow of 14m as net liabilities includes cash balances of 20m 32

33 Muse Developments Overview ADL renamed Muse Developments, continues as a standalone business Core skill of building partnerships in long term mixed use developments Business built on experience of team and track record Interest in 30 projects with 15 in construction phase 33

34 Muse Developments Analysis of Future Workload Residential 42% Office 31% Retail/ leisure 16% Distribution 11% 34

35 Muse Developments Profile of Major Projects Project > 2018 Bromley Park Durham Eastlands Hulme Wakefield Europort Smithfield Cheadle Royal South Lanarkshire Ashton Moss Eurocentral Lingley Mere Preston Lewisham Reading ECf Manchester Victoria ISIS Lord Halifax Stockton Swindon Blackpool Doncaster East Dunbarton 35

36 DPS Overview 650m revenue design, construction and civil engineering business Key sectors: retail, transport, health, education and defence Acquisition draws a line under the past Key relationships with BAA, MoD, Marks & Spencer, Welsh Water National business, employing approximately 2,800 people in five locations 36

37 DPS Future Structure DPS civil engineering activity merged into Morgan Est DPS construction activity merged with Bluestone; business rebranded to become Morgan Ashurst Design business branded Morgan Professional Services, working closely with Morgan Est and Morgan Ashurst 37

38 Acquisition Impact Integration process relatively straightforward for size of acquisition Minimal overlap of contract values between construction businesses while Muse standalone Little duplication of office locations Synergies in procurement realise over next six months Timetable for full integration End Q3 2007: final structure determined for Morgan Ashurst December 2007: transfer of IT platform 2008: integration complete Key rationale is focus on growth, not cost savings 38

39 Future Outlook and Prospects Fit Out and Affordable Housing continue to develop with market leading positions Infrastructure Services increasing in scale to deliver recently secured projects UK wide mixed use regeneration capability following acquisition Construction now a market leader following acquisition Positive outlook with all sectors looking healthy Forward order book at 4.1bn plus 3.7bn pipeline at Muse Developments We have demonstrated impressive profit growth in all business areas. The recent acquisition will further strengthen the Group and creates a UK wide leading urban regeneration business. 39

40 Financial Appendices Income Statement Balance Sheet Cash Flow Fit Out Work Profile Affordable Housing Work Profile 40

41 Financials Income Statement m Six months to Six months to June 2007 June 2006 Revenue Cost of sales Gross profit Administrative expenses (67.9) (57.0) Share of results of joint ventures (0.4) (0.1) Operating profit Net interest Profit before tax Tax Profit after tax

42 Financials Balance Sheet m At 30 June 2007 At 30 June 2006 Non current assets Intangible Tangible Interest in JVs & investments Current assets Inventories Trade and other receivables Cash and cash equivalents Current liabilities (461.7) (378.0) Net current assets (2.8) 34.8 Non current liabilities (3.1) (4.7) Net assets

43 Financials Cash Flow m Six months to Six months to June 2007 June 2006 Operating profit Depreciation Non cash adjustments ¹ Movement in working capital (38.7) (48.2) Net interest Tax (7.6) (6.5) (16.3) (30.8) Net investment in fixed assets (3.5) (1.7) Investments / acquisition (2.4) (18.4) Dividends (8.4) (7.5) JV dividend Finance leases (1.1) (0.5) Payments to acquire own shares (1.3) - Share capital Net cash flow (33.0) (51.6) Net cash balances ¹ JVs, share options, profit on disposals, pension cost 43

44 Fit Out Work Profile m 1 st Half st Half Work type Framework Large Projects "Core" Sector 27 Financial Professional 8 Technology Public Leisure & Entertainment Property Other Total 114m 226m 44

45 Affordable Housing Work Profile m 1 st Half st Half Total 102m 192m Social Housing Refurbishment Mixed Tenure Open Market New Build Social Housing New Build 45