HY2015. Disciplined performance management. Redefining the future for people and places 1. Attractive growth fundamentals & opportunities

Transcription

1 HY2015 Attractive growth fundamentals & opportunities Disciplined performance management Redefining the future for people and places 1

2 Overview Resilient underlying performance HY2015 Headline EPS 31.3p (+1%) Stable 7.6bn order book Strong gross operating cash flow ( 128.3m) Net debt 275.6m (1.6x EBITDA) Managed exit of Energy from Waste activities Attractive growth fundamentals & opportunities Impact in line with May guidance Outlook Strategic review proceeding as planned Disciplined performance management Improved YE2016 net debt guidance 300m- 320m Outlook for current year remains unchanged Further increase in interim dividend Redefining the future for people and places 2

3 Tim Haywood Redefining the future for people and places 3

4 Headlines million H H Revenue 1, , % Total operating profit % Interest (9.1) (8.3) Headline profit % Gross operating cash flow Net debt Headline EPS 31.3p 31.0p +1% Dividend per share 8.1p 7.9p +3% Excl exited business Redefining the future for people and places 4

5 Income statement million H H Revenue 1, , % Total operating profit % Interest (9.1) (8.3) Headline profit % Exited business and exceptional items (72.0) (2.8) Amortisation (15.6) (15.4) Profit / (loss) before tax (33.8) 33.7 Taxation (1.9) (4.4) Profit / (loss) after tax (35.7) 29.3 Minority interest (1.4) (0.5) Redefining the future for people and places 5

6 Support Services UK - Solid work winning m H Revenue impacted by 2015 delays in public sector procurement driven by the election Revenue % TOP Strong work winning bn work won Margin development as guided (National Living wage impact) -8% Margin 4.1% -0.2bps Workload 2 5.7bn +2% 1 Total operating profit 2 %age change vs Dec 2015 workload US visiting forces Redefining the future for people and places 6

7 Construction UK - A diversified business m H Revenue % Focus on smaller (< 10m) contracts & repeat business Strong in period working capital performance Operating margin slightly up on H TOP % Margin 1.0% -0.5bps Workload 2 1.4bn +2% 1 Total operating profit 2 %age change vs Dec 2015 workload Southampton Solent University Redefining the future for people and places 7

8 Exited business guidance unchanged m H H YE 2015 Revenue Post tax impact (70.0) (1.0) (8.5) Net cash flow impact (52.8) (1.3) (10.4) Exited that line of business where we take contractual responsibility for process risk on the construction of energy from waste facilities 6 contracts within this portfolio, procured between and with aggregate revenue of 430m. Significant milestones to be completed in 2016 & Aggregate P&L impact inline with May trading update Redefining the future for people and places 8

9 International Support Services - Strong year on year progress m H Revenue % TOP Good volume and margin growth in period Currently reduced workload & reduced visibility beyond 2016 but significant work being bid Implementing plans to right-size operations +62% Margin 1 4.5% +0.3bps Workload 3 205m -33% 1 Incl JVA revenue, margin adjusted for underlying JVA margin 2 Total operating profit 3 %age change vs Dec 2015 workload Adyard Redefining the future for people and places 9

10 International Construction Good growth & cash conversion m H Revenue % TOP Strong operational performance with excellent cash conversion Positive workload growth Good market outlooks, UAE market strong +23% Margin 1 3.9% +0.6bps Workload 3 344m +16% 1 Incl JVA revenue, margin adjusted for underlying JVA margin 2 Total operating profit 3 %age change vs Dec 2015 workload Dubai Mall of the Emirates Redefining the future for people and places 10

11 Equipment Services Strong growth m H Revenue % TOP Strong volume and margin growth Global business, high operational gearing Continuing to drive innovation (3D modelling, Ground shoring products) +26% Margin 21.4% +3.5bps 1 Total operating profit Salford Canal Redefining the future for people and places 11

12 Taxation million H H Profit Tax Rate Profit Tax Rate Subsidiary companies 44.5 (6.8) 15.3% 42.8 (8.0) 18.7% Joint Ventures and associates Headline profit 53.8 (6.8) 12.6% 53.3 (8.0) 15.0% Amortisation of intangible assets (15.6) % (15.5) % Exited Business and exceptional items (72.0) % (4.1) % Group companies effective rate (33.8) (1.9) (4.4) 13.1% Redefining the future for people and places 12

13 IAS19 Pensions million 30 June June 2015 Gross liabilities (982.6) (910.1) Insurance buy-in asset Obligations net of insurance buy-in (629.5) (539.8) Other assets Gross asset / (deficit) (25.5) 34.3 Increased gross liabilities driven by falling discount rate as bond yields fall Liabilities c35% matched with insurance buy-in asset Cash payments remain unchanged, next triennial valuation begins H Redefining the future for people and places 13

14 Strong gross operating cash flow million H H Group JVs and Associates Total Headline total operating profit Total Land disposal Midlands office consolidation (7.0) Capex in (excess) of depreciation (3.1) - (3.1) (0.5) Dividends in excess / (deficit) of JVA profits (6.0) Other (4.1) - (4.1) (7.8) Movement in working capital (20.4) Gross operating cash flow Closing net debt (275.6) (297.9) Redefining the future for people and places 14

15 Strong gross operating cash flow million H H Group JVs and Associates Total Headline total operating profit Total Land disposal Midlands office consolidation (7.0) Capex in (excess) of depreciation (3.1) - (3.1) (0.5) Dividends in excess / (deficit) of JVA profits (6.0) Other (4.1) - (4.1) (7.8) Movement in working capital (20.4) Gross operating cash flow Closing net debt (275.6) (297.9) Redefining the future for people and places 15

16 Strong gross operating cash flow million H H Group JVs and Associates Total Headline total operating profit Total Land disposal Midlands office consolidation (7.0) Capex in (excess) of depreciation (3.1) - (3.1) (0.5) Dividends in excess / (deficit) of JVA profits (6.0) Other (4.1) - (4.1) (7.8) Movement in working capital (20.4) Gross operating cash flow Closing net debt (275.6) (297.9) Redefining the future for people and places 16

17 Strong gross operating cash flow million H H Group JVs and Associates Total Headline total operating profit Total Land disposal Midlands office consolidation (7.0) Capex in (excess) of depreciation (3.1) - (3.1) (0.5) Dividends in excess / (deficit) of JVA profits (6.0) Other (4.1) - (4.1) (7.8) Movement in working capital (20.4) Gross operating cash flow Exited Business (52.8) - (52.8) (1.3) Gross operating cash flow incl Exited Business Closing net debt (275.6) (297.9) Redefining the future for people and places 17

18 Net debt and dividend Reduced net debt Net debt 275.6m (Dec m) Net debt : EBITDA 1.6x (1.8x Dec 2015) Improved YE2016 guidance 300m- 320m Secure and increasing dividend DPS 8.1p (+3%) 3.9x covered by Headline EPS, well covered by free cash flow Redefining the future for people and places 18

19 Adrian Ringrose Redefining the future for people and places 19

20 Key markets overview UK Outsourcing Market size & outlook Clients and capabilities Construction UK Focus on core competencies Existing workload Future outlook Middle East Strong operations Equipment Services A global player Redefining the future for people and places 20

21 Significant UK FM market 70bn UK FM market c60% outsourcing penetration Similar penetration private/public /regulated segments Expected market growth c4% p.a. Source: Credo Redefining the future for people and places 21

22 Strong UK FM pipeline +35% Figures excl Frontline Service operations and contract job works Bidding opportunities c35% up on H Forward FM workload of 5.2bn (+3% vs Dec 2015) Redefining the future for people and places 22

23 Growing Frontline Services market Substantial government spend Continued outsourcing anticipated Integrated Interserve offering Increasingly important with the devolution agenda Source: Credo bn data represents government resource and capital expenditure. DWP excludes direct benefits costs Redefining the future for people and places 23

24 Support Services UK - Broad existing client base Diverse service offering Continuing to exploit new markets Deep customer knowledge Splits represent H1 revenues Redefining the future for people and places 24

25 Support Services UK - Our proposition What we offer Productivity gains Business process change Efficient resource allocation Our differentiators Breadth of provision (blue & white collar) Deep domain knowledge and experience Smart use of data Redefining the future for people and places 25

26 Construction UK - Focus on core competencies Diversified client base Focus on smaller, simpler projects c 2.6bn of tenders submitted or in preparation c50% of this Health / Education / Local government Splits represent H1 revenues Redefining the future for people and places 26

27 Construction UK Large portfolio of contracts active contracts at a time Average contract size < 10m. Constitutes >40% of workload value c25% of work sourced via frameworks Redefining the future for people and places 27

28 Construction UK Strategic direction Energy from Waste business exited Lessons learned The future Risk appetite reduced Good spread of project size / complexity in existing order books Good outlook in core markets Redefining the future for people and places 28

29 Middle East Strong operations CAGR 23.2% History of delivery Strong H performance Diversified exposure across Middle East Redefining the future for people and places 29

30 Equipment Services a global player CAGR 29.6% Leading global player Strong track record of growth Nimble in seizing market opportunity Well diversified Well invested, c 26m net capex invested in the last 12 months Driving innovation, driving margin Strategic review proceeding as planned Hong Kong - West Kowloon Redefining the future for people and places 30

31 Summary and outlook Expectations unchanged albeit near term uncertainty brings both risks and opportunities Long term growth drivers intact Demographic changes Infrastructure investment Increased public sector outsourcing Majority of the business performing well Headline EPS growth Exited business impacts isolated & controlled Continued dividend growth Redefining the future for people and places 31

32 Questions Redefining the future for people and places 32

33 Appendix 1 Supplementary financial disclosures Redefining the future for people and places 33

34 Segmental analysis million H H Support Services Revenue TOP* Margin Revenue TOP* Margin % growth in TOP -UK % % -8% -International % % +62% Construction -UK % % -32% -International % % +23% Equipment Services % % +26% Group Services (20.0) (14.3) (17.1) (12.5) Ongoing businesses 1, % 1, % +2% *Total operating profit Excl exited busineses Redefining the future for people and places 34

35 Balance Sheet million 30 June June 2015 Goodwill and intangible assets Property, plant and equipment Joint Ventures and associates Working capital (123.4) (94.0) Pension asset / (deficit) (25.5) 34.3 Cash / (net debt) (275.6) (297.9) Net assets Redefining the future for people and places 35

36 Investment Portfolio million 30 June 2016 Addiewell Prison Justice 2.9 Haymarket Property 23.6 Scottish National Blood Transfusion Services Health 1.6 Alder Hey Health 3.3 Invested 31.4 Committed 30.4 Committed and invested 61.8 Redefining the future for people and places 36

37 Appendix 2 Workload and revenue Redefining the future for people and places 37

38 Substantial future workload Redefining the future for people and places 38

39 Strong near-term revenue visibility Redefining the future for people and places 39

40 Diverse customers Group revenue mix by sector Redefining the future for people and places 40

41 Revenue mix by sector Support Services UK Construction UK Redefining the future for people and places 41

42 Revenue mix by sector International Equipment Services Redefining the future for people and places 42

43 Strong Platform for Growth Operating profit by activity Operating profit by geography Redefining the future for people and places 43