Half year results Well-capitalised and strongly positioned for the - PowerPoint PPT Presentation

Half year results Well-capitalised and strongly positioned for the future Six months ended 31 December 2019 12 March 2020

Agenda Bill Hocking Half year results to 31 December 2019 Our business Chief Executive Half year highlights Financial review Strategy & outlook Q&A 2

Our business A people-orientated, progressive business, driven by our values to deliver for our stakeholders and the communities we work in 3

Our business A well-capitalised, UK construction-focused company with a strong pipeline in chosen sectors STRENGTHS  Well-capitalised and debt-free.  Strong client relationships based on collaborative working.  Highly-experienced management team.  Disciplined approach to project selection and rigorous risk management.  Focused on sectors where we have core and proven strengths.  Excellent position on frameworks and in public and regulated sectors.  Committed to creating long-term value for our stakeholders. 4

BUILDING Our business Focused on sectors Educat ation Defe fence Healt He lth FM & & Other er where we have core and proven INFRASTRUCTURE INVESTMENTS strengths Highway ays Environment 5 5

FUNDAMENTALS Our business Health & Safety Operating sustainably (ESG) Environment & Climate Change  Balance our financial performance with obligations to our stakeholders. Our People  Assess and address Environmental, Social and Governance (ESG) across six areas. Clients  Underpinned by our Social Value and Sustainability strategy, owned by the Executive Board. Supply Chain Communities 6

Our business A highly-experienced Executive Board  More than 150 years’ construction sector experience.  Supported by a strong plc Board. 7

HIGHLIGHTS 1 Half year £636m £636 £225 £225m highlights Pre-exceptional revenue Net cash 2 £1.0m £1. £3.2bn £3.  Solid progress against strategic objectives. Order book Pre-exceptional Construction profit  Restructure completed from operations 3 Summer 2019. 96% 96%  Successful strategic disposal of 0. 0.09 09 housebuilding divisions. Planned revenue secured Accident Frequency Rate  AWPR settled.  Strong order book. 1 Excludes Linden Homes and Partnerships. 2 Pro forma stated after adjusting for the disposal of the housebuilding divisions which completed on 3 January 2020, with average month end cash for the second half of the financial year expected to be in excess of £100m. 3 Includes Building and Infrastructure only. Stated before net finance income and amortisation of intangible assets. 8

Andrew Financial Duxbury review Finance Director 9

Financial Contin inuin ing g pre re-exceptio ional Statutory performance HY20 HY20 HY19 HY19 HY20 HY20 HY19 HY19 Revenue £636m £728m £668m £728m  Results for continuing business, excludes (Loss)/profit from housebuilding divisions. £(6.7)m £2.9m £15.5m £(24.0)m operations 1  Revenue reduced in line with strategic review. (Loss)/profit before £(5.6)m £2.2m £16.6m £(24.7)m  Operating profit impacted by contract tax settlements and associated costs. (Loss)/profit after £(4.6)m £2.0m £60.5m £43.6m • Underlying performance encouraging. tax  Discontinued housebuilding operations profit EPS (4.1)p 1.7p 54.6p 39.4p after tax £48.1m. DPS 1.0p n/a 1.0p n/a  Pre-exceptional EPS (4.1)p.  Interim dividend declared of 1.0p. 1 Profit from operations stated before net finance income, amortisation and joint ventures' interest and tax. 10

Financial performance Revenue 1 Profit bridge £m £m £m HY20 HY20 HY19 HY19 80 60.5 60. Continuing 636 636 728 48.1 48. 60 Cont ntinui uing ng o operations ns Discontinued 704 704 677 40 Total 1, 1,340 340 1,405 17. 17.0 20 1. 1.0 (7.7) 7) (6.7) 7) 2.1 2. 0 Exceptional 32 32 - -20 (20) Total 1, 1,372 372 1,405 Construction PPP Loss Amortisation, Exceptional Discontinued PAT Investments from interest & tax items operations (total Group) 1 Pre-exceptional; includes share of joint ventures’ revenue, & Central operations (net of tax) excludes part-exchange revenue. 11

Segmental analysis £m £m HY20 HY20 HY19 HY19 Var Rev even enue 1 636. 636.2 728.0 (13)% 423. 423.5 431.5 (2)% Building 208. 208.7 286.9 (27)% Infrastructure  Building. 3.8 3. 9.3 (59)% PPP Investments • Revenue lower in London and commercial sectors. • Margin impacted by final account settlements. £m £m HY20 HY20 HY19 HY19  Infrastructure. Profit it f from o operatio ions 1 (6. 6.7) 7) 2.9 • Revenue reduced in line with strategic review. 2. 2.4 4.8 Building • Loss reflects settlements and legal costs in period. (1. 1.4) 4) 1.5 Infrastructure PPP Investments (0. 0.9) 9) 2.6  Combined divisional margin 0.2%. (6. 6.8) 8) (6.0) Central • Underlying margin on current work is encouraging. Operating m g margi gin 1 (1. 1.0) 0)% 0.4%  PPP Investments benefited from £3.7m disposals 0. 0.6% 6% 1.1% Building in prior year. (0. 0.7) 7)% 0.5% Infrastructure 0. 0.2% 2% 0.9% Combined  £6.8m costs for central functions. 1 Pre-exceptional, continuing operations. 12

One-off items One ne-off i item ems 1 Other er Transaction £m £m AWPR AW leg egacy Sub tota tal costs Total To HY20 Prior year (80. 80.0) (9. 9.4) 4) (89. 89.4) - (89. 89.4) adjustment  Exceptional items recognised in HY20. Current year – 28. 28.0 - 28. 28.0 (5. 5.8) 8) 22. 22.2 2 exceptional • Net AWPR settlement. • Transaction costs incurred on Vistry deal 2 . Total To (52. 52.0) (9. 9.4) 4) (61. 61.4) (5. 5.8) 8) (67. 67.2)  IFRS 16 Leases. • Adopted 1 July 2019. IFR FRS 1 16 3 Contin inuing ing Disco contin’d £m £m HY20 HY oper peratio ions ns oper peratio ions ns • Net impact to opening reserves £(1.0)m. Lease liability £43.5m £43. £25. £25.6m £17.9m £17.  Housebuilding divisions reported as discontinued operations. Impact on opening retained £(1. £( 1.0)m £(0. £( 0.2)m £( £(0. 0.8)m earnings • Adjusted revenue £703.8m. • Profit from operations £67.2m. 1 Pre-tax. • Profit after tax £48.1m. 2 Non-contingent and incurred prior to 31 December 2019. 3 Transition adjustment at 1 July 2019. 13

31 Dec 31 D 30 J 30 June Financial review 2019 2 2019 3 Balance s e sheet £ et £m 2019 2019 Intangible assets & goodwill 85. 85.5 86.6 Balance sheet PPP & other investments 38. 38.7 41.2 Other non-current assets 4 34. 34.8 15.6  Debt-free group. Working capital • Pro forma net cash at 31 December 2019 of £225m 1 . Working capital (211. 211.7) 7) (241.8) • No balance sheet debt. IFRS 16 (22. 22.8) - • No pension liability. Total (234. 234.5) 5) (241.8)  Daily cash balance 365 days per year. Net debt 5 • Average month end cash to June 2020 >£100m. (225. 225.2) 2) (56.6)  Strong surety facilities and significant headroom.  PFI portfolio currently valued at £39m. Pro forma net cash 1 225. 225.0 n/a 1 Pro forma post transaction which completed on 3 January 2020. 2 Continuing operations. 3 Indicative, excluding disposal group but before receipt of disposal proceeds. 4 Includes impact of right of use assets on transition to IFRS16. 5 Before receipt of £300m cash, transfer of £100m private placement debt to Vistry and receipt of further working capital cash adjustment on completion of sale of housebuilding divisions on 3 January 2020. 14

Payment practices  Performance since July 2019 substantially improved compared to prior year.  Membership of Prompt Payment Code restored in December 2019. • Key to attract and retain our supply chain.  Now paying over 90% of invoices within the Code’s specified 60-day time limit. 15

Pro forma cash flow >£100m average month end cash position £m 17 17 (19 19) 300 (39 39) 256 256 313 313 225 225 10 10 200 Free c cash f flow i in th the period 100 £( £(2) 2)m (57) 57) 0 (100) -100 Opening Pro forma for Pro forma Cash from Other working Dividend Interest, tax Pro forma closing net cash transaction 1 opening operating capital and other net cash 1 July 2019 net cash activities movements 2 31 Dec 2019 1 July 2019 1 Includes cash proceeds received on completion on 3 January 2020 and discontinued operations cash flows in the period. 2 Includes movements in working capital in respect of our joint ventures and PPP and other investments. 16

Bill Strategy Hocking & outlook Chief Executive 17

Business model CORE CAPABILITY BUILDING Investments FM INFRASTRUCTURE Establis lished I Investments & & FM M busin inesses c comple lement core c capabilit ility a and p provid ide o opportunit ity.  Lower risk annuity type income.  Strategic flexibility to maximise value.  Generation of work opportunities for wider Group.  Great opportunity for controlled growth in a margin enhancing market . 18 18