Final R esu t lts 30 June 2013

Transcription

1 Final Results 30 June

2 Fit Out, Retail and Construction Service Line Markets Typical Clients Region Fit Out Office, Engineering Services Multinational Banks, Large Corporates, Services Companies UK Continental Europe Middle East Asia * Retail Retail, Hospitality Multinational l Retail Chains, UK * & Leisure High Street Banks, Continental Europe * Food Retailers Asia * Construction Education, Hospitality and Leisure, Office, Living, Public & Community, Technology & Industrial Private Sector Developers, Large Corporates, Public Sector UK * Specialist services includes commissioning management, design and project management 2

3 Industry Drivers for ISG Service Line Key Drivers for ISG Factors Fit Out London office Data Centers Size & Complexity Multinational Expansion Value Added Services - Lease Renewals and New Developments - Global Demand for Data Services - Skillsets - Consistency Across Multiple Locations - Commtech and Realys Retail Large Retailer s Expansion Large Estates International Roll Out Online Value Added Services - New Build & Refresh - Renewal & Refurb - Complexity Across Multiple Locations - Click & Connect Enabled - Realys Construction (UK) Private Sector Recovery Public Sector Frameworks Efficiency - Repeat Clients, Specialisation - Innovation, Health & Safety, Sustainability - BIM, Supply Chain & Margin Improvement 3

4 Strategy Overview UK Fit Out and Engineering Services Accelerated recruitment t of key staff in London Training and development Expanding Engineering g Services abroad Selective contract bidding UK Retail Focus on large and repeat clients Exploiting our national delivery capability Providing value added services to clients Bush House London UK Construction Continued focus on key private customers and public sector frameworks Target margin improvement - contract selection and overhead efficiency i Nokia London 4

5 Strategy Overview International Growing brand reputation - working for clients in multiple locations Project sizes increasing Widening offering to include Engineering Services, Retail, Hospitality and Consulting (design and project management) Google Paris Develop scale in key markets and strengthen local presence (Germany - Tecton) Enter new growth markets (Brazil ACE) Hackett Hong Kong 5

6 Trading Highlights 2012/13 Revenue maintained despite difficult market conditions Increase in operating margin and underlying profit before tax Increased profit contributions ti from UK Fit Out and Engineering Services, UK Retail, Asia and UK Construction Olympic Overlay Works Olympic Stadium, London photo Middle East and Africa making a positive contribution Reduced profit contribution from Continental Europe due to lower activity in Italy and Russia Net cash increased to 36.1m (2012: 25.4m) Rugby School of Modern Languages Rugby 6

7 Financial Highlights Results for twelve months to June / - Revenue 1 1,284m 1,281m - Operating Profit 1 9.3m 7.8m +20% Profit Before Tax 1 8.5m 7.5m +14% Net Cash 36.1m 25.4m +42% Underlying Basic Earnings per Share p 18.03p +15% Dividend per Share 9.00p 9.00p - 1 from underlying items and continuing operations 7

8 Trading Revenue 1 June 2013 June 2013 m June m Variance % UK Construction 42% UK Fit Out and Engineering Services 22% UK Fit Out and Engineering Services % UK Retail % Continental Europe % Middle East & Africa % Asia % UK Construction % Group Total 1,284 1,281 - UK Construction 43% Asia 6% Continental Europe Middle East & 7% Africa 2% June UK Fit Out and Engineering Services 16% UK Retail 21% UK Retail 25% 1 from underlying items and continuing operations 2 restated to reflect the revised segmentation Asia 6% Continental Europe 8% Middle East & Africa 2% 8

9 Trading Operating Profit 1 Operating profit m June 2013 June Margin Operating profit m Margin % % UK Fit Out and Engineering Services UK Retail Continental Europe Middle East & Africa (0.5) - Asia UK Construction Group Activities (6.1) - (5.3) - Group Total from underlying items and continuing operations 2 restated to reflect the revised segmentation 9

10 Gross and Net Cash 7.5m from placing - 3.5m now invested Net cash inflow from operations 8.5m Improvements in working capital management Average gross cash balance maintained in the year of 27m (2012: 27m) Term debt facility of 6.0m renewed until September 2015 Standby 10m revolving credit facility renewed until September m 45m 40m 35m 30m 25m 20m 15m 10m 5m 0m Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Gross cash Net cash 10

11 Order Book Order book increased by 12% to 854m (2012: 760m) As at 30 June As at 30 June In year order book up 16% to 801m (2012: 693m) m m Order book heavily weighted toward UK Fit Out and private sector 78% (2012: 81%) Engineering Services UK Fit Out and Engineering Services UK Retail benefiting from improvement in London Continental Europe office market and data centers Middle East & Africa UK Retail lower due to reduced new build Asia projects by certain food retail customers UK Construction Continental Europe reflects increased Group Total retail opportunities and recovery in Italy Asia higher due to increased hospitality Of which: h Overseas projects in South East Asia 1 restated to reflect the revised segmentation 11

12 UK Fit Out and Engineering Services Outlook Increasing signs of recovery in London office fit out market where we are a market leader Bush House ( 52m) and British Airways flight training campus ( 27m) secured Since year-end we have secured two further 25m+ office fit out projects Pipeline continues to grow Margins in office fit out stable Second Nordic Data Center ( 130m) now secured, only initial LOI for 15m recognised in June order book Anticipate increased revenue and improved results in current financial year m sq ft London lease expiries (m sq ft) e 2014e 2015e 2016e 12

13 UK Retail Outlook Continued strong demand from retail banking frameworks Continued higher level of refurbishment projects, lower level of new build projects with food retailers Increasing work load with new clients such as the John Lewis Partnership and a leading high street chemist Tesco Truro Anticipate additional fit out work in the new Terminal 2 at Heathrow Providing design led solutions to customers via Realys brand in UK Market stabilised, we expect to maintain results in current year Primark Manchester 13

14 Continental Europe Fit Out Outlook Order book 35% ahead with: - Strong demand from Anglo-Saxon repeat retail clients (Marks & Spencer, Tiffany, Primark) - Strong office fit out demand from technology customers (Microsoft, Google, Alcatel Lucent) - Developing embassy work in Paris, Brussels, Moscow Google Zurich Increasing size and scope of projects Acquisition of Tecton to provide us with greater scale in the largest European market and access to German property owners With higher order book and new acquisition, we expect to deliver an improved performance in the current year Paul Smith Paris photo 14

15 Middle East & Africa Outlook Confidence has started to return in the ME region Order book stable pipeline in Abu Dhabi continues to be strong and in Dubai improving Increasing opportunity for hospitality projects in Dubai is being targeted Mubadala Petroleum Dubai Johannesburg office established projects delivered locally and in Kenya and Tanzania Anticipate further improvement in performance in current year MacQuarie Bank Dubai 15

16 Asia Outlook Order book up 40%, largely due to securing of large hospitality project in Singapore Increasing size and scope of projects Pipeline of retail opportunities remains strong - continue to deliver multiple projects for luxury retail brands across Asia China outlook HK and Macau positive Increasing activity in hospitality and leisure in Singapore and Hong Kong Specialist service brands, Realys and Commtech, continue to grow including new Commtech offer in Middle East Anticipate continued improvement in revenue and performance in the current financial year Rolex Hong Kong Bank Negara Malaysia 16

17 UK Construction Outlook Market no longer in decline Order book maintained Proportion of order book from repeat clients/frameworks improved to >70% Wood Lane Studios London Increase in pipeline of larger projects Reorganisation during Q1 into 3 regions to optimise operational efficiency Planning for lower turnover but improved margins Center Parcs Woburn Forest 17

18 Summary Order book 12% higher at 854m (2012: 760m) Strong blue-chip multinational clients and formal/informal frameworks remain ISG s backbone Improvement in London office market conditions Opportunities continue for growth in Data Centers Frameworks in our UK Retail business stable, increase in value added services Overseas - greater brand recognition and expanding service offering Continue to target new geographies where there is demand from our blue-chip customer base Group well placed to benefit from recovery in UK and from our presence in key global locations 18

19 Appendices 19

20 End Users London Fit Out Office take up in Central London 10m sq ft p.a. is improving Construction of new space has grown for the past two years Visibility of pre-let office fit out increasing Lease expiries will be a driver of demand for new build and refurb Buildings let on 25 year leases in the 1980 s may no longer be fit for purpose or sustainable and energy efficient Outlook is for activity to continue to rise ISG a long term market leader City Development Pipeline London lease expiries (m sq ft) Central London availability and take up (m sq ft) m sq ft 4 3 m sq ft e 2014e 2015e 2016e e 2014e Availability Take up Source: Drivers Jonas Deloitte, Metropolis, Building, CBRE 20

21 End Users Data Centers Outlook Global demand for data growing g strongly gy Driven by cloud computing, online retailing and media providers Users looking for more complex solutions UK market expected to grow by 30% from SE Asia Italy France Germany China UK Data Center Investment 2012 Opportunity ISG continuing to recruit Track record growing in UK RBS, Lloyds, HSBC, EDS, Credit Suisse Cambridge University and BT recently secured Skillset is international Secondments from UK for international opportunities Building and bidding centers in Europe and Asia Links to our Commtech offering Confidentiality USA bn Source: AMA Research, Microsoft C.Belady 21

22 Where We Are 22

23 Key Customers Fit Out Retail UK Construction Financial Barclays Bank, RBS, LBG, HSBC, Credit Suisse, Standard Standard Life Chartered, Goldman Sachs, Deutsche Bank, Citibank, Bank of America, Western Union, Morgan Stanley, Locktons, Nomura, ANZ, CIMB, Nationwide, Royal Bank of Canada, National Australia Bank, Santander, Société Générale, Nottingham Building Society, State Street Bank Credit Agricole, ACE Europe, BBVA, State Street Bank 13% Corporate ExxonMobil, BP, Deloitte, KPMG, Mayer Brown, Pinsent Masons, K&L Gates, GE Capital Real Estate, CBRE, GSK, Pfizer, Philips, Rio Tinto, Ogilvy & Mather, Citadines, Gordon Ramsey Holdings, NBCUniversal, WPP, Norton Rose, Halliburton, Disney, GE, Boeing, Heineken, Chevron, BA, Unilever, JLT, Squire Saunders Hammond, Volvo, Foster Wheeter, CMS Cameron McKenna, AJ Gallaher, Reed Smith, Mayer Brown, RWE, Savills, SNR Denton, Statoil Alliance Leisure, BAE Systems, Severn Trent Water, Siemens, Diageo, Village Hotel (De Vere), Greenwich Leisure Ltd, Network Rail, B&Q, Persimmon, Serco Leisure, TCN, Quantum Care Technology EDS, O2, Guy s and St Thomas Hospital, Microsoft, Google, Yahoo, VM Ware, Illumina, Microsoft, BT, Thomson Reuters, redhat, Netscout, Symantec, Nokia, Skype, Siemans Retail Monsoon, Mulberry, Selfridges, Foot Locker, Hackett, Armani, Tesco, Morrisons UGG, Tod s, Ralph Lauren, Abercrombie & Fitch, Swarovski, Louis Vuitton, Primark, Tiffany & Co, Uniqlo, Miu Miu, Oliver Sweeny, Dior, Chanel, EE, Porsche, Tesco, Asda, Sainsbury s, Morrisons, Marks & Spencer, Primark, Waitrose, John Lewis Partnership Developers Swire Properties, Tishman Speyer, Hong Kong Jockey Club, Blackstone, Great Portland Estates, British Land, Kitewood Hong Kong Club, Hammerson, Scottish Widows, Marina Bay Sands, Aviva Investors, Royal Sun Alliance, Onyx Hotels, Singapore Hotel Group, Minevva, Carlyle Group Neptune, Aviva Public Sector City University of Hong Kong, Australian Embassy, DFID, Bromley College, Trustees of the Natural History Museum, The Royal Free Hampstead NHS, University of Cambridge Public Sector Frameworks with: Ministry of Justice, Aspire Defence, North West Construction Hub, Construction Framework South West, Cardiff City Council, Sheffield Teaching Hospitals NHS Trust, Addenbrooke s Hospital, Cheshire East Low Value, Cheshire West Cornwall Framework, Gloucestershire Council Framework, Guy s & St Thomas, Imperial College, Manchester City Council, Network Housing Group, Suffolk County Council, University of Manchester, University of Salford, YORbuild 23

24 Financials Five Year History % 2009 Revenue 1 1,284m 1,281m 1,174m 972m 1,046m Operating profit 1 9.3m 7.8m 12.7m 12.5m 14.1m Operating margin on revenue 1 0.7% 0.6% 1.1% 1.3% 1.3% PBT 1 8.5m 7.5m 12.4m 12.0m 13.3m Basic Earnings per Share p 18.03p 29.19p 29.91p 33.65p Dividend per share 9.00p 9.00p 15.06p 14.34p 13.66p Net cash 36.1m 25.4m 36.1m 31.0m 32.1m 1 from underlying items and continuing operations 24

25 Cash Flow Statement June 2013 m Underlying operating profit % June m Non-underlying operating loss (6.1) (6.3) Depreciation/amortisation and other Movement in net working capital 0.2 (4.9) Taxation 0.5 (2.6) Net cash inflow from continuing i operations Interest (0.3) (0.1) Net capex (1.8) (2.7) Acquisitions (0.2) (0.7) Dividends paid (2.8) (4.8) Net receipts from share placing Net proceeds/(repayments) of borrowings 1.7 (3.8) Other, including discontinued operations - (2.3) Net movement in cash and cash equivalents 12.5 (14.4) 4) 1 the prior year comparatives have been restated with the deferred contingent consideration in relation to the acquisition of Realys Group Limited (Realys) in April 2011 previously presented within goodwill and recognised as a liability at that time now presented as post-acquisition remuneration and expensed as incurred 25

26 Balance Sheet Non-current assets June 2013 m June m Intangible Tangible Trade and other receivables % Current assets Inventories Trade and other receivables Cash and cash equivalents Non-current liabilities - Bank debt - Other Current liabilities - Bank debt - Other (3.5) (1.1) (2.6) (393.6) (0.5) (4.3) (4.3) (346.2) Net assets restatement of contingent deferred consideration as post-acquisition remuneration following clarification by IFRS Interpretation Committee in January

27 Non-Underlying Items June June m m Amortisation of intangible assets (2.2) (2.9) Restructuring t costs (3.1) (3.0) Acquisition related expenses (0.6) - Post acquisition remuneration arising from the acquisition of Realys 1 (0.2) (0.3) Loss before tax from non-underlying items (6.1) (6.3) 1 restatement of contingent deferred consideration as post-acquisition remuneration following clarification by IFRS Interpretation Committee in January

28 Underlying Effective Tax Rate June 2013 June 2012 PBT 000 s Tax 000 s Tax rate % PBT 000 s Tax 000 s Tax rate % Reported 2, , % Amortisation of intangible assets 2, N/A 2, N/A Restructuring costs 3, N/A 3, N/A Acquisition related expenses N/A N/A Post acquisition remuneration on the acquisition of Realys N/A - - N/A Underlying 8, , ,477 1, % 1 restatement of contingent deferred consideration as post-acquisition remuneration following clarification by IFRS Interpretation Committee in January

29 Group Order Book by Sector June 2013 June % 8% 3% 30% 9% 6% 3% 20% 7% 10% 24% 12% 19% 12% 12% 16% Office Retail Technology and Industry Hospitality and Leisure Living Education Public and Community Health 29

30 Our Vision and Values Our vision To be the leading global construction services company delivering the built environment for international and local customers. We will achieve our vision by: engaging with our customers and understanding their needs providing exceptional levels of service that combine innovation and best practice growing the business to serve customers in a wider range of sectors and geographies employing great people in a values driven culture Our values Passionate about our work Our passion drives our commitment to excellence and continuous improvement. Committed to customer relationships We will grow by having satisfied customers who choose to work with us again and again. Fulfilling our people's potential We will give our people the opportunity to reach their full potential and help them achieve their ambitions. Dedicated to detail Our care and attention to detail drives exceptional quality. Acting responsibly and safely We will not compromise on safety and will act responsibly in all that we do. 30