Final Results 30 June 2014

Transcription

1 Final Results 30 June 2014

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3 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 & Leisure Multinational Retail Chains, High Street Banks, Food Retailers, Hotel Developers UK * Continental Europe * Asia * Construction Education, Hospitality and Leisure, Office, Living, Public & Community, Technology & Industrial Private Sector Developers, Large Corporates, Public Sector UK * Specialist consultancy services includes Commtech (commissioning management) and Realys (D&B, design and project management) 1

4 Trading Highlights 2013/14 Revenue up +19% on significant growth in UK Fit Out and Engineering Services Underlying profit before tax up +27% UK Fit Out and Engineering Services nearly doubled profits, strong growth in Asia and Middle East and UK Retail performed well With more difficult market conditions, Continental Europe and UK Construction showed year-on-year decline in profitability Concluded reorganisation of UK Construction Order book increased by +18% to 1,011m (2013: 854m) Net cash increased to 46.3m (2013: 36.1m) The Aldwych Quarter London photo Fairmont Hotel Singapore 2

5 Financial Highlights Results for twelve months to 30 June / - Revenue 1 1,483m 1,245m +19% Operating Profit m 9.8m +24% Profit Before Tax m 9.1m +27% Net Cash 46.3m 36.1m +28% Underlying Basic Earnings per Share p 22.09p +4% Dividend per Share 9.45p 9.00p +5% 1 from underlying items 2 restated for discontinued operations 3

6 Trading Revenue 1 June m m Variance +/-% UK Fit Out and Engineering Services % UK Retail % UK Construction % UK Construction 31% Asia 6% Middle East & Africa Continental 2% Europe 7% UK Retail 19% UK Fit Out and Engineering Services 35% Continental Europe % June Middle East % UK Construction 40% UK Fit Out and Engineering Services 23% Asia % Group Total 1,483 1, % UK Retail 21% 1 from continuing operations 2 restated for discontinued operations Asia 6% Middle East & Africa 2% Continental Europe 8% 4

7 Trading Operating Profit and Margins 1 Operating profit m Margin Operating profit m Margin % % UK Fit Out and Engineering Services UK Retail UK Construction (1.2) Continental Europe Middle East Asia Group Activities (7.0) - (6.1) - Group Total from underlying items and continuing operations 2 restated for discontinued operations 5

8 Gross and Net Cash Net cash inflow from operations 25.9m (2013: 8.5m) Continuing improvement in working capital management and increased number of larger projects Average gross cash balance increased significantly in the year to 48m (2013: 27m) 7.4m raised from placing in June now substantially invested Term debt reduced to 3.6m with final payment by September 2015 Standby 10m revolving credit facility in place until September m 50m 40m 30m 20m 10m 0m Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Gross cash Net cash 6

9 Order Book As at As at In Year to In Year to 30 June 30 June 30 June 30 June m m m m UK Fit Out and Engineering Services UK Retail UK Construction Continental Europe Middle East Asia Group Total 1, Of which: Overseas Order book increased by 18% to 1,011m (2013: 854m) In year order book up 16% to 926m (2013: 801m) 7

10 Strategy to Take the Business Forward Maintain our leading positions in the office fit out and retail markets Expand and establish ourselves in new growth market sectors such as engineering services and hospitality Recruit, develop and retain the best people in our industry Maximise operating efficiencies and sector focus in UK Construction Grow our Specialist Consultancy services under the Realys and Commtech brands Increase repeat business from framework and bluechip multinational customers Increase our geographic reach and market penetration where there is demand from our customers 8

11 Group Order Book by Sector Circa 90% of our activity in five core sectors % 4% 1% 11% 28% 12% 19% 18% Office Technology and Industry Retail Hospitality and Leisure Education Public and Community Living Health 9

12 London Fit Out Outlook Strong demand from occupiers for Central London office space - 3.3m sq ft of space under offer at end Q1 2014, the highest since Q Central London new development pipeline forecast (m sq ft) 2014/15 will see high level of new space activity, 2016/17 will see more refurbishment 1980s and early 1990s stock = 25% of London total, presents refurbishment and/or redevelopment opportunity Approx 4.5m sq ft currently undergoing demolition or strip out works signs of new construction cycle (Deloitte) m sq ft London lease expiries (m sq ft) e 2014e 2015e 2016e Source: Metropolis, CBRE, Thomas Consultancy Group, Glenigan, Deloitte 10

13 Data Centers Outlook Strongest Q1 in six years for European Data Center letting activity - 16,712 sq m total take-up Driven by cloud computing and growing demand for co-location services Energy efficiency and whole life costs are key drivers of market growth Global market expected to grow ISG building reputation for successful delivery and discretion - completed first and second 100m+ projects in Nordics, currently working on over 300m of data center projects Track record growing in UK and Western Europe RBS, Lloyds, HSBC, EDS, Credit Suisse, Higher Education, TMT Skill set is international and agile Secondments from UK for international opportunities Potential to expand offering in Europe and Nordics Source: AMA Research, Data Center Dynamics, DLA Piper, CBRE, Microsoft 11

14 UK Fit Out and Engineering Services Continued growth Order book increased to 290m (2013: 210m) London office fit out benefiting from large-scale projects 125m UBS construction management contract Increasing proportion of refurbishment opportunities in live environments Since year end secured two 20m+ projects for repeat clients Catapult Cell Therapy London Further growth in Engineering Services anticipated Second Nordic data center handed over successfully in August 2014, third due for delivery in early 2015 Fourth 100m+ Nordic data center secured since year end Working on five data center projects in the UK Expanding into mainland Europe Anticipate revenue for current year will be ahead of prior year JLT Group St Botolph Building, London 12

15 UK Retail Stable frameworks with growth anticipated in consultancy Order book increased to 173m (2013: 142m) Our key framework retail clients continue to invest London continues to be a key target destination for luxury retail brands Selfridges continues to invest United Airlines Lounge Heathrow Airport Benefiting from investment made in hospitality sector - working on three refurbishment projects Consultancy brand Realys launched - working for one of UK s leading banks in UK, France and Italy Revenue for current year anticipated to be in line with prior year Barclays Northampton 13

16 UK Construction Sector focus and operating efficiencies 70m - 90m business Four projects ( 50m) for an international distiller Key office sector clients Scottish Widows and Chevron 150m - 180m business Public Sector and Education Frameworks including North West Construction Hub, MoJ, Cleveland Fire, EFA, Manchester City Council 53m Liverpool Exhibition Centre Office market starting to improve 80m - 110m business Construction South West Framework Defence sector - AWE and ASPIRE 220m - 275m business Repeat office clients - Blackstone, Amsprop, GPE, Standard Life Education Frameworks (Lambeth and Brent), Mid Kent College, American School Exclusive residential and Living Hurlingham and LBWF Leisure Centre 14

17 UK Construction Sector focus and operating efficiencies Order book increased by 14% to 444m (2013: 391m) UK construction market now emerging from bottom of the cycle Increase in number of larger projects secured and in pipeline in our key sectors Hillsborough Inquests Coroner's Court Facility Warrington More favourable margins and contract terms 78% of order book either key repeat clients or frameworks 89% of target revenue secured or preferred Targeting procurement savings of 2m pa over two years Expect business to return to profitability in current year Center Parcs Woburn Forest 15

18 Continental Europe Target organic and acquisitive growth Order book lower at 28m (2013: 54m); since year end secured 10m office fit out project for Google in Munich Management structure now split - Central & Eastern Europe and Western Europe for greater focus Germany office fit out market remains strong, with Tecton trading well Nespresso Toulouse Western Europe retail fit out trading well, particularly in Paris; office market continues to be slow Acquisition of 50.1% of Diadec/Emerald in Madrid in July 2014; very experienced local management team; trading in line with expectations We expect current year revenue to be higher than prior year photo DEVK Cologne 16

19 Middle East Growth in hospitality and larger Abu Dhabi office projects Order book increased to 34m (2013: 15m); continue to see confidence returning to the market Working on two large office fit out projects in Abu Dhabi for local clients 21m hotel refurbishment project at the Kempinski Mall of the Emirates Hotel secured Dolphin Energy Abu Dhabi Commtech commissioning management service established in Middle East We anticipate revenue for the current year to be ahead of prior year Shearman & Sterling Abu Dhabi 17

20 Asia Organic growth around D&B, and retail and hospitality sectors Order book stands at 42m (2013: 42m) Continued growth in hospitality and retail sectors offsetting weaker commercial office market Good spread of international retail and hospitality clients in both North Asia and South East Asia Michael Kors Kuala Lumpur International Airport Class 2 construction licence recently secured in China Growing visibility of pipeline of opportunities in Macau Realys growing in South East Asia including our first D&B offer in Singapore, China more challenging Commtech - underpinned by data center market and growth in Macau hospitality Anticipate revenue for the current financial year to be ahead of prior year Billionaire Macau 18

21 Summary Order book up 18% to 1,011m (2013: 854m) Majority of our traditional UK markets have now recovered, with many experiencing strong growth Our engineering services business is benefiting from growth in data centers UK Retail is investing in value added services and growing its reputation in hospitality UK Construction seeing improved market conditions Overseas, our businesses are benefiting from a growing reputation We anticipate further improvement in our results in the coming year 19

22 Appendices 22

23 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 & Collect Enabled - Realys Construction (UK) Private Sector Recovery Public Sector Frameworks Efficiency - Repeat Clients, Specialisation - Innovation, Health & Safety, Sustainability - BIM, Supply Chain & Margin Improvement 21

24 Where We Are 22

25 Key Repeat Customers and Frameworks Fit Out Retail Construction Financial Barclays Bank, Citibank, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, LBG, Morgan Stanley, Standard Chartered Bank, UBS Barclays Bank, HSBC, LBG, Nationwide, RBS 13% Corporate BP, BT, CMS Cameron McKenna, Deloitte, Disney, EDS, ExxonMobil, GE, GE Capital Real Estate, Google, GSK, JLT, K&L Gates, KPMG, Microsoft, Norton Rose, Rio Tinto, Siemens, Unilever, Virgin Abercrombie & Fitch, Apple, Asda, Boots, Dior, Hackett, Hammerson, John Lewis Partnership, Louis Vuitton, Marks & Spencer, Monsoon, Morrisons, Porsche, Primark, Sainsbury s, Selfridges, Tesco, Tiffany & Co, Tod s, UGG, Waitrose Alliance Leisure, BAE Systems, Chevron, Diageo, Greenwich Leisure Ltd, Network Rail, Persimmon, Quantum Care, Serco Leisure, Severn Trent Water, Siemens, TCN Developers Aviva, Blackstone, Hong Kong Club, Hong Kong Jockey Club, Majid Al Futtaim Group, Mubadala Group, RC Hotels Group, Sino Gulf, Scottish Widows, Tishman Speyer Aviva, Blackstone, Great Portland Estates, Standard Life Public Sector Australian Embassy, Guy s and St Thomas Hospital, Trustees of the Natural History Museum, University of Cambridge Addenbrooke s Hospital, Aspire Defence, Cardiff City Council, Construction Framework South West, EFA Framework, Genesis Housing Group, Guy s & St Thomas Hospital, Imperial College, Manchester City Council, Ministry of Justice, NEPO, North West Construction Hub, Suffolk County Council, University of Manchester 23

26 Financials Five Year History % 2010 Revenue 1,485m 1,245m 1,281m 1,174m 972m Operating profit 12.2m 9.8m 7.8m 12.7m 12.5m Operating margin on revenue 0.8% 0.8% 0.6% 1.1% 1.3% PBT 11.5m 9.1m 7.5m 12.4m 12.0m Basic Earnings per Share 23.00p 22.09p 18.03p 29.19p 29.91p Dividend per share 9.45p 9.00p 9.00p 15.06p 14.34p Net cash 46.3m 36.1m 25.4m 36.1m 31.0m 1 from underlying items and continuing operations 2 restated for discontinued operations 24

27 Cash Flow Statement 2014 m Underlying operating profit m Non-underlying operating loss (4.8) (6.1) Depreciation/amortisation and other Movement in net working capital Taxation (2.5) 0.4 Discontinued operations (9.2) (1.2) Net cash inflow from operations Interest Net capex (0.2) (0.3) (4.4) (1.8) Net acquisitions and investments (4.4) (0.2) Dividends paid (3.4) (2.8) Net receipts from share placing Net proceeds/(repayments) of borrowings (2.7) 1.7 Other (0.3) 0.1 Net movement in cash and cash equivalents restated for discontinued operations 25

28 Balance Sheet Non-current assets Goodwill and other intangible Investments in associates and joint ventures Tangible Deferred tax assets and other 2014 m m % Current assets Inventories Trade and other receivables Cash and cash equivalents - trading Cash and cash equivalents - placing Non-current liabilities - Bank debt - Other (1.2) (1.0) (3.5) (1.1) Current liabilities - Bank debt - Other (2.3) (440.5) (2.6) (393.6) Net assets

29 Non-Underlying Items 2014 m 2013 m Amortisation of intangible assets (2.0) (2.2) Restructuring costs (2.4) (3.1) Acquisition related expenses (0.4) (0.6) Post acquisition remuneration arising from the acquisition of Realys - (0.2) Loss before tax from non-underlying items (4.8) (6.1) Loss after tax from discontinued operations (2.8) (0.4) 27

30 Underlying Effective Tax Rate PBT 000 s Tax 000 s Tax rate % PBT 000 s Tax 000 s Tax rate % Reported 6,754 1, , Amortisation of intangible assets 1, , Restructuring costs 2, , Acquisition related expenses Post acquisition remuneration on the acquisition of Realys Underlying 11,529 2, ,090 1,

31 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. 29