Annual results Year ended 31 st December 2010 Adrian Ringrose, Chief - PowerPoint PPT Presentation

Annual results Year ended 31 st December 2010 Adrian Ringrose, Chief Executive Tim Haywood, Group Finance Director 9 March 2011

Overview Full year in-line, Strong second-half performance Strong financial position Confidence in Group’s prospects • 2011: expect stable performance • Medium-term: capability to double earnings per share over 5 years • Significant growth opportunities Continuation of progressive dividend policy 2 The Trusted Partner

Tim Haywood

Income statement £ million 2010 2009 Revenue 1,872.0 1,906.8 Total operating profit 74.4 85.7 Interest (4.8) (7.4) Headline profit 69.6 78.3 Headline EPS 42.8p 49.7p Dividend per share 18.0p 17.5p 4 The Trusted Partner

Segmental analysis % 2010 2009 growth £ million Revenue TOP* Revenue TOP* in TOP* Margin Margin Support Services 1,093.6 27.2 1,010.2 22.1 2.5% 2.2% +23% Project Services – UK 740.0 22.4 820.5 17.6 3.0% 2.1% +27% – International 26.2 - 23.1 - 10.7% 9.1% +13% Equipment Services 139.9 14.4 157.1 35.9 10.3% 22.9% -60% Joint Ventures - PFI - 4.2 - 4.7 Group Services (101.5) (20.0) (81.0) (17.7) 1,872.0 74.4 1,906.8 85.7 4.0% 4.5% -13% * Total Operating Profit 5 The Trusted Partner

Income statement – phasing of H1 & H2 £ million H1 2010 H2 2010 2010 2009 % growth Revenue 944.5 927.5 1,872.0 1,906.8 -2% Total operating 31.8 42.6 74.4 85.7 -13% profit Interest (1.8) (3.0) (4.8) (7.4) Headline profit 30.0 39.6 69.6 78.3 -11% Operating margin 3.4% 4.6% 4.0% 4.5% Headline EPS 17.5p 25.3p 42.8p 49.7p -14% Dividend per share 18.0p 17.5p +3% 6 The Trusted Partner

Support Services Margin Progression Sustainable medium-term margin c.5% Operating margin 7 The Trusted Partner

Project Services UK Margin Progression Sustainable medium-term Operating margin c.2% margin 3.5% 3.0% 2.5% 2.0% 3.2% 1.5% 2.9% 2.5% 2.2% 1.0% 1.8% 1.7% 0.5% 0.0% H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 8 The Trusted Partner

Project Services International Margin Progression Sustainable medium-term Operating margin c.7% margin 12.0% 10.0% 8.0% 6.0% 10.7% 9.1% 8.9% 8.3% 4.0% 6.5% 6.6% 5.4% 2.0% 0.0% 2004 2005 2006 2007 2008 2009 2010 9 The Trusted Partner

Equipment Services – Mix and Margin Equipment Services - Revenue Mix 120.0% 100.0% 80.0% 60.0% 40.0% 20.0% 0.0% H1 2007 H2 2007 H1 2008 H2 2008 H1 2009 H2 2009 H1 2010 H2 2010 Hire Sales/other Equipment Services – Operating margin Sustainable medium-term margin c.15% 10 The Trusted Partner

Group interest charge £ million 2010 2009 Group net interest payable (5.4) (3.2) PFI sub-debt interest receivable 2.8 4.6 Pension finance charge (2.2) (8.8) Net interest (4.8) (7.4) Increased cost of Group debt on lower borrowings PFI sub-debt interest reduced following disposal of 14 assets in 2009 Reduced pension finance charge on increased asset base 11 The Trusted Partner

Balance sheet summary £ million 2010 2009 Goodwill and intangible assets 228.3 230.8 Property, plant and equipment 149.0 148.8 Joint ventures and associates 121.8 124.4 Working capital (139.7) (163.5) Taxation (10.4) (12.9) Pension obligation (net of tax) (37.6) (68.6) Net debt (53.8) (37.3) Net assets 257.6 221.7 12 The Trusted Partner

PFI/PPP portfolio analysis ––––––– Investment ––––––– Construction/ interim Remaining Sector services Operating Made commitment Total £ 9.2m £ 14.5m £ 23.7m Health Tunbridge UCLH; Wells; Carlisle; Newcastle Enniskillen £ 9.3m £ 8.6m £ 17.9m Education Derry; Down & Holy Cross; Plymouth; Connor; Leeds BSF; Leeds 2; Downpatrick; Leeds 3 Sandwell; St Helens £ 7.0m £ 7.0m - Defence Corsham ATE £ 7.1m £ 7.1m - Custodial Peterborough; Ashford; Addiewell £ 0.2m £ 0.2m - Other Inland Revenue £ 25.8m £ 30.1m £ 55.9m Financially closed projects 13 The Trusted Partner

PFI/PPP portfolio – cash flows and valuation PFI portfolio valuation PFI portfolio - total life cash flows 250 30 25 200 20 15 £ million 10 150 £ million 5 - 100 (5) 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 (10) 50 (15) (20) 0 (25) 4% 5% 6% 7% 8% 9% 10% 11% 12% Year Discount rate Return of cash Investments Dec 2010 Dec 2009 • Total equity committed on remaining portfolio of £55.9m (£25.8m paid) 14 The Trusted Partner

Net debt movement £20m 2007 2008 2008 2009 2009 2010 2010 Dec Jun Dec Jun Dec Jun Dec £0m 2 007 D e c 2 008 J u n 2 008 D e c 2 009 J u n 2 009 D e c 2 01 0 J u n 2 01 0 D e c (£20m) H2 average: £30m (£40m) Closing: £54m (£60m) (£80m) (£100m) Net debt (£120m) Average (£140m) 15 The Trusted Partner

(£60.0m) (£40.0m) (£20.0m) Movement in net debt £20.0m £40.0m £60.0m £80.0m £0.0m Opening net debt Operating profit Depreciation Free cash flow generation of £43m Net disposal proceeds Other operating Working capital JVs and associates Tax paid Committed facilities available Extra pension contributions - £250m until Oct 2013 16 The Trusted Partner Dividends Acquisitions Closing net debt

Cash flow £ million 2010 2009 JVs and Group Assocs TOTAL TOTAL Operating profit 43.4 30.5 85.7 73.9 Depreciation & amortisation 26.3 - 24.5 26.3 Net capital expenditure 9.5 - (15.9) 9.5 Less: associates and JVs profits - (30.5) (29.1) (30.5) Dividends from associates - 32.1 17.6 32.1 Other non-cash (11.4) - (4.1) (11.4) Working capital movement (21.5) - 52.6 (21.5) Operating cash flow 46.3 32.1 78.4 131.3 Pension deficit payments (26.7) - (15.5) (26.7) Tax paid (6.3) - (15.7) (6.3) Other (2.3) - 0.8 (2.3) Free cash flow 11.0 32.1 43.1 100.9 Dividends (24.8) - (24.5) (24.8) Acquisition and investments (32.6) - 68.6 (32.6) Special pension contribution - - (61.5) - Other non-recurring (2.2) - (11.6) (2.2) Movement in net debt (48.6) 32.1 (16.5) 71.9 Operating cash flow conversion % 107% 105% 106% 153.2% 17 The Trusted Partner

Debt capacity and covenants • Debt facility of £250 million • £165 million undrawn facility at 31 December 2010 • Expires October 2013 • Covenants: ― Net debt : EBITDA < 3.0x ▪ 2010: 0.8x ― Interest cover > 3.5x ▪ 2010: 28.3x Significant headroom/capacity to drive growth 18 The Trusted Partner

Investments • Three bolt-on acquisitions for aggregate consideration of £27m ― US formwork and shoring £21.6m ― Indian construction £4.8m ― Oman services £0.5m • PFI investments of c. £6m • Consideration from existing cash resources Geographic footprint expanded into large and growing markets 19 The Trusted Partner

IAS 19 Pensions £ million 2010 2009 Defined benefit obligations 642.3 627.4 Scheme assets (590.8) (532.1) Deferred tax thereon (13.9) (26.7) Net deficit 37.6 68.6 20 The Trusted Partner

Movement in IAS 19 retirement benefit obligation (net of tax) 45% reduction in IAS 19 retirement benefit obligation Driven by: Asset out-performance Cash contributions Change to CPI rather than RPI 21 The Trusted Partner

Summary • Robust trading performance ― Margin progression at Support Services ― Strong margins in UK & International construction • Strong balance sheet ― Continued strong cash generation ― Sustained improvement in pension scheme funding position ― £250m committed credit facilities in place until October 2013 • Full-year dividend increased 3% to 18.0pps 22 The Trusted Partner

Adrian Ringrose

2010 Review Group 2010 performance in line with expectations: strong H2, 32% improvement on H1 Support Services: progress from margin enhancement programme Project Services: excellent performance, both UK and International Equipment Services: experienced anticipated cyclical weakness 24 The Trusted Partner

Support Services • 2010: strong H2 turnaround ― Business responded well to internal restructuring ― Full year contribution from HSBC, Defra ― Grew existing relationships with BP, Sainsbury ― Won new business with William Hill • 2011: building on 2010 progress ― Continue to expect c. £10m annualised benefit from 2010 actions ― MOU with central govt absorbed within current financial expectations • Attractive medium-term outlook ― Future workload of £4bn, £0.7bn re 2011 ― Opportunity pipeline c. £6bn ― UK public sector outsourcing opportunity ― Develop Middle East market 25 The Trusted Partner

Project Services – International • Excellent margin of 10.7% • Strong 2010 performance from Qatar & Oman countering a subdued Dubai • Improving future workload (£0.3bn) in a competitive environment • Positive outlook for Gulf construction markets, notably in our largest market Qatar post award of 2022 FIFA World Cup • First acquisition in India Shell Pearl GTL facility, Ras Laffan Industrial City, Qatar 26 The Trusted Partner