Final Results
Costain Group PLC
16 March 2005
Costain Group PLC
('Costain' or the 'Group')
Audited results for the year ended 31 December 2004
Costain, the international engineering and construction group, which has
recently secured major AMP4 contract wins, announces increased turnover and
profits for the year ended 31 December 2004.
Financial highlights
• Total turnover of £702.9 million (2003: £650.2 million) +8%
• Operating profit of £18.9 million (2003: £15.5 million) +22%
• Profit before tax of £19.5 million (2003: £16.1 million) +21%
• Earnings per share of 4.3p (2003: 3.8p) +13%
• Forward order book at 31 December in excess of £1.1 billion +37%
Operational highlights
• AMP4 contracts from Thames Water, Welsh Water and Yorkshire Water and at
preferred bidder status for Southern Water and United Utilities
• Return to profitability in Building
• First major win for China Harbour joint venture: breakwater project in
Mexico
Corporate developments
• Proposals to restructure balance sheet and facilitate resumption of
dividends
• Company well positioned to adopt International Financial Reporting Standards
• Search underway for right candidate to succeed Stuart Doughty, due to retire
by September 2006
The Chairman, David Jefferies, commented:
'I am delighted to report that we have made excellent progress and this is
reflected in an outstanding result for the year. We have made a strong start to
2005 with a forward order book currently standing at some £1.1 billion. Costain
can be proud of its achievements over the last few years. With a restored
pride, a strong brand and highly skilled teams led by outstanding management, we
are looking forward to the future with confidence.'
16 March 2005
ENQUIRIES:
Costain Group PLC Tel: 01628 842 444
Stuart Doughty, Chief Executive
Charles McCole, Finance Director
Graham Read, Public Relations
College Hill Tel: 020 7457 2020
Mark Garraway
Matthew Gregorowski
CHAIRMAN'S STATEMENT
Overview
I am delighted to report that we continue to make excellent progress and this is
reflected in an outstanding result for the year.
Through a constant focus on our plan for growth, we have enhanced Costain's
reputation both with existing and new clients. The level of repeat business
that we are winning is particularly pleasing and confirms the high regard in
which the Group is now held.
This is particularly demonstrated by the major contract wins during the year in
the water sector where long-term contracts have been awarded in connection with
the latest Asset Management Programme ('AMP4'). During the year we won AMP4
contracts from Thames Water, Yorkshire Water and Welsh Water. We also secured
the country's first water industry Public Private Partnerships (PPP) contract, a
25-year project, in conjunction with Severn Trent, to deliver water services to
the Ministry of Defence's 1,500 sites throughout the UK.
As Stuart Doughty, in his Chief Executive's Review, reports our success in this
sector has continued in 2005. This provides an extremely robust forward order
book for the next five years, with secure margin levels.
On the international front, our key shareholders remain very supportive and we
continue to develop opportunities where we can utilise our joint skills. For
example, the opportunities which arise from rationalisation of the Malaysian
water industry. The joint venture with China Harbour Engineering has also made
an excellent start with a major contract for Sempra Energy in Mexico.
Our policy of being selective in the work for which we tender, had a marginal
affect on turnover in 2004 but has undoubtedly increased significantly the
quality of the Group's earnings. As the results testify, this policy will
remain central to the Group's approach to securing new business.
Results
Total turnover of £702.9 million (2003: £650.2m) was up 8% on the previous year
with profit on ordinary activities before taxation of £19.5 million (2003:
£16.1m), an increase of 21%. Earnings per share were 4.3p (2003: 3.8p), up 13%
on last year.
The Group has no significant borrowings and the net cash balances at the end of
the year totalled £62.6 million (2003: £70.6m) including the Group's share of
cash held by joint arrangements (construction joint ventures) of £18.9 million
(2003: £29.3m). As forecast, cash levels have reduced in line with the
increased level of framework contracts undertaken by the Group with the result
that there was a cash outflow during the year of £8.0 million (2003: £0.7m
outflow).
Balance Sheet Restructuring
Following the Group's much improved financial performance over the past three
years, we will be bringing forward proposals at an Extraordinary General Meeting
to be held immediately before our Annual General Meeting to restructure the
Company's balance sheet to remove the historical losses shown in the profit and
loss account. A positive decision by shareholders at the Extraordinary General
Meeting and subsequent approval by the Court of these arrangements will allow
the Board to consider, subject to prevailing trading conditions, a resumption of
dividend payments from 2006.
Any future dividend policy will in turn have to take account of the Group's
pension fund liabilities. We are, therefore, separately reviewing the pension
scheme with the objective of finding an optimal balance between the scheme's
requirements and the Group's obligations.
Corporate Governance and the Board
The Board continues to take steps to ensure compliance with the Combined Code
wherever possible and where it is in the Company's best interests. In accordance
with the Combined Code the Board established a formal process, led by myself,
for the evaluation of the performance of the Board and its principal Committees.
This review process was carried out with the assistance of external consultants
and their report was considered and acted upon by the Board.
The Company has invested a great deal of time in preparation for the
introduction of International Financial Reporting Standards and is well
positioned to handle the introduction of the new requirements.
Membership of the Board has seen a number of changes during the year.
- Dato' Wahid Omar, the Managing Director and Chief Executive of United
Engineers (Malaysia) Berhad ('UEM') left the company and the Board to take up
the post of Chief Executive of Telekom Malaysia Berhad. He has been replaced by
Dato' Ahmad Pardas Senin who is now the Managing Director and Chief Executive of
UEM.
- Mr Amin Lana has retired and has been replaced by Mr Mohd Azman
Sulaiman.
- Mrs Leslie Rogers a nominee of Raymond International WLL resigned from
the Board to spend more time with her family in the USA.
We thank Dato' Wahid Omar, Mr Amin Lana and Mrs Leslie Rogers for their
contributions to the Board. The number of major shareholder nominated directors
has reduced to three.
During the year Raymond International WLL took the decision to sell down its
shareholding. We are indebted to Raymond International WLL for the support that
they gave Costain over the difficult period that the Company faced in the mid
1990s. The share disposal has improved the Group's liquidity.
Mr Doughty has been responsible for leading the management of Costain through a
significant period of recovery. Mr Doughty is due to retire by September 2006
and the Board has commenced the process of looking for a successor to take the
Company forward. We are confident that succession will be handled in an orderly
and efficient manner. The Board was delighted with Stuart Doughty's appointment
as a Companion of the Order of St Michael and St George (CMG) in the New Years
Honours. The award recognised Mr Doughty's services to international trade and
investment.
People
Our management teams and staff have focused on high quality work, improved
profitability and a safe and sustainable working environment, all of which have
been reflected in the excellent performance for the year. As the business grows
we continue to focus on succession planning including developing the skills of
our existing staff and seeking to recruit new people who have the aptitude and
experience to add value to our business. We thank all of our staff for their
contributions during the year.
Outlook
Costain made excellent progress during 2004 with a forward order book as at 31
December 2004 of £1.1 billion and with a further £1 billion under negotiation.
The industry as a whole has commented on the slowing in central Government
investment in road and healthcare infrastructure, we believe that we will see
greater clarity on spending levels following the impending General Election.
The success achieved during 2004, particularly in the water sector, has greatly
increased the proportion of business derived from the private sector. This,
combined with our policy of reducing and managing risk whilst focusing on the
needs of our key customers, will continue to deliver enhanced turnover and
profitability.
Costain can be proud of its achievements over the last few years. With a
restored pride, a strong brand and highly skilled teams led by outstanding
management, we are looking forward to the future with confidence.
David G Jefferies
15 March 2005
CHIEF EXECUTIVE'S REVIEW
2004 has been an eventful year and rewarding for the business with many of the
actions taken in earlier years now providing a long-term secure future for the
Group.
Our patience in pursuing the water utility market has shown considerable
results, despite earlier concerns regarding slow negotiations, coupled with
commensurably high tender costs. However, we have gained a very strong position
in securing a significant proportion of the utilities' capital asset programmes
for the next five years, many renewable to ten. These contracts will give
Costain a highly significant long-term workflow which will not be susceptible to
risks associated with normal contracting and to external factors such as
downturn in Government expenditure.
We have seen a slowing down in hospital investment under the Procure 21 approach
as the various trusts find ways of accommodating this new method of procurement.
However, this has been complemented by considerable expenditure in education
where we are seeking to secure a dominant position. The Government's commitment
to the transport programme has continued, but has been translated into long term
investment producing later starts for the capital programme. Our position on
major rail infrastructure schemes has allowed us to weather this slow down.
Despite concerns in the housing market, we continue to provide infrastructure
for a large number of house builders and, whilst the commercial market is
slowing down, retail is continuing at a strong level with inner city and town
refurbishment programmes being rolled out, as well as investment on mega-stores
and out-of-town shopping.
Our investment in Spain, being close to Gibraltar, is divorced from the main and
very susceptible tourist areas and has not suffered any effect from the downturn
in house sales experienced in the more populated areas. We have also managed,
through our joint venture with Banco Santander, to secure other tracts of land,
given us an ongoing portfolio of land for development.
Inflation in the UK has remained stable, as have interest rates throughout the
period, giving rise to considerable confidence in the market, especially in
investment in both public and private infrastructure. I believe our strong
performance and strict adherence to a low risk strategy is now producing a
sustainable and robust profit stream, whilst adhering entirely to the core
activity of contracting.
A key part of moving the Company forward was the development and recruitment of
individuals who understood the Costain culture and would play a key role in
providing a quality service. They have added strength to our core skills and
given us additional knowledge in sectors such as education and nuclear, where we
hope to repeat the success we have enjoyed in the water and health sectors.
We have made significant progress in 2004, particularly in highways and
transportation. We were subject to a further third party briefing assessment
regarding our overall capability - the Highway Agency's Capability Assessment
Toolkit. The Company's commitment was reflected in a score of 70, out of a
possible 72, which was the highest of all UK contractors. It was also
confirmation that we have preserved the brand strength and added much to stay
ahead of the competition and keep the Costain name to the fore.
With the increase in the nuclear market we have now pre-qualified for a number
of schemes for AWE, BNFL and UKAEA. This is demonstrated with contracts for
project management, design and build treatment plants and short listing for the
design of a major cementitious plant for nuclear waste. Further, we have
successfully pre-qualified for the first substantial decommissioning project
(£150 million plus) under the newly formed Nuclear Decommissioning Authority,
now responsible for decommissioning the majority of the UK's nuclear civilian
asset base.
Similarly, the Department for Education and Skills capital programme for
Building Schools for the Future (BSF), is valued at £2.5 billion per annum in
addition to existing education construction spending. Our recently recruited
Director for Education has an excellent platform via our Ealing Schools and
Stockley Academy projects from which to capture a significant share of the '
Local Education Partnerships' that are programmed over the next decade within
the BSF programme.
A further reflection on the Company's performance was that the Group achieved
the highest number of awards at the 2004 Royal Society for the Prevention of
Accidents' (ROSPA) Occupational Health and Safety Awards. Nearly 400 businesses
and organisations from the UK's construction and engineering industry were
honoured by RoSPA for their safety records over the year with Costain in number
one position. Costain Oil, Gas & Process received the President's award for 13
years' of exceptional performance and eleven gold medals went to Costain
operations. This fully underlined our commitment to safety and showed we have
continued our focus on health and safety throughout the Group.
We started with 'Be Safe', an initiative to improve safety awareness in the
Company some three years ago which has halved our accident frequency ratio over
the period. Now we face a new challenge of sustainability. Governments,
communities and clients are just some of the external audiences which are
increasingly challenging companies to account for their environmental and
sustainable performances. We have responded to this and launched an initiative
entitled 'Save It' to generate a culture of conservation within the working
environment.
We have a commitment to a prudent use of natural resources, protecting the
environment and reducing waste, which will help to ensure good commercial
practice. Our strategy is to involve all employees, suppliers and
sub-contractors in an environmentally responsible approach. As with all other
parts of the Costain operation, we have set ourselves challenging targets and we
must now ensure they are achieved.
Current Trading and Prospects
Asset Management
Despite the inevitable slow down as the programmes for Asset Management
Programme 4 (AMP4) were being agreed between the regulator and the utilities,
2004 was a year of considerable achievement for our Asset Management business.
We were awarded a five-year contract under AMP4 for Thames Water with potential
for extension to 10 years. This is a contractual agreement to build all of the
capital works within the M25. In addition, we have also been selected for a
list of preferred suppliers for major process and network contracts, similar to
the scheme worth £103 million completed at Perry Oaks and Iver South.
We have also been awarded two further frameworks for Yorkshire Water for the
provision of a significant proportion of their capital works of the order of
£180 - £200 million with again the possibility to extend to 10 years.
Following on from the good news concerning Thames and Yorkshire, Costain was
then able to announce, just weeks later, that the Company had been selected by
Dwr Cymru Welsh Water as Preferred Partner for their programme, amounting to
£20 million per year which could run over 15 years, beginning on 1 April, 2005.
Costain will be primarily responsible for civil construction projects in the
north Wales region.
After considerable tender activity during the latter part of the year, we are at
preferred bidder status on two major schemes:
• United Utilities' five-year water framework contract, value of
approximately £70m per year, in joint venture with Galliford Try;
• The major part of Southern Water's £1.5 billion five-year capital
investment programme, in joint venture with United Utilities and Montgomery
Watson Harza.
We have developed specialist skills focusing not only on this sector but also
the manner in which we have worked with these clients. The regulator OFWAT has
committed the water utilities to a major programme of expenditure and as a
consequence of our ability to produce high quality service over a prolonged
period we have secured a major portion of this work.
The successful framework formula which we have developed in the water sector is
now being transferred to other markets. Costain has secured a five-year
partnering agreement with Manchester Airport Group, worth a potential £50
million, to upgrade the infrastructure at Manchester, East Midlands, Bournemouth
and Humberside Airports. There is a growing demand in most customer-focussed
markets for the provision of infrastructure to be conducted in an expeditious
and efficient way. Frameworks provide clients with this facility.
Civil Engineering
We have secured a number of major road schemes in south Wales during the period,
including Porth and Lower Rhondda Fach Relief Road, now valued at approximately
£60 million, and Sirhowy Way, a PFI contract value approximately £34 million,
which will then be maintained over a period of 30 years.
The project for the improvements to the intersection with the A34/M4 Junction 14
at Chieveley was completed ahead of programme and has generated considerable
praise from road users for the efficient way in which the contract was
administered. The project has received a Gold award in the Considerate
Contractors Scheme.
The A303 project at Stonehenge, value in excess of £200 million, having
successfully obtained route consent is now awaiting regional approval before
commencing. Whilst the Government remains committed to the need for investment
in transport and specifically the roads infrastructure programme, a number of
alternative financial mechanisms are being reviewed to speed up the process.
The Channel Tunnel Rail Link (CTRL) contract at Stratford was completed ahead of
programme and we completed the relining of Network Rail's tunnels at Strood and
Higham in Kent. At the CTRL St Pancras contract we opened the interim station on
time which allowed Midland Mainline to continue to operate. Despite the
complexity of the scheme, one million man-hours were completed with zero
lost-time accidents.
In West London, Costain secured a contract for the replacement of the London
Underground bridgeworks at White City as part of the major retail development
undertaken by Chelsfield/Multiplex, which was valued at £23 million. The
contract is a major continuation of our other railworks in London - CTRL and
Kings Cross. Costain has also embarked on two five-year framework contracts for
infrastructure and drainage for Tube Lines.
Building
The Costain Building Division is continuing its philosophy of de-risking and, as
a result, the Division has established a stronger client base and turnover has
risen from £142 million in 2003 to £225 million in 2004. Due to an inevitable
longer period of negotiation, new orders in 2004 totalled £203 million, with a
further £232 million under negotiation as preferred contractor which already
gives us 60% of the 2005 forward order book. These figures show improvement and
point the way to a more promising future.
The Healthcare sector remains a key market and the final phase of the Kings
College Hospital PFI scheme was completed, in addition to schemes at Ormskirk
and Shrewsbury. A total of ten ProCure 21 schemes were in design or
construction phase during the course of the year with a total value of £70
million.
In 2004, we completed the majority of the Diamond Synchrotron building at
Harwell, Oxfordshire, the UK's largest scientific research project for 30 years.
Progress has been good and our performance on the project paved the way for
the award of the ISIS contract (value £22 million), another high-tech scientific
facility at Harwell.
In the retail sector, Costain's partnership with Tesco continues and the
division also won development contracts in Enfield, Birmingham, Hemel Hempstead
and London. The residential market remained buoyant during the year and
produced a number of major new contracts.
Costain has also been awarded the high-profile construction contract (£23
million) to restore and redevelop St Martin-in-the-Fields in Trafalgar Square.
In addition, as construction partner to Serco Group plc, Costain will be
responsible for the design and build of the MoD's centre of excellence (£80
million) at Shrivenham in Wiltshire.
PFI
The Government continues to promote PFI as a mechanism to enable infrastructure
schemes to be delivered more quickly than would otherwise be the case under
their own capital expenditure plans.
Three projects were negotiated in joint venture to financial close in 2004 and a
further three achieved Preferred Bidder status.
As mentioned earlier, the Sirhowy Enterprise Way in south Wales, the Aquatrine '
C' asset management contract for the MoD for the provision of water resources on
MoD sites and the Kingston Hospital were negotiated to final close.
We reached preferred bidder status on Ealing Schools, Kent Schools and
Shropshire Community Services, the last being with the same partners with whom
we won Kent Integrated Care Services. We are in discussions regarding joining a
consortium that is at preferred bidder status on the Northampton Schools PFI and
in the last two of the 3 Shires batched mental services PFI, with the selection
of preferred bidder to be announced in May. The potential capital value of
these projects is approximately £700 million and with Special Purpose Vehicle
revenues of over £2.5 billion over the life of the schemes.
King's College Hospital continues well with both the Ruskin and Golden Jubilee
Wing being handed over three months early. The project won the 2004 Award for
Best Design for an operational PFI project across all sectors at the 2004 PFI
Awards.
Costain Oil, Gas & Process (COGAP)
The new management team in this division has brought renewed focus to our
operations in this fast growing market and we are beginning to see the benefits
of their efforts.
We completed the Burlington Rivers Field terminal at Barrow and the Clean Fuels
Project for TotalFinaElf (Milford Haven). Our joint venture company, Costain
Petrofac Limited successfully completed the first year of a seven-year contract
for Hydrocarbon Resources Limited (Centrica). New work included the award of
the front-end design of a processing facility for an oil major with the
possibility of continuing the implementation phase in 2005.
We continue to recruit staff necessary to expand the existing shutdown and
maintenance operation in Abu Dhabi and to seek new opportunities in the
surrounding region, particularly in the area of gas processing. We have been
involved in submitting several major proposals for new gas plants in Iran that
should come to fruition in 2005.
In November, Pemex (Mexico) awarded a US$150 million, lump sum EPC contract to
Techint and to COGAP as technology supplier. The facility at Tabasco, Mexico
will be the world's largest nitrogen rejection plant and will use Costain's
proprietary cryogenic process technology. We will be pursuing other similar
projects in 2005.
Finally, our decision to develop a position within the UK nuclear
decommissioning market led to work for UKAEA at Dounreay and at Harwell and for
British Nuclear Group at Hunterston. These projects are part of the overall £2
billion per annum spend in the sector in the UK over the coming twenty years.
International
Our principal shareholders remain very supportive and as Malaysia continues to
promote privatisation we expect opportunities will arise in the future to
combine our expertise in the whole process of water privatisation, and the
management of assets.
Our joint venture with China Harbour is allowing us to access a significant
proportion of the global ports and harbours market where there is considerable
investment projected by the major port operators.
The second half of 2004 saw us achieve the contract award for Costa Azul Gas
project in Mexico at the year-end valued at US$170 million. This is the first
project resulting from the Costain China Harbour alliance. There is also an
opportunity to build on this success and we are also awaiting the result of a
number of bids submitted in the latter part of 2004.
The Group increased its shareholding in Costain (West Africa) Plc to 37% and
completed a debt restructuring of that company. A new management team is now in
place and the prospects for 2005 are promising.
Work in Iraq, as expected, has been slow due to security issues and the focus
on the election. However, we expect further awards in the first half of 2005,
which would consolidate our position in this region
Alcaidesa Holding S. A. the Spanish registered company in which Costain holds a
50% interest has enjoyed another highly successful year. The main thrust for
the company through 2004 was to advance the substantial infrastructure works on
land forming part of the company's estate on the Costa del Sol near Gibraltar.
Excellent progress has been achieved enabling us to complete significant land
sales to Spanish development companies. Further infrastructure work will be
completed in 2005.
Our second golf course is now under construction supervised by the
internationally renowned golf course designer Dave Thomas and should be ready
for play before the end of 2006. This new course will complement the adjoining
established Alcaidesa links course and both will be served by new clubhouse
facilities, work on which will start on site in Spring 2005.
Working with our joint venture partner, Santander, we have agreed to expand
Alcaidesa's activities in the area and to build upon the company's reputation as
masterplanners and infrastructure providers. As a result, strategic land
acquisitions have been made in Granada province and options over further
substantial tracts of land secured. Alcaidesa will now formulate masterplan
proposals for this land bank, which when approved will be infrastructured and
sold on to national developers.
Further land purchase opportunities are being negotiated to ensure Alcaidesa has
a long-term flow of profitable development land to secure its future in the
years ahead.
Safety, Health and the Environment
Our track record in safety has been excellent during the year:
• For the fifth year running Costain has managed to reduce its Accident
Frequency Ratio to a level where it currently stands at 0.26 which represents a
reduction of 21% on the figure for 2003.
• We gained accreditation to OHSAS 18001 on 14 December 2004. OHSAS
18001 is an international health & safety management standard which sits
alongside our existing registrations to ISO 9001 and 14001.
• During the year the concept of Sustainable Construction has been
introduced to the business by professional organisations such as the CITB and
the Environment Agency, both of whom are working with us to promote continuous
improvement in our drive towards sustainable construction. In this role three
key areas have been identified, namely the Environmental, Social and Economical
aspects relating to our operations. In each of these disciplines key
performance indicators are measured and best practices distributed throughout
the Group.
• To verify that our Environmental Management and Health & Safety
systems are functioning efficiently, we were audited throughout the year by
various external bodies. All of these produced favourable reports that
contributed to the report produced by the Highways Agency's Capability
Assessment Toolkit which stated that: 'Costain's approach and deployment of
Health and Safety appears exemplary and as a role model level in all areas.
Environmental, social and economic sustainability are increasingly becoming a
cultural aspect of the company'.
• A new initiative has been developed branded 'Save It' in an effort to
limit waste in both the business and on our sites
Business Systems
Costain continues to invest capital and energy in continuously updating our
business systems. Having completed the development of operational Best Practice,
our skills transfer and awareness programme has seen approximately 1,400
man-days of training completed.
The Company launched an Internet Business Portal, named iCosnet, in January
2004, which now supports over employees, clients and members of the Supply Chain
in the delivery of knowledge, best practice and contract documentation
throughout our UK and international operations. This has been of significant
value when successfully securing framework contracts. The system is in use on
most of our projects across the world and has received over two million access
hits in the last month.
The Commercial Systems Replacement Programme is progressing well with the
renewal of our back office systems with a modern integrated set of commercial
and financial systems, streamlining the business and laying foundations for the
delivery of e-procurement and trading capability for the future. The programme
is due to complete on a phased basis during 2005 and 2006.
Staff
During the course of the year we strengthened our management structure by
appointing heads of nuclear and education, to ensure a focused approach in
those emerging markets. Additional managers have also been appointed to
strengthen our Middle East position in the oil and gas business and similarly
in the building regions in the UK. I believe over the year we have promoted an
environment for staff to deliver to their full potential and that has been
endorsed by our considerable contractual awards and recognition from Investors
in People.
Furthermore, we have continued to promote our Building Awareness initiative
helping a chosen number of schools better understand the opportunities for young
students in our industry. This will produce considerable resource in coming
years, committed to both the Costain brand and the industry.
Conclusion
The year not only saw significant progress in performance, but also demonstrated
the success of our focus on building long-term partnership relationships. The
majority of contracts won during the year and of our forward order book
comprises 5-10 year projects. A significant amount of this work is repeat
business reflecting the high levels of satisfaction amongst our client base.
The long-term visibility of future earnings combined with a significant
reduction in the churn rate of our client base is testimony to the progress the
Group has made.
As the Chairman has reported, on the back of the Group's robust performance, we
are in the process of restructuring the balance sheet to allow for the future
payment of dividends. A resumption of dividend payments would be the ultimate
recognition of the outstanding achievements at Costain over the last three
years. The recovery of the business is complete. Costain can look forward to a
strong future including further progress in 2005.
Stuart J Doughty
15 March 2005
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2004
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 December 2004 2003
Notes
Continuing £m Continuing £m
Turnover
Group undertakings and Group share of joint 1 702.9 650.2
ventures and associates
Less: Group share of joint ventures and associates (29.7) (26.7)
turnover
Group turnover 673.2 623.5
Cost of sales (645.0) (600.9)
Gross profit 28.2 22.6
Administration expenses (18.0) (17.2)
Operating profit from Group undertakings 10.2 5.4
Group share of joint ventures operating results 8.9 10.1
Group share of associates operating results (0.2) -
Operating profit - Group and Group share of joint 18.9 15.5
ventures and associates
Net interest receivable/(payable) and similar
income/(charges)
Group undertakings 2.3 1.7
Joint ventures (0.6) (0.3)
Other finance charges - Group undertakings (1.1) (0.8)
Profit on ordinary activities before taxation 1 19.5 16.1
Taxation (4.3) (2.9)
Profit for the financial year 15.2 13.2
Earnings per share - basic 2 4.3p 3.8p
Earnings per share - diluted 2 4.3p 3.7p
During the year and the previous year, no businesses were acquired and therefore
all continuing results arise from existing operations.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2004
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2004 2003
Notes £m £m £m £m
Net cash outflow from operating activities 4 (10.5) (5.8)
Dividends from joint ventures 4.4 -
Returns on investments and servicing of finance
Interest received 2.6 2.2
Interest paid (0.3) (0.5)
Net cash inflow from returns on investments
and servicing of finance 2.3 1.7
Taxation
UK tax paid - -
Overseas tax paid - (0.2)
Capital expenditure and financial investment
Purchases of tangible fixed assets (1.7) (1.8)
Sales of tangible fixed assets - -
Capital repayments by investments 0.2 6.2
Loans to joint ventures and associates (2.8) -
Additions to investments (0.4) (0.1)
Net cash (outflow)/inflow from capital expenditure and
financial investment (4.7) 4.3
Net cash outflow before financing (8.5) -
Financing
Finance lease capital payments (0.2) -
New loans - 0.3
Issue of ordinary shares 0.9 0.9
Net cash inflow from financing 0.7 1.2
(Decrease)/increase in cash in the year (7.8) 1.2
Reconciliation of net cash flow to movement in net cash
2004 2003
£m £m
(Decrease)/increase in cash in the year (7.8) 1.2
Cash outflow/(inflow) from finance lease capital payments/(loan financing) 0.2 (0.3)
(7.6) 0.9
Currency realignment (0.4) (0.8)
Movement in net cash (8.0) 0.1
New finance leases - (0.8)
(8.0) (0.7)
Net cash at 1 January 70.6 71.3
Net cash at 31 December 62.6 70.6
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2004
CONSOLIDATED BALANCE SHEET
As at 31 December 2004 2003
Notes £m £m £m £m
Fixed assets
Tangible assets 5.4 4.9
Investments in joint ventures and associates
Share of gross assets 109.9 75.7
Share of gross liabilities (90.9) (58.1)
19.0 17.6
Loans to joint ventures 2.6 2.5
Loans to associates 2.7 -
Other investments 1.0 1.0
Investments 25.3 21.1
30.7 26.0
Current assets
Stocks 1.0 1.6
Debtors 159.7 122.4
Cash at bank and in hand 64.1 72.0
224.8 196.0
Creditors: amounts falling due within one year
Borrowings (1.0) (0.5)
Other creditors (214.3) (193.9)
(215.3) (194.4)
Net current assets/(liabilities)
Due within one year 2.1 (4.2)
Due after more than one year 7.4 5.8
9.5 1.6
Total assets less current liabilities 40.2 27.6
Creditors: amounts falling due after more than one
year
Borrowings (0.5) (0.9)
Other creditors (3.0) (1.7)
(3.5) (2.6)
Provisions for liabilities and charges (4.2) (7.1)
Net assets excluding pension liability 32.5 17.9
Net pension liability (69.2) (54.5)
Net liabilities (36.7) (36.6)
Share capital and reserves
Called up ordinary share capital 35.3 34.5
Share premium account 119.5 119.4
Profit and loss account (191.6) (190.6)
Equity shareholders' deficit 3 (36.8) (36.7)
Equity minority interests 0.1 0.1
(36.7) (36.6)
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2004
STATEMENT OF TOTAL CONSOLIDATED RECOGNISED GAINS AND LOSSES
2004 2003
£m £m
Profit for the financial year from Group undertakings 14.1 5.7
Profit for the financial year from joint ventures 1.1 7.5
15.2 13.2
Currency translation differences (0.2) 1.2
Actuarial loss recognised in the pension scheme (22.8) (44.0)
Deferred tax arising thereon 6.8 13.2
Total recognised losses relating to the year (1.0) (16.4)
NOTES TO THE ACCOUNTS
1 Business and geographical segment information
Business segment information
In the opinion of the directors, the only material classes of business are the administering of the
engineering and construction (E&C) projects and property development in Spain. All items below are E&C
projects unless stated otherwise.
Geographical segment Turnover Profit/(loss) Net assets/(liabilities)
information by origin
2004 2003 2004 2003 2004 2003
£m £m £m £m £m £m
Continuing operations
Group undertakings
United Kingdom 647.4 583.9 10.2 7.8 (126.4) (125.6)
Rest of the world 25.8 39.6 - (1.7) 2.8 (1.7)
Reorganisation costs - UK - - - (0.7) - -
Turnover, operating profit and 673.2 623.5 10.2 5.4 (123.6) (127.3)
net
liabilities of Group
undertakings
Joint ventures
United Kingdom 10.1 3.8 0.3 (0.2) 1.4 1.4
Rest of the world - property 12.2 21.0 8.4 9.5 20.3 18.5
development
Rest of the world 6.8 1.9 0.2 0.8 (0.1) 0.2
Associates
Rest of the world 0.6 - (0.2) - 2.7 -
702.9 650.2 18.9 15.5 (99.3) (107.2)
Net interest receivable
and similar income 1.7 1.4
Other finance charges (1.1) (0.8)
Net cash 62.6 70.6
Profit on ordinary activities
before taxation and net
liabilities 19.5 16.1 (36.7) (36.6)
Turnover by destination is not materially different to turnover by origin.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2004
2 Earnings per share
The calculation of earnings per share is based on profit after taxation and
minority interests of £15.2m (2003: £13.2m) and the number of shares set out
below:
2004 2003
Weighted average number of shares for basic earnings per share 351,190,999 344,300,294
calculation
Dilutive potential ordinary shares:
Warrants - 5,161,400
SAYE Scheme 6,417,591 4,710,920
Total dilutive potential ordinary shares 6,417,591 9,872,320
Weighted average number of shares for fully diluted earnings per share 357,608,590 354,172,614
calculation
The number of shares has been adjusted for the issue of 7,999,990 ordinary
shares following the exercise of warrants, which raised £0.9m.
3 Reconciliations of movements in shareholders' funds
2004 2003
£m £m
Profit for the financial year 15.2 13.2
Other recognised losses in the year (16.2) (29.6)
Total recognised losses relating to the year (1.0) (16.4)
Share issue in year 0.9 0.9
Net reduction in shareholders' funds (0.1) (15.5)
Shareholders' deficit at 1 January (36.7) (21.2)
Shareholders' deficit at 31 December (36.8) (36.7)
4 Notes to the cash flow statement
Reconciliation of operating profit from Group undertakings to net cash outflow
from operating activities
2004 2003
£m £m
Operating profit from Group undertakings 10.2 5.4
Depreciation 1.1 0.9
Decrease in stocks 0.6 -
Increase in debtors (38.3) (14.2)
Increase in creditors 18.8 4.9
Decrease in provisions (2.9) (2.8)
Net cash outflow from operating activities (10.5) (5.8)
The accounts and notes set out above do not constitute the Company's statutory
accounts for the years ended 31 December 2004 and 2003 but are derived from
those accounts. Statutory accounts for 2003 have been delivered to the
Registrar of the Companies and those for 2004 will be delivered in due course.
The auditors have reported on these accounts; their reports were unqualified and
did not contain a statement under section 237 (2) or (3) of the Companies Act
1985.
This information is provided by RNS
The company news service from the London Stock Exchange
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