TIDMCOST
RNS Number : 5806R
Costain Group PLC
25 August 2010
Costain Group PLC
("Costain" or the "Group")
Interim results for the half-year ended 30 June 2010
Costain, one of the UK's leading construction and engineering solutions
providers, announces a strong performance for the first half of the year with
increased revenues, profit from operations and profit before tax.
+------------------------+---------------+-------------+-------------+
| | H1 2010 | H1 2009 | FY 2009 |
+------------------------+---------------+-------------+-------------+
| Revenue* | GBP533.4m | GBP508.2m | GBP1,061.1m |
+------------------------+---------------+-------------+-------------+
| Profit from operations | GBP8.8m | GBP8.3m | GBP20.8m |
+------------------------+---------------+-------------+-------------+
| Profit before tax | GBP8.2m | GBP6.9m | GBP18.1m |
+------------------------+---------------+-------------+-------------+
| Net cash | GBP133.9m | GBP119.2m | GBP120.5m |
+------------------------+---------------+-------------+-------------+
| Basic earnings per | 10.0p | 8.7p** | 23.1p** |
| share | | | |
+------------------------+---------------+-------------+-------------+
| Dividend per share | 3.00p | 2.75p** | 8.25p** |
+------------------------+---------------+-------------+-------------+
* Including share of joint ventures & associates
** Restated following 1 for 10 share consolidation in 2010
· Profit from operations increased to GBP8.8 million (June 2009: GBP8.3
million)
· Profit before tax up 19% to GBP8.2 million (June 2009: GBP6.9 million)
· Over GBP400 million of new work secured during the six month period ended
30 June 2010 including:
o A five-year AMP5 contract with Welsh Water
o A five-year GBP115 million joint venture maintenance Managing Agent Contract
('MAC') for the Highways Agency
o Appointed as one of Delivery Partners for Highways Agency National Framework
Contract
o Appointed to construct tunnel portals for Crossrail as part of enabling works
contract
· Maintained a high quality order book of GBP2.5 billion (June 2009: GBP2.5
billion), giving longer-term revenue visibility
· Further contract awards since 30 June including:
o Appointed by Severn Trent for facilities at Frankley in addition to AMP5
contract
o Deptford Green PFI, part of the Lewisham BSF framework
o Appointed, in joint venture, by London Underground for Bond Street station
upgrade
· No significant debt and a strong net cash position of GBP133.9 million
(June 2009: GBP119.2 million)
· Interim dividend increased by 9% to 3.00 pence (2009: 2.75 pence **)
Commenting on the results, the Chairman, David Allvey, said:
"Costain has again delivered a good result for the first half of the year. It is
testimony to the Group's strategic focus and leading market positions that, in
one of the most testing economic environments, Costain continues to deliver a
strong operational and financial performance.
"We are successfully implementing the 'Choosing Costain' strategy, focusing on
major customers with spending plans that are underpinned by strategic needs,
regulatory commitments or essential maintenance requirements.
"As a consequence, the Group entered the second half of the year with a good
order book, robust finances and a net cash balance in excess of GBP100 million.
Whilst challenging market conditions are set to continue for the foreseeable
future, the Board expects to report continued progress at the year-end in line
with its expectations."
25 August 2010
ENQUIRIES:
+---------------------------------------+--------------------------+
| Costain Group PLC | Tel: 01628 842 444 |
+---------------------------------------+--------------------------+
| Andrew Wyllie, Chief Executive | |
+---------------------------------------+--------------------------+
| Tony Bickerstaff, Finance Director | |
+---------------------------------------+--------------------------+
| Graham Read, Group Communications | |
| Director | |
+---------------------------------------+--------------------------+
| | |
+---------------------------------------+--------------------------+
| College Hill | Tel: 020 7457 2020 |
+---------------------------------------+--------------------------+
| Mark Garraway | |
| | |
+---------------------------------------+--------------------------+
| Adam Aljewicz | |
+---------------------------------------+--------------------------+
* Notes to Editors
Costain is one of the UK's leading construction and engineering companies and is
currently at the forefront of the drive to develop and improve the nation's
infrastructure.
In its targeted sectors, Costain is playing a major role in the provision of new
facilities for a range of sectors ranging from waste to transport. The Company's
strategy is entitled 'Choosing Costain' and everyone in the organisation is
committed to making Costain the automatic choice in terms of both business and
technical excellence.
Costain's origins date back to 1865. Since then the Company has featured in some
of the world's major construction projects including the Channel Tunnel. Now the
Company focuses on specific sectors within three divisions: Infrastructure -
Highways, Rail, Airports and Nuclear sectors; Environment - Water, Waste,
Marine and Education sectors; Energy & Process - Nuclear Process, Power and
Hydrocarbons & Chemicals sectors.
Costain has a strong order book. Significant contract awards include the GBP397
million contract (design, construction and commissioning of 44 different
facilities) for the Greater Manchester Waste Disposal Authority. In addition,
Costain has won (as part of the 4D consortium) a GBP225 million contract with
Southern Water to manage the design and build of a new waste water treatment
works in the Brighton and Hove area. Costain is also heavily involved in the
Nuclear sector and, in the Summer of 2009, announced the award of a GBP297
million contract for full Engineering, Procurement, Construction and Inactive
Commissioning of the Evaporator D project at Sellafield.
The Company's status was underlined at the Construction News 2009 Quality Awards
when Costain won the Supreme Award for best overall performance. More recently,
the Company was named 'Contractor of the Decade' by New Civil Engineer at the
magazine's annual awards in London in August 2010.
Chairman's and Chief Executive's Statement
Overview
Costain has delivered a strong operational and financial performance in a
continuing difficult economic environment. In the first half of the year, we
have achieved growth in revenue, profit from operations and profit before tax.
The Group's operations continue to benefit from its 'Choosing Costain' strategy
to focus on targeted blue chip customers in chosen sectors whose major spending
plans are underpinned to a degree by strategic national needs, regulatory
commitments or essential maintenance requirements. Costain has a proven scale
and capability to successfully deliver complex solutions in markets with
significant potential including power, waste, rail and nuclear. We will continue
to broaden our capability in providing a range of lifecycle solutions to our
customers.
The Company was named 'Contractor of the Decade' by New Civil Engineer at the
magazine's annual awards in London in August 2010, underlining Costain's status
as a leading player in the construction market.
Results
Revenue, including the Group's share of joint ventures and associates, for the
half year ended 30 June 2010 was up 5% at GBP533.4 million (2009: GBP508.2
million). Profit from operations was GBP8.8 million (2009: GBP8.3 million), an
increase of 6%. Profit before tax increased by 19% to GBP8.2 million (2009:
GBP6.9 million). Basic earnings per share increased to 10.0 pence (2009: 8.7
pence - restated following the 1 for 10 share consolidation in 2010).
Net cash at 30 June 2010 stood at GBP133.9 million (2009: GBP119.2 million),
while our average month end cash balance during the first six months of the year
was GBP114.1 million (2009: GBP125.9 million) reflecting the variable timing of
receipts and payments.
As a result of a number of further significant contract awards since the
beginning of the year, the order book at 30 June 2010 has been maintained at
GBP2.5 billion (2009: GBP2.5 billion). Approximately GBP1.0 billion of work has
been secured for 2010. We also had in excess of a further GBP500 million in
preferred bidder positions (2009: over GBP700 million) and the Group has so far
secured GBP570 million of revenue for 2011 (2009: GBP690 million for 2010).
Dividend
The Board has declared an increased interim dividend of 3.00 pence per share
(2009: 2.75 pence - restated following the 1 for 10 share consolidation in
2010). The dividend will be paid on 29 October 2010 to those shareholders on
the register as at the close of business on 24 September 2010.
Pension
The deficit in the Group's legacy defined benefit pension scheme as at 30 June
2010 was GBP56.3 million net of deferred tax, a reduction of GBP19.1 million
from the position as at 31 December 2009. The assumptions and sensitivities
used in the valuation of the pension scheme are set out in the notes to the
interim financial statements.
We are in the process of finalising the formal actuarial valuation of the scheme
as at 31 March 2010, together with the associated recovery plan.
Operational Review
In line with Costain's strategy, we recently amalgamated the Environment and
Community activities into a single enlarged Environment division which, together
with the Infrastructure and Energy & Process divisions, form the core focus for
the development of the Group's operations.
Environment
Revenue, including share of joint ventures and associates, during the period was
GBP246.7 million (2009: GBP301.1 million), with a profit from operations of
GBP1.2 million (2009: GBP2.6 million).
In line with strategy, the enlarged Environment division will focus on new
opportunities particularly in the water and waste markets and meeting the needs
of existing long-term customers.
The profit in the division has been impacted by costs associated with the
amalgamation of the enlarged division, bidding activity particularly for waste
PFI opportunities, and for a provision taken for anticipated additional costs on
a marine project.
The division had an order book of GBP1.3 billion at 30 June 2010.
Costain is one of the UK's leading providers of water infrastructure solutions.
During the period, the Group secured an AMP5 extension to its existing
relationship with Dwr Cymru Welsh Water. This appointment is in addition to the
AMP5 relationships previously secured with Severn Trent, Southern Water and
United Utilities.
Work has also continued, in joint venture, on the GBP225 million Brighton and
Hove waste water treatment works contract for Southern Water.
Since the period end, the Group has also been awarded a contract by Severn Trent
to undertake work outside of the AMP5 framework on its Frankley facility.
Good progress continues to be made in the delivery of the GBP397 million Greater
Manchester Waste Authority contract, the largest waste services contract in
Europe. Costain is actively engaged in submission of PFI proposals for major
waste facilities and further opportunities in this growing sector.
In order to continue to reduce costs and to focus resources in line with its
strategy, the Group has closed and disposed of a facility at Erith, previously
part of the marine sector activities. The land and property sale generated a
net profit of GBP1.3 million. In addition, the Group closed a small regional
office in Birmingham.
Since the period end, Financial Close has been achieved on the Deptford Green
PFI school contract, part of the Group's existing Lewisham Building Schools for
the Future ('BSF') concession. The Lewisham programme is one of the BSF schemes
that will continue.
Infrastructure
Revenue, including share of joint ventures and associates, during the period was
GBP223.8 million (2009: GBP164.0 million), with a profit from operations of
GBP8.0 million (2009: GBP6.8 million).
Our Infrastructure division, which undertakes the Group's activities in the
highways, rail and airports sectors, continues to perform well.
The increase in revenue and profit reflects our focus on this activity and the
market opportunities that are available for organisations with the scale,
capability and track record to successfully deliver major complex projects for
customers.
The order book has been maintained at GBP1.0 billion and the level of tendering
activity remains high.
Costain, in joint venture, has been awarded a five-year GBP115 million Managing
Agent Contractor ('MAC') contract by the Highways Agency to carry out routine
operational and maintenance services in Area 14, which covers the North-East of
England. This fourth MAC contract has helped establish Costain as a major player
in the highways maintenance market. We are now pursuing a number of local
authority highways maintenance opportunities.
The Group has also been appointed, in joint venture, as one of the Delivery
Partners to the Highways Agency's National Framework Contract involving the
delivery, subject to budgetary review, of up to GBP2 billion early schemes in
the Managed Motorway Programme.
In rail, Costain, in joint venture, has been appointed to construct tunnel
portals for Crossrail as part of the enabling works framework contract for this
important infrastructure project.
Since the period end, we have been appointed, in joint venture, by London
Underground Limited preferred bidder for the redevelopment of Bond Street
station.
Good progress continues to be made on the delivery of the major 66MW waste to
energy plant for AE&E at Belvedere.
We continued work on the long-term contract for Manchester Airport Group and are
also delivering a number of projects at Gatwick airport.
Energy & Process
Revenue, including share of joint ventures and associates, during the period was
GBP62.4 million (2009: GBP42.5 million), with a profit from operations of GBP3.1
million (2009: GBP2.7 million).
The division, which comprises activities in hydrocarbons & chemicals, nuclear
process and power, has delivered a good first half performance with growth in
revenue and profit. The level of business development cost has been increased in
the period and additional key resources have been added to the team in line with
potential growth opportunities in this area.
The order book was GBP0.15 billion.
In nuclear process, progress continues to be made on the engineering and
construction of the Evaporator D project at Sellafield, one of the UK's largest
nuclear decommissioning projects.
The Group continues to build its capability in the power sector and business
development activities are progressing, including for the UK's nuclear new build
programme which is gathering pace.
Further orders have been received from E.ON for the gas plant for the
underground storage facility being constructed at Holford in Cheshire. In
addition, the operation in Abu Dhabi continues to undertake a number of
contracts on the Das Island oil and gas facility.
Land Development
Revenue for the period was GBP0.5 million (2009: GBP0.6 million) with a loss
after tax of GBP0.5 million (2009: loss of GBP0.7 million). The loss in the
period reflects running costs similar to those in the prior period.
The Alcaidesa joint venture does not undertake direct residential development in
Spain but has acquired over time a land bank for which it seeks to secure Master
Plan approval and build infrastructure prior to selling on developable land to
third parties.
As previously announced, activity has been scaled back until the Spanish
development market improves and maximum shareholder value can be secured for the
assets.
Work on the construction of the 600-berth yacht marina and associated commercial
development at La Linea de la Concepcion is progressing well. The first phase of
the project, which is immediately adjacent to the Spanish border with Gibraltar,
opened on 2 August 2010 and the first berth sales and rentals have been
achieved.
Risks and uncertainties
The Board continuously assesses and monitors the key risks of the business.
Despite the current uncertainty in the global economy, the key risks that could
affect the Group's medium term performance, and the factors which mitigate these
risks, have not significantly changed from those set out on pages 40 to 42 of
the Group's Annual Report for 2009, a copy of which is available from our
website www.costain.com.
The Business Review and the notes to these interim financial statements include
consideration of uncertainties affecting the Group in the remaining six months
of the year.
Outlook
Costain has again delivered a good result for the first half of the year. It is
testimony to the Group's strategic focus and leading market positions that, in
one of the most testing economic environments, Costain continues to deliver a
strong operational and financial performance.
We are successfully implementing the 'Choosing Costain' strategy, focusing on
major customers with spending plans that are underpinned by strategic needs,
regulatory commitments or essential maintenance requirements.
As a consequence, the Group entered the second half of the year with a good
order book, robust finances and a net cash balance in excess of GBP100 million.
Whilst challenging market conditions are set to continue for the foreseeable
future, the Board expects to report continued progress at the year-end in line
with its expectations.
DAVID ALLVEY
Chairman
ANDREW WYLLIE
Chief Executive
24 August 2010
Condensed consolidated income statement
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Half-year ended 30 June, | | | 2010 | | 2009 | | 2009 |
+--------------------------------------+ + +-----------+ +-----------+ +---------+
| year ended 31 December | | | Half-year | | Half-year | | Year |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| |Notes | | GBPm | | GBPm | | GBPm |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Revenue (Group and share of joint | 3 | | 533.4 | | 508.2 | | 1,061.1 |
| ventures and associates) | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Less: Share of joint ventures and | | | (43.5) | | (31.8) | | (67.7) |
| associates revenue | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Group revenue | | | 489.9 | | 476.4 | | 993.4 |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Cost of sales | | | (470.6) | | (457.3) | | (949.2) |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Gross profit | | | 19.3 | | 19.1 | | 44.2 |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Administrative expenses | | | (11.6) | | (11.6) | | (22.2) |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Group operating profit | | | 7.7 | | 7.5 | | 22.0 |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Profit on sale of interests in joint | | | - | | 1.1 | | 2.0 |
| ventures and associates | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Profit on sale of land and property | 8 | | 1.3 | | - | | - |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Share of results of equity accounted | | | (0.2) | | (0.3) | | (3.2) |
| joint ventures and associates | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Profit from operations | 3 | | 8.8 | | 8.3 | | 20.8 |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Finance income | 4 | | 15.6 | | 13.1 | | 26.0 |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Finance expense | 4 | | (16.2) | | (14.5) | | (28.7) |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Net finance expense | | | (0.6) | | (1.4) | | (2.7) |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Profit before tax | | | 8.2 | | 6.9 | | 18.1 |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Income tax expense | 5 | | (1.8) | | (1.4) | | (3.5) |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Profit for the period attributable | | | 6.4 | | 5.5 | | 14.6 |
| to equity holders of the parent | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Earnings per share | 6 | | 10.0p | | 8.7p | | 23.1p |
| | | | | | | | |
| Basic (2009 restated) | | | | | | | |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
| Diluted (2009 restated) | 6 | | 9.9p | | 8.6p | | 22.6p |
+--------------------------------------+-------+--------+-----------+--+-----------+--+---------+
Share numbers included in the earnings per share calculation have been restated
for the 1 for 10 share consolidation (Note 10).
During the period and the previous period and year, no businesses were acquired
or disposed of and, therefore, all results are classified as arising from
continuing operations.
Condensed consolidated statement of comprehensive income
+---------------------------------------------------+-----------+----------+--------+--------+
| Half-year ended 30 June, year ended 31 December | 2010 | 2009 | 2009 |
| | Half-year | Half-year | Year |
+---------------------------------------------------+-----------+-------------------+--------+
| | GBPm | GBPm | GBPm |
+---------------------------------------------------+-----------+-------------------+--------+
| Profit for the period | 6.4 | 5.5 | 14.6 |
+---------------------------------------------------+----------------------+--------+--------+
| | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Exchange differences on translation of foreign | (2.1) | (5.1) | (3.6) |
| operations | | | |
+---------------------------------------------------+----------------------+--------+--------+
| | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Cash flow hedges | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Group: | (3.5) | (4.9) | (0.4) |
| Effective portion of changes in fair value during | | | |
| period | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Net change in fair value of cash flow hedges | 0.4 | (0.9) | (0.9) |
| transferred to retained earnings | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Tax recognised on changes in fair value | 0.9 | 1.6 | 0.4 |
+---------------------------------------------------+----------------------+--------+--------+
| | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Joint ventures and associates: | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Effective portion of changes in fair value (net | (3.1) | 5.1 | 2.7 |
| of tax) during period | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Disposed of during period (net of tax) | - | (0.7) | 1.9 |
+---------------------------------------------------+----------------------+--------+--------+
| | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Actuarial gains/(losses) on defined benefit | 18.3 | (60.3) | (67.4) |
| pension scheme | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Tax recognised on actuarial gains/(losses) | (5.1) | 16.9 | 18.9 |
| recognised directly in equity | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Other comprehensive income/(expense) for the | 5.8 | (48.3) | (48.4) |
| period | | | |
+---------------------------------------------------+----------------------+--------+--------+
| | | | |
+---------------------------------------------------+----------------------+--------+--------+
| | | | |
+---------------------------------------------------+----------------------+--------+--------+
| Total comprehensive income/(expense) for the | 12.2 | (42.8) | (33.8) |
| period attributable to equity holders of the | | | |
| parent | | | |
+---------------------------------------------------+----------------------+--------+--------+
| | | | | |
+---------------------------------------------------+-----------+----------+--------+--------+
Condensed consolidated statement of changes in equity
+--------------------------+---------+---------+-------------+---------+----------+--------+
| | Share | Share | Translation | Hedging | Retained | Total |
| | capital | premium | reserve | reserve | earnings | equity |
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| At 1 January 2009 | 31.7 | 1.7 | 10.6 | (12.7) | 2.3 | 33.6 |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| | | | | | | |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Comprehensive | - | - | (5.1) | 0.2 | (37.9) | (42.8) |
| (expense)/income | | | | | | |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Equity-settled | - | - | - | - | 0.7 | 0.7 |
| share-based payments | | | | | | |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Dividend paid | - | 0.1 | - | - | (3.2) | (3.1) |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| At 30 June 2009 | 31.7 | 1.8 | 5.5 | (12.5) | (38.1) | (11.6) |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| | | | | | | |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Comprehensive income | - | - | 1.5 | 3.5 | 4.0 | 9.0 |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Equity-settled | - | - | - | - | 0.4 | 0.4 |
| share-based payments | | | | | | |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Dividend paid | - | 0.1 | - | - | (1.7) | (1.6) |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| At 31 December 2009 | 31.7 | 1.9 | 7.0 | (9.0) | (35.4) | (3.8) |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| | | | | | | |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Comprehensive | - | - | (2.1) | (5.3) | 19.6 | 12.2 |
| income/(expense) | | | | | | |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Equity-settled | - | - | - | - | 0.6 | 0.6 |
| share-based payments | | | | | | |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| Dividend paid | - | 0.1 | - | - | (3.5) | (3.4) |
+--------------------------+---------+---------+-------------+---------+----------+--------+
| At 30 June 2010 | 31.7 | 2.0 | 4.9 | (14.3) | (18.7) | 5.6 |
+--------------------------+---------+---------+-------------+---------+----------+--------+
Condensed consolidated statement of financial position
+----------------------------------+-------+-----------+-----------+--------+
| Half-year as at 30 June, year as | Notes | 2010 | 2009 | 2009 |
| at 31 December | | Half-year | Half-year | Year |
+----------------------------------+-------+-----------+-----------+--------+
| | | GBPm | GBPm | GBPm |
+----------------------------------+-------+-----------+-----------+--------+
| Assets | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Non-current assets | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Property, plant and equipment | 8 | 9.9 | 11.5 | 11.5 |
+----------------------------------+-------+-----------+-----------+--------+
| Intangible assets | | 0.5 | 1.7 | 1.0 |
+----------------------------------+-------+-----------+-----------+--------+
| Investments in equity accounted | | 24.7 | 27.8 | 27.2 |
| joint ventures | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Investments in equity accounted | | 1.7 | 1.9 | 1.6 |
| associates | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Loans to equity accounted joint | | 14.3 | 8.7 | 12.8 |
| ventures | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Loans to equity accounted | | 1.2 | 2.7 | 2.5 |
| associates | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Other receivables | | 14.5 | 8.3 | 12.7 |
+----------------------------------+-------+-----------+-----------+--------+
| Deferred tax | 5 | 28.3 | 36.0 | 34.6 |
+----------------------------------+-------+-----------+-----------+--------+
| Total non-current assets | | 95.1 | 98.6 | 103.9 |
+----------------------------------+-------+-----------+-----------+--------+
| | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Current assets | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Inventories | | 2.8 | 1.8 | 2.4 |
+----------------------------------+-------+-----------+-----------+--------+
| Trade and other receivables | | 193.8 | 174.6 | 201.9 |
+----------------------------------+-------+-----------+-----------+--------+
| Cash and cash equivalents | | 134.7 | 119.8 | 120.8 |
+----------------------------------+-------+-----------+-----------+--------+
| Total current assets | | 331.3 | 296.2 | 325.1 |
+----------------------------------+-------+-----------+-----------+--------+
| Total assets | | 426.4 | 394.8 | 429.0 |
+----------------------------------+-------+-----------+-----------+--------+
| | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Equity | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Share capital | 10 | 31.7 | 31.7 | 31.7 |
+----------------------------------+-------+-----------+-----------+--------+
| Share premium | | 2.0 | 1.8 | 1.9 |
+----------------------------------+-------+-----------+-----------+--------+
| Foreign currency translation | | 4.9 | 5.5 | 7.0 |
| reserve | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Hedging reserve | | (14.3) | (12.5) | (9.0) |
+----------------------------------+-------+-----------+-----------+--------+
| Retained earnings | | (18.7) | (38.1) | (35.4) |
+----------------------------------+-------+-----------+-----------+--------+
| Total equity attributable to | | 5.6 | (11.6) | (3.8) |
| equity holders of the parent | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Liabilities | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Non-current liabilities | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Retirement benefit obligations | 9 | 78.2 | 105.2 | 104.7 |
+----------------------------------+-------+-----------+-----------+--------+
| Other payables | | 5.1 | 4.8 | 4.5 |
+----------------------------------+-------+-----------+-----------+--------+
| Provisions for other liabilities | | 2.8 | 5.8 | 3.1 |
| and charges | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Total non-current liabilities | | 86.1 | 115.8 | 112.3 |
+----------------------------------+-------+-----------+-----------+--------+
| | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Current liabilities | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Trade and other payables | | 328.4 | 285.8 | 313.3 |
+----------------------------------+-------+-----------+-----------+--------+
| Income tax liabilities | | 1.5 | 1.7 | 1.7 |
+----------------------------------+-------+-----------+-----------+--------+
| Bank overdrafts | | 0.8 | 0.4 | 0.3 |
+----------------------------------+-------+-----------+-----------+--------+
| Interest bearing loans and | | - | 0.2 | - |
| borrowings | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Provisions for other liabilities | | 4.0 | 2.5 | 5.2 |
| and charges | | | | |
+----------------------------------+-------+-----------+-----------+--------+
| Total current liabilities | | 334.7 | 290.6 | 320.5 |
+----------------------------------+-------+-----------+-----------+--------+
| Total liabilities | | 420.8 | 406.4 | 432.8 |
+----------------------------------+-------+-----------+-----------+--------+
| Total equity and liabilities | | 426.4 | 394.8 | 429.0 |
+----------------------------------+-------+-----------+-----------+--------+
Condensed consolidated cash flow statement
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Half-year ended 30 June, year ended 31 | | 2010 | | 2009 | | 2009 |
| December | | Half-year | | Half-year | | Year |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| | | GBPm | | GBPm | | GBPm |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Cash flows from operating activities | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Profit for the period | | 6.4 | | 5.5 | | 14.6 |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Adjustments for: | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Depreciation of property, plant and | | 1.0 | | 0.9 | | 2.7 |
| equipment | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Amortisation of intangible assets | | 0.4 | | 0.4 | | 0.9 |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Finance income | | (15.6) | | (13.1) | | (26.0) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Finance expense | | 16.2 | | 14.5 | | 28.7 |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Share-based payments expense | | 1.3 | | 0.7 | | 1.1 |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Income tax | | 1.8 | | 1.4 | | 3.5 |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Profit on sales of interests in joint | | - | | (1.1) | | (2.0) |
| ventures and associates | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Share of results of joint ventures and | | 0.2 | | 0.3 | | 3.2 |
| associates | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Profit on sale of plant and equipment | | (1.2) | | - | | - |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Profit on sale of land and property | | (1.3) | | - | | - |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Cash from operations before changes in | | | | | | 26.7 |
| working capital and provisions | | 9.2 | | 9.5 | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Increase in inventories | | (0.4) | | (0.2) | | (0.8) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Decrease/(increase) in receivables | | 6.2 | | 2.4 | | (32.7) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Increase/(decrease) in payables | | 12.8 | | (22.0) | | 9.1 |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Movement in provisions and employee | | (8.7) | | (8.1) | | (18.4) |
| benefits | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Cash from/(used by) operations | | 19.1 | | (18.4) | | (16.1) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Interest paid | | (0.4) | | (0.2) | | (0.5) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Income tax received | | - | | - | | 0.1 |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Net cash from/(used by) operating | | 18.7 | | (18.6) | | (16.5) |
| activities | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Cash flows from investing activities | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Interest received | | 0.6 | | 1.0 | | 2.6 |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Dividends received from joint ventures | | - | | - | | 0.6 |
| and associates | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Additions to property, plant and | | (0.5) | | (5.5) | | (7.2) |
| equipment | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Additions to intangible assets | | - | | - | | (0.1) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Proceeds of disposal of plant and | | 1.1 | | - | | 0.4 |
| equipment | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Proceeds of disposal of land and | | 2.5 | | - | | - |
| property | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Proceeds from sales of interests in | | - | | 4.2 | | 8.7 |
| joint ventures and associates | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Additions to investments in joint | | - | | - | | (0.2) |
| ventures and associates | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Loan repayments by joint ventures and | | 0.2 | | - | | 0.7 |
| associates | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Additions to loans to joint ventures and | | (5.8) | | (5.4) | | (9.7) |
| associates | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Net cash used by investing activities | | (1.9) | | (5.7) | | (4.2) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Cash flows from financing activities | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Ordinary dividends paid | | (3.4) | | (3.1) | | (4.7) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Proceeds from/(repayment of) borrowings | | - | | 0.1 | | (0.3) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Net cash used by financing activities | | (3.4) | | (3.0) | | (5.0) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Net increase/(decrease) in cash, cash | | 13.4 | | (27.3) | | (25.7) |
| equivalents and overdrafts | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Cash, cash equivalents and overdrafts at | | 120.5 | | 146.9 | | 146.9 |
| beginning of the period | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Effect of foreign exchange rate changes | | - | | (0.2) | | (0.7) |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
| Cash, cash equivalents and overdrafts at | | 133.9 | | 119.4 | | 120.5 |
| end of the period | | | | | | |
+------------------------------------------+----------+-----------+----------+-----------+----------+--------+
Notes to the interim financial statements
1. General information
Costain Group PLC (the Company) is a public limited company incorporated in the
United Kingdom. The address of its registered office and principal place of
business is Costain House, Vanwall Business Park, Maidenhead, Berkshire SL6 4UB.
The condensed consolidated interim financial statements are presented in pounds
sterling, rounded to the nearest hundred thousand.
The comparative figures for the financial year ended 31 December 2009 are not
the Company's full statutory accounts for that financial year. Those accounts
have been reported on by the Company's auditors and delivered to the Registrar
of Companies. The report of the auditors was (i) unqualified, (ii) did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying their report, and (iii) did not contain a
statement under section 498 (2) or (3) of the Companies Act 2006.
After making enquiries and reviewing the latest forecasts, the directors believe
that the Group has adequate resources to continue in operational existence for
the foreseeable future. Accordingly, they continue to adopt the going concern
basis in preparing the interim financial statements.
2. Statement of compliance
This interim financial information for the half-year ended 30 June 2010 has been
prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the
European Union and with the Disclosure and Transparency Rules of the Financial
Services Authority. The interim financial information should be read in
conjunction with the Annual Report for the year ended 31 December 2009.
Except as described below, the accounting policies and presentation applied in
this condensed set of financial statements are consistent with those described
in the Annual Report for the year ended 31 December 2009.
The Board approved the unaudited interim financial statements on 24 August 2010.
The Group's principal risks and uncertainties are consistent with those noted in
the Annual Report for the year ended 31 December 2009. The Directors consider
that the significant areas of judgement made by management that have significant
effect on the Group's performance and estimates with a significant risk of
material adjustment in the second half of the year are unchanged from those
identified on page 111 of Annual Report for the year ended 31 December 2009.
(i) Change in accounting policy
IFRIC12 applies to contractual arrangements whereby a private sector operator
participates in the development, financing, operation and maintenance of
infrastructure for public sector services, typically under PFI arrangements. The
Group is a party to these arrangements through certain of its investments in
joint ventures and associates. The adoption of IFRIC 12 has not resulted in any
significant changes to the assets recorded within the Group's investments
although there is a change in the timing of profit recognition over the lifetime
of the contract. Importantly, there is no change in the overall project cash
flows arising, or on the directors' valuation. IFRIC 12 has been adopted in the
period with retrospective effect. The effect of adoption on comparative amounts
was immaterial and so comparative amounts have not been restated.
(ii) Change in operating segments
During the period, the Group changed its internal management and reporting
structure and combined the activities previously reported separately as its
Environment and Community activities into a single enlarged Environment segment.
Comparative segment information has been restated accordingly.
3. Business segment information
The Group now has four business segments: Environment, Infrastructure, Energy &
Process and Land Development operations in Spain. As noted above, the activities
previously reported separately as Community have been combined into a single
enlarged Environment segment and comparative segment information has been
restated accordingly. The segments are strategic business units with separate
management and have different core customers or offer different services.
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Half-year | Environment | Infrastructure | Energy | Land | Central | Total |
| ended 30 June | | | & | Development | costs | |
| 2010 | | | Process | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Group revenue | 206.1 | 223.8 | 60.0 | - | - | 489.9 |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Share of | 40.6 | - | 2.4 | 0.5 | - | 43.5 |
| revenue of JVs | | | | | | |
| and associates | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Total revenue | 246.7 | 223.8 | 62.4 | 0.5 | - | 533.4 |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Group | (0.3) | 8.0 | 3.0 | - | (3.0) | 7.7 |
| operating | | | | | | |
| profit/(loss) | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Profit on sale | 1.3 | - | - | - | | 1.3 |
| of land and | | | | | - | |
| property | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Share of | 0.2 | - | 0.1 | (0.5) | | (0.2) |
| results of JVs | | | | | - | |
| and associates | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Profit/(loss) | 1.2 | 8.0 | 3.1 | (0.5) | (3.0) | 8.8 |
| from | | | | | | |
| operations | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Net finance | | | | | | (0.6) |
| expense | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Profit before | | | | | | 8.2 |
| tax | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Half-year | Environment | Infrastructure | Energy | Land | Central | Total |
| ended 30 June | | | & | Development | costs | |
| 2009 | | | Process | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Group revenue | 272.1 | 164.0 | 40.3 | - | - | 476.4 |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Share of | 29.0 | - | 2.2 | 0.6 | | 31.8 |
| revenue of JVs | | | | | - | |
| and associates | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Total revenue | 301.1 | 164.0 | 42.5 | 0.6 | - | 508.2 |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Group | 1.3 | 6.8 | 2.5 | - | (3.1) | 7.5 |
| operating | | | | | | |
| profit/(loss) | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Profit on | 1.1 | - | - | - | - | 1.1 |
| sales of JVs | | | | | | |
| and associates | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Share of | 0.2 | - | 0.2 | (0.7) | | (0.3) |
| results of JVs | | | | | - | |
| and associates | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Profit/(loss) | 2.6 | 6.8 | 2.7 | (0.7) | (3.1) | 8.3 |
| from | | | | | | |
| operations | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Net finance | | | | | | (1.4) |
| expense | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
| Profit before | | | | | | 6.9 |
| tax | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+-------+
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Year ended 31 | Environment | Infrastructure | Energy | Land | Central | Total |
| December 2009 | | | & | Development | costs | |
| | | | Process | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Group revenue | 531.9 | 364.8 | 96.7 | - | - | 993.4 |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Share of | 62.0 | - | 4.5 | 1.2 | | 67.7 |
| revenue of JVs | | | | | - | |
| and associates | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Total revenue | 593.9 | 364.8 | 101.2 | 1.2 | - | 1,061.1 |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Group | 2.1 | 16.9 | 9.1 | - | (6.1) | 22.0 |
| operating | | | | | | |
| profit/(loss) | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Profit on | 2.0 | - | - | - | | 2.0 |
| sales of JVs | | | | | - | |
| and associates | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Share of | (0.8) | - | 0.2 | (2.6) | | (3.2) |
| results of JVs | | | | | - | |
| and associates | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Profit/(loss) | 3.3 | 16.9 | 9.3 | (2.6) | (6.1) | 20.8 |
| from | | | | | | |
| operations | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Net finance | | | | | | (2.7) |
| expense | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
| Profit before | | | | | | 18.1 |
| tax | | | | | | |
+----------------+-------------+----------------+---------+-------------+---------+---------+
4. Net finance (expense)/income
Finance income includes the expected return on the assets of the pension scheme
of GBP14.8 million (2009 half-year GBP11.7 million, 2009 year GBP23.4 million)
and finance expense includes the expected increase in the present value of the
pension scheme liabilities of GBP15.8 million (2009 half-year GBP14.2 million,
2009 year GBP28.2 million). The expected return and the increase in present
value are based on the value of assets and liabilities of the pension scheme at
the start of the period.
5. Income tax
+-------------------------------------+-----------+----------+-----------+----------+--------+
| | 2010 | | 2009 | | 2009 |
| | Half-year | | Half-year | | Year |
| | GBPm | | GBPm | | GBPm |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| UK taxation | (0.3) | | - | | (0.1) |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Deferred taxation | 2.1 | | 1.4 | | 3.6 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Income tax expense in the | 1.8 | | 1.4 | | 3.5 |
| consolidated income statement | | | | | |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Effective tax rate | 22.0% | | 20.3% | | 19.3% |
| | | | | | |
+-------------------------------------+-----------+----------+-----------+----------+--------+
The effective corporation tax charged represents the estimate of the tax rate
for the full year. No account has been taken in these interim financial
statements of the reduction in corporation tax from 28% to 27% with effect from
1 April 2011. If that 1% change had been applied to the deferred tax asset at
30 June 2010, a reduction of GBP1.0 million would have arisen (GBP1.4 million
charged to reserves and GBP0.4 million credited to the interim tax expense
above).
A further reduction to reflect the proposed corporation tax rate of 24% from 1
April 2014 would reduce the deferred tax asset by GBP3.0 million.
6. Earnings per share
The calculation of earnings per share is based on profit for the
period of GBP6.4 million (2009 half-year GBP5.5 million, 2009 year GBP14.6
million) and the number of shares set out below:
+-------------------------------------+-----------+----------+------------+----------+------------+
| | 2010 | | 2009 | | 2009 |
| | Half-year | | Half-year | | Year |
| | Number | | Number | | Number |
| | (m) | | (m) | | (m) |
| | | | (Restated) | | (Restated) |
+-------------------------------------+-----------+----------+------------+----------+------------+
| Weighted average number of shares | 63.4 | | 63.3 | | 63.4 |
| for basic earnings per share | | | | | |
| calculation | | | | | |
+-------------------------------------+-----------+----------+------------+----------+------------+
| Dilutive potential ordinary shares | 0.8 | | 0.4 | | 1.2 |
| arising from employee share schemes | | | | | |
+-------------------------------------+-----------+----------+------------+----------+------------+
| Weighted average number of shares | 64.2 | | 63.7 | | 64.6 |
| for fully diluted earnings per | | | | | |
| share calculation | | | | | |
+-------------------------------------+-----------+----------+------------+----------+------------+
Share numbers included in the earnings per share calculation have been restated
for the 1 for 10 share consolidation (Note 10).
7. Dividends
+------------------------+----------+------------+-----------+----------+----------+----------+
| | | Dividend | Six | Six | Year ended 31 |
| | | per | months | months | December 2009 |
| | | share | ended 30 | ended 30 | |
| | | | June 2010 | June | |
| | | | | 2009 | |
+------------------------+----------+------------+-----------+----------+---------------------+
| | | pence | GBPm | GBPm | GBPm |
| | | (restated) | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| Final dividend for the | | 5.00 | - | 3.2 | 3.2 |
| year ended 31 December | | | | | |
| 2008 | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| Interim dividend for | | 2.75 | - | - | 1.7 |
| the year ended 31 | | | | | |
| December 2009 | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| Final dividend for the | | 5.50 | 3.5 | - | - |
| year ended 31 December | | | | | |
| 2009 | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| Amount recognised as | | | 3.5 | 3.2 | 4.9 |
| distributions to | | | | | |
| equity holders in the | | | | | |
| period | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| Dividends settled in | | | (0.1) | (0.1) | (0.2) |
| shares | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| Dividends settled in | | | 3.4 | 3.1 | 4.7 |
| cash | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| | | | | | |
+------------------------+----------+------------+-----------+----------+---------------------+
| | | | | | | |
+------------------------+----------+------------+-----------+----------+----------+----------+
The proposed interim dividend of 3.00 pence (2009: 2.75 pence - restated
following the 1 for 10 share consolidation in 2010) has not been included as a
liability in these interim financial statements because it had not been approved
at the period end date. The dividend totalling GBP1.9 million will be paid on
29 October 2010 to shareholders on the register at the close of business on 24
September 2010. A scrip dividend alternative will be offered.
8. Property, plant and equipment
During the interim period, the Group spent GBP0.6 million on plant and equipment
(2009 half-year GBP5.5 million, 2009 year GBP7.0 million), and GBPNil on
leasehold property (2009 half-year GBPNil, 2009 year GBP0.2 million). During
the period, the Group closed one of its offices and sold the adjacent land for
net proceeds of GBP2.5 million (2009 half-year GBPNil, 2009 year GBPNil). The
Group also sold plant and equipment during the period for net proceeds of GBP1.1
million (2009 half-year GBPNil, 2009 year GBP0.4 million).
9. Retirement benefit obligations
+---------------------------------------+--+--------+----------+----------+-----------+----------+---------+----------+
| | 2010 | | 2009 | | 2009 |
| | Half-year | | Half-year | | Year |
| | GBPm | | GBPm | | GBPm |
+---------------------------------------+-----------+----------+----------------------+----------+--------------------+
| Present value of defined benefit | (540.4) | | (492.3) | | (560.5) |
| obligations | | | | | |
+---------------------------------------+-----------+----------+----------------------+----------+--------------------+
| Fair value of scheme assets | 462.2 | | 387.1 | | 455.8 |
+---------------------------------------+-----------+----------+----------------------+----------+--------------------+
| Recognised liability for defined | (78.2) | | (105.2) | | (104.7) |
| benefit obligations | | | | | |
+---------------------------------------+-----------+----------+----------------------+----------+--------------------+
| Movements in present value of defined | 2010 | | 2009 | | 2009 | |
| benefit obligations: | Half-year | | Half-year | | Year | |
| | GBPm | | GBPm | | GBPm | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| Opening balance | 560.5 | | 435.8 | | 435.8 | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| Current service cost | - | | 1.2 | | 1.7 | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| Past service cost | 1.1 | | 0.6 | | 1.2 | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| Interest cost | 15.8 | | 14.2 | | 28.2 | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| Actuarial (gains)/losses | (24.2) | | 49.2 | | 113.7 | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| Benefits paid | (12.8) | | (10.5) | | (23.1) | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| Contributions by members | - | | 1.8 | | 3.0 | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| Closing balance | 540.4 | | 492.3 | | 560.5 | |
+------------------------------------------+-------------------+----------+-----------+----------+---------+----------+
| | | | | | | | | |
+---------------------------------------+--+--------+----------+----------+-----------+----------+---------+----------+
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Movements in fair value of scheme | 2010 | | 2009 | | 2009 |
| assets: | Half-year | | Half-year | | Year |
| | GBPm | | GBPm | | GBPm |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Opening balance | 455.8 | | 385.6 | | 385.6 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Expected return on scheme assets | 14.8 | | 11.7 | | 23.4 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Actuarial (losses)/gains | (5.9) | | (11.2) | | 46.3 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Contributions by employer | 10.3 | | 9.7 | | 20.6 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Contributions by members | - | | 1.8 | | 3.0 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Benefits paid | (12.8) | | (10.5) | | (23.1) |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Closing balance | 462.2 | | 387.1 | | 455.8 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
The following actuarial assumptions have been used in the IAS 19 valuations of
the Group's defined benefit pension scheme (expressed as weighted averages):
+-------------------------------------+-----------+----------+-----------+----------+--------+
| | 2010 | | 2009 | | 2009 |
| | Half-year | | Half-year | | Year |
| | % | | % | | % |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Discount rate | 5.40 | | 6.20 | | 5.70 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Future salary increases | 3.20 | | 3.20 | | 3.50 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Future pension increases | 3.20 | | 3.20 | | 3.50 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Inflation assumption | 3.20 | | 3.20 | | 3.50 |
+-------------------------------------+-----------+----------+-----------+----------+--------+
| Expected rate of return on scheme | 6.51 | | 6.07 | | 6.51 |
| assets | | | | | |
+-------------------------------------+-----------+----------+-----------+----------+--------+
The discount rate, inflation and pension increase and mortality assumptions have
a significant effect on the amounts reported. Changes in these assumptions would
have the following effects on the Group's defined benefit scheme:
+-----------------------------------------------------------+-----------+
| | Pension |
| | liability |
+-----------------------------------------------------------+-----------+
| | GBPm |
+-----------------------------------------------------------+-----------+
| Decrease discount rate by 0.2%, increases pension | 17.3 |
| liability by | |
+-----------------------------------------------------------+-----------+
| Decrease inflation (and pension increases) by 0.2%, | 16.2 |
| decreases pension liability by | |
+-----------------------------------------------------------+-----------+
| Increase life expectancy by one year, increases pension | 15.0 |
| liability by | |
+-----------------------------------------------------------+-----------+
10. Share capital
Issued capital as at 30 June 2010 amounted to GBP31.7 million (2009 half-year
GBP31.7 million, 2009 year GBP31.7 million).
On 6 May 2010 at the Annual General Meeting of the Company, shareholders
approved a share consolidation on the basis of one ordinary share in the Company
with a nominal value of 50 pence each for every ten ordinary shares with a
nominal value of 5 pence each held as at close of business on 7 May 2010. The
share consolidation became effective on 10 May 2010. Comparative information has
been restated accordingly
Following the share consolidation, the Company's issued share capital comprised
63,424,871 ordinary shares of 50 pence each. The Company announced on 20 May
2010 that shareholders had, pursuant to the Scrip Dividend Scheme, elected to
receive 37,358 ordinary shares of 50 pence each in the Company in lieu of cash
in respect of all or part of their final dividend for the year ended 31 December
2009. Following admission of the shares issued pursuant to the Scrip Dividend
Scheme, the Company's issued share capital comprised 63,462,229 ordinary shares
of 50 pence each.
The Group has established a Long-Term Incentive Plan (LTIP) under which
directors and senior employees can receive awards of shares subject to the Group
achieving earnings per share growth targets, and a Defined Share Bonus Plan
(DSBP) under which directors and senior employees can receive awards of shares
subject to the Group achieving profit targets. Full details of these plans are
disclosed in the annual financial statements.
The following grants were made during the period to 30 June 2010:
+-------------------+------------------------+--------------------+
| Arrangement | LTIP 2010 | DSBP 2010 |
+-------------------+------------------------+--------------------+
| Date of grant | 19 April 2010 | 19 April 2010 |
+-------------------+------------------------+--------------------+
| Number of | 698,947 | 852,147 |
| instruments | | |
| granted | | |
+-------------------+------------------------+--------------------+
| Share price at | 250.0p | 250.0p |
| date of grant | | |
+-------------------+------------------------+--------------------+
| Contractual life | 3 Years | 3 Years |
| Vesting | 3 year service period | 3 year service |
| conditions | & EPS targets of | period & profit |
| | between 21.0p and | from operations |
| | 27.5p in 2012 | targets in 2010 |
+-------------------+------------------------+--------------------+
| Settlement | Shares | Shares |
+-------------------+------------------------+--------------------+
| Fair value per | | |
| granted | 236.7p | 201.0p |
| instrument | | |
| determined at the | | |
| grant date | | |
+-------------------+------------------------+--------------------+
11. Related party transactions
There have been no significant changes in the nature of related party
transactions since the last annual financial statements as at, and for the year
ended, 31 December 2009.
Responsibility Statement of the Directors in respect of the interim financial
report
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in
accordance with IAS 34 Interim Financial Reporting as adopted by the EU;
· the interim management report includes a fair review of the information
required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an
indication of important events that have occurred during the first six months of
the financial year and their impact on the condensed set of financial
statements; and a description of the principal risks and uncertainties for the
remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related
party transactions that have taken place in the first six months of the current
financial year and that have materially affected the financial position or
performance of the entity during that period; and any changes in the related
party transactions described in the last annual report that could do so
On behalf of the Board
David Allvey - Chairman
Andrew Wyllie - Chief Executive
24 August 2010
Independent review report to Costain Group PLC
Introduction
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 30 June
2010 which comprises the Condensed consolidated income statement, the Condensed
consolidated statement of comprehensive income, the Condensed statement of
changes in equity, the Condensed consolidated statement of financial position,
the Condensed consolidated cash flow statement and the related explanatory
notes. We have read the other information contained in the half-yearly financial
report and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed set of financial
statements.
This report is made solely to the company in accordance with the terms of our
engagement to assist the company in meeting the requirements of the Disclosure
and Transparency Rules ("the DTR") of the UK's Financial Services Authority
("the UK FSA"). Our review has been undertaken so that we might state to the
company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the company for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the DTR of the UK FSA.
The annual financial statements of the company are prepared in accordance with
IFRSs as adopted by the EU. The condensed set of financial statements included
in this half-yearly financial report has been prepared in accordance with IAS 34
Interim Financial Reporting as adopted by the EU.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 30 June 2010 is not prepared, in all material
respects, in accordance with IAS 34 as adopted by the EU and the DTR of the UK
FSA.
Stephen Bligh
for and on behalf of KPMG Audit Plc
Chartered Accountants
London
24 August 2010
UNSOLICITED MAIL
The Company is legally obliged to make its share register available to the
general public. Consequently, some shareholders may receive unsolicited mail,
including correspondence from unauthorised investment firms. Shareholders who
wish to limit the amount of unsolicited mail they receive can contact:
The Mailing Preference Service
Freepost (LON 20771)
London WE1 0ZT
SHAREHOLDER INFORMATION
The Company's Registrar is Equiniti, Aspect House, Spencer Road, Lancing, West
Sussex BN99 6DA. For enquiries regarding your shareholding, please telephone
0871 384 2250. You can also view up-to-date information about your holdings by
visiting the shareholder website at www.shareview.co.uk. Please ensure that you
advise Equiniti promptly of a change of name or address.
ShareGIFT
The Orr Mackintosh Foundation (ShareGIFT) operates a charity share donation
scheme for shareholders with small parcels of shares whose value makes it
uneconomic to sell them. Details of the scheme are available on the ShareGIFT
Internet Site www.sharegift.org. Equiniti can provide stock transfer forms on
request. Donating shares to charity in this way gives rise neither to a gain
nor a loss for Capital Gains Tax purposes. This service is completely free of
charge.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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