REG - Costain Group PLC - Half-year Report <Origin Href="QuoteRef">COSG.L</Origin> - Part 2
23/08/2017 07:05
- Part 2: For the preceding part double click ID:nRSW7142Oa
£m £m £m £m £m
External revenue 172.8 672.3 2.7 - 847.8
Share of revenue of JVs and associates 4.9 21.8 - - 26.7
Total segment revenue 177.7 694.1 2.7 - 874.5
Group operating profit/(loss) 0.2 24.8 (0.5) (3.3) 21.2
Share of results of JVs and associates 0.1 - - - 0.1
Profit/(loss) from operations before other items 0.3 24.8 (0.5) (3.3) 21.3
Other items:
Amortisation of acquired intangible assets (0.5) (1.1) - - (1.6)
Employment related and other deferred consideration (0.9) - - - (0.9)
Profit/(loss) from operations (1.1) 23.7 (0.5) (3.3) 18.8
Net finance expense (3.1)
Profit before tax 15.7
Half-year ended 30 June 2016 Natural Resources Infrastructure Alcaidesa Central costs Total
£m £m £m £m £m
External revenue 172.1 585.5 2.5 - 760.1
Share of revenue of JVs and associates 3.6 27.7 - - 31.3
Total segment revenue 175.7 613.2 2.5 - 791.4
Group operating profit/(loss) (8.5) 27.4 (0.2) (2.9) 15.8
Share of results of JVs and associates 0.1 - - - 0.1
Profit/(loss) from operations before other items (8.4) 27.4 (0.2) (2.9) 15.9
Other items:
Amortisation of acquired intangible assets (1.2) (0.8) - - (2.0)
Employment related and other deferred consideration (0.7) - - - (0.7)
Profit/(loss) from operations (10.3) 26.6 (0.2) (2.9) 13.2
Net finance expense (1.9)
Profit before tax 11.3
Year ended 31 December 2016 Natural Resources Infrastructure Alcaidesa Central costs Total
£m £m £m £m £m
External revenue 361.9 1,207.2 4.6 - 1,573.7
Share of revenue of JVs and associates 15.4 68.9 - - 84.3
Total segment revenue 377.3 1,276.1 4.6 - 1,658.0
Group operating profit/(loss) (8.6) 56.6 (0.7) (6.2) 41.1
Share of results of JVs and associates 0.2 - - - 0.2
Profit/(loss) from operations before other items (8.4) 56.6 (0.7) (6.2) 41.3
Other items:
Amortisation of acquired intangible assets (2.8) (1.8) - - (4.6)
Employment related and other deferred consideration (1.4) (0.2) - - (1.6)
Profit/(loss) from operations (12.6) 54.6 (0.7) (6.2) 35.1
Net finance expense (4.2)
Profit before tax 30.9
4. Net finance expense
Finance expense includes the interest cost on the net liabilities of the
pension scheme of £0.9 million (2016 half-year £0.6 million, 2016 year £1.1
million).
5. Taxation
Half-year ended 30 June,year ended 31 December 2017Half-year 2016Half-year 2016Year
£m £m £m
UK corporation tax (2.3) (0.7) (2.8)
Deferred tax (0.6) (0.9) (1.7)
Tax expense in the condensed consolidated income statement (2.9) (1.6) (4.5)
Effective tax rate 18.3% 14.2% 14.6%
The tax charge is based on the estimated effective tax rate for the full
year.
6. Earnings per share
The calculation of earnings per share is based on profit for the period of
£12.8 million (2016 half-year £9.7 million, 2016 year £26.4 million) and the
number of shares set out below:
2017Half-year 2016Half-year 2016Year
m m m
Weighted average number of shares in issue for basic earnings per share calculation 104.4 102.3 102.8
Dilutive potential ordinary shares arising from employee share schemes 3.1 3.2 2.6
Weighted average number of ordinary shares in issue for fully diluted earnings per share calculation 107.5 105.5 105.4
7. Dividends
Dividend per share pence Half-year ended 30 June 2017 Half-year ended 30 June 2016 Year ended 31 December 2016
£m £m £m
Final dividend for the year ended 31 December 2015 7.25 - 7.4 7.4
Interim dividend for the year ended 31 December 2016 4.30 - - 4.4
Final dividend for the year ended 31 December 2016 8.40 8.8 - -
Amount recognised as distributions to equity holders in the period 8.8 7.4 11.8
Dividends settled in shares (1.8) (0.3) (0.8)
Dividends settled in cash 7.0 7.1 11.0
The proposed interim dividend of 4.75 pence (2016: 4.3 pence) 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 £5.0 million
will be paid on 20 October 2017 to shareholders on the register at the close
of business on 15 September 2017. A scrip dividend alternative will be
offered.
8. Non-current assets
As stated in the annual report for the year ended 31 December 2016, impairment
reviews were carried out on the value of goodwill of £54.1 million (2016
half-year £40.8 million, 2016 year £54.1 million). Consideration has been
given as to whether any events have occurred since the year ended 30 December
2016 which would give rise to an impairment and none have been identified.
During the interim period, the Group spent £0.5 million on plant and equipment
and £0.1 million on software and development (2016 half-year £1.0 million on
plant and equipment and £0.1 million on software and development, 2016 year
£6.8 million on plant and equipment, £0.2 million on land and buildings and
£0.1 million on software and development).
9. Retirement benefit obligations
2017Half-year 2016Half-year 2016Year
£m £m £m
Present value of defined benefit obligations (805.9) (762.3) (827.5)
Fair value of scheme assets 762.4 704.9 754.0
Recognised liability for defined benefit obligations (43.5) (57.4) (73.5)
Movement in present value of defined benefit obligations: 2017Half-year 2016Half-year 2016Year
£m £m £m
Opening balance 827.5 687.4 687.4
Interest cost 10.9 12.8 25.5
Remeasurements - demographic assumptions 15.0 - -
Remeasurements - financial assumptions 4.1 77.3 153.0
Remeasurements - experience assumptions (34.2) - (6.8)
Benefits paid (17.4) (15.2) (31.6)
Closing balance 805.9 762.3 827.5
Movement in fair value of scheme assets: 2017Half-year 2016Half-year 2016Year
£m £m £m
Opening balance 754.0 650.7 650.7
Interest income 10.0 12.2 24.4
Remeasurements - return on assets 8.6 49.6 96.4
Contributions by employer 7.2 7.6 14.3
Administrative expenses - - (0.2)
Benefits paid (17.4) (15.2) (31.6)
Closing balance 762.4 704.9 754.0
The following actuarial assumptions have been used in the IAS 19 valuations of
the Group's defined benefit pension scheme, which was closed to new members in
May 2005 and to future accrual in September 2009 (expressed as weighted
averages):
2017Half-year 2016Half-year 2016Year
% % %
Discount rate 2.60 2.90 2.70
Future pension increases 3.05 2.70 3.10
Inflation assumption 3.10 2.70 3.20
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
£m
Increase discount rate by 0.25%, decreases pension liability by 33.7
Decrease inflation (and pension increases) by 0.25%, decreases pension liability by 29.1
Increase life expectancy by one year, increases pension liability by 30.2
10. Financial instruments
The Group's centralised function manages financial risk, principally arising
from liquidity and funding risks and movements in foreign currency rates, in
accordance with policies agreed by the Directors. At 30 June 2017, the Group
had foreign currency contracts designated as cash flow hedges of future
transactions over a period of up to 3 years as summarised below. The carrying
value represents the fair value of the contract; the cash flows represent the
pounds sterling commitments. There were no ineffective hedges at the reporting
date.
Foreign exchange contracts 2017Half-year 2016Half-year 2016Year
Carrying amount Cash flows Carrying amount Cash flows Carrying amount Cash flows
£m £m £m £m £m £m
Purchases 2.1 (26.3) - - 2.8 (29.6)
Sales (0.2) 6.3 2.7 (21.2) (0.1) 11.8
1.9 (20.0) 2.7 (21.2) 2.7 (17.8)
The Group's investment in Alcaidesa Holding SA is hedged by euro currency
contracts which mitigate the foreign currency risk arising from the
subsidiary's net assets. The value of the forward sale contracts at 30 June
2017 was E30.0 million (2016 half-year E32.0 million, 2016 year E30.5
million). No ineffectiveness was recognised from the net investment hedge.
11. Share capital
Issued capital as at 30 June 2017 amounted to £52.4 million (2016 half-year
£51.4 million, 2016 year-end £52.1 million) and comprised 104,787,233 ordinary
shares of 50 pence each.
The Company announced on 19 May 2017 that shareholders had, pursuant to the
Scrip Dividend Scheme, elected to receive 382,406 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 2016.
The Company operates a Long-Term Incentive Plan and a Share Deferral Plan,
together with a legacy Deferred Share Bonus Plan, under which directors and
senior employees can receive awards of shares subject to defined performance
targets being achieved by the Group. No ordinary shares were issued under
these plans during the period. Full details of these plans are disclosed in
the annual financial statements.
During the period, the Company issued 170,636 ordinary shares of 50 pence each
following the exercise of share options granted to employees under the
Company's Savings Related Share Option Scheme (relating to the 2011 five-year
grant) and the Company's Sharesave Plan (relating the 2013 three-year grant).
12. Related party transactions
Details of transactions between the Group and The Costain Pension Scheme are
included in Note 9. There have been no other changes in the nature of related
party transactions since the last annual financial statements as at and for
the year ended 31 December 2016.
13. Contingent liabilities
Group banking facilities and surety bond facilities are supported by cross
guarantees given by the Company and participating companies in the Group. At
30 June 2017, amounts drawn under the bonding facilities amounted to £87.6
million (2016 half-year £161.5 million, 2016 year £78.7 million).
There are contingent liabilities in respect of performance bonds and other
undertakings, including joint arrangements and legal claims arising, all in
the ordinary course of business. None are anticipated to result in material
liabilities except as already provided.
14. Cautionary forward-looking statements
These results contain forward-looking statements based on current expectations
and assumptions. Various known and unknown risks, uncertainties and other
factors may cause actual results to differ from any future results or
developments expressed or implied from the forward-looking statements. Each
forward-looking statement speaks only as of the date of this document. The
Group accepts no obligation to publicly revise or update these forward-looking
statements or adjust them to future events or developments, whether as a
result of new information, future events or otherwise, except to the extent
legally required.
Responsibility Statement of the Directors in respect of the interim financial
report
Each of the directors of Costain Group PLC confirms, to the best of his or her
knowledge, that:
· 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 Group 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
Paul Golby CBE - Chairman
Andrew Wyllie CBE - Chief Executive
22 August 2017
Independent review report to Costain Group PLC
Report on the Interim results for the half-year
Our conclusion
We have reviewed Costain Group PLC's interim financial statements (the
"interim financial statements") in the Results for the half-year ("interim
results") of Costain Group PLC for the 6 month period ended 30 June 2017.
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
- the condensed consolidated statement of financial position as at 30 June 2017;
- the condensed consolidated income statement and condensed consolidated statement of comprehensive income and expense for the period then ended;
- the condensed consolidated cash flow statement for the period then ended;
- the condensed consolidated statement of changes in equity for the period then ended; and
- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results have been
prepared in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
As disclosed in note 1 to the interim financial statements, the financial
reporting framework that has been applied in the preparation of the full
annual financial statements of the Group is applicable law and International
Financial Reporting Standards (IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The interim results, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The directors are
responsible for preparing the interim results in accordance with the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim financial
statements in the interim results based on our review. This report, including
the conclusion, has been prepared for and only for the company for the purpose
of complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
What a review of interim financial statements involves
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 United Kingdom. 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.
We have read the other information contained in the half-yearly report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
22 August 2017
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 29 (LON20771)
London W1E 0ZT
Company's Registrar
The Company's Registrar is Equiniti, who are located at Aspect House, Spencer
Road, Lancing, West Sussex BN99 6DA. For enquiries regarding your
shareholding, please telephone 0371 384 2250. If you are calling from outside
the UK, please telephone +44(0) 121 415 7047. Lines are open 08.30am to
05.30pm, Monday to Friday. You can also view up to date information about your
shareholdings by visiting the shareholder website at www.shareview.co.uk.
Please ensure that you advise Equiniti promptly of any change of name or
address.
Scrip dividend scheme
A scrip dividend alternative will be offered in respect of the interim
dividend, enabling shareholders to receive new ordinary shares instead of cash
if they so wish. Those shareholders who have already elected to join the scrip
dividend scheme will automatically have their interim dividend sent to them in
this form. Shareholders wishing to join the scheme for the interim dividend
(and all future dividends) should return their completed mandate form to the
Registrar, Equiniti, by 30 September 2017. Copies of the mandate form and the
scrip dividend brochure can be downloaded from the Company's website
www.costain.com or obtained from Equiniti by telephoning 0371 384 2268.
Dividend payments
If your dividend is not currently paid directly into your bank or building
society account and you would like to benefit from this service, please
contact Equiniti on 0371 384 2250 who will be pleased to assist. By receiving
your dividends in this way, you can avoid the risk of cheques getting lost in
the post.
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
website www.sharegift.org and 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
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