REG - Costain Group PLC - Half Yearly Report <Origin Href="QuoteRef">COSG.L</Origin> - Part 2
29/10/2014 14:20
- Part 2: For the preceding part double click ID:nRSU6767Pa
Natural Resources Infrastructure Land Develop-ment Central costs Total
£m £m £m £m £m
External revenue 324.6 560.6 - - 885.2
Share of revenue of JVs and associates 73.0 - 1.8 - 74.8
Total segment revenue 397.6 560.6 1.8 - 960.0
Group operating profit/(loss) 3.1 31.4 - (7.1) 27.4
Profit on sales of JVs and associates 9.1 - - - 9.1
Share of results of JVs and associates 0.6 - (2.1) - (1.5)
Profit/(loss) from operations before other items 12.8 31.4 (2.1) (7.1) 35.0
Other items:
Exceptional transaction costs - - - (3.7) (3.7)
Amortisation of acquired intangible assets (1.2) (0.6) - - (1.8)
Employment related and other deferred consideration (2.1) (0.7) - - (2.8)
Impairment of assets of joint venture - - (9.8) - (9.8)
Profit/(loss) from operations 9.5 30.1 (11.9) (10.8) 16.9
Net finance expense (4.0)
Profit before tax 12.9
Costs of £3.7m associated with the lapsed all share merger with May Gurney
Integrated Services plc have been shown as exceptional transaction costs
within Other items in the 2013 comparative results.
In December 2013, the Group sold three minority shareholdings in three joint
venture companies to Severn Trent Plc for an aggregate cash consideration of
£12.0 million. The three companies were Severn Trent Costain Holdings Limited,
Severn Trent Costain Services Limited and Severn Trent Costain Limited. As a
result of the sale, the Group realised a profit of £9.1 million. £1.2 million
of fair value adjustments on the PFI financial assets relating to cash flow
hedges were recycled through the income statement as part of this profit.
4. Net finance expense
Finance expense includes the interest cost on the net liabilities of the
pension scheme of £0.8 million (2013 half-year £1.1 million, 2013 year £2.1
million).
5. Income tax
2014 2013 2013
Half-year Half-year Year
£m £m £m
UK taxation - - 0.1
Deferred tax (0.7) (0.3) (0.5)
Income tax expense in the condensed consolidated income statement (0.7) (0.3) (0.4)
Effective tax rate 12.1% 9.7% 3.1%
The tax charge is represented by the estimate of the effective tax rate for
the period.
6. Earnings per share
The calculation of earnings per share is based on the profit for the period of
£5.1 million (2013 half-year £2.8 million, 2013 year £12.5 million) and the
number of shares set out below.
2014 2013 2013
Half-year Half-year Year
Number (m) Number (m)Restated * Number (m) Restated *
Weighted average number of shares for basic earnings per share calculation 88.3 70.8 71.2
Dilutive potential ordinary shares arising from employee share scheme 3.4 1.5 2.9
Weighted average number of shares for fully diluted earnings per share calculation 91.7 72.3 74.1
* The number of shares has been adjusted for the bonus element within the 2014
capital raise detailed below.
Capital raise
On 27 February 2014, the Group announced a capital raise of £70.3 million (net
of expenses) by way of a 33,382,068 ordinary shares of 50 pence each at 225
pence per share. 11,111,112 shares were to be issued through a firm placing
and 22,270,956 through a placing and open offer. The capital raise was
completed successfully on 18 March 2014.
The capital raise was effected through a structure, which resulted in a merger
reserve arising under Section 612 of the Companies Act 2006. Following the
receipt of the cash proceeds through the structure, the excess of the net
proceeds over the nominal value of the share capital issued has been
transferred to retained earnings.
7. Dividends
DividendPer sharepence Half-year ended 30June2014£m Half-year ended 30 June2013£m Year ended 31 December2013£m
Final dividend for the year ended 31 December 2012 7.25 - 4.7 4.7
Interimdividendfortheyearended31December2013 3.75 - - 2.5
Finaldividendfortheyearended31December2013 7.75 5.2 - -
Amountrecognisedasdistributionstoequityholdersin
theperiod 5.2 4.7 7.2
Dividendssettledinshares (0.6) (0.2) (0.5)
Dividendssettledincash 4.6 4.5 6.7
The proposed interim dividend of 3.25 pence (2013: 3.75 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 £3.3 million
will be paid on 24 October 2014 to shareholders on the register at the close
of business on 19 September 2014. A scrip dividend alternative will be
offered.
8. Non-current assets
During the interim period, the Group spent £1.0 million on plant and equipment
and £0.9 million on software and development (2013 half-year £0.6 million on
plant and equipment and £0.5 million on software and development, 2013 year
£1.3 million on plant and equipment and £1.2 million on software and
development).
In December 2013, the Group acquired the 27% interest from its partner Serco
Group plc in their Managed Motorway Technology joint venture arrangement for a
cash consideration of £2.4 million, comprising intangible assets, paid in
January 2014. The joint venture arrangement, in which Costain already held the
remaining 73% interest, has a place on the Highways Agency framework to
deliver new technology-led highways improvements.
9. Retirement benefit obligations
2014 2013 2013
Half-year Half-year Year
£m £m £m
Present value of defined benefit obligations (650.7) (621.8) (629.7)
Fair value of scheme assets 599.8 580.7 592.5
Recognised liability for defined benefit obligations (50.9) (41.1) (37.2)
Movements in present value of defined benefit obligations: 2014 2013 2013
Half-year Half-year Year
£m £m £m
Opening balance 629.7 610.7 610.7
Interest cost 14.3 13.1 26.2
Remeasurements 21.0 11.7 21.6
Benefits paid (14.3) (13.7) (28.8)
Closing balance 650.7 621.8 629.7
Movements in fair value of scheme assets: 2014 2013 2013
Half-year Half-year Year
£m £m £m
Opening balance 592.5 558.8 558.8
Interest income 13.5 12.0 24.1
Remeasurements 6.2 18.2 30.2
Contributions by employer 1.9 5.4 8.2
Benefits paid (14.3) (13.7) (28.8)
Closing balance 599.8 580.7 592.5
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):
2014 2013 2013
Half-year Half-year Year
% % %
Discountrate 4.30 4.70 4.60
Futurepensionincreases 3.10 3.30 3.20
Inflationassumption 3.20 3.40 3.30
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 24.4
Decrease inflation (and pension increases) by 0.25%, decreases pension liability by 21.4
Increase life expectancy by one year, increases pension liability by 18.8
10. Share capital
Issued capital as at 30 June 2014 amounted to £50.5 million (2013 half-year
£33.1 million, 2013 year £33.4 million) and comprised 100,989,714 ordinary
shares of 50 pence each.
On 18 March 2014, 33,382,068 ordinary shares of 50 pence each were issued in
connection with the capital raise approved by shareholders at the general
meeting on 17 March 2014 raising £70.3 million (net of expenses) (note 6).
The Company announced on 25 April 2014 that shareholders had, pursuant to the
Scrip Dividend Scheme, elected to receive 191,503 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 2013.
The Company operates a Long-Term Incentive Plan (LTIP), a Deferred Share Bonus
Plan and a Share Deferral Plan under which directors and senior employees can
receive awards of shares subject to defined performance targets being achieved
by the Group. Full details of these plans are disclosed in the annual
financial statements.
The 2011 LTIP award vested in April 2014 resulting in the issue of 603,275
ordinary shares. During the period, the Company also issued 19,927 ordinary
shares of 50 pence each on exercise of options granted under the 2008 5 year
Save As You Earn scheme. Full details will be disclosed in the annual
financial statements.
11. 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 2013.
12. 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
David Allvey - Chairman
Andrew Wyllie - Chief Executive
21 August 2014
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 2014 which comprises The Condensed consolidated income statement, the
Condensed consolidated statement of comprehensive income and expense, the
Condensed consolidated 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 Conduct Authority
("the UK FCA"). 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 FCA.
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 2014 is not prepared, in all
material respects, in accordance with IAS 34 as adopted by the EU and the DTR
of the UK FCA.
Andrew Marshall
for and on behalf of KPMG LLP
Chartered Accountants
London
21 August 2014
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
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 0871 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 3 October 2014. 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 0871 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 0871 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.
* Calls to this number cost 8p per minute plus network extras. Lines are open
08.30am to 05.30pm, Monday to Friday. If you are calling from outside the UK
please telephone +44(0)121 415 7047.
This information is provided by RNS
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