ECOMM 2014: Innovations for Institutional Frameworks (1) Sarah Wixey (WYG)
Half Year Results to September 2013 - WYG · Participation restricted to Group Leadership Team,...
Transcript of Half Year Results to September 2013 - WYG · Participation restricted to Group Leadership Team,...
Half Year Results to September 2013
Paul Hamer, Chief Executive Officer Sean Cummins, Finance Director
© Crown Copyright
• Project management & technical consultancy
• Specialising in front-end enabling services
• Working on the client-side: higher margin, lower risk
• Helping navigating the route to asset creation & change implementation
• Multi-year contracts & long-term framework agreements
• For private, public & donor-funded sector clients
• Delivered by a team of 1,300 across UK, Europe, Southern Africa & Asia
Who we are
Strategic definition
Preparation Concept design
Navigate local regulations and industry
practices
Supervise implementation
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A global consultancy and a market leader
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Spread of the business
Turnover by funding sector*
Donor funded 32%
Private Sector 34%
Turnover by region for the 6 months to 30 September 2013
UK 55% EAA 31%
MENA 14%
Defence and Justice
Environment
Urban and Commercial Development
Transportation
Mining, Metals and Minerals
Social Development and Infrastructure
Seven core sectors
Energy and Waste
Other Public Sector
Funded 34%
Recent achievements
Transformed the Group: • reduced headcount by c.60%; closed 40 offices • introduced critical risk management and governance processes
Capital restructuring and refinancing
Returned to profitability
Improving efficiency by focussing on key regions and sectors
Organic and acquisitive growth of the business
New management team appointed in 2009 to restructure the Group
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Highlights
“Revenue growth, significant improvement in profitability
increased order book and improved cash flow”
• Strong performance with significant improvement across all key metrics
• Revenue showing modest increase
• Significant improvement in profitability
• Positive operating cash flow over a 12 month period
• Investments in growth enabled by strong cash and good working capital management
• Major contract win momentum underpinned growth in the order book
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H1
6 months to
Sep 2013
£m
H1
6 months to
Sep 2012
£m
Revenue 63.9 61.8
Operating profit 1.7 0.1
Finance costs (0.3) (0.5)
Profit/(loss) before tax* 1.4 (0.4)
Tax charge (0.2) (0.1)
Profit/(loss) after tax* 1.2 (0.5)
Adjusted earning / (loss) per share* 1.8p (0.8p)
* Before separately disclosed items
Consolidated income statement
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• 3.4% revenue increase
• stronger underlying growth excluding £1.5m RoI sales in prior period
• £1.6m positive swing in operating profit
• driven by revenue increase (one third) and focus on quality margin revenue primarily
• £0.2m reduction in finance costs reflects tapering cost of legacy bonds
30 Sep 2013
actual
£m
30 Sep 2012
actual
£m
Goodwill 11.8 11.6
Fixed assets 7.1 8.4
Debtors and WIP 49.0 50.0
Fees in advance (13.8) (16.9)
Net working capital 35.2 33.1
Creditors (37.2) (34.5)
Legacy provisions (16.0) (18.1)
Net cash unrestricted
12.5 12.7
Net cash restricted 3.3 4.3
Shareholders’ funds 16.7 17.5
Consolidated balance sheet
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• Conditional fees in advance reduced as expected
• Debtors and WIP reductions fund fees in advance unwind over 2 years
• £2.1m decrease in legacy provisions; reducing lease terms and redundancies effected
• Unrestricted cash of £12.5m after investments
Consolidated cash flow statement 12 months to
September 2013
£m
12 months to
September 2012
£m
Operating profit (before separately disclosed items) 3.1 0.4
Depreciation and amortisation 1.6 1.8
Movement in working capital 4.6 3.7
9.3 5.9
Interest and tax (0.7) (1.6)
Capex (0.9) (2.2)
Cash flow before legacy issues & acquisitions 7.7 2.1
Movement in bonded fees in advance (2.9) (4.3)
Legacy cash costs (4.5) (9.1)
Cash flow before acquisitions 0.3 (11.3)
Acquisitions (inc costs) (0.6) -
Net cash flow (0.3) (11.3)
Opening unrestricted cash 12.7 24.0
Closing unrestricted cash 12.5 12.7
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• Modest but positive cashflow before acquisitions, driven by:
• Improving operating profit
• Capex halved and running below depreciation
• Reduced interest and tax
• A good working capital position
Full year guidance
• Revenue trend – continuation of modest growth in revenues
• Gross margin – focus on quality revenues; should improve margin by c.1-2%
• Operating costs – very modest reduction
• Pension accounting – c.£200k impact on operating profit in full year; interest
charge reduced by the same
• Interest costs – continued reduction as EU bonds mature
• Tax – still settling down, but c.10-15% expected with benefit of UK tax losses
• Capex – slight increase from first half as we upgrade our IT software
• Debtor & WIP days – having reduced through 100 days at 31 March 2013
now target <90 for this year end
• Legacy cash – continues to unwind in line with first half
• Cash flows – underlying cash flows continue to strengthen – H2 should be
positive, subject to any investments in acquisitions etc
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UK – improving market, improving margins
UK 61%
H1 - 2013
£m
H1 - 2012
£m
Revenue 35.4 37.8
Operating profit/(loss)* 0.3 (0.8)
Operating margin* 1% -1%
• Defence – Market-leading position driving growth and further opportunity
• Energy – Increased activity in nuclear with Sellafield decommissioning and confirmation of new build programme
• Urban Development - House building stimulus accelerating activity for our multidisciplinary teams
• Education and Health – Top 3 position with upturn in spending across higher education institutions and specialist laboratories.
*before separately disclosed items
Basing Optimisation Programme, UK: optimising the British Army’s estate so personnel and their families have a stable base from which to live and work, while Britain as a whole benefits from the economic savings delivered by the project.
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H1 - 2013
£m
H1 - 2012
£m
Revenue 19.8 17.0
Operating profit* 1.2 0.6
Operating margin* 6% 4%
• Western Balkans – Market leader with major pipeline of opportunity building on IPF programme
• Croatia accession to EU will see significant increase in funding
• Poland seeing an anticipated lull ahead of next funding cycle
• Africa – Growth opportunities built upon CRIDF win. Expanding into West and East Africa in support of IFIs
• Asia – Leading provider of Climate Change advisory services
• Upper Quartile investment far exceeding expectations.
EAA – strong performance, engine for growth
*before separately disclosed items
International Technical Assistance Programme of Support to Local Economic Development in the Eastern Cape Province, South Africa: tackling poverty through the empowerment of local people.
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H1 - 2013
£m
H1 - 2012
£m
Revenue 8.8 7.2
Operating profit* 0.2 0.3
Operating margin* 3% 4%
• Further success in our primary sector of socio-economic consultancy
• Market leading position in water sector
• Expertise in environment and climate issues being recognised
• Success in diversifying into local markets
• Continued work in Afghanistan and first contract win in Libya
• Strong opportunities with local partners in Qatar / Saudi.
MENA – niche markets, continued investment
*before separately disclosed items
Water and Wastewater Infrastructure, Turkey: actively supporting the government in meeting the levels of environmental compliance that are a prerequisite in enabling the country to move a step closer to joining the EU.
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Delivering on our strategy
Complete £15m PBT Journey
by 2015/16
• Strengthening core customer relationships
• Following client activity to grow from key regions
• Gaining access to growth markets through partnership and acquisition
• Further diversification for growth
• Recruiting and developing business winners
Creating top line growth
Improving business
performance
Legacy cost reduction
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+9
-6
Mar 14
Key growth themes
Preserving the Global Environment
• Linking clients and programmes such as UK Met Office and climate resilience
o Tajikistan – building climate resilience in the Pyanj River Basin, home to more than 1.2m people, funded by ADB
o Southern Africa – CRIDF – working in consortium on £18.2m contract over 2 years with potential to extend
o Turkey – various water, waste water and projects using technical references gained in UK and around the world.
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Fragile States & Stabilisation
• Identified DFID as potential key client (links with existing clients: MOD and FCO)
• Successful in gaining access to a number of frameworks (GEFA and Wealth Creation)
• Previously not on the FCAS framework – investment in Upper Quartile LLP in May 2013 brought access
• September 2013 – awarded first contract in Libya.
Urban Development & Connected Cities
• Deploying UK masterplanning and transportation expertise around the world
o Wadi Al Asla Jeddah, Saudi Arabia – masterplanning and infrastructure design for a new city of 170,000 residents, 41,000 houses and associated infrastructure
o Bulgaria – advising the municipalities of Burgas and Plovdiv on new integrated public transport systems as part of investment programmes totalling c.€75m
o Prospects in Qatar, Southern Africa & Turkey.
Conclusion and outlook
• Further progress, delivering on our strategy with return to profit and margin growth
• Strong cash and good working capital management enabling investment
• Management incentivised to deliver shareholder value
• Strong platform from which to focus on achieving sustainable growth
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Targeting £9m+ PBT by 2015/16
Appendices
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© Crown Copyright
Current and Recent Projects
UK Region
• MOD Army Rebasing Plan: £1.6bn programme to support the return of 16,000 soldiers, their families and equipment from Germany to the UK by 2020.
• MOD – Defence Technical Training Change Programme - November 2013 – construction management on £150m major base redevelopment – RAF Lyneham
• Hinkley Point C: First new nuclear power station in the UK for 20 years. From 2023 it will provide sufficient power for almost 6 million homes.
• Liverpool Waters: Regeneration of sixty hectares of historic docklands to bring £5.5bn of inward investment and up to 20,000 jobs to the area.
International
• IPF (Infrastructure Projects Facility) Western Balkans: 130 projects leveraging £4.5bn of infrastructure investment. November 2013 - €10m extension to 2018.
• CRIDF (Climate Resilient Infrastructure Development Facility) Southern Africa: Improving access to water for many of the 95 million population of the region.
• Wadi Al Asla Jeddah, Saudi Arabia: Masterplanning and infrastructure design for a new city of 170,000 residents, 41,000 houses and associated infrastructure.
• Covasna Romania: Integrated waste management system to benefit a population of over 200,000.
Hinkley Point C
Wadi Al Asla
Shareholders
Shareholder % Cumulative %
Artemis 14.8 14.8
Golden Peaks 10.8 25.6
Hargreave Hale 9.6 35.2
Robert Keith 9.3 44.5
Soros 9.0 53.5
Legal & General 8.0 61.5
Henderson 7.3 68.8
Aviva 7.3 76.1
Fidelity 6.3 82.4
Rivers & Mercantile 3.2 85.6
Franklin Templeton 3.0 88.6
Others 12.8 100.0
100.0
As at 30 September 2013
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The team
Paul Hamer, CEO • Appointed Chief Executive in March 2009
• Previously Managing Director of VT Nuclear Services, part of Babcock International, and brings with him over 20 years’ experience in business management, leadership and project delivery
• Held several senior executive positions in the contracting, nuclear, oil, chemical and petrochemical sectors
• Immediate Past Chairman of ACE – Association for Consultancy and Engineering
Sean Cummins, Group Finance Director • Joined WYG in Dec 2011 as Group Finance Director
• Previously Group Finance Director at Scott Wilson Group plc and Yule Catto & Co plc
• 25 years' experience of commercial and operational financial management, including the last 13 years as Finance Director of a plc
Graham Olver, Chief Operating Officer • Joined WYG in August 2009
• 25 years’ UK and International experience as a contractor, developer, investor and COO of a portfolio of high profile innovative infrastructure projects around the world including PPP, Concessions and project finance projects in Energy, Transport, Water, Schools and Hospitals and related international mergers and acquisitions, joint ventures and partnerships
• Held senior director positions at ALSTOM, RWE Thames Water, Skanska Infrastructure Development
• Chairman of British Expertise – the leading UK private sector organisation for British companies offering professional services internationally
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Management incentive scheme
WYG Transformation Incentive Plan (‘TIP’) established following the placing.
Participation restricted to Group Leadership Team, consisting of 20 most senior leaders in the Group.
Options are exercisable at nil or nominal amount only when stretching share price targets are met.
Share price targets are:
– £1.00 – 33% vested in August 2013
– £1.25 – 67% vests
– £1.50 – 100% vests
Shares released 12 months after vesting
50% of future bonus payments to be reinvested in additional shares.
TIP Scheme
Shares
Paul Hamer 4,313,720
Graham Olver 1,941,174
Sean Cummins 1,941,174
Group Leadership Team 13,372,531
21,568,599
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