Final Results
Costain Group PLC
27 March 2002
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
Costain, the international engineering and construction group, announces the
findings of a comprehensive strategic review and preliminary results for the
year ended 31 December 2001.
HIGHLIGHTS
* Strengthened Board in place
- Finance Director appointed and three non-executive directors
* Strategy in place
- achieving equal proportions of asset management and contracting by 2003, the
profitable growth of COGAP and redeveloping presence in international markets
* Priorities identified
- change contracting relationships with clients
- implement full business improvement programme
- recruit additional staff
* New management in place
- appointments made: Procurement Director and Business Development Director
* Performance targets set
- increase turnover by 15% year on year
- 3% group operating margin
- identify £85m turnover internationally
* Recent contract wins
- significant water contract wins totalling potential value of £370m
- increased order intake in COGAP, including the £60m Burlington Resources Ltd.
contract
- other substantial Channel Tunnel Rail Link contracts
- 85% of current contracting order book in framework agreements, negotiated
work and partnering arrangements
* Improved results
- profit before tax £8.7m (2000: £6.5m)
- net cash balance at the end of 2001 of £67.8m (2000: £42.7m)
Commenting on the announcement, Stuart Doughty, Chief Executive of Costain Group
PLC said:
'Costain is achieving its objectives of increasing asset management operations
and securing major contracts which ensure the interests of the clients and
Costain are properly focused and aligned.'
27 March 2002
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
ENQUIRIES:
Costain Group plc Tel: 020 7705 8444
Stuart Doughty, Chief Executive
Graham Read, Public Relations
College Hill Tel: 020 7457 2020
Mark Garraway Email: mark.garraway@collegehill.com
Lisa Pearson Email: lisa.pearson@collegehill.com
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
CHAIRMAN'S STATEMENT
Since becoming Chairman, and the appointment of Stuart Doughty as Chief
Executive, we have completed a comprehensive review of the Group and embarked
upon a major programme of strategic re-direction and management change to
capture the major opportunities that exist for the Group. This is designed to
restore profitability to appropriate higher levels and re-establish Costain's
position as one of the UK's major contractors.
Results and Finance
The Group made a profit on ordinary activities before taxation of £8.7 million
(2000: £6.5 million) on a turnover of £462.9 million (2000: £386.3 million).
Earnings per share were 2.5p (2000:1.5p)
No dividend has been recommended for payment.
The Group has no significant borrowings and net cash balances at the end of the
year total £67.8 million (2000:£42.7m), including the Group's share of cash held
by joint arrangements (construction joint ventures) of £38.0 million (2000:
£30.1m). This represented a cash inflow during the year of £25.1 million (2000:
£12.4m inflow) which was ahead of forecast.
Overall view
In the comprehensive review, we identified a number of key strengths within the
business including high-calibre skills, an internationally recognised brand and
a loyal, committed workforce.
Over the last four years the Group has made progress but it lacked focus and
consistency across the range of works that it was undertaking. Success tended
to be sporadic.
A key objective is to grow profitability throughout the Group primarily by
building the asset management business, winning more negotiated contracts and
further establishing partnering arrangements with enlightened clients. We have
already had success, particularly in the water and retail sectors and the pace
of change within the Group is gathering momentum.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
CHAIRMAN'S STATEMENT (cont'd)
We have set ourselves ambitious targets and, in light of this we have reviewed
the key resources of the Group and have begun the process of bringing into the
Company appropriate talent from other businesses and sectors. Senior management
and employees will need to focus on growing the business and increasing margins
over the next few years and translating this growth into shareholder value. To
help us deliver our objectives the Company has totally reviewed its management
systems and is currently implementing the necessary changes to bring them into
line with the needs of the business. Extensive training is also being
undertaken to generally improve the skill base of the Company and ensure that
the appropriate skills are to hand to meet the demands of the strategy going
forward.
We have reviewed the Group's remuneration strategy and to further align the
interests of directors and employees with those of shareholders, we intend to
introduce new share incentive plans. These are further dealt with in a circular
to members which accompanies the Annual Report.
Board
I am delighted to report that we appointed Charles McCole as Finance Director on
25 March 2002. He will be working full-time for the Group with effect from the
end of April. Mr McCole was Finance Director of Sodexho UK the multi-service
provider and he brings with him specific experience of PFI/PPP projects.
We have also strengthened the Board in order to move towards compliance with the
corporate governance principles as set out in Section 1 of the Combined Code's,
'Principles of Good Governance and Code of Best Practice'. We are moving
towards a balance between non-executive directors representing major
shareholders and independent non-executive directors.
We have appointed two non-executive directors, David Allvey and John Bryant.
David, who was appointed on 1 November 2001, is a former Finance Director of
Barclays Bank Plc, Chief Operations Officer of Zurich Financial Services AG and
Group Finance Director of BAT Industries Plc. John, who was appointed on 1
February 2002, is a former Chief Executive of British Steel and joint Chief
Executive of the Corus Group. Both individuals bring particular skills in terms
of their financial and commercial experience coupled with their engineering
backgrounds which will ensure they provide valuable insights into both the needs
of the client and Costain.
When major shareholder Mohammed Abdulmohsin Al-Kharafi & Sons WLL decided to
reduce its representation on the Board to one non-executive director the Board
agreed to retain the services of Mr F W Ballard as an independent non-executive
director.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
CHAIRMAN'S STATEMENT (cont'd)
Stuart and I succeeded John Armitt and Michael Beckett, the previous Chief
Executive and Chairman respectively. Michael decided to resign for personal
reasons in May and John, having led Costain through a turbulent four year period
to relative stability, announced he wished to pursue other opportunities. Both
individuals left with the best wishes of the Board.
At the end of the year, Miles Roberts, the Finance Director, left the Company to
take up another position. Miles joined Costain in May 2000 and served the
Company well, providing enthusiasm and skill at all times. We wish him success
in his new role.
We also bid farewell to Dato' Dr Ramli bin Mohamad from Intria Berhad, a
non-executive Director and Deputy Chairman of Costain. Dr Ramli resigned on 11
December 2001 to pursue other interests and he has now been replaced by Abdul
Wahid Omar, a nominee of Intria Berhad, who was appointed to the Board on 21
January 2002 and appointed Deputy Chairman of Costain on the 22 March 2002.
Tribute
In conclusion I, on behalf of the Board, would like to pay tribute to the
Costain employees for their commitment throughout the year. Our employees
recognise the need for change and have given their total support to the new
strategy. There is a pride and loyalty amongst the workforce and that coupled
with recognised skills and professionalism is our most powerful attribute. Since
my arrival, I have fully realised the strength and value of the Costain brand
and that is due in no small amount to the competence and dedication of the
Costain people. Long may it continue.
DAVID JEFFERIES
Chairman
26 March 2002
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
OPERATING REVIEW
Strategy
We have begun the task of implementing a new strategy which highlights clear
goals for the future and leaves no one in doubt that we have embarked on a new
chapter in the history of Costain. Every operation and all employees are
involved. The strategy is a result of an in-depth review of Costain which was
carried out during the first three months of my tenure.
We have as a Group many choices but standing still is not one of them. That is
why the Costain strategy includes an objective to achieve a growth in turnover
for the entire Group of 15 per cent year on year for the next five years on the
basis of delivering three per cent profit before tax from our operations. It is
realistic in the context of the UK Government's commitment to spending major
sums on infrastructure which will provide significant growth to both traditional
and PFI markets. Costain is a leader in roads and the Company's success in being
awarded two Channel Tunnel Rail Link contracts underlines our success in other
transport sectors. The UK's infrastructure needs are not in doubt and they must
be met in this decade and beyond. That will mean opportunity for Costain in one
of our specialist areas and, as a consequence, provide the Company with solid
growth potential.
However, the UK public sector is not the only potential area for Costain to
thrive. We are also keen to grow our asset management operation, which was 12
per cent of UK construction turnover in 2001, to 50 per cent by 2003. In recent
times we have added three more prestigious water contracts (see Asset Management
sub section) to our portfolio. We are now involved in four of the largest
long-term framework agreements and we have become a leading contractor in the
sector. The percentage of asset management work increased by 100 per cent during
the year and I am confident the growth will be maintained in 2002.
Increases are also planned for International and Costain Oil Gas & Process
(COGAP). Costain has a distinct advantage over UK competitors with regard to
overseas operations. Our major shareholders are well known and influential in
many foreign markets and representatives from Intria, Kharafi and Raymond have
expressed their support for pursuing quality opportunities overseas. Strict
controls on risk management will be maintained as we work with our shareholders
to capitalise on new opportunities.
COGAP is a high value added business and, as such, experiences a market of
better quality margins. This division comprises highly skilled people, operating
in a specialist market. The announcement that we had been awarded the £60
million Burlington contract gave ample evidence of COGAP's potential and there
are several other major opportunities to be capitalised on in the near future.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
OPERATING REVIEW (cont'd)
The Costain strategy will need resource and that is why we have embarked on a
recruitment campaign which will be in line with growth of the business and
involve potentially an extra 400 people. We are already discovering that our
brand coupled with a bold and aggressive strategy is attracting capable people
from the competition. Costain is seen by many as a contractor with clear goals
and a potentially attractive employer.
Profitability is our primary goal and it is essential that we make the correct
and often difficult decisions, such as the closure of the Scottish regional
office which was announced towards the end of 2001. There are excellent people
in our Scottish operation and they have been given the opportunity to work in
other parts of the Company. Again, with regard to the regions, a Birmingham
office will be opened because that area has a strong construction market and it
is important Costain takes advantage of that market. The Company left Birmingham
in the last decade but the time is right to return and compete.
Current trading and prospects
When we announced the strategy at the end of 2001, our stakeholders reacted
favourably as they had been given a clear picture of the Company and where we
wanted to go. During the year, we also witnessed clients declaring a wish to
partner with us on a considerable number of contracts which ensure the interests
of the clients and Costain are properly focused and aligned.
This was particularly encouraging, as we had said in 2001 that we would not deal
with clients where the balance of risk was unreasonably drawn in the contracts.
The Company had rejected four major project awards, in the first half of the
year, worth more than £150 million, despite being the preferred bidder on each
one. This action, far from causing damage, has enhanced our reputation with
those more mature clients who wish to use a partnering route with a contractor
to avoid conflict and share the added value. We have shown ourselves to be clear
and open in our approach and this has won us new friends.
In general terms, the UK construction market is stable. There is neither rapid
growth nor sudden decline. The tragic events of September 11 have not led to
recession in our industry and we are only witnessing some evidence of schemes
being cancelled in the hotel development sector.
Review
In the year, we began to move away from traditional contracting and projects
with one-off clients to concentrating on partnering with a select client base
and asset management. This is providing us with a steady, reliable workload
without exposing the business to the more volatile elements, such as high-risk
and lack of predictability.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
OPERATING REVIEW (cont'd)
Asset management
Our success in this area of operation has been pleasing both in terms of
contract awards and their impact on the business mix. The Company already has
significant awards with Thames Water (five years with anticipated value of £140
million) and Yorkshire Water (five years with anticipated value of £65 million).
In recent times, we have also added major awards from Southern Water and Wessex
Water with a combined value of more than £100 million and the contract with a
potential value of up to £250 million over three years for United Utilities.
The Southern Water work, in joint venture, is part of the client's K3 West
Programme. The value of the work, lasting more than four years, is expected to
exceed £75 million. The contract involves expansion, improvement, demolition,
maintenance or refurbishment of existing treatment plants and other waste/
wastewater infrastructure facilities.
Wessex Water has selected alliancing as a main driver to achieve financial
efficiency through improved team working, aligned objectives in the management
and design of schemes plus elimination of duplication, inefficiencies and
interfaces. The Wessex Water work has a predicted value of £45 million and will
last three years.
United Utilities has selected Costain in joint venture to undertake, with other
nominated contractors, the vast majority of new construction projects for the
next three years including major assets such as water and wastewater treatment
works.
Building
The Building operation offers much promise to the Company as knowledgeable
blue-chip clients such as Tesco and Waitrose are keen to work with contractors
forming partnering type relationships, specifically to ensure both parties avoid
the pitfalls related to potential changes and achieve targets together. It is
these relationships which we need to foster and grow. I have already stated
that, during 2001, we rejected more than £150 million of work because of
high-risk changes to the project having been received at post award stage. This
Company will not sacrifice long-term profitability for the short-term
satisfaction of simply winning a contract. We are quite prepared to turn away
work if the risks are not properly defined.
We recently completed the new Great Western Royal Hotel at Paddington. This
project presented considerable challenges to the Costain-Skanska joint venture
but the commitment of the workforce eventually won the day. The building is of
premier quality and is a tribute to the technical skills of those involved. In
general, our building regions are performing satisfactorily with North-West
recently winning £22 million of work, including a £13 million contract to design
and construct a seven-storey building for Bellway Homes.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
OPERATING REVIEW (cont'd)
Civil Engineering
Contracts which change and radically improve a nation's infrastructure are the
lifeblood of civil engineering and Costain has always played a prominent part in
such schemes. The Channel Tunnel Rail Link (CTRL) is a perfect example and this
Company has, in joint venture, become one of the major participants. We have
been awarded Contract 240 at Stratford and Contract 105 at St Pancras.
Contract 105 is for the building and civil engineering works to double the
length of the existing St Pancras Station to accommodate 13 new platforms,
including six for international CTRL services. Costain has also, again in joint
venture, been named as the preferred bidder for Contract 108 - the construction
of the St Pancras station building.
Contract 240 (value £120 million) involves the construction of 4.67km of twin
running tunnels from the Stratford Station Box to Barrington Road along with two
ventilation shafts and cross passages. The project will be technically demanding
as the 7.15m internal diameter tunnels are to be driven through some of the
wettest ground conditions in London and Essex - the Thanet Sands. To achieve
this, one of the most extensive dewatering schemes ever undertaken in the UK
will be set up and more than 350 litres of water a second will be pumped out of
the ground.
Our skilled staff relish this kind of challenge and confidence is high,
especially because the client, Union Railways, has stipulated its determination
to work with contractors and not adopt an adversarial approach which has plagued
the progress of UK construction in the past.
In addition, Costain in joint venture, is responsible for the redevelopment of
King's Cross underground station. The King's Cross project will take six years
to complete.
With regard to roads, the £58 million design and build A43 contract for the
Highways Agency is progressing well despite facing unusual problems. The much
publicised foot and mouth epidemic resulted in the project being suspended for
nearly two months. However, the commitment of the workforce and the relatively
good weather have played a major part in getting the project back on track.
The A2/M2 project has also not been without problems but Costain and partners,
Skanska and Mowlem, have worked closely with the Highways Agency and we are
beginning to see beneficial results. This project is another example of having
the right client and being able to work in unison rather than apart.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
OPERATING REVIEW (cont'd)
Progress in the design and build project widening of the M2 between junctions 1
and 4 is on programme for completion in Spring 2003. The new London bound
carriageway is in operation and the multi-span viaduct crossing the River Medway
is due to be completed in Autumn 2002.
All of the above contracts highlight a movement in civil engineering towards a
more cohesive arrangement between contractor and client, where a partnering
approach is adopted and common goals identified.
International
In the overseas markets, we are now actively looking at opportunities with our
major shareholders and other partners and will move forward employing a highly
selective approach. We still have a strong South-East Asia presence due, in the
main, to our Costain-China Harbour joint venture for the £57 million rail depot
building for the Kowloon Canton Railway Corporation (West Rail).
In Africa, the market is mixed. Joint ventures with Kharafi in Botswana and
Tanzania progress well but, in Zimbabwe, the political unrest is obviously
impacting on industry in general but our exposure is limited and we have already
completed, well ahead of programme, the Ngezi Road project which involved the
construction of 80 kilometres of road plus three bridges.
In Spain, Alcaidesa Holding SA, the residential and leisure development company
in which the Group holds a 50% interest, has enjoyed another successful year.
Infrastructure within the first of the four substantial phases of developable
land was completed and this enabled the company to sell profitably a significant
number of land enclaves to other developers. In addition, Alcaidesa's own
developments sold well with the completion of 41 houses and 25 individual
building plots during the year. Further housing is under construction with a
healthy level of forward sales already agreed.
The company is now progressing detailed proposals for the second phase of the
scheme for which all required consents are expected later in the year. This
second phase will include three hotel development sites which will be sold on
over time and a substantial housing scheme part of which will be developed by
Alcaidesa.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
OPERATING REVIEW (cont'd)
PFI
We have been equity holders in Bridgend Custodial Services Limited, the operator
of Parc Prison Bridgend, for five years now. The project continues to perform
well.
Construction of the £76 million King's College Hospital project in London by
Costain-Skanska has proceeded well with the satisfactory completion of the first
phase anticipated ahead of programme in 2002. The design, build, funding and
operation are controlled by the Hospital Partnership Consortium (Costain,
Skanska, Sodexho and Noble).
In December, the Stratus Consortium (Costain, Skanska, Group 4 Falck) reached
Contract close with the Ministry of Defence for the design, construction,
relocation and operation of the Meteorological Office in Exeter under a PPP
arrangement. Costain-Skanska have commenced work on site on the £79 million
design and construction project.
Progress is being made through the bid process on an increasing number of
projects. We are confident that this will be a growth area for Costain.
Costain Oil Gas & Process (COGAP)
COGAP maintained its marketing focus on high technology gas projects throughout
2001, with turnover up some 30% on 2000. The order intake secured was
approximately £80 million in this sector. This included the world scale gas
processing terminal for Burlington Resources Ltd in Barrow in Furness. An
important turnkey project to be built in partnership with Costain regional
civils operation.
The Abu Dhabi operation was transferred to the management of COGAP in 2001 and
this is now focused on work with synergies to COGAP's core business and the
support of the ongoing maintenance and minor works for ADGAS on Das Island.
Turnover for this unit has progressively increased over the year.
Construction was completed on the second compressor station for NTS Transco
(Alrewas) and the first compressor was commissioned and handed over. The two
liquid polishing plants for NPC in Iran were completed to the Client's
satisfaction and shipped on schedule.
COGAP maintained a particularly high standard in safety throughout the year,
securing the prestigious President's Award from ROSPA for safety performance
generally across the division.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
OPERATING REVIEW (cont'd)
Accreditation for the ISO14001 Environment Standard was awarded by the British
Standards Institute in July 2001. This covers the whole of COGAP's operations,
including design and supply as well as construction.
Safety
Safety is of paramount importance to the entire Costain Group. It is vital that
health risks and accidents to employees, subcontractors, members of the public
and others who may come into contact with the Group's activities are avoided. In
addition, we must meet all applicable Government guidelines or regulations and
industry codes of practice on the environment and in so doing seek to reduce
environmental disturbance in all the Group's activities.
We try to achieve these objectives in two main ways. The first is to reinforce
the responsibility and competence of the management chain for all projects. The
second way is to provide advice and support to line managers through regional
and site safety advisers.
Regular reports on the performance of safety arrangements are submitted to and
considered by the Main Board. The Executive Board considers health, safety and
environmental performance at each monthly meeting. In addition, a Committee,
chaired by myself, is responsible for overseeing the preparation, updating and
dissemination of the Group's health, safety and environmental policies,
monitoring health, safety and environmental performance, ensuring that
appropriate training is undertaken by employees and the employees of
subcontractors and taking the appropriate initiatives to deliver steady
improvement in the health, safety and environmental performance of the Group.
The Group reviewed its formal arrangements for Directors' accountability
following the publication of the HSC code 'Health and Safety Responsibilities of
Directors'. I have, in my capacity as Chief Executive, formal health and safety
responsibility.
During the year, Costain Limited pleaded guilty under the Health and Safety at
Work etc Act for the accident at the M5, Avonmouth Bridge which resulted in four
fatalities in 1999. The Company was fined £250,000 with costs. Yarm Road,
formerly Kvaerner Cleveland Bridge, received the same penalty. I considered this
matter to be so serious I chose to attend the Court to express the Company's
regrets on the tragic loss of life that occurred. During 2001, the Company
continued to implement the improvements to the safety and environmental
management systems resulting from the review carried out.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
OPERATING REVIEW (cont'd)
Conclusion
I am delighted to report that the Costain Group is now meeting its objectives in
respect of financial performance and strategic direction. We are continuing to
pursue a policy of securing low risk major contracts in a clear and unambiguous
relationship with our clients; a relationship where the ultimate objective is to
work in harmony with one common goal. We have also made considerable progress
in developing our asset management operations to a point where we are now
achieving results in both turnover and profit ahead of our targets.
We have reason for optimism but not complacency. The staff have taken the
challenge on board and our clients can clearly see the direction the Company is
taking. The next few years will be stimulating as challenges are overcome and
goals are achieved. We are not going to allow external factors to deter us from
success. We are in control of our future and my colleagues and I are relishing
the responsibility and eager to succeed.
STUART DOUGHTY
Chief Executive
26 March 2002
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
FINANCIAL REVIEW
Results
Profit before tax has improved to £8.7 million (2000: £6.5m) on a turnover,
including joint arrangements (construction joint ventures), up 20% to £463
million (2000: £386m).
Net interest receivable amounted to £2.0 million (2000: £1.9m) and other finance
income amounted to £4.5 million (2000: £4.2m).
The tax charge on profits of £0.5 million (2000: £1.4m) is a rate of only 6%
(2000: 22%). This is attributable to the utilisation of losses overseas and
the recognition of deferred tax benefits in the UK.
Earnings per share were 2.5p (2000: 1.5p).
Cash Flow and Borrowings
The Group achieved a strong net cash inflow during the year of £25.1 million
(2000: £12.4m inflow) that brought the net cash position to £67.8 million
(2000: £42.7m). This net position includes £1.3 million of overdrafts.
The strong cash flow reflected the increase in turnover in the year.
The move to a higher proportion of asset management contracts and cost
reimbursable type contracts is expected to reduce the level of advance cash.
Order Intake
Order Intake improved during the year. The work in hand position was £570
million at the year-end slightly down on the position last year. However, awards
since the year-end have increased this position substantially and in line with
the Group strategy, an increasing proportion of the work in hand is asset
management work.
Shareholders' Funds
The Group's shareholders' funds have fallen to £4.1 million (2000: £25.4m). This
is caused by a reduction in the surplus in the pension scheme, which, under FRS
17, is included on the balance sheet. The assets of the pension scheme have
fallen by 8% in the year to December 2001 following a year of negative returns
in the equity markets.
The Group adopted FRS 17 in full last year because it gave a fairer view of the
pension position. It was recognised that this meant that there could be greater
volatility because under the standard a valuation is made at the balance sheet
date and is therefore subject to market fluctuations.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
FINANCIAL REVIEW (cont'd)
Treasury
The Group holds financial instruments for two main purposes: to finance its
operations and to manage the interest rate and currency risks arising from its
operations and its sources of finance. Various financial instruments - for
example, trade debtors, trade creditors, accruals and prepayments - arise
directly from the Group's operations.
The Group finances its operations through a mixture of working capital and bank
borrowings. With the Group's low level of borrowings, the main exposure to
interest rates fluctuations arises from the surplus cash, which when available
is generally deposited with one of the Group's relationship banks.
The Group has borrowing facilities with its relationship banks to a maturity
date of 31 December 2003. In addition, to its borrowing facilities the Group
also enjoys contract bonding facilities with its relationship banks and St Paul
Surety Europe Limited, both of which facilities subsist until the 31 December
2003.
The Group has transactional currency exposure arising from commercial activities
overseas by subsidiaries in currencies other than the subsidiaries' operating
currencies. In such circumstances the Group requires its subsidiaries to use
forward currency contracts to minimise the currency exposure unless a natural
hedge exists elsewhere within the Group.
Going Concern
The Directors believe, after due and careful enquiry, that the Group has
sufficient working capital for its present requirements and, therefore, consider
it appropriate to adopt the going concern basis in preparing the 2001 accounts.
26 March 2002
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Year ended 31 December 2001 2000
Notes Continuing Continuing
£m £m
Turnover 1
Group undertakings and Group share of joint ventures 462.9 386.3
Less: Group share of joint ventures turnover (5.8) (5.1)
Group turnover 457.1 381.2
Cost of sales (440.7) (368.2)
Gross profit 16.4 13.0
Administration expenses (16.1) (15.8)
Operating profit/(loss) from Group undertakings 0.3 (2.8)
Share of joint ventures operating results 1.9 1.3
Operating profit/(loss) - Group and share of joint ventures 2.2 (1.5)
Profit on sale of fixed assets - 1.9
Profit on ordinary activities before interest 2.2 0.4
Net interest receivable/(payable) and similar income/
(charges)
Group undertakings 2.5 2.2
Joint ventures (0.5) (0.3)
Other finance income - Group undertakings 4.5 4.2
Profit on ordinary activities before taxation 1 8.7 6.5
Taxation (0.5) (1.4)
Profit on ordinary activities after taxation 8.2 5.1
Equity minority interests 0.1 -
Profit for the financial year 8.3 5.1
Earnings per share - basic and diluted 2 2.5p 1.5p
During the year and the previous year, no businesses were acquired and therefore
all continuing results arise from existing operations.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2001 2000
Notes £m £m £m £m
Net cash inflow from operating activities 4 19.4 9.0
Returns on investments and servicing of finance
Interest received 2.8 3.1
Interest paid (0.3) (0.9)
Net cash inflow from returns on investments and servicing
of finance 2.5 2.2
Taxation
Overseas tax paid (0.2) (0.6)
Capital expenditure and financial investment
Purchases of tangible fixed assets (0.8) (0.4)
Sales of tangible fixed assets 1.0 3.5
Funding of investments - (1.4)
Loans to joint ventures (0.4) (0.7)
Repayment of loans to joint ventures 3.1 -
Net cash inflow from capital expenditure and financial
investment 2.9 1.0
Net cash inflow before financing 24.6 11.6
Financing
Loan repayments (2.9) (3.1)
Net cash outflow from financing (2.9) (3.1)
Increase in cash in the year 21.7 8.5
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH
2001 2000
£m £m
Increase in cash in the year 21.7 8.5
Cash outflow from reduction in loan financing 2.9 3.1
24.6 11.6
Currency realignment 0.5 0.8
Movement in net cash 25.1 12.4
Net cash at 1 January 42.7 30.3
Net cash at 31 December 67.8 42.7
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
CONSOLIDATED BALANCE SHEET
As at 31 December 2001 2000
Notes £m £m
Fixed assets
Tangible assets 2.8 4.2
Investments 1.1 1.1
Investments in joint ventures
Share of gross assets 48.6 45.4
Share of gross liabilities (40.9) (39.0)
11.6 11.7
Current assets
Stocks 1.1 1.6
Debtors 95.6 96.2
Cash at bank, monies on deposit and in hand 69.1 51.7
165.8 149.5
Creditors: amounts falling due within one year
Bank loans and overdrafts (1.3) (9.0)
Other creditors (166.3) (143.0)
(167.6) (152.0)
Net current assets/(liabilities)
Due within one year (7.3) (7.1)
Due after one year 5.5 4.6
(1.8) (2.5)
Total assets less current liabilities 9.8 9.2
Creditors: amounts falling due after more than one year
Other creditors (0.5) (0.5)
Provisions for liabilities and charges (14.5) (17.5)
Net liabilities excluding pension asset (5.2) (8.8)
Pension asset 9.5 34.6
Net assets including pension asset 4.3 25.8
Share capital and reserves
Called up ordinary share capital 33.7 33.7
Share premium account 119.3 119.3
Profit and loss account (148.9) (127.6)
Equity shareholders' funds 3 4.1 25.4
Equity minority interests 0.2 0.4
4.3 25.8
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
NOTES TO THE ACCOUNTS
1 Business and geographical segment information
Business segment information
In the opinion of the directors, the administering of the engineering and
construction projects is the only material class of business.
Geographical segment information by origin Turnover Profit/(loss) Net assets/
(liabilities)
2001 2000 2001 2000 2001 2000
£m £m £m £m £m £m
Continuing operations
Group undertakings
United Kingdom 415.6 327.1 (2.2) (5.1) (68.8) (31.2)
Rest of the world 41.5 54.1 2.5 2.3 (2.4) 7.9
Turnover, operating profit/(loss) and net
liabilities of Group undertakings 457.1 381.2 0.3 (2.8) (71.2) (23.3)
Joint ventures
United Kingdom - - - - 1.6 2.3
Rest of the world 5.8 5.1 1.9 1.3 6.1 4.1
462.9 386.3 2.2 (1.5) (63.5) (16.9)
Profit on sale of fixed assets
United Kingdom - -
Rest of the world - 1.9
Net interest receivable/(payable)
and similar income/(charges) 2.0 1.9
Other finance income 4.5 4.2
Net cash 67.8 42.7
Profit on ordinary activities before
taxation and net assets 8.7 6.5 4.3 25.8
Turnover by destination is not materially different to turnover by origin.
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
2 Earnings per share
The calculation of earnings per share is based on earnings of £8.3m (2000:
£5.1m) and 337,136,350 ordinary shares being the weighted average number of
ordinary shares in issue during the year. Diluted earnings per share are the
same as basic earnings per share.
3 Reconciliations of movements in shareholders' funds
2001 2000
£m £m
Profit for the financial year 8.3 5.1
Other recognised losses in the year (29.6) (8.4)
Net reduction in shareholders' funds (21.3) (3.3)
Opening shareholders' funds 25.4 28.7
Closing shareholders' funds 4.1 25.4
4 Notes to the cash flow statement
Reconciliation of operating profit/(loss) to net cash inflow from operating
activities
2001 2000
£m £m
Operating profit/(loss) 2.2 (1.5)
Depreciation 0.8 0.9
Amounts written back to investments (2.9) (0.7)
Joint ventures (1.9) (1.3)
Decrease/(increase) in stocks 0.8 (0.1)
Decrease in debtors 3.0 10.7
Increase/(decrease) in creditors 20.4 (3.6)
(Decrease)/increase in provisions (3.0) 4.6
Net cash inflow from operating activities 19.4 9.0
COSTAIN GROUP PLC
Preliminary Results for the year ended 31 December 2001
The accounts and notes set out above do not constitute the Company's statutory
accounts for the years ended 31 December 2001 or 2000 but are derived from those
accounts. Statutory accounts for 2000 have been delivered to the Registrar of
Companies and those for 2001 will be delivered in due course.
The auditors have reported on these accounts; their reports were unqualified and
did not contain a statement under section 237 (2) or (3) of the Companies Act
1985.
This information is provided by RNS
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