Our asset-light and flexible operating model and access to a wide range of end-markets and customers means we are well-placed to tackle the challenging market conditions which continue in many areas of our operations. This resilience means our financial guidance for 2016 remains unchanged.
January-March unaudited commentary:
In the first quarter, Revenue was £1,300m (2015: £1,320m), down 1.5% against last year’s result, and 3.1% lower on a like for like basis (adjusting for currency).
The order book stood at £6.4bn at the end of March, compared to £6.6bn at the year end. This represents a decline of 3% since December. None of the US$500m of projects on which GPG has been selected as the supplier and which we are waiting for the go-ahead from customers have been sanctioned so far this year (and so remain out of the order book).
Net Debt at the end of March was £1.16bn. This includes the £49m payment to settle the Longview arbitration which was made in March and the £57m payment of the 2015 interim dividend made in January, as well as the normal seasonal outflow of working capital in the first half.
The sale process of GPG is continuing with a number of interested parties. We continue to expect to complete a disposal in the second half.
Other businesses/assets that have been identified as non-core are also being prepared for sale. We continue to expect these disposals to provide the major contribution to the plan to halve net debt by mid-2017.
On 2 March 2016 we announced we had completed the refinancing of our main debt facilities by entering into a new facility with a syndicate of 20 banks. No capital repayments are required to be made until 2019 under the terms of the facility.
The facility is denominated in GBP. However, we have drawn down monies in a range of currencies (including using swaps) to provide a natural hedge with our key operating currencies (GBP, EUR, USD and CAD).
We have current credit ratings from Moody’s (Ba1, negative outlook) and Standard & Poors (BB+, negative outlook).
Today we have also announced the appointment of Dr Jonathan Lewis as Chief Executive, effective 1 June 2016.
Our financial guidance for 2016 remains the same as we gave at the full-year results in March.
For the full-year 2016, we expect to see only slight like-for-like revenue decline, with a reduction in trading margins significantly less than the decline in 2015.
As in recent years, we anticipate a working capital outflow in the first half reversing in the second half. Net debt is expected to be circa £1 billion at the year end, before any proceeds from disposals.
The board believes selected disposals can make the major contribution to its objective of halving the Group’s net debt before June 2017.
Contracts announced year to date include:
6-year MSA for nuclear engineering and project management
7-year prime contractor for environmental services
7-year prime contractor for military housing programme
Design engineering for ammonia plant
EPC for new refrigeration plant in the Forties pipeline
EPCm of new vacuum distillation unit at Lysekil refinery
10-year framework agreement on Magnox Swarf silo storage clean-up
Trial of proprietary SIAL technology for Fukushima clean-up
Aegis Ashore Missile Defense System construction support
FEED for Heydar Aliyev Oil Refinery modernisation
Pakistan Refinery Ltd
Feasibility study for upgrade at Karachi refinery
FEED for three new refineries
3-year brownfield services contract for Bayu-Undan
Commissioning for new manufacturing facility, Rabigh
Design and supply of two Heat Recovery Steam Generators
Supply biomass dust combustion plant
Design and supply of power island