Slide 1: 2010 Half-Year Results
2010 Half-Year Results 11 August 2010
Slide 2: Duncan Magrath, Finance Director
Duncan Magrath Finance Director
Slide 3: Headline numbers
Headline numbers Actual Constant HY 2010 HY 2009 growth currency Revenue £5,199m £5,072m +3% +3% Profit from operations* £151m £113m# +34% +35% Pre-tax profit* £141m £107m# +32% Adjusted eps* 15.5p 14.9p# ^ +4% Interim dividend 5.05p 4.79p ^ +5% Cash (used in)/from operations (£21m) £78m Net cash (e
Slide 4: Professional services
Professional services FY 2009 HY 2010 HY 2009 £1.4bn Order book £1.6bn £0.3bn £558m Revenue £829m £157m £13m Profit £49m £6m 2.3% Margin % 5.9% 3.8% Included above are results of Parsons Brinckerhoff acquired October 2009 (HY 2010: Order book £1.3bn; Revenue £710m; Profit £35m) (FY 2009: Order book
Slide 5: Professional services – 2010 by geography
Professional services – 2010 by geography UK UK 17% 16% RoW RoW 29% £0.3bn 29% £135m (down 13%) (down 10%) £0.5bn £237m (up 3%) (up 11%) £0.8bn £457m (up 14%) (no change) US US 54% 55% Order book Revenue £1.6bn up 7% £829m up 1% (June 2009 pro forma: £1.5bn) (June 2009 pro forma: £822m) The creation
Slide 6: Construction services
Construction services Actual Constant FY 2009 HY 2010 HY 2009 growth currency £8.2bn Order book £8.5bn £8.3bn +2% -2% £7,491m Revenue £3,282m £3,785m -13% -13% £207m Profit £83m £71m +17% +19% 2.8% Margin % 2.5% 1.9% US – strong profit performance despite reduced revenue UK – reduced revenue from he
Slide 7: Cost base and efficiency
Cost base and efficiency Step change in efficiency focused on UK businesses Employee consultation underway to create a UK support centre: – to cover transactional accounting and payroll processes – likely to be based in Newcastle – to be part of support services Proposed benefits: – one-off implemen
Slide 8: Construction services – 2010 by geography
Construction services – 2010 by geography RoW RoW 26% 16% UK UK 41% £521m 53% (down 7%) £2.2bn (up 36%) £3.5bn £1,727m (down 12%) (down 9%) £1,034m (down 22%) £2.8bn (up 3%) US US 33% 31% Order book Revenue £8.5bn up 2% £3,282m down 13% (June 2009: £8.3bn) (June 2009: £3,785m) The creation and care
Slide 9: Support services
Support services Actual Constant FY 2009 HY 2010 HY 2009 growth currency £4.5bn Order book £4.5bn £3.9bn +15% +17% £1,443m Revenue £735m £726m +1% +1% £55m Profit £21m £28m -25% -25% 3.8% Margin % 2.9% 3.9% Contract wins for North East Lincolnshire and Southampton roads (July 2010) Extensions to con
Slide 10: Support services – 2010 by market
Support services – 2010 by market Highways mgt & rail Highways mgt & rail BSO + FM renewals BSO + FM renewals 26% 39% 28% 37% £1.2bn £208m (up 16%) £1.7bn £270m (up 6%) (up 1%) (up 15%) £0.9bn (down 10%) £191m £66m Power £0.7bn Power (down 9%) (down 20% (up 688%) 26% 24%) Water Water 15% 9% Order bo
Slide 11: PPP portfolio valuation – June 2010
PPP portfolio valuation – June 2010 UK/Singapore US £2m -£7m £6m £645m -£15m £610m -£1m £611m £13m £624m £1m £34m -£17m £17m -£24m £3m £172m £171m £158m £171m £473m £453m £453m £439m Dec Equity Distributions Unwind Rebased New Disposals Operational June FX June 2009 invested of discount project perf
Slide 12: Infrastructure investments
Infrastructure investments HY 2010 HY 2009 JVs & JVs & FY 09 £m Group assoc Total Group assoc Total 30# PPP UK/Singapore 1 15 16 1 15# 16# 24 PPP US 9 3 12 11 2 13 16 Infrastructure (2) 7 5 (2) 11 9 (30) Bidding costs & overheads (19) - (19) (13) - (13) 40# Investments operating profit* (11) 25 14 (
Slide 13: Infrastructure investments
Infrastructure investments Achieved financial close on – Florida Atlantic University student accommodation – Blackburn with Darwen and Bolton BSF – Coventry Street Lighting (August 2010) Appointed preferred bidder on – North West Fire & Rescue – Thanet offshore high-voltage transmission (“OFTO”) (Au
Slide 14: Investment income and finance costs
Investment income and finance costs FY 09 £m HY 2010 HY 2009 9 PPP subordinated debt interest receivable 9 6 14 PPP interest on financial assets 9 6 1 Income on net investment hedges - 1 8 Other interest receivable 4 4 32 Investment income 22 17 (13) PPP interest on bank loans and overdrafts (9) (6)
Slide 15: Performance by sector
Performance by sector FY 09 £m HY 2010 HY 2009 13 Professional services 49 6 207 Construction services 83 71 55 Support services 21 28 40 Infrastructure investments 14 25 (35) Corporate costs (16) (17) 280 Profit from operations* 151 113 32 Investment income 22 17 (47) Finance costs* (32) (23) 265 P
Slide 16: Exceptional items and intangible asset amortisation
Exceptional items and intangible asset amortisation HY 2010 Profit £m before tax Tax Net Exceptional items: Profit on disposal of PPP investments 20 - 20 Asset impairment in Barking Power (27) - (27) Post acquisition integration, reorganisation (11) 3 (8) & other costs (18) 3 (15) Amortisation of in
Slide 17: Cash from operations
Cash from operations £m H1 2010 H2 2009 H1 2009 Group operating profit* 110 126 73 Depreciation 37 33 36 Exceptional cash items (11) (30) (3) Other items (7) 2 2 Pension deficit payments (16) (22) (13) Working capital (increase)/decrease (134) 107 (17) Cash (used in)/from operations (21) 216 78 Net
Slide 18: Pensions – balance sheet movement
Pensions – balance sheet movement £76m £4m £629m £586m £26m £36m £178m £166m £27m £420m £451m Dec Service Company Actuarial Actuarial Other June 2009 cost contributions gain loss movements 2010 assets liabilities Dec 2009 June 2010 Pension deficits, net of tax Discount rate 5.65% 5.30% Deferred tax
Slide 19: Balance sheet cash movement
Balance sheet cash movement £m HY 2010 HY 2009 Opening net cash† 572 440 Cash (used in)/from operations† (39) 71 Dividends from JVs and associates 26 27 Capital expenditure and financial investment (61) (47) Acquisitions/disposals (net of net cash acquired) 19 (26) Dividends, interest and tax paid (
Slide 20: Net cash balances
† Net cash balances £600m £500m £400m £436m £300m £342m £312m £200m £249m £256m £223m £224m £100m £0m Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 £ $ € Other 6-mthly average † excluding net debt of PPP subsidiaries The creation and care of essential assets 19
Slide 21: Summary of first half 2010
Summary of first half 2010 Overall performance – Profit from operations up 34% – Pre-tax profit up 32% Dividend up 5% Average cash £436m £14.6bn order book, up 4% from Dec 2009 The creation and care of essential assets 20
Slide 22: Ian Tyler, Chief Executive
Balfour Beatty ; lan Tyler Chief Executive
Slide 23: Agenda
Agenda Infrastructure markets and Balfour Beatty business model Update on Parsons Brinckerhoff and opportunities across the Group Longer-term direction of the Group The creation and care of essential assets 22
Slide 24: Infrastructure – an attractive, long-term market
Infrastructure – an attractive, long-term market Growth in infrastructure expenditure forecast to exceed GDP growth over next 15 – 20 years Infrastructure deficit in many developed economies Exciting opportunities in developing economies The creation and care of essential assets 23
Slide 25: Balfour Beatty business model
Balfour Beatty business model The creation and care of essential assets 24
Slide 26: Parsons Brinckerhoff – a game-changing move
Parsons Brinckerhoff – a game-changing move Acquisition rounded out capabilities across the infrastructure lifecycle 14,000 employees, 80 countries Strong cultural and strategic alignment with Balfour Beatty Performance ahead of plan and growing order book Key role as integrator across the infrastru
Slide 27: Opportunities in international infrastructure
Opportunities in international infrastructure Denver Rail Preferred bidder on Eagle commuter rail project, Denver: – engineering, procurement and construction – rolling stock procurement – systems integration – operations and maintenance Good prospects for similar schemes across the US The creation
Slide 28: Opportunities in international infrastructure
Opportunities in international infrastructure Heathrow Airport £460 million contract at Heathrow Terminal 2 – T2B Enhanced range of capabilities through PB’s US resource and expertise The creation and care of essential assets 27
Slide 29: Opportunities in international infrastructure
Opportunities in international infrastructure India roads PB has operated in India for a number of years (Metros in Delhi and Mumbai; Delhi airport) Balfour Beatty joint venture with GVK to bid for road projects on a build/ operate/transfer basis PB provides design and programme management capabilit
Slide 30: Opportunities in international infrastructure
Opportunities in international infrastructure UK power Well-positioned to support nuclear new-build programme Substantial opportunities in offshore generation and renewable energy Appointed preferred bidder to acquire and operate Thanet offshore transmission system (OFTO) The creation and care of es
Slide 31: Where we are today
Where we are today Capabilities across the infrastructure lifecycle and access to wide range of markets and geographies Continued growth in earnings Order book increased to £14.6 billion in H1 2010 H2 order book to include Denver, Heathrow T2B Strong balance sheet Resilient business model The creati
Slide 32: Growth opportunities
Growth opportunities Significant UK opportunities Plus, opportunities in: – US – South-East Asia – emerging economies through PB Efficiency programme Confident in ability to deliver growth over the medium-term, reflected in dividend policy The creation and care of essential assets 31
Slide 33: Future direction of the Group
Future direction of the Group Significant growth in professional services Relative exposure to UK construction to fall Further growth in US construction Strong growth in support services Continued value creation from infrastructure investments The creation and care of essential assets 32
Slide 34: Summary
Summary Creation of powerful position to deliver across the infrastructure lifecycle Strong, market-leading and mutually reinforcing businesses Uniquely strong collective capability Diversification, through markets and geographies, provides resilience and access to more opportunities Balance sheet s
Slide 35: Appendix
Appendix Balfour Beatty
Slide 36: Pensions charge
Pensions charge FY 2009 £m HY 2010 HY 2009 Defined benefit schemes: 32 P&L charge – service cost 26 16 (116) Expected return on assets (64) (57) 131 Interest cost on scheme liabilities 75 65 15 Net finance charge 11 8 47 Net pension charge* 37 24 Defined contribution schemes: P&L charge & employer f
Slide 37: Group balance sheet
Group balance sheet £m June 10 Dec 09* June 09 Goodwill and intangible assets 1,462 1,441 1,118 Other non-current assets (excluding PPP & RBO tax) 934 973 897 Current assets (excluding cash) 2,224 1,958 1,775 Current liabilities (excluding borrowings) (3,157) (3,028) (2,794) Net cash (excluding PPP
Slide 38: Acquisitions and disposals
Acquisitions and disposals £m Acquisitions: Multibuild Interiors 29 January 2 Deferred consideration 3 5 Disposals: Aberdeen and Edinburgh PPP investments 23 April (24) (19) The creation and care of essential assets 37
Slide 39: Order book
Order book £16bn June Dec £14bn £12bn £10bn £8bn £6bn £4bn £2bn £0bn 2005 2006 2007 2008 2009 2010 The creation and care of essential assets 38
Slide 40: Order book – June 2010
Order book – June 2010 £4.7bn £4.3bn £0.6bn £1.0bn £3.3bn £2.3bn £2.1bn £3.3bn £3.2bn £0.8bn £1.2bn £0.8bn £0.4bn £0.5bn £0.3bn £0.4bn 2010 2011 2012 2013+ Professional services Construction services Support services The creation and care of essential assets 39