Balfour Beatty Plc · LSE:BBY
Balfour Beatty — H1 2004 Earnings Presentation
28 slides from Balfour Beatty's earnings presentation, Aug 11, 2004
Slide 1: 2004 Interim Results
Balfour Bea~y 2004 Interim Results 11 August 2004 Balfour Bea~y 2004 Interim Results
Slide 2: Anthony Rabin
Anthony Rabin Balfour Beatty
Slide 3: Headline numbers
Headline numbers First half First half 2003 2004 Turnover £1,751m £1,992m +14% Operating profit* £66m £82m +24% Pre-tax profit* £51m £68m +33% Earnings per share* 8.0p 10.7p +34% Dividends per share 2.6p 2.85p +10% Net cash (excluding 100% PFI) £104m £121m Order book £6.4bn £6.5bn * Before exception
Slide 4: Performance by sector
Performance by sector Full year First half First half 2003 £m 2003 2004 Building, Building Management 28 13 13 and Services 17 Andover Controls (discontinued) 6 7 Balfour Bea~y 2004 Interim Results
Slide 5: Building, Building Management and Services
Building, Building Management and Services Full year First half First half 2003 £m 2003 2004 17 Construction 8 11 11 Services 5 2 28 13 13 17 Andover Controls (discontinued) 6 7 • Mansell performs as anticipated • Strong order book for major building construction • Heery first-half costs Balfour Bea
Slide 6: Performance by sector
Performance by sector Full year First half First half 2003 £m 2003 2004 Building, Building Management 28 13 13 and Services Civil and Specialist Engineering 21 7 8 +14% and Services Balfour Bea~y 2004 Interim Results
Slide 7: Civil and Specialist Engineering and Services
Civil and Specialist Engineering and Services Full year First half First half 2003 £m 2003 2004 13 Civil and specialist engineering 4 - 8 Services 3 8 21 7 8 • Further costs taken in the US pending claim recoveries • Strong performance in UK road maintenance • Utilities recovery continues Balfour Be
Slide 8: Performance by sector
Performance by sector Full year First half First half 2003 £m 2003 2004 Building, Building Management 28 13 13 and Services Civil and Specialist Engineering 21 7 8 +14% and Services 41 Rail Engineering and Services 16 23 +44% Balfour Bea~y 2004 Interim Results
Slide 9: Rail Engineering and Services
Rail Engineering and Services Full year First half First half 2003 £m 2003 2004 26 Projects and specialist businesses 9 8 15 UK infrastructure services 7 15 41 16 23 • Sound performance in rail engineering and projects • German market uncertain • Maintenance settlement increases profits in UK infras
Slide 10: Performance by sector
Performance by sector Full year First half First half 2003 £m 2003 2004 Building, Building Management 28 13 13 and Services Civil and Specialist Engineering 21 7 8 +14% and Services 41 Rail Engineering and Services 16 23 +44% 54 Investments and Developments 24 31 +29% Operating profit – continuing 1
Slide 11: Investments and Developments
Investments and Developments Full year First half First half 2003 £m 2003 2004 48 PFI/PPP 20 24 6 Barking Power 4 7 54 Profit before interest 24 31 26 Profit after interest 11 17 • Operational concession performance continues to be satisfactory • Full half-year contribution from Metronet concessions
Slide 12: Operating profit v operating cash flow
Operating profit v operating cash flow First half First half First half 2004 exc PFI £m 2003 2004 subsidiaries Group operating profit 23 41 33 Add back: goodwill amortisation 8 8 8 Group operating profit* 31 49 41 Depreciation 19 23 19 Exceptional items – cash (4) (1) (1) expenditure Other items (1)
Slide 13: Balance sheet cash movement
Balance sheet cash movement First half First half First half 2004 exc PFI £m 2003 2004 subsidiaries* Opening net cash 67 124 127 Net cash inflow from operations 116 117 66 Dividends from J/Vs and associates 3 2 8 Capital expenditure and financial (29) (55) (20) investment Acquisitions and disposals
Slide 14: Group balance sheet
Group balance sheet First half First half £m 2003 2004 Goodwill* 276 313 Net cash 104 121 PPP subsidiaries - 21 Tangible assets + working capital - 259 Non-recourse net debt - (238) Other assets (185) (218) Shareholders’ funds 195 237 * Includes share of joint ventures and associates Balfour Bea~y 2
Slide 15: Summary
Summary Continuing growth in profits and earnings Strong cash flow Strong cash position to support future growth Balfour Bea~y 2004 Interim Results
Slide 16: Mike Welton
Mike Welton Balfour Bea~y
Slide 17: Our businesses
Our businesses Established positions of leadership in local / regional markets Technology-based businesses which are internationally transportable Balfour Bea~y 2004 Interim Results
Slide 18: Strategic priorities
Strategic priorities Continue to strengthen our existing business Grow where we are already established Develop US presence Consolidate our position in Asia-Pacific Extend PPP portfolio Extend rail footprint Balfour Bea~y 2004 Interim Results
Slide 19: Integration of Mansell
Integration of Mansell New MD appointed Strong focus and clear strategy in growing markets • Repair and maintenance • Education • Social housing Large proportion of work in frameworks / partnerships Balfour Bea~y 2004 Interim Results
Slide 20: Developments in UK Rail
Developments in UK Rail Maintenance successfully handed over “The management and staff of Balfour Beatty have been very professional and without their help this major organisational change could not have happened as quickly or as smoothly as it has.” Network Rail Route Director for Anglia Settlement
Slide 21: Sale of Andover Controls
Sale of Andover Controls Change in market structure – future profits at risk Significant supply side consolidation – a seller’s market Exceptional second-half profit of c£120m £226m cash available for investment Balfour Bea~y 2004 Interim Results
Slide 22: Balfour Beatty in the US
Balfour Beatty in the US New management team in place Heavy marine engineering business closed Full integration of rail businesses Profitable transport contracting businesses in California, Texas and Pennsylvania/Ohio Heery a leader in its field Balfour Bea~y 2004 Interim Results
Slide 23: US priorities
US priorities Address loss-making businesses Establish strong organisation Sell Andover Carefully grow the business Balfour Bea~y 2004 Interim Results
Slide 24: Acquisition of 50% of Gammon
Acquisition of 50% of Gammon Market leader in Hong Kong Strong presence in long-term growth market Established businesses in China and Singapore Conduit for transportable businesses Balfour Bea~y 2004 Interim Results
Slide 25: Adding to the PPP portfolio
Adding to the PPP portfolio New preferred bidder status • £520m Birmingham Hospital • £140m Lanarkshire Schools Committed equity will exceed £200m Currently bidding for 7 schemes Balfour Bea~y 2004 Interim Results
Slide 26: Comprehensive Spending Review
Comprehensive Spending Review NHS spending up 7% to £92bn Education spending up 5% to £77bn Transport budget increased to £10.8bn by 2008 50% increase in social housing Balfour Bea~y 2004 Interim Results
Slide 27: The future
The future Increasing PPP bidding opportunities Increasing profit / cash contribution from Investments Core market growth • M25 and M1 widening • Utilities post regulatory review • Increasing outsourcing • Social housing Balfour Bea~y 2004 Interim Results
Slide 28: Summary
Summary Progress in line with expectations Careful evaluation of opportunities Continuation of reliable, responsible growth Balfour Bea~y 2004 Interim Results