Slide 1: 2020 half year results presentation
2020 half year results presentation 12 August 2020
Slide 2: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive
Slide 3: COVID-19: Balfour Beatty's four aims
COVID-19 Balfour Beatty’s four aims £ 1 Keep people 2 Maintain 3 Keep cash flowing 4 Supporting employees safe critical national through the – whether on-site, infrastructure – open supply chain working remotely or and operational furloughed [ Supporting all stakeholders: driving profitable managed
Slide 4: Build to Last highlights
Build to Last highlights Maintained expert capability Record order book at £17.5bn Build to Last disciplines delivered for > 20% increase following HS2 approval; customers, supply chain partners now at over two years of revenue; and employees Group continues to bid selectively Strong balance sheet P
Slide 5: Build to Last leading indicators
Build to Last leading indicators 200 Cash in Lean 2020 Expert 80 0 c. £350m improvement 70 76 Cumulative annual (200) Employee cash flow^ engagement index 60 (£m) (400) (%) 60 2014* 50 (600) Cash out 40 (800) 2015 2016 2017 2018 2019 HY20 Dec Mar Jun Sept Dec ^ includes other disposals * adjusting f
Slide 6: Build to Last delivering
Build to Last delivering Average net cash/(debt) Earnings-based businesses profit/(loss) from operations* £m £m Due to impact of COVID-19 (16) 45 507 (180) 40 (1) HY 2015 HY 2017 HY 2020 HY 2015 HY 2017 HY 2020 Other net operating expenses* UK voluntary attrition: moving annual average £m % 215 158
Slide 7: Phil Harrison, Chief Financial Officer
Phil Harrison Chief Financial Officer
Slide 8: Headline numbers
Headline numbers £m (unless otherwise stated) HY 2020 HY 2019 Revenue* 4,115 3,881 (Loss) / profit from operations* (14) 72 Pre-tax (loss) / profit* (24) 64 (Loss) / profit for the period* (18) 54 Basic (loss) / earnings per share* (2.5)p 7.6p Dividends per share − 2.1p HY 2020 FY 2019 Order book* £
Slide 9: Financial impacts of COVID-19
Financial impacts of COVID-19 Site Lower Additional Contract closures productivity operating costs reassessments 78% of sites Availability of Implementation of Reforecast of open in April; employees, social distancing and contract revenues 83% in May; subcontractors enhanced safety and costs for 95%
Slide 10: Construction Services
Construction Services HY 2020* HY 2019* £m Revenue PFO Revenue PFO ● Resilient revenue performance, particularly in US UK 986 (23) 1,014 17 Construction following 2019 order book increase US 1,911 6 1,727 19 ● Material impact on profit as a result of disruptions Gammon 468 6 380 9 caused by COVID-19
Slide 11: Support Services
Support Services £m HY 2020 HY 2019 Revenue ● Many employees designated as key workers Utilities 258 276 ● Accelerated some road and rail projects, Transportation 218 227 more than offset by COVID-19 disruption Total 476 503 ● Focus on power, road and rail maintenance ● Exiting UK gas and water mark
Slide 12: Infrastructure Investments
Infrastructure Investments £m HY 2020 HY 2019 Pre-disposals operating profit* 3 9 ● Reduction in pre-disposals operating profit following Profit on disposals* − 16 prior year disposals and higher legal costs Investments profit* 3 25 ● Given market uncertainty, no disposals in first half Subordinated
Slide 13: Directors' valuation of Investments portfolio
Directors’ valuation of Investments portfolio £21m £41m £34m 163p/share 155p/share £(39)m £nil £1,068m £1,125m FY 2019 Equity Distributions Sales Unwind of Other including HY 2020 invested received proceeds discount FX* * other includes movements in £(6)m operational performance and £40m foreign exc
Slide 14: Investments portfolio and infrastructure asset market
Investments portfolio and infrastructure asset market Investments portfolio cash flows (2020-2040) Infrastructure assets under management (2009-2023) Cash flows Directors’ valuation $1,200bn £200m £1,600m $1,000bn £1,400m 15% CAGR (2019-23) £150m £1,200m $800bn £100m £1,000m $600bn £800m 16% CAGR (2
Slide 15: Order book
Order book HY 2020 FY 2019 £bn £bn ● Group order book increased >20%, Support Services UK Construction Support Services UK Construction following Notice to 3.0 6.1 3.2 3.0 Proceed on HS2 ● Order book now stands at over two years of revenue 2.1 Gammon 17.5 1.6 Gammon 14.3 ● UK Construction order book
Slide 16: Cash flow waterfall
Cash flow waterfall £74m £13m £17m £22m £(8)m £(29)m £(17)m £nil £(21)m £512m £563m FY 2019 Operating Working Pension Lease Dividends Capital Ordinary Net equity Other HY 2020 cash flows capital deficit payments from expenditure dividends invested cash flows payments* JVAs paid * includes £2m of reg
Slide 17: Financial guidance
Financial guidance 2020 PFO from earnings-based businesses > Steady recovery through the second half of the year Infrastructure Investments > No material disposals in the second half of the year Average net cash > £430 to £460 million for the full year Dividend > Re-instate as soon as is appropriate
Slide 18: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive
Slide 19: Leading the conversation
Leading the conversation Diversity & inclusion Sustainability Capitalising on change [ The right response from the industry ] 18
Slide 20: Diversified Group
Diversified Group £17.5bn order book £1.1bn* Investments portfolio UK Construction order book more than doubled in first half of 2020 * Directors’ valuation [ Resilient portfolio with geographical and operational diversification ] 19
Slide 21: Pivoting towards large Government backed infrastructure
Pivoting towards large Government backed infrastructure Group order book at HY 2020 UK Construction UK Support Services US Construction Gammon £6.1bn £3.0bn £6.3bn £2.1bn Private sector Private sector Private sector Private sector Public & Regulated Public & Regulated Public & Regulate
Slide 22: Transition of contractual risk
Transition of contractual risk UK Construction order book 9% 4% 22% Contract type Relative risk Fixed price R £2.7bn £6.1bn I 50% 46% Target cost S HY 2018 HY 2020 K Cost reimbursable 69% [ Over 75% of UK Construction order book now target cost or cost reimbursable contract ] 21
Slide 23: UK infrastructure pipeline
UK infrastructure pipeline Key: A19 A57 Kent Highways A14 (RDP) (RDP) M3 LC Construction (SMA) Maintenance Regional Smart Lower Services M25 Development Thames executing Motorways M25 CPS Partnership Surrey Crossing M4 A2 Alliance J10-16 A66 N LC (RDP) J3-12 (RDP) (SMA) (SMA) Pennine Maintenance Sup
Slide 24: US and Hong Kong pipeline
US and Hong Kong pipeline Key: US Construction N. Microsoft Southern Icon Carolina Services Campus Gateway Marina Forsythe MMIP Museum executing Village County of History Apartments Courthouse (Georgia) US183 LAX North Planned University Automated investment Caltrain of N. People Carolina TxDOT sche
Slide 25: Creating a digital future
Creating a digital future Automation Leverage operational datasets eGRN Z Digitise on-site processes Power BI Launched Project on a Page Launched Build to Last Standardisation Efficiency and effectiveness Breakthrough [ Building from a scalable foundation ] 24
Slide 26: Build to Last outlook
Build to Last outlook Maintained expert capability Record order book at £17.5bn Build to Last disciplines delivered for > 20% increase following HS2 approval; customers, supply chain partners now at over two years of revenue; and employees Group continues to bid selectively Strong balance sheet Posi
Slide 27: Appendix
Appendix
Slide 28: Forward-looking statements
Forward-looking statements This presentation may include certain forward-looking statements, beliefs or opinions, including statements with respect to Balfour Beatty’s business, financial condition and results of operations. These forward-looking statements can be identified by the use of forward- l
Slide 29: Order book compared with HY 2019
Order book compared with HY 2019 Total at HY 2020 £17.5bn Total at HY 2019 £13.2bn £5.1bn £5.2bn £4.3bn £3.8bn £3.4bn £3.4bn £3.2bn £2.3bn HY 2019 HY 2020 HY 2019 HY 2020 HY 2019 HY 2020 HY 2019 HY 2020 0-6 months 6-18 months 18-30 months 30+ months Construction Services - UK Construction Services -
Slide 30: Underlying (loss) / profit from operations
Underlying (loss) / profit from operations £m HY 2020* HY 2019* UK Construction (23) 17 US Construction 6 19 Gammon 6 9 Construction Services (11) 45 Support Services 10 18 Earnings-based businesses (1) 63 Infrastructure Investments Pre-disposals operating profit 3 9 Profit on disposals − 16 Corpora
Slide 31: Group balance sheet
Group balance sheet £m HY 2020 FY 2019 HY 2019 Goodwill and intangible assets 1,184 1,128 1,178 Working capital (833) (725) (728) Net cash (excluding infrastructure concessions) 563 512 425 Investments in joint ventures and associates 605 550 519 PPP financial assets 159 155 156 Infrastructure conce
Slide 32: Cash flow
Cash flow £m HY 2020 HY 2019 £m HY 2020 HY 2019 Operating cash flows 22 94 Working capital flows^ Working capital inflow 74 11 Inventories (1) (10) Pension deficit payments≠ (8) (16) Net contract assets 101 (36) Cash from / (used in) operations 88 89 Trade and other payables 6 98 Lease payments (inc
Slide 33: Working capital – Group
Working capital – Group £0 0 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 £(200) (4)% £(400) £(600) (8)% £(800) (9.9)% (10.3)% (10.7)% (9.9)% (12)% £(1,000) (11.9)% (12.8)% (13.2)% (12.9)% (13.1)% (12.8)% (13.6)% (13.9)% £(1,200) (16)% Period end working capita
Slide 34: Working capital – Construction Services
Working capital – Construction Services £0 0 Dec 14 Jun 15 Dec 15 Jun 16 Dec 16 Jun 17 Dec 17 Jun 18 Dec 18 Jun 19 Dec 19 Jun 20 £(200) (4)% £(400) (8)% £(600) (10.6)% (12)% £(800) (11.8)% (11.1)% (11.9)% (12.2)% £(1,000) (14.2)% (14.7)% (14.2)% (16)% (14.4)% (16.8)% (16.6)% £(1,200) (18.2)% (20)% P
Slide 35: Non-underlying items
Non-underlying items £m HY 2020 HY 2019 Impairment and amortisation Amortisation of acquired intangibles (2) (3) Other Provision release relating to settlements of health and safety claims − 2 Tax Non-underlying recognition of deferred tax assets in the UK 36 (6) Impact of tax rate change on deferre
Slide 36: Net finance costs
Net finance costs £m HY 2020 HY 2019 Subordinated debt interest receivable 9 Interest on PPP financial assets 4 Interest on non-recourse borrowings (6) 7 10 Net finance income – pension schemes 1 1 Other interest receivable 2 Other interest payable (3) (1) (2) US private placement (6) (6) Preference
Slide 37: Pensions – balance sheet movement
Pensions – balance sheet movement £185m £8m £326m £133m £32m £54m £(128)m £(231)m £(146)m 2014 2015 2016 2017 2018 2019 Employer Net actuarial HY 2020 contributions gains* 0.65% 0.7% (0.7)% (0.6)% (0.4)% (1.00)% Real discount rate (1.20)% * includes other movements £(1)m 36
Slide 38: Borrowing repayment profile
Borrowing repayment profile £200m £160m £120m £80m £169m £40m £41m £0m 2021 2022 2023 2024 2025 US PP notes The Group has a £375 million committed revolving credit facility extending through to 2022, which was undrawn at 26 June 2020 37
Slide 39: Financial history
Financial history 450% £12bn Build to Last £400m Increase in £10bn revenue at peak £300m £8bn £6bn £200m 45 £4bn Acquisitions £100m £2bn £94m £0bn £0m Average ordinary dividend -£2bn (2011-2014) £(100)m -£4bn -£6bn £(200)m £18m 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Average ordinary divid