Babcock International Group PLC · LSE:BAB
Babcock International — H1 2008/09 Earnings Presentation
25 slides from Babcock International's earnings presentation, November 2008
Slide 1: Half year results
Babcock International Group PLC trusted to deliver Half year results for six months ended 30 September 2008 The largest facilities management support provider to the MoD The largest support provider to the Royal Navy The largest track contractor for Network Rail One of the largest nuclear engineerin
Slide 2: First half highlights
First half highlights trusted trusted to to deliver deliver • Strong growth trend continues – revenue + 40%, operating profit* + 32%, pbt* + 33% • Double digit organic growth – revenue + 15%, operating profit + 10% • High level of cash generation – cash from operations £86.9m, conversion rate 132% •
Slide 3: Financial results
trusted to deliver Financial results for the six months to 30 September 2008 Bill Tame Group Finance Director
Slide 4: Income statement
Income statement trusted to deliver H1 2008/09 H1 2007/08 FY 2007/08 £m £m Change £m Revenue 940.6 672.6 + 40% 1555.9 Operating profit* 72.5 55.0 + 32 % 121.1 Margin 7.7% 8.2% - 7.8% Joint ventures - 0.3 - - Net finance cost (14.7) (11.7) - (25.6) Profit before tax* 57.8 43.6 + 33% 95.5 * Before amo
Slide 5: Income statement cont
Income statement cont trusted to deliver H1 2008/09 H1 2007/08 FY 2007/08 £m £m Change £m Profit before tax* 57.8 43.6 + 33% 95.5 Tax (11.0) (7.9) - (18.2) Effective tax rate** 19% 19% - 19% Profit after tax* 46.8 35.7 + 31% 77.3 Amortisation of acquired (4.9) (3.2) - (7.6) intangibles and exception
Slide 6: Bridging analysis
Bridging analysis trusted to deliver Revenue Operating profit* 1000 128.5 940.6 80 6.9 72.5 146.4 70 11.2 (6.9) (0.6) 800 60 55.0 672.6 50 600 £m £m 40 400 30 20 200 10 0 0 2007 Acquisitions Organic FX 2008 2007 Acquisitions Organic FX 2008 * Before amortisation of acquired intangibles and exception
Slide 7: Segmental analysis
Segmental analysis trusted to deliver Revenue Operating profit* Operating return on revenue H1 H1 H1 H1 H1 H1 2008/09 2007/08 Change 2008/09 2007/08 Change 2008/09 2007/08 £m £m £m £m Marine 432.4 236.7 + 83% 42.2 29.1 + 45% 9.8% 12.3% Defence 152.6 138.6 + 10% 14.1 13.5 + 4% 9.2% 9.7% Rail 113.7 98
Slide 8: Operating return on revenue
Operating return on revenue* trusted to deliver Group Segmental 10% 15% 12.3% 8.2% 7.8% 7.7% 10.8% 8% 9.8% 6.9% 6.9% 10% 9.1% 9.2% 9.0% 6.3% 6.2% 6.0% 7.9% 7.5% 7.3% 6.8% 6% 5.7% 5% 4% 0.2% 2% 0% Marine Defence Rail Nuclear Netw orks Eng & Plant 0% 2004/05 2005/06 2006/07 2007/08 2008/09 -4.1% -5% h
Slide 9: Cash flow
Cash flow trusted to deliver H1 2008/09 H1 2007/08 FY 2007/08 £m £m £m Operating profit 65.6 50.6 110.2 Non cash items 16.8 13.1 29.5 Working capital 4.5 (10.2) (20.5) Cash from operations 86.9 53.5 119.2 Cash conversion 132% 106% 108% Net capital expenditure (3.3) (3.3) (8.6) Interest (14.8) (7.0)
Slide 10: Defined benefit pensions – IAS19 position: income statement
Defined benefit pensions – IAS19 position Impact on income statement trusted to deliver • 2008/09 income statement Income statement H1 2008/09 FY 2008/09 FY 2007/08 – reflects a full six months of Forecast DML £m £m £m – is not affected by current Service cost 13.1 26.3 26.8 market disruption Expect
Slide 11: Defined benefit pensions – IAS19 position: balance sheet
Defined benefit pensions – IAS19 position Impact on balance sheet trusted to deliver • Increased balance sheet Balance Sheet 30 Sept 30 Sept 31 March 2008 2007 2008 protection from further bias to £m £m £m fixed interest investments and 2,032.1 1,983.8 Assets at market 1,880.9 liability driven inves
Slide 12: Defined benefit pensions – Managing pension plans
Defined benefit pensions – IAS19 position Managing pension plans trusted to deliver • Progressive movement towards Matching of assets and liability matched asset portfolio liabilities 2,000 • Bulk buy-out proposed of 138 Property c £300m of pensioner liabilities 1,500 • Longevity, inflation and inte
Slide 13: Funding
Funding trusted to deliver • Period end net debt £373.9m • Facilities (ex overdrafts - £20m) £600.0m • Term of facility - 5 years from June 2007 • Net debt to ebitda (annualised) ratio 2.2 x • Interest cover 5.8 x • Free cashflow less dividends 07/08 full year £60.5m 08/09 half year £44.7m Slide 13
Slide 14: Financial summary
Financial summary trusted to deliver • Growth in operating profit 32% £72.5m • eps increased 29% 20.08p • Dividend increased 21% 4.0p • Cash conversion rate 132% • Funding position good – no refinancing required until 2012 Slide 14 Half year results to 30 September 2008
Slide 15: Operational Review
trusted to deliver Operational Review Peter Rogers Chief Executive
Slide 16: Marine
Marine 46% % Group revenue trusted to deliver Revenue £432.4m Operating profit £42.2m Operating margin 9.8% + 83% + 45% • Excellent first half – stable operating margins • Strong organic growth • ToBA progressing well – forecast synergies £14m by 2011 – Process Commitment Document signed October – f
Slide 17: Defence
Defence 16% % Group revenue trusted to deliver Revenue £152.6m Operating profit £14.1m Operating margin 9.2% + 10% + 4% • Steady first half growth – stable operating margins • RSME concluded – operational start January 2009 • Regional Prime contracts performing well – additional extension projects a
Slide 18: Rail
Rail 12% % Group revenue trusted to deliver Revenue £113.7m Operating profit £(4.7)m Operating margin - 4.1% + 15% • H1 damaged by projects business – now withdrawn from new bids for multi-disciplinary projects – close management of project run outs • Track and signalling framework contracts providi
Slide 19: Nuclear
Nuclear 6% % Group revenue trusted to trusted to deliver deliver Revenue £54.4m Operating profit £6.7m Operating margin 12.3% + 50% + 103% • Very strong first half – excellent margins • BNS Nuclear Services achieved significant market presence – Strachan & Henshaw and INS fully integrated • Operatio
Slide 20: Networks
7% Networks % Group revenue trusted trusted to to deliver deliver Revenue £65.1m Operating profit £4.4m Operating margin 6.8% + 20% - 19% • Alliance contracts continue to deliver good flow of work for Transmission business – greater long term visibility and increased revenues offset reduced margin •
Slide 21: Engineering and Plant
13% Engineering and Plant % Group revenue trusted to deliver Revenue £122.4m Operating profit £11.0m Operating margin 9.0% + 13% + 31% • Very strong first half • Government commitment to improving electricity supply and infrastructures unaffected by global economic situation • Demand increasing for
Slide 22: Order book
Order book trusted to deliver • Major long term contracts increased order book to over £5bn – CVF £675m through to 2016 – VISSC £125m through to 2013 • opportunity to extend for another 10 years – RSME £1.5bn through to 2038 • H2 contracts expected – Hackney Building Schools for the Future – 10 yrs
Slide 23: Outlook
Outlook trusted to deliver • Markets remain attractive with good long term growth prospects • Trading remains strong • Order book strengthened by major contract wins – good long term visibility • We remain confident that this will be another year of excellent progress for the Group Slide 23 Half yea
Slide 24: Questions
trusted to deliver Questions
Slide 25: Babcock International Group PLC
Babcock International Group PLC trusted to deliver The largest facilities management support provider to the MoD The largest support provider to the Royal Navy The largest track contractor for Network Rail One of the largest nuclear engineering resources in the UK The largest engineering support ser
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