Slide 1: 2004 Preliminary Results
Balfour Bea~y 2004 Preliminary Results 9 March 2005 Balfour Bea~y
Slide 2: Sir David John
Sir David John Balfour Beatty
Slide 3: Anthony Rabin
Anthony Rabin Balfour Beatty
Slide 4: Headline numbers
Headline numbers 2004 2003 Turnover £4,171m £3,678m +13% Operating profit* £173m £161m +7% Pre-tax profit* £150m £130m +15% Earnings per share* 23.4p 20.6p +14% Dividends per share 6.6p 6.0p +10% Net cash (excl 100% PFI) £311m £127m Order book £6.8bn £5.8bn +17% * Before exceptionals, goodwill charg
Slide 5: Performance by sector
Performance by sector £m 2004 2003 Building, Building Management 32 28 +14% and Services Andover Controls (discontinued) 8 17 • Mansell performs ahead of expectations • Record order books, largely from PFI • £1bn construction work at preferred bidder stage • Lower profits from facilities management
Slide 6: Performance by sector
Performance by sector £m 2004 2003 Building, Building Management 32 28 +14% and Services Civil and Specialist Engineering 23 21 +10% and Services Balfour Bea~y 2004 Preliminary Results
Slide 7: Civil and Specialist Engineering and Services
Civil and Specialist Engineering and Services £m 2004 2003 Civil and specialist engineering 4 13 Services 19 8 Operating profit 23 21 • Significant performance in UK major projects and the regions • Further losses in the US • Good progress in road maintenance and utilities Balfour Bea~y 2004 Prelimi
Slide 8: Performance by sector
Performance by sector £m 2004 2003 Building, Building Management 32 28 +14% and Services Civil and Specialist Engineering 23 21 +10% and Services Rail Engineering and Services 43 41 +5% Balfour Bea~y 2004 Preliminary Results
Slide 9: Rail Engineering and Services
Rail Engineering and Services £m 2004 2003 UK infrastructure services 35 15 Projects and specialist businesses 8 26 Operating profit 43 41 • Maintenance settlement at satisfactory levels • Good performance in other UK businesses • Weakness in German market • Loss-making US business reorganised Balfo
Slide 10: Performance by sector
Performance by sector £m 2004 2003 Building, Building Management and Services 32 28 +14% Civil and Specialist Engineering and Services 23 21 +10% Rail Engineering and Services 43 41 +5% Investments and Developments 67 54 +24% Operating profit - continuing businesses* 165 144 +15% Andover Controls (d
Slide 11: Investments and Developments
Investments and Developments £m 2004 2003 PFI/PPP* 52 48 Barking Power 15 6 Profit before interest 67 54 Profit after interest 41 26 • Increased contribution from Metronet and Connect • Barking Power performance improves significantly * Including Property Balfour Bea~y 2004 Preliminary Results
Slide 12: Operating profit v operating cash flow
Operating profit v operating cash flow 2004 excl PFI £m subsidiaries* 2004 2003 Group operating profit 46 67 68 add back: goodwill amortisation 33 33 15 Group operating profit* 79 100 83 Depreciation 41 50 43 Exceptional items – cash (6) (6) 5 receipts/(expenditure) Other items 1 1 - Working capital
Slide 13: Cash v profits
Cash v profits (cumulative since Jan 2000) £m 500 500 400 400 300 300 200 200 100 100 00 2000 2000 2001 2001 2002 2002 2003 2003 2004 2004 Profit Profit before before goodwill goodwill amortisation amortisation Cash Cash inflow inflow before before acquisitions, acquisitions, buy-backs buy-backs and
Slide 14: Balance sheet cash movement
Balance sheet cash movement 2004 excl PFI £m subsidiaries* 2004 2003 Opening net cash 127 124 67 Net cash inflow from operations 140 171 170 Dividends from J/Vs and associates 17 8 11 Capital expenditure and financial (55) (57) (39) investment Acquisitions and disposals 159 161 (21) Buy-back of pref
Slide 15: Acquisitions and disposals – net cash
Acquisitions and disposals – net cash £m Acquisitions in 2004: Gammon 34 Connect Roads (32%) 11 Other 7 Deferred consideration for earlier acquisitions 4 56 Disposals in 2004: Andover Controls 218 Other (1) 217 Net cash inflow on acquisitions and disposals 161 Balfour Bea~y 2004 Preliminary Results
Slide 16: Exceptional items
Exceptional items £m Profit on disposal of Andover Controls 137 Loss on disposal of First Philippine (1) Profit on sale of Hong Kong business 1 Cancellation of Network Rail maintenance contracts 7 Profit on sale of UK fixed assets 2 Loss on sale of US plant and machinery (4) Net exceptional pre-tax
Slide 17: Pensions
Pensions £m 2004 2003 P&L charges: SSAP 24 35 28 FRS 17 - before exceptional gain 46 40 - after settlement gain 38 35 • Two main funds show 100% funding level at end 2004 • £121m deficit (after tax credit) under FRS 17 for two main funds • Disparity due entirely to differences in discount rates Balf
Slide 18: Group balance sheet
Group balance sheet £m 2004 2003 2002 Goodwill* 295 318 280 Net cash 311 124 67 PFI/PPP subsidiaries 23 - - Tangible assets + working capital 267 3 - Non-recourse net debt (244) (3) - Other assets/(liabilities) (216) (211) (155) Shareholders’ funds 413 231 192 * Includes share of joint ventures and
Slide 19: Principal impacts of IFRS
Principal impacts of IFRS Net assets Reduced by Increased by • Preference share treatment • Dividend costs post balance sheet date • Pension fund deficits • Revaluation of PFI assets • Treatment of derivatives Pre-tax profits and earnings Reduced by Increased by • Preference share charges • Impairme
Slide 20: Summary
Summary Continuing growth in underlying earnings Strong cash flow Cash available to further improve business mix Balfour Bea~y 2004 Preliminary Results
Slide 21: Ian Tyler
Ian Tyler Balfour Bea~y
Slide 22: Balfour Beatty – a successful company …
Balfour Beatty – a successful company … Consistent profits and earnings growth Arising from organic growth, acquisitions and PFI Basic management principles consistently applied Experienced management, market leadership, consistent culture Balfour Beatty strengths and procurement trends match Strong
Slide 23: … with strong core skills
… with strong core skills Engineering Bid management Project management Commercial management Labour management Professional services management Specialist PFI skills Balfour Bea~y 2004 Preliminary Results
Slide 24: … which has outstripped GDP base growth
… which has outstripped GDP base growth Strong concession base Extended life-cycle presence Greater geographic focus New procurement methods exploited Balfour Bea~y 2004 Preliminary Results
Slide 25: Our markets
Our markets UK building UK facilities management UK infrastructure UK utilities Rail US Asia and the Middle East Investments Balfour Bea~y 2004 Preliminary Results
Slide 26: UK building
UK building Balfour Beatty Construction Mansell Haden Young Balfour Kilpatrick Market leaders Good processes / reputations £1.2bn orders £1bn+ preferred bidder Balfour Bea~y 2004 Preliminary Results
Slide 27: UK facilities management
UK facilities management Haden Building Management Rapid market growth over recent years Order book at £800m in long-term contracts Sales doubled to £250m over last five years Sector/product specialisms for future growth Balfour Bea~y 2004 Preliminary Results
Slide 28: UK infrastructure
UK infrastructure Balfour Beatty Civil Engineering Stent RCS UK leader in roads and complex schemes Superior capabilities and relationships In harmony with procurement modes and developments £1.5bn order book Build our position as supplier of choice Balfour Bea~y 2004 Preliminary Results
Slide 29: UK utilities
UK utilities Balfour Beatty Utilities Balfour Beatty Power Networks Focussed, good market positions Forward order book of over £800m Work secured to deliver medium-term growth Balfour Bea~y 2004 Preliminary Results
Slide 30: Rail
Rail Balfour Beatty Rail Balfour Beatty Rail Inc Strong core business base Some market difficulties Revisit growth model Scope for appropriate acquisitions Balfour Bea~y 2004 Preliminary Results
Slide 31: USA
USA Balfour Beatty Construction Inc Balfour Beatty Rail Inc Heery International Substantial losses in 2004 Major rationalisation implemented Sound business models now established Careful growth only on strong business base Balfour Bea~y 2004 Preliminary Results
Slide 32: Asia and the Middle East
Asia and the Middle East Gammon Dutco Balfour Beatty Leading player in Hong Kong Presence in China and Singapore Good regional prospects Strong player in Dubai Balfour Bea~y 2004 Preliminary Results
Slide 33: Investments
Investments Balfour Beatty Capital Projects Barking Power Established market leader in PPP / PFI Good returns from invested funds Built-in future earnings growth No imperative to trade Key future source of contracting work Balfour Bea~y 2004 Preliminary Results
Slide 34: Social housing
Social housing Mansell Balfour Beatty Construction £47bn spend scheduled by 2010 Mansell has confirmed order book of £200m Mansell “Partnering Contractor of the Year” 2004 Balfour Bea~y 2004 Preliminary Results
Slide 35: Our themes in developing the business
Our themes in developing the business Retain / strengthen all key disciplines Best use of cash resources Acquire for medium-term earnings growth Retain and grow PPP portfolio Exploit the strength of our capability and our brand Balfour Bea~y 2004 Preliminary Results
Slide 36: Outlook
Outlook Sustained growth in 2005 and beyond Balfour Bea~y 2004 Preliminary Results