Babcock International Group PLC · LSE:BAB
Babcock International — FY2003 Earnings Presentation
23 slides from Babcock International's earnings presentation, June 2003
Slide 1: Preliminary Results Presentation for Year Ending March 2003
PRELIMINARY RESULTS PRESENTATION FOR YEAR ENDING MARCH 2003 G A Campbell P L Rogers W Tame 1
Slide 2: Babcock Strategy 2000
BABCOCK STRATEGY 2000 • To enhance shareholder value by transforming itself into a fast growing support services business • To exit the low growth cyclical materials handling business • To grow organically by securing major new defence outsourcing contracts and to be a leading supplier of services t
Slide 3: Where Are We Today?
WHERE ARE WE TODAY? • Formally classified as a support services business • Continuing businesses grew by 19.3% (51% 2nd half on 2nd half) • Operating profit on continuing businesses up by 44% • Faslane and SLAM contracts secured • RSME moved to sole bidder • Rosyth named as key yard in carrier progr
Slide 4: Financial Review
Financial Review W Tame 4
Slide 5: Group Operating Result
Group Operating Result £ million 2002/03 2001/02 % change Turnover Continuing operations 409.0 326.9 25.1% Discontinued operations 14.5 96.1 Total 423.5 423.0 0.1% Operating profit* Continuing operations 22.9 15.9 44.0% Discontinued operations (2.1) (1.0) Total 20.8 14.9 39.6% Joint ventures & assoc
Slide 6: Divisional Performance
Divisional Performance Turnover Operating profit* £ million 2002/03 2001/02 % change 2002/03 2001/02 % change Technical Services Babcock Engineering Services (BES) 188.1 193.0 -2.5% 15.5 15.1 2.6% Babcock Eagleton 11.1 15.5 -28.4% 0.7 1.1 -36.4% Total 199.2 208.5 -4.5% 16.2 16.2 0.0% * Before goodwi
Slide 7: Divisional Performance
Divisional Performance Turnover Operating profit* £ million 2002/03 2001/02 % change 2002/03 2001/02 % change Technical Services Babcock Engineering Services (BES) 188.1 193.0 -2.5% 15.5 15.1 2.6% Babcock Eagleton 11.1 15.5 -28.4% 0.7 1.1 -36.4% Total 199.2 208.5 -4.5% 16.2 16.2 0.0% Training and Su
Slide 8: Divisional Performance
Divisional Performance Turnover Operating profit* £ million 2002/03 2001/02 % change 2002/03 2001/02 % change Technical Services Babcock Engineering Services (BES) 188.1 193.0 -2.5% 15.5 15.1 2.6% Babcock Eagleton 11.1 15.5 -28.4% 0.7 1.1 -36.4% Total 199.2 208.5 -4.5% 16.2 16.2 0.0% Training and Su
Slide 9: Divisional Performance – Phasing
Divisional Performance – Phasing £m Turnover £m Operating Profit 140 Technical Training & Technical Training & 10 Services Support Services Support 120 9 8 100 7 80 6 5 60 4 40 3 2 20 1 0 0 01/02 01/02 02/03 02/03 01/02 01/02 02/03 02/03 01/02 01/02 02/03 02/03 01/02 01/02 02/03 02/03 First Half Sec
Slide 10: Tax, EPS & Dividend
Tax, EPS & Dividend £ million 2002/03 2001/02 % change Profit before tax, pre-goodwill and exceptionals 18.0 13.4 34.3% Goodwill and exceptionals (4.6) (27.3) Profit/(Loss) before Tax 13.4 (13.9) Tax (5.1) (3.1) Profit/(Loss) after Tax 8.3 (17.0) Effective tax rate on continuing operations % 26.0% 2
Slide 11: Group Operating Cash Flow
Group Operating Cash Flow £ million 2002/03 2001/02 Group Operating Profit/(Loss)* 18.9 1.4 Non-cash items Depreciation and amortisation 11.0 13.0 Impairment of goodwill 7.9 11.0 20.9 Increase in working capital (18.6) (2.5) Capital expenditure – net (2.7) (7.2) Operating cash flow 8.6 12.6 *Before
Slide 12: Cash Flow – Working Capital Analysis
Cash Flow – Working Capital Analysis £ Million 2002/03 Recurring/volatility Business growth/contract stage of completion 6.4 Slippage in receipt of cash from MoD 5.0 Non-recurring 11.4 Prior year settlements and non-core businesses 3.0 Decrease in payments in advance of turnover - BMH 3.0 6.0 Other
Slide 13: Group Net Cash Flow
Group Net Cash Flow £ million 2002/03 2001/02 Operating cash flow 8.6 12.6 Acquisitions, disposals & investments - Acquisitions (24.1) (8.1) - Disposals - net (2.6) (4.4) - Purchase of own shares (0.9) (1.4) (27.6) (13.9) Movement in share capital 0.5 2.7 Interest (2.5) (1.1) Tax (3.0) (3.4) Dividen
Slide 14: Group Balance Sheet
Group Balance Sheet £ million 2002/03 2001/02 Fixed assets Tangible 16.5 22.4 Intangible 78.6 58.5 95.1 80.9 Investments 4.3 4.2 Working capital (11.8) (32.1) Pension pre-payments 71.3 70.5 Corporation tax (4.2) (4.8) Dividends payable (2.7) (2.6) Provisions (27.4) (26.8) Net assets 124.6 89.3 Finan
Slide 15: FRS 17 - Balance Sheet Impact
FRS 17 - Balance sheet impact £ million SSAP 24 FRS17 2002/03 2001/02 2002/03 2001/02 Total pension fund surplus 130.8 130.8 2.3 136.1 Off-balance sheet surplus 59.5 60.3 0.0 2.3 Balance sheet surplus – pre-tax 71.3 70.5 2.3 133.8 Related tax liability (21.4) (21.1) (1.0) (41.0) Balance sheet surplu
Slide 16: FRS 17 - Profit and Loss Account Impact
FRS 17- Profit and loss account impact Defined Benefit only £ million SSAP 24 FRS17 2002/03 2001/02 2002/03 Charged in arriving at Operating profit Service cost 6.1 5.6 7.0 Interest on surpluses (6.0) (6.0) Net charge 0.1 (0.4) 7.0 Credited to Other finance income Net return on scheme net assets 0.0
Slide 17: Operations Review 2003 – Technical Services
OPERATIONS REVIEW 2003 Technical Services Turnover (£m) Operating Profit + (£m) BES 188 (193)* 15.5 (15.1)* Eagleton 11 ( 16) 0.7 ( 1.1) • BES profits ahead of last year despite turnover decline • Eagleton profits and turnover lower due to energy market in US • Babcock named as key player in CVF • H
Slide 18: Operations Review 2003 – Training & Support
OPERATIONS REVIEW 2003 Training & Support Turnover (£m) Operating Profit + (£m) Defence Services (BDS) 64 (63)* 6.7 (5.7)* Naval Services (BNS) 49 (- ) 1.2 ( - ) Infrastructure Services (BIS) 66 (35) 2.2 (0.4) Defence Services • Defence Services profits up by 17.5% on level turnover • Sole bidder st
Slide 19: Operational Review 2003 – Naval Services
OPERATIONAL REVIEW 2003 Naval Services • Faslane contract commenced 1.9.2002: now worth £420m over 5 years • Cost savings targets well in hand • Prudent margin accounting in first seven months • Work extensions being achieved 19
Slide 20: Operations Review 2003 – Infrastructure Services
OPERATIONS REVIEW 2003 Infrastructure Services • SGI fully integrated • Babcock and Bovis Lend Lease win SLAM contract (worth £150m to Babcock over 10 years) • T5 accommodation contract secured • SW Prime bid presented (£65mpa for 7 years) • Babcock Africa sales grow 45% to £50m and profits double 2
Slide 21: Operations Review 2003 – Non-core Businesses
OPERATIONS REVIEW 2003 Non-core Businesses • Chronos Richardson sold but incurred losses during process • BMH Marine turned around to breakeven and sale process begun • Turnover less than 5% of anticipated sales in 2003/4 21
Slide 22: Bid Activity
Bid Activity • Sole Bidder •Bids Being Prepared – Post PQQ - RSME - Hawk Maintenance • Bids Submitted - Navy Multi-Activity Contracts - AVTS - 1 NPPO - ASSP - Marine Services - SWRP - Oil Rig Manifolds - Lancaster/Chatham - DeBeers Ship Configuration - 2 NPPO Contracts - Terminal 5 Modules • Other -
Slide 23: Summary and Prospects
SUMMARY AND PROSPECTS • Consistent Strategy • Objectives met • 2003/4 will be a year of further progress with 80% of order book confirmed in the core business • Beyond that growth should accelerate as new contracts kick-in • We continue to explore opportunities to add to growth through acquisition 2
Babcock International Group — FY2003 Earnings Presentation on 6ix