Slide 1: 2022 full year results presentation
2022 full year results presentation 15 March 2023 Image: Midland Metropolitan University Hospital, UK
Slide 2: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: Los Angeles International Airport Automated People Mover, US
Slide 3: 2022 performance
2022 performance Exceeding Positioning Delivering for expectations for growth shareholders Strong performance £17.4 billion lower risk 17% growth across all divisions order book in dividend Increase in Directors’ Unique capabilities Third consecutive year valuation of aligned to critical of £150 mil
Slide 4: Sustaining our expert capability is a competitive advantage
P3 – LAX Airport Automated People Mover, US Nuclear offshore marine capability – Hinkley Point C, UK Offsite modular expertise – HS2 Marston Box, UK 80% Group employee engagement score 3 Sustaining our expert capability is a competitive advantage
Slide 5: Phil Harrison, Chief Financial Officer
Phil Harrison Chief Financial Officer Image: CGI of new office building in Causeway Bay, Hong Kong
Slide 6: Headline numbers
Headline numbers £m (unless otherwise stated) 2022 2021 Variance Group revenue* 8,931 8,280 8% Profit from earnings-based businesses* 232 181 28% Profit from operations* 279 197 42% Profit for the year* 290 194 49% Basic earnings per share* 47.5p 29.7p 60% Dividends per share 10.5p 9.0p 17% 2022 202
Slide 7: Construction Services
Construction Services £m 2022* 2021* Revenue PFO PFO % Revenue PFO PFO % ● Strong recovery in UK Construction, UK 2,763 59 2.1% 2,593 (2) (0.1)% with 2.1% PFO margin within industry US 3,651 58 1.6% 3,344 51 1.5% standard range Gammon 1,068 32 3.0% 809 30 3.7% ● Consistent performance at US and Gamm
Slide 8: UK Construction order book evolution
UK Construction order book evolution HY 2018 FY 2022 Fixed – Two Stage Fixed – One Stage Cost Plus Cost Plus Fixed – Two Stage 16% 5% 5% 10% 4% 28% £2.7bn 50% £6.1bn 46% 22% Target Cost Fixed – One Stage Target Cost 74% 95% of order book from public and regulated clients 7 Lower risk, higher quality
Slide 9: Support Services
Support Services £m 2022 2021 Revenue ● Reduced revenue following exit from gas Utilities 363 469 and water sector Transportation 626 597 ● 8.4% PFO margin ahead of 6-8% Total 989 1,066 targeted range ● Profitable recurring revenues underpinned by long-term frameworks Profit from operations* (PFO) 8
Slide 10: Infrastructure Investments
Infrastructure Investments £m 2022 2021 Pre-disposals operating profit* 11 14 ● Sale of Purdue University student Gain on disposals 70 35 accommodation and four multifamily Investments profit* 81 49 housing projects Sub-ordinated debt interest receivable ^ 31 18 ‒ £70 million gain; all sold above Di
Slide 11: Directors' valuation increased & assumptions refreshed
Directors’ valuation increased & assumptions refreshed Portfolio summary: Dec 2022 UK US Valuation increased to £1.3 billion, driven by: Projects 26 33 ● £139 million of operational performance, including inflation and rental increases and gains on disposal Value £548m £743m ● £85 million foreign ex
Slide 12: Directors' valuation of Investments portfolio
Directors’ valuation of Investments portfolio £54m £85m £30m £139m £85m £(26)m £(93)m £(89)m £1,263m £1,291m £1,106m FY 2021 Equity Sales Distributions Unwind of Operational Foreign FY 2022 Discount Other FY 2022 invested proceeds received discount performance exchange rate revised Assumption and me
Slide 13: Cash flow
Cash flow £63m £282m £89m £(43)m £(58)m £(31)m £(54)m £(151)m £(58)m £(14)m £790m £815m Net cash Operating Working Dividends Net Pension Lease Capital Share Dividends Other Net cash FY 2021 cash capital from JVAs disposal deficit payments expenditure buybacks+ FY 2022 flows cash flows proceeds^ paym
Slide 14: Capital allocation framework
Capital allocation framework Continued Active Strong Sustainable Additional investment in realisation of but efficient ordinary dividend cash returns organic growth the Investments balance (target 40% via share opportunities portfolio sheet payout ratio^) buybacks Significant opportunities Five asse
Slide 15: 2023 guidance
2023 guidance PFO from earnings-based businesses expected to be broadly in line with 2022 ̶ Incremental PFO improvement in UK and US Construction Services ̶ Support Services PFO towards top end of 6-8% industry standard margin target range Profit on Investments disposals expected in the range of £15
Slide 16: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: Piccadilly Line Underground Tunnel, UK
Slide 17: Geographically and operationally diversified Group
Geographically and operationally diversified Group £17.4 billion order book £1.3 billion* Investments portfolio * Directors’ valuation 16 Diversified and resilient Group
Slide 18: Infrastructure Investments
Infrastructure Investments Continued returns from Investments business Portfolio segmentation £1.3 billion Directors’ valuation US student US multifamily housing accommodation & PPP Strongly correlated to inflation UK roads Average distributions of 6% since 2016, prior to disposals US military UK he
Slide 19: Infrastructure Investments: Purdue University case study
Infrastructure Investments Investment cycle case study: Purdue University Growth opportunities US student accommodation, 835 bed apartment complex UK Student Accommodation Balfour Beatty designed, financed and operated 100% occupancy, including a waiting list, following COVID-19 US Student Accommoda
Slide 20: Strong UK infrastructure market
Strong UK infrastructure market 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Offshore wind Hinkley Point C Energy transition & hydrogen Significant transformational infrastructure schemes Sizewell C Modular nuclear HS2 – Area North & Old Oak Common Major / high speed rail Rail CP6 CP7
Slide 21: UK energy transition and security
UK energy transition and security Balfour Beatty End to end capabilities Commercial & technical c. £50bn* estimated total Design & market planning opportunity Ground engineering Civil engineering Mechanical & electrical Hinkley Point C Power and Sizewell C transmission & distribution * this figure r
Slide 22: Resilient US Construction portfolio
Resilient US Construction portfolio Northwest California Texas Southeast Mid Atlantic Key industry: Key industry: Key industry: Key industries: Key industry: Technology Education Development Hospitality & Federal Aviation Recent increase in Technology market Second largest player Significant level o
Slide 23: Gammon: Hong Kong
Gammon: Hong Kong Order book 2022 successes Future opportunities 6% West Kowloon Hotel Two ten storey block hotel: HK$100 billion Cultural District 34% Northern Metropolis Hong Kong Airport Completed Residential Five towers, totalling 990 HK$300 billion flats: Won 2nd Hospital ten-year development p
Slide 24: Building New Futures
Building New Futures Environment Materials Communities 2040 Beyond Net 2040 Generate 2040 Positively Impact Ambitions Zero Carbon Ambitions Zero Waste Ambitions More than 1 Million People Achieve 2030 2030 2030 40% reduction £3 billion social value science-based carbon generated Targets reduction ta
Slide 25: Digital: Faster, smarter, greener, safer
Digital: Faster, smarter, greener, safer Digital Permits Control Rooms Construction Management Improves safety, productivity, Digitises logistics, scheduling Large scale digital dashboards paperless assurance and just-in-time productivity Streamlines process for thousands Provides real-time datasets
Slide 26: Progress across the board
Progress across the board Group order book (£bn) Group order book (£bn) Average monthly net cash (£m) 20 1000 15 800 600 10 400 5 200 0 0 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 PFO from earnings-based businesses (£m) Shareholder cash returns (£m) 250 250 Share buybacks 200 200 Dividends 1
Slide 27: Appendix
Appendix Image: World’s largest modular construction student hostel project, Hong Kong
Slide 28: Disclaimer & important information
Disclaimer & important information This presentation, including information incorporated by reference in it, contains statements that are or may be forward-looking statements which are prospective in nature with respect to Balfour Beatty’s business, financial condition and operations. These forward-
Slide 29: Order book by phase
Order book by phase Total FY 2022 £17.4bn £7.3bn Total FY 2021 £16.1bn £6.3bn £5.9bn £5.2bn £4.9bn £3.9bn FY 2021 FY 2022 FY 2021 FY 2022 FY 2021 FY 2022 0-12 months 13-24 months 25+ months UK Construction US Construction Gammon Support Services US Construction Gammon 28
Slide 30: Underlying profit from operations
Underlying profit from operations £m 2022* 2021* UK Construction 59 (2) US Construction 58 51 Gammon 32 30 Construction Services 149 79 Support Services 83 102 Earnings-based businesses 232 181 Infrastructure Investments Pre-disposals operating profit 11 14 Gain on disposals 70 35 Corporate activiti
Slide 31: Group balance sheet
Group balance sheet £m 2022 2021 Goodwill and intangible assets 1,168 1,113 Current working capital (1,167) (1,118) Net cash (excluding infrastructure concessions) 815 790 Investments in joint ventures and associates 426 503 PPP financial assets 26 30 Infrastructure concessions – non-recourse net de
Slide 32: Cash flow
Cash flow £m 2022 2021 £m 2022 2021 Operating cash flows before working capital 282 127 Working capital flows^ movements and pension deficit payments Inventories (6) 11 Working capital (outflow)/inflow (54) 269 Net contract assets (137) 221 Pension deficit payments≠ (43) (42) Trade and other receiva
Slide 33: Working capital: Group
Working capital: Group £0m 0 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 £(200)m (4)% £(400)m (10.3)% (9.9)% (8)% £(600)m (12.1)% (12.8)% (12.9)% (12)% £(800)m (15.3)% (15.6)% (16)% £(1,000)m £(1,200)m (20)% Year end working capital Year end working capital as % revenue from continuing operatio
Slide 34: Net finance costs
Net finance costs £m 2022 2021 Subordinated debt interest receivable 27 Interest on PPP financial assets 2 Interest on non-recourse borrowings (9) 20 17 Net finance income – pension schemes 5 1 Other interest receivable 16 Other interest payable (6) 10 2 US private placement (15) (10) Interest on le
Slide 35: Pensions: balance sheet movement
Pensions: balance sheet movement £43m £(51)m £133m £231m £223m £89m £32m £54m £(128)m £(146)m £(231)m 2014 2015 2016 2017 2018 2019 2020 2021 Employer Net 2022 contributions actuarial losses & other 34
Slide 36: Borrowing repayment profile
Borrowing repayment profile £200m £160m £120m £80m 173* £40m 66 41 29 36 £0m 2023 2025 2027 2029 2032 US Private Placement notes The Group has a £375m committed bank facility extending through to October 2024 and a £30m bilateral committed bank facility extending through to December 2024, both of wh
Slide 37: Inflation
Inflation Infrastructure Construction Services Investments & Support Services Inflation protection Inflation management ● In an inflationary market asset values increase ● Contractual protection > UK portfolio positively correlated with inflation ● Early buyout to lock in costs > US portfolio positi
Slide 38: End to end multiple
Track record of Investments disposals 6 5 End to end multiple* 4 3 2 1 0 2016 2017 2018 2019 2020 2021 2022 Directors’ valuation £1.2bn £1.2bn £1.2bn £1.2bn £1.1bn £1.1bn £1.3bn £30m+ * calculated as the sales proceeds plus distributions received over time divided by the original equity investment A
Slide 39: Balfour Beatty
Balfour Beatty