Slide 1: 2023 half year results presentation
2023 half year results presentation 16 August 2023 Image: Hinkley Point C offshore works, UK 0
Slide 2: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: Hong Kong International Airport, Terminal 2 1
Slide 3: Strong and well positioned Group
Strong and well positioned Group Strong Positioned for Delivering for first half growth shareholders Continuing Unique capabilities Strong balance sheet momentum in first aligned to critical and consistent cash half from earnings- national infrastructure flow supporting based businesses investment s
Slide 4: Unique end to end capabilities
3 Unique end to end capabilities Hinkley Point C connection project, UK HS2 Old Oak Common station, UK HS2 Curzon Street, Birmingham, UK Hong Kong International Airport, Terminal 2 On track for full year earnings
Slide 5: Phil Harrison, Chief Financial Officer
Phil Harrison Chief Financial Officer Image: Nuneham Rail Viaduct structural repairs, UK 4
Slide 6: Headline numbers: strong first half
Headline numbers: strong first half £m (unless otherwise stated) HY 2023 HY 2022 Variance Group revenue 4,527 4,147 9% Profit from earnings-based businesses* 95 85 12% Profit from operations* 80 85 (6)% Profit for the period* 74 80 (8)% Basic earnings per share* 13.0p 12.9p 1% Dividends per share 3.
Slide 7: Construction Services: upward margin trajectory
Construction Services: upward margin trajectory £m HY 2023 HY 2022 Revenue PFO* PFO % Revenue PFO* PFO % o 67% growth in UK Construction profit UK 1,516 30 2.0% 1,237 18 1.5% from operations, with continuing upward margin trajectory US 1,736 21 1.2% 1,766 21 1.2% ̶ No material change to forecasts Ga
Slide 8: Lower risk UK Construction order book
Lower risk UK Construction order book Fixed – Two Stage HY 2023 Fixed – One Stage o £5.9 billion order book providing short and medium term visibility 10% o Heavily weighted to lower risk cost plus 6% and target cost contracts which provide protection from inflation Cost Plus Target Cost o Majority
Slide 9: Support Services: delivering in targeted PFO % range
Support Services: delivering in targeted PFO % range £m HY 2023 HY 2022 Revenue o Profitable recurring revenues Utilities 158 187 underpinned by long term frameworks Transportation 305 312 o 6.5% PFO margin within targeted range of 6-8% Total 463 499 o £6 million reduction in PFO including: ̶ Lower
Slide 10: Infrastructure Investments: disposals in second half
Infrastructure Investments: disposals in second half £m HY 2023 HY 2022 Pre-disposals operating profit* 2 10 o Pre-tax profit reduced from £24 million to Gain on disposals - 7 £14 million: Investments profit* 2 17 ̶ No disposals in first half (2022: £7 million gain), with 2023 disposals Subordinated
Slide 11: Directors' valuation of Investments portfolio
Directors’ valuation of Investments portfolio £24m £42m £(33)m £(39)m £(16)m £1,291m £1,269m FY 2022 Equity Distributions Unwind of Foreign Operational HY 2023 invested received discount exchange performance Directors’ valuation stable at £1.3 billion 10
Slide 12: Consistent cash flow generation
Consistent cash flow generation £112m £27m £(42)m £(24)m £(13)m £(31)m £(30)m £(87)m £(17)m £815m £710m Net cash Operating Working Dividends Equity Pension Lease Capital Share Other Net cash FY 2022 cash flows capital from JVAs invested deficit payments expenditure buybacks HY 2023 cash flows paymen
Slide 13: Multi-year capital allocation framework
Multi-year capital allocation framework Continued Active realisation of Strong but efficient Sustainable ordinary Additional cash investment in the Investments balance sheet dividend (target 40% returns via share organic growth portfolio payout ratio^) buybacks opportunities Significant Disposals in
Slide 14: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: Central Kowloon Route, Hong Kong 13
Slide 15: UK energy infrastructure momentum
UK energy infrastructure momentum UK energy security plan UK commitments £20 billion £20 billion £20 billion ASTI carbon development framework capture and of small hydrogen modular nuclear production reactors Notable UK Government announcements in 2023 o £157 million modular reactor & nuclear techno
Slide 16: Support Services: underpinned by long term contracts
Support Services: underpinned by long term contracts Continued strong performance from all three businesses Power T&D o UK9s largest power transmission contractor Power Road Rail o £60 billion government funding through Ofgem ̶ Preferred bidder status on SSEN ASTI framework Road maintenance o Succes
Slide 17: Unique end to end Group capabilities
Unique end to end Group capabilities Case study Case study Cabling, substations ASTI Nuclear Sizewell C: and overhead lines framework: power £20bn c. Recent momentum: £20bn c. Recent momentum: EDF cost est. Preferred bidder for SSEN Transmission’s Ofgem £170 million cash (2020) Accelerated Strategic
Slide 18: US Construction: investing in geographic expansion
US Construction: investing in geographic expansion Dynamic buildings market Investing in new growth areas o Strong delivery and outlook in Southeast and California o Favourable federal order book in Mid-Atlantic o Technology industry downturn challenge in the Northwest o Interest rates impacting Tex
Slide 19: Gammon: strong position in buoyant market
Gammon: strong position in buoyant market Major civils and building capabilities Strong order book underpinned by major projects Airport Railway Highway Infrastructure integral to driving economic growth Large pipeline of publicly funded infrastructure o Construction expenditure: HK$300 – HK$370 bil
Slide 20: Infrastructure Investments: a source of value
Infrastructure Investments: a source of value US P3 Student UK energy accommodation transition Maintaining disciplined approach to investments and disposals in current market conditions New investment o Electric vehicle charging – Urban Fox o £24 million in new and existing projects ̶ Student accomm
Slide 21: Building New Futures: Sustainability Strategy
Building New Futures: Sustainability Strategy Environment Progress 2040 Beyond Net Ambitions Zero Carbon 2030 Achieve science-based Scope 1, 2 and 3 Targets carbon reduction target decarbonisation pathway ready for Science Based Targets Materials Battery operated initiative validation 2040 Generate
Slide 22: Strong outlook
Strong outlook On track for Positioned for Delivering for full year growth shareholders Diversified, Unique capabilities c. £600 million of lower risk Group aligned to critical shareholder returns providing resilience national infrastructure from 2021 to 2023 investment Strongly positioned to delive
Slide 23: Q&A
Q&A Image: Student hostel at Whitehead, Ma On Shan, Hong Kong
Slide 24: Appendix
Appendix Image: London Power Tunnels 2, UK 23
Slide 25: 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 Beatty9s business, financial condition and operations. These forward-
Slide 26: Order book by phase
Order book by phase Total HY 2023 £16.4bn Total HY 2022 £17.7bn £5.5bn £5.7bn £4.7bn £3.9bn £4.1bn £3.6bn £3.4bn £3.2bn 0-6 months 7-18 months 19-30 months 31+ months UK Construction US Construction Gammon Support Services US Construction Gammon 25
Slide 27: Underlying profit from operations
Underlying profit from operations £m HY 2023* HY 2022* UK Construction 30 18 US Construction 21 21 Gammon 14 10 Construction Services 65 49 Support Services 30 36 Earnings-based businesses 95 85 Infrastructure Investments Pre-disposals operating profit 2 10 Gain on disposals - 7 Corporate activities
Slide 28: Group balance sheet
Group balance sheet £m HY 2023 FY 2022 £m Goodwill and intangible assets 1,129 1,168 Current working capital (1,144) (1,167) Net cash (excluding infrastructure concessions) 710 815 Investments in joint ventures and associates 406 426 PPP financial assets 25 26 Infrastructure concessions – non-recour
Slide 29: Cash flow
Cash flow £m HY 2023 HY 2022 £m HY 2023 HY 2022 Operating cash flows 112 110 Working capital flows^ Working capital (outflow)/inflow (42) (55) Inventories (27) (5) Pension deficit payments≠ (13) (29) Net contract assets (158) (4) Cash from operations 57 26 Trade and other receivables (51) 22 Dividen
Slide 30: Working capital – Group
Working capital – Group £0m 0 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 Dec 22 Jun 23 £(200)m (4)% £(400)m (10.3)% (9.9)% (8)% £(600)m (12.1)% (12.8)% (12.9)% (12)% £(800)m (15.0)% (15.6)% (15.3)% (16)% £(1,000)m £(1,200)m (20)% Period end working capital Period end working capital as % revenue from
Slide 31: Net finance income
Net finance income £m HY 2023 HY 2022 Subordinated debt interest receivable 16 Interest on PPP financial assets 1 Interest on non-recourse borrowings (4) Fair value (loss)/gain on investment asset (1) 12 14 Net finance income – pension schemes 6 2 Other interest receivable 15 Other interest payable
Slide 32: Pensions – balance sheet movement
Pensions – balance sheet movement £13m £231m £223m £(62)m £174m £133m £89m £32m £54m £(146)m £(231)m 2015 2016 2017 2018 2019 2020 2021 2022 Employer Net HY 2023 contributions actuarial losses & other 31
Slide 33: Borrowing repayment profile
Borrowing repayment profile £80m £40m 28 63 39 34 28 £0m 2025 2027 2029 2032 Bilateral US Private Placement notes The bilateral facility has an extension option for three years to December 2027. As at the end of HY 2023 the Group had not t riggered the option NB: US Private Placement notes includes
Slide 34: Inflation
Inflation Infrastructure Construction Services Investments & Support Services Inflation protection Inflation management o In an inflationary market asset values increase o Contractual protection ̶ UK portfolio positively correlated with inflation o Early buyout to lock in costs ̶ US portfolio positi
Slide 35: 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 36: Geographically and operationally diversified Group
Geographically and operationally diversified Group £16.4 billion order book £1.3 billion* Investments portfolio * Directors’ valuation 35
Slide 37: Balfour Beatty
Balfour Beatty