Slide 1: 2005 Interims
Balfour Beatty 2005 Interims 17 August 2005
Slide 2: Anthony Rabin
Anthony Rabin Balfour Beatty
Slide 3: Headline numbers
Headline numbers First half Pro forma First half 2004 first half 2004 2005 Turnover (revenue) £2,026m £2,026m £2,308m +14% Pre-tax profit* £53m £44m £52m +18% continuing operations Adjusted eps* 10.4p 10.1p 9.3p -9% * Before exceptional items, and in the case of eps, eps, premium on buy- buy-back of
Slide 4: Headline numbers
Headline numbers First half First half 2004 2005 Interim dividend 2.85p 3.5p +23% Net cash (excluding 100% PFI) £121m £299m Order book £6.5bn £7.4bn +14%
Slide 5: Performance by sector
Performance by sector Full year First half First half 2004 £m 2004 2005 Building, Building Management 34 14 8 and Services
Slide 6: Building, Building Management and Services
Building, Building Management and Services Full year First half First half 2004 £m 2004 2005 34 14 8 • Steady underlying performance • Mansell performs particularly well • Some short-term contract issues in Construction • Heery performance improves • Significantly stronger performance expected in 2n
Slide 7: Performance by sector
Performance by sector Full year First half First half 2004 £m 2004 2005 Building, Building Management 34 14 8 and Services Civil and Specialist Engineering 16 8 17 and Services
Slide 8: Civil and Specialist Engineering and Services
Civil and Specialist Engineering and Services Full year First half First half 2004 £m 2004 2005 (3) Civil and specialist engineering (1) 10 19 Services 9 7 16 8 17 • Steady performance overall • Significant improvement in US civils performance • Utilities gearing up for major new long-term contracts
Slide 9: Performance by sector
Performance by sector Full year First half First half 2004 £m 2004 2005 Building, Building Management 34 14 8 and Services Civil and Specialist Engineering 16 8 17 and Services 44 Rail Engineering and Services 23 20
Slide 10: Rail Engineering and Services
Rail Engineering and Services Full year First half First half 2004 £m 2004 2005 50 UK businesses 19 26 (6) Overseas businesses 4 (6) 44 23 20 • Steady UK performance - renewals settlements • German market remains depressed • Write-down of one US rail signalling contract • 2nd half performance expect
Slide 11: Performance by sector
Performance by sector Full year First half First half 2004† £m 2004† 2005 Building, Building Management 34 14 8 and Services Civil and Specialist Engineering 16 8 17 and Services 44 Rail Engineering and Services 23 20 17 Investments and Developments 7 8 † Pro forma
Slide 12: Investments and Developments
Investments and Developments First half 2004 First half 2005 Full PFI PFI year JVs & JVs & 2004 £m Assocs Barking Total Assocs Barking Total Share of results of 26 7 3 10 8 4 12 JVs & associates (9) Group operating profit* (3) (4) 17 I & D operating profit 7 8 16 Group net finance income 8 9 9 Subor
Slide 13: Investments and Developments
Investments and Developments • UCLH 1st phase and M77 handed over on-time • Financial close on North Lanarkshire and Bassetlaw schools • Metronet performance satisfactory • Pre-qualification and bidding opportunities strong • Satisfactory performance expected for full year
Slide 14: Performance by sector
Performance by sector Full year First half First half 2004† £m 2004† 2005 Building, Building Management 34 14 8 and Services Civil and Specialist Engineering 16 8 17 and Services 44 Rail Engineering and Services 23 20 17 Investments and Developments 7 8 (17) Corporate costs (10) (10) 94 Profit from
Slide 15: Operating profit v operating cash flow
Operating profit v operating cash flow First half First half £m 2004* 2005* Group operating profit 31 24 Trading profit from discontinued operations 7 - Depreciation 20 20 Other items 1 1 Working capital decrease 8 39 Cash generated from operations 67 84 * Treating PFI subsidiaries as associates / j
Slide 16: Balance sheet cash movement
Balance sheet cash movement First half First half £m 2004* 2005* Opening net cash 127 311 Cash generated from operations 67 84 Dividends from JVs and associates 8 9 Capital expenditure and financial investment (17) (33) Acquisitions and disposals (15) (6) Buy-back of preference shares (18) (9) Divid
Slide 17: Exceptional items
Exceptional items £m Profit from operations: TXU distributions to Barking Power (net of tax) 24 Finance costs: Premium on buy-back of preference shares (3) Premium on repayment of US$ term loan (6) Tax on exceptional finance costs 2 Net exceptional post-tax profit 17
Slide 18: Pension charges under IAS 19
Pension charges under IAS 19 Full year First half First half 2004 £m 2004 2005 50 Current service cost 24 24 (5) Net finance income (2) (2) 2 Defined contribution schemes 1 1 47 23 23 (8) Exceptional settlement gain - - 39 23 23
Slide 19: Group balance sheet
Group balance sheet Dec Pro forma June £m 2004 Dec 2004 2005 Goodwill* 310 305 307 Net cash 311 311 299 Preference shares – liability - (103) (99) PFI / PPP subsidiaries 32 63 72 Non-current assets + working capital 276 307 319 Non-recourse net debt (244) (244) (247) Other assets / liabilities (351)
Slide 20: Summary
Summary • No impact from IFRS on business operations, strategy or cash • Continuing growth in profits • Strong cash flow • Strong cash position to support future growth
Slide 21: Ian Tyler
lan Tyler Balfour Beatty
Slide 22: First half 2005
First half 2005 • Strong cash generation • Increased order book • Turnaround in US civils • Growth in PFI portfolio • Satisfactory settlement of legacy rail issues Dividend rebased
Slide 23: Today's agenda
Today’s agenda • Mansell – an established leader in growing markets • Balfour Beatty Utilities – a new business to exploit market change • Heery – solid positions and future growth potential • Texas Highways – a growing business with future PFI potential
Slide 24: Mansell
Mansell • Substantial portfolio of long-term frameworks • Social housing
Slide 25: Mansell
Mansell • Top 10 frameworks have £600m potential • Good spread of customer types - British Telecom - BAA - Department of Work and Pensions - Metropolitan Housing Association - University of Reading - MoD
Slide 26: BAA
Airports
Slide 27: Defence Estates
Defence Estates
Slide 28: Social housing – key trends
Social housing – key trends • £22bn government spend committed – private sector to match • All housing to “decent” standards by 2010 • Project size increasing in value and duration • Potential for new procurement methods
Slide 29: Market trends – social housing
Market trends – social housing Estimated Annual Value £m • Morgan Sindall (Lovell Partnerships) 420 • Mansell 200 • Kier 185 • ROK 180 • Wates 175 • Willmott Dixon 160 • Keepmoat 135 Source: Contract Journal, July 2005
Slide 30: UNITE
UNITE
Slide 31: Mansell
Mansell • Excellent spread of blue chip customers • Dedicated skills aligned to market sectors • Comprehensive regional network • High customer satisfaction ratings
Slide 32: Balfour Beatty Utilities
Balfour Beatty Utilities • Acquisition of John Kennedy and Kentons (£70m) • Merged and reorganised in 2002
Slide 33: Why invest in utilities?
Why invest in utilities? • Growth and change from regulatory reviews • Continued trend to outsourced services • Within Balfour Beatty’s competence footprint
Slide 34: The markets
The markets • 78% of water network yet to be upgraded / replaced • 50% of gas network yet to be upgraded / replaced • 77% of volumes now under partnering / alliance contracts
Slide 35: Forward order book
Forward order book Order book: c.£1bn including: Greater Manchester NGT Alliance United Utilities Integrated Services Anglian and Severn Trent Water South West and Yorkshire Water
Slide 36: Balfour Beatty Utilities
Balfour Beatty Utilities Market shares • Clean water – operations 18% • Clean water – capital 19% • Gas mains replacement 15% • Wastewater 6%
Slide 37: The current position
The current position • Order book secured to 2010 • Mobilisation in progress • Efficiencies key to maximising margin levels
Slide 38: Heery International
Heery International Capabilities • Architecture • Interior design • Engineering • Facilities planning and design • Construction management • Programme management
Slide 39: K-12 education
K-12 education • Market volumes on long-term upward trend • Market leader with a substantial track record - 160 school districts - $20 billion managed value • Long-term relationships with key customers
Slide 40: Federal government
Federal government • Major Washington presence • Leading supplier to the GSA - eg Department of Transportation National Archives Building Patent and Trademark Office • Well positioned for high-growth security market
Slide 41: Other growth business
Other growth business • Healthcare - Veterans hospitals and clinics - HUD funded critical access hospitals • Higher education - Public and community college upgrade - Site master planning • Justice - Federal and county courthouse programme
Slide 42: Heery
Heery • $55m profits, $60m cash • Recent acquisitions further strengthen business • Positive market fundamentals
Slide 43: Balfour Beatty Construction Inc
Balfour Beatty Construction Inc • Three regional businesses - Texas - California - Pennsylvania / Ohio
Slide 44: The Federal Transport budget
The Federal Transport budget • $286bn federal funding guaranteed 2005-2009 • Up 38% on previous budget Top spending states 2005/09 $bn California 17.2 +34% Texas 14.5 +37% Florida 8.7 +33% New York 8.4 +19% Pennsylvania 8.2 +19% Ohio 6.6 +36%
Slide 45: Texas Highways Division
Texas Highways Division • Set up in 1995 • Experienced management team • 40+ road projects – worth £1bn over 10 years • Consistently profitable • SH 130 going well • PFI market in development
Slide 46: Texas Highways Division
Texas Highways Division Turnover ($ million) $224m $161m $136m $141m $88m $82m 2001 2002 2003 2004 2005 2006 projected projected
Slide 47: Balfour Beatty
Baliour Beatty Balfour Beatty
Slide 48: Outlook
Outlook • Good trading prospects • Substantial net cash • Normal seasonal pattern resumed • Good progress in year as a whole
Slide 49: Balfour Beatty
Baliour Beatty Balfour Beatty