Slide 1: 2002 Preliminary Results
Balfour Bea~y 2002 Preliminary Results 5 March 2003
Slide 2: Anthony Rabin, Finance Director
Balfour Bea~y Anthony Rabin Finance Director
Slide 3: Headline Numbers
Balfour Bea~y Headline Numbers 2002 2001 Turnover £3,441m £3,071m +12% Operating profit* £149m £136m +10% Pre-tax profit* £118m £102m +16% Earnings per share* 16.1p 14.1p +14% Dividends per share 5.4p 5.0p +8% Net cash £67m £63m Order book £5.1bn £4.3bn +19% * Before exceptionals and goodwill amorti
Slide 4: Performance by Sector
Balfour Bea~y Performance by Sector £m 2002 2001 Building, Building Management and Services 46 44 +5%
Slide 5: Building, Building Management and Services
Balfour Bea~y Building, Building Management and Services £m 2002 2001 Construction 20 18 Services and systems 26 26 Operating profit 46 44 • Construction businesses continue to perform well • Services and systems businesses steady
Slide 6: Performance by Sector
Balfour Bea~y Performance by Sector £m 2002 2001 Building, Building Management and Services 46 44 +5% Civil and Specialist Engineering and Services 17 22 -23%
Slide 7: Civil and Specialist Engineering and Services
Balfour Bea~y Civil and Specialist Engineering and Services £m 2002 2001 Services 12 5 Civil and specialist engineering 5 17 * Operating profit 17 22 * • Utilities business created • Further US write-offs depress civil engineering profits • Market prospects good and improving * Excluding results for
Slide 8: Performance by Sector
Balfour Bea~y Performance by Sector £m 2002 2001 Building, Building Management and Services 46 44 +5% Civil and Specialist Engineering and Services 17 22 -23% Rail Engineering and Services 37 24 +54%
Slide 9: Rail Engineering and Services
Balfour Bea~y Rail Engineering and Services £m 2002 2001 UK infrastructure services 12 3 Projects and specialist businesses 25 21 Operating profit 37 24 • Return to profit in UK maintenance • Acquisition of ABB Dacom • Strong performance in Europe
Slide 10: Performance by Sector
Balfour Bea~y Performance by Sector £m 2002 2001 Building, Building Management and Services 46 44 +5% Civil and Specialist Engineering and Services 17 22 -23% Rail Engineering and Services 37 24 +54% Investments and Developments 49 45 +9% Operating profit* - continuing businesses 149 135 +10% * Befo
Slide 11: Investments and Developments
Balfour Bea~y Investments and Developments £m 2002 2001 PFI/PPP 34 26* Barking Power 15 19 Profit before interest 49 45 Profit after interest 23 16 • Concession income increases • Barking Power affected by electricity market difficulties * Including Property
Slide 12: Operating Profit v. Operating Cash Flow
Balfour Bea~y Operating Profit v. Operating Cash Flow £m 2002 2001 2000 Group operating profit 67 61 53 add back: goodwill amortisation 19 10 3 Group operating profit* 86 71 56 Depreciation 40 35 32 Exceptional items – cash expenditure (9) (4) (20) Other items – – (5) Working capital decrease 25 15
Slide 13: Balance Sheet Cash Movement
Balfour Bea~y Balance Sheet Cash Movement £m Opening net cash 63 Net cash inflow from operations 142 Dividends from J/Vs and associates 20 Capital expenditure (46) Disposal of tangible fixed assets 4 Acquisitions and disposals (68) Dividends and interest (41) Tax paid (17) Other items 10 Closing net
Slide 14: Acquisitions and Disposals
Balfour Bea~y Acquisitions and Disposals £m Acquisition of Kenton Utility 25 Acquisition of Walgrave Contracting Services 7 Acquisition of 49% of Romec 10 Other acquisitions/disposals 8 Deferred consideration for earlier acquisitions 18 68
Slide 15: Pensions
Balfour Bea~y Pensions £m £m SSAP24 FRS17 P&L charge 2002 19 26 • Funds in actuarial surplus at end 2002 • Note 22 shows £107m deficit under FRS17 • Disparity due entirely to differences in discount rates • Future funding under review
Slide 16: Group Balance Sheet
Balfour Bea~y Group Balance Sheet £m 2002 2001 Goodwill* 280 255 Net cash 67 63 Other assets/(liabilities) (154) (133) Shareholders’ funds 193 185 * Including share of joint ventures and associates
Slide 17: Summary
Balfour Bea~y Summary • Continuing growth in underlying earnings • Strong cash flow • Record order book
Slide 18: Mike Welton, Chief Executive
Balfour Bea~y Mike Welton Chief Executive
Slide 19: Key Objectives
Balfour Bea~y Key Objectives • Sustainability Better, more secure margins • Focus Maintain competitive advantage • Growth Organic and by acquisition • Process Continuous improvement
Slide 20: Balfour Beatty 2002
Balfour Bea~y 2002
Slide 21: Balfour Beatty in the UK Building Market
Balfour Bea~y Balfour Beatty in the UK Building Market Balfour Beatty Construction (BBCL), Haden Young (HY), Balfour Kilpatrick (BK), Haden Building Management (HBM) Sales £900m Operating profits £30m Operating cash £30m Margins 3.3% Competitor margins 1-3% Repeat business 75%
Slide 22: Government Procurement
Balfour Bea~y Government Procurement • Very substantial forward programmes in public building – complex project and programme management – complex mechanical and electrical engineering – whole-life asset management
Slide 23: Customers
Balfour Bea~y Customers BBCL HY BK HBM Top 5 Consort* BB* Goldman Royal Mail Customers Babcock & Laing* Sachs Benefits Brown* Sir R Canary Wharf Agency BAE McAlpine* LUL* Consort Hammerson Bovis* BAA Healthcare* CIN Skanska Laing* Inland Revenue BT * PFI
Slide 24: Balfour Beatty in the US Building Market
Balfour Bea~y Balfour Beatty in the US Building Market Heery and Andover • Profits maintained despite some market weakness • Well positioned for future upturn
Slide 25: UK Roads
Balfour Bea~y UK Roads • £600m new maintenance and management work • £270m Early Contractor Involvement Contracts – A3 – A303 • Preferred bidder for £130m M77 PFI
Slide 26: Utilities Contracting
Balfour Bea~y Utilities Contracting Approximate £m Annual Sales Balfour Beatty Power Networks 145 John Kennedy Balfour Beatty 100 Kentons Utilities 75 320
Slide 27: US and LUL
Balfour Bea~y US and LUL • USA – Improved performance and recoveries • Metronet – £600m+ civil engineering work over 7½ years
Slide 28: UK Rail
Balfour Bea~y UK Rail Essential works – UK • West Coast Main Line completion • Southern Region Power Upgrade • Southern Region Signalling Framework Upgrade • Maintenance and renewals • Track systems and plant • £500m trackwork for Metronet
Slide 29: Overseas Rail
Balfour Bea~y Overseas Rail Value to Length Progress Electrification in Italy BB - €m km to date Rome-Naples 90 195 65% Turin-Novara 72 120 5% Milan-Bologna 118 178 15% Bologna-Florence 70 76 30%
Slide 30: Overseas Rail
Balfour Bea~y Overseas Rail • Germany Satisfactory performance in flat market • Eastern Europe Accession funding increasing • Asia Selective market presence • USA Continuing market expansion
Slide 31: UK PFI / PPP
Balfour Bea~y UK PFI / PPP The Forward Market £bn • Forecast new PFI/PPP investment in 2002-2005 25 • Committed expenditure on signed contracts to 2012 52 • Committed expenditure on signed contracts to 2027 92
Slide 32: Balfour Beatty and PPP
Balfour Bea~y Balfour Beatty and PPP • Highly segmented market • Focus on large, complex projects with potential for full- service integration • Favourable market characteristics • Strong team and quality portfolio
Slide 33: Balfour Beatty in Healthcare PPP
Balfour Bea~y Balfour Beatty in Healthcare PPP Construction value (£m) Current Portfolio Durham 70 Edinburgh 220 UCLH 225 Preferred Bidder Blackburn 86 Short Listed Birmingham 400 Pinderfields 200 St Helens 140 Coming to market by end 2003: 18 further major hospitals with total construction value of
Slide 34: Balfour Beatty in Education PPP
Balfour Bea~y Balfour Beatty in Education PPP Construction value (£m) Current Portfolio Stoke 80 Preferred Bidder Rotherham 90 Short Listed Crawley 50 Coming to market by end 2003: 9 schemes with total construction value of nearly £800m
Slide 35: The US Market
Balfour Bea~y The US Market • Rail spending on a sharp increase • Highway spending to stay strong • Heery / Andover resilient • New US CEO appointed 1.1.03
Slide 36: Order Book
Balfour Bea~y Order Book £bn Dec 2000 Dec 2001 Dec 2002 Building, Building Management and Services 1.3 1.3 1.9 Civil and Specialist Engineering and Services 1.2 1.8 2.1 Rail Engineering and Services 0.8 1.2 1.1 Total 3.3 4.3 5.1 * * 45% for execution in 2003
Slide 37: Outlook
Balfour Bea~y Outlook • Further substantial growth in order book • Growing income from investments • Performance improvements in engineering • Strong positions in rail and major building • Further progress in 2003