Slide 1: 2005 Preliminary Results
2005 Preliminary Results 8 March 2006
Slide 2: Sir David John
Sir David Jonn Balfour Beatty
Slide 3: Anthony Rabin
Anthony Rabin Balfour Beatty
Slide 4: Headline numbers
Headline numbers Pro forma 2004 2004 2005 Revenue £4,239m £4,239m £4,938m +16% Pre-tax profit* £122m £107m £134m +25% continuing operations Adjusted eps* 22.5p 22.1p 24.1p +9% * Before exceptional items, and in the case of eps, premium on buy buy--back of preference shares
Slide 5: Headline numbers
Headline numbers 2004 2005 Full-year proposed dividend 6.6p 8.1p +23% Net cash (excluding 100% PFI) £311m £315m Order book £6.8bn £7.6bn +12%
Slide 6: Performance by sector
Performance by sector £m 2004 2005 Building, Building Management 34 35 +3% and Services
Slide 7: Building, Building Management and Services
Building, Building Management and Services £m 2004 2005 34 35 • Steady underlying performance • Mansell performs well • Construction recovers strongly from some short-term contract issues in first half • Heery performance improves
Slide 8: Performance by sector
Performance by sector £m 2004 2005 Building, Building Management 34 35 +3% and Services Civil and Specialist Engineering 16 49 +206% and Services
Slide 9: Civil and Specialist Engineering and Services
Civil and Specialist Engineering and Services £m 2004 2005 Civil and specialist engineering (3) 29 Services 19 20 16 49 • Return to profit in US civils • Steady performance in UK civils • Good progress in RCS and Power Networks • Utilities gearing up for major new long-term contracts • Strong order
Slide 10: Performance by sector
Performance by sector £m 2004 2005 Building, Building Management 34 35 +3% and Services Civil and Specialist Engineering 16 49 +206% and Services Rail Engineering and Services 44 32 -27%
Slide 11: Rail Engineering and Services
Rail Engineering and Services £m 2004 2005 UK businesses 50 37 Overseas businesses (6) (5) 44 32 • UK profits affected by handover of rail maintenance business to Network Rail in 2004 • Improved performance in Rail Power Systems • Further write-downs on one US rail signalling contract
Slide 12: Performance by sector
Performance by sector £m 2004† 2005 Building, Building Management 34 35 +3% and Services Civil and Specialist Engineering 16 49 +206% and Services Rail Engineering and Services 44 32 -27% Investments and Developments 17 20 +18% † Pro forma
Slide 13: Investments and Developments
Investments and Developments 2004 2005 £m PFI Barking Total PFI Barking Total Share of results of JVs & 19 7 26 22 8 30 associates Group operating profit* (9) (10) I & D operating profit 17 20 Group net finance income 16 17 Subordinated debt interest income 9 5 I & D net result 42 42 * Including Pro
Slide 14: Investments and Developments
Investments and Developments • UCLH 1st phase and M77 handed over on-time • Financial close on South Tyneside street lighting, and North Lanarkshire and Bassetlaw schools • Metronet operational performance satisfactory • Pre-qualification and bidding opportunities strong
Slide 15: Portfolio valuation: December 2005
Portfolio valuation: December 2005 Total equity committed: £283m Cash invested: £149m Other Metronet £14m £33m Connect Transform £123m £3m Valuation £289m Consort £116m
Slide 16: Performance by sector
Performance by sector £m 2004† 2005 Building, Building Management 34 35 +3% and Services Civil and Specialist Engineering 16 49 +206% and Services Rail Engineering and Services 44 32 -27% Investments and Developments 17 20 +18% Corporate costs (17) (21) Profit from operations* 94 115 Net finance inc
Slide 17: Operating profit v operating cash flow
Operating profit v operating cash flow £m 2004 2005 Group operating profit 55 58 Trading profit from discontinued operations 8 - Depreciation 41 41 Impairment charge 18 12 Other items 2 (5) Working capital decrease 17 61 Cash generated from operations† 141 167 PFI subsidiaries – adjustment 7 - Cash
Slide 18: Balance sheet cash movement
Balance sheet cash movement £m 2004 2005 Opening net cash 127 311 Cash generated from operations 141 167 Dividends from JVs and associates 17 19 Capital expenditure and financial investment (56) (71) Acquisitions and disposals 159 (42) Buy-back of preference shares (20) (11) Dividends, interest and
Slide 19: Acquisitions and disposals
Acquisitions and disposals £m Consort Healthcare ERI (31.4%) 31 Signalbau Bahn 9 Pennine 8 JCM 6 Deferred consideration 2 56 Connect Roads disposal (15%) (14) 42
Slide 20: Exceptional items
Exceptional items £m Profit from operations: Gain on sale of 15% of Connect Roads 6 Legacy legal issue in the US (8) Romec investment impairment (8) Goodwill impairment Balfour Beatty Rail Inc (4) TXU distributions to Barking Power (net of tax) 30 16 Finance costs: Premium on buy-back of preference
Slide 21: Pensions under IAS 19
Pensions under IAS 19 £m 2004 2005 P&L charge pre-exceptionals 48 49 Exceptional settlement gain (8) - 40 49 Employer contributions 42 43 Balance sheet liability 254 280
Slide 22: Group balance sheet
Group balance sheet Dec Pro forma Dec £m 2004 Dec 2004 2005 Goodwill 279 274 284 Net cash (excluding PFI) 311 311 315 Preference shares – liability - (103) (98) PFI / PPP subsidiaries 32 58 - Non-current assets + working capital 276 302 14 Non-recourse net debt (244) (244) (14) Other assets / liabil
Slide 23: 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 24: Ian Tyler
lan) hyler Balfour Beatty
Slide 25: Balfour Beatty growth 2000-2005
Balfour Beatty growth 2000-2005 CAGR 20% 15% 10% 18% 18% 13% 11% 5% 0% Pre-tax profits Earnings per Sales Order book share
Slide 26: Balfour Beatty growth 2006 and beyond
Balfour Beatty growth 2006 and beyond • Short-term - Inherent in existing business mix
Slide 27: Strategic conundrum
Strategic conundrum Infrastructure market growth Market share growth = 3% Gap Target growth Diversification = 10%
Slide 28: Strategic framework
Strategic framework • Minimum distance from core capabilities • Exploit / create positions of market leadership
Slide 29: Balfour Beatty growth 2006 and beyond
Balfour Beatty growth 2006 and beyond • Short-term - Inherent in existing business mix • Medium-term - New infrastructure investment markets - Knowledge-based businesses - UK regional business expansion • Longer-term - Expansion of non-UK domestic businesses
Slide 30: Criteria for international diversification
Criteria for international diversification • Adequate market size • Acceptable business environment • Sufficiently sophisticated • Market leadership possible
Slide 31: Balfour Beatty growth 2006 and beyond
Balfour Beatty growth 2006 and beyond • Short-term - Inherent in existing business mix • Medium-term - New infrastructure investment markets - Knowledge-based businesses - UK regional business expansion • Longer-term - Expansion of non-UK domestic businesses • US • Western Europe • South-East Asia