Babcock International Group PLC · LSE:BAB
Babcock International — Investor Day (March 2012)
97 slides from Babcock International's investor day presentation, Mar 27, 2012
Slide 1: Analyst and Investor Site Visit
Analyst and Investor Site Visit Support Services Division BMW Academy, Wokefield Park – 27 March 2012 Defence and Security Division School of Electrical and Mechanical Engineering, Bordon – 28 March 2012
Slide 2: Disclaimer
Disclaimer This document has been prepared by Babcock International Group PLC (the “Company”) solely for use at a presentation in connection with the Company’s Analyst and Investor Site Visit on 27 and 28 March 2012. For the purposes of this notice, the presentation that follows (the “Presentation”)
Slide 3: Agenda
Agenda Tuesday 27 March • Welcome and Introduction Bill Tame • Support Services Introduction Kevin Thomas • Education and Training Overview Alex Khan • Babcock – The Customers Perspective Nick Wilson • Tour of BMW Academy, Wokefield Park Wednesday 28 March • Defence and Security Overview John Davies
Slide 4: Analyst and Investor Site Visit – Support Services Division
Analyst and Investor Site Visit Support Services Division BMW Academy – Wokefield Park 27 March 2012
Slide 5: Support Services Division
Support Services Division Kevin Thomas Chief Executive – Support Services Division
Slide 6: Support Services – in brief
Support Services – in brief • A key part of the Group Revenue by Division 2010/11 – c 1/3rd of Group revenue Support Services – c 60% of Group’s bid pipeline 16% 33% Marine and Technology • Blend of Babcock and ex-VT businesses 17% Defence and Security • Over 10,000 employees International • We 34%
Slide 7: A leading position across all markets
A leading position across all markets Critical Assets Education & Infrastructure Mobile Nuclear Rail Training Assets Airports School Defence and Gov Emergency Decommissioning Track renewals Communications Property Services Improvement and Signalling and Power Building Schools Ministry of Support Ser
Slide 8: Our business model focuses on high-value contracts
Our business model focuses on high-value contracts •Complex integrated • Managed by strategic output-based contracts partner •Critical to customers’ success • Higher barrier to entry •Single strategic partner • Fewer competitors •Long-term relationship • Higher margin •Shared risk/reward Criticality
Slide 9: Key bid successes
Key bid successes Expanding our customer base • London Fire Brigade training contract – 25 years • Devon County Council education support – 7 years • Lafarge USA and Canada fleet management support – 10 years • Sellafield Design Services Alliance – 15 years • Appointed as Dounreay Parent Body Organi
Slide 10: Majority of contracts at high value end of market
Majority of contracts at high value end of market; recent contract wins further improve position Criticality Existing contracts Criticality Contract Criticality wins Criticality Complexity Complexity Analyst and Investor Site Visit - March 2012 10
Slide 11: A strong foundation for growth
A strong foundation for growth • Leading positions across all our markets • A unique combination of technical, management and analytical expertise – at the heart of customers’ operations – using our expertise to deliver financial and operational efficiencies – enhanced capability from VT acquisition
Slide 12: Education and Training
Education and Training A market leading provider of education support services and vocational training Alex Khan Managing Director
Slide 13: A market-leading provider of training and education services
A market-leading provider of training and education services • Revenue £140m • 2,100 employees in the UK • 38 delivery sites Training Education The largest provider of The UK’s largest education work-based training support services company in the UK Partnering with Local Equipping employees Authorit
Slide 14: Training and Education are both growth markets for Babcock
Training and Education are both growth markets for Babcock Training Education Customers are… Local Authorities are… • Experiencing widespread • Under budget pressure skills shortages • Focused on continually • Looking to consolidate spending improving educational • Seeking consistent high-quality at
Slide 15: Training – What do we offer?
Training What do we offer? Apprenticeships Equipping young people with the skills they need to start their career Vocational Training Giving employees the skills they need to succeed in the workplace Fire Training Delivering specialist fire training and facilities for fire-fighters to safeguard loca
Slide 16: Training – In brief
Training In brief • UK’s largest provider of vocational training • Circa 45,000 learners nationwide on programme at any one time • Broad range of sectors – automotive, nuclear, rail, fire, hospitality, leisure, • Managing the entire training lifecycle – designing and managing the programme, deliveri
Slide 17: Training - blue-chip and public sector employer partners
Training - a broad range of blue-chip and public sector employer partners Engineering sector Service sector Analyst and Investor Site Visit - March 2012 17
Slide 18: Case Study: BMW
Case Study: BMW Babcock – trusted to deliver… • 3 year apprenticeship programme for 200 + dealership Apprentices • c 25,000 days of training per annum • Spanning Technical, Sales, Leadership and Management • Manage complete course booking process • BMW and Mini brand training across the dealership n
Slide 19: Education
Education A market leading provider of education support services
Slide 20: Education – In brief
Education In brief • Working in partnership with local authorities to raise educational achievements and drive down costs – key clients include Surrey CC and the Department for Education • Employing over 500 education specialists, including ex-head teachers, bursars, education advisers – analysing d
Slide 21: Babcock does everything apart from teaching classes
Babcock does everything apart from teaching classes Support Special Support Educational Vulnerable Needs Children Curriculum Finance, HR, Development ICT Support Supporting learners Improve Teaching Health & Safety Effectiveness Improving Supporting Improve School school schools Facilities Leadershi
Slide 22: Only company delivering a fully integrated education offering
Babcock is the only company delivering a fully integrated education offering Improvement Specialist Non- Back Soft Facilities Hard Services Support classroom Office Management Facilities education Management services Babcock Serco Capita Tribal Currently in discussions with several local authorities
Slide 23: Case Study: Surrey CC
Case Study: Surrey CC • Against most key measures school performance is in the top quartile nationally with spend in the bottom quartile – from early years to post 16 school performance • At Key Stage 4, Surrey is now ranked 23rd in the country – a significant improvement from 47th in 2004 • In 2011
Slide 24: Recent contract wins in Education and Training
Recent contract wins in Education and Training expand our customer base Education • Devon County Council education support • 7 years – contract value £125m • School Improvement, Curriculum Enrichment, Workforce Training and Development and Learner Support • 364 schools Training • London Fire Brigade
Slide 25: Further opportunities to grow across Education and Training
Further opportunities to grow exist across both Education and Training Education • Develop UK-wide local authority network of “contract hubs” to deliver education services – build on Devon success through similar partnership model – direct sales to individual schools and academies • Drive to deliver
Slide 26: Partnership: Surrey County Council & Babcock
Partnership Surrey County Council & Babcock International Group Nick Wilson Strategic Director for Children, Schools & Families 27 March 2012
Slide 27: The Joint Venture partnership
The Joint Venture partnership Surrey is the 5th largest local Shareholders authority in England • Babcock - 80.1% Secondary schools 53 • Surrey CC - 19.9% Primary schools 308 Special schools 34 Directors • Kevin Thomas, Chairman • Alex Khan “Our innovative JV partnership with • Steven West Babcock h
Slide 28: Partnership model
Partnership model Surrey County Council Babcock International Group Strategic Director Director, For Children, Schools & Families Education Services Assistant Director Chief Adviser Leadership Team Schools & Learning Primary Secondary Special Inclusion Schools & Learning Directorate
Slide 29: The Joint Venture Partnership
The Joint Venture Partnership
Slide 30: Raising Standards
Raising Standards Ofsted Annual Children’s Services Report • Performing well (Grade 3) • Over 74% schools good or outstanding • Surrey continues be above the national and south east average for most key performance measures for schools
Slide 31: Making a difference to children
Making a difference to children • Improving standards and closing the gap for vulnerable children • Working in partnership to turn around failing schools - Epsom and Ewell High • Appointing and supporting new headteachers • Developing the curriculum and improving the quality of teaching • Delivering
Slide 32: Value of the relationship
Value of the relationship Four year partnership contract extension agreed in 2011 • Contract value £120m (2004 – 2015) • Further four year extension to be negotiated, 2015 – 2019 Secures a sustainable integrated Education Services in Surrey • Provides expert specialist consultancy, training and busi
Slide 33: Rolling out the Babcock 4S model
Rolling out the Babcock 4S model • Develop new partnerships with neighbouring authorities and schools in the South East • Support the expanding Academies market • Respond to the changing regulatory environment and the need for LA’s to commission their services
Slide 34: babcock – trusted to deliver
www.babcock.co.uk babcock trusted to deliver ™ 34
Slide 35: Analyst and Investor Site Visit – Defence and Security Division
Analyst and Investor Site Visit Defence and Security Division School of Electrical and Mechanical Engineering – Bordon 28 March 2012
Slide 36: Defence and Security
Defence and Security John Davies Divisional Chief Executive
Slide 37: Defence and Security division Key facts
Defence and Security division Key facts 37
Slide 38: Market leading position
Market leading position • Key focus on military training and equipment support – extensive experience across all three services – 1.5 million man training days per annum – 50,000 servicemen trained per annum – management and support of 20,000 vehicles – support to over 250 rotary and fixed wing airc
Slide 39: Long-term partnering contracts
Long-term partnering contracts • Contracted major programmes up to 30 years • Partnering – co-located teams – gainshare – excellent Key Supplier Relations Team scores – strong site relationships Analyst and Investor Site Visit - March 2012 39
Slide 40: Mission critical activities
Mission critical activities • Complex activities • Output-based availability contracts • Operationally critical • Strong margins Analyst and Investor Site Visit - March 2012 40
Slide 41: Strong bid success
Strong bid success • 2011/2012 - £600m of orders – White Fleet/Phoenix - £400m (5 years) – Flagship - £92m (6 years) – Bordon and Arborfield - £41m (2 years) – Technical Establishment Support Contract - £22m (4 years) – Maritime Composite Training System - £24m (8 years) – Hawk T1 - £12m (1 year) An
Slide 42: Defence environment
Defence environment • Significant Defence budget pressure • Strategic Defence and Security Review – equipment cuts – sale of DSG – “Efficiencies and improvements in military training” – “Reductions in our spend on commodities” – “Improved Fleet management” • Budget reduction and reduction in service
Slide 43: Addressable markets
Addressable markets MoD in year spend 2011/12 Addressable market £26.1bn Current focus Other Logis&cs £3.3bn £500m Civil pay & Equipment allowance support £2.8bn £1.7bn Military Market Vehicle £1.6bn training Infrastructure total and per £600m Equipment £3.7bn £5bn Support annum per annum £800m Trai
Slide 44: Future major opportunities
Future major opportunities Total Fleet Management Defence Overseas Support Group Defence Defence Storage TA Training and and Distribution Security Agency Defence Frontline School of Aircraft Transport Support Tri-Service Training Analyst and Investor Site Visit - March 2012 44
Slide 45: Summary
Summary Market leading position in Military Training and Equipment Support Customer environment Defence Mission driving and critical outsourcing activities opportunities Security Consistent Bidding Success Analyst and Investor Site Visit - March 2012 45
Slide 46: Air Overview
Air Overview Ken Cornfield Managing Director
Slide 47: Contents
Contents • Overview – three broad areas of activity – support to Military Flying Training – engineering/technical support – key support to joint ventures – Military Flying Training – Future Strategic Tanker Aircraft • Current/emerging opportunities • Summary Analyst and Investor Site Visit - March 2
Slide 48: Locations
Locations • 1700+ employees • 30+ sites Analyst and Investor Site Visit - March 2012 48
Slide 49: Support to Military Flying Training
Support to Military Flying Training
Slide 50: Support to military flying training – Tutor
Support to military flying training Tutor Light Aircraft Flying Task 2 (LAFT 2) • HQ RAFC Cranwell – but delivered at 15 sites • Provision of aircraft, instructors and services to support – University Air Squadrons (UAS) – Elementary Flying Training (EFT) – Air Experience Flying (AEF) • Company owne
Slide 51: Support to military flying training – Tucano
Support to military flying training Tucano Tucano In Service Support Contract (TISC) • RAF Linton-on-Ouse • Management of Tucano fleet to deliver Annual Flying Task of 14,000 hours in support of Basic Flying Training • Customer owned assets • 2014 – but already advised MoD likely to take 2 year exte
Slide 52: Support to military flying training – Hawk T1
Support to military flying training Hawk T1 Hawk Integrated Operational Support (Hawk T1) • RAF Valley, RAF Leeming, RNAS Culdrose and RNAS Yeovilton • Engineering Support to Hawk T1 in Advanced Flying Training and support role • Management of Aircraft Fleet to support Annual Flying Task of 10,000 h
Slide 53: Support to military flying training – Hawk T2
Support to military flying training Hawk T2 Advanced Jet Training (AJT ISS – Hawk T2) • RAF Valley • Engineering support to Hawk T2 • Management of engineering support to deliver Annual Training Task of 9,200 hours • Current contract runs out to 2014 – will be replaced by follow-on contract – to be
Slide 54: Pilot training progression
Pilot training progression Rotary Wing Multi Engine Pilot MOD MOD MOD MOD - Instructors - Aircraft - Aircraft - Aircraft Babcock - Instructors - Instructors - Aircrew - Aircraft - Engineering Babcock Babcock - Instructors manpower / services ? - Engineering - Engineering - Engineering manpower / ser
Slide 55: Engineering/Technical Support
Engineering/Technical Support
Slide 56: Engineering/technical support – Sea King
Engineering/technical support Sea King Sea King Integrated Operational Support (SKIOS) - Search and Rescue (SAR) • Engineering manpower support to Agusta Westland to deliver the Sea King Search and Rescue Service to MoD • 24/7 mission critical maintenance supporting SAR Helicopters on 7 bases in UK
Slide 57: Engineering/technical support – Military bases
Engineering/technical support Military bases • Deliver broad spectrum of support activities including – General Engineering – management and administration – Motorised Transport (MT) support Analyst and Investor Site Visit - March 2012 57
Slide 58: Joint Ventures
Joint Ventures
Slide 59: Joint ventures – AirTanker
Joint ventures AirTanker • JV with EADS, Thales, Cobham and RR – PFI - Babcock share £1bn • 27 year contract awarded March 2008 for – provision of air-to-air refuelling and air transport A330-200 Fleet – full service by 2016 • Babcock contracted to AirTanker Services (ATrS) to provide infrastructure
Slide 60: Joint ventures – UKMFTS
Joint ventures UK Military Flying Training System (UKMFTS) • Ascent – 50/50 joint venture with Lockheed Martin for provision of a training system delivering aircrew training to all 3 services • 25 year programme awarded May 2008 • Ascent responsible for delivering Training Design and manages competi
Slide 61: Joint ventures – UKMFTS infrastructure and ICT
Joint ventures UK Military Flying Training System (UKMFTS) • Babcock contracted to Ascent to deliver Infrastructure and Information Communications Technology (ICT) to support Fast Jet pilot training at RAF Valley and RN Observer training at RAF Barkston Heath and RNAS Culdrose • Will deliver Infrast
Slide 62: Current/Emerging opportunities
Current/Emerging opportunities
Slide 63: Current opportunities
Current/emerging opportunities Current opportunities • Deliver UKMFTS Fixed Wing Training Programme – working with BAE Systems, Pilatus and Gama – detailed solution RFP to be released in June – 15 year programme commencing 2015/16 - value c £800m • Deliver Infrastructure/ICT programme at all UKMFTS
Slide 64: Emerging opportunities
Current/emerging opportunities Emerging opportunities • Extend equipment support model from training platforms to operational platforms – MoD commissioned study Future Optimised Typhoon Availability Service (FOTAS) into service support for Typhoon – current service ends Dec 2013 – MoD wishes to defi
Slide 65: Summary
Summary • Equipment support/asset availability, engineering support and support services • Over 1,700 employees across multiple sites • Leading position in engineering support to UK military flying training – opportunities emerging to transfer model into ‘operational’ areas – MoD considering future
Slide 66: Land and Sea Overview
Land and Sea Overview Nic Anderson Managing Director
Slide 67: Land and Sea
Land and Sea • Providing integrated management services to meet our Land, Sea and Security customers’ needs • High customer satisfaction rated at excelling by MoD • A key partner for training design and delivery • Delivering leading-edge equipment support • Providing secure and resilient services to
Slide 68: Training and training support
Training and training support
Slide 69: Training – Royal School of Military Engineers
Training Royal School of Military Engineers • A 30 year PPP with co-located teams – value c £3bn • Rated as excelling in customer feedback • Phase 2 technical trade training to Royal Engineers – training delivery, training management, design and scheduling – equipment care, security, asset managemen
Slide 70: Training – Bordon
Training – Bordon School of Electrical and Mechanical Engineering • Royal Electrical and Mechanical Engineers’ (REME) partner for over a decade • Rated as excelling in customer feedback • Providing training and support to the School of Electrical and Mechanical Engineering (SEME) • Output based cont
Slide 71: Training – Arborfield
Training – Arborfield School of Electronic and Aeronautical Engineering • Royal Electrical and Mechanical Engineers’ (REME) partner for over a decade • Rated as excelling in customer feedback • Training delivery (Phase 2 and 3) to – School of Electronic and Aeronautical Engineering (SEAE) – Royal El
Slide 72: Training – Bovington
Training – Bovington Training, Maintenance and Support Services • Providing Training, Maintenance and Support Services (TMASS) to the Armour Centre • Rated as excelling in customer feedback • Deliver Phase 2 and 3 training – driving and maintenance – Armoured Fighting Vehicle (AFV) Gunnery – Bowman
Slide 73: Training – FOAP (T)
Training – FOAP (T) Fleet Outsourced Activity Project (Training) • Successfully won £92m 6 year contract – partnering with the Royal Navy • FOAP (T) contract for delivery of instructional training, training design and training support to the Royal Navy • Providing over 1,000 course types and 700,000
Slide 74: Establishment Support and Training Services Tasking Order (ESTSTO)
Establishment Support and Training Services Tasking Order (ESTSTO) • The ESTSTO contract is primarily for the delivery of soft facilities management (FM) across five Royal Navy training establishments – HMS Excellent, HMS Sultan, HMS Collingwood, HMS Raleigh, Britannia Royal Naval College • Also inc
Slide 75: Maritime Composite Training System
Maritime Composite Training System MCTS • Developed by BAE SYSTEMS as part of the Maritime Synthetic Training Programme • Provides a flexible, dual-site ashore training capability • Versatile configuration enables training to be facilitated for all six major combat platforms • Role players, training
Slide 76: Fire Fighting Training Unit (FFTU)
Fire Fighting Training Unit (FFTU) • 20 year PFI contract in partnership with the Navy – total value £175m • Fire fighting training to surface and submarine crews • Fire fighting training for overseas navies and UK fire services • Situated in Strathclyde, Portsmouth and Plymouth • 140,000 trained Ro
Slide 77: Opportunities – Military Training
Opportunities Military Training £600m pa • Defence Technical Training Change Programme (DTTCP) – Defence College of Communication and Information Systems – Defence College of Aeronautical Engineering • Army Recruiting and Training Directorate – Defence School of Transport – Logistics Training School
Slide 78: Equipment Support
Equipment Support
Slide 79: Fleet Management – Phoenix
Fleet Management Phoenix • Ten years of successful delivery • Babcock selected as Service Provider for new contract – Project Phoenix • Babcock providing run-out contract on legacy fleet of over 14,000 vehicles to be replaced over 4 ½ years • Procurement (via Government frameworks) and management of
Slide 80: Fleet Management – ALC
Fleet Management ALC • 50-50 Amey and Babcock joint venture PFI • 16 year partnership with MoD value £600m • Own/maintain/repair/replace Army construction vehicles used worldwide by Royal Engineers and Royal Logistics Corps • Fleet management of over 2,000 construction vehicles • Services include –
Slide 81: Fleet Management – Aspire
Fleet Management Aspire • Aspire programme to upgrade/provide infrastructure and services to Aldershot and Salisbury Plain area • Subcontractor for provision of a fleet management service – maintenance and services to Green Fleet at Aldershot and Warminster – manage and operate fuel and lubricant st
Slide 82: Security
Security • Babcock is a Strategic Partner to a Government Agency • Working together for 15 years • Provision of engineering and procurement services (outsourced 1996) – engineering and workshop services – installation services – project management services – managing infrastructure projects – site s
Slide 83: Opportunities – Equipment Support
Opportunities Equipment Support £800m pa • Logistics Commodities and Support Transformation – MoD intends to outsource elements of Joint Support Chain, probably in FY 2013/14 – expected to be in scope – commodity provision (food, fuel, clothing, medical supplies) – services (warehousing, distributio
Slide 84: Summary
Summary • Largest provider of military training • A key partner for training design and delivery • Delivering leading-edge equipment support • Providing secure and resilient services to Government • Significant addressable markets in core areas Analyst and Investor Site Visit - March 2012 84
Slide 85: Defence and Security division Summary
Defence and Security division Summary • Train 30% of all armed forces personnel • Navy’s training partner for over 15 years • Deliver 1.5m man days of training every year • Run 20 engineering workshops maintaining tanks to trucks • Support over 30% of all MoD’s vehicle fleet • Support over 20% of al
Slide 86: REME Training – Bordon contract overview
REME Training Bordon contract overview Tony Buchanan
Slide 87: Welcome
Welcome Analyst and Investor Site Visit - March 2012 87
Slide 88: Committed to Health and Safety
Committed to Health and Safety • Babcock is passionate about the health and safety of all employees • Home Safe Every Day is Babcock’s safety programme aiming to ensure a safe working environment for all employees • Our goal is to move towards zero accidents across the Company Analyst and Investor S
Slide 89: The Royal Electrical and Mechanical Engineers (R.E.M.E.)
The Royal Electrical and Mechanical Engineers (R.E.M.E.) • Formed October 1942 from – Royal Army Ordnance Corps Weapons and Armoured Vehicles – Royal Engineers Engineering Plant & Machinery – Royal Signals Corps Communication Equipment – Royal Army Service Corps General Motor Transport – Royal Artil
Slide 90: The Royal Electrical and Mechanical Engineers (R.E.M.E.)
The Royal Electrical and Mechanical Engineers (R.E.M.E.) • Responsibility – the examination, modification, repair and recovery of all mechanical, electrical and optical equipment of the Army beyond the capacity of unit personnel. – Challenger 2 Main Battle Tank to Apache helicopters • Operate as – 7
Slide 91: Defence Training College
Defence Training College Defence Training College (22Trg GP) Defence College of Electrical Defence College of Communications and Defence College of and Mechanical Engineering Information Systems Aeronautical Engineering School of Electrical and Royal Naval School of School of Electronic and Mechanic
Slide 92: Training progression
Training progression Adult recruits • Phase 1 - basic recruit training (14 wks) • Phase 2 – pre-trade training (up to 6 wks) – key skills – Common Foundation Module • Phase 2 – trade training (up to 28 wks) – vehicle mechanic – armourer – metalsmith – Royal Marine special to role • Phase 3 – career
Slide 93: Training – Bordon
Training – Bordon School of Electrical and Mechanical Engineering • Providing training and support to the School of Electrical and Mechanical Engineering (SEME) • Output based contract – Phase 2 and Phase 3 training to REME • 5,800 students trained, 145 different course types • Specialist Urgent Ope
Slide 94: Additional Services
Additional Services • Technical Support Services workshops (TSS) – provides servicing and inspection for ‘A’, ‘B’ and plant equipment – Over 33,000 man hours per year – 2000 items plus 860 weapons – 115 ‘A’ vehicles – 158 ‘B’ vehicles and miscellaneous mechanical equipment • Technical Establishment
Slide 95: Contract Performance
Contract Performance • MoD have consistently scored Bordon as excellent in their annual Supplier Relationship Team ranking • Both contracts have been graded overall Green against KPIs for last 8 years • The contract received a BSI Benchmarking Gold award for the first assessment in 2009 – currently
Slide 96: The Success
The Success 6,912 courses * 2,294,553 man training days * 58,136 students Analyst and Investor Site Visit - March 2012
Slide 97: babcock
babcock trusted to deliver ™ www.babcock.co.uk
Babcock International Group — Investor Day (March 2012) on 6ix