Babcock International Group Plc · LSE:BAB
Babcock International — FY2008 Earnings Presentation
24 slides from Babcock International's earnings presentation, May 13, 2008
Slide 1: Preliminary Results for year ended 31 March 2008
Preliminary Results for year ended 31 March 2008 trusted to deliver Babcock International Group PLC The largest facilities management support provider to the MoD The largest support provider to the Royal Navy The largest track contractor for Network Rail One of the largest nuclear engineering resour
Slide 2: 2007/08 highlights
2007/08 highlights trusted to deliver • Organic growth and acquisitions drive record results – 57% increase in revenue – 77% increase in underlying operating profit – 53% increase in underlying profit before tax • Acquisitions enhance strategy of creating leading market positions – Continuing track
Slide 3: Financial Review
trusted to deliver Financial Review for the year ended 31 March 2008 Bill Tame Group Finance Director
Slide 4: Sustained strong growth
Sustained strong growth trusted to deliver Revenue Profit before tax* 1600 100 1400 80 1200 1000 60 £m 800 £m 40 600 400 20 200 0 0 2003/04 2004/05 2005/06 2006/07 2007/08 2003/04 2004/05 2005/06 2006/07 2007/08 half year full year half year full year * Before amortisation of acquired intangibles an
Slide 5: Income statement
Income statement trusted to deliver FY 2007/08 FY 2006/07 £m £m Change Revenue 1,555.9 988.3 + 57% Operating profit* 121.1 68.3 + 77% Margin 7.8% 6.9% - Joint ventures - 0.4 - Net finance cost (25.6) (6.2) - Profit before tax* 95.5 62.5 + 53% Amortisation of acquired (10.9) (5.5) - intangibles and e
Slide 6: Income statement continued
Income statement continued trusted to deliver FY 2007/08 FY 2006/07 £m £m Change Profit before tax* 95.5 62.5 + 53% Tax (18.2) (12.6) + 44% Effective tax rate** 19% 22% - Profit after tax* 77.3 49.9 + 55% Amortisation of acquired (7.6) (4.7) - intangibles and exceptionals*** Profit for the period 69
Slide 7: Acquisitions bridging analysis
Bridging analysis trusted to deliver Revenue Operating profit* 1800 140 174.2 121.1 1555.9 15.2 1600 407.7 120 38.8 (1.2) 1400 (14.3) 100 1200 988.3 1000 80 68.3 £m £m 800 60 600 40 400 20 200 0 0 2007 Acquisitions Organic FX 2008 2007 Acquisitions Organic FX 2008 * Before amortisation of acquired i
Slide 8: Segmental analysis
Segmental analysis trusted to deliver Revenue Operating profit Operating return on revenue FY FY FY FY FY FY 2007/08 2006/07 Change 2007/08 2006/07 Change 2007/08 2006/07 £m £m £m £m Marine 633.2 217.3 + 191% 68.7 22.3 + 208% 10.8% 10.3% Defence 302.1 247.3 + 22% 27.5 20.4 + 35% 9.1% 8.2% Rail 228.1
Slide 9: Organic growth – FY 2007/08
Organic growth – FY 2007/08 trusted to deliver Revenue % Operating profit* % 50% 50% 45% 37% 40% 40% 35% 31% 28% 29% 30% 30% 22% 20% 20% 13% 8% 9% 10% 10% 0% 0% Marine Defence Nuclear Networks Eng & Marine Defence Nuclear Networks Eng & Plant Plant * Before amortisation of acquired intangibles and e
Slide 10: Operating return on revenue
Operating return on revenue* trusted to deliver Group Segmental 10% 12% 10.8% 10.3% 7.8% 10% 9.1% 9.1% 8% 6.9% 8.2% 7.9% 8.0% 8% 7.5% 7.3% 5.8% 6.0% 6% 5.7% 6.1% 6% 4% 4.1% 4% 2% 2% 0.2% 0% 0% 2003/04 2004/05 2005/06 2006/07 2007/08 Marine Defence Rail Nuclear Networks Eng & Plant FY 2007/08 FY 2006
Slide 11: Cash flow
Cash flow trusted to deliver FY 2007/08 FY 2006/07 £m £m Operating profit 110.2 62.8 Non cash items 29.5 14.7 Working capital (20.5) (17.3) Cash from operations 119.2 60.2 Cash conversion 108% 96% Net capital expenditure (8.6) (6.3) Interest (20.3) (5.5) Tax (9.5) (7.7) Free cash flow 80.8 40.7 Acqu
Slide 12: Strong financial position high levels of cash generation
Strong financial position high levels of cash generation trusted to deliver 150% • OCF conversion rate 108% 100% • Gearing ratio 89% 50% • Interest cover stands at 5.5 x 0% FY 04/05 FY 05/06 FY 06/07 FY07/08 • Net debt to EBITDA ratio at 2.3 x OCF Conversion 100% • Period end net debt £322.2m 75% 50
Slide 13: Defined benefit pensions - IAS19 position
Defined benefit pensions* - IAS19 position trusted to deliver 2007/08 2006/07 Income statement £m £m Service cost 26.8 15.0 Asset class % Expected return on assets (115.1) (68.5) 100% Interest on obligation 92.1 51.6 (23.0) (16.9) 80% Net charge/(credit) to operating 3.8 (1.9) profit before one-offs
Slide 14: Financial summary
Financial summary trusted to deliver • Organic growth in operating profit 20% • Improved operating margins 7.8% v 6.9% • Eps up 43% 33.40p v 23.35p • Dividend up 43% 11.50p v 8.05p • Cash conversion rate 108% • Debt service ratios comfortable • Order book £3bn v £2.4bn Slide 14 Preliminary Results f
Slide 15: Operational Review
trusted to deliver Operational Review Peter Rogers Group Chief Executive
Slide 16: Marine
Marine trusted to deliver 2007/08: Revenue £633.2m Operating profit £68.7m Operating margin 10.8% 2006/07: Revenue £217.3m Operating profit £22.3m Operating margin 10.3% • DML integration on course – initial synergies delivered • Marine ToBA moving ahead • Acquisition of Strachan & Henshaw provides
Slide 17: Defence
Defence trusted to deliver 2007/08: Revenue £302.1m Operating profit £27.5m Operating margin 9.1% 2006/07: Revenue £247.3m Operating profit £20.4m Operating margin 8.2% • Excellent organic growth • All contracts performing well – High levels of customer satisfaction – Scope extensions being awarded
Slide 18: Rail
Rail trusted to deliver 2007/08: Revenue £228.1m Operating profit £0.5m Operating margin 0.2% 2006/07: Revenue £228.8m Operating profit £9.3m Operating margin 4.1% • Poor H1 performance improved in H2 – New management team and new operational structure – Further progress expected in 2008/09 • Larges
Slide 19: Nuclear
Nuclear trusted to trusted to deliver deliver 2007/08: Revenue £76.3m Operating profit £5.7m Operating margin 7.5% 2006/07: Revenue £54.4m Operating profit £3.3m Operating margin 6.1% • Demand for high quality nuclear engineering expertise continues to grow • Delays to decommissioning and new build
Slide 20: Networks
Networks trusted trusted to to deliver deliver 2007/08: Revenue £98.5m Operating profit £7.2m Operating margin 7.3% 2006/07: Revenue £74.9m Operating profit £6.8m Operating margin 9.1% • Transmission Alliances working successfully – Good long term visibility albeit at reduced margins • Further incre
Slide 21: Engineering and Plant
Engineering and Plant trusted to deliver 2007/08: Revenue £217.7m Operating profit £17.1m Operating margin 7.9% 2006/07: Revenue £165.6m Operating profit £13.3m Operating margin 8.0% • Electricity provision remains key priority for South African government – major infrastructure improvement plans –
Slide 22: Outlook
Outlook trusted to deliver • All markets provide opportunities for growth • Good relationships with major customers • Good visibility of earnings streams/order book underpins future • Well positioned for additional major long term contracts – RSME - £1.3bn over 30 years – CVF - £600m to 2015 – Subma
Slide 23: Appendices
trusted to deliver Appendices
Slide 24: Number of shares in issue
Number of shares in issue trusted to deliver 2008 2007 Weighted average number of ordinary shares 224,459,855 205,715,620 for purpose of basic EPS Effect of dilutive potential ordinary shares 4,264,409 6,228,491 Weighted average number of ordinary shares 228,724,264 211,944,111 for purpose of dilute
Babcock International Group — FY2008 Earnings Presentation on 6ix