Slide 1: 2020 full year results presentation
2020 full year results presentation 10 March 2021 Image: Legacy Magnet Academy located in Tustin, California
Slide 2: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: M4 motorway, UK
Slide 3: Strong outlook
Strong outlook Growing infrastructure Record order book Build to Last markets Global fiscal stimuli provide Record year end order Embedded culture of significant infrastructure investment book at £16.4bn continuous improvement Leading positions Lower risk profile with focus on Underpinned by expert
Slide 4: Group net cash
Group net cash £800m £527m* £600m £325m* £194m* £400m £42m* £3m* Net cash £(46)m* £200m £0m (£200m) (£400m) 2015 2016 2017 2018 2019 2020 *Average monthly net cash [ £150 million share buyback programme in 2021 ] 3
Slide 5: Phil Harrison, Chief Financial Officer
Phil Harrison Chief Financial Officer Image: Ealing Common track renewals, UK
Slide 6: Headline numbers
Headline numbers £m (unless otherwise stated) 2020 2019 Revenue* 8,587 8,405 Profit from operations* 51 221 Pre-tax profit* 36 200 Profit for the year* 25 186 Basic earnings per share* 3.7p 26.7p Dividends per share 1.5p 2.1p 2020 2019 Order book* £16.4bn £14.3bn Directors’ valuation of Investments
Slide 7: Construction Services
Construction Services 2020* 2019* £m Revenue PFO Revenue PFO ● Resilient revenue performance following 2019 order UK 2,190 (26) 2,213 47 book increase US 3,789 26 3,752 52 ● Material impact on profit primarily due to COVID-19 Gammon 985 29 893 26 > UK Construction impacted by site closures, lower pr
Slide 8: Support Services
Support Services £m 2020 2019 Revenue ● Revenue and profit demonstrates strong resilience Utilities 565 551 > Contracts generally designated as critical Transportation 502 472 infrastructure Total 1,067 1,023 > Acceleration of some road and rail projects, offset by economic uncertainty ● Focus on po
Slide 9: Infrastructure Investments
Infrastructure Investments £m 2020 2019 Pre-disposals operating profit* 8 13 ● Pre-disposals operating profit includes provision for Gain on disposals* − 69 an estimate of historical military housing incentive fees which the Group has not been able to fully verify Investments profit* 8 82 > Continue
Slide 10: Directors’ valuation of Investments portfolio
Directors’ valuation of Investments portfolio £46m £83m £(39)m £(72)m £nil £1,068m £1,086m 2019 Equity Distributions Sales Unwind of Other including 2020 invested received proceeds discount fx* * other includes movements in operational performance £(20)m and foreign exchange £(19)m [ Directors’ valu
Slide 11: Investments portfolio disposals: end to end multiple
Investments portfolio disposals 6 5 End to end multiple* 4 3 2 1 0 2015 2016 2017 2018 2019 2020 Directors’ £1.2bn £1.2bn £1.2bn £1.2bn £1.1bn £1.1bn valuation at £30m+ year end * calculated as the sales proceeds plus distributions received over time divided by the Above At original equity investmen
Slide 12: Cash flow waterfall
Cash flow waterfall £167m £50m £127m £(18)m £(64)m £(34)m £(112)m £(46)m £(1)m £512m £581m 2019 Operating Working Pension Lease Dividends Capital Redemption Net equity Other 2020 cash flows capital cash deficit payments from JVAs expenditure of preference invested flows payments* shares * includes £
Slide 13: Capital allocation framework
Capital allocation framework Continued Active Strong Sustainable Additional investment in realisation of but efficient ordinary dividend cash returns organic growth the Investments balance (40% payout via share opportunities portfolio sheet ratio^) buybacks Investments meet Disposals timed to Platfo
Slide 14: 2021 outlook
2021 outlook Earnings-based Infrastructure Balance sheet businesses Investments Quality and quantity of Strength provides capacity £1.1 billion portfolio provides order book provides for shareholder returns disposal opportunities clear medium term visibility Recommence asset £150 million share buyba
Slide 15: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: Park District located in Dallas, Texas
Slide 16: Global growth through fiscal stimuli
Global growth through fiscal stimuli US UK Hong Kong Public sector construction Infrastructure construction output Public sector construction $450bn £40bn $200bn $400bn £35bn $150bn $350bn £30bn $300bn £25bn $100bn $250bn £20bn $200bn £15bn $50bn 2010 2015 2020 2025 2010 2015 2020 2025 2010 2015 202
Slide 17: Green infrastructure investment
Green infrastructure investment Low carbon transport Renewable energy New nuclear [ Expert capability to deliver for a net zero world ] 16
Slide 18: Sustainability strategy – Building New Futures
Sustainability strategy – Building New Futures Environment Materials Communities 2040 Beyond Net Generate Positively Impact More than Ambitions Zero Carbon Zero Waste 1 Million People Achieve 2030 science-based carbon 40% reduction in £3bn social value waste generated generated Targets reduction tar
Slide 19: Sustainability in action
Sustainability in action Positively Impact More Beyond Net Zero Carbon Generate Zero Waste than 1 Million People Enertainer: battery storage system Slurry Treatment Plant: The King County Children replacing on-site diesel generators processing excavated material & Family Justice Center: in Hong Kong
Slide 20: Record year end order book
Record year end order book 18 £16.4bn ● Increased c. 45% over last 16 £14.3bn £2.7bn three years 14 £12.6bn £2.1bn ● UK Construction order book 12 £11.4bn more than doubled in 2020 10 £5.2bn ● Gammon won largest ever 8 contract at Hong Kong Airport 6 ● Exiting gas and water in UK; 4 exiting US water
Slide 21: Order book by customer
Order book by customer UK Construction Support Services US Construction Gammon £6.4bn £2.7bn £5.2bn £2.1bn ⚫ Public & regulated (88%) ⚫ Public & regulated (100%) ⚫ Public & regulated (56%) ⚫ Public & regulated (82%) ⚫ Private sector ⚫ Private sector ⚫ Private sector ⚫ Private sector [ Public and reg
Slide 22: UK Construction order book risk
UK Construction order book 4% 10% Contract type Relative risk 20% Fixed price RISK Target cost 50% £2.7bn 46% £6.4bn Cost reimbursable 70% HY 2018 FY 2020 [ Lower risk order book underpins future returns ] 21
Slide 23: Build to Last platform
Build to Last platform Lean Expert Cumulative annual cash flow^ (£m) Employee engagement index (%) 80 200 Cash in 2020 0 70 75 (200) c. £650m improvement 60 66 (400) Sustainable 60 (600) 50 Cash out Tonnes of Scope 1 and 2 CO2 emissions per £m revenue 2014* (800) 40 40 Dec Mar Jun Sept Dec 2015 2016
Slide 24: Transformed operational capability
Transformed operational capability Average net cash/(debt) Earnings-based businesses profit/(loss) £m from operations* Primarily due to COVID-19 £m (371) 42 527 (144) 113 75 2014 2017 2020 2014 2017 2020 Other net operating expenses* UK voluntary attrition: moving annual average £m % 470 302 226 16%
Slide 25: Drive for digital productivity
Drive for digital productivity 2020 Operator Construction Skills Hub Microsoft Digital Twin Teams (M25 Connect Plus) Design Integration MSite and LiveLink eGRN and Jaggaer Data Lake Power BI Project on a page 2015 [ Continuous investment to improve returns ] 24
Slide 26: Strong outlook
Strong outlook Growing infrastructure Record order book Build to Last markets Global fiscal stimuli provide Record year end order Embedded culture of significant infrastructure investment book at £16.4bn continuous improvement Leading positions Lower risk profile with focus on Underpinned by expert
Slide 27: Appendix
Balfour Beatty Appendix
Slide 28: Forward-looking statements
Forward-looking statements This presentation, including information included or incorporated by reference in it, may include statements that are or may be forward-looking statements, beliefs or opinions, including statements with respect to Balfour Beatty’s business, financial condition and results
Slide 29: Order book compared with 2019
Order book compared with 2019 Total 2020 £16.4bn Total 2019 £14.3bn £6.6bn £6.4bn £6.4bn £4.2bn £3.5bn £3.6bn FY 2019 FY 2020 FY 2019 FY 2020 FY 2019 FY 2020 0-12 months 13-24 months 25+ months Construction Services - UK Construction Services - US Construction Services - Gammon Support Services 28
Slide 30: Underlying profit from operations
Underlying profit from operations £m 2020* 2019* UK Construction (26) 47 US Construction 26 52 Gammon 29 26 Construction Services 29 125 Support Services 46 47 Earnings-based businesses 75 172 Infrastructure Investments Pre-disposals operating profit 8 13 Gain on disposals − 69 Corporate activities
Slide 31: Group balance sheet
Group balance sheet £m 2020 2019 Goodwill and intangible assets 1,123 1,128 Working capital (887) (725) Net cash (excluding infrastructure concessions) 581 512 Investments in joint ventures and associates 554 550 PPP financial assets 155 155 Infrastructure concessions – non-recourse net debt (317) (
Slide 32: Cash flow
Cash flow £m 2020 2019 £m 2020 2019 Operating cash flows 127 213 Working capital flows^ Working capital inflow 167 32 Inventories (14) (18) Pension deficit payments≠ (18) (33) Net contract assets 154 (30) Cash from operations 276 212 Trade and other receivables 42 (56) Lease payments (inc. interest
Slide 33: Working capital – Group
Working capital – Group £0 0 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 £(200) (4)% £(400) £(600) (8)% £(800) (9.9)% (10.3)% (9.9)% (12)% £(1,000) (12.1)% (12.8)% (12.9)% (12.8)% £(1,200) (16)% Period end working capital Period end working capital as % revenue Debtor days * 29 27 34 28 33 29 2
Slide 34: Working capital – Construction Services
Working capital – Construction Services £0 0 Dec 14 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 £(200) (4)% £(400) (8)% £(600) (10.6)% (12)% £(800) (11.8)% (12.2)% (13.4)% (14.7)% (16)% £(1,000) (14.4)% (16.6)% £(1,200) (20)% Period end working capital Period end working capital as % revenue 33
Slide 35: Non-underlying items
Non-underlying items £m 2020 2019 Impairment and amortisation Amortisation of acquired intangibles (6) (6) Other Grant income received in relation to UK Job Retention Scheme 19 − Loss arising from the recognition of GMP equalisation on the Group’s pension schemes (3) − Release of provision held for
Slide 36: Net finance costs
Net finance costs £m 2020 2019 Subordinated debt interest receivable 15 Interest on PPP financial assets 8 Interest on non-recourse borrowings (11) 22 16 Net finance income – pension schemes 3 2 Other interest receivable 2 Other interest payable (7) (5) (5) US private placement (10) (12) Preference
Slide 37: Pensions – balance sheet movement
Pensions – balance sheet movement £18m £133m £(62)m £89m £32m £54m £(128)m £(146)m £(231)m 2014 2015 2016 2017 2018 2019 Employer Net 2020 contributions actuarial losses 36
Slide 38: Borrowing repayment profile
Borrowing repayment profile £200m £160m £120m £80m £153m £40m £36m £0m 2021 2022 2023 2024 2025 US PP notes The Group has a £375m committed bank facility extending through to 2023, which was undrawn at 31 December 2020 37
Slide 39: Investments – steady cash in a low yield world
Investments – steady cash in a low yield world Investments portfolio cash flows (2021-2040) Global Infrastructure AUM (2010-2025) Cash flows Directors’ valuation £200m £1,600m $1,000bn £1,400m £150m $800bn £1,200m £100m £1,000m $600bn £800m £50m $400bn £600m £400m £0m $200bn £200m (£50m) £0m $0bn 20
Slide 40: Financial impacts of COVID-19
Financial impacts of COVID-19 Site Lower Additional Contract closures productivity operating costs reassessments Reforecast of Availability of employees, Implementation of social c. 15% of sites closed in contract revenues subcontractors distancing and enhanced second quarter of 2020 and costs for a
Slide 41: Financial history
Financial history 450% £12bn Build to Last £400m Increase in £10bn revenue at peak £300m £8bn £6bn £200m 45 £4bn Acquisitions £100m £2bn £94m £0bn £0m Primarily due to Average ordinary dividend -£2bn COVID-19 (2011-2014) £(100)m -£4bn -£6bn £(200)m £15m 2000 2002 2004 2006 2008 2010 2012 2014 2016 2