Slide 1: 2009 Preliminary Results
2009 Preliminary Results 4 March 2010
Slide 2: Duncan Magrath, Finance Director
Duncan Magrath Finance Director
Slide 3: Business segments
Business segments Design, Planning, Construction, Maintenance Infrastructure lifecycle Professional Construction Support services services services 25% 30% 15% Infrastructure investments 30% Financing and Operating Note: Balfour Beatty analysis – illustrative allocation of value by segment The creat
Slide 4: Headline numbers
Headline numbers Actual Constant 2009 2008 growth currency Revenue £10,339m £9,486m +9% +3% Profit from operations* £282m £230m +23% +14% Pre tax profit* Pre-tax £267m £249m +7% Adjusted eps*^ 34.7p 34.7p Full-year proposed dividend^ 12.0p 11.1p +8% Cash generated from operations £294m £297m Average
Slide 5: Professional services
Professional services Actual Constant 2009 2008 growth currency Order book £1.4bn £0.4bn +250% +285% Revenue £558m £290m +92% +70% Profit £13m £14m -7% 7% -19% 19% Margin % 2.3% 4.8% Included above are post-acquisition results of Parsons Brinckerhoff (2009: Order book £1.1bn; Revenue £248m; Loss £
Slide 6: Professional services – revenue by geography
Professional services – revenue by geography RoW RoW 14% 22% UK UK £78m 29% 22% £160m £374m £377m US £320m US £974m 57% 56% 2009 actual act al 2009 proforma* £558m £1,725m * includes pre-acquisition pre acquisition Parsons Brinckerhoff The creation and care of essential assets
Slide 7: Construction services
Construction services Actual Constant 2009 2008 growth currency Order book £8.2bn £9.5bn -14% -8% Revenue £7,491m £7,095m +6% -2% Profit £207m £167m +24% +14% Margin % 2.8% 2.4% US – strong revenue and profit performance plus small benefit from acquisitions of RT Dooley and SpawMaxwell UK – stro
Slide 8: Construction services – 2009 by geography
Construction services – 2009 by geography RoW RoW 23% 16% UK UK 46% £1,197m 52% £1.9bn £3.8bn £3,898m £2,396m £2.5bn US US 31% 32% Order book Revenue Re en e £8.2bn £7,491m The creation and care of essential assets
Slide 9: Support services
Support services Actual Constant 2009 2008 growth currency Order book £4.5bn £2.9bn +55% +50% Revenue £1,443m £1,548m -7% -7% Profit £55m £52m +6% +7% Margin % 3.8% 3.4% M25 management contract started Sept ‘09 QinetiQ FM contract and one year extension to Royal Mail contract S Secured d AMP5
Slide 10: Support services – 2009 by market
Support services – 2009 by market Highways Highways BSO + FM mgtt & railil BSO + FM mgtt & railil 26% renewals 29% renewals 38% 32% £1.2bn £414m £1 7bn £1.7bn £469m £0.9bn £382m £178m £0.7bn Power Power 20% Water 27% Water 16% 12% Order book Revenue £4.5bn £1,443m BSO Business services outsourcing B
Slide 11: Infrastructure investments
Infrastructure investments 2009 2008 JVs & JV JVs & JV £m Group assoc Total Group assoc Total PPP 1 31 32 1 31 32 BB Co Communities u t es 20 4 24 10 2 12 Infrastructure (3) 19 16 (3) 17 14 Bidding costs & overheads (30) - (30) (27) - (27) I Investments t t operating ti fit*# profit* (12) 54 42 (19)
Slide 12: PPP portfolio valuation 2009
PPP portfolio valuation 2009 BB Capital BB Communities £1m -£21m --£3m -£18m £610m £15m £1m £556m £1m £3m £32m £58m -£42m £27m £189m £171m £191m £196m £439m £439m £403m £360m 2008 Equity Distributions Unwind Restated New AcquisitionsOperational 2009 FX 2009 invested of discount project p j performan
Slide 13: Infrastructure investments
Infrastructure investments Increase in Directors’ valuation of PPP concessions to £610m Full F ll year’s ’ results l off BB C Communities i i (GMH Military Mili H Housing) i ) acquired 30 April 2008 Achieved financial close on – M25 project – Southwark Schools – Fife Hospital p – Carlisle Nort
Slide 14: Investment income & finance costs
Investment income & finance costs £m 2009 2008 PPP subordinated debt interest receivable 9 12 PPP interest on financial assets 14 7 Income on net investment hedges 1 6 Other interest receivable 8 13 Net investment income – pension schemes - 5 Investment income 32 43 PPP interest on bank loans and ov
Slide 15: Performance by sector
Performance by sector £m 2009 2008 Professional services 13 14 Construction services 207 167 S Support t services i 55 52 Infrastructure investments 42 31 Corporate p costs ((35)) (34) Profit from operations* 282 230 Investment income 32 43 Finance costs* (47) (24) Pre-tax profit* 267 249 * before e
Slide 16: Exceptional items & intangible asset amortisation
Exceptional items & intangible asset amortisation 2009 Profit £m before tax Tax Net Exceptional items: Pension gain 100 (28) 72 Acquisition related expenses (16) 1 (15) Mansell OFT penalty (5) - (5) US dollar options (15) 4 (11) Post acquisition integration, reorganisation & other costs (16) 5 (11)
Slide 17: Cash generated from operations
Cash generated from operations £m 2009 2008 Group operating profit* 199 155 Depreciation 69 65 E Exceptional ti l cash h it items (33) (6) Other items 4 7 Pension deficit p payments y ((35)) ((38)) Working capital decrease 90 114 Cash generated from operations 294 297 Net capital expenditure (52) (7
Slide 18: Balance sheet cash movement
Balance sheet cash movement £m 2009 2008 Opening net cash† 440 374 Cash generated from operations 291 293 Dividends from JVs and associates 75 53 Capital expenditure and financial investment (89) (83) Acquisitions and disposals (net of net cash acquired) (314) (331) Share issues – net proceeds from
Slide 19: Net cash balances
Net cash balances† 700 £ $ € Other 6-mthly average 600 500 400 300 342 312 223 224 200 249 256 100 0 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 † excluding net debt of PPP subsidiaries The creation and care of essential assets
Slide 20: Pensions – balance sheet movement
Pensions – balance sheet movement £587m £83m £100m £16m £25m £586m £40m £160m £166m £193m £208m £561m £427m £420m June Acquisitions Liability Current Company Actuarial Actuarial Other Dec 2009 mitigation service contributions gain loss movements 2009 cost assets liabilities J 2009 Jun D 2009 Dec Pen
Slide 21: Summary of 2009
Summary of 2009 Performance excluding exchange and acquisitions – Revenue down 4% – Profit from operations up 10% Overall performance – Revenue up 9% – Profit from operations up 23% – Pre-tax profit up 7% Dividends up 8% Average cash £283m £14.1bn order book, up 10% The creation and care o
Slide 22: Ian Tyler, Chief Executive
atmo ea lan Tyler Chief Executive
Slide 23: Services provided across the infrastructure lifecycle
Services provided across the infrastructure lifecycle Strategic Programme Systems Finance Design Construct Operate Maintain Consultancy Mgt Integration Professional Construction Support Infrastructure services services services investments Creation and Care of Essential Assets 22
Slide 24: Balfour Beatty business model
Balfour Beatty business model 25% Professional Construction 30% services services 15% Support Infrastructure 30% services investments UK 54% US 31% RoW 15% Notes: 1. Balfour Beatty analysis – illustrative allocation of value by segment 2. Geographic revenue includes pre-acquisition Parsons Brinckerh
Slide 25: Underlying demand for infrastructure
Underlying demand for infrastructure High-quality order book of £14.1 billion Does not include preferred bidder positions, Short term framework contracts, optional contract extensions and concession income Exciting opportunities in many markets and geographies Medium term Well placed to deal
Slide 26: Professional services
Professional services Acquisition of Parsons Brinckerhoff (PB) delivered key strategic objectives: – One of the world’s major players in professional services – Added substantially to our position in the US – Access to new geographies; strengthened offer in existing markets Outlook as expected a
Slide 27: Professional services
Professional services US transport Increased funding over the medium term US building Growth through geographic diversity, design- build and Federal work US power and water Small presence currently Significant growth potential Australia Opportunities for growth in transport, transport powe
Slide 28: Construction services
Construction services Business operates across public, regulated and private sectors Better B b balance l b between UK and d overseas activity i i UK public capital Fiscal constraint All political parties recognise need to maintain infrastructure investment Inevitably, greater use of priva
Slide 29: Construction services
Construction services US Expanding geographical footprint L Lower llevels l off activity ti it in i building b ildi iin 2010 2010, generall recovery H2 2011 Good opportunities in Federal markets, including civil infrastructure Hong Kong Significant increase in high-quality work Expect grow
Slide 30: Support services
Support services Increased outsourcing across business Customers seeking to deliver “more more for less less” Facilities management / Successfully evolving business model business services Expanding range of services outsourcing Long-term contracts, eg QinetiQ Increasingly large addressa
Slide 31: Infrastructure investments
Infrastructure investments Rolling out a successful model Flexibility and expertise to adapt to new procurement models UK education Continuing opportunities Latest win £450m Blackburn and Bolton BSF UK health Major schemes currently under construction Reduction in new projects coming to
Slide 32: Integrated capability
Integrated capability Professional Construction services services Support Infrastructure services investments Creation and Care of Essential Assets 31
Slide 33: Summary
Summary Creation of unique capability to deliver across the infrastructure lifecycle Four strong, market-leading and mutually reinforcing businesses Diversification, through markets and geographies, provides resilience and access to more opportunities Right skills and capabilities, and prove
Slide 34: Appendix
Appendix Balfour Beatty
Slide 35: Reconciliation to former segments
Reconciliation to former segments Order book £bn 2009 2008 Building 5.5 5 5 6.7 6 7 Engineering 6.1 4.9 Rail 1.4 1.2 13.0 12.8 Revenue £m 2009 2008 Building 4,976 4,635 Engineering 3,136 3,243 Rail 1,132 1,055 9,244 8,933 Profit £ £m 2009 2008 Building 134 88 Engineering 107 104 Rail 35 41 276 233 N
Slide 36: Pensions charge
Pensions charge £m 2009 2008 Defined benefit schemes: P&L charge – current service cost 32 45 E pected ret Expected return rn on assets (116) (141) Interest on scheme liabilities 131 136 Net finance credit 15 ( ) (5) Net pension charge* 47 40 Defined contribution schemes: P&L charge & employer fundi
Slide 37: Group balance sheet
Group balance sheet £m Dec 2009 Dec 2008 Goodwill and intangible assets 1,429 1,198 Other non-current assets (excluding PPP & RBO tax) 963 962 Current assets (excluding cash) 1 958 1,958 1 703 1,703 Current liabilities (excluding borrowings) (3,002) (2,797) Net cash (excluding PPP subsidiaries) 572
Slide 38: Acquisitions
Acquisitions £m RT Dooley * 23 February 22 Parsons Brinckerhoff * 27 October 272 SpawMaxwell * 13 November 11 Strata Construction * 24 December 5 Deferred consideration 4 * after adjusting for cash acquired totalling £136m and including £14m acquired debt 314 Creation and Care of Essential Assets 37
Slide 39: Order book
Order book £16bn June Dec £14bn £12bn £10bn £8bn £6bn £4bn £2bn £0bn 2005 2006 2007 2008 2009 Creation and Care of Essential Assets 38
Slide 40: Order book – December 2009
Order book – December 2009 £6.6bn £1.1bn £4.1bn £3.4bn £4.9bn £0.9bn £2.5bn £2.1bn £1.2bn £0 6bn £0.6bn £0 4bn £0.4bn £0 4bn £0.4bn 2010 2011 2012+ Professional services Construction services Support pp services Creation and Care of Essential Assets 39