Slide 1: 2021 half year results presentation
2021 half year results presentation 18 August 2021 Image: London Underground Track Renewals
Slide 2: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: Automated People Mover, Los Angeles International Airport (LAX)
Slide 3: Headlines
Headlines High quality order book underpinned by strong infrastructure markets Expert capability for sustainable infrastructure growth supported by Group-wide Sustainability Strategy £1.1 billion Investments portfolio with growing US P3 pipeline Support Services transformation delivering outperforma
Slide 4: Net cash
Group net cash £800m £527m* £611m* £600m £325m* £194m* £400m £42m* Net cash £(46)m* £200m £0m £(200)m £(400)m 2016 2017 2018 2019 2020 HY 2021 *Average monthly net cash [ Strong cash generation underpins shareholder returns ] 3
Slide 5: Build to Last transformation
Build to Last transformation Average net cash/(debt) Earnings-based businesses profit/(loss) from operations* £m £m (16) 290 611 (180) 63 60 HY 2015 HY 2019 HY 2021 HY 2015 HY 2019 HY 2021 Other net operating expenses* UK voluntary attrition: moving annual average £m % 209 134 105 15% 11% 10% HY 201
Slide 6: Phil Harrison, Chief Financial Officer
Phil Harrison Chief Financial Officer Image: University of Sussex, East Slope Student Accommodation
Slide 7: Headline numbers
Headline numbers £m (unless otherwise stated) HY 2021 HY 2020 HY 2019 Revenue* 4,154 4,115 3,881 Profit / (loss) from operations* 60 (14) 72 Pre-tax profit / (loss)* 55 (24) 64 Profit / (loss) for the period* 51 (18) 54 Basic earnings / (loss) per share* 7.7p (2.5)p 7.6p Dividends per share 3.0p - 2
Slide 8: Underlying profit from operations
Underlying profit from operations £m HY 2021* HY 2020* HY 2019* UK Construction (23) (23) 17 US Construction 20 6 19 Gammon 9 6 9 Construction Services 6 (11) 45 Support Services 54 10 18 Earnings-based businesses 60 (1) 63 Infrastructure Investments Pre-disposals operating profit 8 3 9 Gain on disp
Slide 9: Construction Services
Construction Services £m HY 2021* HY 2020* HY 2019* Revenue PFO Revenue PFO Revenue PFO Good performance at US UK 1,262 (23) 986 (23) 1,014 17 Construction and Gammon – 2021 US 1,697 20 1,911 6 1,727 19 PFO at, or above, 2019 Key UK infrastructure projects Gammon 377 9 468 6 380 9 (HS2, Hinkley, Hig
Slide 10: Support Services
Support Services £m HY 2021* HY 2020* HY 2019* Revenue Support Services characterised by Utilities 258 258 276 profitable recurring revenues underpinned by long-term Transportation 297 218 227 contracts Total 555 476 503 Power, road and rail maintenance contracts all performing strongly Outperforman
Slide 11: Infrastructure Investments
Infrastructure Investments £m HY 2021* HY 2020* HY 2019* Pre-disposals operating profit* 8 3 9 Re-commenced disposals Gain on disposals* 7 - 16 from portfolio: Investments profit* 15 3 25 ̶ sold Canadian hospital project for £20 million in June Subordinated debt interest receivable ^ 3 9 13 ̶ sold b
Slide 12: Directors' valuation of Investments portfolio
Directors’ valuation of Investments portfolio £8m £41m £(32)m £(20)m £(4)m £1,086m £1,079m FY 2020 Equity Distributions Sales Unwind of Other* HY 2021 invested received proceeds discount * other includes gains on sale £3m, new project wins £2m, movements in operational performance £(2)m and foreign
Slide 13: Cash flow waterfall
Cash flow waterfall £123m £12m £64m £20m £7m £(29)m £(32)m £(16)m £(97)m £(8)m £581m £625m FY 2020 Operating Working Pension Lease Dividends Capital Share Disposal Equity Other HY 2021 cash flows capital cash deficit payments from JVAs expenditure buybacks proceeds invested flows payments* * include
Slide 14: 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 15: Shareholder returns
Shareholder returns Profitable managed Multi-year share Sustainable dividend buyback programme growth 2021 PFO from earnings-based 40% ordinary dividend £150 million share buyback businesses in line with 2019 pay-out ratio^ programme commenced in 2021 Raising Support Services PFO 2021 interim divide
Slide 16: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: M+ Museum, West Kowloon, Hong Kong
Slide 17: Diversified Group
Diversified Group £16.1bn order book £1.1bn* Investments portfolio * Directors’ valuation [ Geographically and operationally diversified portfolio ] 16
Slide 18: Higher quality, lower risk order book
Higher quality, lower risk order book UK Construction Support Services US Construction Gammon £6.2bn £2.6bn £5.0bn £2.3bn ⚫ Public & regulated (90%) ⚫ Public & regulated (100%) ⚫ Public & regulated (56%) ⚫ Public & regulated (77%) ⚫ Private sector ⚫ Private sector ⚫ Private sector ⚫ Private sector B
Slide 19: Growing markets map to Group capabilities
Growing markets map to Group capabilities US Construction UK Construction Gammon (Hong Kong) $450bn Public sector construction (US$) £30bn Infrastructure construction (GBP) $110bn Public sector construction (HK$) $410bn $370bn £25bn $90bn $330bn £20bn $70bn $290bn $250bn £15bn $50bn 2010 2013 2016 2
Slide 20: Building New Futures
Building New Futures Group-wide Sustainability Strategy CO2 emissions (tonnes per £m revenue) Environment Materials Communities 2040 Ambitions Beyond Net Zero Carbon Generate Zero Waste Positively Impact More than 1 Million People 45 35 25 19 Achieve 40% reduction £3bn 2030 science-based carbon in w
Slide 21: Support Services
Support Services Power Rail Maintenance Road Maintenance Gas & Water Proposed RIIO2 (2021-26) Rail infrastructure Local authority road spend: spend: maintenance: £53bn £2.5bn of additional £30bn investment in CP6+TfW (2019-24) funding over the next energy networks five years Eight year framework Pot
Slide 22: UK Construction
UK Construction Central London Major Projects Highways Regional residential £2bn SCAPE £100bn High Speed 2 Civil Engineering framework £27bn Write-downs on a small number RIS2 (2020-25) Crown Commercial £23bn New nuclear of private sector property projects Service (e.g. COVID- caused by lengthening
Slide 23: US Construction
US Construction Buildings Civils Market size Roads: $20bn of funding in next Education: $13bn available for +4.8% p.a. 10 years for development of new build schools in California transportation projects in Texas $323bn (2024) Leisure and entertainment: Rail: $27bn mass transit progressively recoveri
Slide 24: Infrastructure Investments
Infrastructure Investments US P3 market Projects and opportunities Transportation: Student accommodation: Increasing use of P3 LAX Airport Vanderbilt University Bipartisan Infrastructure Act recognises need for private investment ̶ $100m for P3 feasibility studies ̶ allocation of Private Activity Bo
Slide 25: Gammon
Gammon Buildings Civils Market size Aviation: HK$20bn contracts at Healthcare: HK$500bn to construct new hospitals by 2036 Hong Kong Third Runway System +4.0% p.a. – T2 expansion and APM HK$162bn (2024) Housing: Target to build 430,000 Roads: Central Kowloon route – new homes by 2029 Kai Tak West an
Slide 26: Strong outlook
Strong outlook Significant recovery in profitability Strategic portfolio choices to strengthen future earnings Infrastructure growth in chosen markets Expert capability to deliver a net zero world Strong positive trajectory for Investments business [ Driving attractive cash generation and returns ]
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 HY 2020
Order book compared with HY 2020 Total HY 2021 £16.1bn Total HY 2020 £17.5bn £5.1bn £4.9bn £5.2bn £4.6bn £3.8bn £3.7bn £3.4bn £2.9bn HY 2020 HY 2021 HY 2020 HY 2021 HY 2020 HY HY 2021 2021 HY 2020 HY 2021 0-6 months 6-18 months 18-30 months 30+ months Construction Services - UK Construction UK Const
Slide 30: UK Construction order book
UK Construction order book 4% 17% 12% Contract type Relative risk Fixed price R I Target cost S 50% £2.7bn 46% K £6.2bn Cost reimbursable 71% HY 2018 HY 2021 29
Slide 31: Group balance sheet
Group balance sheet £m HY 2021 FY 2020 HY 2020 Goodwill and intangible assets 1,109 1,123 1,184 Working capital (1,023) (887) (833) Net cash (excluding infrastructure concessions) 625 581 563 Investments in joint ventures and associates 541 554 605 PPP financial assets 149 155 159 Infrastructure con
Slide 32: Cash flow
Cash flow £m HY 2021 HY 2020 £m HY 2021 HY 2020 Operating cash flows 64 22 Working capital flows^ Working capital inflow 123 74 Inventories 11 (1) Pension deficit payments≠ (29) (8) Net contract assets 113 101 Cash from operations 158 88 Trade and other receivables 6 (53) Lease payments (inc. intere
Slide 33: Working capital – Group
Working capital – Group £0m 0 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 21 £(200)m (4)% £(400)m £(600)m (8)% £(800)m (10.7)% (12)% £(1,000)m (11.9)% (13.2)% (13.1)% (13.6)% £(1,200)m (13.9)% (14.2)% (16)% Period end working capital Period end working capital as % revenue Debtor days* 28 3
Slide 34: Working capital – Construction Services
Working capital – Construction Services £0m 0 Jun 15 Jun 16 Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 21 £(200)m (4)% £(400)m (8)% £(600)m (12)% £(800)m (11.1)% (11.9)% £(1,000)m (14.2)% (14.2)% (16)% (15.4)% (16.8)% £(1,200)m (18.2)% (20)% Period end working capital Period end working capital as % rev
Slide 35: Non-underlying items
Non-underlying items £m HY 2021 HY 2020 Impairment and amortisation Amortisation of acquired intangibles (2) (2) Other Grant income repaid in relation to UK Job Retention Scheme (19) − Release of accrual relating to sale of Parsons Brinckerhoff 1 − Tax Non-underlying recognition of deferred tax asse
Slide 36: Net finance costs
Net finance costs £m HY 2021 HY 2020 Subordinated debt interest receivable 12 Interest on PPP financial assets 4 Interest on non-recourse borrowings (7) 9 7 Net finance income – pension schemes 1 1 Other interest receivable 5 Other interest payable (3) 2 (1) US private placement (5) (6) Preference s
Slide 37: Pensions – balance sheet movement
Pensions – balance sheet movement £48m £29m £166m £133m £89m £32m £54m £(128)m £(146)m £(231)m 2014 2015 2016 2017 2018 2019 2020 Employer Net HY 2021 contributions actuarial gains & other 36
Slide 38: Borrowing repayment profile
Borrowing repayment profile £200m £160m £120m £80m £151m £40m £36m £0m 2021 2022 2023 2024 2025 US Private Placement notes The Group has a £375m committed bank facility extending through to 2023, which was undrawn at 2 July 2021 37
Slide 39: Financial history
Financial history 450% £12bn Build to Last £400m Increase in £10bn revenue at peak £300m £8bn 45 £6bn £200m Acquisitions £4bn £100m £2bn £94m £0bn £0m Average ordinary dividend -£2bn (2011-2014) £(100)m -£4bn Primarily due to COVID-19 -£6bn £(200)m £15m 2000 2002 2004 2006 2008 2010 2012 2014 2016 2