Slide 1: Balfour Beatty
Balfour Bea~y
Slide 2: Ian Tyler, Finance Director
Balfour Bea~y Ian Tyler Finance Director
Slide 3: Headlines
Balfour Bea~y Headlines • Continuing forward profit momentum • Earnings supported by strong cash flow • Growing contribution from acquisitions • Good growth prospects in key markets
Slide 4: Headlines
Balfour Bea~y Headlines • Turnover +18% • Operating profits*† +23% • Pre-tax profits* +17% • Earnings per share* +41% • Dividends per share +10% • Order book +20% (since Dec 2000) +40% (since June 2000) * Before exceptional items and goodwill amortisation † Continuing businesses
Slide 5: Headline Numbers
Balfour Bea~y Headline Numbers First Half First Half 2000 2000 2001 £2,603m Turnover £1,215m £1,436m £114m Operating profit* £48m £59m £86m Pre-tax profit* £35m £41m 10.9p Earnings per share* 3.9p 5.5p 4.5p Dividends per share 2.0p 2.2p £104m Net Cash £135m £63m * Before exceptionals and goodwill am
Slide 6: Performance by Sector
Balfour Bea~y Performance by Sector 2000 First First Full Half Half Year £m 2000 2001 Building, Building Management 39 and Services 14 22 +57% Civil and Specialist Engineering 27 and Services 10 7 -30% 6 Rail Engineering and Services 6 7 +17% 41 Investments and Developments 18 23 +28% Operating prof
Slide 7: Building, Building Management and Services
Balfour Bea~y Building, Building Management and Services 2000 First Half First Half Full Year £m 2000 2001 18 Construction 7 9 21 Services and Systems 7 13 39 14 22 • Construction and service businesses improve • Significant contribution from Integral • More even half-year split
Slide 8: Performance by Sector
Balfour Bea~y Performance by Sector 2000 First First Full Half Half Year £m 2000 2001 Building, Building Management 39 and Services 14 22 +57% Civil and Specialist Engineering 27 and Services 10 7 -30% 6 Rail Engineering and Services 6 7 +17% 41 Investments and Developments 18 23 +28% Operating prof
Slide 9: Civil and Specialist Engineering and Services
Balfour Bea~y Civil and Specialist Engineering and Services 2000 First Half First Half Full Year £m 2000 2001 24 Continuing businesses 9 6 3 Cables 1 1 27 10 7 • Foot and mouth impact on power networks business • Ducab sold • Seasonal uplift anticipated in second-half
Slide 10: Civil and Specialist Engineering and Services
Balfour Bea~y Civil and Specialist Engineering and Services Operating Profits 20 18 17 16 15 14 12 10 10 9 8 7 6 4 2 0 First Half Second Half First Half Second Half First Half
Slide 11: Performance by Sector
Balfour Bea~y Performance by Sector 2000 First First Full Half Half Year £m 2000 2001 Building, Building Management 39 and Services 14 22 +57% Civil and Specialist Engineering 27 and Services 10 7 -30% 6 Rail Engineering and Services 6 7 +17% 41 Investments and Developments 18 23 +28% Operating prof
Slide 12: Rail Engineering and Services
Balfour Bea~y Rail Engineering and Services 2000 First Half First Half Full Year £m 2000 2001 (8) Maintenance 2 (2) 10 Specialist Businesses 4 4 4 Acquisitions - 5 6 6 7 • First quarter RT1a losses; IMC2000 from 1/4/2001 • Earnings from acquisitions second-half biased
Slide 13: Performance by Sector
Balfour Bea~y Performance by Sector 2000 First First Full Half Half Year £m 2000 2001 Building, Building Management 39 and Services 14 22 +57% Civil and Specialist Engineering 27 and Services 10 7 -30% 6 Rail Engineering and Services 6 7 +17% 41 Investments and Developments 18 23 +28% Operating prof
Slide 14: Investments and Developments
Balfour Bea~y Investments and Developments 2000 First Half First Half Full Year £m 2000 2001 24 PFI/PPP 15 12 16 Barking Power 4 12 1 Property (1) (1) 41 18 23
Slide 15: Cashflow from Activities
Balfour Bea~y Cashflow from Activities £m Group operating profit 25 Dividends from J/Vs and associates 6 Goodwill amortisation 5 Capex less depreciation (2) Increase in working capital (19) Group interest (1) Tax (1) Cash from operations 13
Slide 16: Movement in Net Cash
Balfour Bea~y Movement in Net Cash £m Opening net cash 104 Cash from operations 13 Net cost of acquisitions/disposals (8) Investments (24) Share buy back/minority interest repaid (2) Cash expenditure on exceptionals (2) Dividends (16) Exchange (2) Closing net cash 63
Slide 17: Group Balance Sheet
Balfour Bea~y Group Balance Sheet First Half First Half £m 2001 2000 Goodwill 173 63 Net cash 63 135 Other assets (73) (52) Shareholders funds 163 146
Slide 18: Summary
Balfour Bea~y Summary • Continuing growth in underlying earnings • Strong cash flow • Strong cash position to support future growth
Slide 19: Mike Welton, Chief Executive
Balfour Bea~y Mike Welton Chief Executive
Slide 20: Key Objectives
Balfour Bea~y Key Objectives • Sustainability - Better, more secure margins • Focus - Maintain competitive advantage • Growth - Organic and by acquisition • Process - Continuous improvement
Slide 21: Key Objectives
Balfour Bea~y Key Objectives as stated in August 1999 • Generate steady and sustainable earnings growth • Improve the quality of earnings • Retain strong financial disciplines and control • Manage continuous business process improvement • Maximise range of group capabilities • Develop businesses wit
Slide 22: Underlying Operating Profit Growth
Balfour Bea~y Underlying Operating Profit* Growth £m 140 113 120 98 100 85 80 66 60 40 59 48 48 20 36 25 0 1997 1998 1999 2000 2001 1st Half Full year * From continuing businesses, before exceptional items and goodwill amortisation
Slide 23: Quality of Earnings
Balfour Bea~y Quality of Earnings • Base margins improved • Approximately 30% of sales in long-term service contracts • Earnings underpinned by predictable concession income • Order book size and quality
Slide 24: Order Book
Balfour Bea~y Order Book June Dec June £bn 2000 2000 2001 Building, Building Management and Services 1.1 1.3 1.5 Civil and Specialised Engineering 1.0 1.1 1.2 Rail Engineering and Services 0.7 0.9 1.2 Total 2.8 3.3 3.9 Current order book: over 40% in support services
Slide 25: Quality of Earnings
Balfour Bea~y Quality of Earnings • Base margins improved • Approximately 30% of sales in long-term service contracts • Earnings underpinned by predictable concession income • Order book size and quality • Operating profits underpinned by operating cash
Slide 26: Cash Underpins Profits
Balfour Bea~y Cash Underpins Profits Operating Operating £m Profit* Cash* 1996-2000 277 302 * Excluding joint ventures and associates
Slide 27: Financial Disciplines and Control
Balfour Bea~y Financial Disciplines and Control • Profit before turnover, strict margin targets • Conservative profit recognition and accounting • Strong operating cash and working capital controls
Slide 28: Business Process Improvement
Balfour Bea~y Business Process Improvement • Supplier base cut radically; preferred supplier regime • Enhanced Risk Management system • Alliance with BuildOnLine for e-commerce • Increasing emphasis on Knowledge Management • Repeat business ratios continue to improve
Slide 29: Maximising Group Capabilities
Balfour Bea~y Maximising Group Capabilities • Strong public and private sector market trends to outsource services and interface management – PFI, prime contracting, design and build • Comprehensive and successful combination of linked skills/disciplines in PFI hospitals, schools, etc • Increasing c
Slide 30: Develop Growth Businesses
Balfour Bea~y Develop Growth Businesses • Rail – Acquisitions for electrification, trackwork, signalling – Market presence extended in key growth areas • PPP/PFI – 11 concessions active, most now earning – LUL PPP – Extensive bidding and prequalification • USA – Building control systems – Civil and
Slide 31: Key Objectives
Balfour Bea~y Key Objectives • Sustainability - Better, more secure margins • Focus - Maintain competitive advantage • Growth - Organic and by acquisition • Process - Continuous improvement
Slide 32: Building, Building Management and Services
Balfour Bea~y Building, Building Management and Services Sector status • Strong profit growth momentum • Excellent business mix Key market dynamics • Increasing demand for outsourcing, service integration and efficient construction
Slide 33: Civil and Specialist Engineering and Services
Balfour Bea~y Civil and Specialist Engineering and Services Sector status • Stable underlying profitability • Period returns variable Key market dynamics • Substantially increased public/PPP spending plans for UK and US infrastructure
Slide 34: Rail Engineering and Services
Balfour Bea~y Rail Engineering and Services Sector status • UK maintenance position stabilised • Broad business mix based on leadership positions Key market dynamics • Worldwide market growth in mainline and light rail expenditure
Slide 35: Investments and Developments
Balfour Bea~y Investments and Developments Sector status • Current portfolio set to deliver predictable growth • LUL PPP • First-class team targeting carefully selected opportunities Key market dynamics • £20 billion of PFI deals over the next 5 years plus further growth in PPP
Slide 36: The Future
Balfour Bea~y The Future • Order book of £3.9 billion a new record • Key markets remain positive • Business mix to exploit key long-term market trends • Rail business recovering after 2000 setback • Further acquisitions and market opportunities being evaluated • Continuing adherence to key objective