Babcock International Group PLC · LSE:BAB
Babcock International — Investor Presentation (March 2017)
45 slides from Babcock International's investor presentation, Mar 14, 2017
Slide 1: Aligned for growth
Aligned for growth Archie Bethel, Chief Executive Investor seminar 14 March 2017 1 Babcock International – Realignment Presentation - March 2017
Slide 2: Disclaimer
Disclaimer This document has been prepared by Babcock International Group PLC (the “Company”) solely for use at a presentation in connection with the Company’s Re-alignment Seminar for analysts and investors on 14 March 2017. For the purposes of this notice, the presentation that follows (the “Prese
Slide 3: Agenda
Agenda Who we are Rationale for realignment Details of realignment Summary Q&A 3 Babcock International – Realignment Presentation - March 2017 www.babcockinternational.com
Slide 4: Who we are
Who we are Babcock is an engineering services company: • we have specialist expertise our customers do not possess; • we provide skilled, bespoke engineering services; • we work in highly regulated environments, managing complex assets; • we maintain, upgrade, operate and manage critical infrastruct
Slide 5: What sets us apart
What sets us apart Our technical skills Deep sector-specific expertise ● decades of experience ● understanding of risk and resilience ● ability to deliver availability ● innovation ● platform agnostic: able to work with any OEM ● ability to identify and integrate technology ● expertise in through-li
Slide 6: How we benefit from realignment
How we benefit from realignment Closer to our markets • in the main, our customers, regulators, competitors and key suppliers are already grouped in these four key sectors • closer alignment with key government customers and the Armed Forces Increased focus aligned to capability • focused management
Slide 7: Sector specialists
Sector specialists For over 15 years we have consistently built up expertise and commercial positions in these four sectors, both organically and through targeted acquisitions: TECHNOLOGY MARINE AVIATION INFRASTRUCTURE TRAINING ENGINEERING SERVICES LAND CAVENDISH NUCLEAR GLOBAL GROWTH 7 Babcock Inte
Slide 8: History of building focused positions
History of building focused positions For over 15 years we have consistently built up expertise and commercial positions in these four sectors, both organically and through targeted acquisitions: TECHNOLOGY Devonport Strachan & VT Group Henshaw VT Group MARINE AVIATION Avincis SAA INFRASTRUCTURE LGE
Slide 9: Experts in our chosen sectors
Experts in our chosen sectors Each sector has: • sufficient scale to become a world leader TECHNOLOGY • both defence and civil customers sitting MARINE AVIATION under one focused management team £1.8bn £0.7bn INFRASTRUCTURE Revenue Revenue TRAINING • existing UK and international operations ENGINEER
Slide 10: Accelerating global growth
Accelerating global growth New Group structure designed to enhance our ability to grow • recent international successes – Alitalia, Qantas, FOMEDEC – highlighted the limitations of how we organised ourselves internally • each sector is now customer facing, shares deep sector technical knowledge, exp
Slide 11: FOMEDEC
FOMEDEC Key support partner providing and maintaining training platforms and related services for the French Air Force over an 11-year contract Applying the Babcock model overseas – ‘double sell’ complexity proven creating the reference compete with and technical record of sell model market cases ot
Slide 12: Group-wide technology
Group-wide technology Technology already at the core of our engineering skills and capabilities • a deep technical understanding of the systems and equipment that make up our customers’ complex assets underpins our offering • we invest in skilled people and in systems to improve our customers’ perfo
Slide 13: Technology – iFrigates (Project Athena)
Technology – iFrigates (Project Athena) Project Athena uses data from ship and shore systems to translate into precise support decisions and provide a bespoke understanding of through-life support • innovative support technology (air and underwater drones, data from ship systems) • complex real-time
Slide 14: Training
Training Technical training: TECHNOLOGY • an integral part of our engineering Fleet Officers Fixed wing offering to our customers Rotary wing Submarine training • training is a fundamental MARINE AVIATION INFRASTRUCTURE UK & International ongoing requirement in the RN Fire Fighting TRAINING highly-r
Slide 15: Group Structure: how we will operate
Group Structure: how we will operate Babcock International Group Chief Executive, Archie Bethel Group Finance Director Marine Land Aviation Cavendish Nuclear Franco Martinelli John Howie John Davies Roger Hardy Simon Bowen Global Growth Group Revenue Group Revenue Group Revenue Group Revenue Bill Ta
Slide 16: Realignment: Sector FY16 key numbers
Realignment: Sector FY16 key numbers TECHNOLOGY MARINE AVIATION Revenue Order book Pipeline Revenue Order book Pipeline 37% 27% 36% 15% 25% 10% INFRASTRUCTURE International 23% International 52% Revenue: £1,800m International: Civil/Defence 23% 20/80 Revenue: £738m International: Civil/Defence 52% 7
Slide 17: Realignment: Sector overview
Realignment: Sector overview TECHNOLOGY MARINE AVIATION Naval Marine Technology Emergency Aviation Training • UK , Canadian, Australian • Equipment support Services Support • UK Military submarine sustainment • Engineering consultancy • Air ambulances • Aircraft Flying • UK, Australia, NZ surface •
Slide 18: Realignment: Sector reconciliation
Realignment: Sector reconciliation Marine & Technology Marine Marine 35% 37% Marine Training International MCS Aviation 16% 15% Air Defence South Africa &Security 18% Land & DSG Land 33% Critical Services Network Engineering Support Skills & Learning Services 31% Cavendish Nuclear Nuclear 15% All pe
Slide 19: Marine
Marine 19 Babcock International – Realignment Presentation - March 2017 www.babcockinternational.com
Slide 20: Marine: activities
Marine: activities Activities Customers Key contracts • Vanguard Class LIFEX • Submarine Support • Type 23 Frigate LIFEX • Surface Ship Support • UK MOD • Maritime Services Delivery • Naval Base Management • Royal Navy Framework Naval Marine • QE Class Aircraft Carriers • Irish Naval Service • Aircr
Slide 21: Marine: addressable markets
Marine: addressable markets Market segment Size* Key Opportunities Competitors • Nuclear facilities • BAE Systems • Successor • Rolls-Royce UK naval marine £4.4bn • Submarine decommissioning • Lockheed Martin • Astute deep maintenance • Cammell-Laird • Future platform support (T45 & QEC) • Irving •
Slide 22: Marine: key characteristics
Marine: key characteristics Differentiators and barriers to entry Technology • largest support partner to Royal Navy (100% of • deep nuclear know-how submarine and 75% of the surface fleet refits) • IP in weapons handling and launch systems • unique owned marine facilities • IP in gas handling & emi
Slide 23: Marine: financials
Marine: financials FY15 FY16 Geographies* Marine (£m) (£m) Revenue total (incl. JVs) 1,666.8 1,799.9 23% JVs 19.0 21.5 UK Operating profit total (incl. JVs) 190.3 213.6 JVs International 2.0 3.0 Operating margin 77% total (incl. JVs) 11.4% 11.9% JVs 10.5% 14.0% Share of order book Share of pipeline
Slide 24: Land
Land 24 Babcock International – Realignment Presentation - March 2017 www.babcockinternational.com
Slide 25: Land: major activities
Land: major activities Activities Customers Key contracts • MOD • DSG, Phoenix, ALC Vehicle & • Defence & Civil vehicle fleet • London Fire Brigade • Met Police and London Fire Brigade Asset support • Met Police fleet management Support • Fleet and asset availability • FCO • British Airways, Qantas,
Slide 26: Land: addressable markets
Land: addressable markets Market segment Size* Key Opportunities Competitors • General Dynamics • DSG: Warrior; Challenger; • Lockheed Martin Protected Mobility vehicles UK Defence fleet, equipment & training • Thales £1.3bn • Individual and collective training support solutions • BAE Systems • Supp
Slide 27: Land: key characteristics
Land: key characteristics Differentiators and barriers to entry Technology • main support partner for British Army with strategic • fleet management and telematics portfolio of initiatives • specialist vehicle conversion • core training partner for British Army • electromagnetic testing facilities •
Slide 28: Land: financials
Land: financials FY15 FY16 Geographies* Land (£m) (£m) Revenue total (incl. JVs) 1,551.9 1,603.7 22% JVs 62.2 91.9 UK Operating profit total (incl. JVs) 170.7 144.7 International JVs 19.8 10.9 Operating margin 78% total (incl. JVs) 11.0% 9.0% JVs 31.8% 11.9% Share of order book Share of pipeline Cus
Slide 29: Aviation
Aviation 29 Babcock International – Realignment Presentation - March 2017 www.babcockinternational.com
Slide 30: Aviation: activities
Aviation: activities Activities Customers Key contracts • Engineering and equipment support • Royal Air Force • Airtanker JV Defence • Airbase support, infrastructure build and Royal Navy • Tucano In-Service Support Aviation estate management • French Army • RAF Airbase Multi-Activity Contracts Supp
Slide 31: Aviation: addressable markets
Aviation: addressable markets Market segment Size* Key Opportunities Competitors • OEMs (LM, Boeing, BAE) • OEM support (P-8, Apache) eg CSAT Defence aviation support • Marshall Aerospace £1.6bn • Airbase support (HADES, Lossiemouth) (equipment & infrastructure) • Vector Aerospace • Project GATEWAY
Slide 32: Aviation: key characteristics
Aviation: key characteristics Differentiators and barriers to entry Technology • world leading provider of helicopter emergency • unmanned air system technologies services • night vision device capability • long-term relationships and critical asset expertise • 24/7 co-ordination centres, proprietar
Slide 33: Aviation: financials
Aviation: financials FY15 FY16 Geographies* Aviation (£m) (£m) Revenue total (incl. JVs) 726.0 738.4 JVs 89.4 78.5 UK Operating profit total (incl. JVs) 132.2 139.3 48% 52% International JVs 39.2 36.9 Operating margin total (incl. JVs) 18.2% 18.9% JVs 43.8% 47.0% Share of order book Share of pipelin
Slide 34: Cavendish Nuclear
Cavendish Nuclear 34 Babcock International – Realignment Presentation - March 2017 www.babcockinternational.com
Slide 35: Cavendish Nuclear: activities
Cavendish Nuclear: activities Activities Customers Key contracts UK • Nuclear • Decommissioning the Magnox stations Decommissioning • Decommissioning the Dounreay site Authority • Specialist decommissioning projects at • Magnox decommissioning • Atomic Weapons Sellafield and AWE • Dounreay decommiss
Slide 36: Cavendish Nuclear: addressable markets
Cavendish Nuclear: addressable markets Market segment Size* Key Opportunities Competitors • Amec FW • Growth on Magnox and Dounreay • Atkins UK Nuclear • Sellafield • Jacobs £2.4bn Decommissioning • AWE • AECOM • EDF AGR fleet • CH2M • Bechtel International Nuclear • Japan Energy Solutions, AECOM, B
Slide 37: Cavendish Nuclear: key characteristics
Cavendish Nuclear: key characteristics Differentiators and barriers to entry Technology • largest nuclear services provider in the UK • proven nuclear expertise across the whole of • approximately 6,000 skilled nuclear employees the nuclear lifecycle including decommissioning • operate 13 out the UK
Slide 38: Cavendish Nuclear: financials
Cavendish Nuclear: financials FY15 FY16 Geographies* Cavendish Nuclear (£m) (£m) Revenue 1% total (incl. JVs) 558.6 700.1 JVs 336.1 491.8 UK Operating profit total (incl. JVs) 27.1 47.8 International JVs 10.4 19.5 Operating margin total (incl. JVs) 4.9% 6.8% 99% JVs 3.1% 4.0% Share of order book Sha
Slide 39: Division to Sector reconciliation
Division to Sector reconciliation 39 Babcock International – Realignment Presentation - March 2017
Slide 40: Division to Sector reconciliation: revenue
Division to Sector reconciliation: revenue FY15 FY16 FY15 FY16 As Reported New alignment (£m) (£m) (£m) (£m) Group Revenue Marine and Technology 1,543.6 1,674.3 Marine 1,647.8 1,778.4 Defence and Security 710.6 754.6 Aviation 636.6 659.9 Support Services 937.1 946.6 Land 1,489.7 1,511.8 Internationa
Slide 41: Division to Sector reconciliation: op profit
Division to Sector reconciliation: op profit FY15 FY16 FY15 FY16 Return on revenue As Reported New alignment (£m) (£m) (£m) (£m) FY15 FY16 Group Operating Profit Marine and Technology 172.0 195.9 Marine 188.3 210.6 11.4% 11.8% Defence and Security 82.4 86.1 Aviation 93.0 102.4 14.6% 15.5% Support Se
Slide 42: Summary
Summary 42 Babcock International – Realignment Presentation - March 2017
Slide 43: Babcock at a glance
Babcock at a glance Consistent strategy Realignment Barriers to entry Market leading Deep sector expertise Trusted to deliver positions in four key areas Our technical skills Focus on areas of and experience Public body and blue Strong track record of core capability chip customers delivering comple
Slide 44: Trusted to deliver
Trusted to deliver Babcock is an engineering services specialist We have deep technical expertise in our four sectors, unique infrastructure and a compelling track record of reference cases. Realignment brings us: TECHNOLOGY • closer to our markets better alignment of our capabilities with INFRASTRU
Slide 45: Babcock International – Realignment Presentation - March 2017 www.babcockinternational.com
45 Babcock International – Realignment Presentation - March 2017 www.babcockinternational.com
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