Slide 1: 2007 Preliminary Results
2007 Preliminary Results 5 March 2008
Slide 2: Anthony Rabin, Balfour Beatty
Anthony Rain Balfour Beatty
Slide 3: Headline numbers
Headline numbers 2006 2007 Revenue £5,506m £7,488m +36% Pre-tax profit* £136m £201m +48% Adjusted eps* 27.3p 35.0p +28% Full-year proposed dividend 9.1p 11.5p +26% Cash generated from operations £217m £281m +29% Net cash (excluding 100% PPP) £305m £374m Order book £9.1bn £11.4bn +25% * Before except
Slide 4: Performance by sector
Performance by sector £m 2006 2007 Building, Building Management 43 75 +74% and Services
Slide 5: Building, Building Management and Services
Building, Building Management and Services £m 2006 2007 Construction and building services 32 63 Building management services 11 12 43 75 • Good progress in UK building construction • Acquisition of Cowlin extends regional coverage • BB Construction US performance above expectations • Strengthening
Slide 6: Building, Building Management and Services
Building, Building Management and Services Programme & Facilities Management £556m (32% growth) Building Services Building Construction £516m £2,568m (24% growth) (96% growth) Revenue £3,640 million (+70%) (2006: £2,145 million) Order book £6.1 billion (+69%) (December 2006: £3.6 billion)
Slide 7: Performance by sector
Performance by sector £m 2006 2007 Building, Building Management 43 75 +74% and Services Civil and Specialist Engineering 47 86 +83% and Services
Slide 8: Civil and Specialist Engineering and Services
Civil and Specialist Engineering and Services £m 2006 2007 Civil and specialist engineering 17 55 Services 30 31 47 86 • Profit progress in UK civils, including full year contribution from Birse • Strong progress in Hong Kong and Dubai • US civils returns to profit • Balfour Beatty Utility Solutions
Slide 9: Civil and Specialist Engineering and Services
Civil and Specialist Engineering and Services UK Utilities & Services £988m UK Civil Engineering (20% growth) £950m (42% growth) International £730m (6% decline) Revenue £2,668m (+17%) (2006: £2,271m) Order book £4.4bn (+5%) (December 2006: £4.2bn)* *excluding Trans4M orders, subsequently cancelled
Slide 10: Performance by sector
Performance by sector £m 2006 2007 Building, Building Management 43 75 +74% and Services Civil and Specialist Engineering 47 86 +83% and Services Rail Engineering and Services 38 44 +16%
Slide 11: Rail Engineering and Services
Rail Engineering and Services £m 2006 2007 UK businesses 23 29 Overseas businesses 15 15 38 44 • Good progress on overground and underground renewals in UK • Confirmation of on-going role in overground and underground renewals • Steady performances in Continental Europe and North America • £10bn UK
Slide 12: Rail Engineering & Services
Rail Engineering & Services Other £390m (7% growth) UK £395m (3% decline) Revenue £785m (+2%) (2006: £770m) Order book £0.9bn (-5%) (December 2006: £0.95bn)
Slide 13: Performance by sector
Performance by sector £m 2006 2007 Building, Building Management 43 75 +74% and Services Civil and Specialist Engineering 47 86 +83% and Services Rail Engineering and Services 38 44 +16% Investments 24 16 -33%
Slide 14: Investments
Investments 2006 2007 PPP PPP JVs & Infrast- JVs & Infrast- £m Assocs ructure Total Assocs ructure Total Share of results of 28 15 43 29 12 41 JVs & associates* Group operating costs (19) (25) Invest. operating profit 24 16 Subordinated debt interest income 8 11 Invest. net result 32 27 * Before exc
Slide 15: Investments
Investments • Financial close for Pinderfields, Salford and Tameside Hospitals, Knowsley Schools and Derby streetlighting • Preferred bidder for Islington Schools, Carlisle Northern Distributor Road and ITE Singapore • Metronet concessions treated as discontinued following PPP Administration • Exete
Slide 16: PPP portfolio valuation: December 2007
PPP portfolio valuation: December 2007 +£40m +£8m +£20m £341m +£58m -£77m £324m £299m -£91m 2006 Equity Distributions Unwind of Rebased Other Metronet Operational 2007 invested discount movements performance gains
Slide 17: Performance by sector
Performance by sector £m 2006 2007 Building, Building Management 43 75 +74% and Services Civil and Specialist Engineering 47 86 +83% and Services Rail Engineering and Services 38 44 +16% Investments 24 16 -33% Corporate costs (24) (30) Profit from continuing operations* 128 191 +49% Net finance inco
Slide 18: Operating profit v operating cash flow
Operating profit v operating cash flow £m 2006 2007 Group operating profit* 80 126 Depreciation 43 50 Exceptional items (3) (39) Other items 4 3 Working capital decrease 93 141 Cash generated from operations 217 281 * Before exceptional items and amortisation
Slide 19: Balance sheet cash movement
Balance sheet cash movement £m 2006 2007 Opening net cash† 315 305 Cash generated from operations 216 283 Dividends from JVs and associates 24 83 Capital expenditure and financial (78) (132) investment Acquisitions and disposals (80) (106) Buy-back of preference shares (19) (8) Dividends, interest a
Slide 20: Acquisitions and disposals
Acquisitions and disposals £m BB Construction US (Centex)* 86 Cowlin* 31 Covion* 32 Exeter International Airport (net)* 16 Other acquisitions 23 Deferred consideration 2 190 Devonport disposal (84) 106 * After adjusting for cash balances
Slide 21: Exceptional items
Exceptional items £m Profit from operations: Metronet – investment write-off (87) Metronet – contract balances written off (27) (114) Tax on items above 19 (95) US reorganisation and integration costs (net of tax) (4) (99) Finance costs: Premium on buy-back of preference shares (2) (101) Recognition
Slide 22: Pensions under IAS 19
Pensions under IAS 19 £m 2006 2007 Defined benefit schemes: P&L charge 39 41 Employer cash contributions 36 44 Balance sheet liability (gross) 288 286 Balance sheet liability (net of deferred tax) 212 213 Defined contribution schemes: P&L charge and contributions 13 17
Slide 23: Group balance sheet
Group balance sheet £m Dec 2006 Dec 2007 Goodwill and intangible assets 436 753 Net cash (excluding PPP) 305 374 Preference shares – liability (90) (87) PPP subsidiaries - (3) Non-current assets + working capital 21 58 Non-recourse net debt (21) (61) Other assets / liabilities (264) (554) Shareholde
Slide 24: Summary
Summary • Continuing growth in profits and earnings • Strong cash flow • Strong cash position to support future growth
Slide 25: Ian Tyler, Balfour Beatty
lan) hyler Balfour Beatty
Slide 26: Growth underpinned
Growth underpinned • Order book and pipeline • Non-cyclical markets • Business growth momentum • Strategic investment
Slide 27: Order book and pipeline
Order book and pipeline As at end December 2007 35 £32bn 30 25 20 15 £11.4bn £2.5bn 10 5 £3.1bn £2.4bn £1.9bn £9.5bn £1.4bn 0 Order Book Preferred Term Framework PPP FM Concession Total bidder extensions potential income pipeline
Slide 28: Order book and pipeline
Order book and pipeline £19.0bn £6.6bn £4.8bn 2008 2009 2010
Slide 29: Non-cyclical markets (2007 Revenue)
Non-cyclical markets (2007 Revenue) UK Revenue US Revenue Regulated Public Regulated 32% 3% 48% Private 38% 59% Public 20% Private £5.3 billion £1.5 billion
Slide 30: Historic market trends: UK
Historic market trends UK 4.0% 6.0% 5.0% 3.0% 4.0% 3.0% 2.0% 2.0% 1.0% 1.0% 0.0% -1.0% 0.0% -2.0% 1983 1986 1989 1992 1995 1998 2001 2004 2007P Bldg + Infra (LHS) Change in GDP (RHS) Source: Department for Business, Enterprise and Regulatory Reform Reform
Slide 31: Historic market trends: US
Historic market trends US 6.0% 8.0% 7.0% 5.0% 6.0% 4.0% 5.0% 4.0% 3.0% 3.0% 2.0% 2.0% 1.0% 1.0% 0.0% 0.0% -1.0% 1983 1986 1989 1992 1995 1998 2001 2004 2007P Bldg + Infra (LHS) Change in GDP (RHS) Note: Indices classification changed in 2007 hence the jump in infra that year Source: Bureau of Econom
Slide 32: Business growth momentum
Business growth momentum 2005-2008 revenue growth UK Facilities Management 60%+ £1.2bn order book Increasingly successful Professional and Technical Services 300%+ differentiator Continuing strong Dubai 50%+ market growth Revenue secured to UK Utilities 50%+ 2010 Together 30% of 2008 EBIT
Slide 33: Medium and long-term growth drivers
Medium and long-term growth drivers • Short-term - Inherent in existing business mix • Medium-term - UK regional contracting - Professional and technical services - New infrastructure investment markets • Longer-term - Expansion of non-UK domestic businesses
Slide 34: Strategic development: UK regional contracting
Strategic development UK regional contracting 2003 Mansell 70% revenue increase, 100% profit increase 2006 Birse Performing ahead of expectations, fully integrated 2007 Cowlin Performing well, integration proceeding to plan
Slide 35: Strategic development: Civil Engineering market shares
Strategic development Civil Engineering market shares Strong Medium Low
Slide 36: Strategic development: Building Construction market shares
Strategic development Building Construction market shares Strong Medium Low
Slide 37: Strategic development: Professional and technical services
Strategic development Professional and technical services Balfour Beatty Management • 500+ professionals • Major projects and bids - National Grid - BAA - British Energy - M25 - Olympics • Independent operation - Transport for London - Developer market
Slide 38: Strategic development: Heery International
Strategic development Professional and technical services Heery International • Major player in public sector markets • At forefront of design and build trend • On-going acquisition programme
Slide 39: Strategic development: Private infrastructure investment
Strategic development Private infrastructure investment UK PPP • 3 new preferred bidder • 5 concessions converted to contract New markets • Exeter International Airport • ITE Singapore • GMH Military Housing
Slide 40: Strategic development: US
Strategic development US • Long-established businesses well positioned for growth • Balfour Beatty Construction performing above expectations • Growth through increased penetration + geographic expansion • Excellent prospects in PPP accommodation and support service markets through GMH
Slide 41: GMH Military Housing performance
GMH Military Housing performance Profit from operations $35.9m $26.8m $23.3m 2005 2006 2007
Slide 42: GMH Military Housing
GMH Military Housing • 15 concessions covering 42 bases across US • 810 employees • $110m of invested and committed capital • Excellent prospects in associated markets
Slide 43: Balfour Beatty in the US
Balfour Beatty in the US Civil Building Rail Engineering Investment 9 9 9 9 Professional & Technical Services Execution / Delivery 9 9 9 Support Services 9 9
Slide 44: Strong financial performance and strategic progress
2007 • Strong financial performance • Significant progress in our strategic development • Exciting long-term market prospects