Slide 1: 2021 full year results presentation
2021 full year results presentation 10 March 2022 Image: Hinkley Point C, Somerset, UK
Slide 2: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: Eleclink 1GW electricity interconnector, Channel Tunnel
Slide 3: Building momentum
Building momentum 2021 results ahead of expectations Balfour Beatty transformed into resilient, diversified Group Higher quality order book provides clear visibility Expert capability matched to favourable infrastructure markets Attractive Infrastructure Investments portfolio and opportunities £150
Slide 4: Build to Last transformation
Build to Last transformation UK voluntary attrition: moving annual average Earnings-based businesses profit/(loss) from operations* % £m 16 11 14 (144) 172 181 2014 2019 2021 2014 2019 2021 Other net operating expenses* Average net cash/(debt) £m £m 460 261 226 (371) 325 671 2014^ 2019^ 2021 2014 20
Slide 5: Capital allocation pivot under Build to Last
Capital allocation pivot under Build to Last Strengthening the Returning cash Self help balance sheet to shareholders £300m £250m £200m £179m £188m £150m £100m £50m £0m 2015 2016 2017 2018 2019 2020 2021 2022 Dividends paid Scheduled debt repaid Share buyback Significant returns for shareholders now
Slide 6: Phil Harrison, Chief Financial Officer
Phil Harrison Chief Financial Officer Image: Interstate 635 East, Texas, US
Slide 7: Headline numbers
Headline numbers £m (unless otherwise stated) 2021 2020 Group revenue* 8,280 8,587 Profit from earnings-based businesses* 181 75 Profit from operations* 197 51 Profit for the year* 194 25 Basic earnings per share* 29.7p 3.7p Dividends per share 9.0p 1.5p 2021 2020 Order book £16.1bn £16.4bn Director
Slide 8: Construction Services
Construction Services £m 2021* 2020* Revenue PFO Revenue PFO ● US Construction and Gammon UK 2,593 (2) 2,190 (26) recorded PFO in line with pre-pandemic US 3,344 51 3,789 26 levels Gammon 809 30 985 29 ● UK Construction impacted by performance issues at three private Total 6,746 79 6,964 29 sector p
Slide 9: Support Services
Support Services £m 2021 2020 Revenue ● Profitable recurring revenues Utilities 469 565 underpinned by long-term contracts Transportation 597 502 ● Outperformance is a result of: Total 1,066 1,067 > improved portfolio performance > exit from gas and water sector Profit from operations* 102 46 > end
Slide 10: Infrastructure Investments: all disposals above Directors' valuation
Infrastructure Investments £m 2021 2020 Pre-disposals operating profit* 14 8 ● Re-commenced disposals Gain on disposals 35 - from portfolio: Investments profit* 49 8 > bundle of UK PPP assets for £48m Sub-ordinated debt interest receivable ^ 18 15 > Canadian hospitals for £20m Infrastructure concess
Slide 11: Non-underlying items
Non-underlying items £m 2021 2020 Impairment and amortisation Amortisation of acquired intangibles (5) (6) Other Grant income (repaid)/received in relation to COVID-19 UK Job Retention Scheme (19) 19 Military housing settlement charge following resolution with US Department of Justice (41) - Provisi
Slide 12: Cash flow
Cash flow £62m £8m £60m £281m £(42)m £(59)m £(36)m £115m £(180)m £790m £581m FY 2020 Operating Working Dividends Net Other Pension Lease Capital Share FY 2021 cash flows capital cash from JVAs disposal deficit payments expenditure buybacks and flows proceeds^ payments* dividends paid+ ^ includes £19
Slide 13: 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 (target 40% via share opportunities portfolio sheet payout ratio^) buybacks Investments meet Disposals timed to
Slide 14: Shareholder returns
Shareholder returns Profitable Sustainable Multi-year share managed growth dividend buyback programme 2021 PFO from earnings-based Target 40% ordinary dividend £150m share buyback businesses 5% higher than 2019 pay-out ratio^ completed in 2021 2022 continued profit growth in line 2021 total dividend
Slide 15: Leo Quinn, Group Chief Executive
Leo Quinn Group Chief Executive Image: HS2 Long Itchington Wood Tunnel, Warwickshire, UK
Slide 16: Geographically and operationally diversified portfolio
Geographically and operationally diversified portfolio £16.1bn order book £1.1bn* Investments portfolio * Directors’ valuation Balfour Beatty transformed into resilient, diversified Group 15
Slide 17: Inflation
Inflation Construction Services Infrastructure & Support Services Investments Inflation management Inflation protection ● Contractual protection ● In an inflationary market asset values increase ● Early buyout to lock in costs > UK portfolio positively correlated with inflation ● Leveraging the Grou
Slide 18: UK Construction order book evolution
UK Construction order book evolution HY 2018 FY 2021 50% Driving more predictable outcomes 17
Slide 19: UK Construction
UK Construction Major Projects Highways Regional HS2 Area North, Old Oak Common M4 Junctions 3 - 12 Manchester Engineering Campus Development Hinkley Point C A63 Castle Street, Hull SCAPE Civils 2nd generation frameworks Market drivers Market drivers Market drivers ● UK Government9s £650bn National
Slide 20: Future UK infrastructure pipeline
Future UK infrastructure pipeline HS2 Nuclear & Decarbonisation Lower Thames Defence Crossing ● c.£2bn over four rail track ● Sizewell C c.£20bn 3.2 GW ● Net Zero Teesside: Carbon ● £6.3bn National Highways systems packages nuclear power station capture, utilisation and storage road crossing ● Phase
Slide 21: Support Services: transformed portfolio
Support Services: transformed portfolio Power Road maintenance Rail maintenance £300m Hinkley Point C connection project M25 30 year concession £220m London Underground track renewals £85m Port Ann to Crossaig for SSEN Local authority reactive and capital works £1.5bn Central Rail Systems Alliance M
Slide 22: US Construction
US Construction Buildings Civils Broward County Convention Centre, Florida Highways in Texas (IH-635), Carolinas & Georgia Microsoft campus: 18 new buildings, Washington Mass Transit Rail projects: Caltrain, California Market drivers Market drivers ● Post-pandemic rebound in tendering activity ● US$
Slide 23: Gammon: 50:50 joint venture – new CEO
Gammon: 50:50 joint venture – new CEO Strong order book* Portfolio highlights Vertically integrated capability Main civils contract ● Plant ● Steel ● Foundations ● M&E Central Kowloon Route ● Concrete ● Façade Hong Kong Airport £2.6bn Consistent dividend* Advanced Manufacturing Centre £40m £30m £20m
Slide 24: Hong Kong pipeline
Hong Kong pipeline Mass Transit Railway (MTR) network Proposed land development Northern Metropolis Northern link and Kwu Tung Station (HK$23bn) 2,270 East Rail Line Hung Shui Kiu Ma Liu Shui Guangzhou Tuen Mun East Station Shenzhen-Hong (HK$3bn) 60 West Rail Line Kong Express 220 70 96 Lam Tei 28 R
Slide 25: Infrastructure Investments – new CEO
Infrastructure Investments – new CEO Strong competitive advantage Growth markets Project financing expertise Student accommodation UK & US P3 social and transport US ● High ROI for Group negative working capital ● Portfolio positively correlated with inflation ● Disposals underpin share buyback prog
Slide 26: Building New Futures
Building New Futures Environment Materials Communities 2040 2040 Positively Impact More 2040 Beyond Net Generate Zero Waste than Ambitions Zero Carbon Ambitions Ambitions 1 Million People Achieve 2030 2030 2030 40% reduction £3bn social value science-based carbon generated Targets reduction target T
Slide 27: Strong outlook
Strong outlook Well positioned for 2022 and beyond Balfour Beatty transformed into resilient, diversified Group Higher quality order book provides clear visibility Expert capability matched to favourable infrastructure markets Attractive Infrastructure Investments portfolio and opportunities £150 mi
Slide 28: Appendix
Appendix Image: Royal Holloway student accommodation, University of London, UK
Slide 29: 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 Beatty9s business, financial condition and results
Slide 30: Group net cash
Group net cash £1,000m £671m* £800m £527m* £600m £325m* Group net cash £400m £42m* £194m* £(46)m* £200m £0m £(200)m £(400)m FY 2016 FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 *Average monthly net cash 29
Slide 31: Order book by phase
Order book by phase Total 2021 £16.1bn Total 2020 £16.4bn £6.4bn £6.3bn £6.4bn £5.9bn £3.6bn £3.9bn FY 2020 FY 2021 FY 2020 FY 2021 FY 2020 FY 2021 0-12 months 13-24 months 25+ months UK Construction US Construction Gammon Support Services Construction Services - UK Construction US Services - US Con
Slide 32: Order book by customer
Order book by customer UK Construction Support Services US Construction Gammon £5.6bn £2.5bn £5.4bn £2.6bn ⚫ Public & regulated (91%) ⚫ Public & regulated (100%) ⚫ Public & regulated (57%) ⚫ Public & regulated (70%) ⚫ Private sector ⚫ Private sector ⚫ Private sector ⚫ Private sector 31
Slide 33: Underlying profit from operations
Underlying profit from operations £m 2021* 2020* UK Construction (2) (26) US Construction 51 26 Gammon 30 29 Construction Services 79 29 Support Services 102 46 Earnings-based businesses 181 75 Infrastructure Investments Pre-disposals operating profit 14 8 Gain on disposals 35 - Corporate activities
Slide 34: Group balance sheet
Group balance sheet £m FY 2021 FY 2020 Goodwill and intangible assets 1,113 1,123 Working capital (1,118) (887) Net cash (excluding infrastructure concessions) 790 581 Investments in joint ventures and associates 503 554 PPP financial assets 30 155 Infrastructure concessions – non-recourse net debt
Slide 35: Cash flow
Cash flow £m 2021 2020 £m 2021 2020 Operating cash flows 115 127 Working capital flows^ Working capital inflow 281 167 Inventories 11 (14) Pension deficit payments≠ (42) (18) Net contract assets 221 154 Cash from operations 354 276 Trade and other receivables (22) 42 Dividends from joint ventures &
Slide 36: Working capital – Group
Working capital – Group £0m 0 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 £(200)m (4)% £(400)m (9.9)% (8)% (10.3)% £(600)m (12.1)% (12.8)% (12.9)% (12.8)% (12)% £(800)m (15.6)% £(1,000)m (16)% £(1,200)m (20)% Period end working capital Period end working capital as % revenue Debtor days* 27 34
Slide 37: Working capital – Construction Services
Working capital – Construction Services £0m 0 Dec 15 Dec 16 Dec 17 Dec 18 Dec 19 Dec 20 Dec 21 £(200)m (4)% £(400)m (8)% £(600)m (10.6)% (12)% £(800)m (11.8)% (13.4)% (16)% £(1,000)m (14.4)% (14.7)% (16.6)% (16.9)% £(1,200)m (20)% Period end working capital Period end working capital as % revenue fr
Slide 38: Net finance costs
Net finance costs £m 2021 2020 Subordinated debt interest receivable 23 Interest on PPP financial assets 5 Interest on non-recourse borrowings (11) 17 22 Net finance income – pension schemes 1 3 Other interest receivable 10 Other interest payable (8) 2 (5) US private placement (10) (10) Preference s
Slide 39: Directors' valuation of Investments portfolio
Directors’ valuation of Investments portfolio £19m £61m £83m £(62)m £(81)m £1,086m £1,106m FY 2020 Equity Distributions Sales Unwind of Other* FY 2021 invested received proceeds discount * other includes movements in operational performance £27m, gains on disposal £21m, foreign exchange £7m and new
Slide 40: Pensions – balance sheet movement
Pensions – balance sheet movement £100m £42m £231m £133m £89m £32m £54m £(128)m £(146)m £(231)m 2014 2015 2016 2017 2018 2019 2020 Employer Net 2021 contributions actuarial gains & other 39
Slide 41: Borrowing repayment profile
Borrowing repayment profile £200m £160m £120m £80m 155 £40m 37 £0m 2022 2023 2024 2025 US Private Placement notes The Group has a £375m committed bank facility extending through to October 2024, which was undrawn at 31 December 2021 40