Babcock International Group PLC · LSE:BAB
Babcock International — Investor Day (October 2016)
33 slides from Babcock International's investor day presentation, Oct 17, 2016
Slide 1: Babcock International Group – Defence and Security Division DSG Capital Markets Day
Babcock International Group Defence and Security Division DSG Capital Markets Day – 17 October 2016
Slide 2: Archie Bethel, Chief Executive
Archie Bethel Chief Executive, Babcock International Group
Slide 3: Babcock International Group: at a glance
Babcock International Group: at a glance Operations in 27 countries The UK’s over 6 continents Revenue of over Employing a leading workforce of £4.8 billion engineering over in FY16 Trusted to deliver support services services that are 35,000 organisation complex, skilled critical and personnel besp
Slide 4: Our strategy strengthens future prospects
Our strategy strengthens future prospects Consistent strategy strengthens future prospects: Leading market • predictability of future revenues positions • strong track record of delivering growth Excellent Public body health and and blue chip • unique infrastructure and skills safety record customer
Slide 5: Group structure: how we operate
Group structure: how we operate Our c 35,000 employees deliver critical support through four customer facing divisions Babcock International Group Chief Executive, Archie Bethel CBE Marine & Technology Defence & Security Support Services International Group Finance Director John Howie Roger Hardy Jo
Slide 6: What we deliver
What we deliver Marine and Technology Revenue of Group 35% Marine Technology Order book • 100% of UK and Canadian submarine refits • Weapons handling system 35% Pipeline Marine Technology •• 75% of UK surface 100% of UK and Canadian fleet refits • Weapons handling system • Equipment support 28% 37%
Slide 7: Our strategy in action: 2015/16
Our strategy in action: 2015/16 Organic growth Continued focus on; through strong underlying +8% +6% 11.1% • Leading market Revenue growth Operating profit Operating margin performance positions • Preferred customer Cash Financial discipline and conversion 1.7x 2.0x characteristics Pre capex 114% Ne
Slide 8: Our defence business is substantive: second largest MOD supplier
Our defence business is substantive: We are the second largest MOD supplier MOD’s suppliers BAE Systems 18.4% £3,673m Other 10 largest suppliers Babcock 7.7% £1,548m suppliers 49% 51% £9,808m £10,192m Rolls-Royce 4.1% £822m Airbus 3.9% £771m Leonardo 3.7% £739m Hewlett-Packard 3.0% £606m Lockheed Ma
Slide 9: UK defence requirement to generate £9bn of efficiency savings
The UK defence requirement to generate £9bn of efficiency savings in the next five years is a major Babcock opportunity • 2% GDP reaffirmed whereas most allies reducing defence spending; and • Good news for D&S - 0.7% GDP spend on overseas capabilities can only development be acquired by • Manpower
Slide 10: Roger Hardy, Divisional Chief Executive
Roger Hardy Divisional Chief Executive Defence and Security Division
Slide 11: Our Defence and Security Division operates across five key areas
Our Defence and Security Division operates across five key areas Land Air Security Sea Training International Incl. DSG Provision of Leading provider Develop defence Strategic partner Leading provider aircraft of critical markets in key to the British of naval availability and engineering Babcock Ar
Slide 12: What we do for our customers
What we do for our customers Training Vehicle fleets Equipment support 12 Babcock International - DSG Capital Markets Day - 17 Oct 2016 www.babcockinternational.com
Slide 13: We operate across many customer sites, UK and overseas
We operate across many customer sites, both in the UK and overseas Business Unit Major sites Staff no. (rounded) Land and DSG Donnington 3,400 Bovington Chatham Minley c.7,000 staff Warminster across 80 Ashchurch sites Lyneham Air Valley 1,800 Linton-on-Ouse Cranwell Yeovilton Sea Training Collingwo
Slide 14: Babcock is the only 'pure' engineering support services provider
Babcock is uniquely the only ‘pure’ engineering support services provider Platform and System OEMs • Platform agnostic • Critical and complex engineering • Asset availability contracts Support Engineering • Whole life and Services Services through life support Outsourcers Providers 14 Babcock Intern
Slide 15: D&S Air business operates in three main areas
D&S Air business operates in three main areas covering all aspects of military aviation services Aircraft Support Base Support Operational Training Line maintenance Infrastructure programme Provision of training aircraft management Depth maintenance Support to training equipment Facilities and lifec
Slide 16: Significant partner in two major long term air Joint Ventures
We are a significant partner in two major long term air Joint Ventures Delivering, maintaining and supporting the The UK MOD appointed military flying training tasking of Voyager to provider a cutting-edge service partner, through a unique 25-year air-to-air refuelling operational capability to part
Slide 17: Our Sea Training capabilities span full naval training requirements
Our Sea Training capabilities span the full breadth of naval training requirements Crew training Naval warfare skills training Fire fighting Naval engineering training training In-house training Damage control design & support training Sea survival Diver training training support 17 Babcock Internat
Slide 18: Nic Anderson, Managing Director, Land Business
Nic Anderson Managing Director, Land Business Defence and Security Division
Slide 19: Land – unique market and customer position
Land – unique market and customer position c3,000 people Army annual budget We maintain 50,000 vehicles each year c£8bn – only major industry supplier Warfighting Division Stirling We train over 16,000 soldiers for the British Army – Royal Engineers seen Reset for as benchmark contingency Catterick
Slide 20: Army priorities and key land suppliers
Army priorities and key land suppliers Company Annual spend • Restore and update war fighting capability. Babcock • Become a more intelligent customer and contract manager General Dynamics • Improve the force preparation process, particularly fleet management. Lockheed Martin • Overhauling its indiv
Slide 21: Land: Delivering equipment support and training solutions
Land Delivering equipment support and training solutions Equipment Support Training • DSG • Royal School of Military Engineering • Whitefleet – Phoenix II • Training, Maintenance and Support • ALC - Construction vehicles Services – The Armour Centre • Equipment Failure Report Analysis Service • Defe
Slide 22: Royal School of Military Engineering
Royal School of Military Engineering Providing: Training and associated support services to the Royal School of Military Engineers (RSME) Customer: MOD - Army Sector: Defence Training Contract Value: c£3bn Contract Length: 2008-2038 22 Babcock International - DSG Capital Markets Day - 17 Oct 2016 ww
Slide 23: Defence College of Technical Training Electro-Mechanical Training Contract
Defence College of Technical Training Electro-Mechanical Training Contract Providing: Technical training to the Defence College Technical Training Electro Mechanical Training Contract. Customer: MOD - Army Sector: Defence Training Babcock contract since: 1998 Contract Length: 2014-2019 (plus extensi
Slide 24: Training, Maintenance and Support Services
Training, Maintenance and Support Services Providing: Training, maintenance and support services (TMASS) to the British Army Armoured Centre Customer: MOD – Army Sector: Defence Training Babcock contract since: 2004 Contract Length: 2016-2019 Contract Value: c£25m 24 Babcock International - DSG Capi
Slide 25: Joint Venture: ALC PFI
Joint Venture: ALC PFI Joint Venture Providing: Service and support to the MOD's 2,000+ construction vehicles. Customer: MOD – Army Sector: Defence Equipment Contract Length: 2005-2021 25 Babcock International - DSG Capital Markets Day - 17 Oct 2016 www.babcockinternational.com
Slide 26: Phoenix
Phoenix Providing: Phoenix II - Fleet management services including integration of MoD core fleet management services currently delivered by three separate contracts covering UK, NI and Europe Customer: MOD – Tri-service Sector: Defence Equipment Babcock contract since: 2001 (as White Fleet) Contrac
Slide 27: Defence Support Group (DSG)
Defence Support Group (DSG) Providing: Green fleet (armoured vehicles, troop support, light weapons) equipment support, fleet management and sustainment Customer: MOD – Defence Equipment & Support Sector: Defence Equipment Babcock contract since: 2015 Contract Length: 10 years (plus 5 year extension
Slide 28: DSG service categories
DSG service categories Maintenance Repair & Receipt Inspection Issue Fleet Management Overhaul 1-3 & Storage Resource Fleet Management Fleet Resources Manageme nt Maintenance Repair & Light Weapons Overhaul 4 Total Support Force Inventory & Repair Training Uplift Fleet Power Pack Regeneration Manage
Slide 29: DSG Transformation
DSG Transformation 1. Transform the business - innovate • Deliver fleet management capability • Investment in engineering optimisation e.g. Maintenance policy change, scanning • Usage monitoring system – enable improved fleet management and support 2. Implement Strategic Support Supplier • By year f
Slide 30: New vehicle and upgrade programmes
New vehicle and upgrade programmes – DSG aim to provide production and through life-support Image Project name Programme Type Potential Planned Planned in Prime Contractor numbers service date / Bidders Warrior Capability Platform upgrade Lockheed Martin 380 2020 Sustainment Programme (Prime) (Warri
Slide 31: DSG embedded with the Army
DSG embedded with the Army • Provided support to the Equipment Sustainability System in Camp Bastion with c150 engineers • Regenerated equipment from Afghanistan under Herrick Exchange Programme • Supporting overseas exercises • Providing 50 engineers as Sponsored Reserves for Power Pack Regeneratio
Slide 32: UK defence efficiency savings requirement is a major Babcock opportunity
The UK defence requirement to generate £9bn of efficiency savings in the next five years is a major Babcock opportunity • SDSR 2015 brings significant opportunity to Babcock • D&S is to the Army as Marine is to the Navy • DSG provides indispensable complex engineering support to the Army • DSG allow
Slide 33: Babcock International - DSG
33 Babcock International - DSG Capital Markets Day - 17 Oct 2016 www.babcockinternational.com
Babcock International Group — Investor Day (October 2016) on 6ix