Babcock International Group Plc · LSE:BAB
Babcock International — Merger or Acquisition (March 2014)
26 slides from Babcock International's merger presentation, Mar 27, 2014
Slide 1: Recommended acquisition of Avincis Mission Critical Services
Recommended acquisition of Avincis Mission Critical Services March 2014
Slide 2: Information notice
Information notice This presentation has been prepared by Babcock International Group PLC (the "Company") for information purposes only in relation to a potential secondary offering of equity securities in the capital of the Company (the "Transaction"). By attending the meeting where this presentati
Slide 3: Information notice continued
Information notice continued This presentation and its contents are confidential and may not be reproduced, redistributed, published or passed on, directly or indirectly, to any other person or published, in whole or in part, for any purpose. Failure to comply with these restrictions may constitute
Slide 4: Overview and strategic rationale
Overview and strategic rationale Peter Rogers – CEO
Slide 5: Acquisition overview
Acquisition overview Proposed acquisition of Avincis – a leading international provider of specialist helicopter and fixed wing services for mission-critical operations • 2013 Total Revenue of £487 million, Adjusted EBITDA1 of £113 million and an order book of £1.9 billion as at 31 December 2013 Ali
Slide 6: Avincis – a Babcock business
Avincis – a Babcock business An excellent fit with existing strategy and a strong platform for growth Babcock Avincis Leading market positions Market leader in Helicopter and Fixed Wing Emergency Services in Europe No 3 in Offshore Oil and Gas in UK Preferred customer Blue-chip companies, central an
Slide 7: Strong platform for growth
Strong platform for growth Successful business with an experienced management team Avincis business well positioned for growth • in existing markets • in existing geographies • in new geographies Babcock’s scale, capabilities and balance sheet accelerate Avincis’s existing growth plans Avincis suppo
Slide 8: Enhances geographic and customer coverage
Enhances geographic and customer coverage Babcock Avincis Revenue by geography Revenue by customer UK Babcock** Babcock** South Africa UK MoD 16% UK Canada 38% International RoW defence Australia 55% Civil 84% 7% Brazil Middle East Avincis** Avincis** 6% UK 3% Civil Spain 30% Other Europe Internatio
Slide 9: Critical engineering skills
Critical engineering skills A leading international provider of specialist helicopter and fixed wing services for mission- critical operations Avincis delivers mission-critical services and complex engineering support • with a network of OEM-approved Service Centres carrying out maintenance, repair
Slide 10: Delivering complex services
Delivering complex services Avincis operates in a highly regulated environment – country specific requirements • Aircraft Operator’s Certificate and maintenance permits • comprehensive safety management systems and processes • skilled and experienced workforce Long-standing relationships and reputat
Slide 11: Broad spread of customers
Broad spread of customers Helicopter and Fixed Wing Emergency Services Energy Support Services • Centre Hospitalier • U.L.S.S. • Azienda Ospedaliera • Sicily Illustrative customer list Note: Helicopter and Fixed Wing Emergency Services constitutes Life and Rescue services and Safety and Environmenta
Slide 12: Helicopter and Fixed Wing Emergency Services
Helicopter and Fixed Wing Emergency Services Helicopter and Fixed Wing Emergency Services 2013 revenue Service Helicopter Emergency Services – medical Search and Rescue (SAR) Fire Fighting 24% Civil protection – police, disaster response Maintenance, repair and overhaul Customers National and local
Slide 13: Energy Support Services
Energy Support Services Energy Support Services 2013 revenue Service Crew change Search and Rescue (SAR) 24% Customers Blue-chip oil and gas companies 76% Typical contracts Regular service provision 4-7 years plus customer option to extend Helicopter and Fixed Wing Emergency Services Typically 60% f
Slide 14: Order book and pipeline
Order book and pipeline High revenue visibility • average contract renewal rates of approximately 96% over the 3 years ended 31 December 2013 Order book c£1.9 billion at 31 December 2013 Over the past six months – 16 contract wins totalling c£275 million, including • emergency medical services in Fr
Slide 15: Significant growth potential
Significant growth potential Avincis well positioned for growth through • further outsourcing eg SAR, civil protection and MRO • market share growth, eg oil and gas North Sea and Australia • underlying market growth eg oil and gas Australia Opportunities to expand existing Avincis operations into ne
Slide 16: A compelling combination
A compelling combination Avincis is a successful business • senior management team are expected to remain in place Avincis is a Babcock business – a business model we know and understand Avincis is well positioned for growth Babcock’s financial strength, capabilities and scale • support and enhance
Slide 17: Financials and transaction structure
Financials and transaction structure Bill Tame – Group Finance Director
Slide 18: Avincis financial highlights
Avincis financial highlights Growing revenues – EBITDA margins over 20% Total Revenue • 2013 impacted by EC225 issues in 2012, c£12 million revenue 600 41 • significant contract mobilisation costs 2013 400 Expected to achieve double digit revenue growth in 2014 £m and 2015 431 480 487 200 • full yea
Slide 19: High revenue visibility
High revenue visibility Order book of c£1.9 billion at 31 December 2013 Order book growth 2.0 1.9 2013 order intake increased by over 40% on 2012 1.5 1.3 Recent contract wins provide assured revenue growth for 1.1 £ bn 2014 and 2015 1.0 85% of 2014 revenue in the order book or at preferred bidder 0.
Slide 20: Large pipeline supports growth
Large pipeline supports growth Total pipeline (bidding and tracking) of c£5.9 billion at March 2014 Currently bidding on contracts valued at c£0.6 billion Significantly shorter bidding timetables than traditional Babcock model Total pipeline by sector Total pipeline by geography Total pipeline by co
Slide 21: Enlarged Group net debt
Enlarged Group net debt Pro forma net debt/EBITDA expected to be Net debt/EBITDA c2.5x* at 31 March 2014 3 • target to reduce to c2.3x by 31 March 2015* • below previous acquisition spike levels 2.5 ‒ VT Group plc July 2010 = c2.9x 2 Refinancing of Avincis debt • potential interest cost reduction of
Slide 22: Transaction and financial highlights
Transaction and financial highlights Fully underwritten rights issue Sources £m Uses £m • to raise gross proceeds of c£1.1 billion (c22% of market capitalisation) Rights Issue 1,100 Purchase price 920 • 34.5% discount to theoretical ex-rights price Refinancing of Avincis debt Term loan 900 Refinance
Slide 23: Expected timetable and rights issue
Expected timetable and rights issue Key expected dates Rights issue 27 March 2014: Announcement of acquisition 5 for 13 rights issue at a price of 790 pence and rights issue per share 16 April 2014: General meeting Gross proceeds of £1,100 million 17 April 2014: Admission and Discount to TERP: 34.5%
Slide 24: In summary
In summary Clear strategic fit Well positioned for growth Medium term revenue synergy opportunity High revenue visibility Diversified customer base and geographic presence Earnings accretive Creates value for shareholders 24 Recommended acquisition of Avincis March 2014 www.babcockinternational.com
Slide 25: Questions?
Questions? 25 Recommended acquisition of Avincis March 2014 www.babcockinternational.com
Slide 26: Recommended acquisition of Avincis March 2014 www.babcockinternational.com
26 Recommended acquisition of Avincis March 2014 www.babcockinternational.com
Babcock International Group — Merger or Acquisition (March 2014) on 6ix