Babcock International Group PLC · LSE:BAB
Babcock International — H1 2006 Earnings Presentation
20 slides from Babcock International's earnings presentation, November 2006
Slide 1: Interim Results Presentation for the 6 months ended September 2006
Interim Results Presentation for the 6 months ended September 2006 Babcock is an asset management business. We manage fixed infrastructure and mobile assets. Babcock integrates labour, technical capabilities, systems and supply chain partners to meet the outsourcing needs of customers for ‘mission-c
Slide 2: Highlights
Highlights • Revenue up by 26% to £487.6 million • Operating profit up by 40% to £33.5 million • Further margin improvement to 6.9% • EPS up by 49% to 11.29p • Further significant contract wins in Networks, Rail and Africa • Alstec and Powerlines acquisitions performing ahead of expectations • Order
Slide 3: Financial Review
Financial Review Bill Tame 3
Slide 4: Results Summary 6 months to 30 September
Results Summary 6 months to 30 September £ million 2006 2005 % FY Change 2005/6 Revenue - Existing businesses 440.4 386.7 14% 836.7 - Acquisitions 47.2 - - - 487.6 386.7 26% 836.7 EBITDA 36.6 27.5 33% 57.5 Operating Profit - Existing businesses 28.4 23.9 19% 49.9 - Acquisitions 5.1 - - - 33.5 23.9 4
Slide 5: Segmental Analysis - 6 months to 30 September
Segmental Analysis - 6 months to 30 September Operating Profit £ million Revenue Return on Sales 2006 2005 Growth 2006 2005 Growth Defence Services 163.7 121.9 34% 13.6 8.9 53% 8.3% 7.3% Technical Services 85.7 65.7 30% 7.3 5.3 38% 8.5% 8.1% Engineering & Plant 80.2 68.3 17% 6.7 4.0 68% 8.4% 5.9% Ne
Slide 6: Summary Group Income Statement 6 months to 30 September
Summary Group Income Statement 6 months to 30 September FY £ million % Growth 2005/6 2006 2005 Operating Profit* 33.5 23.9 40% 49.9 Joint ventures 0.1 - - (0.1) Net interest (3.0) (3.4) (12%) (5.2) Profit before tax* 30.6 20.5 49% 44.6 Tax (6.7) (4.9) (9.2) Effective tax rate 22% 24% 21% Profit from
Slide 7: Intangible amortisation and exceptional items
Intangible amortisation and exceptional items £ million 2006 2005 Underlying earnings 23.9 15.6 Acquired intangibles amortisation (2.9) (1.6) Exceptional items (1.3) - Related tax credit 1.2 0.5 Sub Total (3.0) (1.1) Trading gain on discontinued operations - 0.2 net of tax Total (3.0) (0.9) Reported
Slide 8: Defined Benefit Pension Schemes 6 months to September 2006
Defined Benefit Pension Schemes 6 months to September 2006 £ million 2006 2005 Profit and Loss account - Service cost (7.7) (6.9) - Financing – net 8.4 5.0 Net profit/loss 0.7 (1.9) Funded Status/Balance Sheet - Schemes in surplus 59.6 63.0 - Schemes in deficit (8.1) (53.3) 51.5 9.7 8
Slide 9: Cash flow, net debt and gearing 6 months to September 2006
Cash flow, net debt and gearing 6 months to September 2006 FY £ million 2006 2005 2005/6 Operating Profit* 29.3 22.6 45.6 2006 2005 Non-cash items 6.8 5.7 12.1 £m £m Working capital (9.0) (4.5) (3.6) Net debt (80.0) (52.3) Interest (3.0) (3.4) Cash generated from operations 27.1 23.8 54.1 EBITA/Net
Slide 10: Operational Review
Operational Review Peter Rogers 10
Slide 11: Defence Services
Defence Services Revenue (£m) Operating Profit* (£m) 2006 2005 2006 2005 163.7 121.9 13.6 8.9 • Regional Prime East successfully mobilised • Additional scope secured on Regional Prime South West • SLAM 2 close to signature – award is non-competitive • RSME on track for financial close next year • DT
Slide 12: Technical Services
Technical Services Revenue (£m) Operating Profit* (£m) 2006 2005 2006 2005 85.7 65.7 7.3 5.3 • Surface Ship Alliance progressing – some volume increase likely • CVF programme projections continue to increase Rosyth share • Technical Services at capacity – warship refit about 30% of workload • Short-
Slide 13: Engineering & Plant Services
Engineering & Plant Services Revenue (£m) Operating Profit* (£m) 2006 2005 2006 2005 80.2 68.3 6.7 4.0 • Another outstanding half year for Africa • Alliance to support new Eskom capacity being formed • Powerlines acquisition ahead of expectations; £11 million contract win in October • Construction e
Slide 14: Networks
Networks Revenue (£m) Operating Profit* (£m) 2006 2005 2006 2005 42.4 36.7 4.8 4.0 • National Grid Alliance won (with Amec and Mott MacDonald) worth ca £250 million over 5 years • Latest forecasts confirm doubling of National Grid expenditures • Renewables slow • Telecoms steady • Digital Switch Ove
Slide 15: Rail
Rail Revenue (£m) Operating Profit* (£m) 2006 2005 2006 2005 115.6 94.1 4.4 4.2 • Good sales growth and strong order book • Margin below target as anticipated • Major reorganisation on course – to improve margin • Two of six signalling contracts won • In final two bidders for Greater Manchester PTE
Slide 16: Acquisitions at 30 September 2006
Acquisitions at 30 September 2006 £ million Alstec Powerlines Other Total Net cash consideration (after costs) 45.8 5.2 0.5 51.5 To 30 September 2006 Revenue 42.2 5.0 - 47.2 Operating Profit 4.5 0.6 - 5.1 Period of ownership 5 months 4 months • Both performing well with strong sales and growing orde
Slide 17: Major opportunities
Major opportunities Bidding opportunity Babcock value opportunity Likely award date RSME £1,100 million/30 years Financial Close mid 2007 DTR £1,300 million/25 years Preferred bidder - November Grid Framework £250 million/5 years Preferred bidder - December 2006 award ISP Gibraltar £50 million/5 yea
Slide 18: Summary and Prospects
Summary and Prospects • Growth trend in sales and profits continues • Continuing to win contracts and improve margins • Order book remains healthy • Decisions on major contracts imminent • Robust financial health will facilitate further acquisitions • Environment for Babcock remains excellent 18
Slide 19: Appendix – Summary Balance Sheet
Appendix – Summary Balance Sheet £ million 2006 2005 FY 2005/6 Non current assets - Intangibles and Investments 227.4 179.2 178.4 - Property, Plant and Equipment 27.9 36.1 25.3 - Assets held for resale - 0.4 5.8 Working capital (27.4) (23.9) (27.6) Pensions surplus 51.5 9.7 29.3 Financial working ca
Slide 20: Interim Results Presentation for the 6 months ended September 2006
Interim Results Presentation for the 6 months ended September 2006 Babcock is an asset management business. We manage fixed infrastructure and mobile assets. Babcock integrates labour, technical capabilities, systems and supply chain partners to meet the outsourcing needs of customers for ‘mission-c
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