Babcock International Group PLC · LSE:BAB
Babcock International — H1 2005 Earnings Presentation
24 slides from Babcock International's earnings presentation, November 2004
Slide 1: Babcock International Group PLC Interim Results to 30 September 2004
Babcock International Group PLC INTERIM RESULTS TO 30 SEPTEMBER 2004 Peter Rogers Bill Tame
Slide 2: Financial Review
Financial Review Bill Tame
Slide 3: Group Operating Result
Group Operating Result 6 months to 30 September FY £ million 2004 2003 % change 2003/04 Turnover Existing operations 243.4 214.9 13 438.0 Acquisitions 95.8 - - Discontinued operations - 10.2 14.0 Total 339.2 225.1 51 452.0 Operating profit* Existing operations 15.4 12.3 25 25.5 Acquisitions 4.9 - -
Slide 4: Revised Segmental Structure
Revised Segmental Structure Defence Services Babcock Infrastructure Services (BIS) Babcock Defence Services (BDS) Babcock Naval Services (BNS) Technical Services Babcock Engineering Services (BES) Engineering & Plant Services Babcock Africa (BAS) Babcock Eagleton Networks Eve Transcom Eve Trakway Ra
Slide 5: Divisional Performance
Divisional Performance 6 months to 30 September Turnover Operating profit* FY FY £ million 2004 2003 % change 2003/4 2004 2003 % change 2003/4 Defence Services 107.9 82.6 31 171.5 8.5 5.0 70 11.6 Technical Services 82.8 85.8 (4) 180.0 6.7 7.2 (7) 14.8 Engineering & Plant 52.7 46.5 13 86.5 2.8 2.2 27
Slide 6: Divisional Performance
Divisional Performance 6 months to 30 September Turnover Return on Sales* FY FY £ million 2004 2003 2003/4 2004 2003 2003/4 Existing Defence Services 107.9 82.6 171.5 7.9% 6.1% 6.8% Technical Services 82.8 85.8 180.0 8.1% 8.4% 8.2% Engineering & Plant 52.7 46.5 86.5 5.3% 4.7% 4.0% Total Existing 243
Slide 7: Tax, EPS & Dividend
Tax, EPS & Dividend 6 months to 30 September FY £ million 2004 2003 % change 2003/04 Profit before tax, pre-goodwill and exceptionals 17.8 11.1 60 23.1 Goodwill amortisation – Existing (1.7) (1.6) (3.3) – Acquisition (1.0) - - Exceptionals 1.5 (0.1) - Profit before Tax 16.6 9.4 19.8 Tax (3.1) (1.4)
Slide 8: Exceptional Items
Exceptional Items Sept FY £ million 2004/05 2003/04 2003/04 Cash Non-cash Total Total Total Operating Technical Services - Restructuring (0.8) (4.6) (5.4) Rail - NWR compensation net of costs 10.0 - 10.0 Peterhouse integration (1.5) - (1.5) Total - operating 7.7 (4.6) 3.1 Non-operating Loss on sale
Slide 9: Group Operating Cash Flow
Group Operating Cash Flow 6 months to 30 September FY £ million 2004 2003 2003/04 Group Operating Profit* 20.7 10.5 21.9 Depreciation, amortisation and impairment 11.4 4.1 8.2 Increase in working capital (7.4) (1.2) (2.0) Net capital expenditure / other 1.0 (0.8) (1.9) Operating cash flow 25.7 12.6
Slide 10: Group Net Cash Flow
Group Net Cash Flow 6 months to 30 September FY £ million 2004 2003 2003/04 Operating cash flow 25.7 12.6 26.2 Acquisitions and disposals (24.7) (1.1) 1.4 Interest (2.4) 0.8 (0.4) Tax (2.5) (0.7) (1.6) Dividends (4.3) (2.7) (4.5) Financing / Acquired borrowings (47.5) (0.6) 0.7 Net cash flow (55.7)
Slide 11: Group Balance Sheet
Group Balance Sheet 6 months as at 30 September FY £ million 2004 2003 2003/04 Fixed assets Tangible 38.7 15.0 12.2 Intangible 140.4 78.8 77.5 179.1 93.8 89.7 Working capital 13.5 (10.5) (8.7) Pension pre-payments 106.1 70.2 69.0 Financial Items (6.1) (5.7) (8.5) Provisions (50.5) (31.1) (29.0) Capi
Slide 12: Peterhouse acquisition
Peterhouse acquisition £m Consideration • £140 million RC facility in place Cash 31.7 Shares 64.7 • Network Rail maintenance cash received £21 million Costs 2.7 Total 99.1 • Closing net debt £71.1 million Net assets acquired 32.8 • Gearing at 30.9.04 42% Goodwill 66.3 Debt assumed 47.1
Slide 13: Pensions - Profit and loss account impact
Pensions - Profit and loss account impact Main DB Schemes £ million SSAP 24 FRS17 Sept 04 Sept 03 Sept 04 Sept 03 Service cost (net of variation) 4.6 3.1 5.9 4.7 Interest on surpluses / Net Return (2.8) (2.1) Net charge to Operating profit 1.8 1.0 5.9 4.7 Net Interest Income - - (3.8) (1.1) Net char
Slide 14: International Financial Reporting Standards
International Financial Reporting Standards Key Issues Timetable • First Reporting Period – 30.9.05 • First Reporting Date – Nov 2005 • Issuing Comparatives prior to above Key Accounting Issues • Pensions – see FRS 17 • Acquisition Balance sheet / Intangibles / Peterhouse profits before amortisation
Slide 15: Operations Review: Defence Services
Operations Review September 2004 Defence Services Turnover (£m) Operating Profit (£m)* 2004 2003 2004 2003 107.9 82.6 8.5 5.0 • SW Prime successfully started • Central Prime announcement now February 2005, East bid submission soon • SLAM volumes increasing • RAF Valley start up pleases customers • A
Slide 16: Operations Review: Technical Services
Operations Review September 2004 Technical Services Turnover (£m) Operating Profit (£m)* 2004 2003 2004 2003 82.8 85.8 6.7 7.2 • Turnover decline being managed – will continue in second half • Illustrious a success – on time under budget • Terminal 5 building to a maximum in Q1 2005 • Further opport
Slide 17: Operations Review: Engineering & Plant Services
Operations Review September 2004 Engineering & Plant Services Turnover (£m) Operating Profit (£m)* 2004 2003 2004 2003 52.7 46.5 2.8 2.2 • Another good 6 months for Africa • Volvo market share continuing to increase and value up • Replacement parts market building • High activity level in power cont
Slide 18: Operations Review: Networks
Operations Review September 2004 Networks Turnover (£m) Operating Profit (£m)* 2004 2003 2004 2003 28.7 - 3.0 - • Activity in cellular slow over summer – now picking up rapidly • Vodafone have launched 3G • Turner & Partners acquisition going well • Transmission stable so far – now accelerating • 3
Slide 19: Operations Review: Rail
Operations Review September 2004 Rail Turnover (£m) Operating Profit (£m)* 2004 2003 2004 2003 62.4 - 2.9 - • Maintenance successfully handed back • Track renewals at high activity level • Projects slow to be released – Network Rail reorganisation and re-funding • Win of high output contract encoura
Slide 20: Operations Review: Health, Safety & Environment
Operations Review September 2004 Health, Safety & Environment Turnover (£m) Operating Profit (£m)* 2004 2003 2004 2003 4.7 - (0.6) - • The future of these businesses is under review • IETG currently being offered for sale * Before goodwill and exceptional items
Slide 21: Peterhouse acquisition: Cost Synergies
Peterhouse acquisition Cost Synergies £ million Operational (p.a.) Financial (p.a.) Approximate Cost to achieve Offer document 4.0 1.3 Banked for 05/06 Peterhouse HO 2.3 1.8 (some benefit in 04/05) Tax 1.6 0.3 By September 05 IT network 0.5 0.3 Property (some benefit in 04/05) 0.8 1.5 Acetech labour
Slide 22: Peterhouse acquisition: Commercial Synergies
Peterhouse acquisition Commercial Synergies There are a number of potential revenue opportunities currently under consideration Design & Technology Review of broad, IT based design skills to focus service on commercial markets (Transport, Energy, Telecoms, Oil & Gas). Power and Telecoms Project unde
Slide 23: Bid Activity – Update on July Status
Bid Activity – Update on July Status Status - AVTS Lost - RSME Timetable for approval agreed - DTR Progressing - South East Prime Lost - Central Prime Decision February - Eastern Prime Decision March - Hydrographic Office Won - Libya Power Won – 3 contracts - NATO Submarine Won - Marine Services BAF
Slide 24: Summary and Prospects
SUMMARY AND PROSPECTS • Consistent strategy followed • Objectives set in 2000 have been met • Focus now on completing Peterhouse Integration • Sales and profit growth in existing businesses • Order book totals £1.4 billion, inclusive of £0.4 million of secured framework contracts
Babcock International Group — H1 2005 Earnings Presentation on 6ix