Babcock International Group PLC · LSE:BAB
Babcock International — UBS Support and Business Services Conference 2012
31 slides from Babcock International's conference presentation, Sep 13, 2012
Slide 1: Trusted to deliver
trusted to deliver UBS Support and Business Services Conference – 13 September 2012 Bill Tame Group Finance Director Babcock International Group PLC
Slide 2: Disclaimer
Disclaimer This Document has been prepared by Babcock International Group PLC (the “Company”) solely for use at presentation in connection with the company’s participation in the UBS Support and Business Services Conference on the 13th of September 2012. For the purposes of this notice, the presenta
Slide 3: Trusted to deliver
Trusted to deliver No 1 support Largest supplier • The UK’s leading engineering provider to the of support support services company Royal Navy services to the MoD • The UK’s largest naval • Support to all three armed support business forces • We deliver critical support and • 100% of submarine refit
Slide 4: Key facts
Key facts • FY 12 results Revenue by geography – £3.1bn revenue 2% – £329.0m operating profit 9% 3% UK – £274.1m profit before tax Africa – 61.47p eps Canada • c 25,000 employees across the world RoW 86% – >89% UK based • 58% of our business is in global defence markets Customers by category – but n
Slide 5: Delivering growth
Delivering growth
Slide 6: The market environment
The market environment Driving further opportunities • Economic environment creates a need for Customers’ economic environment ‒ financially constrained outsourcing ‒ cost reductions required – customers’ imperative to find cost efficient support solutions • Long-term relationships are of fundamenta
Slide 7: Differentiating ourselves
Differentiating ourselves Our knowledge, experience and unique infrastructure ensure we are able to operate in the higher value sectors of our markets Our business model Our strategy • Complex Babcock integrated output Leading market positions Criticality based Complex contracts Complex Equipment •
Slide 8: Our selected growth routes
Our selected growth routes Our objective is to develop from our position as the UK’s leading engineering support services company and grow in both the UK and overseas How we are doing this • Continuing to focus on our strategy • Controlling risk by sticking to what we know • Building on our strength
Slide 9: Grow existing contracts
Grow existing contracts • Using existing contract structures to offer a wider range of services and deliver more within each contract • Efficiencies generated by doing more within one contract • Our understanding of outputs and availability is crucial • We have a number of large, long-term contracts
Slide 10: Grow existing contracts
Grow existing contracts MoD Infrastructure Single Living contract 2004 Regional and National Accommodation provision extension Capital Works Frameworks Scotland bidding on a new and NI +£500m opportunity Prime National Housing bidding on a new Contract +£500m opportunity Prime National Training bidd
Slide 11: Grow existing contracts
Grow existing contracts RSME PPP Delivering additional services to the Royal Engineers under a 30 Year PPP • Delivery of 300,000 training days to the Royal Engineers including phase 2 and 3 technical trade training • Increased role in training scheduling, management, training design and delivery • T
Slide 12: Grow existing customers
Grow existing customers • We have strong long-term relationships with our major customers • We have enhanced our strategic importance to our customers • We are able to offer a broader range of services and solutions UBS Conference - 13 September 2012 12
Slide 13: The Royal Australian Navy
Grow existing customers The Royal Australian Navy An established Babcock position • Provision of Collins class weapon discharge system and subsequent through life support • Provision of MK 32 torpedo launch system and in-country designed torpedo handling system for new Hobart Class (air warfare dest
Slide 14: The Coles Review
The Coles Review A change in approach to submarine support • Issues with Collins class submarine availability – “lack of a strategic approach” – “confused responsibilities and accountabilities” – “lack of submarine knowledge and experience” – “disparate organisation unfit for purpose” Findings of th
Slide 15: EDF
Grow existing customers EDF Existing generation New build Infrastructure Equipment Training Well placed for Supporting all 8 of Mechanical and Advanced UK’s new EDF’s nuclear sites electrical Apprenticeship generation of design and Programme - nuclear power Reactor implementation combining stations
Slide 16: Grow new customers
Grow new customers • We seek to be leaders in our chosen markets • Using the success of our current operations to demonstrate benefits of outsourced operations to new customers in UK and overseas • We can build on the strength of our reputation and track record of delivery UBS Conference - 13 Septem
Slide 17: Grow new customers
Grow new customers Mobile asset management Opening up a new market in mining and London Metropolitan Ambulance Police construction asset management • Lafarge growth British Local – building on existing mobile asset systems and Airways government processes – £50m 10 year availability contract signed
Slide 18: Targeted growth
Targeted growth Building an international business Canada: • submarine support Far East: • Lafarge mobile asset • South Korean Northern Europe: management submarine • BMW training • nuclear weapons handling decommissioning system • other mobile asset • monitoring management Japanese nuclear • surfac
Slide 19: Order book - £13 billion
Order book - £13 billion • Order book c £13bn at 05.07.12 Order book by division – robust performance – excludes sole source forward programmes for Marine and submarines and warships c £3bn under the ToBA 1% Technology 27% Defence and 39% Security • In addition to regular “book and burn” contracts S
Slide 20: Bid Pipeline - £13 billion
Bid Pipeline - £13 billion Pipeline by division • Bid pipeline - £13bn at 05.07.12 12% ‒ £9.5bn at 31.03.12 Marine and 8% Technology Defence and • New bids make up 79% of the pipeline Security 80% Support Services • Currently bidding 27 opportunities in excess of £100m comprising 76% of our pipeline
Slide 21: Sustained track record of growth
Sustained track record of growth Revenue Operating profit and margin 3500 350 12% 15% 6% 3000 300 5% 10% 5% 2500 250 8% 10% 0% £m £m 2000 200 16% 10% 6% 1500 9% 150 20% 4% 1000 100 500 2% 50 0 FY 08 FY 09 FY 10 FY 11 FY 12 0 0% FY 08 FY 09 FY 10 FY 11 FY 12 % Organic growth Op profit Op margin % Org
Slide 22: Strong financial position
Strong financial position Cash conversion (KPI) • Focus on cash across the business 200 ‒ deleveraging rapidly 150 ‒ supporting future growth opportunities % 100 50 • Total net debt on 31.03.12 equalled £641.1m 0 FY 08 FY 09 FY 10 FY 11 FY 12 ‒ £729m at 31.03.11 ‒ c £890m pro forma at 31.03.10 Net d
Slide 23: Delivering value for shareholders
Delivering value for shareholders • 17% increase in FY 12 full year dividend to 22.7p 1,000 Total shareholder return Babcock – FY 11 19.4p FTSE 250 800 • 17% increase in FY 12 eps* to 61.47p 600 – FY 11 52.5p % 400 • Policy to maintain dividend cover of between 2.5x 200 and 3x 0 Mar-02 Mar-04 Mar-06
Slide 24: Conclusions
Conclusions A strong platform for the future • Focused growth strategy • Good business model – operating in the higher value areas of the market – strong, long-term relationships with key customers – demonstrable track record of delivering financial and operational efficiencies • Current market envi
Slide 25: Questions?
Questions?
Slide 26: Appendices
Appendices
Slide 27: Marine and Technology
Appendix 1 – divisional information Marine and Technology Key activities • Warships – class output management (SSSA) – upkeep and design support – Queen Elizabeth class aircraft carriers c £1.3 billion to 2018 • Submarines – Submarine Enterprise Performance Programme (SEPP) – engineering support • N
Slide 28: Defence and Security
Appendix 2 – divisional information Defence and Security Key activities • Future Strategic Tanker Air (FSTA) c £1.4bn to 2035 (jv and sub contract to jv) – provision of hanger facilities, ICT systems support • Military Flying Training Systems (MFTS) c £300m to 2033 (jv and sub contract to jv) – prov
Slide 29: Support Services
Appendix 3 – divisional information Support Services Key activities • Maintenance and new build of high voltage transmission and distribution networks c £95m pa • Education and school improvement service– Surrey and Devon c £35m pa • Dounreay site operation and decommission – Babcock share of total
Slide 30: International
Appendix 4 – divisional information International Key activities South Africa • Volvo construction equipment franchise • DAF truck franchise • Eskom power generation support • Construction and maintenance of high voltage power networks • Crane Hire * Continuing revenue Middle East • Co-ordinating of
Slide 31: UBS Conference - 13 September 2012
UBS Conference - 13 September 2012 31
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