Babcock International Group PLC · LSE:BAB
Babcock International — Investor Day (September 2013)
91 slides from Babcock International's investor day presentation, Sep 27, 2013
Slide 1: Marine and Technology Division Analyst and Investor Seminar
Marine and Technology Division Analyst and Investor Seminar 27 September 2013
Slide 2: Agenda and introductions
Agenda and introductions Overview Archie Bethel Divisional Chief Executive Naval Marine John Howie Managing Director, Naval Marine Technology Jon Hall Managing Director, Technology Question and answer Coffee Canada Mark Dixon President, Babcock Canada Australia Craig Lockhart Chief Executive, Babcoc
Slide 3: Marine and Technology: Its place within the Group
Marine and Technology Its place within the Group Babcock International Group Chief Executive, Peter Rogers Marine and Technology Defence and Support International Security Services Archie Bethel John Davies Kevin Thomas Peter Rogers FY 13 Revenue £1,201.6 million Operating profit £156.9 million 1% 1
Slide 4: An emerging global footprint
An emerging global footprint The UK’s leading maritime support business South Korea • Design of weapons handing system Canada for new • Victoria class upkeep submarine class and engineering support • Design and supply of LPG Spain process • Weapons systems handling and discharge system for S80 Irela
Slide 5: Structured for growth
Structured for growth Marine and Technology International Naval Marine Technology International Energy and Defence Submarines Warships Naval Bases Marine Consultancy Australia Canada Technology Systems Canada Australia 10% 3% Submarines Defence 31% Systems 11% £1,201.6m Consultancy 4% Revenue 4% Ene
Slide 6: Consistent revenue growth
Consistent revenue growth • 6 year CAGR around 8% 1,400 11% 1,200 7% 1,202 5% 9% 1,000 1,085 1,020 974 893 800 £m 600 400 200 0 FY 09 FY 10 FY 11 FY 12 FY 13 6 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 7: Technology and International driving growth
Technology and International driving growth • Technology and International revenue growth double Naval Marine • Also driving growth in operating profit and margin Naval Marine Technology and International Compound average growth rate 5.7% Compound average growth rate 12.8% 900 900 800 800 700 700 60
Slide 8: Order book and bid pipeline
Order book and bid pipeline • 50% increase in order book since 2009 ‒ 2009 - £2.9 billion ‒ 2013 - £4.7 billion • Naval Marine order book increased from £2.3 billion to around £3.6 billion • Technology and International order book increased from £670 million to just over £1 billion • Record bid pipe
Slide 9: Customer focused
Customer focused • Divisional focus on delivering value for our customers ‒ reducing through-life cost whilst improving availability and reliability • Strong relationships ‒ partnering and collaborating with customers to understand better their needs and ensure they are met or exceeded • Knowing our
Slide 10: Our plan for growth
Our plan for growth 1. Strategy statement 2. Strategic priorities 3. Drivers of growth 4. Business environment 5. Target growth area 6. The importance of Reachback 7. Developing our people 10 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 11: Our strategy statement
Our strategy statement We deliver through-life support for submarines, surface warships and naval bases in the UK and , increasingly, overseas. We also apply our engineering expertise in adjacent commercial energy and marine markets 11 Marine and Technology Analyst and Investor Seminar 27.09.13 www.
Slide 12: Our strategic priorities
Our strategic priorities 1. To grow our core UK business by exploiting new opportunities in the UK naval environment 2. To increase our international growth through our emerging “Naval Capability Partner” model 3. To pursue new naval and commercial marine growth opportunities based on our Technology
Slide 13: Drivers of growth
Drivers of growth • Through-life engineering support • Strategic facilities and infrastructure • Technology across naval and commercial marine platforms 13 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 14: Through-life engineering support
Through-life engineering support As a driver of growth • Platform level ships and submarines • Systems level • Equipment level • In-service support 14 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 15: Infrastructure
Infrastructure As a driver of growth Faslane and Coulport Devonport Rosyth Clyde • Strategic infrastructure essential to through-life support of submarine and surface ship fleets • Unique facilities across three sites • Experienced nuclear site operator 15 Marine and Technology Analyst and Investor
Slide 16: Technology
Technology As a driver of growth UK Naval Marine Energy and Marine Canada Technology Australia 16 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 17: The UK naval environment
The UK naval environment • MoD remains extremely cost focused • Our Terms of Business Agreement (ToBA) is viewed as an ideal tool for delivering increased efficiency and transformation • Changes in the way the Maritime Sector is managed across DE&S and Navy Command are likely to result in further ou
Slide 18: International naval environment
International naval environment • Our primary focus is on the development of our "home markets" in Australia and Canada • The characteristics of our target markets include countries with ‒ similar approaches to Government procurement as the UK ‒ a desire to outsource the support of naval platforms,
Slide 19: Market segment growth opportunities
Market segment growth opportunities • Already established as UK’s No 1 naval support partner but continuing opportunities from growing scope, further outsourcing and new platforms eg Future Deterrent, Type 26 frigate • Around 20% of revenue from outside UK and this will continue to grow ‒ quickly es
Slide 20: Target growth areas
Target growth areas UK Naval Marine Energy and Marine Canada Australia Technology Future International 20 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 21: Supporting international growth from the UK: Reachback
Supporting international growth from the UK “Reachback” M&T International International UK Support operations businesses Group People, Processes, Technology • “Portal” into Marine and Technology businesses and technical functions • Coordination and liaison of reachback • Forecasting international re
Slide 22: Driving the growth agenda through our people
Driving the growth agenda through our people • We have a workforce of over 10,000 highly qualified, experienced and motivated people • We invest heavily in recruitment, retention and development and work closely with the other Babcock divisions to ensure we maximise the career opportunities we can o
Slide 23: Naval Marine: Growing our UK business
Naval Marine Growing our UK business John Howie – Managing Director, Naval Marine
Slide 24: Naval Marine: The Royal Navy's key support partner
Naval Marine The Royal Navy’s key support partner • We deliver engineering solutions that help keep the fleet at sea Clyde • We own or operate infrastructure Rosyth which is critical to our customer’s operations • We make money by reducing the cost of support whilst sustaining Keynsham or improving
Slide 25: Organisation
Organisation John Howie Managing Director Naval Marine Mike Homer Phil Jones Mike Whalley Sean Donaldson Managing Director Managing Director Managing Director QEC Project Submarines Naval Bases Warship Support Ben Carter David Semken Corporate Corporate Planning Director Development Dir 25 Marine an
Slide 26: Operating in long-term partnerships
Operating in long-term partnerships 15 year Terms of Business Agreement (ToBA) with MoD • Delivers guaranteed savings in excess of £1 billion over that period • Defined roles ‒ through-life support for submarines and surface warships ‒ MoD’s naval base partner at Clyde and Devonport ‒ lead industry
Slide 27: Operating in long-term partnerships
Operating in long-term partnerships Maritime Support Delivery Framework (MSDF) • Initial 5 year contract to allow delivery of ToBA savings related to engineering and naval base management • Opportunity to leverage cost savings and enhance our role through further transformation • Value circa £2 bill
Slide 28: Providing integrated through-life support
Providing integrated through-life support Programme Waterfront Support Naval Base Management Engineering, maintenance Management of naval base Planning and management and repair activities operations for through-life support activities Dockyard Training Ownership and management Delivery of submarine
Slide 29: Submarines
Submarines Delivering support across the life-cycle We own unique strategic nuclear facilities at Devonport We provide through-life engineering support to all classes of UK submarines We deliver critical Royal Navy training for the new Astute class Submarines We are strongly positioned to deliver gr
Slide 30: Successor Deterrent
Successor Deterrent A significant, complex long term project to replace the Vanguard class submarines We are well positioned to deliver critical elements of the overall programme • The development and delivery of the Life Extension (LifeEx) programme for the Vanguard class • Solutions for transition
Slide 31: Naval base management
Naval base management Supporting naval base infrastructure and operations • Savings of £300 million delivered over a 10 year period • Operational performance sustained or improved • Strategic weapon system support now being provided through the ABL Alliance • ToBA protects our naval bases role until
Slide 32: Warships
Warships Through-life engineering support capability • Phase 2 of the Surface Ship Support Alliance (SSSA) has met all availability and cost reduction targets • Delivering system upgrades and capability sustainment package for HMS Ocean ‒ the largest package of its kind in Devonport for 20 years • 5
Slide 33: QE class aircraft carriers
QE class aircraft carriers • Programme being delivered by the Aircraft Carrier Alliance • Structural assembly of the 1st ship (Queen Elizabeth) at Rosyth will be complete by the end of 2013 • Installation and commissioning of “whole ship” systems is well underway • Flood-Up planned for mid-2014 • Ma
Slide 34: Delivering our strategic objectives
Delivering our strategic objectives • Market-leading position • An excellent customer reputation and trusted to deliver operationally • Operating within long-term agreements • Our Terms of Business Agreement (ToBA) provides excellent visibility of strategic programmes and future revenues • Well posi
Slide 35: Growth based on our Technology capabilities
Growth based on our Technology capabilities Jon Hall – Managing Director, Technology
Slide 36: Technology: A clear purpose
Technology A clear purpose We provide specialised equipment and engineering services that improve our customers’ maritime capability • Complex equipment design, development, supply and through-life support or operation • Technical engineering and management services – as advisor or in delivery • Del
Slide 37: A strong capability base for growth
A strong capability base for growth Our technology is central to the complex equipment we deliver – and our engineering capability is a distinctive technology in itself • Consistent themes in our equipment ‒ bespoke, performing a critical function ‒ electro-mechanical and high integrity • Solutions
Slide 38: Integrated capability and deep experience
Integrated capability and deep experience Defence Systems Technology Energy and Marine Technology Technology Consultancy Jeff Lewis Ian Lindsay Neil McDougall Complex Equipment Technical Engineering Services 38 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 39: Complex equipment for submarines
Complex equipment for submarines 39 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 40: ...and naval ships
…and naval ships 40 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 41: Wide capability in defence equipment support
Wide capability in defence equipment support We provide Support - Asset Management over a wide range of defence equipment Taking care of any or all aspects • Demand management • Supply chain fulfilment • Inventory optimisation • Asset availability • Full operating service Our technology advantages •
Slide 42: Applying our equipment support capability
Applying our equipment support capability… 42 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 43: Distinctive capability in defence communications
Distinctive capability in defence communications We maintain and operate low frequency communications systems at UK MoD and remote locations • Bringing together ‒ specialist systems engineering know-how ‒ and complex equipment management ‒ with full service delivery • Our capabilities can be applied
Slide 44: Good progress on complex long-term programmes
Good progress on complex long-term programmes Key opportunities are being driven through our early involvement based on technology • Spanish S-80 submarines ‒ systems tested and first units delivered • Korean KSS-III submarines ‒ contract secured and design advancing • UK Successor deterrent and Fut
Slide 45: New programmes continuously build our revenues
New programmes continuously build our revenues SEA UK 1000 FSM KSS-III S-80 ASTUTE 4, 5, 6, 7 2013 2018 2023 45 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 46: Continued growth through complex equipment programmes and support
Continued growth - through complex equipment programmes and support in our defence markets New programmes • Expanding our portfolio of naval equipment, initially by partnering & integration – Type 26 programme pipeline c.£600m starting 2014 • Our solutions are attractive for major international wars
Slide 47: Engineering technology consultancy continues to grow
Our engineering technology consultancy continues to grow and provides supporting technical capability • Providing highly technical services in systems Staff qualifications engineering, modelling and analysis Technical • With capability in collaborative working and staff data management tools With hi
Slide 48: Applying this capability to defence and offshore markets
Applying this capability to defence and offshore markets... Offshore vessel stress Active corrosion modelling protection Complex systems and Engineering data management thermo-fluids modelling 48 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 49: Developing capabilities in energy and marine technology
Developing capabilities in energy and marine technology Technology capability founded on marine engineering design and in-service technical support for complex ships is now growing • Customers are majors in energy markets ‒ vessel concept studies to in-service upgrades, survey and inspection • Capab
Slide 50: Growing in energy and commercial marine markets
Growing in energy and commercial marine markets • Survey, analysis, information management, technical work package specification • Asset integrity management and project engineering services • Combining our technical know-how with our waterfront infrastructure & services 50 Marine and Technology Ana
Slide 51: LGE – a natural fit for our business and growth strategy
LGE – a natural fit for our business and growth strategy LGE Process specialises in equipment for handling complex gases • Strong in its marine gas transport niche • Complementary expertise in “topsides” (LGE) and “vessel” (Babcock) engineering • Complementary expertise in EPC and in- service suppor
Slide 52: Delivering our strategic objectives
Delivering our strategic objectives Technology – specialised equipment and technical engineering services that we use to drive growth • Across the full lifecycle – from concept design, through hardware delivery to in-service support • Working directly for customers and as an integral part of Marine
Slide 53: Questions?
Questions? Half year results for six months ended 30 September 2013 53
Slide 54: Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
54 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 55: Canada
Canada Mark Dixon, President – Babcock Canada
Slide 56: Babcock in Canada today
Babcock in Canada today • 300 employees located in or adjacent to key customer facilities • Delivering through-life engineering support for the Victoria Class submarines Canada Victoria • Undertaking deep maintenance and upgrade packages on HMCS Chicoutimi Ottawa Halifax and HMCS Corner Brook 56 Mar
Slide 57: Organisation
Organisation Mark Dixon President Glenn Walters Mark Dixon Gilles Hainse John O’Neill Vice President Vice President Vice President Vice President Engineering Submarines Business Dev’t Finance 57 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 58: Key capabilities
Key capabilities Providing key engineering and through-life support capabilities • Configuration management of platforms and systems • Development and implementation of major capability upgrades • Delivering solutions for component and system obsolescence Bringing our reputation for partnering and c
Slide 59: Delivering support to the Victoria class
Delivering support to the Victoria class • Babcock awarded the through-life support contract (VISSC) in 2008 • Initial 5 year contract to provide configuration management and engineering support • Contract includes the framework for outsourced Extended Docking Work Packages (EDWP) on an ongoing basi
Slide 60: Delivering support to the Victoria class
Delivering support to the Victoria class • VISSC contract extended in 2013 for a further 5 years • The first EDWP on HMCS Chicoutimi is well underway with undocking planned for Oct 2013 • Chicoutimi’s EDWP consists of over 1 million man hours and includes major upgrades to the communications systems
Slide 61: Growth: Canadian Coast Guard Vessel Life Extension
Growth Supported by key partnerships Canadian Coast Guard Vessel Life Extension • Partnered with Davie Shipyard in Quebec to provide infrastructure and engineering support • Programme covers − 18 vessels across 6 classes/types ‒ valued at C$360 million over a 10 year period • Competition expected to
Slide 62: Growth: Canadian National Shipbuilding Programme
Growth Supported by key partnerships Canadian National Shipbuilding Programme • Programme announced in June 2010 valued at C$33 billion (excluding support - C$500 million pa) − 21 combat vessels and 7 non-combat vessels − 116 small vessels (competition) valued at C$2 billion • Opportunities for engi
Slide 63: Growth: Naval base support and training
Growth Supported by key partnerships Naval base support • Fleet maintenance facilities and naval bases ‒ east and west coast • Environment very similar to UK pre-outsourcing Esquimalt Graving Dock • Canadian Government study into potential cost reductions • Potential to increase our influence and li
Slide 64: Delivering our strategic objectives
Delivering our strategic objectives • Established player with a growing reputation − The Canadian Department for National Defence sees their relationship with Babcock as a "long term strategic commitment" • Strong core business − We have overcome significant structural and geographic challenges in e
Slide 65: Australia
Australia Craig Lockhart – Chief Executive, Babcock Pty
Slide 66: Babcock in Australia today
Babcock in Australia today • Headquartered in Adelaide, South Australia with support facilities in Adelaide, Perth, Sydney and Auckland Australia • 362 employees (including New Zealand) Perth • Established Joint Venture with local partner for delivery of ANZAC support Adelaide Sydney • Utilising Gov
Slide 67: Key capabilities
Key capabilities Providing key engineering and through-life support capabilities • Supply and support of weapons handling systems and upgrades • Providing in-service support and deep maintenance on key platforms • Supplying critical engineering support for new and legacy classes Bringing our reputat
Slide 68: Building a position
Building a position Collins class submarines • Provision of Collins class weapon discharge system and subsequent through life support • In-country support of systems and equipment • US Air turbine pumps fitted to Collins Hobart class destroyers • Provision of MK 32 torpedo launch system and in-count
Slide 69: Building a position
Building a position • ANZAC class support contract highest performing of ship classes across fleet after only 8 months of operation • Partnering with Austal Ships for future patrol boats • SEA1000 future submarine concept assessment phase • Establishing Frazer-Nash presence in Adelaide • Enlarging t
Slide 70: Key opportunities
Key opportunities Surface ships • Awaiting a decision on the support contract for the new Canberra class amphibious ships • Development of a solution for LifeEx of the ANZAC class frigates • Potential solution for new Antarctic Division IceBreaker Submarines • Continue to position Babcock as a Tier
Slide 71: Having an impact
Having an impact Minister Mike Kelly AM MP “....today’s announcement follows the GMC signed in May with NSM a Joint Venture between Babcock and UGL which has delivered savings of 20% in a like for like scope in only four months” 71 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babc
Slide 72: Delivering our strategic objectives
Delivering our strategic objectives • Strong core business • ANZAC class support contract producing highest performing metrics across the fleet • Changing market environment suits our business model • Well positioned for future opportunities in ‒ future submarine project ‒ surface warship market 72
Slide 73: BP Quad 204 project overview
BP Quad 204 project overview Ian Donnelly – Managing Director Energy and Marine Services
Slide 74: BP Quad 204 - project overview
BP Quad 204 - project overview Content • Quad 204 - project description • Why Babcock? • Babcock scope and schedule • Project progress • Where does this project lead Babcock? 74 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 75: Project description
Project description • Re-development of the existing Schiehallion and Loyal fields to extend their life to 2035 • Quad 204 is an ambitious project to construct a new Floating, Production, Storage and Offloading (FPSO) unit to replace the existing Schiehallion FPSO • This includes an extension of the
Slide 76: FPSO to sea bed
FPSO to sea bed 76 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 77: Key dates
Key dates • Existing FPSO ceased production – December 2012 • New FPSO mobilisation and hook up – June 2015 • 1st structures installation completes - July 2014 • 2nd structures installation complete – June 2015 • Field start up – spring 2016 77 Marine and Technology Analyst and Investor Seminar 27.0
Slide 78: Why Babcock?
Why Babcock? • Project management capability across wide value chain • Integrated teams with engineering and design solutions using state of art tools and systems • Large scale manufacture and assembly • Skilled resource availability • Supply chain management and relationships 78 Marine and Technolo
Slide 79: Why Babcock?
Why Babcock? “our project strategy is to work with the best suppliers and contractors on the planet to execute the various elements of the project scope” “we have placed a great deal of trust in Babcock to deliver safely and to the highest quality standards. Through the bid submissions, evaluation p
Slide 80: Babcock scope
Babcock scope Largest single order ever placed in the UK for subsea structures • Contract value c £30 million • 71 structures Two year programme providing a single site solution for • Detail design • Fabrication including integration of customer supplied equipment - pipework and controls • FAT and S
Slide 81: Babcock scope: Example structure – Manifold M32
Babcock scope Example structure – Manifold M32 81 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 82: Babcock scope: Example structure - FTA
Babcock scope Example structure - FTA 82 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 83: Babcock scope: Example structure - SSIV
Babcock scope Example structure - SSIV 83 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 84: Babcock schedule
Babcock schedule Structure FAT completion dates M71 Manifold 28 November 2013 M32 20 December 2013 M25 28 January 2014 UET (x10) 31 January 2014 SSIV (x3) 4 February 2014 FTA (x30) 14 February 2014 RET (x7) 10 October 2014 M44 21 November 2014 M1X 28 November 2014 CDA (x14) 15 January 2015 M45 23 Ja
Slide 85: Project progress: M71 build
Project progress M71 build 85 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 86: Project progress: FTA build
Project progress FTA build 86 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
Slide 87: Where does this project lead Babcock?
Where does this project lead Babcock? • Quad 204 Project Phase 2 • BP Framework Partner for North Sea projects • BP Global Projects Strategic Partner • Future similar opportunities ‒ BP Sullom Voe gas sweetening project ‒ Chevron Rosebank FPSO sub assemblies and major equipment items 87 Marine and T
Slide 88: Questions?
Questions? Half year results for six months ended 30 September 2013 88
Slide 89: Closing remarks
Closing remarks Archie Bethel – Divisional Chief Executive
Slide 90: In conclusion
In conclusion Well positioned to meet our strategic objectives and drive growth • Strong core UK business with excellent reputation and track record ‒ UK’s No 1 naval support partner • Significant ongoing opportunities in the UK naval marine support market • Build on our extensive Technology capabil
Slide 91: Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
91 Marine and Technology Analyst and Investor Seminar 27.09.13 www.babcockinternational.com
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