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Babcock International Group (LSE: BAB).

Head Office

Babcock International Group PLC

33 Wigmore St



United Kingdom

Tel: +44 (0)20 7355 5300


The Company

Babcock is a leading engineering support services organisation with revenue of over [pounds sterling]3.5bn in 2014 and an order book of circa [pounds sterling]12 billion. Babcock specializes in defence, energy, telecommunications, transport and education. Babcock employs approximately 26,000 skilled staff workers who design, build, manage, operate and maintain assets that are vital to the delivery of many key public services, both in the UK and overseas.
Key Financial Figures

([pounds sterling]m)         2014    2013     2012     2011     2010
Continuing operations
- underlying (*):

Revenue                      3547.6  3,243.5  3,070.4  2,703.2  1,923.4
Operating Profit (**)         377.9    345.6    302.6    258.4    158.8
Profit before tax (**)        316.1    275.0    235.1    181.9    142.9
Basic EPS (**):
- Continuing                   70.3     62.2     53.5     44.7     50.7
- Restated for Rights issue    62.1     54.9     47.2     39.5     44.8
- Continuing (***)
- Continuing and               70.3     62.4     56.3     47.2     50.7

Continuing operations
- statutory:

Revenue                      3321.0  3,029.4  2,848.4  2,564.5  1,895.5
Operating Profit (**)         233.1    203.5    175.6    136.2    142.2
Profit before tax (**)        218.8    181.8    134.0     76.3    126.9
Basic EPS (**):
- Continuing                   50.1     43.9     34.9     22.3     45.6
- Restated for Rights issue    44.2     38.8     30.8     19.7     40.2
- Continuing (***)
- Continuing and               50.1     39.7     20.1     23.5     45.6
Total Net Debt                533.7    499.5    641.1    729.0    302.3
Group free cash flow          123.6    163.4    149.6    206.0    126.4
Cash conversion rate          103%     119%     112%     150%     122%
Dividend per share (****):
- Interim                       5.0      4.6      4.1      3.8      3.5
- Second interim dividend       -        -        -        -        9.2
- Final                        16.4     14.4     12.3     10.3      -
Total                          21.4     19.0     16.4     14.0     12.7

(*) Underlying includes the Group's share of joint ventures and
includes IFRIC 12 investment income in operating profit but is before
amortisation of acquired intangibles and exceptional items.
(**) Operating Profit, Profit before tax, and EPS have been restated
for 2013 and preceding years for the effect of IAS 19 Revised 2011.
(***) EPS as adjusted for the rights issue completed on 6 May 2014.
(****) Dividend per share as adjusted for the rights issue completed on
6 May 2014.

22 May 2018

Full year results for the year ended March 2019

Financial highlights

* Underlying revenue of [pounds sterling]5.2 billion, in line with guidance given in February 2019. Exits and disposals and lower activity in the short cycle parts of our business impacted revenue while performance across long term contracts remained strong. Organic underlying revenue growth at constant rates was -1.9% (-1.0% excluding exits)

* Underlying operating profit up 0.7% to [pounds sterling]588 million

* Margin expansion reflects increased JV contribution, good contract performance and the exit of low margin businesses

* Statutory revenue down 4.0% with statutory operating profit of [pounds sterling]197 million impacted by [pounds sterling]161 million of exceptional costs: [pounds sterling]41 million of operating profit exceptional costs recognised in the second half, mostly related to pensions as flagged in February 2019

* Underlying basic EPS up 1.2% to 84.0p

* Cash performance: underlying operating cash flow of [pounds sterling]618m, with net capex of [pounds sterling]149 million and cash conversion post capex of 104%. Free cash flow (including pension payments) was [pounds sterling]324 million, [pounds sterling]74 million higher year on year

* De-gearing: net debt [pounds sterling]958 million, down [pounds sterling]157 million year-on-year and represents 1.4x EBITDA, in line with our guidance

* Full year dividend: up 1.7% to 30.0p, reflecting our confidence in the prospects of the Group and sustained cash generation

Operational highlights

* Combined order book and pipeline stable at [pounds sterling]31 billion

* Continued partnerships working with our customers to drive operational excellence

* Significant UK contract wins in the year: integration of new training technology across naval bases and air stations (MARTASS), Naval Design Partnership, commenced continuous production of submarine missile launch tube assemblies, DSG vehicle transformation additional scope, Dounreay Materials Test Reactor dismantling, new ten year Rail contracts

* Building strong positions in key long term projects: Dreadnought/Columbia Class nuclear submarine programmes, Hinkley Point C new build

* Continue to grow international businesses (now 30% of group revenue): large Marine win in Australia, aerial firefighting in Canada, mobilising aerial medical emergency services in Sweden and Norway

* Taking action: reshaped Oil and Gas business, restructured ahead of the end of Magnox contract, continued to exit non-strategic businesses

Outlook for the year ending 31 March 2020

* As previously highlighted, the year ending 31 March 2020 will be affected by a number of step downs (detailed on page 6). In total,these step downs will reduce revenue by [pounds sterling]410 million and reduce operating profit by [pounds sterling]63 million

* The Group's guidance reflects these step downs and the current market conditions, including the weakness in short cycle contracts experienced this financial year

* We expect underlying revenue to be around [pounds sterling]4.9 billion

* We expect to maintain our underlying margin (incl. JVs) at between 10.7% and 11.0%

* Underlying operating profit is expected to be in the range of [pounds sterling]515 million to [pounds sterling]535 million

* Free cash flow (post pension payments) is expected to be over [pounds sterling]250 million and we expect to continue to reduce net debt

* As with previous years, performance for the group will be weighted to the second half, especially for cash generation

Upcoming investor events

* We will hold a Capital Markets Day in London on 5 June 2019. This will set out the details of the Group's strategy, including the long term growth opportunities available to Babcock from our leadership positions in our three focus markets of defence, aerial emergency services and civil nuclear. We will discuss our strategy in detail, including milestones and medium term financial targets, to deliver for our shareholders. The day will include presentations from our senior executive team

* Our Annual General Meeting will be held on 18 July 2019 and our next trading update will be issued in September 2019
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Title Annotation:Leading Companies in the Industry
Publication:United Kingdom Armaments
Geographic Code:4EUUK
Date:Jul 24, 2019
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