Analysis of Balfour Beatty plc Business and Competitive Environment - Essay Example

Research & Analysis Study of Balfour Beatty plc Business and Competitive Environment Balfour Beatty with 4,938 million total revenues and 134m profits in 2005 and having 27,592 employees in over 20 principal countries is leading provider of construction, rail engineering and investments to international markets. Balfour Beatty draws a major part of its revenues from building and maintaining large-scale public infrastructure and private sector assets. They offer a unique range and depth of expertise in key markets to customers. Balfour Beatty's Business Segments Balfour Beatty's Building Management Services division, with revenues of 1,787m and 10,913 employees, specializes in designing, constructing, equipping, maintaining buildings and their internal environment resulting in 35m profit from operations in 2005 (3% rise). The company made good progress in the building sector in 2006. Heery, a leading architectural, engineering and programme management business, represents Balfour Beatty's business interests in USA. Balfour Beatty's Civil and Specialist Engineering and Services division, with revenues of 1,920m and 10,455 employees, specializes in engineering, design and management services provider in civil, transport, energy and water sectors in UK, USA, Hong Kong and Middle East. It has a leading market presence in specialised engineering services like overhead transmission lines, gas and water utility contracting and in road management and maintenance resulting in profit from operations tripled to 49m in 2005. The company with strong orders and a number of large contracts under their belt gained growth momentum in 2006 in the engineering sector. Balfour Beatty's Rail Engineering and Services division, with revenues of 766m and 5,922 employees, specializes in designing, constructing, equipping, maintaining and renewal of rail assets and systems in UK, USA, Germany, Italy and Portugal. The profit from operations in these services fell by 27% to 32m in 2005. This was a result of full year without maintenance and tighter market in UK and some losses in the US. 2006 saw some progress due to increase in efficiency and improving project volume in London Underground, Germany and Italy. Balfour Beatty Rail Inc has been restructured into a single organisation, headquartered in Jacksonville, Florida, USA. The organisation has shown substantial growth in recent years with strategic acquisitions in the US and Germany. Balfour Beatty's Investments and Developments division, with revenues of 465m and only 136 employees promotes, manages and invests in privately funded infrastructure projects and developments in selected sectors in the UK and overseas, through its operating company Balfour Beatty Capital, established in 1997. Balfour Beatty's is currently conducting PPP/PFI projects in two principal sectors such as infrastructure (comprising transportation, power and waste water treatment) and accommodation (including health and education). It showed 20m profit from operations in 2005. Balfour Beatty's Other Service Segments Balfour Beatty holds 20% share in the Metronet consortium, a 30-year PPP project responsible for upgrading and maintaining two thirds of London Underground's infrastructure like trains, stations, signalling, track, tunnels and bridges. Balfour Beatty also has four DBFO (design-build-finance-operate) road concessions. Balfour Beatty is provider of a range of Healthcare services to major UK hospital schemes in London, Edinburgh, Durham and Blackburn providing a total of over 2,500 beds. Through Consort Healthcare, Balfour Beatty is also appointed preferred bidder for 521m PPP contracts in Birmingham Acute and Adult Psychiatric Hospitals and 250m Pinderfields and Pontefract hospitals. Balfour Beatty operates the largest grouped schools scheme in England called the Transform Schools' Stoke concession covering 98 schools since 2000. The Rotherham Schools started in 2003, was awarded "Best Community Use Project" in 2005 in the PPP/PFI Journal Awards. The Transform scheme built and maintained 21 new schools for North Lanarkshire Council and the financial close reached 140m in June 2005. In July 2005, the scheme achieved financial close for Bassetlaw, including six new schools, two post-16 learning centres and two new leisure centres. In April 2006, the Birmingham Schools project reached financial close, providing a total of 12 new and refurbished schools, including two secondary schools, nine primary schools and one early years centre. Balfour Beatty holds 10% share in Seeboard Powerlink Ltd (operates the London Underground high voltage power system) and 25% share in PADCo (Power Asset Development Company Ltd - upgrades system to enhance the reliability of operation). In Scotland, Aberdeen Environmental Services constructed and operates the waste water treatment facilities, providing enhanced sewage treatment for Aberdeen and its environs. Financial Review Financial figures of Balfour Beatty for the year 2005 show the following results: 1) Rise of 25% rise in pre-tax profits from continuing operations before exceptional items 2) Rise of 16% in revenues and the Group's share of joint ventures 3) Rise of 9% in adjusted earnings per share before exceptional items 4) 24.9p basic earnings per share; (5) Net exceptional profit of 4m 5) Profit for the year (after tax and exceptional items) was 106m 6) Rise of 2m in Net operating cash at Year-end to 315m 7) Rise of 12% in order bookings at the year-end to 7.6bn 8) 1bn plus of further work at preferred bidder stage 9) Rise of 23% in final dividend to 4.6p per ordinary share 10) Total dividend for the year of 8.1p TASK 1 Mansell complemented its other businesses by focussing on niche markets Mansell Plc is a leading a Construction and Construction Services Company employing over 2,200 people operating from 20 locations throughout the UK. Mansell has its principal operations in constructing new buildings, repair and improvement and it focuses on a number of selected market sectors like social housing, fit-out, education, health, airports, defence, heritage, interior solutions, airports, defence and telecommunications offering potential future work of over 1b. Mansell has pursued a strategy of focussing on specific products and developing sustainable business through framework and partnering contracts and also operated a small plant hire business. Mansell had a record of consistent underlying profit performance and substantial cash balances. Mansell's UK turnover in the year ended 31 Dec 2002 was 511 million. Balfour Beatty acquired the entire issued share capital of Mansell on 29 Dec 2003. Mansell concentrates on specific products. It develops sustainable business through framework and partnering agreements. Almost 73% of turnover is from such arrangements and 89% of all orders received in 2004 were repeat business. Among its major clients are Department for Work and Pensions of the Ministry of Defence and various leading housing associations of UK. Balfour Beatty launched 42m cash for acquisition of Mansell to strengthen presence in key sectors of UK building market complementary to its activities that focussed on large, complex, multidisciplinary building projects. The acquisition also benefited Mansell to be better placed to develop its business by providing their shareholders to realise the fair price value of their investment and giving Mansell greater capital resources of the enlarged Balfour Beatty Group. Balfour Beatty also took responsibility for Mansell's pension liabilities providing considerable stability to the company and its employees. The acquisition provided an excellent fit in terms of geography, sector and project size and awarded a strong presence with high-quality customers in key refurbishment and new build markets in both the public and private sectors. The acquisition of Mansell offered Balfour Beatty a substantial position in UK building market sections in which they did not operate and also brought a wide range of blue-chip customer relationships through long-term framework and partnership contracts. 65 per cent of Mansell's business was for the public sector, including a growing social housing business with annual sales of approximately 110 million. Mansell's long-term partnerships included framework agreements with BAA, BT, Ministry of Defence, Department for Work and Pensions, Unite and a number of large housing associations, including Places for People, Home Housing and Southern Housing. Prospective on-going work from Mansell's framework agreements amounted to 1 billion plus. However, Mansell was retained as a stand alone business, maintaining the Company's brand, culture and structure within the enlarged Balfour Beatty Group. Mansell's relationship with the USAF goes back to 1945. The US government makes a very substantial investment in education and training of armed forces and very high housing design standards required for its forces serving overseas reflects. Mansell was awarded 14.5 million project in the first construction phase, under a Framework Partnering Contract, to redevelop accommodation facilities for United States Air Force staff and their families at RAF Lakenheath in Suffolk. They had to replace USAF housing stock at Lakenheath with 89 new dwellings. The design work for phases 2 & 3 worth 1.3 million is already underway. It will have a combined construction value of 53 million with the entire project (for 606 new dwellings) likely to have an overall value of 127 million once completed. Mansell has made excellent progress since it became part of the Balfour Beatty Group at the end of 2003. Its order book has grown by 35% to 438 million since it joined the Group. Its position in the fast-growing social housing market has been further strengthened and the work coming through its long-term framework agreements with blue chip customers has continued to expand. Mansell was appointed by the Metropolitan Housing Trust in the social housing market to construct 345 new mixed tenure housing units in Northamptonshire under a 37 million framework partnering contract. The development comprises 144 apartments, 114 two and three bedroom traditional houses, 87 houses and flats designed using new standards of energy efficiency. Mansell is now established as the second largest participant in the fast-growing social housing market, to which the UK government has committed some 22 billion of expenditure over the next five years. With over 4,000 sites spread across almost a quarter of a million hectares, the Ministry of Defence is one of the largest landowners in the UK. To consolidate property development therefore, the MoD has divided this workload through five Regional Prime Contracts - enlisting a single main deliverer for each region. With 40,000 patients in the UK suffering End Stage Renal Failure, and 2.5 million with Chronic Kidney Disease, there can be few buildings as welcome as the 40 million West London Renal & Transplant Centre, recently completed by Mansell. Officially opened in 2005 by Her Majesty the Queen, the Royal Bank of Scotland World Headquarters in Gogarburn has been nominated as a project of the decade by Construction News magazine. Mansell's business works towards continuous improvement in key areas like awareness in safety & environment, understanding customer needs and priorities to give the best customer service, eliminating defects, using Industry best practices in collaborative working, communication and knowledge management, integrating supply team and specialising the expertise in focused market sectors and products. Safety was Mansell's # 1 priority. Mansell significantly improved their health and safety record and continue to out-perform the industry. Their performance not only meets high targets for corporate social responsibility, but helps them to improve profitability, maximise their efficiency and helps to widen customer base. This recognises their business focus on economic, social and environmental sustainability that is particularly important in the social housing sector. Mansell's Communications Strategy Team took major initiatives to enhance communication within the company, with customers and throughout the supply chain. Some of them were Centurion, a communication programme for staff to educate them about philosophies, working practices and support services to communicate better and share knowledge more effectively. The other initiative was MENSA, an IT network-based knowledge centre for project information, which helped in quality standards in product and service, and minimising unnecessary process costs. Mansell are members of the Knowledge Management Construction Community, a group of 25 construction and property services companies for gaining competitive advantage through knowledge sharing. Mansell has strong communication links with schools. They employ a school careers advisor. They encourage students visits to their manufacturing facilities, sites and offices of architects, quantity surveyors and engineers an even extend an opportunity of sponsorship or employment with MANSELL or their supply chain partners. Mansell have experienced staff and specialist knowledge managers, who helped in understanding the customers better and in sharing knowledge across the group thereby reaching significant milestones in the continued improvement in management and delivery of social housing. Mansell have long association with UK's major airports. They are designing and developing new construction methods that meet the needs for security, with minimum disturbances to passenger and air traffic. MANSELL's interior solutions offer particular value and innovation. Mansell's customer focused approach of understanding customers' needs and customising service to their requirements, took complete property services cycle in to consideration from project inception to completion and beyond. They are highly experienced in working in occupied buildings and taking care of having minimum impact on both workforce and visitors. They strike a right balance between customer's commercial aspirations and the workforce comforts. With the help of their supply team partners, they offer specialised design and space planning skills along with installation and refurbishment service. Defence property is Mansell's major product sector giving them hundreds of million pounds of revenues through framework partnering upgrading contracts with Defence Estates for UK and USA. Mansell has flourishing construction partnerships with Telecommunications companies like Orange, Three and Ultramast offering them acquisition, design and construct service, with a national network of offices and detailed knowledge of the sector's processes and procedures. Mansell was instrumental in a programme aimed at achieving 100% mobile phone coverage on the UK rail system. This includes a new security network to facilitate communication between control centres and train crews, communication in tunnels. Mansell has a strong history of working in safety critical areas. They can install equipment anywhere on the network. MANSELL stood up to the challenges of restoration work in heritage/historic buildings Houses of Parliament and London the British Museum. Mansell enjoys the status of contractors to the Royal family carrying out work in various royal residences, restoration of Kings Library and conversion of two Royal Palaces to create Her Majesty the Queen's Gallery. Mansell's Egan agenda inside the Balfour Beatty group For being Egan Agenda compliant, Mansell practised improvisations like committed leadership, a focus on the customer, integrating the process and the team around the projects, a quality driven agenda, and commitment to people; reductions in annual capital cost and construction time, reduction in defects and accidents, increase in productivity and profitability and increase in predictability of project performance. Mansell also adopted benchmarking as a method of improving in a systematic way by measuring and comparing its performance against others as well as own year on year performance, and then using the lessons learned to make targeted improvements. Mansell exercised key changes in their processes like developing partnering arrangements, establishing key performance indicators by which any changes could be monitored and setting up and managing of whole house building supply chain. They set themselves targets to continue delivering improvements in quality, cost, time and customer satisfaction. They measured their performance over a range of activities and set improvement targets to be met year on year. Mansell seeks to achieve excellence in everything they do. It is integral to its corporate culture, in every project it undertakes, in the people it employs and in its dealings with customers, the supply team, stakeholders and others. Excellence is the very basis of its vision: to be the most admired construction and property services provider in the UK. To help achieve its vision, Mansell introduced Mansell for Excellence (M4E) as the cornerstone in the drive for continuous improvement. M4E embraces everything from the concept of Lean Construction to Accelerating Change. It aligns with the principles of Egan's Rethinking Construction, which seeks to improve the actuality and image of the industry by encouraging working more closely with customers and supply teams. It therefore supports the cultural changes that Mansell is implementing to realise its vision. TASK 2 Main Competitors of Balfour Beatty plc There are 27 competitors for Balfour Beatty but the two main competitors are AMEC and Carillion in domestic markets. Closely following is Alfred McAlpine. Bechtel Inc is the main competitor of Balfour Beatty in the international market. AMEC Plc is an engineering and construction giant AMEC with 3,131 million revenues and 116.8 million profits and 20,000 employees working from a network of offices throughout the UK, US and Canada, as well as regional offices and projects worldwide. AMEC is listed in the Support Services sector in the London Stock Exchange. AMEC is selling its construction and infrastructure operations into five separate units. The company will keep hold of the activities in the energy and process management sectors under its own banner. Capital Projects Investments and services are main operations of AMEC. AMEC's Capital Projects division offers design and engineering services in manufacturing industries. Its Investment division deals in private and public finance projects for industries in infrastructure health and property sector. AMEC's services sector provides facilities management, engineering, and environmental and architectural consulting. The primary activities of AMEC group are in the Engineering & Technical Services, Oil & Gas and Project Solutions. The Engineering & Technical Services division not only deals in engineering solutions but also handles safety consultancy services in the nuclear sector. This division provides design, development and decommissioning services throughout the life of nuclear assets as well as waste management. The Oil & Gas division provides design and project management consultancy services and asset support on offshore platforms. The Project Solutions provides design and long term building maintenance services to schools, hospitals, infrastructure, transport, commercial and government. Client list of AMEC is impressive. There are big names like Cegetel, Electricite de France, BAA, Bowater, BP, BNP Paribas, UBS, BT, Sinopec, BNFL, Canadian Natural Resources, Continental Airlines and Credit Lyonnais. Carillion plc is a construction services business headquartered in Wolverhampton, UK. With 1,726 million annual revenues in 2005, today Carillion is a leading building and infrastructure business services companies. It has 40,000 employees and an order bookings worth over 9bn. They design, build and maintain new environments for business, leisure and safer and reliable transport networks. Carillion has a client base in health sector, education sector, construction sector, local and national governments, transport sector and defence sector. They mainly undertake range of construction projects like roads, hospitals and also provides facilities management services. Most of its business is in the UK, but it also operates in Canada and Middle East. Carillion is consistently profitable since its conception in1999. In 2005, the profit before tax and exceptional items was 55 million and profit after exceptional items was 52 million. Carillion's vision is to become the leader in integrated solutions delivery for infrastructure, buildings and render exceptional services. Alfred McAlpine is also a leading construction focused support services business. Their main businesses aim at large and growing building maintenance outsourcing markets high investment markets of health, leisure, education facilities, transport and utility infrastructure sectors. With 474.4 million revenues and over 8,500 employees in 2005, Alfred McAlpine aims to be the partner of choice in the construction industry for providing integrated solutions for their clients in public and private sectors. Alfred McAlpine provides support services business focused on Facilities Management, Environmental Management, Health & Safety Solutions, IT Services, Project & Utility Services, and Highway construction, Plant, Fleet and Accommodation Services. Bechtel is USA's No.1 contractor that is ahead of Fluor and has $18,100 million sales revenues and 40,000 employees. It specialises in engineering, construction, and project management and operates worldwide and has participated in projects like the construction of Hoover Dam and the cleanup of the Chernobyl nuclear plant. A subsidiary of Bechtel provides infrastructure and financing projects for its clients. With a controlling stake in the Bechtel group, four generations of the billionaire Bechtel family have effectively led the group and Riley Bechtel is the current Chairman & CEO. Bechtel has completed more than 22,000 projects in 140 countries, including Hoover Dam, the Channel Tunnel, Hong Kong International Airport, the San Francisco Bay Area Rapid Transit (BART) system, the reconstruction of Kuwait's oil fields after the Gulf War, Jubail Industrial city, and the Alma Aluminium Smelter. Note: Please refer to the Appendix for Inter-firm Comparison for key businesses and financial highlights Balfour Advantage over its competitors In UK, Balfour Beatty is the largest listed construction group on the basis of market capitalization. Balfour Beatty stresses on growth through PPP (public-private partnerships) investments. It is also concentrating on overseas expansion of its core engineering and construction operations. The main factors responsible for driving business of the construction companies in UK are commitment of the UK government to the PFI projects, increasing demand for housing and outsourcing of facilities management. Three main advantages responsible for Balfour Beatty's growth are its success in the PFI markets in UK, healthy performance reflected by a strong looking balance sheet and record number of orders. Over the years, Balfour Beatty has performed well in the Government's PFI scheme. Balfour Beatty is a leading bidder in Asia, Europe and USA for large number of projects. Based on PFI scheme, there are number of infrastructure projects across California, Virginia, Texas and the Atlantic. Hong Kong and Singapore are also following them. Balfour Beatty should be at advantage in carrying out projects abroad due to its vast experience of PFI schemes in UK. Balfour Beatty group continues to do very well with its core UK construction and engineering operation. With 15 per cent rise in first half profits to 60m, Balfour Beatty group's order bookings had hit a record 8.8bn. Balfour scores well while we analyse construction companies, looking at their ability to turn contracts to cash. At the end of 2005, it had 315m of cash in the bank. By 2006 July, this figure had risen to 353m, despite the group having made 20m worth of acquisitions. Balfour Beatty is the single biggest contractor working on the Heathrow Terminal 5 development at present along with AMEC and the US group Jacobs. Balfour Beatty is looking forward to manage the London 2012 Olympics site. Despite stiff competition, Balfour consortium, which is also the corporate partner of the 2007 London Youth Games, hopes to win the project worth hundreds of millions of pounds. Balfour Beatty is the corporate partner of the 2007 London Youth Games. TASK 3 Results of comparative analyses Doing a SWOT Analysis of Balfour Beatty on the basis of 2005 figures shows that large number of projects are in pipeline is the greatest strength of Balfour, roadblocks in executing the project operations is the area where Balfour needs to improve. Growing markets for PFI in the UK are the biggest potential opportunities for Balfour and a slowdown of industry as a whole is posing a threat to Balfour's growth. There is a big plus on Balfour's side in terms of greater presence in all its product and services categories than any of its competitors and ever increasing customer base comprising large business groups in UK as well as abroad. The financial analysis of profitability ratios reveals that Balfour Beatty enjoys highest profit margin compared to its competitors. Liquidity Ratios analysis shows that Alfred McAlpine is the most leveraged company in the five companies in competition. Activity Ratios analysis shows that due to short project spans and emphasis on PFI's, Alfred McAlpine scores by maintaining the lowest inventory levels. Carillion's main focus is on lower risk segments in construction industry. It also focuses on support services and PPP. This is the reason why Carillion is likely to emerge as Balfour Beatty's strongest competitor. AMEC, a leading construction services companies in UK has volatile cash flow and highly leveraged balance sheet. So it may not pose a threat to Balfour. But with small scale of operations, Alfred McAlpine is well-poised in high-growth markets. Notable competition can be seen in between domestic players like AMEC, Carillion and Alfred McAlpine in the construction industry. The construction industry and market is also open to foreign competition. Especially French and Spanish construction majors can pose threats. In Sep 2006, AMEC was #1 in World and European sustainability DJSI (Dow Jones Sustainability) indices in the support services sector as best performer based on social, environmental and economic performance listed in the index. AMEC develops its own AMEC Agenda 21 programmes of action to stimulate each business for developing measured objectives and targets designed to improve sustainability. It brings together existing management systems and communicates individual business actions to improve sustainability. Carillion's work has a significant impact on the quality of people's lives. They recognise responsibility, live up to the expectations of customers, shareholders and also future generations. For Carillion, social and corporate responsibility is part to everything their businesses produce, their effects on environment, how they respect the rights of people and they invest in community. They are committed to improving the quality of life employees, their families and communities by providing equal opportunities and access to training. They support a wide range of social, voluntary and environmental projects like job centres and schools. With commercial, immediate and long term benefits of sustainable solutions, Carillion tackles problems such as air pollution, water pollution, energy usage and waste management in such a way that they deliver best value to customers. Balfour Beatty's contribution to sustainable development is in the infrastructure they create. They fully recognise their responsibility. They ensure that they do not compromise the quality of life for future generations and meeting their needs. Their process delivery enhances building assets and quality of life and stakeholder satisfaction. The key concepts include partnership and innovation with a view of technical feasibility and affordable price. Balfour Beatty's basic approach is doing business with integrity aiming at creating shareholder value and meeting client expectations thus ensuring safety and health of workforce and others; and protecting the environment by engaging with communities and those affected by their activities. Appendix: Inter-firm Comparison for key businesses and financial highlights Comparison Balfour Beatty Plc AMEC Plc Carillion Alfred McAlpine Bechtel Inc Type Public (LSE: BBY) Public (LSE: AMEC) Public (LSE: CLLN) Public (LSE: MCA) Private Head Quarters Central London, UK London, UK Wolverhampton, UK London, UK San Francisco, USA Segment Strategy Focus on large scale Civil Engineering and Public Utilities work Strategic areas like Nuclear Power and Oil & Gas Building Management and Support Services through long term contracts Exiting non-performing projects and small-scale facility maintenance Focus on construction, transport, energy and environment business, from strategy to operations Key Businesses Segments Building, building management and services Civil and specialist engineering and services Rail engineering and services Investments and developments Oil and Gas Oil Sands Minerals and Metals Mining Nuclear Industrial Earth and Environmental Wind Energy Health Rail & Road Transport Defence and Secure Establishments International services Business services Development services Environmental Management Health & Safety Solutions IT Services Project Services Utility Services Facilities Management Highways Services Plant, Fleet & Accommodation Services Roads and rail systems Airports and seaports Fossil and nuclear power plants Refineries and petrochemical facilities Mines and smelters Defence and aerospace facilities Environmental cleanup projects Telecommunications networks Pipelines Oil and gas field development Number of Employees 27,592 20,000 40,000 8,500 40,000 2005 revenues 4,938 million 3,131 million 2,284 million 1,039 million $17.4 billion 2005 Profits (Pre - tax) 134 million 25.4 million 40.8 million 37.4 million NA Comparison Balfour Beatty Plc AMEC Plc Carillion Alfred McAlpine 2005 Financial Highlights contd. Increase in pre-tax profits, strong operating cash performance, increased tax charge impacting adjusted earnings per share growth, 23% increase in yearly dividend, record order bookings at 7.6bn, three PPP concessions reaching financial close and returning to profit by US civil engineering. Adjusted profit before intangible amortisation, exceptional items and taxation 80.3m Intangible amortisation 4.5m Exceptional items 72.1m Adjusted profit before income tax 3.7m Group Income tax 16.1m Joint venture and associate Income tax 4.7m Loss for the year from continuing operations 17.1m Profit for the year from discontinued operations 20.8m Profit for the year 3.7m Basic earnings per share from continuing operations 18.5p Adjusted diluted earnings per share from continuing operations before intangible amortisation and exceptional items 17.9p Dividends per share 11.5p Revenue (including joint ventures) up 15% to 2,284m Underlying profit before tax* up 15% to 55.5m Underlying earnings per share up 10% to 20.4p Strong operating cash flow - net cash at 31 December 90.8m Final dividend 5.2p per share - total 2005 dividend up 7% to 8p per share Order book and framework contracts up 40% to 7 billion Revenues 474.4m Underlying profit before tax 14.9m Reported profit before tax 15.9m Underlying earnings per share 12.8p Basic earnings per share 14.4p 10% increase in interim dividend for the 4th successive year 6.0p per ordinary share After investing 10 m in future growth Net cash of 32.8m 25% increase in Pre-tax profit from continuing operations before exceptional items 134m (2005) 122m (2004) 33% increase in Pre-tax profit from continuing operations after exceptional items 141m (2005) 120m (2004) Revenue including joint ventures 2005 - 2,284m 2004 - 1,985m Revenue excluding joint ventures 2005 - 2,025m 2004 - 1,859m Good performances from all businesses Increase in order bookings 3.5bn 70% + activities now on long term contracts providing good visibility of earnings 1bn + new business secured in the first half 150m + new business wins since 2005 end Comparison Balfour Beatty Plc AMEC Plc Carillion Alfred McAlpine 2005 Financial Highlights contd. 9% rise in adjusted earnings per share 24.1p (2005) 22.5p (2004) 58% rise in basic earnings per share 24.9p (2005) 57.4p (2004 Opening net debt 284m Share issues 90m Acquisitions/disposals (net) 66m Securitisation proceeds - AMEC SPIE 80m Tax, dividends and interest 51m Cash inflow from trading etc 55m Decline in advance cash 70m Closing net debt 246m Total equity attributable to equity holders of the parent 323m Minority interests 0.3m Total equity 323m Underlying profit before tax* 2005 - 55.5m 2004 - 48.1m Underlying earnings per share 2005 - 20.4 p 2004 - 18.6 p Profit before tax 2005 - 51.9m 2004 - 66.8m Basic earnings per share 2005 - 18.7p 2004 - 27.1 p Underlying profit before tax 37.4m Reported profit before tax 37.7m Revenues 1,038.8m Year end net cash 1.5m Dividend up 10% to 13.3p per share Dividend paid 12.6p per share New business secured 1.4bn Record order bookings of 3.5bn Net cash before PFI/PPP subsidiaries (non-recourse) 315m (2005) 311m (2004) Net borrowings of PFI/PPP subsidiaries (non-recourse) (14)m (2005) (244)m (2004) Balfour Beatty Group Acquisitions in Dec 2005: 31m (additional 31.4% interest in Consort Edinburgh Royal Infirmary PFI concession) plus 25m in three smaller acquisitions; 14m Goodwill amounting on these acquisitions. Comparison Balfour Beatty Plc AMEC Plc Carillion Alfred McAlpine 2005 Financial Highlights contd. Basic earnings per ordinary share 24.9p Diluted earnings per ordinary share 24.1p Dividends per ordinary share proposed for the year 8.1p Net cash from operating activities 139m Net cash (used in)/from investing activities 135m Net cash used in financing activities 97m Note: This table shows a rough comparison of general financial highlights of all the companies in consideration under the purview of this study. All figures are for the year 2005 and the currency is in million pounds, unless expressed otherwise. References Balfour Beatty Company Business and Investments Retrieved Feb 20, 2007 from http://www.balfourbeatty.co.uk/bbeatty/businesses/investments UK Business Clearance & Mergers Decisions Retrieved Feb 20, 2007 from http://www.oft.gov.uk/Business/Mergers+EA02/Decisions/Clearances+and+referrals/Balfour+Beatty+Plc.htm Mansell Plc Website and Annual Report 2002 Retrieved Feb 20, 2007 from http://www.mansell.plc.uk/cms/layouts/xq/asp/idocid.920/qx/default.htm Mansell Plc UK BSI Case study Retrieved Feb 20, 2007 from http://asia.bsi-global.com/HK+OHS/CaseStudies/Mansell.pdf Yamuna Kaluarachchi, Keith Jones & Simon Palmer, 'Benchmarking Egan Compliance in Social Housing in the UK- Using Case Studies from the Amphion Housing Programme' Retrieved Feb 20, 2007 from http://www.york.ac.uk/inst/chp/hsa/papers/spring%2004/Yamuna%20Kaluarachchi%20&%20Keith%20Jones.pdf Balfour Beatty Fact Sheet Retrieved Feb 20, 2007 from http://www.hoovers.com/balfour-beatty/--ID__90099--/free-co-factsheet.xhtml Annual report and accounts 2005 Retrieved Feb 20, 2007 from http://www.investis.com/bb_ar_2005/ppp.html Information on Competitors Bechtel Company Information Retrieved Feb 20, 2007 from http://www.bechtel.com/default_about.htm AMEC Plc Retrieved from http://www.amec.com/about/about_landing.asppageid=7 http://www.findarticles.com/p/articles/mi_qn4158/is_20060817/ai_n16640442 Balfour Beatty: Competitive Benchmarking Report Retrieved Feb 22, 2007 from http://www.researchconnect.com/buyreport/report_16426.asp Read More