Annual Report and Accounts 2019 The trusted partner
Babcock International Group PLC Annual Report and Accounts 2019 The trusted partner. Babcock is a leading provider of critical, complex engineering services which support national defence, save lives and protect communities. We focus on three highly regulated markets – defence, aerial emergency services and civil nuclear – delivering vital services and managing complex assets in the UK and internationally. We are a trusted partner who understands the key roles that our technology, our expertise, our infrastructure and our assets play in ensuring our customers can deliver. We share risk with them in delivering innovation, and we share the benefits.
Strategic report Group financial statements Financial and operational highlights 1 Group income statement 152 Chairman’s review 2 Group statement of Strategic framework 5 comprehensive income 153 Babcock at a glance 6 Group statement of changes in equity 153 Business model 8 Group balance sheet 154 Strategy 10 Group cash flow statement 155 Market review 12 Notes to the Group financial Defence 12 statements 156 Aerial emergency services 16 Civil nuclear 18 Company financial statements Chief Executive’s review 22 Company balance sheet 208 babcockinternational.com Strategic Partnering Programme 24 Company statement of Key Performance Indicators 26 changes in equity 209 Financial review 28 Notes to the Company Operational review: 40 financial statements 210 Marine 40 Land 43 Other information Aviation 46 Shareholder information 215 Cavendish Nuclear 49 Five‑year financial record 216 Sustainability 54 Principal risks and management controls 70 Viability statement 81 Governance statement Chairman’s introduction 84 Leadership: Governance framework 86 Board of Directors 88 Executive Committee 90 Effectiveness: Report of the Nominations Committee 94 Accountability: Report of the Audit and Risk Committee 96 Remuneration: Report of the Remuneration Committee 101 Relations with Shareholders 132 Additional statutory information: 133 Directors’ responsibility statement 138 Independent auditors’ report to the members of Babcock International Group PLC 142 Financial and operational highlights
A partner for progress Strategic report
Statutory results
Group revenue Operating profit Cash from operations Basic earnings per share
£4,474.8m £196.5m £507.9m 39.5p Governance -4% -47% +13% -41%
15 16 17 18 1 15 16 17 18 1 15 16 17 18 1 15 16 17 18 1 Financial statements
Underlying results*
Group revenue Operating profit Free cash flow Basic earnings per share £5,160.6m £588.4m £323.7m 84.0p -4% +1% +29% +1%
15 16 17 18 1 15 16 17 18 1 15 16 17 18 1 15 16 17 18 1
Strengthening the Group *Underlying We have continued to deliver across new and existing contracts, The adjustments described below, collectively, are made demonstrating the quality of our operations and the resilience to derive the underlying operating results of the Group. The of our business. Our combined order book and pipeline of underlying figures provide a consistent measure of business £31 billion supports the future of our business. This year, we performance year to year. They are used by management to also took action to strengthen the Group, including reshaping measure operating performance and as a basis for forecasting our Oil and Gas business, and restructuring across the Group. and the Group believes they are used by investors in analysing business performance. Throughout the Strategic report, unless otherwise stated, revenue, operating profit, operating margin, net finance costs, Full year dividend profit before tax and earnings per share refer to results before amortisation of acquired intangibles and exceptional items. 30.0p Underlying revenue, operating profit, operating margins and net finance costs also include the Group’s share of equity accounted +1.7% joint ventures and associates. Underlying operating profit and