Description Page - Doosan Power Systems

Annual Report 

and Financial Statements 2007 

A bright future

For over a century our people have been developing cutting-edge 

technologies to improve plant performance, reduce emissions and 

ensure safe and efficient plant operation. Today Doosan Babcock can 

claim an enviable track record of successfully completed projects 

with more than 150,000 MW installed capacity worldwide. 

04 Doosan Edge 

In December 2006, Doosan Babcock was 

acquired by the Korean corporation Doosan 

Heavy Industries and Construction. One 

year on, find out why this has given us such 

a competitive edge. 

Contents 

01 Financial and Operational Highlights 

02 Chief Executive Officer’s Statement 

04 The Doosan Edge 

06 Operational Review 

10 Our People 

12 Quality, Health, Safety and Environment 

13 Board of Directors 

14 Chief Financial Officer’s Statement 

16 Directors’ Report 

19 Independent Auditors’ Report 

20 Financial Statements 

06 Operational Review 

Services and Power Projects have seen 

strong growth and some major contracts 

secured. Turn to page 6 to discover how 

this is shaping our business. 

10 Our People 

It’s the people at Doosan Babcock that 

make the company so successful. 

And as our company grows so does our 

workforce. Read more in Our People.

Financial 

Highlights * 

ORDER INTAKE: 

£771m 

March 2007: £505m 

TURNOVER: 

£472m 

March 2007: £410m 

PROFIT BEFORE TAX: 

£22.7m 

March 2007: £11.1m 

CASH BALANCE: 

£72.7m 

March 2007: £51.3m 

*Proforma figures for the 12 months ended 31 December 2007 

compared with 12 months ended 31 March 2007 

Operational 

Highlights 

> Doosan Babcock awarded contract to 

supply 2 x 800MW ultra-supercritical 

coal fired units in Europe 

> Doosan Babcock signed seven-year 

partnership agreement with British 

Energy, worth £550m, to support their 

generating fleet across the UK** 

> Doosan Heavy adopts the ‘Babcock’ 

OEM product as their standard 

DOOSAN BABCOCK ENERGY 

Annual Report and Financial Statements 2007 

> Launch of dedicated R&D Centre to 

develop state of the art boiler and related 

technologies for the Doosan Group 

> Successful installation of Doosan 

Babcock’s Boosted Overfire Air (BOFA) 

technology to meet the Large Combustion 

Plant Directive requirements 

> Doosan Babcock signed emissions 

reduction and upgrade contracts with 

China Light & Power worth over £40m 

> Doosan Babcock successfully completed 

Residue Export Facility construction 

project at Sellafield 

**Not included in order intake for 12 months ended 31 December 2007 

01



Chief Executive Officer’s Statement 

A bright 

future 

It has been just over a year since 

Babcock was acquired by Doosan 

Heavy Industries & Construction. 

Since then, the business has developed considerably 

with many initiatives aimed at improving performance, 

increasing capacity and achieving ‘preferred employer’ 

status with all our employees through best-in-class 

conditions and standards. 

In our first year as Doosan Babcock, we have achieved 

significant growth, booking record order intake and 

improved operating profits. This has been achieved on 

the back of improved operating performance across the 

business. Our organisational structure has been altered 

in order to ensure that there is clear accountability for all 

functions across the business - the main growth area will 

be in ‘big ticket’ items, that is, major projects often 

involving Engineering, Procurement and Construction, 

and our organisation has been structured to address 

such new business. 

We have had a number of notable successes during the 

last 12 months - a major order was received for two 800 

MW state of the art ultra-supercritical coal fired units in 

Germany, our first major new build order in Europe for 

decades and an excellent reference plant for the 

company incorporating our best available technology 

and very high efficiency. We signed the Mechanical, 

Engineering & Technology Support long-term support 

contract with British Energy, which will see Doosan 

Babcock providing Engineering support to the UK’s 

Advanced Gas-Cooled Reactor fleet for the next seven 

years. We signed emissions reduction and upgrade 

contracts in Hong Kong as well as significant plant 

upgrade contracts in mainland China. Our business in 

the USA continues to attract good upgrade business and 

we are in the process of delivering our first large utility 

02 

Iain Miller Chief Executive Officer 

plant, a 750 MW supercritical coal fired unit in Kentucky. 

Overall, it has been an excellent start for Babcock as 

part of the Doosan family. 

Significant synergies have been achieved by becoming 

part of the Doosan Heavy Industries & Construction 

(Doosan Heavy) business during the course of 2007. 

Doosan Heavy have now adopted the ‘Babcock’ Original 

Equipment Manufacturer (OEM) product as their new 

standard for all future utility applications. Doosan Babcock 

have adopted Doosan Heavy’s Changwon manufacturing 

facility for future major new build work. The Doosan 

Babcock operation in Chennai will host a variety of support 

functions for both Doosan Babcock and Doosan Heavy in 

the future and we have opened a new office with increased 

resources to address this need. We have incorporated 

some of the ‘best practice’ processes developed by 

Doosan Heavy and have achieved notable successes in 

improving our utility boiler design, our procurement 

processes and we are implementing new integrated 

delivery systems for our major projects business. We 

have adopted Doosan Heavy’s risk management processes 

and these are proving highly effective. Our aim is to 

achieve our order intake targets whilst controlling risk, an 

essential element of our future success. 

Looking ahead, the future looks very encouraging for the 

company in all of our main markets. Rising demand for 

new and replacement power plant will drive growth in 

our business for the foreseeable future. 

In our home market, the UK, there is already activity 

developing new ‘clean coal’ stations by major utilities. 

In parallel, some UK clients see the advantage of major

An international presence 

From Atlanta in the US, through to our headquarters in the 

UK, and on to Shanghai in China, Doosan Babcock is 

present across the globe. 

Order Intake (£m) 

800 

700 

600 

500 

400 

300 

200 

100 

0 

345 

06 07 07 

Mar Mar Dec* 

*12 months proforma 

505 

771 

Profit Before Tax (£m) 

25 

20 

15 

10 

5 

O 

9.1 

11.1 

22.7 

06 07 07 

Mar Mar Dec* 

retrofits for their plants which incorporate state-of-theart 

technology and low emissions. Doosan Babcock 

expect to secure a significant share of these projects in 

the short term. 

Longer term in the UK, Doosan Babcock will be fully 

engaged in the execution of Carbon Capture & Storage 

projects and in Nuclear New Build - the UK government 

have indicated their support for both of these energy 

initiatives for the future and Doosan Babcock are well 

positioned to benefit through our OEM capability 

coupled with our strong Field Services business. 

We continue to aggressively seek opportunities in 

mainland Europe, North & South America, Southern 

Africa and China - we are planning to secure major 

projects in all of these territories over our 5 year plan. 

There is a growing demand for our OEM product in all 

of these markets and we plan to reinforce our sales 

presence to ensure that we secure our fair share of 

opportunities. 

During the last year, we created a dedicated R&D group 

based at our Renfrew facility, the intent being to invest 

heavily over the next few years in our core OEM utility 

boiler product, in emissions reduction and in carbon 

capture technology. All of this investment will position 

Doosan Babcock at the forefront of power plant 

technology in the future. 

In 2007, we recruited our largest intake of graduates and 

trainees for decades - this is another area where 

we intend to excel, building a long-term future for the 

younger people in the business, an area where we 

• 

believe we have a competitive advantage through 

investment over the last 10 years or so. 

Our most important performance indicators are in the 

Quality, Health and Safety & Environmental areas since 

we aim at high standards across our business in order 

to satisfy our customer needs and to protect our 

employees and others affected by our operations. 

We are all pleased that our QHS&E standards have 

again improved during the year, with record numbers 

of customer compliments, the award of the RoSPA 

gold award for Health and Safety performance and 

we incurred zero environmental incidents during 2007. 

I look forward to working with the rest of the Executive 

Team and our staff to ensure we capitalise upon the very 

bright future that we foresee for the company. 

Iain Miller 

Chief Executive Officer 



•• • 

Left: British Energy CEO, Bill Coley, 

shakes hands with Doosan 

Babcock’s GW Park at the signing of 

the 7-year support deal worth over 

£550m. 

• 

• 

•• • 

Below left : Iain Miller cuts the 

ribbon to officially open the new 

Chennai office in India. 

Below: Doosan Babcock’s Global 

Headquarters in Crawley, UK. 

03

Doosan Heavy’s Changwon Facility, South Korea 

04

On 14 December 2006 the Korean corporation 

Doosan Heavy Industries & Construction (Doosan 

Heavy) acquired the company now known as Doosan 

Babcock. With their vision to be the global leader in 

power Doosan Babcock’s future is brighter than ever. 

The 

Doosan Edge 

> An integral part of the Doosan family 

Doosan Heavy is a global infrastructure business with a focus on power 

and desalination plant supply and construction as well as being a 

major supplier of castings and forgings. In 2006 Doosan Heavy had 

consolidated turnover of £6.2billion and net assets of £1.7 billion. 

Doosan Heavy is listed on the Korean Stock Exchange and is part of 

Doosan Corporation a major Korean conglomerate with a separate 

listing on the Korean Stock Exchange. 

Doosan Heavy’s vision is to be a global leader in power and water. 

Their acquisition of Doosan Babcock was a critical step in achieving 

this and for Doosan Babcock brings many benefits. 

With Doosan Heavy’s support and capabilities Doosan Babcock is now 

able to more fully exploit its market opportunities. There have already 

been impressive synergies, particular in respect of a strengthened 

supply chain and coordinated marketing. The focus is now on improved 

efficiency and operations with new systems and process and a clear 

drive to improve competitiveness. 

Being part of Doosan Heavy provides Doosan Babcock with access 

to world leading manufacturing facilities at Changwon in Korea and 

a soon to be opened facility in Vietnam. We are now working together 

jointly on research and development and Doosan Babcock is the centre 

for boiler development within the Group. 

Most importantly being part of Doosan Heavy gives Doosan Babcock 

the support of a major global business with high ambition and a strong 

management philosophy. Being part of the Doosan family gives us a 

new competitive edge. 

05



Operational Review 

Services 

This year has seen the performance of the Services business reach new 

levels of success with class-leading returns in financials, quality, health 

and safety. Underpinned by increased customer investment, this strong 

performance has been achieved through our three main business 

streams: 

• Power & Technology - the Original Equipment Manufacturer (OEM) 

and engineering expertise 

• Construction - the main aftermarket repair and maintenance (R&M) 

business 

• Nuclear - the Engineering, Procurement and Construction (EPC) 

projects integrator business in Decommissioning and Clean up 

Power & Technology 

Power & Technology has maintained significant market share in Large 

Combustion Plant Directive (LCPD) emission reduction projects for the 

Phase 1 requirements, to be in place by 2008, capturing new contracts 

including Electrabel’s Langerlo in Belgium, to install our Boosted 

Overfire Air (BOFA) technology. Our customers are now beginning to 

focus on the LCPD Phase 2 requirements, and we are developing 

leading Selective Catalytic Reduction technology through a design 

study award from E.on at their Ratcliffe plant to maintain the UK market 

lead position. 

Our unique Advanced Supercritical Retrofit offering, whereby a high 

efficiency supercritical boiler replaces the existing boiler whilst 

retaining the plants other infrastructure, provides a cost effective 

solution. There is strong interest in this concept and Scottish Power 

06 

have commissioned feasibility studies for their plants at Longannet 

and Cockenzie. 

The strength of our OEM position in the UK will be a major target 

for business growth in 2008 and beyond, as our customers look for 

assistance in extending the life of their facilities, especially with the 

current delay in ordering of new, non gas-fired plant. 

Beyond the UK, we continue to undertake contracts in a number 

of countries. The major overhaul at Nikola Tesla in Serbia nears a 

successful completion, whilst we anticipate a full order release for 

a boiler project in Libya soon. 

Construction 

Our Construction business stream continues to be Doosan Babcock’s 

high turnover, high intensity business activity carrying out major 

repair and maintenance contracts in the Power, Petrochemical, 

Pharmaceutical and Industrial market sectors across the UK and 

in Europe. 

Our major utility customers remain committed to Doosan Babcock and 

long-term partnerships continue with RWE, Drax Power, Scottish Power, 

Scottish & Southern Energy and British Energy. This is a testament to 

our excellent contract delivery record coupled with our industry-leading 

Safety and Quality performance. We have been working against tight 

schedules in order to return strategic plant back to the customer in 

record time, such as on the INEOS Grangemouth and Total Lindsey Oil 

Refinery projects, resulting in added customer satisfaction.

Our subsidiaries in Germany and Poland continue to undertake R&M 

and fabrication work in their respective countries and beyond, fully 

engaging in Doosan Babcock’s New Build process as this market 

develops in Europe. 

A Construction and Commissioning core support team has been newly 

formed to provide expertise to our entire Doosan Babcock portfolio 

throughout each project lifecycle. This includes support to Power 

Projects in the New Build and aftermarket and refurbishment scene, 

and is integral to enhancing our EPC status. 

Nuclear 

The most notable award of 2007 was the seven year deal with British 

Energy to be their fleet boiler OEM via the Mechanical, Engineering & 

Technology Support contract, a deal which spreads over all our three 

business streams involving operational repair and maintenance, 

technology and OEM asset provision and life extension projects 

work. This contract could be worth £550m over the seven year term. 

The Nuclear business stream continues to focus on major EPC projects 

on the Nuclear Decommissioning Authority (NDA)-funded 

Decommissioning and Clean Up market, primarily at Sellafield. 

The Residue Export Facility, a major EPC project where we were the 

lead project integrator in consortium, was completed with great 

success with all programme and financial milestones achieved. 

Following the success of Sludge Preparation Plant 1 Phase 1, we were 

awarded Phase 2. Implementation of Phase 2 will commence in 2008. 



“Our major utility 

customers remain 

committed to Doosan 

Babcock and 

long-term partnerships 

continue…” 

Bob Nimmo, Managing Director, Services, pages 6-7 

“Doosan Babcock 

reached a milestone 

with its first major new 

build order in Europe 

for decades…” 

Barbara Lefebvre, Managing Director, Power Projects, pages 8-9 

A number of other major opportunities exist for projects work at 

Sellafield and given the NDA budget focus at this site, in the short to 

medium term, we established an office facility near the complex at 

Westlakes. This facility whilst providing ‘front office’ business 

development activity also provides the ability to carry out engineering 

and other project activity local to the site. 

Our Gateshead facility has opened a new reactor simulator training 

facility for British Energy and together we are preparing for major 

campaigns at Hunterston and Hinkley Point on boiler inspections 

in 2008. 

Services Outlook 

The business is delivering excellent financial performance and looking 

to deliver best in class financials over the term of the new business 

plan. A key aspect of this improvement will be to undertake a ‘Design 

to Cost’ initiative with focus on aftermarket business activity 

improvement. 

We will continue to focus on our core sectors and maximise our OEM 

position to transfer our business from mechanical R&M contractor into 

an OEM product and service partner. 

07



Power Projects 

We are privileged to be working in what is probably the most exciting 

time in 30 years for the global power business. The activity in the 

market is unprecedented with capacity expansion and obsolete 

equipment replacement plans underway in each of our target markets, 

namely, Europe, the Americas and Southern Africa. We are uniquely 

placed to compete in these markets with our very strong core 

technology, excellent customer relations, a long history of global 

operations, competitive pricing and the best people in the industry. 

Doosan Babcock reached a milestone with its first major new build 

order in Europe for decades. This is for two 800 MW state of the art 

Posiflow TM ultra-supercritical coal fired units in Germany, incorporating 

our best available technology and very high efficiency, and will provide 

an excellent reference plant. 

Good progress is being made at Trimble County Unit 2, Doosan 

Babcock’s first large utility plant in the USA where we are designing and 

supplying a 750 MW supercritical coal fired unit for LGE. Engineering is 

moving into the close out phase and with pressure parts, from Doosan 

Heavy, being delivered to site and steel fabrication nearly complete, 

erection will begin in early 2008. 

The major refurbishment of the Consumers Energy 800MW Campbell 

Unit 3 was completed with successful testing. As one of the most 

technically complicated repair and maintenance jobs of its kind, this 

was testament to Doosan Babcock’s design excellence. 

08 

The USA plant upgrade market is extremely competitive, but our proven 

commitment to our customers is driving our success here. For instance, 

we have been awarded further projects with Alliant Energy at their 

Edgewater and Columbia plants, and We Energies for design and 

supply of a superheater at Pleasant Prairie Unit 2, following our 

success on Unit 1. 

Following establishment of Babcock Power Technologies in China in 

2006 to focus on the local after-market services and plant upgrade 

sector, considerable success was achieved in 2007. 

Doosan Babcock signed significant contracts to work with China Light 

& Power in Hong Kong to upgrade and reduce emission levels on their 

Castle Peak boilers. Showcasing our expertise, this includes the EPC 

of the Emissions Control Boiler Island project at Castle Peak B plant, 

involving the supply of a BOFA and optimised Selective Catalytic 

Reactor to achieve the emissions requirement. 

We won plant upgrade contracts in mainland China for major Chinese 

utility groups, including the Posiflow TM retrofit and boiler refurbishment 

for Yaomeng Unit 2, a follow on from the successful Yaomeng 

Unit 1 retrofit. 

We received Provisional Acceptance Certificate on Unit 2 at Wangqu, 

where we have also been awarded the contract to supply the SCR for 

the two 600MW units at the plant.

We are expanding and developing our global organisational capabilities 

to execute EPC power projects with ‘best in class’ management tools 

and business methods. We are also concentrating on our people - an 

area we will continue to develop hand in hand with our products and 

services. Additionally, we enjoy the benefit, respect and support of 

many long term partners, strategic suppliers and other stakeholders. 

Over the years we have formed and maintained many important and 

lasting relationships which are an integral part of our success in 

today’s market. 

Our global infrastructure with engineering, manufacturing and business 

management centres in the UK, Europe, USA, China, India, Korea and 

other countries position us to both address customer requirements 

and to leverage global sourcing activity using local expertise. This 

has proved to be a valuable asset in the current market environment. 

With power demands growing globally, developing new technologies 

to meet rigorous environmental standards is increasingly important. 

Power from “clean coal” represents a viable and sustainable way to 

address the complex needs of nations to provide the necessary support 

for human development and to sustain existing high environmental 

standards. Doosan Babcock has the technology now and the 

development programmes underway to meet today’s challenges and 

tomorrow’s opportunities. 



RESEARCH AND DEVELOPMENT 

Shaping the future 

of energy 

Historically, our commitment to research and development 

has put Doosan Babcock’s technology at the forefront of 

industry, and it is now at the heart of our future. In 2007 the 

decision was taken to launch a dedicated Research 

and Development Centre at our European Headquarters in 

Renfrew. The centre will be the global focal point for R&D in 

boilers and associated technologies for both Doosan 

Babcock and Doosan Heavy. 

Customers are now facing the environmental challenge 

of reducing emissions such as CO2, NOx and SOx while 

keeping existing plant operational in more volatile and 

uncertain market trading conditions. Therefore life 

extension, efficiency and availability are all important 

to continued viability. 

With these factors in mind the new Research Centre will 

initially focus on: 

1. CO2 – Carbon capture and storage, relating to both 

new and existing power plant. 

2. Increasing plant efficiency through raising steam 

temperatures and pressures with the immediate target of 

700 o C and 50% efficiency. 

3. Improvement of the performance of existing plant to give 

greater flexibility, life extension and reliability/ 

availability. 

Many of these topics require the combination of process, 

thermal, heat transfer, mechanical and material disciplines 

all collaborating to deliver the right product. Such complex 

projects demand long lead times, for example Doosan Babcock 

carried out its first CO2 reduction technology pilot plant 

tests based on Oxycoal combustion in 1993 and materials 

development for 700 o C have been going on for 10 years. 

R&D is a long-term investment in the company’s future. 

To deliver these challenging projects the company will 

be investing over £1m in new facilities in the next year 

and increasing staff numbers each and every year for the 

next 5 years. 

An illustration of the type of project to be undertaken is the 

key contract award for the Oxycoal 2 project. This is 

a conversion of the large combustion test rig in Renfrew. 

The £5.5m project, in collaboration with the UK government 

department BERR, is supported by Scottish and Southern 

Energy, Scottish Power, EDF, DONG, E.ON, Drax Power, Air 

Products, Imperial College and University of Nottingham. 

This will result in the largest combustion demonstration of 

this technology anywhere in the world. 

09



Our People 

Here at Doosan Babcock our people are absolutely vital to our 

success and there’s never been a better time to be an employee 

of the Company. We are enjoying a period of dramatic and sustained 

expansion, which means the number of opportunities we can offer 

continues to grow. This growth is taking place in our core technical 

offices and various site operations throughout the UK and across our 

offices around the world. 

We successfully attract the best skills and expertise in the industry 

and recruit our new talent from all corners of the globe. Our campaigns 

over the past 12 months have targeted Western and Eastern Europe, 

India and South East Asia, the Middle East and the Americas. 

International mobility of staff is increasingly important and we factor 

this into our development plans by encouraging movement between 

our various office locations, projects and businesses including our 

parent organisation Doosan Heavy in Korea. Being a seamless, global 

organisation is one of our key goals. To support this we have sent 

over 120 of our top management and technical staff on familiarisation 

programmes in Korea, enabling them to understand and experience 

the diverse cultural and professional environments of our organisation. 

Across the UK our extensive Branch Network facilitates efficient 

communication and operations across the thousands of staff and 

labour deployed on the sites we support. 

In fact growing and developing our future leaders and technical 

experts is a key part of our strategy. The full range of career options 

are available across all disciplines and supported by world class 

management development and career coaching programmes. We sum 

this up in an approach we call our ‘2G’ Virtuous Cycle – ‘Growing the 

Business by Growing our Staff’. 

10 

In the highly competitive and successful Energy sector we face the 

challenge of a skills shortage, and we play our full part in replenishing 

skills through our renowned Graduate Trainee and Apprenticeship 

schemes, now taking record numbers of new entrants and training 

them for the future. 

Those on the Graduate schemes develop their knowledge and 

competencies by following structured programmes which take them 

through a series of placements in different functions and locations, 

including the opportunity to experience working overseas. These 

schemes are fully accredited by the Chartered Institutions, which means 

we can continue to grow our pool of recognised, professional experts. 

As an organisation we ensure we extend our support to the local 

communities in which we operate. We have partnerships with schools 

and universities so we can share some of our knowledge and time 

with the next generation. 

An example of this was our sponsorship of an Energy Workshop 

at Imperial College, London. Here teams of students from various 

secondary schools engaged in activities to look at energy and 

environmental issues affecting the world. We also support local 

charitable organisations, teams and individuals to ensure others 

outside the organisation can benefit from our resources and staff. 

Indeed with all of the opportunities for growth and development 

ahead of us, our diverse and talented workforce can enjoy the highest 

technical and professional job satisfaction and look forward to the 

brightest of futures with Doosan Babcock.

Description 

Page 



Top: Maidenbower Football 

Club, proudly sponsored by 

Doosan Babcock. 

Above: Doosan Babcock 

welder, Stuart Greer, meets 

UK Prime Minister Gordon 

Brown. Stuart represented the 

UK in the 2007 World Skills 

Championship in Japan.* 

*© Crown copyright material is 

reproduced with the permission of 

the Controller of HMSO and Queen's 

Printer for Scotland. 

11



Quality, Health, Safety and Environment 

Through continued investment in employee training and development 

of our working processes, Doosan Babcock’s Quality, Health, Safety 

and Environmental (QHS&E) performance again reached an exemplary 

standard. 

World Class QHS&E Performance 

Doosan Babcock achieves the highest of standards in QHS&E through: 

• Delivering value to our customers 

• Providing a safe working environment for our employees 

• Protecting the environment 

• Complying with legislation 

• Building positive relationships with local communities 

In support of our world class QHS&E performance objective we 

continued with our policy of “Zero Tolerance” to failure. Through our 

sustainable investment programme we have established an effective 

and proven set of QHS&E tools and processes to achieve our 

aspiration and to deliver value to our customers in high quality 

products and services. 

Training and Awareness Programme 

As part of our improvement strategy the QHS&E group delivers a yearon-year 

training and awareness programme to support and improve 

QHS&E performance. Most notably the group under licence from IOSH, 

have now delivered formal training to over 1300 employees in the 

leading IOSH “Managing Safely” certification. Other improvement 

workshops and training included: 

• Risk Assessment 

• Environmental Awareness 

• Management Systems and Audit 

• Construction Design and Management Regulations 

• Procedure Rationalisation 

• Improving Operational Delivery Process 

This programme has benefited all areas of QHS&E. 

Quality Performance 

Significant achievements were made in the field of Quality: 

• Record levels of formal customer satisfaction endorsements. This 

reflected the calibre of our work force and model team-working 

which met our customers’ needs and high expectations, on time, 

within budget and to the required standards 

• 98% defect-free welding success rate in some complex and harsh 

environments. A best-in-class UK industry performance. 

• A 50% improvement in rework costs 

• Continuing validity of our 14 product and management systems 

certifications necessary for ongoing participation in our market 

sectors 

Health & Safety Performance 

Health and Safety performance was equally impressive with: 

• Over 80 operational sites achieved “zero” recordable accidents 

• AIFR reportable incident frequency rate of 0.08: a world-leading 

figure. 

• Over 1300 employees achieving IOSH “Managing Safely” Award 

• Winning the RoSPA Gold Award for outstanding health and safety 

performance 

• Zero Health and Safety regulatory breaches 

12 

Environmental Performance 

Within our Environmental Improvement Programme we derived 

notable gains: 

• Up to 20% reduction in gas usage at our permanent establishments 

across the UK 

• Up to 10% reduction in electricity usage 

• Up to 30% reduction of water usage 

• Up to 12% reduction in materials waste 

• A 7% improvement in our Environmental Management System 

application score to 96.4% by 3rd party industry sector “Achilles” 

audit scheme. A leading and best-in-class performance 

Doosan Babcock is understandably proud of its achievements and this 

reflects the commitment of its employees in embracing its corporate 

values and delivering its objectives. 

Through application our annual QHS&E Improvement Programme 

and innovative strategies, Doosan Babcock will continue to focus 

on improving its QHS&E performance, continually delivering value 

to our customers and meeting the needs and expectations of our 

stakeholders. 

All Injury Frequency Rate 2000-2007 

0.5 

0.4 

0.3 

0.2 

0.1 

0 

2000 

2001 

2002 

Reportable injury frequency rate 

> 3 day loss time accident per 100,000 hours worked (UK ECIA Benchmark Metric) 

2003 

Below: 

Bob Nimmo, Managing Director, Services, receives the 2007 RoSPA Gold Award 

from Lord Brougham and Vaux, Vice President of RoSPA 

2004 

2005 

Frequency 

Trend 

2006 

2007

Board of Directors 

Gee Won Park 

Director 

Gee Won Park was appointed 

Chairman of the Doosan Babcock 

Board in 2006. Mr Park joined 

Doosan America Corporation in 

1993 and has held senior positions 

in Doosan Corporation and Doosan 

Heavy, gaining wide experience 

in Corporate Strategy and 

International Business. In 2007, 

Mr Park was appointed President 

and Chief Executive Officer of 

Doosan Heavy Industries & 

Construction in Korea. 

Stephen Moore 

Chief Financial Officer 

Stephen Moore qualified as a 

chartered accountant with Deloitte 

& Touche in 1996. Mr Moore joined 

the Company in 1997 as Group 

Accountant, and was promoted 

through a number of roles within 

the finance department, until 

being made Group Finance 

Director and joining the Executive 

Committee in 2003. In 2007 

Mr Moore was appointed 

Chief Financial Officer and 

joined the Board. 

Dong Soo Suh 

Director 

Mr Suh graduated from Seoul 

National University in 1973 

where he majored in Electrical 

Engineering. He joined Doosan 

Heavy in 1997 as Vice President 

of Turbine/Generator Design & 

Engineering working in a number 

of positions up to 2007 and is now 

Head of Power Plant Business 

Group. 



Iain Miller 

Chief Executive Officer 

Iain Miller joined what was 

Babcock & Wilcox as a graduate 

trainee in 1975 and rose to 

become Managing Director of 

Energy Services and a member of 

the Board in 1998, Director of UK 

Operations in 2000 and then 

Managing Director of Group’s 

European operations in 2001. 

Mr Miller was appointed as 

Chief Operating Officer in 2004, 

then following the acquisition by 

Doosan Heavy, appointed 

Chief Executive Officer. 

Heung Gweon Park 

Chief Operating Officer 

Heung Gweon Park was appointed 

Chief Operating Officer at Doosan 

Babcock in 2008. Prior to this, 

Mr Park was Vice President of 

Strategy & Business Development 

at Doosan Heavy overseeing major 

corporate initiatives in the areas 

of business portfolio, global 

marketing and M&A including 

leading the acquisition of Doosan 

Babcock. Mr Park holds an MBA 

from The Wharton School of The 

University of Pennsylvania. 

13



Chief Financial Officer’s Statement 

Delivering 

growth and 

performance 

It has been a very successful period of significant growth and 

financial performance in the first year with Doosan Heavy 

Order Intake (£m) 

800 

600 

400 

200 

14 

0 

Mar 

04 

Profit Before Tax (£m) 

25 

20 

15 

10 

5 

0 

Mar 

04 

Mar 

05 

Mar 

05 

Mar 

06 

Mar 

06 

Mar 

07 

Mar 

07 

Dec* 

07 

Dec* 

07 

Turnover (£m) 

500 

400 

300 

200 

100 

0 

Cash (£m) 

Mar 

04 

Mar 

05 

Stephen Moore Chief Financial Officer 

*12 months proforma In order to give the most helpful commentary on the development of 

the business the figures within the Chief Financial Officer’s Statement 

compare the proforma 12 months ended 31 December 2007 with the 

12 months ended 31 March 2007. 

80 

60 

40 

20 

0 

Mar 

04 

Mar 

05 

Mar 

06 

Mar 

06 

Mar 

07 

Mar 

07 

Dec* 

07 

Dec* 

07

Five Year Summary 

Major Growth 

The first year of trade following the acquisition by Doosan Heavy 

Industries & Construction has been extremely successful with record 

performance being achieved in a number of areas. Both order intake 

at more than £770m and profit before tax at over £22m are records 

for Doosan Babcock and highlight both excellent current operational 

performance and strong growth for the future. 

The past year has seen substantial developments within the company. 

The anticipated synergies and benefits following the acquisition and 

the alignment with such a well matched parent have been comfortably 

exceeded. The cost competitiveness of our major projects has been 

significantly improved and with a much larger scope to tackle the 

worldwide energy market (which is in considerable need of our services), 

Doosan Babcock has huge potential to grow year on year in significant 

terms and is looking to break £1bn order intake in the short term. 

Financial Results 

In the year to December 2007, turnover was 15% higher than in 

the year to March 2007 at £472m, reflecting growth in the Services 

business particularly in implementing NOx solutions and in the New Build 

business where major orders recently won are just starting 

to come through the books. 

Group operating profit before exceptional items over the same periods 

more than doubled from £8.3m to £19.4m. This represents a superb 

performance in terms of our Services business which has seen its 

operating profit ratio increase by more than 25% on the back of excellent 

operational performance. Both we and our customers are benefiting from 

the excellent management and delivery which allows deadlines to be 

constantly met or exceeded, reducing lost generation time: the largest 

cost for our customers. The New Build business contribution remains 

modest as orders are in their early stages and so the profit is still to come 

through. However with the recently won major orders and those in the 

pipeline this area of the businesses will soon be meeting or exceeding 

the strong returns already being achieved by the Services side. 

Net interest receivable increased from £3.1m to £4.8m reflecting our 

continuing exceptional cash management which is so important in 



our industry. This was combined with an increase in our pension 

assets with the resultant increase in our expected return on assets. 

Profit before tax also more than doubled from £11.1m to £22.7m, in line 

with the growth in both interest receivable and operating profit. With a tax 

charge of £5.3m related in the main to deferred tax and withholding tax on 

overseas royalties, profit after tax at £17.4m is 132% higher than in the 

prior year reflecting a major step in our aim to become a very significant 

global company. 

Cash Management 

Cash generation has been a continuous key indicator for Doosan 

Babcock over recent years, reflecting the potentially significant funding 

requirements of a labour-intensive service business and large projects 

with substantial commitments. 2007 has been another year where 

attention to this area has been extremely successful, reflected by a 

cash balance of over £72m at the year end (March 2007: £51m). Strong 

operating cash generation has been added to by advanced payments on 

recently awarded contracts resulting in the 42% increase in the period. 

The Future 

2007 was another year of records for Doosan Babcock, following on from 

those in the previous year. The company has been transformed following the 

acquisition with a whole new horizon in terms of growth plans. The last year 

has shown that these targets are not just plans but reality as we make the 

first significant step to being a much larger business. 2008 is already 

looking like being another year of records with major opportunities available 

and continuous development of our capabilities in conjunction with our 

parent; highlighting again the exciting future for Doosan Babcock. 

Stephen Moore 

Chief Financial Officer 

12 months to 

March March March March December 

2004 2005 2006 2007 2007** 

£000 £000 £000 £000 £000 

as restated* as restated* 

Order Intake 433 375 345 505 771 

Turnover 306 396 431 410 472 

Operating profit from continuing 

operations before exceptional items 4.3 15.3 9.2 8.3 19.4 

Profit on ordinary activities before taxation 4.2 10.7 9.1 11.1 22.7 

Profit on ordinary activities after taxation 

and minority interests 3.2 4.9 6.3 7.5 17.4 

Equity shareholders' funds 15.3 20.0 14.9 22.8 33.1 

Net assets before pension liability 38.8 41.5 44.4 41.1 44.1 

Cash 49.4 46.7 56.5 51.3 72.7 

*Restated for FRS17 disclosure 

**12 months proforma 

15



Directors’ Report 

for the period ended 31 December 2007 

The directors present their annual report on the affairs of the Group, 

together with the financial statements, for the nine-month period ended 

31 December 2007. Comparative figures given in this report are for the 

year ended 31 March 2007. In addition, to ease comparability, proforma 

figures are included for the 12 months ended 31 December 2007. 

Principal activities 

The principal activities of the Group are associated with providing high 

value added energy services and innovative technology led business 

solutions and coal-fired power plant to the power generation industry 

and associated markets. 

Details of subsidiary undertakings are given in note 9. 

On 12 November 2007 DH Dampfkessel- und Behälterbau Hohenthurm 

GmbH and DH Kraftwerksservice Hohenthurm Verwaltungs GmbH 

merged into Doosan Babcock Energy Germany GmbH (formerly Doosan 

Babcock Energy GmbH), combining the share capital of the individual 

companies. 

Business Review 

Trading Performance 

The nine months to December 2007 has been a period of continued 

growth for Doosan Babcock Energy with returns outstripping those of 

the previous 12 month period. Our Services business continued to 

deliver outstanding returns with a strong growth in operating profit %. 

Against this our New Build business contribution in margin terms is 

more modest however it has been a period of significant development 

for the future with major New Build orders secured or in the pipeline. 

The predicted synergies following our acquisition by Doosan Heavy 

Industries & Construction are being exceeded and the order intake in 

the nine month period of more than £670m highlights the direction we 

are moving in. 

In the nine month period turnover increased to £350m with proforma 

12 month figures standing at £472m, a 15% increase on the year to 

March 2007. Growth has been seen both in our Service business 

(especially in the area of NOx reduction solutions) and New Build 

business as recently won orders start to flow through. Profit Before 

taxation for the nine months at £11.6m exceeded that of the 12 months 

to March 2007 with proforma figures for the year at £22.7m more than 

double this. This reflects excellent performance on the Services side 

where good performance is being rewarded by early completion and 

similar bonuses as customers recognise our excellent performance. 

Added to this is a significant improvement in net interest receivable 

which reflects excellent cash management in the year along with growth 

in the return on our pension scheme assets following the injection of 

substantial employer contributions. 

With a tax charge of £3.9m for the nine months related in the main to 

deferred tax on the pension scheme liability and withholding tax on 

overseas royalties, profit after tax at £7.7m is also higher than that in 

the 12 months to March 2007. Again proforma 12 month figures with tax 

of £5.3m and profit after tax of £17.4m are more than double this, a sign 

of the significant progress and growth being achieved following the 

acquisition. 

16 

Year end position 

The year end cash position of £72.7m shows a major increase of 

£21.4m from the previous reporting date. This reflects the strong cash 

generation in the period and advances on recently awarded contracts. 

Our strong cash position continues to highlight the underlying strength 

of the balance sheet; this is still affected by the impact of the pension 

scheme deficit although this has reduced substantially in the period 

from £18.3m to £11.0m on the back of sound management and the 

significant contributions from the company. Year end debtor and 

creditor balances have increased reflecting the increased volume of 

trading at that date. 

Non-financial key performance indicators 

The Directors consider that the following key performance indicators are 

the most effective measures of achievement of the Group’s objective to 

provide the highest standards of Quality, Health, Safety and 

Environment. 

These measures are reviewed each month by senior management and 

highlight excellent performance and identify any areas for improvement. 

The objectives are supported by initiatives developed to drive forward 

continuous improvements to procedures and processes. 

Key performance indicators and 2007 performance: 

• Customer compliments received - 33% increase on previous year 

• Reportable Lost Time Accidents - same level as previous year 

• All Injury Frequency Rate - 0.08 per 100,000 hours worked 

• Recordable Injury Frequency Rate - 0.88 per 200,000 hours worked 

• Health and Safety regulatory breaches - none (2006: none) 

• Environmental issues and compliance with Regulator Licence – none 

• Environmental Management System application score by 3rd party 

industry sector “Achilles” audit scheme - improved by 7% to 96.4% 

Principal Risks & Uncertainties 

The Directors take the management of risk very seriously and as such 

all activities are conducted with a framework of policies and guidelines 

authorised by the Board. 

In respect of foreign currencies, the Group’s policy is to hedge all 

significant exposure to movements in exchange rates primarily through 

the use of the forward market. No trading or speculation in financial 

instruments is undertaken. 

With regard to the recognition of the pension scheme position the 

Group is exposed to the performance of the assets invested in equities 

and bonds as well as the impact on liabilities of movements in bond 

rates and other actuarial assumptions which can vary significantly over 

time. To tackle these risks the Group has taken a number of actions over 

the previous years including closing the scheme to new entrants and 

increasing contributions. There is an investment sub-committee jointly 

appointed by the Company and Pension Trustees in addition to the 

financial advisors appointed by the Trustees who aim to optimise the 

performance of the scheme’s assets.

The major uncertainty in terms of trading in the current market is the 

steep rise in raw material and supplier costs, especially on major 

contracts. Reflecting this situation the Company will not enter a fixed 

price contract with a customer unless the supply of such items is in 

place and the price certain, alternatively appropriate escalation or cost 

plus agreements will be agreed with customers to reflect the market 

volatility. 

Managing risk is seen as a key attribute of the Group, with a focus on 

quality in everything we do. The backbone of our business is our people 

who we make significant efforts to train and develop through our many 

accredited programmes to ensure that they are amongst the best in 

their respective field. 

Additional information 

In addition to the commentary above, further information is given on 

pages 1-15. 

Results and dividends 

The financial statements represent the audited consolidated financial 

statements for Doosan Babcock Energy Limited. 

The consolidated net profit on ordinary activities after taxation was 

£7,655,000 (March 2007: £7,471,000). No dividend was declared in the 

year (March 2007: Nil). The profit has been transferred to reserves. 

The Group’s net assets including the impact of FRS 17 at 31 December 

2007 are £33,084,000 (March 2007: £22,838,000). 

Directors 

The names of the directors who, unless otherwise noted, served 

throughout the period are: 

I H Miller 

G W Park 

S C Nam (resigned 16 January 2008) 

H G Park 

S E Hong (resigned 16 January 2008) 

S N Moore 

D S Suh (appointed 16 January 2008) 

Research and development 

The Group is engaged in high technology markets and recognises the 

need for the continued improvement and development of its products 

relative to market requirements. The extent of unfunded research 

programmes in the period was £2,638,000 (March 2007: £2,596,000). 

Funded research and development amounted to £249,000 (March 2007: 

£915,000). 

Disabled employees 

The policy and practice of the Group is to seek to encourage and assist 

the employment of disabled persons, subject to their ability to perform 

the duties of the job without exposing themselves or other employees 

to abnormal risk. The training, career development and promotion of 

disabled persons is similarly encouraged and assisted. Arrangements 

are made wherever possible for retraining employees who become 

disabled to enable them to perform work identified as appropriate to 

their aptitudes and abilities. 



Employee involvement 

The Group's employment policies are designed to meet local conditions 

and requirements. The board acknowledges the need to encourage 

employee involvement in the improvement of the Group's performance 

by supplying information on matters of concern through regular 

consultation with employees and by participation of employees in joint 

problem solving activities. 

Information is provided by various means including briefing groups, 

audio/visual presentations, the Group’s intranet and other publications. 

In many parts of the Group, joint consultative committees are in 

operation which provide an effective means of consultation with 

employees on a wide range of issues. 

Donations 

During the period the Group made charitable donations of £15,386 

(March 2007: £28,207). 

Creditor payment policy 

It is the Group’s policy to agree terms of payment for its transactions 

with its suppliers, and to adhere to such terms, subject to satisfactory 

completion of the transaction concerned. At 31 December 2007 the 

amounts due to trade creditors represented approximately 23 days of 

average daily purchases throughout the period (March 2007: 36 days) 

in respect of the Company and approximately 22 days (March 2007: 36 

days) in respect of the Group. This reduction on March 2007 reflects the 

lower trade creditor balance arising from lower trading levels around the 

December 2007 period end. 

Directors' responsibilities 

The directors are responsible for preparing the Directors' Report and 

the financial statements in accordance with applicable law and 

regulations. 

Company law requires the directors to prepare financial statements for 

each financial year. Under that law they have elected to prepare the 

Group and Parent Company financial statements in accordance with 

applicable law and UK Accounting Standards (UK Generally Accepted 

Accounting Practice). 

The Group and Parent Company financial statements are required by 

law to give a true and fair view of the state of affairs of the Group and 

the Parent Company and of the profit or loss of the Group for that 

period. 

In preparing each of the Group and Parent Company financial 

statements, the directors are required to: 

• select suitable accounting policies and then apply them consistently; 

• make judgements and estimates that are reasonable and prudent; 

• state whether applicable UK Accounting Standards have been 

followed, subject to any material departures disclosed and explained 

in the financial statements; and 

• prepare the financial statements on the going concern basis unless it 

is inappropriate to presume that the Group and the Parent Company 

will continue in business. 

17



Directors’ Report continued 


The directors are responsible for keeping proper accounting records 

that disclose with reasonable accuracy at any time the financial position 

of the Parent Company and enable them to ensure that its financial 

statements comply with the Companies Act 1985. They have a general 

responsibility for taking such steps as are reasonably open to them to 

safeguard the assets of the Group and to prevent and detect fraud and 

other irregularities. 

The directors are responsible for the maintenance and integrity of the 

corporate and financial information included on the Group’s website. 

Disclosure of information to Auditors 

The directors who held office at the date of approval of this directors’ 

report confirm that, so far as they are each aware, there is no relevant 

audit information of which the Group auditors are unaware; and each 

director has taken all the steps that they ought to have taken as a 

director to make themselves aware of any relevant audit information 

and to establish that the Group auditors are aware of that information. 

Auditors 

In accordance with Section 384 of the Companies Act 1985, a resolution 

for the reappointment of KPMG LLP as auditors of the company is to be 

proposed at the forthcoming Annual General Meeting. 

By order of the board on 28 February 2008 

I Miller 

Director 

11 The Boulevard 

Crawley 

West Sussex 

RH10 1UX 

18

Independent auditors' report to the members of 

Doosan Babcock Energy Limited 

We have audited the group and parent company financial statements 

(the ‘‘financial statements’’) of Doosan Babcock Energy Limited for the 

period ended 31 December 2007 which comprise the Consolidated 

Profit and Loss Account, the Consolidated and Parent Company Balance 

Sheets, the Consolidated Cash Flow Statement, the Consolidated 

Statement of Total Recognised Gains and Losses and the related notes. 

These financial statements have been prepared under the accounting 

policies set out therein. 

This report is made solely to the company’s members, as a body, in 

accordance with section 235 of the Companies Act 1985. Our audit 

work has been undertaken so that we might state to the company’s 

members those matters we are required to state to them in an auditor’s 

report and for no other purpose. To the fullest extent permitted by law, 

we do not accept or assume responsibility to anyone other than the 

company and the company’s members as a body, for our audit work, for 

this report, or for the opinions we have formed. 

Respective responsibilities of directors and auditors 

The directors’ responsibilities for preparing the Directors’ Report and 

the group and parent company financial statements in accordance with 

applicable law and UK Accounting Standards (UK Generally Accepted 

Accounting Practice) are set out in the Statement of Directors’ 

Responsibilities on pages 17-18. 

Our responsibility is to audit the financial statements in accordance 

with relevant legal and regulatory requirements and International 

Standards on Auditing (UK and Ireland). 

We report to you our opinion as to whether the financial statements 

give a true and fair view and are properly prepared in accordance with 

the Companies Act 1985. We also report to you whether in our opinion 

the information given in the Directors' Report is consistent with the 

financial statements. 

In addition we report to you if, in our opinion, the company has not kept 

proper accounting records, if we have not received all the information 

and explanations we require for our audit, or if information specified by 

law regarding directors' remuneration and other transactions is not 

disclosed. 

We read the Directors' Report and consider the implications for our 

report if we become aware of any apparent misstatements within it. 

Basis of audit opinion 

We conducted our audit in accordance with International Standards on 

Auditing (UK and Ireland) issued by the Auditing Practices Board. An 

audit includes examination, on a test basis, of evidence relevant to the 

amounts and disclosures in the financial statements. It also includes 

an assessment of the significant estimates and judgements made by 

the directors in the preparation of the financial statements, and of 

whether the accounting policies are appropriate to the group’s and 

company’s circumstances, consistently applied and adequately 

disclosed. 



We planned and performed our audit so as to obtain all the information 

and explanations which we considered necessary in order to provide us 

with sufficient evidence to give reasonable assurance that the financial 

statements are free from material misstatement, whether caused by 

fraud or other irregularity or error. In forming our opinion we also 

evaluated the overall adequacy of the presentation of information in the 


Opinion 

In our opinion: 

• the financial statements give a true and fair view, in accordance with 

UK Generally Accepted Accounting Practice, of the state of the 

group’s and parent company’s affairs as at 31 December 2007 and of 

the group’s profit for the period then ended; 

• the financial statements have been properly prepared in accordance 

with the Companies Act 1985; and 

• the information given in the Directors’ Report is consistent with the 


KPMG LLP 

Chartered Accountants 

Registered Auditor 

1 Forest Gate 

Brighton Road 

Crawley 

West Sussex 

RH11 9PT 

28 February 2008 

19



Consolidated profit and loss account 


20 

Proforma 

12 months 9 months 12 months 

ended ended ended 

December December March 

2007 2007 2007 

Notes £000 £000 £000 

Turnover 2 471,604 349,884 410,451 

Group operating profit 18,179 7,695 8,124 

Share of operating loss in associates (235) (178) (168) 

Group and share of associates operating profit 3 17,944 7,517 7,956 

Net interest receivable 5 4,754 4,046 3,100 

Profit on ordinary activities before tax 22,698 11,563 11,056 

Tax on profit on ordinary activities 6 (5,310) (3,908) (3,585) 

Profit on ordinary activities after tax 17,388 7,655 7,471 

Equity minority interests (3) – – 

Profit for the period 17 17,385 7,655 7,471 

In accordance with the concession granted under Section 230(4) of the Companies Act 1985 the profit and loss account of Doosan Babcock Energy 

Limited has not been separately presented in these accounts. Included in the profit for the period is the profit of £9,403,000 (March 2007: 

£11,503,000) dealt with in the financial statements of the Company. 

The accompanying notes are an integral part of this profit and loss account. 

All turnover and operating profit arose from continuing operations.

Consolidated balance sheet 

as at 31 December 2007 

December December March March 

2007 2007 2007 2007 

Notes £000 £000 £000 £000 

Fixed Assets 

Intangible assets 

Positive goodwill 1,804 1,887 

Negative goodwill – (91) 

1,804 1,796 

Deferred development expenditure 4 6 

7 1,808 1,802 

Tangible assets 8 12,115 11,564 

Investments 

Investment in associates 9 67 – 

13,990 13,366 

Current assets 

Stocks 10 18,564 26,342 

Debtors 11 86,742 80,453 

Cash at bank and in hand 72,650 51,268 

177,956 158,063 

Creditors: amounts falling due within one year 12 (136,310) (118,738) 

Net current assets 41,646 39,325 

Total assets less current liabilities 55,636 52,691 

Creditors: amount falling due after more than one year 13 (723) (1,195) 

Provisions for liabilities 14 (10,797) (10,391) 

Net assets excluding pension liability 44,116 41,105 

Net pension liability 4 (11,032) ( 18,267) 

Net assets 33,084 22,838 

Capital and reserves 

Called up share capital 16 65,000 65,000 

Profit and loss account 17 (31,950) (42,191) 

Equity shareholders’ funds 23 33,050 22,809 

Equity minority interests 24 34 29 

33,084 22,838 

The accompanying notes are an integral part of this balance sheet. 

These financial statements were approved by the Board of Directors on 28 February 2008. Signed on behalf of the Board of Directors. 

I Miller 

Director 



21



Company balance sheet 

as at 31 December 2007 

22 

December December March March 

2007 2007 2007 2007 

Notes £000 £000 £000 £000 

Fixed Assets 

Intangible assets – positive goodwill 7 692 729 

Tangible assets 8 9,283 9,692 

Investments 

Investment in subsidiary undertakings 1,000 1,000 

Investment in associates 413 – 

9 1,413 1,000 

11,388 11,421 

Current assets 

Stocks 10 17,212 24,042 

Debtors 11 80,744 68,139 

Cash at bank and in hand 76,559 52,225 

174,515 144,406 

Creditors: amounts falling due within one year 12 (119,939) (94,203) 

Net current assets 54,576 50,203 

Total assets less current liabilities 65,964 61,624 

Creditors: amount falling due after more than one year 13 (703) (1,176) 

Provisions for liabilities 14 (10,797) (10,223) 

Net assets excluding pension liability 54,464 50,225 

Net pension liability 4 (11,032) ( 18,267) 

Net assets 43,432 31,958 

Capital and reserves 

Called up share capital 16 65,000 65,000 

Profit and loss account 17 (21,568) (33,042) 

Equity shareholders’ funds 23 43,432 31,958 

The accompanying notes are an integral part of this balance sheet. 

These financial statements were approved by the Board of Directors on 28 February 2008. Signed on behalf of the Board of Directors. 

I Miller 

Director

Consolidated cash flow statement 




Proforma 




2007 2007 2007 

Notes £000 £000 £000 

Cash flow from operating activities 18(a) 37,816 22,736 (3,337) 

Returns on investments and servicing of finance 18(b) 2,615 2,030 1,869 

Taxation 18(c) (1,498) (604) (1,339) 

Capital expenditure and financial investment 18(d) (4,192) (2,973) (2,640) 

Acquisitions and disposals 18(e) (163) (163) – 

Cash inflow/(outflow) before management of liquid resources and financing 34,578 21,026 (5,447) 

Management of liquid resources 18(f) 7,344 58 9,881 

Financing 18(g) 69 131 (1,363) 

Increase in cash in the period 41,991 21,215 3,071 

Reconciliation of net cash flow to movement in net funds 

Proforma 




2007 2007 2007 

Notes £000 £000 £000 

Increase in cash in the period 41,991 21,215 3,071 

Cash inflow from decrease in liquid resources (7,344) (58) (9,881) 

Cash (inflow)/outflow from financing (69) (131) 1,363 

Change in net funds resulting from cash flows 34,578 21,026 (5,447) 

Exchange movements 390 266 1,604 

Movement in net funds in the period 34,968 21,292 (3,843) 

Net funds at beginning of the period 36,733 50,409 54,252 

Net funds at end of the period 19 71,701 71,701 50,409 

23



Consolidated statement of total recognised gains and losses 


24 

Proforma 




2007 2007 2007 

Notes £000 £000 £000 

Profit for the period 17,385 7,655 7,471 

Currency translation differences on foreign currency net investments 580 515 1,551 

17,965 8,170 9,022 

Pension actuarial gain/(loss) in the period 4 1,297 2,876 (1,579) 

Deferred tax (charge)/credit thereon 15 (364) (805) 474 

Total recognised gains and losses relating to the period 18,898 10,241 7,917

Notes to the financial statements 

1. Accounting policies 

A summary of the principal accounting policies, all of which have been 

applied consistently throughout the period and the preceding period, is 

set out below. 

Basis of Preparation 

The financial statements have been prepared under the historical cost 

convention. The financial statements are prepared in accordance with 

applicable accounting standards, and on the going concern basis. 

As the Company is a 100% owned subsidiary of Doosan Corporation Co., 

Ltd, the Company’s voting rights are controlled within the Group. 

Therefore the Company has taken advantage of the exemption 

contained in Financial Reporting Standard (FRS) 8 and has not disclosed 

transactions or balances with entities which form part of the Doosan 

Corporation Co., Ltd Group. The accounts of Doosan Corporation Co., 

Ltd are available from the address in note 26. 

Basis of Consolidation 

The Group financial statements comprise a consolidation of the 

accounts of the Company and its subsidiary undertakings at 31 

December 2007. The acquisition method of accounting has been 

adopted. Under this method the profits and losses of the subsidiary 

undertaking are consolidated from its date of acquisition or up until the 

date of disposal as appropriate. 

The Group financial statements include the appropriate share of the 

results and net assets of joint ventures and associates accounted for 

using the gross equity method. Joint ventures are entities in which the 

Group has a long term interest and shares control with another party or 

parties. Associates are entities in which the Group has a long term 

interest and exercises a significant influence with another party or 

parties. 

Joint Arrangements 

The Group has certain contractual arrangements with other participants 

to engage in joint activities that do not create an entity carrying on a 

trade or business of its own. The Group includes its share of assets, 

liabilities and cash flows in such joint arrangements, measured in 

accordance with the terms of each arrangement, which is usually prorata 

to the Group’s interest in the joint arrangement. 

Goodwill 

Purchased goodwill (both positive and negative) in respect of 

acquisitions before 1 January 1998, when FRS 10 Goodwill and 

intangible assets was adopted, was written off to reserves in the year of 

acquisition. When a subsequent disposal occurs any related goodwill 

previously written off to reserves is written back through the profit and 

loss account as part of the profit or loss on disposal. 

Purchased goodwill (representing the excess of the fair value of the 

consideration given over the fair value of the separable net assets 

acquired) in respect of acquisitions since 1 January 1998 is capitalised. 

Positive goodwill is amortised to nil by equal annual instalments over 

20 years (or its estimated useful life if shorter). 



Negative goodwill in respect of acquisitions after 1 January 1998 is 

included within fixed assets and released to the profit and loss account 

in the periods in which the fair values of the non-monetary assets 

purchased on the same acquisition are recovered, whether through 

depreciation or sale. 

Foreign Currencies 

(a) Foreign currency transactions: 

Transactions in foreign currencies are translated at the foreign exchange 

rate ruling at the date of the transaction. The monetary assets and 

liabilities denominated in foreign currencies at the balance sheet date 

are translated to pounds sterling at the foreign exchange rate ruling at 

that date. Foreign exchange differences arising on translation are 

recognised in to the profit and loss account. 

(b) Financial statements of foreign operations: 

The monetary assets and liabilities of foreign operations are translated 

to pounds sterling at the foreign exchange rate ruling at the balance 

sheet date. The trading results of foreign operations are translated to 

pounds sterling at the average foreign exchange rate ruling during the 

period; this represents a change of policy from previous years when the 

foreign exchange rate ruling at the balance sheet date was used; this 

change does not have a material impact on the financial statements and 

accordingly there is no restatement of prior period figures. On 

consolidation exchange differences arising from the retranslation of the 

opening net investment in foreign operations and the result for the 

period are recognised in reserves. 

Turnover 

Turnover, which excludes sales within the Group and value added and 

similar taxes, comprises:- 

(a) Contract work - amounts transferred to cost of sales plus attributed 

profit. A major part of the activity of the Group comprises long term 

contracts. Such contracts are subject to regular detailed financial 

and technical review to determine the estimated costs to 

completion. A proportion of profits earned on contracts is credited in 

the accounts on a prudent basis as work progresses, according to 

the stage of completion. Full provisions are made in respect of 

foreseeable losses on uncompleted contracts. 

(b) Sales (other than contract sales) of goods and services at invoiced 

value. 

(c) Fees for technical aid and other services rendered. 

Research and Development 

Development expenditure on clearly defined projects, the commercial 

outcome of which can be assessed with reasonable certainty, is 

capitalised within intangible fixed assets. Such capitalised expenditure 

is amortised over the shorter of the project life and seven years. All 

other research and development expenditure is written off as incurred. 

25



Notes to the financial statements continued 

1. Accounting policies (continued) 

Taxation 

The credit or charge for United Kingdom taxation represents the amount 

which it is estimated will materialise as a receipt or payment of 

corporation tax on the results of the period. Overseas taxation is based 

on profits of overseas subsidiaries and on other overseas income. 

Except where otherwise required by accounting standards, full provision 

is made for all timing differences which have arisen but not reversed at 

the balance sheet date. 

A deferred tax asset is recognised to the extent that there are likely to 

be suitable taxable profits in the future against which the underlying 

timing differences can be deducted upon reversal. 

Fixed Assets 

Freehold properties, plant, machinery and equipment are stated at cost 

less depreciation. 

Depreciation is charged on cost on a straight line basis at rates 

appropriate to the expected useful lives of the assets concerned. 

The principal rates of depreciation used are:- 

Freehold land Not depreciated 

Freehold and leasehold buildings 2% to 10% 

Plant and machinery 

Heavy production 6 2 /3% 

Other 10% 

Motor vehicles 20% to 25% 

Office equipment and furniture 20% 

Computers and software 20% to 33 1 /3% 

Leasing and Hire Purchase Commitments 

Assets held under finance leases and hire purchase contracts are 

capitalised and are depreciated over either the term of the lease or their 

useful lives. The interest element of the rental obligations is charged to 

the profit and loss account over the period of the lease and represents a 

constant proportion of the balance of capital repayments outstanding. 

Hire charges paid under operating leases are charged against income 

on a straight line basis over the term of the lease. 

Investments 

Investments held as fixed assets are stated at cost less provision for any 

impairment. 

Stocks and Work in Progress 

Stocks are valued at the lower of cost and net realisable value. 

Long-term work in progress is valued at cost less any provisions 

necessary to reduce it to net realisable value. Cost comprises direct 

materials, and in the case of work in progress, direct labour and 

overheads, including depreciation, but excludes selling and 

administration costs. 

Amounts recoverable on contracts are included in debtors and represent 

turnover recognised in excess of payments on account. 

26 

Pension Costs 

Defined Benefit Scheme 

The Group operates a pension scheme providing benefits based on final 

pensionable pay. The assets of the scheme are held separately from 

those of the Group. Contributions are based on periodic actuarial 

calculations and are charged so as to spread the cost of the pensions 

over the expected services lives of the employees who are members of 

the scheme. The scheme was closed to new members on 31 March 

2001. 

Pension scheme assets are measured using market rates. Pension 

scheme liabilities are measured using a projected unit method and 

discounted at the current rate of return on a high quality corporate 

bond of equivalent term and currency to the liability. 

The pension scheme surplus (to the extent that it is recoverable) or 

deficit is recognised in full. The movement in the scheme surplus/deficit 

is split between operating charges, finance items and, in the statement 

of total recognised gains and losses, actuarial gains and losses. 

Defined Contribution Scheme 

The Group also operates a defined contribution pension scheme. The 

assets of the scheme are held separately from those of the Group in an 

independently administered fund. The amounts charged against profit 

represent the contributions payable to the scheme in respect of the 

accounting period. 

Liquid resources and cash 

Liquid resources comprise short term treasury deposits which have 

maturity dates of up to one year, government securities and money 

market funds. Cash comprises cash in hand and on overnight deposit 

less, for the purpose of the cash flow statement only, overdrafts. 

Government grants 

Capital based Government grants are credited to deferred income when 

received and are released to the profit and loss account over the useful 

economic lives of the assets to which they relate.

2. Geographical analysis 



Proforma 




2007 2007 2007 

£000 £000 £000 

Turnover by destination 

United Kingdom 337,783 265,415 326,536 

Other EU 32,621 25,287 25,862 

Rest of Europe 8,761 8,526 4,216 

East Asia 30,496 21,220 16,948 

South East Asia 1,370 528 1,728 

North America 57,514 27,731 33,441 

South and Central America 705 268 502 

Middle East 620 501 402 

Africa 1,175 402 816 

Other 559 6 – 

471,604 349,884 410,451 

Turnover by origin 

United Kingdom 392,725 306,161 357,651 

United States of America 55,708 26,713 29,557 

India 193 16 263 

China 343 343 153 

Poland 11,588 8,087 13,646 

Germany 11,047 8,564 9,181 

471,604 349,884 410,451 

As at As at 

December March 

2007 2007 

£000 £000 

Net assets by location 

United Kingdom 46,924 35,608 

United States of America (16,306) (15,260) 

India (416) (218) 

China (573) (449) 

Oceania (incl. Australia) 427 423 

Poland 2,187 1,866 

Germany 841 868 

In the opinion of the directors, the Group’s business constitutes a single class of business. 

33,084 22,838 

A geographical analysis of profit before tax is not given, as in the opinion of the directors such disclosure would be prejudicial to the interests of the 

Group. 

27




3. Operating profit 

(a) Movement between turnover and operating profit 

28 

Proforma 




2007 2007 2007 

Notes £000 £000 £000 

Turnover 471,604 349,884 410,451 

Cost of sales (426,706) (321,697) (380,019) 

Gross profit 44,898 28,187 30,432 

Net operating expenses: 

Exceptional costs - manufacturing * (3,047) (3,047) – 

Exceptional credit/(costs) - other 14 1,638 1,715 (310) 

Defined benefit pension scheme service cost 4 (6,507) (4,687) (6,542) 

Research & development (3,638) (2,638) (2,596) 

Other administrative expenses (15,162) (11,819) (12,831) 

Total administrative expenses (26,716) (20,476) (22,279) 

Loss on disposal of tangible fixed assets (6) (19) (29) 

Profit on disposal of intangible fixed assets 3 3 – 

Share of operating loss in associates (235) (178) (168) 

Operating profit 17,944 7,517 7,956 

All turnover and profit arose from continuing operations. 

*The exceptional costs – manufacturing relates to the impairment of the Group’s manufacturing operations. The charge comprises: 

Fixed asset write down 559 

Onerous lease provision (see note 14) 2,488 

£000 

3,047

(b) Operating profit is stated after charging/(crediting): 



Proforma 




2007 2007 2007 

£000 £000 £000 

Depreciation of tangible fixed assets: 

Owned 3,513 2,368 3,195 

Leased 379 289 396 

Amortisation of intangible fixed assets: 

Goodwill 111 83 111 

Negative goodwill (145) (88) (344) 

Deferred development expenditure 2 2 429 

Loss on disposal of tangible fixed assets 6 19 29 

Amortisation of Government grants (291) (221) (312) 

Rentals under operating leases: 

Hire of plant & machinery 1,214 1,222 1,214 

Land & buildings 3,788 3,544 3,301 

Exchange gain (229) (716) (461) 

The prior year disclosure in respect of exchange (gain)/loss has been corrected to that disclosed above. 

Auditors’ remuneration: 

Proforma 




2007 2007 2007 

£000 £000 £000 

Audit of these financial statements 114 114 106 

Amounts receivable by the auditors and their associates in respect of: 

Audit of Company’s subsidiaries, pursuant to legislation 19 19 19 

Other services pursuant to such legislation 58 25 30 

Services relating to taxation 187 106 141 

Pension consultancy – – 7 

29




4. Employees and directors 

30 

Proforma 




2007 2007 2007 

Average number of persons employed during the period: 

Production 4,179 4,148 4,164 

Administration 405 412 358 

4,584 4,560 4,522 

The average monthly number of persons employed reflects staff levels of the Company and subsidiary undertakings during the period. 

Proforma 




2007 2007 2007 

£000 £000 £000 

Staff costs during the period: 

Wages & salaries 174,078 134,929 167,608 

Social security costs 16,645 12,908 16,327 

Other pension costs 6,929 5,023 6,864 

197,652 152,860 190,799

4. Employees and directors (continued) 

Remuneration of directors 



Proforma 




2007 2007 2007 

£000 £000 £000 

Directors’ emoluments 743 572 779 

The aggregate emoluments of the highest paid director were £287,692 (March 2007: £258,745). He is a member of a Group pension scheme, under 

which his accrued pension at the year end was £94,864 (March 2007: £90,957). 

Retirement benefits accruing to the following number of directors: 


2007 2007 

Defined benefit schemes 2 2 

Post-retirement benefits 

The Group operates two defined contribution schemes, a Group Personal Pension Plan and a Stakeholder Plan. The charge for the period in respect 

of these schemes was £336,318, £37,547 of which was outstanding at the year end. 

The Group operates a pension scheme providing benefits based on final pensionable pay. This scheme is now closed to new entrants. The Group’s 

pension contributions during the period amounted to £10,085,000 which was equal to the regular pension cost calculated by the Scheme’s actuary. 

The contributions are determined by a qualified actuary on the basis of triennial valuations using the projected unit method. The most recent 

valuation was at 31 March 2007. The assumptions which have the most significant effect on the results of the valuation and the contributions paid by 

the Group are those relating to the rate of return on investments and the rates of increase in salaries and pensions. It was assumed that the 

investment return would be 6.5% per annum, that salary increases would average 4.0% per annum and that present and future pensions would 

increase at the rate of 3.0% per annum. 

The market value of the scheme assets at 31 March 2007 was estimated to be £201.4m. Based on this, the Scheme is 90% funded. As a result of this 

it was agreed that the Group contribution level would remain at 30%. 

The actuarial valuation of the scheme at 31 March 2007 was updated to 31 December 2007 by a qualified actuary, using a set of assumptions 

consistent with those required under FRS17. 

The scheme was formally closed to new entrants with effect from 31 March 2001 although late new entrants were permitted to join until 31 January 

2002. Under the Projected Unit Method (the method used for the purposes of FRS17), the current service cost will increase (as a percentage of 

scheme salaries) as members of the scheme approach retirement. 

31





The major assumptions used by the actuary were: December March March 

2007 2007 2006 

£000 £000 £000 

Financial assumptions: 

Discount rate 5.4% 5.1% 5.0% 

Rate of increase in pensionable salaries 2.5% - 4.0% 2.5% -3.5% 2.5% - 3.5% 

Rate of increase in pensions in payment (post May 2002 service) 3.0% 2.75% 2.5% 

Rate of increase in pensions in payment (pre May 2002 service) 3.0% 3.0% 3.0% 

Inflation assumption (and increases to pension in deferment) 3.0% 2.75% 2.5% 

Demographic assumptions: 

Pre retirement mortality (male/ female) PMA92 YOB + 1 / A67/70-1 / A67/70-1 / 

PFA92 YOB + 1 FA75/78 – 1 FA75/78 – 1 

Post retirement mortality for non pensioner members (male/ female) PMA92 YOB + 1 / PA90 – 5 PA90 – 5 

PFA92 YOB + 1 

Post retirement mortality for pensioner members (male/ female) PMA92 YOB + 1 / PA90 – 5 PA90 – 5 

PFA92 YOB + 1 

The rates used have been chosen from a range of possible amounts determined using actuarial assumptions that due to the timescale covered may 

not necessarily be borne out in practice. 

The assets in the scheme and the expected rates of return were: 

32 

December March March 

2007 2007 2006 

Expected Expected Expected 

rate rate rate 

of return of return of return 

% £m % £m % £m 

Equities and property 8.5 – 8.0 – 8.0 123.5 

Diversified growth fund 8.5 165.6 8.0 150.8 – – 

Bonds 5.4 50.9 5.0 49.4 4.5 47.4 

Cash 4.75 1.8 4.75 1.2 4.0 2.6 

Total market value of assets 218.3 201.4 173.5 

Present value of liabilities (233.6) (227.5) (215.6) 

Deficit in scheme (15.3) (26.1) (42.1) 

Related deferred tax asset 4.3 7.8 12.6 

Net pension liability (11.0) (18.3) (29.5) 

An analysis of the movement in the deficit during the period to 31 December 2007 follows: 

9 months 12 months 

ended ended 


2007 2007 

Notes £m £m 

Deficit in scheme at beginning of the period (26.1) (42.1) 

Movement in the period: 

Current employee service cost (4.7) (6.5) 

Employer contributions 10.1 22.1 

Other financing credit 5 2.5 2.0 

Actuarial gain/(loss) 2.9 (1.6) 

Deficit in scheme at end of the period (15.3) (26.1)




Analysis of actuarial gain/(loss): 9 months 12 months 

ended ended 


2007 2007 

£m £m 

Actual return less expected return on scheme assets 0.1 (0.6) 

Experience gains/(losses) arising on the scheme liabilities 1.3 (2.1) 

Changes in assumptions underlying the scheme liabilities 1.5 1.1 

Net actuarial gain/(loss) recognised in the period 2.9 (1.6) 

A history of expected gains and losses at 31 December 2007 was as follows: 



December March March 

2007 2007 2006 

£m £m £m 

Difference between the expected and the actual return on scheme assets: 

Amount 0.1 (0.6) 23.2 

Percentage of scheme assets 0% (0%) 13% 

Experience gains/(losses) on scheme liabilities: 

Amount 1.3 (2.1) (2.8) 

Percentage of present value of scheme liabilities 1% (1%) (1%) 

Total gains/(losses) recognised in statement of total recognised gains and losses: 

Amount 2.9 (1.6) (15.2) 

Percentage of present value of scheme liabilities 1% (1%) (7%) 

5. Net interest receivable 

Proforma 




2007 2007 2007 

Notes £000 £000 £000 

Interest receivable and similar income 2,651 2,030 1,882 

Expected return on pension scheme assets 13,206 11,204 12,783 

Total interest receivable 15,857 13,234 14,665 

Interest payable on bank loans and overdrafts (23) (2) (59) 

Unwinding of discounting 14 (686) (481) (722) 

Interest on pension scheme liabilities (10,394) (8,705) (10,784) 

Total interest payable (11,103) (9,188) (11,565) 

Net interest receivable 4,754 4,046 3,100 

33




6. Taxation charge 

34 

Proforma 




2007 2007 2007 

Notes £000 £000 £000 

Current tax: 

UK Corporation tax at 30% (March 2007: 30%) 520 – 259 

In respect of prior year 379 340 (185) 

899 340 74 

Overseas taxation 1,412 698 989 

Total current tax 2,311 1,038 1,063 

Deferred taxation excluding pension (848) 137 (2,766) 

Deferred tax on pension charge 3,847 2,733 5,288 

Total deferred tax 15 2,999 2,870 2,522 

Total tax on profit on ordinary activities 5,310 3,908 3,585 

Factors affecting tax charge for period 

The current tax assessed for the period is lower (March 2007: lower) than the standard rate of corporation tax in the UK (30%). The differences are 

explained below: 

Proforma 




2007 2007 2007 

£000 £000 £000 

Profit on ordinary activities before tax 22,698 11,563 11,056 

Profit on ordinary activities multiplied by standard rate of 

corporation tax in the UK of 30% (March 2007: 30%) 6,809 3,469 3,317 

Overseas losses with no tax relief in period 621 465 1,185 

Group relief (582) (438) (385) 

Expenses not deductible for tax purposes (1,004) 137 (1) 

Other timing differences – – (1,236) 

Timing difference re pension charge (4,382) (3,287) (1,828) 

Capital allowances for period in excess of depreciation 359 269 16 

Utilisation of tax losses – – (191) 

Overseas tax 111 83 371 

Adjustment to tax charge in respect of previous period 379 340 (185) 

Current tax charge for period 2,311 1,038 1,063 

Factors that may affect future tax charges 

The Group has tax losses and other short term timing differences in the region of £2.3m (tax benefit), which may reduce future tax payments.

7. Intangible fixed assets 



Deferred 

Positive Negative development 

goodwill goodwill expenditure Total 

£000 £000 £000 £000 

Group 

Cost 

At 1 April 2007 2,230 (702) 1,828 3,356 

Foreign exchange translation differences – – (18) (18) 

Disposals – 3 (1) 2 

At 31 December 2007 2,230 (699) 1,809 3,340 

Amortisation 

At 1 April 2007 343 (611) 1,822 1,554 

Foreign exchange translation differences – – (18) (18) 

Charge for period 83 (88) 2 (3) 

Disposals – – (1) (1) 

At 31 December 2007 426 (699) 1,805 1,532 

Net book value 

31 December 2007 1,804 – 4 1,808 

31 March 2007 1,887 (91) 6 1,802 

Positive 

goodwill 

£000 

Company 

Cost 

At 1 April 2007 and 31 December 2007 972 

Amortisation 

At 1 April 2007 243 

Charge for period 37 

At 31 December 2007 280 


31 December 2007 692 

31 March 2007 729 

35




8. Tangible fixed assets 

36 

Land & Plant & 

buildings equipment Total 

£000 £000 £000 

Group 

Cost 

At 1 April 2007 4,806 63,337 68,143 

Foreign exchange translation differences 122 502 624 

Additions 108 2,928 3,036 

Disposals (23) (10,678) (10,701) 

Reclassifications (16) 16 – 

At 31 December 2007 4,997 56,105 61,102 

Depreciation 

At 1 April 2007 2,400 54,179 56,579 

Foreign exchange translation differences 34 336 370 

Charge for period 158 2,499 2,657 

Disposals (16) (10,603) (10,619) 

At 31 December 2007 2,576 46,411 48,987 


31 December 2007 2,421 9,694 12,115 

31 March 2007 2,406 9,158 11,564 

Included in the net book value of land and buildings is land costing £297,000 (March 2007: £297,000) which is not depreciated. 

Included in the net book value of plant and equipment is £444,000 (March 2007: £641,000) in respect of assets held under finance leases. 

Depreciation for the period on these assets was £202,000 (March 2007: £261,000). 

The net book value of land and buildings comprises: 


2007 2007 

£000 £000 

Freehold 1,421 1,375 

Leasehold - short 1,000 1,031 

2,421 2,406

8. Tangible fixed assets (continued) 



Land & Plant & 

buildings equipment Total 

£000 £000 £000 

Company 

Cost 

At 1 April 2007 3,988 59,255 63,243 

Additions – 1,917 1,917 

Disposals (23) (10,050) (10,073) 

Reclassifications (16) 16 – 

At 31 December 2007 3,949 51,138 55,087 

Depreciation 

At 1 April 2007 2,166 51,385 53,551 

Charge for period 82 2,234 2,316 

Disposals (16) (10,047) (10,063) 

At 31 December 2007 2,232 43,572 45,804 


31 December 2007 1,717 7,566 9,283 

31 March 2007 1,822 7,870 9,692 

Included in the net book value of land and buildings is land costing £297,000 (March 2007: £297,000) which is not depreciated. 

Included in the net book value of plant and equipment is £444,000 (March 2007: £617,000) in respect of assets held under finance leases. 

Depreciation for the period on these assets was £173,000 (March 2007: £224,000). 

The net book value of land and buildings comprises: 


2007 2007 

£000 £000 

Freehold 1,134 1,181 

Leasehold - short 583 641 

9. Fixed asset investments 

1,717 1,822 

Shares in 

Investment subsidiary 

in associates undertakings Total 

£000 £000 £000 

Company - Cost 

At April 2007 – 1,000 1,000 

Transfer from debtors 250 – 250 

Additions 163 – 163 

At 31 December 2007 413 1,000 1,413 

37




9. Fixed asset investments (continued) 

38 

Share of net 

(liabilities) 

/assets 

£000 

Group - Associates 

At 1 April 2007 (168) 

Transfer from debtors 250 

Additions 163 

Share of loss for the period (178) 

At 31 December 2007 67 

The share of net liabilities at 1 April 2007 is reflected in the opening balance within provisions (note 14). 

The analysis of the Group’s share of associates is set out below: 


2007 2007 

£000 £000 

Loss before and after tax 178 168 

Current assets 78 90 

Creditors: amounts falling due within one year (11) (41) 

Creditors: amounts falling due after more than one year – (217) 

Investment in associates 67 (168) 

On 12 November 2007 DH Dampfkessel- und Behälterbau Hohenthurm GmbH and DH Kraftwerksservice Hohenthurm Verwaltungs GmbH merged into 

Doosan Babcock Energy Germany GmbH (formerly Doosan Babcock Energy GmbH, combining the share capital of the individual companies. 

Principal Group investments 

Doosan Babcock Energy Limited holds 100% of the equity share capital of the following undertakings and each has a 31 December period end, is 

located in Great Britain and is registered in England and Wales (unless otherwise stated). The principal activities of the Group are associated with 

providing high value-added energy services and innovative technology led business solutions and coal-fired power plant to the power generation 

industry and associated markets. The following subsidiaries are included within the consolidation. 

Principal Subsidiary Undertakings: 

Doosan Babcock Energy India Private Limited** (registered and located in India) 

Doosan Babcock Overseas Investments Limited 

Doosan Babcock Energy Services (Overseas) Limited 

Babcock (Shanghai) Trading Limited ** (registered and located in China) 

Babcock Power Technologies (Shanghai) Limited ** (registered and located in China) 

Doosan Babcock Energy America LLC (registered and located in United States of America) 

Doosan Babcock Energy Polska Sp. z.o.o. (98%) ** (registered and located in Poland) 

Doosan Babcock Energy Germany GmbH **** (registered and located in Germany) 

Other Subsidiary undertakings: 

Doosan Babcock Energy Services Limited * - (dormant) 

Babcock Welding Products Limited * - (dormant) (registered in Scotland) 

Babcock Energy Limited (dormant) 

Doosan Babcock Energy Scotland Limited (registered in Scotland) 

Clean Energy Solutions LLC*** (registered and located in United States of America) 

Doosan Babcock Energy Germany Holdings GmbH ** (registered and located in Germany)

9. Fixed asset investments (continued) 

Joint Ventures and Associates: 

VMB Energy Services BV (50%) ** (registered and located in the Netherlands) 

Connective Energy Limited (33%) - (year end 31 March) 

* Denotes agency undertaking 

** Indirectly held by Doosan Babcock Overseas Investments Limited 

*** Indirectly held by Doosan Babcock Energy America LLC 

**** Indirectly held by Doosan Babcock Energy Germany Holdings GmbH 

10. Stock 



Company Group 

December March December March 

2007 2007 2007 2007 

£000 £000 £000 £000 

Raw materials and consumables 946 987 1,082 1,227 

Work in progress 16,266 23,055 17,482 25,115 

11. Debtors 

17,212 24,042 18,564 26,342 

Company Group 

Notes December March December March 

2007 2007 2007 2007 

£000 £000 £000 £000 

Amounts falling due within one year: 

Trade debtors 36,074 45,643 57,858 56,861 

Amounts recoverable on contracts 8,333 4,454 17,825 12,059 

Amounts owed by Group undertakings 25,104 6,224 946 990 

Amounts owed by associates 27 19 27 19 

Other debtors 5,296 6,144 5,939 6,531 

Prepayments and accrued income 1,048 358 1,164 537 

Deferred tax asset 15 1,829 917 1,870 1,020 

77,711 63,759 85,629 78,017 

Amounts falling due after one year: 

Trade debtors 132 20 139 348 

Amounts owed by Group Undertakings 2,045 2,275 – – 

Amounts owed by associates – 250 – 250 

Prepayments and accrued income – – 118 3 

Deferred tax asset 15 856 1,835 856 1,835 

3,033 4,380 1,113 2,436 

Total debtors 80,744 68,139 86,742 80,453 

The analysis of debtors falling due within one year at 31 March 2007 has been restated by the reclassification of £306,000 from other debtors to 

prepayments. 

39




12. Creditors: Amounts falling due within one year 

40 

Company Group 


2007 2007 2007 2007 

Notes £000 £000 £000 £000 

Bank loans and overdrafts – – 512 236 

Obligations under finance leases 22 230 230 230 244 

Payments received on account 22,475 15,539 26,957 19,915 

Trade creditors 11,117 14,799 14,994 19,799 

Amounts owed to Group undertakings 16,858 2,483 415 368 

Overseas & Corporation taxation 829 362 857 423 

Other creditors, including taxation and social security 50,964 43,890 74,164 58,380 

Accruals and deferred income 16,716 16,150 18,181 19,373 

Subsidiaries - Called up share capital not paid 750 750 – – 

Included within deferred income is an amount of £316,000 (March 2007: £319,000) for deferred government grants. 

13. Creditors: Amounts falling due after more than one year 

119,939 94,203 136,310 118,738 

Company Group 


2007 2007 2007 2007 

Notes £000 £000 £000 £000 

Obligations under finance leases 22 207 379 207 379 

Trade creditors – – 20 19 

Accruals and deferred income 496 797 496 797 

Included within deferred income is an amount of £478,000 (March 2007: £698,000) for deferred government grants. 

14. Provisions for liabilities 

703 1,176 723 1,195 

Onerous leases Other Total 

£000 £000 £000 

Group 

Balance at 1 April 2007 611 9,780 10,391 

Profit and loss account charge/(credit) 2,488 (1,715) 773 

Unwinding of discounting – 465 465 

Applied (48) (616) (664) 

Amounts transferred to investments – (168) (168) 

Balance at 31 December 2007 3,051 7,746 10,797

14. Provisions for liabilities (continued) 



Onerous leases Other Total 

£000 £000 £000 

Company 

Balance at 1 April 2007 611 9,612 10,223 

Profit and loss account charge/(credit) 2,488 (1,715) 773 

Unwinding of discounting – 465 465 

Applied (48) (616) (664) 

Balance at 31 December 2007 3,051 7,746 10,797 

The onerous lease provision includes amounts set aside in respect of lease obligations relating to the manufacturing premises, which are partially 

vacant following downsizing. This provision will be utilised over the next five years to meet the obligations under the lease. 

Other provisions include amounts set aside in the period in respect of known and potential claims for which the Group may be liable together with 

related legal costs. Due to their nature, it is not possible to predict precisely when these provisions will be utilised, but it is anticipated that if there 

were to be a liability then, in the majority of cases, it would be in the medium term. 

15. Deferred taxation 

Company Group 


2007 2007 2007 2007 

Notes £000 £000 £000 £000 

Tax losses 972 77 972 77 

Other timing differences 1,713 2,675 1,754 2,778 

Deferred tax asset 11 2,685 2,752 2,726 2,855 

Deferred tax asset included in net pension liability 4,283 7,829 4,283 7,829 

6,968 10,581 7,009 10,684 

Asset at start of period 10,581 12,643 10,684 12,732 

Deferred tax charged to profit and loss account for period (2,808) (2,536) (2,870) (2,522) 

Deferred tax (charged)/credited to the statement of total 

recognised gains and losses for the period (805) 474 (805) 474 

Asset at the end of period 6,968 10,581 7,009 10,684 

A deferred tax asset has been recognised to the extent that there are expected future taxable profits against which the asset will be utilised. 

41




15. Deferred taxation (continued) 

Deferred taxation which has not been provided for in view of uncertainty over its recoverability is set out as follows: 

42 


2007 2007 

£000 £000 

Tax losses 503 – 

Other timing differences 1,835 3,838 

Unrecognised deferred tax asset 2,338 3,838 

16. Share capital 


2007 2007 

£000 £000 

Authorised 

67,000,000 ordinary shares of £1 67,000 67,000 

Called up, allotted and fully paid 

65,000,000 ordinary shares of £1 65,000 65,000 

17. Reserves 

Company Group 

Profit & loss Profit & loss 

account account 

£000 £000 

Balance at 1 April 2007 (33,042) (42,191) 

Profit for the period 9,403 7,655 

Currency translation differences on foreign currency net investments – 515 

Pension actuarial gain in the period 2,876 2,876 

Deferred tax charge thereon (805) (805) 

Balance at 31 December 2007 (21,568) (31,950)

18. Cash flow 

(a) Reconciliation of operating profit to net cash flow from operating activities 



Proforma 




2007 2007 2007 

£000 £000 £000 

Operating profit 17,944 7,517 7,956 

Depreciation and amortisation 3,860 2,654 3,787 

Share of operating loss in associates 235 178 168 

Difference between pension charge and cash contribution (5,912) (5,389) (4,094) 

One-off cash contribution to defined benefit pension scheme (3,000) – (11,500) 

Decrease/(increase) in stocks 13,368 7,778 (4,072) 

Increase in debtors (24,090) (6,670) (22,664) 

Increase in creditors and provisions 35,408 16,652 27,053 

Loss on disposal of tangible fixed assets 6 19 29 

Profit on disposal of intangible fixed asset (3) (3) – 

Net cash inflow/(outflow) from operating activities 37,816 22,736 (3,337) 

The operating cash flows include an outflow of £616,000 which relates to exceptional costs (see note 3). 

(b) Returns on investments and servicing of finance 

Proforma 




2007 2007 2007 

£000 £000 £000 

Interest received 2,638 2,032 1,928 

Interest paid (23) (2) (59) 

(c) Taxation 

2,615 2,030 1,869 

Proforma 




2007 2007 2007 

£000 £000 £000 

Overseas tax paid (1,329) (604) (890) 

UK tax paid (169) – (449) 

(1,498) (604) (1,339) 

43




18. Cash flow (continued) 

(d) Capital expenditure and financial investment 

44 

Proforma 




2007 2007 2007 

£000 £000 £000 

Payments to acquire tangible fixed assets (4,272) (3,036) (2,682) 

Receipts from sales of tangible fixed assets 80 63 44 

Capitalisation of internal development – – (2) 

(e) Acquisitions and disposals 

(4,192) (2,973) (2,640) 

Proforma 




2007 2007 2007 

£000 £000 £000 

Investment in associate (163) (163) – 

(f) Management of liquid resources 

Proforma 




2007 2007 2007 

£000 £000 £000 

Net decrease in short term treasury deposits 7,344 58 9,803 

Net decrease in current asset investments – – 78 

(g) Financing 

7,344 58 9,881 

Proforma 




2007 2007 2007 

£000 £000 £000 

Increase/(decrease) in short term borrowings 317 317 (793) 

Decrease in long term borrowings – – (319) 

Repayments of finance leases (248) (186) (251) 

69 131 (1,363)

19. Analysis of changes in net funds 

(a) For the nine month period to 31 December 2007 



At At 

1 April Cash Exchange 31 December 

2007 flow movements 2007 

£000 £000 £000 £000 

Cash in hand and at bank 51,210 21,159 281 72,650 

Overdrafts (236) 56 (15) (195) 

50,974 21,215 266 72,455 

Short term treasury deposits 58 (58) – – 

Bank loans – (317) – (317) 

Finance leases (623) 186 – (437) 

(b) For the 12 months to 31 December 2007 

50,409 21,026 266 71,701 

At At 

1 January Cash Exchange 31 December 

2007 flow movements 2007 

£000 £000 £000 £000 

Cash in hand and at bank 30,074 42,168 408 72,650 

Overdrafts – (177) (18) (195) 

30,074 41,991 390 72,455 

Short term treasury deposits 7,344 (7,344) – – 

Bank loans – (317) – (317) 

Finance leases (685) 248 – (437) 

36,733 34,578 390 71,701 

45




20. Capital commitments 

46 

Company Group 


2007 2007 2007 2007 

£000 £000 £000 £000 

Contracted but not provided 764 328 846 334 

21. Contingent liabilities 

In the ordinary course of business the Group has guarantees and counter indemnities in respect of bonds relating to performance under contracts. 

The Group also enters into forward exchange contracts to reduce its risk and exposure to fluctuations in exchange rates, which accrue in the ordinary 

course of business. 

22. Leasing 

Company Group 


2007 2007 2007 2007 

£000 £000 £000 £000 

a) Finance leases 

The net obligations under finance leases were as follows: 

Amounts payable: 

within one year 230 230 230 244 

between one and five years 207 379 207 379 

437 609 437 623 

b) Operating leases 

Annual commitments under non-cancellable operating leases were as follows: 

Leases on land and buildings expiring: 


between one and five years 103 129 830 308 

after five years 2,914 2,813 2,914 2,813 

Leases on other assets expiring: 


between one and five years 960 696 1,044 754 

The majority of leases on land and buildings are subject to rent reviews. 

4,147 4,007 5,000 4,426

23. Reconciliation of movements in shareholders' funds 



Company Group 

9 months 12 months 9 months 12 months 

ended ended ended ended 


2007 2007 2007 2007 

£000 £000 £000 £000 

Opening shareholders’ funds 31,958 21,560 22,809 14,892 

Profit for the financial period 9,403 11,503 7,655 7,471 

Currency translation differences on foreign currency net investments – – 515 1,551 

Pension actuarial gain/(loss) in the period 2,876 (1,579) 2,876 (1,579) 

Deferred tax (charge)/credit thereon (805) 474 (805) 474 

Closing shareholders’ funds 43,432 31,958 33,050 22,809 

24. Equity Minority Interests 

Balance at 1 April 2007 29 

Currency translation difference 5 

Balance at 31 December 2007 34 

25. Related Party Transactions 

During the period the Group provided and received goods and services in the ordinary course of business with Doosan Heavy Industries & 

Construction Limited, its parent Company, at a value of £3,017,000 and £6,581,000 respectively (March 2007: £4,000,000 and £793,000). Amounts 

due to Doosan Heavy Industries & Construction Limited are £443,000 (March 2007: £323,000). 

During the period the Group provided goods and services in the ordinary course of business to Connective Energy Limited, an associate undertaking, 

at a value of £117,000 (March 2007: £163,000). The amounts due from this associate undertaking are disclosed in note 11, £27,000 (March 2007: 

£19,000) relating to trading and £nil (March 2007: £250,000) in respect of convertible loan notes. The amount due at March 2007 in respect of 

convertible loan notes has been transferred to investments. 

26. Ultimate Parent Company 

The Company is a subsidiary undertaking of Doosan Corporation Co., Ltd registered in Korea which the directors consider to be Company’s ultimate 

parent Company. This is largest Group in which the results of the Company are consolidated. The smallest such Group is that headed by Doosan 

Heavy Industries UK Investments Ltd which is registered in England and Wales. 

The consolidated financial statements of Doosan Corporation Co., Ltd are available to the public and may be obtained from Euljiro 6-ga, Jung-gu, 

Seoul, Korea, 100-730. 

The consolidated financial statements of Doosan Heavy Industries UK Investments Ltd are available to the public and may be obtained from 11 The 

Boulevard, Crawley, West Sussex RH10 1UX, United Kingdom. 

2007 

£000 

47



48

Contacts 

Main Offices 

Global Headquarters 


11 The Boulevard, Crawley, 

West Sussex, RH10 1UX 

United Kingdom 

Tel:- + 44 (0) 1293 612888 

Fax:- + 44 (0) 1293 584321 

European Headquarters 


Porterfield Road, Renfrew, 

PA4 8DJ, United Kingdom 

Tel:- + 44 (0) 141 886 4141 

Fax:- + 44 (0) 141 885 3338 

Asia Pacific Headquarters 

Babcock Power Technologies 

(Shanghai) Limited 

38F, 999 South Pudong Road 

XinMei Union Square, 

Pudong New Area 

Shanghai, 200120, PR China 

Tel:- + 86 21 5877 6868 

Fax:- +86 21 5877 3903 

Americas Headquarters 

Doosan Babcock Energy 

America LLC 

1050 Crown Pointe Parkway, 

Suite 1200, Atlanta, 

GA 30338, USA 

Tel:- +1 770 551 5750 

Fax:- +1 770 551 5753 

Regional Offices 


5/6 Brickfield Business Centre 

60 Manchester Road 

Northwich, Cheshire, CW9 7LS 


Tel:- + 44 (0) 1606 331011 

Fax:- + 44 (0) 1606 331033 


5 Maisies Way 

The Village, South Normanton 

Derbyshire, DE55 2DS 


Tel:- + 44 (0) 1773 819876 

Fax:- + 44 (0) 1773 862721 


Unit 1A, Selby Business Park 

Oakney Wood Road Selby 

Yorkshire, YO8 8LZ 


Tel:- + 44 (0) 1757 70464 

Fax:- + 44 (0) 1757 700238 


15- 17 Traill Street, 

Thurso 

Caithness, KW14 8EJ 


Tel:- + 44 (0) 1847 891968 

Fax:- + 44 (0) 1847 894673 


Rubislaw Den House 

23 Rubislaw Den North 

Aberdeen, AB15 4AL 


Tel:- + 44 (0) 1224 329019 

Fax:- + 44 (0) 1224 310037 


Church Barn, Church Lane, 

Tickenham, Clevedon 

North Somerset, BS21 6SB 


Tel:- + 44 (0) 1275 810300 

Fax:- + 44 (0) 1275 810086 


Gemini House, Orbital One 

Green Street, Green Road, 

Dartford, Kent, DA1 1QG 


Tel:- + 44 (0) 1322 394350 

Fax:- + 44 (0) 1322 394390 


Birmingham New Road 

Tipton 

West Midlands, DY4 8YY 


Tel:- + 44 (0) 121 530 5000 

Fax:- + 44 (0) 121 530 5101 


Baltic Business Centre, 

Saltmeadow Road, Gateshead, 

Tyne & Wear, NE8 3DA 


Tel:- + 44 (0) 191 478 1789 

Fax:- + 44 (0) 191 478 8260 


Galemire Court, Ground Floor 

Crow Park Way, Westlakes Science 

& Technology Park, Moor Row, 

Cumbria, CA24 3HY 


Tel:- + 44 (0) 1946 514400 

Fax:- + 44 (0) 1946 599538 

Doosan Babcock Energy 

Germany GmbH 

Droyssiger Weg 56 

D-06188 Hohenthurm 

Germany 

Tel:- + 49 (0) 3 46 02/33-330 

Fax:- + 49 (0) 3 46 02/33-309 

Doosan Babcock Energy Polska 

Sp. z o.o. 

UI. Podmiejska 7 

44-207 Rybnik 

Poland 

Tel:- + 48 (0) 32 739 1739 

Fax:- + 48 (0) 32 422 1488 

Babcock (Shanghai) Trading 

Limited 

3rd Floor Building H, Central 

Southern China Electric 

Power Design Institute 

668 Minzhu Road, Wuhan, 

Hubei, PRC 430071 

Tel:- + 86 27 6781 9655 

Fax:- + 86 27 6781 6773 

Doosan Babcock Energy Limited, 

Beijing 

Room 2108 Scite Plaza 

22 Jianguomenwai Avenue 

Beijing, PRC 100004 

Tel:- + 86 10 6515 8989 

Fax:- + 86 10 6512 8548 

Doosan Babcock Energy Limited, 

Taiwan 

7F-4 51 Keelung Road Sec 2 

Taipei, Taiwan, R.O.C. 

Tel:- +886-2-2739-0583 

Fax:- +886-2-2739-1430 

Doosan Babcock Energy India 

Private Limited 

5th Floor, Gee Gee Universal 

2 McNichols Road 

Chetpet 

Chennai 600 031 India 

Tel:- + 91 44 28366930 – 35 

Fax:- + 91 44 28366936 

Parent Company 

Doosan Heavy Industries & 

Construction Co., Ltd 

1303-22, Seocho-Dong 

Seocho-Gu 

Seoul 137-920 Korea 

Tel:- +82 2513 6114 

Fax:- +82 2513 6200 

www.doosanheavy.com 

For further information or to obtain additional copies of the 2007 

Annual Report please contact Corporate Communication at our Global 

Headquarters, or send an email to: enquiries@doosanbabcock.com 

Designed and produced by corporateprm, Edinburgh and London. 

www.corporateprm.co.uk

www.doosanbabcock.com

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