Description Page - Doosan Power Systems

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
DOOSAN BABCOCK ENERGY
Annual Report and Financial Statements 2007
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
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