project management excellence WS Atkins plc Preliminary results - - PowerPoint PPT Presentation

Celebrating 75 years of design, engineering and project management excellence

WS Atkins plc

Preliminary results for the year ended 31 March 2013

13 June 2013

Uwe Krueger

Chief executive officer

Delivering the strategy

Good results, despite challenges in some markets

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• Underlying profit before tax up 2.9% to £104.5m on flat revenue
• Strong UK performance with revenue up 4.7% and operating profit

up 9.7%

• Progress on portfolio optimisation
• Investment in growth continues with Energy revenue up 18.3%
• North America and Middle East markets remain challenging
• Improved operating cash flow, with net funds of £143.0m
• Full year dividend increased by 4.9% to 32.0p
• Positive momentum continues into 2013/14, with outlook

unchanged and in line with expectations.

Heath Drewett

Group finance director

2013 2012 Revenue £1,705 m £1,711 m nm Operating profit £104.1 m £137.2 m (24.1) % Operating margin 6.1 % 8.0 % (190) bp Underlying operating profit £109.8 m £110.5 m (0.6) % Underlying operating margin 6.4 % 6.5 % (10) bp Underlying profit before tax £104.5 m £101.6 m 2.9 % Underlying fully diluted eps 86.7 p 79.0 p 9.7 % Dividend per share 32.0 p 30.5 p 4.9 % Work in hand 55 % 56 % Average staff numbers 17,648 17,489 0.9 % Closing staff numbers 17,899 17,420 2.7 % Net funds £143.0 m £122.6 m

Financial summary

Good underlying performance

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Segmental summary

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£m Revenue Operating profit/(loss) Operating margin UK 900 56.6 6.3 % North America 390 15.3 3.9 % Middle East 162 11.8 7.3 % Asia Pacific and Europe 165 13.8 8.4 % Energy 152 13.8 9.1 % Total for segments 1,769 111.3 6.3 % Joint ventures included above (64) (1.5) Total before unallocated items 1,705 109.8 6.4 % Unallocated central items

• (5.7)

Total for Group 1,705 104.1 6.1 %

UK

Return to growth, at improving margins

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H1 2013 H2 2013 2013 2012 Revenue

(£m)

420.5 479.8 900.3 859.9 4.7 % Operating profit

(£m)

24.8 31.8 56.6 51.6 9.7 % Operating margin 5.9 % 6.6 % 6.3 % 6.0 % 30 bp Work in hand* 52 % 56 % Average staff numbers 9,129 9,260 (1.4) % Staff numbers 9,374 8,924 5.0 %

• Strong revenue and profit growth
• Operational excellence continuing to focus on improved productivity

and cash performance

• Headcount growth of 5%.

* Excludes highways services

UK

Well funded markets

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• Highways

Key beneficiary of infrastructure stimulus

• Rail

Major programmes underway

• Defence/security

Growth sector

• Water/environment

Good demand and diversification of client base.

1,051.2 983.5 926.5 859.9 900.3 09 10 11 12 13

UK revenue (£m)

29% 23% 13% 10% 8% 3% 14% Highways 29% Rail 23% Defence/security 13% Water/environment 10% Aerospace/aviation 8% Education 3% Other 14%

North America

A difficult year

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• Cost reduction focus in H2 drove improved margin; with staff

numbers stabilising from 3,064 at September 2012

• Peter Brown losses impacted performance
• Work in hand holding up.

H1 2013 H2 2013 2013 2012 Revenue (£m) 195.7 194.0 389.7 421.9 (7.6) % Operating profit (£m) 6.6 8.7 15.3 21.2 (27.8 ) % Operating margin 3.4 % 4.5 % 3.9 % 5.0 % (110) bp Work in hand 61 % 60 % Average staff numbers 3,091 3,314 (6.7) % Staff numbers 3,039 3,255 (6.6) %

North America analysis

Peter Brown losses impacted overall performance

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H1 2013 H2 2013 2013 2012 Revenue (£m) Consultancy 152.5 150.9 303.4 286.4 Peter Brown 13.6 10.8 24.4 80.9 Faithful+Gould 29.6 32.3 61.9 54.6 North America 195.7 194.0 389.7 421.9 Operating profit (£m) Consultancy 8.6 9.5 18.1 18.9

Margin 5.6% 6.3% 6.0% 6.6%

Peter Brown (3.4) (3.1) (6.5) (1.1) F+G 1.4 2.3 3.7 3.4

Margin 4.7% 7.1% 6.0% 6.2%

North America 6.6 8.7 15.3 21.2 Margin (%) 3.4% 4.5% 3.9% 5.0%

Middle East

Improved margin in H2

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• H2 margin improvement despite ongoing contract variation

negotiations

• Overall headcount flat but growth of 85% in key focus market of Qatar
• Positive outlook with increased work in hand.

H1 2013 H2 2013 2013 2012 Revenue (£m) 79.8 82.4 162.2 171.4 (5.4) % Operating profit (£m) 5.1 6.7 11.8 16.8 (29.8 ) % Operating margin 6.4 % 8.1 % 7.3 % 9.8 % (250) bp Work in hand 80 % 74 % Average staff numbers 2,006 1,758 14.1 % Staff numbers 1,979 1,972 nm

Middle East

Our move into planning and infrastructure

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61% 5% 7% 17% 10%

Revenue 2008/09

30% 27% 17% 8% 14% 4%

Revenue 2012/13

Project & cost management Property Planning & management consultancy Mixed-use infrastructure Major transport Project & cost management Property Planning & management consultancy Mixed-use infrastructure Major transport Defence, communications & security

Asia Pacific and Europe

Improving margins across the portfolio

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H1 2013 H2 2013 2013 2012 Revenue

(£m)

78.0 86.8 164.8 163.5 0.8 % Operating profit

(£m)

6.3 7.5 13.8 11.9 16.0 % Operating margin 8.1 % 8.6 % 8.4 % 7.3 % 110 bp Work in hand 45 % 50 % Average staff numbers 2,044 1,993 2.6 % Staff numbers 2,055 2,020 1.7 %

• Ongoing diversification in Hong Kong, beyond strong MTRC relationship
• H2 margin performance driven by Asia Pacific
• Work in hand reflects a strong position in Asia Pacific and a reduced

pipeline in Scandinavia.

Energy

Continued growth at attractive margins

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H1 2013 H2 2013 2013 2012 Revenue

(£m)

72.5 79.4 151.9 128.4 18.3 % Operating profit

(£m)

5.6 8.2 13.8 11.4 21.1 % Operating margin 7.7 % 10.3 % 9.1 % 8.9 % 20 bp Work in hand 33 % 32 % Average staff numbers 1,307 1,095 19.4 % Staff numbers 1,376 1,182 16.4 %

• Strong revenue and profit growth reflecting good opportunities

in our target markets

• Increased partnering to strengthen our offering to clients
• Investment in growth continues.

Cash flow

Increased cash flow from operating activities

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£m 2013 2012 Operating profit 104.1 137.2 Depreciation/amortisation 28.6 26.6 Working capital (27.0) (31.1) Pension (21.0) (26.0) Provisions/other (1.8) (38.1) Cash flow from operating activities 82.9 68.6

• Full year working capital outflow as anticipated, although positive

recovery in H2

• Pension contributions in accordance with agreed 2010 funding plan
• Net funds £143.0m (March 2012: £122.6m).

Working capital

Composition of year on year movement

17

£m 31 Mar 2013 31 Mar 2012 D Trade receivables 290.6 286.3 Amounts recoverable on contracts 106.5 111.4 Fees invoiced in advance (165.9) (173.1) Lockup 231.2 224.6 (6.6) Other receivables/prepayments 52.1 47.6 (4.5) Trade payables (74.3) (87.8) (13.5) Other payables/accruals (246.5) (245.2) 1.3 Inventories/other (3.7) Movement in working capital (27.0)

Pension

Falling discount rates

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• £219m IAS 19 deficit net of

deferred tax at 31 March 2013 (March 2012: £187m)

• ETV exercise completed
• Strong asset performance
• Next triennial valuation due

as at 31 March 2013.

151 215 302 317 342 249 206 187 244 219

Sep 2008 Mar 2009 Sep 2009 Mar 2010 Sep 2010 Mar 2011 Sep 2011 Mar 2012 Sep 2012 Mar 2013

IAS19 deficit net of deferred tax (£m)

IAS 19 pension changes

To take effect in 2013/14

19

£m 2012/13 (as reported) 2012/13 (restated) Estimated 2013/14 (on new basis)

Interest cost

68.1 12.6 c.12.0

Expected return on plan assets

(60.7)

Net finance cost

7.4 12.6

• c. 12.0
• No cash impact
• Changes to take effect in 2013/14 (with comparatives restated).

Outlook

Positive momentum in key markets

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• Good results, delivering on our strategy
• Diversified portfolio with good work in hand
• Outlook for 2013/14 is for continued underlying growth

and performance in line with expectations.

Uwe Krueger

Chief executive officer

Delivering the strategy

A year of good progress

22

• Operational excellence supporting UK margin improvement
• Progress on portfolio optimisation
• Continued growth in Energy and other sector focus areas
• Strong cash generation across the Group

Challenges

• Close out of Peter Brown legacy contracts
• Non-transportation consultancy business in North America
• Middle East contract variation negotiations.

Our overall objective is value creation

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Drive margins >8%

+

Reduce dependence on UK (long term aspiration <25%)

+

Grow organically and by acquisition Increased shareholder value

Profitable growth

A focused approach

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Strong relationships High growth and high margin Margin improvement Revenue

• pportunities

Foundations for profitable growth Sector & regional focus areas

High growth and high margin

Driving top and bottom line improvement

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• Sector focus areas

– Energy – Aerospace – Defence and security

• Regional focus

– Malaysia – Singapore – Vietnam

• Improving balance of the Group

– Industrial and infrastructure – Geographic – Leveraging Faithful+Gould’s private sector relationships.

2 4 6 8 10 12 14 16 0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0 09 10 11 12 13 Revenue Operating profit

Energy (£m)

Revenue opportunities

Driving the top line

26

• Growth areas

– Global rail markets – Aviation – Nuclear – Middle East infrastructure

Margin improvement

Driving the bottom line

27

• Operational excellence

– Reduced business complexity and costs – Continued drive on utilisation, improved cash processes and conversion – Increased use of our global design centres in India – Roll out in Middle East and North America

• Portfolio optimisation
• Growth focused on higher margin areas

– Ongoing investment.

Strong relationships

Key to our business

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• Our clients

– Frameworks (eg oil and gas) – Tier 1 strategic supplier positioning – Alliances (eg Thames Water AMP, NWR Staffordshire Alliance)

• Our partners

– Joint ventures (eg Assystem, AREVA, ITER) – Teaming

• Our employees

– Training – Recognition in Sunday Times awards – Group headcount turnover rate stable at 10.6% – Graduate intake expected to increase.

Emerging opportunities

Future-proofing cities

29 Qatar 2012 Olympic Park Baku White City Karamay, China

Summary

Good results, despite challenges in some markets

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• Our objective is to drive shareholder value and we will

accelerate our strategy through operational excellence, portfolio optimisation and sector/regional focus

• Driving top and bottom line improvement
• Positive momentum continues into 2013/14, with outlook

unchanged and in line with expectations.

WS Atkins plc

Preliminary results for the year ended 31 March 2013

13 June 2013

Appendices

Profit bridge

Underlying profit before tax

33 135.5 101.6 104.5 103.3

30.9 4.2 7.2 10.4 9.3 4.0 4.3 8.3 3.8 10.0

2011/12 reported Pension credit PBSJ amortisation Profit on disposal Underlying 2011/12 Peter Brown and ME performance Underlying UK, Energy, Asia Pacific JV/interest &

• ther

Underlying 2012/13 Pension credit Profit on disposal Transaction costs on highway services disposal PBSJ amortisation and impairment 2012/13 reported

Working capital movement

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£m 2013 2012 Inc/(Dec) Lock-up UK 93.0 88.9 4.1 North America 80.5 80.4 0.1 Middle East 76.7 86.2 (9.5) Other (net) (19.0) (30.9) 11.9 Total 231.2 224.6 6.6

Regional lock-up

Net funds reconciliation

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£m

Cash Loan notes < 1yr Loan notes > 1yr Financial assets at FV Available for Sale Borrowings < 1yr Borrowings > 1yr Leases < 1yr Leases > 1yr Net funds

Operating profit 104.1 104.1 Depreciation/amortisation 28.6 28.6 Working capital (27.0) (27.0) Pension (21.0) (21.0) Provisions / other (1.8) (1.8) Cashflow from operating activities 82.9 82.9 Net interest (0.6) (0.6) Tax (7.1) (7.1) Joint ventures

• Net capital expenditure

(23.9) (23.9) 51.3 51.3 Acquisitions / disposals 13.0 13.0 Dividends (30.0) (30.0) Net cash flow 34.3 34.3 Non-operating items Foreign Exchange 3.5 (3.3) (1.8) (8.6)

EBT share purchase

(7.0) Financing - I

Disposal of investment

• (6.9)

Investment growth

• 1.3

Sukuk gain on disposal

• 0.8

(5.3)

Acquired

• Transfers
• (1.0)

1.0

New leases

• (0.5)

Financing - II

Investments

(1.8) 1.8

Financial assets

7.3 (0.4) (6.9)

• Borrowings - short term

(47.5) 47.5

Borrowings - long term

47.5 (47.5)

Leases : principal

(1.8) 1.8 Movement 34.5

• (5.1)

0.9 (6.1) 44.2 (49.3) 0.3 1.0 20.4 Opening balance 167.0

• 25.1

35.0 6.1 (104.0)

• (1.7)

(4.9) 122.6 Closing balance 201.5

• 20.0

35.9

• (59.8)

(49.3) (1.4) (3.9) 143.0

Asia Pacific and Europe region

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H1 2013 H2 2013 2013 Revenue (£m) Asia Pacific 41.2 46.8 88.0 Europe 36.8 40.0 76.8 Asia Pacific and Europe 78.0 86.8 164.8 Operating profit (£m) Asia Pacific 2.9 5.2 8.1 Europe 3.4 2.3 5.7 Asia Pacific and Europe 6.3 7.5 13.8 Staff numbers (closing) 2012 2013 Asia Pacific 1,234 1,295 Europe 786 760

Disclaimer

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The information in this presentation pack, which does not purport to be comprehensive, has been provided by Atkins and has not been independently verified. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by Atkins as to or in relation to the accuracy or completeness of this presentation pack or any other written or oral information made available as part

• f the presentation and any such liability is expressly disclaimed. Further, whilst Atkins may

subsequently update the information made available in this presentation, we expressly disclaim any

• bligation to do so.

The presentation contains indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the Group’s results, strategy and prospects. Forward-looking statements involve risks, uncertainties and

• assumptions. They relate to events and/or depend on circumstances in the future which could cause

actual results and outcomes to differ materially from those currently expected. No obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or otherwise.