WS Atkins plc Preliminary results for the year ended 31 March 2017 - - PowerPoint PPT Presentation

WS Atkins plc

Preliminary results for the year ended 31 March 2017

15 June 2017

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Uwe Krueger

Chief executive officer

Delivering the strategy

Financial highlights

• Revenue up 11.8% to £2.1bn, up 4.3% on a constant currency basis
• Underlying operating profit up 15.7%, 8.2% margin
• Underlying profit before tax up 18.4% to £164.6m
• Underlying diluted EPS up 15.8%, no full year dividend given recommended SNC-Lavalin offer
• Strong balance sheet with net debt of £6.1m at 31 March 2017

Operational highlights

• Strong UK and Europe performance, 9.9% operating margin
• Significant growth in North America supported by major projects
• Performance in Middle East in line with expectations, in challenging markets
• Some encouraging progress in southeast Asia
• Improving performance in Energy during the year - PP&T nuclear acquisition completed in April 2016
• Investment phase for new growth initiatives, Atkins Acuity and Digital.

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A year of strong financial and strategic progress

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Heath Drewett

Group finance director

Financial summary

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2017 2016 Revenue £2,082m £1,862m 11.8% Operating profit £154.1m £143.4m 7.5% Operating margin 7.4% 7.7% (30)bp Underlying operating profit £171.5m £148.2m 15.7% Underlying operating margin 8.2% 8.0% 20bp Underlying profit before tax £164.6m £139.0m 18.4% Underlying diluted EPS 124.2p 107.3p 15.8% Dividend per share 12.5p* 39.5p Work in hand 43% 44% Average staff numbers 18,352 18,416 (0.3)% Closing staff numbers 18,308 18,052 1.4% Net (debt)/funds £(6.1 )m £191.7 m

* No full year dividend given recommended SNC-Lavalin offer

UK and Europe

• Strong performance reflects a good position in a well-funded infrastructure market

across rail, highways, water, education and airports

• Operating performance enhanced by improved project delivery and reorganisation to

better serve end markets

• UK Government infrastructure spend continues to provide an attractive pipeline of
• pportunities.

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31 March 2017 31 March 2016 Revenue (£m)

911.1 943.6 (3.4)%

Operating profit (£m)

90.4 73.8 22.5%

Operating margin

9.9% 7.8% 210bp

Average staff numbers

9,305 9,707 (4.1)%

Closing staff numbers

9,246 9,591 (3.6)%

Strong performance

North America

• Constant currency revenue up 14% and operating profit up 44%
• Major projects: NEON (for Nevada Department of Transportation) and Purple Line

(light rail project in Maryland) have delivered well during the year and contributed to significant growth

• We are encouraged by the proposed level of infrastructure spend and focused on

securing larger scale opportunities, as current major projects demobilise.

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31 March 2017 31 March 2016 Revenue (£m)

480.5 362.6 32.5%

Operating profit (£m)

33.5 20.4 64.2%

Operating margin

7.0% 5.6% 140bp

Average staff numbers

2,828 2,754 2.7%

Closing staff numbers

2,901 2,747 5.6%

Significant growth

Middle East and Africa

• Revenue and operating profit down against a strong prior year comparator

benefiting from a number of major projects in final delivery

• Challenging market conditions remain, particularly in our transportation and

infrastructure businesses

• Geographic expansion supported by acquisition of Howard Humphreys, a

multidisciplinary consultancy in East Africa with a strong track record in transportation, water and property.

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31 March 2017 31 March 2016 Revenue (£m)

232.2 248.3 (6.5)%

Operating profit (£m)

21.8 29.5 (26.1)%

Operating margin

9.4% 11.9% (250)bp

Average staff numbers

2,453 2,580 (4.9)%

Closing staff numbers

2,469 2,459 0.4%

In line with expectations

Asia Pacific

• Constant currency revenue decline of 1.4% reflects some delays in workload in

Hong Kong and challenging market conditions in mainland China

• Good progress made in southeast Asia with further work secured in Singapore and

architectural wins in Vietnam

• Immediate outlook remains stable, and the region continues to offer attractive,

medium term growth.

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31 March 2017 31 March 2016 Revenue (£m)

118.2 106.1 11.4%

Operating profit (£m)

9.3 8.5 9.4%

Operating margin

7.9% 8.0% (10)bp

Average staff numbers

1,289 1,448 (11.0)%

Closing staff numbers

1,275 1,354 (5.8)%

Encouraging progress in southeast Asia

Energy

• Strong revenue growth supported by PP&T acquisition and currency tailwinds
• Encouraging early signs of stabilisation in oil and gas markets in the second half after

a first half impacted by continued workload shortfalls and restructuring

• Second half product sales to Asia have made good progress
• PP&T acquisition significantly enhances the scale and capability of our nuclear

business, which now represents c70% of the segment.

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31 March 2017 31 March 2016 Revenue (£m)

327.0 201.3 62.4%

Operating profit (£m)

30.3 16.7 81.4%

Operating margin

9.3% 8.3% 100bp

Average staff numbers

2,346 1,840 27.5%

Closing staff numbers

2,276 1,806 26.0%

A transformational year

Cashflow

• Working capital outflow reflects the timing of major projects in both our Energy and UK

businesses

• Provisions/other includes share based payment charge and FX gains/losses
• Minority PFI investment in M25 sold to Edge Orbital Holdings 2 Limited for a cash

consideration of £66.3m

• Closing net debt of £6.1m (March 2016: Net funds of £191.7m).

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Continuing focus on working capital

(£m) 31 March 2017 31 March 2016 Underlying operating profit

171.5 148.2

Depreciation/amortisation

23.2 23.8

Working capital

(57.6) (23.6)

Net capital expenditure

(20.7) (19.8)

Provisions/other

2.6 9.9

Underlying operating cash flow

119.0 138.5

Cash conversion

69% 93%

Pension

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Continued steady reduction in the deficit

• £194m IAS 19 deficit net of deferred tax

at 31 March 2017 (March 2016: £216m)

• Discount rate down 100 basis points to

2.5%

• Deficit repayment of £33.6m in 2016/17,

escalating at 2.5% per annum

• Triennial valuation at March 2016 agreed,

with the associated repayment plan unchanged from the 2013 valuation.

258 238 216 194

Mar 2014 Mar 2015 Mar 2016 Mar 2017

IAS19 deficit net of deferred tax (£m)

Summary

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Delivering the strategy

• A year of strong financial and strategic progress
• Our core markets of UK and Europe and North America have performed well
• PP&T nuclear acquisition fully integrated, enhancing our nuclear capabilities
• Established East Africa presence through Howard Humphreys acquisition
• New growth initiatives offer key differentiators.

Uwe Krueger

Chief executive officer

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Strategic progress

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Financial delivery

• Three pillar strategy delivered: operational excellence, portfolio optimisation and

sector/regional focus

• Operational excellence focused on margin improvement and cash generation
• TSR of 144% over five year period to March 2017.

6.5 6.4 6.7 7.6 8.0 8.2

4.0 4.5 5.0 5.5 6.0 6.5 7.0 7.5 8.0 8.5

2012 2013 2014 2015 2016 2017

Underlying operating margin (%)

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400 800 1,200 1,600 2,000 2,400 2012 2013 2014 2015 2016 2017 £m Core revenue Acquisitions Disposals

Revenue growth

Our track record

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What we have delivered

• UK and Europe operating margin has improved from 5.7% (FY12) to 9.9% through

client focus, organisational change and portfolio optimisation

• Performance of North America has been transformed through organisational

change, a focus on larger projects and portfolio optimisation

• Middle East has grown in its focus geographies with enhanced metro design

capability in region

• Asia Pacific has diversified its geographic and sector coverage
• Energy has delivered attractive growth through a differentiated offering and targeted

acquisitions.

Growth through differentiation

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What we have delivered

• Atkins is becoming a driver of digital innovation in the engineering industry
• We are increasingly well positioned in attractive growth markets across the

nuclear life cycle

• Our new Acuity business offers a unique combination of consultancy and

engineering/technical expertise

• India is our centre for technical and digital excellence.

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 audited or otherwise independently verified. While this information has been prepared in good faith, no representation

• r 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 of 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 obligation to do so. The presentation contains indications of likely future developments and other statements which are, or may be deemed to be, “forward-looking statements”. Forward looking statements are prospective in nature and are not based on historical or current facts, but rather on current expectations and projections of the management of Atkins about future events, and are therefore 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 the future results expressed or implied by the forward-looking statements. You are cautioned not to place any reliance on these forward looking statements. No obligation is assumed to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Nothing in this presentation should be construed as a profit

• forecast. All persons, wherever located, should consult any additional disclosures that Atkins may make in any regulatory

announcements or documents which it publishes. All persons, wherever located, should take note of these disclosures. The information in this presentation pack does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any shares in Atkins. Past performance cannot be relied upon as a guide to future performance.