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 • 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. 4

Heath Drewett Group finance director

Financial summary Good underlying performance 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 6

Segmental summary Operating Operating Revenue £m profit/(loss) 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 % 7

UK Return to growth, at improving margins 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 8

UK Well funded markets Highways 29% 14% Rail 23% • 3% 29% Highways Defence/security 13% 8% Key beneficiary of Water/environment 10% infrastructure stimulus 10% Aerospace/aviation 8% Education 3% • Rail 23% 13% Other 14% Major programmes underway UK revenue (£m) • Defence/security 1,051.2 Growth sector 983.5 926.5 900.3 859.9 • Water/environment Good demand and diversification of client base. 09 10 11 12 13 9

North America A difficult year 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) % • 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. 10

North America analysis Peter Brown losses impacted overall performance 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 11 Margin (%) 3.4% 4.5% 3.9% 5.0%

Middle East Improved margin in H2 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 • 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. 12

Middle East Our move into planning and infrastructure Revenue 2008/09 Revenue 2012/13 Defence, communications Project & cost & security management Project & cost 4% management 10% 14% Property 30% Major transport 17% Major 8% transport 7% Mixed-use 61% Property infrastructure 17% 5% Mixed-use Planning & infrastructure 27% management Planning & consultancy management consultancy 13

Asia Pacific and Europe Improving margins across the portfolio 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. 14

Energy Continued growth at attractive margins 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. 15

Cash flow Increased cash flow from operating activities 2013 2012 £m 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). 16

Working capital Composition of year on year movement D 31 Mar 2013 31 Mar 2012 £m 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) 17

Pension Falling discount rates • IAS19 deficit net of deferred tax £219m IAS 19 deficit net of (£m) deferred tax at 31 March 2013 (March 2012: £187m) 342 • ETV exercise completed 317 302 • Strong asset performance 249 244 • Next triennial valuation due 219 215 206 as at 31 March 2013. 187 151 Sep Mar Sep Mar Sep Mar Sep Mar Sep Mar 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 18

IAS 19 pension changes To take effect in 2013/14 Estimated 2012/13 2012/13 £m 2013/14 (as reported) (restated) (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). 19

Outlook Positive momentum in key markets • 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. 20

Uwe Krueger Chief executive officer

Delivering the strategy A year of good progress • 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. 22

Our overall objective is value creation Drive margins >8% + Reduce dependence on UK (long term aspiration <25%) + Grow organically and by acquisition Increased shareholder value 23

Profitable growth A focused approach Sector & regional focus areas High growth and high margin Strong relationships Revenue Margin opportunities improvement Foundations for profitable growth 24

High growth and high margin Driving top and bottom line improvement • Sector focus areas 160.0 16 Energy (£m) – Energy 140.0 14 120.0 12 – Aerospace 100.0 10 – Defence and security 80.0 8 • 60.0 6 Regional focus 40.0 4 – Malaysia 20.0 2 – Singapore 0.0 0 – Vietnam 09 10 11 12 13 Revenue Operating profit • Improving balance of the Group – Industrial and infrastructure – Geographic – Leveraging Faithful+Gould’s private sector relationships. 25