WS Atkins plc Half year results for the six months ended 30 - PDF document

Celebrating 75 years of design, engineering and project management excellence WS Atkins plc Half year results for the six months ended 30 September 2013 14 November 2013

Uwe Krueger Chief executive officer Delivering the strategy Good results • Underlying profit before tax up 8.2% to £44.7m, on revenue 12.2% ahead • Strong UK performance with revenue up 16%, good growth in focus areas of Energy and Asia Pacific • Strategic progress with the sale of UK highways services and Peter Brown construction management disposal • Confluence project management business acquired on 4 October 2013 • Improved operating cash performance with net funds at September 2013 of £136.1m • Financial position remains strong, with new five year revolving credit facility secured • Interim dividend increased by 5% • Full year outlook slightly ahead of expectations. 4

Heath Drewett Group finance director Financial summary 30 Sep 2013 30 Sep 2012 Revenue £915.4 m £815.7 m 12.2 % Operating profit £49.7 m £44.8 m 10.9 % Operating margin 5.4 % 5.5 % (10) bp Underlying operating profit £50.7 m £45.9 m 10.5 % (10) bp Underlying operating margin 5.5 % 5.6 % Underlying profit before tax £44.7 m £41.3 m 8.2 % Underlying fully diluted eps 35.9 p 32.9 p 9.1 % Dividend per share 10.5 p 10.0 p 5.0 % Work in hand 87.7 % 88.3 % Average staff numbers 17,715 17,482 1.3 % Net funds £136.1 m £83.7 m 30 Sep 2013 31 Mar 2013 Closing staff numbers 17,407 17,899 Note: numbers above include UK highways services staff 169 1,128 6

Segmental summary Operating Operating £m Revenue profit margin UK and Europe 525.4 27.7 5.3 % North America 205.4 8.4 4.1 % Middle East 82.6 4.2 5.1 % Asia Pacific 49.2 3.4 6.9 % Energy 83.4 6.4 7.7 % Total for segments 946.0 50.1 5.3 % Joint ventures included above (30.6) 0.6 Total before unallocated items 915.4 50.7 5.5 % Unallocated central items - (1.0) Total for Group 915.4 49.7 5.4 % 7 UK and Europe New segmental reporting 30 Sep 2013 30 Sep 2012 Revenue (£m) 525.4 457.3 14.9 % Operating profit (£m) 27.7 28.2 (1.8) % Operating margin 5.3 % 6.2 % (90) bp Work in hand 87 % 89 % Average staff numbers 9,924 9,791 1.4 % 30 Sep 2013 31 Mar 2013 Staff numbers 9,606 10,134 (5.2) % 8

UK performance Strong top line growth 30 Sep 2013 30 Sep 2012 Revenue (£m) 488.4 420.5 16.1 % Operating profit (£m) 26.2 24.8 5.6 % Operating margin 5.4 % 5.9 % (50) bp Work in hand 88 % 90 % Average staff numbers 9,184 9,002 2.0 % 30 Sep 2013 31 Mar 2013 Staff numbers 8,878 9,374 (5.3) % Note: above includes highways services staff 169 1,128 • Revenue growth across all sectors, particularly strong in rail and highways • Operating margin of 6.0%, excluding highways services business • Underlying headcount growth of 5.6% since 31 March. 9 Europe Steady markets in Scandinavia 30 Sep 2013 30 Sep 2012 Revenue (£m) 37.0 36.8 nm Operating profit (£m) 1.5 3.4 (56) % Operating margin 4.1 % 9.2 % (510) bp Work in hand 78 % 80 % Average staff numbers 740 790 (6.3) % 30 Sep 2013 31 Mar 2013 Staff numbers 728 760 (4.2) % • Revenue flat despite headcount reductions, predominantly in Denmark • Tough comparatives due to provision release in H1 2012/13 • Work in hand position stable, underpinning delivery of second half numbers. 10

North America Improved performance 30 Sep 2013 30 Sep 2012 Revenue (£m) 205.4 195.7 5.0 % Operating profit (£m) 8.4 6.6 27.3 % Operating margin 4.1 % 3.4 % 70 bp Work in hand 91 % 89 % Average staff numbers 3,016 3,127 (3.5) % 30 Sep 2013 31 Mar 2013 Closing staff numbers 2,994 3,039 (1.5) % • Overall market remains stable • Headcount reduction driven by Peter Brown disposal – completed in August • Roll out of operational excellence will focus on reducing overhead and complexity in the business, driving margin improvement over time. 11 North America analysis Peter Brown losses impacted overall performance 30 Sep 30 Sep 31 Mar 31 Mar 2013 2012 2013 2012 Revenue (£m) Consultancy 164.1 152.5 303.4 286.4 Peter Brown 6.9 13.6 24.4 80.9 Faithful+Gould 34.4 29.6 61.9 54.6 North America 205.4 195.7 389.7 421.9 Operating profit (£m) Consultancy 9.4 8.6 18.1 18.9 Margin 5.7 % 5.6 % 6.0 % 6.6 % Peter Brown (3.3) (3.4) (6.5) (1.1) F+G 2.3 1.4 3.7 3.4 Margin 6.7 % 4.7 % 6.0 % 6.2 % North America 8.4 6.6 15.3 21.2 12 Margin (%) 4.1 % 3.4 % 3.9 % 5.0 %

Middle East Good cash collection in a difficult first half 30 Sep 2013 30 Sep 2012 Revenue (£m) 82.6 79.8 3.5 % Operating profit (£m) 4.2 5.1 (17.6) % Operating margin 5.1 % 6.4 % (130) bp Work in hand 90 % 89 % Average staff numbers 1,979 2,004 (1.2) % 30 Sep 2013 31 Mar 2013 Staff numbers 1,971 1,979 nm • First half impacted by ongoing project delays and restructuring in Kuwait and Bahrain • Focus on infrastructure, the re-emerging property market in United Arab Emirates (UAE) and metro/rail opportunities in Qatar, UAE and Kingdom of Saudi Arabia • Key metro wins underpin second half outlook. 13 Asia Pacific Strong growth 30 Sep 2013 30 Sep 2012 Revenue (£m) 49.2 41.2 19.4 % Operating profit (£m) 3.4 2.9 17.2 % Operating margin 6.9 % 7.0 % (10) bp Work in hand 93 % 91 % Average staff numbers 1,317 1,241 6.1 % 30 Sep 2013 31 Mar 2013 Closing staff numbers 1,341 1,295 3.6 % • Revenue increase of almost 20% reflects successful diversification strategy • Confluence acquisition complements our existing project management business in the region • Investment in expanding footprint in SE Asia will support further growth over time. 14

Energy Significant bidding activity 30 Sep 2013 30 Sep 2012 Revenue (£m) 83.4 72.5 15.0 % Operating profit (£m) 6.4 5.6 14.3 % Operating margin 7.7 % 7.7 % nm Work in hand 78 % 81 % Average staff numbers 1,401 1,249 12.2 % 30 Sep 2013 31 Mar 2013 Closing staff numbers 1,420 1,376 3.2 % • Strong revenue and profit growth in the period • Ongoing investment in partnerships and larger scale projects • Outlook remains positive given buoyant market conditions. 15 Cash flow Increased cash flow from operating activities 30 Sep 2013 30 Sep 2012 £m Operating profit 49.7 44.8 Depreciation/amortisation 11.4 10.0 Working capital (33.5) (54.9) Pension (16.0) (11.0) Provisions/other (2.0) (1.5) Cash flow from operating activities 9.6 (12.6) • Continued focus on cash across the Group • Improved working capital performance, supported by good collections in the Middle East • Net funds significantly ahead year on year at £136.1m (Sep 2012: £83.7m). 16

Working capital Composition of first half movement D 30 Sep 2013 31 Mar 2013 £m Trade receivables 283.4 290.6 Amounts recoverable on contracts 109.5 106.5 Fees invoiced in advance (157.1) (165.9) Lockup 235.8 231.2 (4.6) Other receivables/prepayments 59.3 52.1 (7.2) Trade payables (59.3) (74.3) (15.0) Other payables/accruals (239.9) (246.5) (6.6) Inventories/other (0.1) Movement in working capital (33.5) 17 Financial strength Positive cash performance • Net funds significantly ahead year on year at £136.1m (Sep 2012: £83.7m) • New five year revolving credit facility • Enlarged facility of £200m • Four existing lenders (BAML, Barclays, HSBC and RBS) • Three new banks (National Bank of Abu Dhabi, Santander and United Overseas Bank) • Diverse, wider banking group more closely reflects our international footprint • Matures in October 2018. 18

Pension Impacted by lower asset returns • £263m IAS 19 deficit net of IAS19 deficit net of deferred tax (£m) deferred tax at 30 Sept 2013 (March 2013: £217m) 342 • Weak asset performance 317 302 • Triennial valuation, based 263 249 on 31 March 2013 position, 242 217 in progress. 206 187 Sep Mar Sep Mar Sep Mar Sep Mar Sep * Restated for IAS19 revision 2009 2010 2010 2011 2011 2012 2012* 2013* 2013 19 Outlook Continued progress across all divisions • We continue to deliver on our strategy • Diversified portfolio with good work in hand • Outlook for the remainder of 2013/14 is for underlying growth and performance slightly ahead of expectations. 20

Uwe Krueger Chief executive officer Delivering the strategy A half year of further progress Successes • Roll out of operational excellence into North America and Middle East • Successful sale of UK highways services and disposal of Peter Brown • Confluence acquisition adds to our project and cost management capability in Asia Pacific and Middle East • Good growth in Energy, Aerospace, Defence/Security and Asia Pacific • Strong cash performance Challenges • Non-transportation consultancy business in North America • Middle East project delays and resource management. 22