WS Atkins plc Preliminary results for the year ended 31 March 2017 15 June 2017 1
Uwe Krueger Chief executive officer 2
Delivering the strategy A year of strong financial and strategic progress 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. 3
Heath Drewett Group finance director 4
Financial summary 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 5 * No full year dividend given recommended SNC-Lavalin offer
UK and Europe Strong performance 31 March 2017 31 March 2016 911.1 943.6 (3.4)% Revenue (£m) 90.4 73.8 22.5% Operating profit (£m) 9.9% 7.8% 210bp Operating margin 9,305 9,707 (4.1)% Average staff numbers 9,246 9,591 (3.6)% Closing staff numbers • 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 opportunities. 6
North America Significant growth 31 March 2017 31 March 2016 480.5 362.6 32.5% Revenue (£m) 33.5 20.4 64.2% Operating profit (£m) 7.0% 5.6% 140bp Operating margin 2,828 2,754 2.7% Average staff numbers 2,901 2,747 5.6% Closing staff numbers • 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. 7
Middle East and Africa In line with expectations 31 March 2017 31 March 2016 232.2 248.3 (6.5)% Revenue (£m) 21.8 29.5 (26.1)% Operating profit (£m) 9.4% 11.9% (250)bp Operating margin 2,453 2,580 (4.9)% Average staff numbers 2,469 2,459 0.4% Closing staff numbers • 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. 8
Asia Pacific Encouraging progress in southeast Asia 31 March 2017 31 March 2016 118.2 106.1 11.4% Revenue (£m) 9.3 8.5 9.4% Operating profit (£m) 7.9 % 8.0 % (10)bp Operating margin 1,289 1,448 (11.0)% Average staff numbers 1,275 1,354 (5.8)% Closing staff numbers • 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. 9
Energy A transformational year 31 March 2017 31 March 2016 327.0 201.3 62.4% Revenue (£m) 30.3 16.7 81.4% Operating profit (£m) 9.3% 8.3% 100bp Operating margin 2,346 1,840 27.5% Average staff numbers 2,276 1,806 26.0% Closing staff numbers • 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. 10
Cashflow Continuing focus on working capital (£m) 31 March 2017 31 March 2016 171.5 148.2 Underlying operating profit 23.2 23.8 Depreciation/amortisation (57.6) (23.6) Working capital (20.7) (19.8) Net capital expenditure 2.6 9.9 Provisions/other 119.0 138.5 Underlying operating cash flow 69% 93% Cash conversion • 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). 11
Pension Continued steady reduction in the deficit IAS19 deficit net of deferred tax • £194m IAS 19 deficit net of deferred tax (£m) at 31 March 2017 (March 2016: £216m) 258 • Discount rate down 100 basis points to 238 2.5% 216 • Deficit repayment of £33.6m in 2016/17, 194 escalating at 2.5% per annum • Triennial valuation at March 2016 agreed, with the associated repayment plan unchanged from the 2013 valuation. Mar 2014 Mar 2015 Mar 2016 Mar 2017 12
Summary 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. 13
Uwe Krueger Chief executive officer 14
Strategic progress 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. 2,400 Underlying operating margin (%) Revenue growth 2,000 8.2 8.5 8.0 8.0 7.6 1,600 7.5 7.0 6.7 £m 1,200 6.5 6.4 6.5 6.0 800 5.5 400 5.0 4.5 0 4.0 2012 2013 2014 2015 2016 2017 2012 2013 2014 2015 2016 2017 Core revenue Acquisitions Disposals 15 15
Our track record 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. 16
Growth through differentiation 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. 17
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