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					Interim Results 2000



31 August 2000
Interim Results 2000



Sydney Gillibrand, CBE
Chairman, AMEC plc
Interim Results 2000



Stuart Siddall
Finance Director, AMEC plc
Overall Performance
£ million                                              June 2000           June 1999   Percentage
                                                                                        change

Total turnover*                                         1,690               1,436       +18%
Operating profit*
    Continuing operations                                 30.7               26.9       +14%
    Acquisitions                                            4.4                    -
Total operating profit*                                   35.1               26.9       +30%
Net interest*                                             (2.7)                  0.5
Pre-tax profit*                                           32.4               27.4       +18%




 * Before discontinued operations, goodwill amortisation and exceptional items
Taxation
                                                      June 2000          June 1999

Half year charge*                                      27.8%              27.4%




• Benefit from tax free Fairclough dividend
• Focus on mitigating impact of higher Canadian tax rates
• Expect underlying rate to approximate UK tax rate


* Before discontinued operations, goodwill amortisation and exceptional items
Earnings Per Share
Diluted                                                            Percentage
                                           June 2000   June 1999    change



Adjusted                                     8.2p        6.9p        +19%
before discontinued operations, goodwill
amortisation and exceptional items


Net                                          7.1p        5.9p        +20%
after discontinued operations, goodwill
amortisation and exceptional items
Ordinary Dividend Per Share                                                            Percentage
                                                      June 2000         June 1999       change




Interim                                                  2.8p              2.5p            +12%
Cover*                                                   2.9x              2.8x




* On a diluted basis and before discontinued operations, goodwill amortisation and exceptional items
Acquisitions

• AGRA (AMEC Inc.) plus two small acquisitions
• AMEC Inc. accretive in first two months (excluding goodwill amortisation)
• Cost of acquisitions £232 million (plus AMEC Inc. debt of £67 million)
• Goodwill amortisation £1.8 million in first half
AGRA Goodwill
£ million

Goodwill per circular*                                                             102
Deferred consideration and other costs
associated with AGRA’s acquisitions                                                 19
                                                                                   121
Fair value adjustments
  Revaluations                                                       13
  Alignment of accounting policies                                   12
  Contract related provisions                                        13             38
                                                                                   159

 * Based on AGRA’s balance sheet at 31 January 2000 and before fair value adjustments
Finance Income / (Charges)
£ million                                              June 2000     June 1999




AMEC                                                       0.2           3.5*
Joint ventures                                            (2.9)         (2.0)

                                                          (2.7)          1.5*


• AMEC Inc. impact circa £4 million
• Increased Fairclough dividend up to £3.4 million
• Further costs as PPP projects become operational

 * Including £1 million interest income from discontinued business
Net Debt
£ million
Cash at 31 December 1999                                        105
Acquisitions                                      (232)
Debt assumed                                       (67)
Preference share buyback                           (14)        (313)
Working capital and dividends etc                               (44)
Net debt at 30 June 2000                                       (252)
Fairclough loan note - due first quarter 2001                    95
Adjusted net debt                                              (157)


• First half absorption of working capital in line with previous years
• Release cash from sale of non-core assets
• Reduce working capital in AMEC Inc.
Net Assets
Movement by sector
£ million                                June 2000   June 1999


Capital Projects                           (33)        (42)
Services                                     37          27
Investments                                  85          95
AMEC Inc. (AGRA)                            147            -
Operating capital employed                  236          80
Goodwill                                    168            -
(Net debt) / cash
including Fairclough loan note            (157)         160
Unallocated net assets / (liabilities)         6       (12)
Net assets                                  253         228
Administrative Expenses
Before goodwill amortisation
£ million                           June 2000   June 1999

Continuing                           67.0         66.9
Acquisitions                         16.8           -
Discontinued                           -           3.0
                                     83.8         69.9

 • Cost control in continuing businesses
 • Planned investment in e-commerce spend and further fiscal
     restructuring costs
 • AMEC Inc. overheads at 15 per cent of sales represents norm
     for engineering services
Segmental Analysis
Operating Profit
£ million


   25
              June 1999        June 2000

   20

   15

   10

    5

    0
            Capital Projects          Services   Investments
 Capital Projects
 Turnover
             June 2000                                     June 1999
          Total £1,116 million                          Total £1,022 million

              54
                   40                                           37
                        186                              156         153
        143

                              160                                          181
                                                       228
         268
                            172                                         127
                   93                                          140




Civil engineering             Morse Diesel
Construction                  SPIE
Mechanical and electrical     AMEC Inc. (2.3 months)
Process and energy            Other
Capital Projects
£ million                          June 2000    June 1999




Turnover                            1,116        1,022
Operating profit*                    11.9           7.3
Margin                              1.1%          0.7%



• Benefit from AMEC Inc.
• Volume excluding AMEC Inc. little changed
• Underlying improvement elsewhere - principally Germany


 * Before goodwill amortisation
Services
Turnover
     June 2000                             June 1999
  Total £532 million                    Total £422 million

         55
                  151                              125
                                        156
  176
                  100                              82
           50                              59




  Oil and gas services
  Utilities and facilities management
  Rail maintenance
  Spie Trindel
  AMEC Inc. (2.3 months)
Services
£ million                             June 2000    June 1999




Turnover                                532           422
Operating profit*                      21.4          18.2
Margin                                4.0%          4.3%


•   Benefit from AMEC Inc.
•   Reduced activity and margins on rail maintenance contracts
•   Good performance in utilities and facilities
•   Increased activity at Spie Trindel
•   Marked improvement in oil and gas services

 * Before goodwill amortisation
SPIE S.A.
(41.6% share)
£ million                              June 2000     June 1999




Turnover                                  319           313
Operating profit                           7.9           6.5
Margin                                   2.5%         2.1%



• Excellent underlying growth
• Expect to invest up to £25 million in rights issue to accelerate
  SPIE’s investment plans and increase our stake by up to 5 per cent
• Option to buy balance of SPIE in 2002
Investments
£ million                            June 2000   June 1999




Turnover                                 77          39
Operating profit*                        4.3        3.6




• Property development generating first class returns
• Further positive contribution from operational PPP projects
• Continued investment in PPP with ongoing net bidding costs
    of circa £5 million per annum


 * Before goodwill amortisation
PPP Projects Secured to Date
£ million               Engineering/       AMEC share
                      Construction Value
Roads
    A1(M)                    176                44
    A417/419                 116                29
    A13                      190                48
Hospitals
    Carlisle                  60                60
    UCLH                     226               113
Accommodation
    Longbenton               160               160
International
    Israel highway           540                60

                          1,468               514
PPP Dynamics

•   Construction benefits from work with better quality margins
•   Opportunity to expand facilities business
•   High barriers to entry
•   Committed investment of £55 million
•   Quality profits streams from investments
•   Real equity returns should exceed our earlier expectations
•   Ability to release cash from operational assets
•   Market will continue to grow
Geographical Analysis
£ million                                 June 2000                      June 1999
                                     Turnover* Operating             Turnover* Operating
                                                 profit*                         profit*

United Kingdom                         907          31.8              833        37.3
Rest of Europe                         304           3.1              270         0.1
America                                371           1.7              243        (4.4)
Rest of the World                      108           1.0               90        (3.9)

                                    1,690           37.6            1,436        29.1

Corporate costs                                     (2.5)                        (2.2)

                                                    35.1                         26.9      +30%



 * Before discontinued operations, goodwill amortisation and exceptional items
Order Book
                                                 Percentage change
                                 June 2000      from 1 January 2000



AMEC (UK and Asia Pacific)      £ 2.3 billion       + 5%
AMEC (North America)
- AMEC Inc.                   C$ 1.2 billion        + 9%
- Morse Diesel               US$ 1.4 billion         -16%

SPIE (100%)                    1.9 billion        +34%



                    Total orders £5 billion
Interim Results 2000



Peter Mason
Chief Executive, AMEC plc
Strategic Plan

•   Expansion in services, engineering and technology
•   Selective capital projects work
•   Providing complete solutions to customers on a global basis
•   Sectors where AMEC has in-depth knowledge and experience




      Improved returns through
      recurring income.. greater quality.. less risk
Agenda

•   AGRA - integration and value
•   Excellent results from SPIE
•   Capital Projects, Services and Investments
•   Outlook
Americas - AMEC Inc.
Taking advantage of synergies


Focus on
• Integrating cultures and processes
• Rationalising structures and costs
• Top-line growth
• Developing technology resources
Culture and Process

•   AGRA Inc. now AMEC Inc.
•   Common platform to serve global base of customers
•   Sharing knowledge across AMEC
•   Sector specific global teams
    – Energy
    – PharmaChem
Structural Issues

• Birwelco joins UK Capital Projects sector
• New top management at Morse Diesel
   – Opportunities in broader range of sectors
   – Reduced sales in traditional commercial work
   – Margin improvement expected over time
• Sale of non-strategic assets
• Potential for new areas of business
Top Line Growth

• Strength in engineering services, technology and client
  relationships
• Recurring engineering and service revenues
• Build on ‘evergreen’ relationships; developing globally
• AGRA will follow SPIE in delivering top line growth
Technology

• AMEC Technologies division created
• Project management system and web-enabling
  AMEC’s internal systems
• E-commerce initiatives
• Technology a leading differentiator of AMEC
• Portfolio of technology businesses
   – Geospatial data management
   – Operations analysis
   – Process simulation
   – Computer based training
AMEC Inc.

•   Blending cultures
•   Structural rationalisation
•   Top line synergies
•   Technology development
Early Wins

• £5 million savings on target
• Increasing margins
• Top line opportunities
    – Global engineering services for SmithKline Beecham
    – Project webs for Shell, Philippines
    – International web technology projects
     ENR Top International Design Firms
     July 2000



                                                                                            1999 Revenue

    Rank                                                                          International      % Of Total
                                                                                        Design         Design
                                                                                      Revenue         Revenue

         1     AMEC, UK                                                                 1,032.2               86
         2     Bechtel Group Inc., USA                                                    745.0               35
         3     Foster Wheeler Corp. USA                                                   741.0               76
         4     Fluor Corp., USA                                                           690.0               45




Companies ranked according to international revenue for design services performed in 1999 in US $ millions.
Includes subsidiaries
SPIE
Another excellent performance


•   Revenues and profits increased
•   First class management
•   Strong French economy
•   AMEC SPIE Rail Systems
    – Contracts of £300 million in UK
SPIE
Commandes au 31 Juillet 2000
Comparison des Realisations 1999 et 2000
                                         COMMANDES
FF million
                                1999        2000
                                                     Ecart % 00/99
                               Réalisé     Réalisé




 Spie Trindel                 4 985       6 166          24%

 Spie Enertrans               2 937       3 019            3%

 Spie Batignolles             2 615       3 373          29%


 Total SPIE                  10 537 12 558               19%
Capital Projects

• Improved margins through project selectivity and
  management of overheads
• Significant oil and gas work, despite mature North Sea market
   – £235 million ethane recovery project, Arabian Gulf Coast
Services

• Increased turnover and profit
• Good performances from
    – Oil and gas services
    – Utilities outsourcing
    – Facilities management
• Reduced returns from rail maintenance
• Shell in Philippines, in alliance with Fluor Daniel
• UK leader in wind energy
Investments

•   Excellent returns from property development
•   First PPP hospital opened in Carlisle
•   Financial close on A13 road project
•   Financial close on University College London Hospital
Outlook
Market prospects underpin positive outlook for AMEC

United Kingdom
• PPP work and encouraging UK Government spending review
• Relationships with industrial clients
France
• Strong European market
• New global opportunities, especially pipelines and power
North America
• Greatest market potential in United States
• Advancing recovery in natural resource industries in Canada
Worldwide
• South East Asian markets recovering; rail opportunities in Hong Kong
• New oil sector spending
Summary

Strategy
• Expanding businesses with recurring revenue
• Improving project margins selective bidding and
   innovative partnering
SPIE
• Delivering exceptional value
AMEC Inc.
• Provides wider access to North American market
• Strengthens engineering services and new technology

            Delivering excellent value to clients and shareholders
A provider of services and engineering
solutions to the world’s infrastructure,
manufacturing and process industries

				
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