AMEC Interim Results Presentation 2001 by keara

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									Interim Results 2001
Six Months Ended 30 June 2001
Interim Results 2001
Six Months Ended 30 June 2001




                                Sydney Gillibrand CBE
                                              Chairman
Interim Results 2001
Six Months Ended 30 June 2001




                                Stuart Siddall
                                 Finance Director
Financial Highlights
Six months ended 30 June* (£ million)
                                               2001                2000           Change


 Total turnover                             2,069.4            1,690.1         + 22.4%


 Total operating profit                        51.5                 35.1       + 46.7%
 Net interest payable                         (12.7)                 (2.7)

 Pre-tax profit                                38.8                 32.4       + 19.8%

  • Six months’ contribution from AGRA and cost of acquisition funding
      (2000 : 2.3 months)
  •   46.0 per cent share of SPIE’s results (2000: 41.6 per cent)
  •   Good results from other core businesses
                                                * Before goodwill amortisation and exceptional items
Financial Highlights
Six months ended 30 June*
                                           2001                 2000          Change


Basic earnings per share                 10.0p                  8.8p        +13.6%
Diluted earnings per share                 9.1p                 8.2p        +11.0%


Dividend per share                         3.1p                 2.8p        +10.7%



 • As predicted, EPS growth impacted by higher North American tax rates
 • Dividend cover on a diluted basis remains at 2.9 times


                                            * Before goodwill amortisation and exceptional items
Goodwill Amortisation and Exceptional Items
Six months ended 30 June (£ million)
                                             2001           2000


 Goodwill amortisation                        5.4            1.8


 • Six months’ ownership of AGRA (2000 : 2.3 months)
 • £0.5 million arising from increased investment in SPIE


 Exceptional items                            3.7            1.4


 • Exceptional items reflect progress made in disposal or closure
    of several non-core interests
Net Interest Payable
Six months ended 30 June (£ million)
                                                     2001         2000

Group                                                (8.5)        0.2
Share of joint ventures
   - Public Private Partnerships                     (3.0)        (1.6)
   - SPIE                                            (1.2)        (1.3)

                                                    (12.7)        (2.7)



 • Full period of funding AGRA acquisition
        – Charge in line with second half of 2000
 • PPP reflects Longbenton
        – Accounting for share commenced in second half of 2000
Tax Charge
Six months ended 30 June*
                                              2001                 2000


 Effective rate                               30.2%                27.8%


 • Rate in line with previous predictions and reflects higher
    North American rates
 • Headline rate will continue to be close to UK underlying rate




                                               * Before goodwill amortisation and exceptional items
Business Analysis of Total Operating Profit
Six months ended 30 June 2001*



                       Investments
                         £6.4 million


                                  10%
  Capital Projects
     £21.4 million
                       34%
                                            56%
                                                                    Client Support
                                                                    Services
                                                                    £35.9 million




                        * Before goodwill amortisation, exceptional items, e-commerce and corporate costs
Client Support Services - Consulting and Design Services
Six months ended 30 June* (£ million)
                                             2001                 2000


 Total turnover                             205.3                  86.1

 Total operating profit                       9.6                   4.3

 Margin                                      4.7%                 5.0%

 • Six months’ contribution from AGRA (2000: 2.3 months)
 • Annualised turnover of £400 million (2000: estimate £350 million)
 • Margin influenced by the run out of inherited Ogden contracts
     and rationalisation costs
 •   Ogden environmental consultancy successfully integrated

                                              * Before goodwill amortisation and exceptional items
Client Support Services - Operations Support Services
Six months ended 30 June* (£ million)
                                               2001                  2000


 Total turnover                               652.4                 519.2

 Total operating profit                         26.3                 19.8

 Margin                                        4.0%                  3.8%

 • Organic growth of 20 per cent
 • Volume increases in rail, utilities, oil and gas and Spie Trindel
 • Margin improvement in part due to new rail IMC contracts



                                                 * Before goodwill amortisation and exceptional items
Capital Projects - Construction Management
Six months ended 30 June* (£ million)
                                            2001                 2000


 Total turnover                            293.4                265.9

 Total operating profit                      (0.3)                (2.1)

 Margin                                    (0.1)%               (0.8)%

 • As expected, turnover increased
 • Sound progress in refocusing the business
 • As planned, order book reduced by £500 million (50 per cent reduction)



                                             * Before goodwill amortisation and exceptional items
Capital Projects - Construction
Six months ended 30 June* (£ million)
                                               2001                 2000


 Total turnover                                907.4               777.4

 Total operating profit                         21.7                18.6

 Margin                                        2.4%                 2.4%

 • Increased activity through full contribution from AGRA and
     increased investment in SPIE
 • Organic growth of two per cent but reflects continued selectivity
     in contract tendering, especially in UK
 •   Margins in line with 2000

                                                * Before goodwill amortisation and exceptional items
Investments - Property Development
Six months ended 30 June* (£ million)
                                                2001                  2000


 Total turnover                                  48.8                  65.6

 Total operating profit                           5.2                   2.1


 • Continued good performance from property development
 • Seasonal contribution from Grand Cayman Hotel
     – Second half contribution expected to be minimal




                                                  * Before goodwill amortisation and exceptional items
Investments - Public Private Partnerships
Six months ended 30 June* (£ million)
                                                2001                 2000


 Total turnover                                 14.1                  11.4

 Total operating profit                          1.2                   2.5


 •   No major projects will be brought to financial close in 2001
 •   Continued application of prudent policy for bid costs
 •   PPP projects in operation continue to make good progress
 •   A13, UCLH and Ayrshire Water PPP projects are currently a source
     of work for Capital Projects
 •   Proposal activity should increase

                                                 * Before goodwill amortisation and exceptional items
SPIE S.A.
Six months ended 30 June* (£ million)
                                               2001                 2000


 Total turnover                               401.0                319.1

 Total operating profit                         9.9                   7.9

 Margin                                        2.5%                 2.5%


 • Share of results reflects increased investment in SPIE
     from 41.6 per cent to 46.0 per cent
 •   Significant growth in underlying businesses especially Spie Trindel
 •   Margins in line with 2000


                                                * Before goodwill amortisation and exceptional items
Geographical Analysis of Results
Six months ended 30 June* (£ million)
                                       2001                                  2000

                              Total          Total                 Total             Total
                            turnover    operating profit         turnover       operating profit


 United Kingdom              891.3            40.9                906.8               36.0
 Rest of Europe              420.4             6.1                304.5                3.1
 Americas                    611.6            12.3                371.2                5.1
 Rest of the World           146.1             4.4                107.6                1.0
                           2,069.4            63.7             1,690.1                45.2
 E-commerce costs               -             (2.8)                    -               (0.9)
 Corporate costs                -             (9.4)                    -               (9.2)

                           2,069.4            51.5             1,690.1                35.1


                                                     * Before goodwill amortisation and exceptional items
Cashflow
Six months ended 30 June 2001 (£ million)




   Opening net debt                         (211.8)
   Cashflow from operating activities        (16.9)
   Profit retained in joint ventures          (5.0)
   Acquisitions and disposals                70.3
   Shares issued                               1.0
   Interest, dividends and tax               (22.7)
   Currency and other adjustments             (7.9)

   Closing net debt                         (193.0)
Net Assets
(£ million)                                   30 Jun    31 Dec
                                               2001      2000


Client Support Services                       113.6      71.5
Capital Projects                               63.3       11.1
Investments                                   126.7     140.9
                                              303.6     223.5

Goodwill capitalised                          179.7     175.7
Net debt                                      (193.0)   (211.8)
Other (2000 includes Fairclough loan notes)    24.0     114.8

                                              314.3     302.2
Net Assets
    (£ million)                               30 Jun        31 Dec
                                               2001          2000


Client Support Services                       113.6          71.5
Capital Projects                               63.3           11.1
Investments                                   126.7         140.9
                                              303.6         223.5



•     Increased investment in SPIE
•     Funding of equipment for civil engineering projects
•     Reversal of advance cash in North America and funding of AGRA contracts
•     Investments includes Grand Cayman Hotel and impact of refinancing
      of several property development projects (limited recourse)
AGRA Fair Value Accounting

• Fair values will be finalised in next six months
     – Outcome on the hotel potentially a sensitivity
• No change to acquisition goodwill in the period other than
    currency movement less amortisation
•   Fair value adjustments had an insignificant impact on
    the income in the period
Total Order Book
(£ billion)
                                             30 Jun         31 Dec
                                              2001           2000

United Kingdom                                 2.8           2.2
SPIE (100%)                                    1.2           1.1

North America                                  1.0           1.5

Rest of the World                              0.2           0.2

                                               5.2           5.0


• Planned reduction in Construction Management order book,
    reduced by £0.5 billion
•   Total order book up by 17.5 per cent, excluding Construction Management
•   UK Services order book would rise to nearly three years
    if options taken into account
Interim Results 2001
Six Months Ended 30 June 2001




                                Peter Mason
                                Chief Executive
Agenda


• Economic overview                • SPIE
• Business overview                • AMEC North America
   – Oil, gas and power               – Integration
   – Transportation                   – Benefits of synergy
   – Telecoms
                                   • Outsourcing and partnering
   – Public Private Partnerships
   – Property Developments         • Outlook
Themes

• Performance underlines benefit of AMEC’s strategy
    of transformation

• Expanded international base
• Well positioned in market sectors largely insulated
    from current slowdown
•   Strong growth in outsourcing and partnering




        AMEC continues to differentiate itself through increased global spread,
                                        knowledge, innovation and technology
Economic Overview




                       United Kingdom



                        North America



                    Continental Europe
Economic Overview - United Kingdom

• Global economic slowdown spreading to UK
    – Government spending compensates
• Infrastructure spending growth remains strong
    – Buoyant demand in road and rail
    – PPP offers opportunities for growth
• Increasing pressures on businesses to outsource
    – Larger clients consolidating supplier base
• Oil and gas sector buoyant
    – Overseas projects creating work in the UK



                                            Strength in key AMEC markets offsets
                                                             economic slowdown
Economic Overview - North America

• Economic fundamentals remain weak
• Forestry and mining sectors difficult
    – Mitigated by strong client relationships and managing staff levels
• Oil, gas and power sectors remain strong
    – Demand outstripping resources
• US Government expenditure
    – TEA-21/AIR-21 investment in road, rail and air infrastructure
    – Education, health and prison markets
• Food, beverage and pharmachem largely insulated from current slowdown


                                             Strength in key AMEC markets offsets
                                                              economic weakness
Economic Overview - Continental Europe

• General economic trends turning negative
     – Offset by SPIE strength in key markets
• Transportation sector remains strong
• Telecoms slowdown offset by buoyant conditions in traditional
    electrical service activities
•   Prospects for order intake remain good




                                                Strength in key SPIE markets
                                                  offsets economic slowdown
Business Overview
Oil, Gas and Power

• Established market leading position
    – Global capability
• Major contract wins
    – Bonga (Nigeria), Corrib (Ireland), Sakhalin (Russia)
• Market for power generation in North America remains strong
    – Around 2,000 new power plants forecast in the US
    – Over 20 projects ongoing




                                      Oil, gas and power markets remain buoyant
Transportation

• SPIE strengthens well established market position
• Rail
    – London Underground bid unsuccessful
    – Key Railtrack contracts renewed
    – Bidding for Docklands Light Railway extension and Manchester Metrolink
• Highways
    – Bidding for A1 Darrington-Dishforth and M77, UK
• Airports continue to offer growth opportunities
    – Increased focus in USA



                                           Investment remains strong in Europe,
                                                 North America and Asia Pacific
Telecoms

• Outsourcing trends reinforced by global telecoms downturn
• Continued requirement to plan and implement infrastructure
   for 3G networks presents growth opportunities
• Global alliance with Nortel Networks underscores AMEC capabilities in
   provision of services to the telecoms industry
    – Close involvement with SPIE
• Negotiations with major players ongoing




                                Opportunities in outsourcing and infrastructure
                                         development offset market downturn
Public Private Partnerships

• Renewed government commitment
    – Long-term opportunity
    – AMEC well placed to participate
• Involved in 10 projects, no major financial closures in 2001
• Bidding for hospitals, Ministry of Defence, roads and light rail




                                        Progressing opportunities with expected
                                                        financial close in 2002
Property Development

• Continued focus on managed risk developments
    – Specialisation in urban renewal schemes
• English Cities Fund
• Opportunities for both public and private development schemes in UK
• Ongoing interest by private investors offsets soft institutional demand




                                                AMEC well placed to participate in
                                                 major UK property developments
SPIE

•   SPIE continues to make a strong contribution to earnings
•   Electrical services strong despite slowdown in telecoms growth
•   Construction business robust
•   Order book up nine per cent




                                             SPIE continues to make a strong
                                                     contribution to earnings
SPIE - Option to Buy Outstanding Shares

•   Current holding 46 per cent
•   Call option on remaining 54 per cent available from 1 July 2002
•   Price capped at 1.8x NAV as at 31 December 2001
•   Completion/payment from January 2003
     – Full consolidation of results would take place from January 2003




                                        Relationships with SPIE are excellent and
                                                         both management teams
                                     remain enthusiastic about the future together
AMEC North America

• Integration continues successfully

• Benefits of synergy - early examples
    – Earth and Environmental (Sakhalin)
    – Power (Innogy)
    – Pharmachem (Deltek)
    – Food (key supplier of global services to a major international client)




                                        Combined AMEC AGRA relationships and
                                        expertise are opening up new international
                                                                    opportunities
Outsourcing and Partnering

• Strong growth market
    – Wide range of industries
    – Long-term contracts
    – More predictable earnings
• Economic downturn has reinforced trends
    – Companies seeking to consolidate service providers
    – Increasingly looking to providers of one-stop-shop, global solutions
• International spread presenting increased barrier of entry to others



                                                          Global reach is becoming
                                                          an important differentiator
Outlook
Outlook

• Economic outlook remains uncertain
• Oil, gas and power expected to remain buoyant
• Government spending driving infrastructure demand in UK and US
• Strong growth in outsourcing and partnering
• Benefits from AMEC, AMEC North America and SPIE will grow
• Disposal of non-core assets remain a priority
• Order book strong


                          AMEC remains on track to make progress in 2001
A leading provider of services and engineering
solutions to the world’s infrastructure,
manufacturing and process industries

								
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