ws atkins plc - north america –...
TRANSCRIPT
WS Atkins plc Half year results for the six months ended 30 September 2012
15 November 2012
2
Uwe Krueger
Chief executive officer
First half trading in line On track for the full year
3
• Encouraging set of results despite challenging markets
• Solid UK performance with growing headcount, Olympic success
• Challenging first half in North America and Middle East
• Strong growth in Asia Pacific & Europe and Energy
• Financial position remains strong, with new funding arrangements
in place
• Interim dividend increased by 2.6%
• Good work in hand moving into H2.
4
Heath Drewett
Group finance director
30 Sep 2012 30 Sep 2011
Revenue £815.7 m £842.9 m (3.2) %
Operating profit £44.8 m £49.3 m (9.1) %
Operating margin 5.5 % 5.8 % (30) bp
Underlying operating profit £45.9 m £51.5 m (10.9) %
Underlying operating margin 5.6 % 6.1 % (50) bp
Underlying profit before tax £43.9 m £46.4 m (5.4) %
Underlying fully diluted eps 34.9 p 36.2 p (3.6) %
Dividend per share 10.0 p 9.75 p 2.6 %
Work in hand 89.5 % 88.2 %
Average staff numbers 17,482 17,529 (0.3) %
Net funds £83.7 m £95.6 m
30 Sep 2012 31 Mar 2012
Closing staff numbers 17,756 17,420 1.9 %
Financial summary In line performance
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Profit bridge Underlying profit before tax
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44.2
2.2
46.4
(8.2)
5.7
43.9
(1.1)
7.6
50.4
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Segmental summary
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£m Revenue Operating
profit/(loss)
Operating
margin
UK 420.5 24.8 5.9 %
North America 195.7 6.6 3.4 %
Middle East 79.8 5.1 6.4 %
Asia Pacific and Europe 78.0 6.3 8.1 %
Energy 72.5 5.6 7.7 %
Total for segments 846.5 48.4 5.7 %
Joint ventures included above (30.8) (2.5)
Total before unallocated items 815.7 45.9 5.6 %
Unallocated central items - (1.1)
Total for Group 815.7 44.8 5.5 %
UK Solid underlying H1 performance
8
• Revenue 5% ahead excluding asset management disposal
• Margin impacted short term by rail profit phasing
• Productivity improving across the business
• Headcount growth reflecting market opportunities.
30 Sep 2012 30 Sep 2011
Revenue (£m) 420.5 420.4 nm
Operating profit (£m) 24.8 24.6 nm
Operating margin 5.9 % 5.9 %
Work in hand 92 % 92 %
Average staff numbers 9,002 9,449 (4.7) %
30 Sep 12 31 Mar 2012
Staff numbers 9,169 8,924 2.7 %
UK Headcount growth
9
• Underlying staff numbers growing, positive for second half performance
9,826 9,680
9,095
8,870 8,924
9,169
8,200
8,400
8,600
8,800
9,000
9,200
9,400
9,600
9,800
10,000
Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12
Headcount (FTE) excluding asset management
North America Short term progress held back by market conditions
10
30 Sep 2012 30 Sep 2011
Revenue (£m) 195.7 226.0 (13.3) %
Operating profit (£m) 6.6 11.7 (43.6) %
Operating margin 3.4 % 5.2 % (180) bp
Work in hand 89 % 83 %
Average staff numbers 3,127 3,352 (6.7) %
30 Sep 2012 31 Mar 2012
Closing staff numbers 3,064 3,255 (5.9) %
• Margin impacted by contract delays and Peter Brown loss
• Headcount reductions reflecting soft market conditions
• Work in hand ahead, some delayed projects now progressing.
Overall performance significantly impacted by Peter Brown loss
North America analysis
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6 months to Sep 2012 Revenue Operating profit Margin
Faithful+Gould 29.6 1.4 4.7 %
Consultancy 152.5 8.6 5.6 %
Peter Brown 13.6 (3.4) nm
Total 195.9 6.6 3.4 %
6 months to Sep 2011 Revenue Operating profit /(loss) Margin
Faithful+Gould 26.1 1.2 4.6 %
Consultancy 151.1 10.3 6.8 %
Peter Brown 48.8 0.2 0.4 %
Total 226.0 11.7 5.2 %
Middle East Difficult first half, full year outlook unchanged
12
30 Sep 2012 30 Sep 2011
Revenue (£m) 79.8 78.2 2.0 %
Operating profit (£m) 5.1 7.8 (35) %
Operating margin 6.4 % 10.0 % (360) bp
Work in hand 89 % 91 %
Average staff numbers 2,004 1,640 22 %
30 Sep 2012 31 Mar 2012
Staff numbers 2,047 1,972 3.8 %
• Results impacted by delays and protracted contract variation
negotiations on major projects
• Significant market opportunities
• Full year outlook remains unchanged.
Asia Pacific and Europe Regional growth opportunities
13
30 Sep 2012 30 Sep 2011
Revenue (£m) 78.0 78.4 nm
Operating profit (£m) 6.3 3.9 62 %
Operating margin 8.1 % 5.0 % 310 bp
Work in hand 87 % 91 %
Average staff numbers 2,031 1,960 3.6 %
30 Sep 2012 31 Mar 2012
Staff numbers 2,080 2,020 3.0 %
• Strong performance in Asia Pacific and Scandinavia
• Headcount growth in Scandinavia driven by good workload
• Year on year margin enhanced by restructuring provision release.
Energy Strong performance in buoyant markets
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• Strong top and bottom line growth
• Margin improvement despite ongoing investment
• Improved work in hand will support further headcount
growth in H2.
30 Sep 2012 30 Sep 2011
Revenue (£m) 72.5 58.2 25 %
Operating profit (£m) 5.6 4.3 30 %
Operating margin 7.7 % 7.4 % 30 bp
Work in hand 81 % 76 %
Average staff numbers 1,249 1,056 18 %
30 Sep 2012 31 Mar 2012
Staff numbers 1,324 1,182 12 %
Cash flow Cash flow from operating activities
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• Increased working capital outflow in a number of areas
• Pension costs reduced following enhanced transfer value exercise
• Provisions/other includes deferred income release on RMPA sale and unrealised foreign exchange gains
• Net funds £83.7m (Sep 2011: £95.6m).
£m 30 Sep 2012 30 Sep 2011
Operating profit 44.8 49.3
Depreciation/amortisation 10.0 12.8
Working capital (51.5) (37.3)
Pension (11.0) (14.0)
Provisions/other (4.9) 2.1
Cash flow from operating activities (12.6) 12.9
Working capital Composition of first half movement
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£m 30 Sep 2012 31 Mar 2012 D
Trade receivables 284.1 286.3
Amounts recoverable on contracts 123.1 111.4
Fees invoiced in advance (166.5) (173.1)
Lockup 240.7 224.6 (16.1)
Other receivables/prepayments 56.2 47.6 (8.6)
Trade payables (89.5) (87.8) 1.7
Other payables/accruals (214.8) (245.2) (30.4)
Inventories/other 1.9
Movement in working capital (51.5)
Group financial position Remains strong
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• Net funds at 30 September 2012 £83.7m (Sep 2011 £95.6m)
• Debut US private placement increases tenor and diversity of funding
• New £30m bi-lateral facility with Bank of America
• Undrawn funds of £84m on main facility.
Pension Focused actions taken
18
• £244m IAS 19 deficit net of
deferred tax at 30 Sep 2012
(March 2012: £190m)
• Final salary link removed
• Enhanced Transfer Value
exercise delivered
• Deficit impacted by lower than
expected return on assets and
reduction in discount rate.
IAS19 deficit net of deferred tax
(£m)
0
50
100
150
200
250
300
350
400
Sep2007
Mar2008
Sep2008
Mar2009
Sep2009
Mar2010
Sep2010
Mar2011
Sep2011
Mar2012
Sep2012
IAS 19 pension changes To take effect in 2013/14
19
• No cash impact
• Pension contributions continue in accordance with agreed 2010
funding plan
• Changes to take effect in 2013/14 (with comparatives re-stated).
£m 2011/12 Estimated
2012/13
Estimated
2012/13
(on new basis)
Interest cost 70.9 c.10.0 c.15.0
Expected return on plan assets (60.0)
Net finance cost 10.9 c. 10.0 c. 15.0
Outlook Remains in line with our expectations
20
• Continued strong performance in UK, Asia Pacific and
Europe and Energy
• No change anticipated in North American market conditions but
improvement in H2 consultancy margin expected
• Full year expectations unchanged in the Middle East despite
ongoing earnings’ volatility
• Overall outlook for 2012/13 is unchanged.
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Uwe Krueger
Chief executive officer
First year achievements
22
Operational
excellence
Portfolio
optimisation
Sector focus
Regional
focus
Diligent implementation in UK
Extending roll-out
• Improve utilisation in North America
• Active management of contract variations in the Middle East
Focus on cash and working capital
Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 Aug 12 Sep 12
UK 12 month rolling productivity
UK business
c.1.5%
First year achievements
23
Operational
excellence
Portfolio
optimisation
Sector focus
Regional
focus
Diligent implementation in UK
Extending roll-out
Focus on cash and working capital
Sale of UK Asset Management business
Disposal of RMPA investment
Significant growth in Energy headcount
Targeting North American market with new aerospace office in Seattle
Expanding in Asia Pacific – initial focus in Malaysia and Singapore.
Strategy implementation
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• Portfolio optimisation continues
• Regional expansion – Malaysia & Singapore, Scandinavia and new
North American markets, over time
• Cross selling of Group skills eg rail bridgehead into North America
and Asia Pacific
• Leverage from Faithful+Gould markets and its differentiated
client base
• Continue to review a pipeline of potential bolt-on acquisitions
Ongoing action
Delivering profitable growth
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Stringent processes
• Technical excellence
– Design principles
– Risk management process
• Differentiation
– Tolling skills in North America transportation
– Cross selling of rail and aviation expertise
• Legacy of Olympic Games
– Targeting more complex projects.
Our people
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• Graduate recruitment
– Up significantly in 2012 to 500 (250 in UK)
– Graduate scheme extended, particularly in growth sectors
• London 2012 Olympic Games
– Legacy work and Commonwealth Games opportunities
– Attraction to potential employees
• Diversity
– Practical measures introduced
• Retention
– Group headcount turnover rate stable at 10.4%
– Viewpoint survey.
Ability to attract and retain staff is a key differentiator
Our overall objective remains value creation
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Drive margins >8%
+ Reduce dependence on UK
(long term aspiration <25%)
+ Grow organically and by acquisition
Increased shareholder value.
Summary
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• First half results in line with our expectations
• Strategy unchanged
• Exciting growth opportunities in a number of markets.
WS Atkins plc Half year results for the six months ended 30 September 2012
15 November 2012
Appendix
Net funds reconciliation
Net funds reconciliation
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Net funds reconciliation
£m CashLoan notes
< 1yr
Loan notes
> 1yr
Financial
assets at FV
Available for
Sale
Borrowings
< 1yr
Borrowings
> 1yr
Leases
< 1yr
Leases
> 1yrNet funds
Operating profit 44.8 44.8
Depreciation/amortisation 10.0 10.0
Working capital (51.5) (51.5)
Pension (11.0) (11.0)
Provisions / other (4.9) (4.9)
Cashflow from operating activities (12.6) (12.6)
Net interest (0.2) (0.2)
Tax (1.4) (1.4)
Net capital expenditure (9.0) (9.0)
(23.2) (23.2)
Acquisitions / disposals 14.4 14.4
Dividends (20.3) (20.3)
Net cash flow (29.1) (29.1)
Non-operating items Foreign Exchange (1.8) 0.4 1.2 (3.6)
EBT share purchase (3.4)
Financing - I Disposal of investment - (6.9)
Sukuk profit on disposal - 0.8 (6.2)
Transfers - (0.8) 0.8
New leases - (0.1)
Financing - II Investments (1.1) 1.1
Financial assets 7.9 (1.1) (6.8) -
Borrowings - short term (47.5) 47.5
Borrowings - long term 47.5 (47.5)
Leases : principal (1.0) 1.0
Movement (28.5) - (5.8) (1.1) (6.0) 47.9 (46.3) 0.1 0.8 (38.9)
Opening balance 167.0 - 25.1 35.0 6.1 (104.0) - (1.7) (4.9) 122.6
Closing balance 138.5 - 19.3 33.9 0.1 (56.1) (46.3) (1.6) (4.1) 83.7
Disclaimer
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The information in this presentation pack, which does not purport to be comprehensive, has been
provided by Atkins and has not been independently verified. While this information has been prepared
in good faith, no representation or warranty, express or implied, is or will be made and no
responsibility or liability is or will be accepted by Atkins as to or in relation to the accuracy or
completeness of this presentation pack or any other written or oral information made available as part
of the presentation and any such liability is expressly disclaimed. Further, whilst Atkins may
subsequently update the information made available in this presentation, we expressly disclaim any
obligation to do so.
The presentation contains indications of likely future developments and other forward looking
statements that are subject to risk factors associated with, among other things, the economic and
business circumstances occurring from time to time in the countries, sectors and business segments
in which the Group operates. These and other factors could adversely affect the Group’s results,
strategy and prospects. Forward looking statements involve risks, uncertainties and
assumptions. They relate to events and/or depend on circumstances in the future which could cause
actual results and outcomes to differ materially from those currently expected. No obligation is
assumed to update any forward looking statements, whether as a result of new information, future
events or otherwise.