WS Atkins plc Half year results six months ended 30 September 2008 26 November 2008 Plan Design Enable
Summary Very good half year results Strong cash generation Improving the business Progressing in balance and continuing to invest Well placed to respond to challenges and opportunities ahead 1
Robert MacLeod Group Finance Director 2
Financial highlights continuing operations 30 Sept 2008 30 Sept 2007 Revenue 710.80 m 633.8 m + 12 % Operating profit 48.20 m 40.1 m + 20 % Operating margin 6.80 % 6.3 % + 50 bp Normalised profit before tax 47.50 m 42.7 m + 11 % Normalised fully diluted eps 36.40 p 30.8 p + 18 % Dividend per share 8.75 p 7.5 p + 17 % Net funds 164.50 m 128.3 m + 28 % Work in hand 87 % 85 % Good 3
Design and Engineering Solutions 30 Sep 2008 30 Sep 2007 Revenue ( m) 202.6 181.8 + 11 % Operating profit ( m) 16.8 15.7 + 7 % Operating margin 8.3 % 8.6 % - 30 bp Work in Hand 87 % 83 % Very Good Staff numbers (FTE inc. agency) 5,176 4,730 + 9 % Average staff numbers 5,057 4,580 + 10 % Businesses performed well in first half Markets generally remain robust Early signs of softening in the UK design market Outlook is positive 4
Highways and Transportation 30 Sep 2008 30 Sep 2007 Revenue ( m) 133.7 134.0 flat Operating profit ( m) 8.0 8.0 flat Operating margin 6.0 % 6.0 % flat Work in Hand 86 % 89 % Good Staff numbers (FTE inc. agency) 3,077 3,114-1 % Average staff numbers 2,937 3,082-5 % Results in line with expectations Design related business has strong workload (M25, M74, A14) Demand continuing for Intelligent Transport Systems enabled solutions Outlook remains stable 5
Rail 30 Sep 2008 30 Sep 2007 Revenue ( m) 99.6 102.0-2 % Operating profit ( m) 7.1 3.9 + 82 % Operating margin 7.1 % 3.8 % + 330 bp Work in Hand 90 % 87 % Good Staff numbers (FTE inc. agency) 1,627 1,740-6 % Average staff numbers 1,643 1,712-4 % Results as predicted with significantly improved margin Good progress on large contracts (RuN resignalling) Growth in enhancement work Outlook remains good 6
Middle East 30 Sep 2008 30 Sep 2007 Revenue ( m) 82.0 52.9 + 55 % Operating profit ( m) 8.7 4.6 + 89 % Operating margin 10.6 % 8.7 % + 190 bp Work in Hand 85 % 77 % Very Good Staff numbers (FTE inc. agency) 2,948 2,148 + 37 % Average staff numbers 2,696 1,947 + 38 % Excellent results Increasing demand for large-scale multi-disciplinary projects Dubai metro project progressing well Outlook for the rest of the year remains strong 7
Management and Project Services 30 Sep 2008 30 Sep 2007 Revenue ( m) 113.3 103.1 + 10 % Operating profit ( m) 7.5 6.5 + 15 % Operating margin 6.6 % 6.3 % + 30 bp Work in Hand 84 % 83 % Fair Staff numbers (FTE inc. agency) 2,433 2,421 Flat Average staff numbers 2,449 2,350 + 4 % Faithful+Gould: Growth driven by energy, utilities and public sector services Challenging UK commercial property market Management Consultants: Refocused business performing ahead of expectations 8
Asset Management 30 Sep 2008 30 Sep 2007 Revenue ( m) 26.6 25.3 + 5 % Operating profit ( m) (1.2) 1.2-200 % Operating margin (4.5) % 4.7 % Work in Hand 90 % 90 % Fair Staff numbers (FTE inc. agency) 708 675 + 5 % Average staff numbers 687 678 + 1 % Performance impacted by legacy PFI education contract 2.5m profit on disposal of interest in Modern Housing Solutions Outlook for Managing Agent business remains good 9
Cash Flow 30 Sept 2008 30 Sept 2007 Operating profit 48.2 40.1 Depreciation/amortisation 16.0 14.5 Working capital (3.3) (48.5) Pension (28.1) (20.7) Provisions/other 5.4 (2.2) Cashflow from operations 38.2 (16.8) Working capital improvement in September due to early focus on debt collection Last year adversely impacted by extension of payment terms from Metronet 10
Pension Gross Net of deferred tax Net deficit at 1 April 2008 (213.1) (154.1) Service cost (4.8) Net finance cost (2.9) Total cost (7.7) Contributions 32.9 Actuarial loss (20.7) Net deficit at 30 September 2008 (208.6) (150.8) Decrease in value of plan assets offset by benefit of increased discount rates Agreed deficit funding contributions in H1: 12.5m + 16m = 28.5m Movement in discount rates likely to reverse asset value may take longer to recover Cash flow fixed for next 2 years 11
Keith Clarke Chief Executive 12
Atkins aims to become the World s Best Infrastructure Consultancy through Multi-skill, Multi-local Excellence World s We will target chosen geographies and develop deep local expertise Best We will seek to consistently anticipate and address our clients needs Multi-Skill A broad range of skills for complex projects To be the world s best infrastructure consultancy Multi-Local Strong devolved national businesses Infrastructure Buildings, transport, utilities, Government and industry and their social and environmental context Consultancy Our primary business model will be selling expertise Excellence Striving to deliver world-leading services 13
Atkins has a diverse portfolio US UK & Europe RoW Transport, Buildings, Industry Transport, Buildings, Industry Transport, Buildings, Industry 14 Petro Cost Highways Transit Heavy Rail Architecture & Planning Bdg Eng Bdg Asset & PM Defence & Aero Water & Envt. Petro. Power Nuclear Cost Consultancy Man Con Hwy Transit Rail Arch. & Plan Bd Eng PM Pet
Atkins markets are resilient UK Revenue segmentation Local Government National Government Regulated Private Transport Olympic Games Education Transport Defence Environment Transport Water Utilities Aerospace Oil and gas Buildings 15
United Kingdom Local Government Segmental revenue Drivers AM M&PS H&T Mainly long term contracts: Gloucestershire CC (2 years to 2011, extension likely) Somerset CC (1 year to 2010) Cambridgeshire CC (7 years to 2016) Rail D&ES H&T D&ES Olympic Delivery Authority Education: Design services for colleges Rail London Underground: Significant ongoing work programme c. 200m 16
United Kingdom National Government Segmental revenue Drivers M&PS AM D&ES Diverse range of clients Studies likely to continue Projects may be reprofiled Carbon agenda: e.g. Environment Agency Long term contracts: e.g. RSME (4 years to 2013) H&T D&ES H&T Design of nationally important projects: e.g. M25, M74, A14 Area 6 MAC (4 years to 2013) Intelligent Transport Services: in demand to increase capacity c. 125m M&PS Long term contracts: e.g. GCHQ (2 years to 2011), DCSF (1 year to 2010) 17
United Kingdom Regulated Segmental revenue Drivers M&PS Rail D&ES c. 125m Rail 28.5bn investment 2009-2014 (CP4) Enhancement and signalling markets robust Key is ability of Network Rail to bring projects to market Large scale projects committed: e.g. Crossrail, Thameslink D&ES Water: AMP5 upcoming Nuclear: Strong client demand. High barrier to entry market Telecom: demand for fixed network cost efficiency programme 18
United Kingdom Private Segmental Revenue Drivers H&T Rail M&PS M&PS Commercial property sector workload slowdown (< 10m) Oil and gas/petrochemicals: strong portfolio Financial services clients outlook currently stable AM D&ES c. 100m D&ES Aerospace: Airbus programmes on A350 and A400M Oil and gas: continuing demand AM Demand driven by requirement for cost efficiency 19
Middle East Segmental Revenue Drivers Sharjah Other Oman Qatar Bahrain UAE Dubai Dubai Growth likely to temper Higher end market likely to be more resilient Relationships key Abu Dhabi Oil rich state with 2030 plan Projects with carbon critical focus Northern Gulf Urban planning development Concept design Abu Dhabi 82m 20
Rest of the world China Hong Kong: Outlook strong with Rail projects Mainland China: Design and urban planning services in demand Europe Denmark: Opportunities in Rail services Ireland: Continues to be impacted by slowdown USA Cost consulting: Energy market remains strong Oil and gas: continuing demand 21
Economic conditions have led to a number of credible scenarios Engineering consultancies can navigate well in difficult conditions Market Levers Intervention Outsourcing Reengineering Capital availability Project pipeline management Internal Levers Quality and performance Strength in depth Barriers to entry Conservative approach Skill transferability Resilience 22
People Staff turnover down to 14.5% Staff at 30 Sept 2008: over 18,000 Ongoing evaluation of activities: Transferability of skills Shrinking where appropriate Hiring where required 15,003 15,867 16,909 17,278 18,322 Sept 2006 March 2007 Sept 2007 March 2008 Sept 2008 (Staff numbers exclude LSH: disposed in June 2007) 23
Looking forward Confident for the full year 2008/09 Demand for infrastructure remains Well placed: Depth and breadth Flexibility and agility 24
WS Atkins plc Half year results six months ended 30 September 2008 26 November 2008 Plan Design Enable
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