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 2,082 m 1,862 m 11.8% Operating profit 154.1 m 143.4 m 7.5% Operating margin 7.4% 7.7 % (30)bp Underlying operating profit 171.5 m 148.2 m 15.7 % Underlying operating margin 8.2% 8.0 % 20 bp Underlying profit before tax 164.6 m 139.0 m 18.4 % Underlying diluted EPS 124.2 p 107.3 p 15.8 % Dividend per share 12.5 p* 39.5 p 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 * No full year dividend given recommended SNC-Lavalin offer 5
UK and Europe Strong performance 31 March 2017 31 March 2016 Revenue ( m) 911.1 943.6 (3.4 )% Operating profit ( m) 90.4 73.8 22.5 % Operating margin 9.9% 7.8% 210 bp Average staff numbers 9,305 9,707 (4.1 )% Closing staff numbers 9,246 9,591 (3.6 )% 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 Revenue ( m) 480.5 362.6 32.5 % Operating profit ( m) 33.5 20.4 64.2 % Operating margin 7.0% 5.6 % 140 bp Average staff numbers 2,828 2,754 2.7 % Closing staff numbers 2,901 2,747 5.6 % 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 Revenue ( m) 232.2 248.3 (6.5 )% Operating profit ( m) 21.8 29.5 (26.1 )% Operating margin 9.4% 11.9% (250)bp Average staff numbers 2,453 2,580 (4.9 )% Closing staff numbers 2,469 2,459 0.4% 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 Revenue ( m) 118.2 106.1 11.4 % Operating profit ( m) 9.3 8.5 9.4 % Operating margin 7.9% 8.0% (10 )bp Average staff numbers 1,289 1,448 (11.0 )% Closing staff numbers 1,275 1,354 (5.8 )% 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 Revenue ( m) 327.0 201.3 62.4 % Operating profit ( m) 30.3 16.7 81.4 % Operating margin 9.3% 8.3% 100 bp Average staff numbers 2,346 1,840 27.5 % Closing staff numbers 2,276 1,806 26.0 % 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 Underlying operating profit 171.5 148.2 Depreciation/amortisation 23.2 23.8 Working capital (57.6 ) (23.6 ) Net capital expenditure (20.7 ) (19.8 ) Provisions/other 2.6 9.9 Underlying operating cash flow 119.0 138.5 Cash conversion 69% 93% 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 194m IAS 19 deficit net of deferred tax at 31 March 2017 (March 2016: 216m) IAS19 deficit net of deferred tax ( m) Discount rate down 100 basis points to 2.5% Deficit repayment of 33.6m in 2016/17, escalating at 2.5% per annum 258 238 216 194 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 2,000 1,600 Revenue growth 8.5 8.0 7.5 Underlying operating margin (%) 8.2 8.0 7.6 m 1,200 7.0 6.5 6.5 6.4 6.7 800 6.0 5.5 400 5.0 4.5 0 2012 2013 2014 2015 2016 2017 4.0 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
Disclaimer The information in this presentation pack, which does not purport to be comprehensive, has been provided by Atkins and has not been audited or otherwise 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 statements which are, or may be deemed to be, forward-looking statements. Forward looking statements are prospective in nature and are not based on historical or current facts, but rather on current expectations and projections of the management of Atkins about future events, and are therefore 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 the future results expressed or implied by the forward-looking statements. You are cautioned not to place any reliance on these forward looking statements. No obligation is assumed to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Nothing in this presentation should be construed as a profit forecast. All persons, wherever located, should consult any additional disclosures that Atkins may make in any regulatory announcements or documents which it publishes. All persons, wherever located, should take note of these disclosures. The information in this presentation pack does not constitute an invitation to underwrite, subscribe for or otherwise acquire or dispose of any shares in Atkins. Past performance cannot be relied upon as a guide to future performance. 18