WS Atkins plcHalf year results – six months ended 30 September 2008
Plan Design Enable
26 November 2008
1
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
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Robert MacLeodGroup Finance Director
3
Financial highlights
Good%85%87Work in hand
%28+m£128.3m£164.50Net funds
%17+p7.5p8.75Dividend per share
%18+p30.8p36.40Normalised fully diluted eps
%11+m£42.7m£47.50Normalised profit before tax
bp50+%6.3%6.80Operating margin
%20+m£40.1m£48.20Operating profit
%12+m£633.8m£710.80Revenue
30 Sept 200730 Sept 2008
continuing operations
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Design and Engineering Solutions
• Businesses performed well in first half
• Markets generally remain robust
• Early signs of softening in the UK design market
• Outlook is positive
30 Sep 200730 Sep 2008
Revenue (£m) 202.6 181.8 + 11 %Operating profit (£m) 16.8 15.7 + 7 %Operating margin 8.3 % 8.6 % - 30 bpWork in Hand 87 % 83 %Staff numbers (FTE inc. agency) 5,176 4,730 + 9 %Average staff numbers 5,057 4,580 + 10 %
Very Good
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Highways and Transportation
• 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
30 Sep 200730 Sep 2008
Revenue (£m) 133.7 134.0 flatOperating profit (£m) 8.0 8.0 flatOperating margin 6.0 % 6.0 % flatWork in Hand 86 % 89 %Staff numbers (FTE inc. agency) 3,077 3,114 - 1 %Average staff numbers 2,937 3,082 - 5 %
Good
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Rail
• Results as predicted with significantly improved margin
• Good progress on large contracts (RuN resignalling)
• Growth in enhancement work
• Outlook remains good
30 Sep 200730 Sep 2008
Revenue (£m) 99.6 102.0 - 2 %Operating profit (£m) 7.1 3.9 + 82 %Operating margin 7.1 % 3.8 % + 330 bpWork in Hand 90 % 87 %Staff numbers (FTE inc. agency) 1,627 1,740 - 6 %Average staff numbers 1,643 1,712 - 4 %
Good
7
Middle East
• Excellent results
• Increasing demand for large-scale multi-disciplinary projects
• Dubai metro project progressing well
• Outlook for the rest of the year remains strong
30 Sep 200730 Sep 2008
Revenue (£m) 82.0 52.9 + 55 %Operating profit (£m) 8.7 4.6 + 89 %Operating margin 10.6 % 8.7 % + 190 bpWork in Hand 85 % 77 %Staff numbers (FTE inc. agency) 2,948 2,148 + 37 %Average staff numbers 2,696 1,947 + 38 %
Very Good
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Management and Project Services
• Faithful+Gould:
• Growth driven by energy, utilities and public sector services
• Challenging UK commercial property market
• Management Consultants:
• Refocused business performing ahead of expectations
30 Sep 200730 Sep 2008
Revenue (£m) 113.3 103.1 + 10 %Operating profit (£m) 7.5 6.5 + 15 %Operating margin 6.6 % 6.3 % + 30 bpWork in Hand 84 % 83 %Staff numbers (FTE inc. agency) 2,433 2,421Average staff numbers 2,449 2,350 + 4 %
FairFlat
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Asset Management
• 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
30 Sep 200730 Sep 2008
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 %Staff numbers (FTE inc. agency) 708 675 + 5 %Average staff numbers 687 678 + 1 %
Fair
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Cash Flow
30 Sept 2008 30 Sept 2007
• Working capital improvement in September due to early focus on debt collection
• Last year adversely impacted by extension of payment terms from Metronet
Operating profit 48.2 40.1Depreciation/amortisation 16.0 14.5Working capital (3.3) (48.5)Pension (28.1) (20.7)Provisions/other 5.4 (2.2)Cashflow from operations 38.2 (16.8)
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Pension
Gross Net of deferred tax
• 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
Net deficit at 1 April 2008 (213.1) (154.1)Service cost (4.8)Net finance cost (2.9)Total cost (7.7)Contributions 32.9Actuarial loss (20.7)Net deficit at 30 September 2008 (208.6) (150.8)
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Keith ClarkeChief Executive
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Atkins aims to become the World’s Best Infrastructure Consultancy through Multi-skill, Multi-local Excellence
• Multi-Skill• A broad range of skills for
complex projects
• Multi-Local• Strong devolved national
businesses
• Excellence• Striving to deliver world-leading
services
To be the world’s best
infrastructure consultancy
World’sWe will target
chosen geographies and
develop deep local expertise
BestWe will seek to
consistently anticipate and address our
clients’ needs
InfrastructureBuildings,
transport, utilities, Government and industry and their
social and environmental
context
ConsultancyOur primary
business model will be selling
expertise
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US UK & Europe RoWTransport, Buildings, Industry Transport, Buildings, Industry Transport, Buildings, Industry
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Atkins has a diverse portfolio
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Atkins markets are resilient
National Government Regulated PrivateLocal Government
UK Revenue segmentation
TransportOlympic GamesEducation
TransportDefenceEnvironment
TransportWaterUtilities
AerospaceOil and gasBuildings
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✔ 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)
✔ D&ES– Olympic Delivery Authority– Education: Design services for colleges
✔ Rail– London Underground: Significant
ongoing work programme
United Kingdom – Local Government
Segmental revenue Drivers
c.£200m
H&T
AM M&PS
D&ES
Rail
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United Kingdom – National Government
Segmental revenue Drivers
✔ 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– 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
✔ M&PS– Long term contracts: e.g. GCHQ (2 years to
2011), DCSF (1 year to 2010)
D&ES
M&PS
AM
H&T
c.£125m
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United Kingdom – Regulated
Segmental revenue Drivers
✔ 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
M&PS
D&ESRail
c.£125m
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United Kingdom – Private
Segmental Revenue Drivers
✔ M&PS– Commercial property sector workload
slowdown (<£10m)– Oil and gas/petrochemicals: strong
portfolio– Financial services clients outlook currently
stable
✔ D&ES– Aerospace: Airbus programmes on A350
and A400M– Oil and gas: continuing demand
✔ AM– Demand driven by requirement for cost
efficiency
AM
D&ES
H&TRail
M&PS
c.£100m
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Other
OmanQatar
Bahrain
Sharjah
Abu Dhabi
Dubai
Middle East
Segmental Revenue Drivers
✔ 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
UAE
£82m
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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
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Economic conditions have led to a number of credible scenarios
• Engineering consultancies can navigate well in difficult conditions
✔ Internal Levers– Quality and performance– Strength in depth – Barriers to entry– Conservative approach– Skill transferability
✔ Market Levers– Intervention– Outsourcing– Reengineering– Capital availability– Project pipeline management
Resilience
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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
16,90917,278
18,322
Sept2006
March2007
Sept2007
March2008
Sept2008
(Staff numbers exclude LSH: disposed in June 2007)
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Looking forward
✔ Confident for the full year 2008/09
✔ Demand for infrastructure remains
✔ Well placed:– Depth and breadth– Flexibility and agility
WS Atkins plcHalf year results – six months ended 30 September 2008
Plan Design Enable
26 November 2008
26
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.
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