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WS Atkins plcPreliminary results for the year ended31 March 2014
12 June 2014
Uwe Krueger
Chief executive officer
Delivering growthGood results and significant strategic progress
3
• Underlying profit before tax up 7.3%, on turnover 2.6% ahead
• Continuing businesses operating margin of 7.2%, excluding Peter Brown and UK highways services
• Portfolio optimisation substantially complete
• Operational excellence roll out in North America and Middle East
• Confluence acquisition adds key programme management expertise and additional presence in our growth region ofAsia Pacific
• Pending acquisition of Nuclear Safety Associates brings additional skills to support the world’s largest nuclear fleet in US
• Strong operating cash flow with net funds of £188.3m
• Full year dividend increased by 5.5% to 33.75p.
Heath Drewett
Group finance director
Financial summary
5
2014 2013
Revenue £1,750 m £1,705 m 2.6 %
Operating profit £113.7 m £104.0 m 9.3 %
Operating margin 6.5 % 6.1 % 40 bp
Underlying operating profit £116.4 m £109.7 m 6.1 %
Underlying operating margin 6.7 % 6.4 % 30 bp
Underlying profit before tax £106.4 m £99.2 m 7.3 %
Underlying diluted EPS 85.7 p 82.6 p 3.8 %
Dividend per share 33.75 p 32.00 p 5.5 %
Work in hand 51 % 55 %
Average staff numbers 17,565 17,648 (0.5) %
Closing staff numbers 17,489 17,899 (2.3) %
Net funds £188.3 m £143.0 m
Segmental summary
6
£m RevenueOperating
profit/(loss)Operating
margin
UK and Europe 998 62.6 6.3 %
North America 381 19.1 5.0 %
Middle East 168 14.4 8.6 %
Asia Pacific 101 8.0 8.0 %
Energy 170 15.1 8.9 %
Total for segments 1,818 119.2 6.6 %
Joint ventures included above (65) 0.2
Total before unallocated items 1,753 119.4 6.8 %
Unallocated central items (3) (5.7)
Total for Group 1,750 113.7 6.5 %
UK and EuropeKey markets remain strong
7
• Revenue growth driven by buoyant UK rail market, Scandinavia flat
• UK highways services sale completed during the year (1,128 people
transferred).
* Excludes highways services
H1 2014 H2 2014 2014 2013
Revenue (£m) 525.4 472.9 998.3 977.1 2.2 %
Operating profit (£m) 27.7 34.9 62.6 62.2 0.6 %
Operating margin 5.3 % 7.4 % 6.3 % 6.4 % (10) bp
Work in hand* 87 % 49 % 51 %
Average staff numbers 9,924 9,751 9,913 (1.6) %
Staff numbers 9,606 9,544 10,134 (5.8) %
UKGood revenue growth in transportation
8
• 7% operating margin in continuing businesses, excluding
highways services
• M25 joint venture gain share, offset by provisions for outstanding
contract variation negotiations in rail
• Underlying headcount up 6.8%, excluding highways services
• Outlook stable given strong performance in 2014 and
aerospace softening.
H1 2014 H2 2014 2014 2013
Revenue (£m) 488.4 433.6 922.0 900.3 2.4 %
Operating profit (£m) 26.2 31.9 58.1 56.5 2.8 %
Operating margin 5.4 % 7.4 % 6.3 % 6.3 % 0.0 bp
Work in hand 88 % 50 % 52 %
Average staff numbers 9,184 9,017 9,129 (1.2) %
Staff numbers 8,878 8,810 9,374 (6.0) %
UK revenue by sectorHighways services impact
9
29%
23%13%
10%
8%
8%
3%3% 3%
2012/13 2013/14
(continuing businesses)
12%
33%
15%
9%
10%
9%
3%
5%4%
Roads
Rail (inc. mass transit)
Defence and security
Water and environment
Aerospace and aviation
Other
Buildings
Education
Urban development
EuropeStable markets
10
• Our Scandinavian business remains focused on rail, bridges
and roads
• Prior year results benefited from one off releases
• Scandinavian market experiencing changing industry business
models and project delays.
H1 2014 H2 2014 2014 2013
Revenue (£m) 37.0 39.3 76.3 76.8 (0.7) %
Operating profit (£m) 1.5 3.0 4.5 5.7 (21.1) %
Operating margin 4.1 % 7.6 % 5.9 % 7.4 % (150) bp
Work in hand 78 % 42 % 39 %
Average staff numbers 740 734 784 (6.4) %
Staff numbers 728 734 760 (3.4) %
North AmericaImproved business
11
• Stable performance in consultancy, overall segment results
impacted by Peter Brown, now sold
• Headcount reduction reflects right sizing in infrastructure and
environment business and Peter Brown disposal
• Streamlined organisational structure and operational excellence
initiatives expected to improve efficiency and operating margin
going forward.
H1 2014 H2 2014 2014 2013
Revenue (£m) 205.4 175.5 380.9 389.7 (2.3) %
Operating profit (£m) 8.4 10.7 19.1 15.3 24.8 %
Operating margin 4.1 % 6.1 % 5.0 % 3.9 % 110 bp
Work in hand 91 % 59 % 61 %
Average staff numbers 3,016 2,970 3,091 (3.9) %
Staff numbers 2,994 2,836 3,039 (6.7) %
North America analysisSteady margin in continuing businesses
12
H1 2014 H2 2014 2014 2013
Revenue (£m)
Consultancy 164.1 141.2 305.3 303.4
Peter Brown 6.9 (0.1) 6.8 24.4
Faithful+Gould 34.4 34.4 68.8 61.9
North America 205.4 175.5 380.9 389.7
Operating profit/(loss) (£m)
Consultancy 9.4 8.0 17.4 18.1
Margin 5.7% 5.7% 5.7% 6.0%
Peter Brown (3.3) 0.1 (3.2) (6.5)
Faithful+Gould 2.3 2.6 4.9 3.7
Margin 6.7% 7.6% 7.1% 6.0%
North America 8.4 10.7 19.1 15.3
Margin (%) 4.1% 6.1% 5.0% 3.9%
Middle EastStrong second half performance
13
H1 2014 H2 2014 2014 2013
Revenue (£m) 82.6 85.8 168.4 162.2 3.8 %
Operating profit (£m) 4.2 10.2 14.4 11.8 22.0 %
Operating margin 5.1 % 11.9 % 8.6 % 7.3 % 130 bp
Work in hand 90 % 63 % 80 %
Average staff numbers 1,979 1,985 2,006 (1.0) %
Staff numbers 1,971 2,071 1,979 4.6 %
• Second half performance driven by increased metro workload, key
infrastructure projects in Qatar and re-emerging property market
• Region continues to focus on three key markets: Qatar, UAE and
Kingdom of Saudi Arabia
• Significant future project opportunities remain.
Asia PacificDiversification progressing
14
• Growth in turnover includes c.£9m from Confluence acquisition
• Margin dilution reflects further investment in growth and acquisition
related costs
• Confluence acquisition adds additional programme management
expertise and market presence
• Recent West Kowloon Cultural District project win underpins
current year workload.
H1 2014 H2 2014 2014 2013
Revenue (£m) 49.2 51.3 100.5 88.0 14.2 %
Operating profit (£m) 3.4 4.6 8.0 8.1 (1.2) %
Operating margin 6.9 % 9.0 % 8.0 % 9.2 % (120) bp
Work in hand 93 % 49 % 50 %
Average staff numbers 1,317 1,357 1,260 7.7 %
Staff numbers 1,341 1,498 1,295 15.7 %
EnergyA further year of good growth
15
H1 2014 H2 2014 2014 2013
Revenue (£m) 83.4 86.2 169.6 151.9 11.7 %
Operating profit (£m) 6.4 8.7 15.1 13.8 9.4 %
Operating margin 7.7 % 10.1 % 8.9 % 9.1 % (20) bp
Work in hand 78 % 32 % 33 %
Average staff numbers 1,401 1,424 1,307 9.0 %
Staff numbers 1,420 1,461 1,376 6.2 %
• Strong revenue growth across oil and gas and nuclear businesses
• Margin maintained, despite significant bid activity during the year
• Acquisition of Nuclear Safety Associates pending regulatory approval
• Attractive pipeline and international growth underpins current
year expectations.
Cash flow
16
• Strong working capital performance
• Cash flow targets embedded in management incentive schemes
• Net funds £188.3m (March 2013: £143.0m).
Increased cash flow from operating activities
£m 2014 2013
Operating profit 113.7 104.0
Depreciation/amortisation 22.2 28.6
Working capital (9.6) (27.0)
Pension (32.0) (21.0)
Provisions/other 1.2 (1.7)
Cash flow from operating activities 95.5 82.9
Working capital
17
Composition of year on year movement
£m 2014 2012
Operating profit 104.1
Depreciation/amortisation 28.6
Working capital (27.0)
Pension (21.0)
Provisions/other (1.8)
Cash flow from operating activities 82.9
£m 31 Mar 2014 31 Mar 2013 D
Trade receivables 281.9 290.6
Amounts recoverable on contracts 93.2 106.5
Fees invoiced in advance (155.5) (165.9)
Lockup 219.6 231.2 11.6
Other receivables/prepayments 43.0 52.1 9.1
Trade payables (63.1) (74.3) (11.2)
Other payables/accruals (234.5) (246.5) (12.0)
Inventories/other (7.1)
Movement in working capital (9.6)
PensionTriennial valuation completed
18
• £258m IAS 19 deficit net of
deferred tax at 31 March
2014 (March 2013: £217m)
• Year on year increase
driven by
• discount rate reduction
• modest asset
performance
• Triennial valuation
completed with payments
held at £32m for first two
years, thereafter escalating
at 2.5% per annum.
302317
342
249
206
187
242
217
263 258
Sep2009
Mar2010
Sep2010
Mar2011
Sep2011
Mar2012
Sep2012*
Mar2013*
Sep2013*
Mar2014
IAS19 deficit net of deferred tax
(£m)
* Restated for IAS19 revision
Outlook
19
• Continued progress in strategic focus areas
• Good demand for services in key markets
• Outlook for 2014/15 is for continued underlying growth
and performance in line with expectations.
Uwe Krueger
Chief executive officer
Our overall objective is value creation
21
Drive margins >8%
+
Reduce dependence on UK
(long term aspiration <25%)
+
Grow organically and by acquisition
Increased shareholder value
Delivering the strategyLooking forward
22
Our business Our markets Our strategy
Our businessWinning work
23
• Embedding key account management
– Cross selling capability
– Partnering : Hitachi, Siemens, Areva, EDF, CCCC
– CRM tools
• Adoption of systematic approach to business development(Miller Heiman) to deliver more work with existing clients
• Brand investment
– To achieve clear differentiation between ourselves and our competitors in the market
– To help unify the Group as one Atkins worldwide
– To enable us to market ourselves more effectively and winmore work.
Our businessDelivering work
24
• Major projects
– Riyadh metro
– SDP (Silos Direct Encapsulation Plant)
– West Kowloon Cultural District
– Central Planning Office, Qatar
– UK schools’ programme
• Frameworks
– FEMA
– AMP 5/6
– BP
– URENCO
• Partnering/design build delivery
– Samsung, China Railway ConstructionCorporation, VINCI.
Riyadh Metro
M+ museum, West Kowloon Cultural District
Our marketsEmerging trends supporting growth
25
Urbanisation
Work delivery
Technology
Creating ongoing demand for new
and improved infrastructure
Driving advances in design and
engineering of projects.
Establishing centres of excellence
Our marketsResponding to market trends
26
Urbanisation
• Infrastructure and Cities Advisory
• Future Proofing Cities
Work delivery
Global design centres in Bangalore
and Delhi.
Future Proofing Cities, Lagos
Safina Towers, our offices in Bangalore
Our marketsResponding to market trends
27
Technology
• Building Information Modelling (BIM)
• Innovation – intelligent mobility
– big data, predictive analytics.
3D models in BIM, Farringdon station, Crossrail
28
Our strategyPillars and progress
Positives
• Operational excellence roll out in North America and Middle East
• Strong second half margin performance
• Portfolio optimisation substantially complete
• Continued growth in Energy – our key sector focus area
• Strong cash generation across the Group
Challenges
• Growth in our non-transportation consultancy business inNorth America
• Reduced demand in aerospace and working through the UK AMP cycle transition
• Resolving UK rail contract variations.
Sector/regional focusProgress on acquisitions
29
Confluence
• Programme and project
management skill-base
• Headquartered in Singapore
with 237 people across Asia
Pacific and Middle East
• £8.4m consideration
• Attractive private sector
focused client base.
© Marina Bay Sands Pte. Ltd. 2010. All rights reserved
Singapore Grand Prix
Marina Bay Sands Resort
Our businessDelivering work
30
• People
– Well established graduate and UK apprenticeship
programmes
– Global leadership programme with Saïd Business School
– University partnerships
– Industry awards
• The Atkins Way
– Created an employer value proposition to assist retention
and recruitment.
SummaryGood results and significant progress on our strategy
31
• Our objective is to drive shareholder value and we will accelerate
our strategy through operational excellence, portfolio optimisation
and sector/regional focus
• Execution of our strategy is delivering bottom line improvement
• Outlook for 2014/15 is for continued underlying growth
and performance in line with expectations.
WS Atkins plcPreliminary results for the year ended31 March 2014
12 June 2014
Appendices
Profit bridgeUnderlying profit before tax
34
103.3
99.2
106.4
114.2
5.3
4.3
10.0
4.56.7
0.5
10.5
2.7
2012/13Reported
IAS 19 pensionchanges
Pension credit PBSJamortisation
and impairment
Net profit ondisposal
2012/13Underlying
Operating profitimprovement
JV/interest andother
2013/14Underlying
Profit ondisposal
Amortisation ofintangibles
2013/14Reported
Working capital movement
35
Regional lock-up
£m 2014 2013 Inc/(Dec)
Lock-up
UK and Europe 87.1 100.2 (13.1)
North America 69.4 80.5 (11.1)
Middle East 67.3 76.7 (9.4)
Other (net) (4.2) (26.2) 22.0
Total 219.6 231.2 (11.6)
Group results Continuing businesses
36
2013/14
reported
Peter
Brown
Highways
services
2013/14
continuing
Revenue (£m) 1,750.1 6.8 72.4 1,670.9
Underlying operating profit /(loss) (£m) 116.4 (3.2) (1.0) 120.6
Underlying operating margin 6.7 % 7.2 %
Net funds reconciliation
37
£m CashLoan notes
< 1yr
Loan notes
> 1yr
Financial
assets at
FV
Borrowings
< 1yr
Borrowings
> 1yr
Leases
< 1yr
Leases
> 1yrNet funds
Operating profit 113.7 113.7
Depreciation/amortisation 22.2 22.2
Working capital (9.6) (9.6)
Pension (32.0) (32.0)
Provisions / other 1.2 1.2
Cash flow from operating activities 95.5 95.5
Net interest (2.0) (2.0)
Tax (10.9) (10.9)
Joint ventures - -
Net capital expenditure (16.9) (16.9)
65.7 65.7
Acquisitions / disposals 6.7 6.7
Dividends (31.7) (31.7)
Net cash flow 40.7 40.7
Non-operating items Foreign Exchange (7.0) 4.6 3.8 (7.0)
EBT share purchase (8.4)
Financing - I Disposal of operations - 0.7 3.9
Investment growth - (0.2) 4.4
Acquired -
Financing - II Financial assets 4.2 (4.2)
Distribution from
operations-
Leases : principal 6.8 0.6 7.2
New loan notes (0.4) 0.4
Redemption of loan
notes 0.5 (0.1)
Movement 35.8 0.4 (0.1) (4.4) 4.6 3.8 1.3 3.9 45.3
Opening balance 201.5 - 20.0 35.9 (59.8) (49.3) (1.4) (3.9) 143.0
Closing balance 237.3 0.4 19.9 31.5 (55.2) (45.5) (0.1) - 188.3
Disclaimer
38
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.
