Half year results for the six months ended 30 September 2014

WS Atkins plc Half year results for the six months ended 30 September 2014

13 November 2014

Uwe Krueger

Chief executive officer

Good results despite currency headwinds Strong performance in Middle East and Energy

3

• Revenue up 2% excluding effects of currency, acquisitions and

disposals

• Underlying profit before tax up 5%

• Underlying operating margin of 6.4%, up 90 basis points year on year

• Mixed UK and improving North American performance

• Strong financial position with net funds of £155.3m

• Interim dividend increased by 4.8% to 11.0p

• Outlook for the full year unchanged.

Heath Drewett

Group finance director

Financial summary

5

30 Sep 2014 30 Sep 2013

Revenue £831.4 m £915.4 m (9.2) %

Operating profit £44.6 m £49.7 m (10.3) %

Operating margin 5.4 % 5.4 % - bp

Underlying operating profit £53.0 m £50.7 m 4.5 %

Underlying operating margin 6.4 % 5.5 % 90 bp

Underlying profit before tax £46.9 m £44.7 m 4.9 %

Underlying diluted EPS 37.7 p 35.9 p 5.0 %

Dividend per share 11.0 p 10.5 p 4.8 %

Work in hand 89.1 % 87.7 %

Average staff numbers 17,569 17,715 (0.8) %

Net funds £155.3 m £136.1 m

30 Sep 2014 31 Mar 2014

Closing staff numbers 17,898 17,489 2.3 %

Segmental summary

6

£m Revenue Operating

profit/(loss)

Operating

margin

UK and Europe 428 22.4 5.2 %

North America 171 10.2 6.0 %

Middle East 96 8.9 9.3 %

Asia Pacific 53 3.5 6.6 %

Energy 81 8.1 10.0 %

Total for segments 829 53.1 6.4 %

Joint ventures included above -

Total before unallocated items 829 53.1 6.4 %

Unallocated central items 2 (8.5)

Total for Group 831 44.6 5.4 %

UK and Europe Mixed performance

7

30 Sep 2014 30 Sep 2013

Revenue (£m) 428.3 525.4 (18.5) %

Operating profit (£m) 22.4 27.7 (19.1) %

Operating margin 5.2 % 5.3 % (10) bp

Work in hand 85 % 87 %


30 Sep 2014 31 Mar 2014

Closing staff numbers 9,414 9,544 (1.4) %

UK Mixed trading

8

• Revenue in continuing businesses down 4% (excluding highways services revenue of

£73.7m

in prior year) and operating profit down 8.5%, against a strong first half comparator

• Market downturn in aerospace and outstanding contract variations in rail impacting margin

performance

• Our highways and design and engineering businesses have performed well,

driven by continuing investment in infrastructure by the UK Government

• Next phase of operational excellence announced, including reorganisation

of our six businesses.

30 Sep 2014 30 Sep 2013

Revenue (£m) 398.5 488.4 (18.4) %

Operating profit (£m) 22.7 26.2 (13.4) %

Operating margin 5.7 % 5.4 % 30 bp



30 Sep 2014 31 Mar 2014


North America Improved performance

9

• Revenue reduction reflects currency effects (£15m) and the sale of Peter Brown (£7m)

• Operating profit performance benefited from disposal of loss making Peter Brown business

• Margin improvement in consultancy, particularly good returns in Department of

Transportation work

• Focus around five market facing businesses and a streamlined organisational structure

expected to deliver further operating margin improvements.

30 Sep 2014 30 Sep 2013

Revenue (£m) 170.5 205.4 (17.0) %

Operating profit (£m) 10.2 8.4 21.4 %




30 Sep 2014 31 Mar 2014


North America analysis Progress despite currency headwinds

10

30 Sep 2014 30 Sep 2013

Revenue (£m)

Consultancy 137.5 164.1

Peter Brown - 6.9

Faithful+Gould 33.0 34.4

North America 170.5 205.4

Operating profit/(loss) (£m)

Consultancy 8.4 9.4

Margin 6.1% 5.7%

Peter Brown - (3.3)

Faithful+Gould 1.8 2.3

Margin 5.5% 6.7%

North America 10.2 8.4

Margin (%) 6.0% 4.1%

Middle East Strong first half performance

11

• Focus remains on three key markets: UAE, Qatar and Kingdom of Saudi

Arabia and three sectors: rail, infrastructure and property

• Significant performance improvement driven by major metro project wins

and improving property market in the UAE

• Strong pipeline of future project opportunities.

30 Sep 2014 30 Sep 2013

Revenue (£m) 96.0 82.6 16.2 %

Operating profit (£m) 8.9 4.2 112 %



Average staff numbers 2,288 1,979 15.6 %

30 Sep 2014 31 Mar 2014


Asia Pacific Good consultancy performance

12

• Revenue growth includes Confluence acquisition in October 2013

• Margin dilution reflects further investment in diversification in the

region and mainland China slowdown

• Positive second half outlook despite mainland China slowdown and

risk of project delays in Hong Kong.

30 Sep 2014 30 Sep 2013

Revenue (£m) 53.4 49.2 8.5 %


Operating margin 6.6 % 6.9 % (30) bp



30 Sep 2014 31 Mar 2014


Energy Strong first half performance

13

• Strong profit growth, in part due to impact of bid costs in prior year

• Nuclear Safety Associates acquisition achieved regulatory approval

• Looking ahead, attractive pipeline and international growth underpinned

further by recent Houston Offshore Engineering acquisition.

30 Sep 2014 30 Sep 2013

Revenue (£m) 81.3 83.4 (2.5) %





30 Sep 2014 31 Mar 2014


Cash flow

14

• Working capital performance reflects increasing lock-up in the UK

• Cash flow targets embedded in management incentive schemes

• Net funds at 30 September of £155.3m (Sep 2013: £136.1m).

£m 30 Sep 2014 30 Sep 2013

Operating profit 44.6 49.7

Depreciation/amortisation 11.6 11.4

Impairment of goodwill 2.8 -

Working capital (35.6) (33.5)

Pension (16.0) (16.0)

Other 6.1 (2.0)

Cash flow from operating activities 13.5 9.6

Working capital

15

First half increase driven by lock-up

£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 30 Sep 2014 31 Mar 2014 D

Trade receivables 300.6 281.9

Amounts recoverable on contracts 125.3 93.2

Fees invoiced in advance (175.2) (155.5)

Lock-up 250.7 219.6 (31.1)

Other receivables/prepayments 46.9 43.0 (3.9)

Trade payables (70.6) (63.1) 7.5

Other payables/accruals (232.7) (234.5) (1.8)

Other (6.3)

Movement in working capital (35.6)

Pension Improved asset performance

16

• £235m IAS 19 deficit net of

deferred tax at 30 Sept

2014 (March 2014: £258m)

• Strong asset and liability

hedging programme

performance offsetting

impact of falling

interest/discount rates

• Deficit repayment of £32m

in current year, thereafter

escalating at 2.5% per

annum.

317

342

249

206

187

242

217

263 258

235

Mar2010

Sep2010

Mar2011

Sep2011

Mar2012

Sep2012*

Mar2013*

Sep2013*

Mar2014

Sep2014

IAS19 deficit net of deferred tax

(£m)

* Restated for IAS19 revision

Summary

17

• Good first half performance

• Delivery of strategy continues

• Outlook for the remainder of 2014/15 is for continued underlying

growth and performance in line with expectations.

Uwe Krueger

Chief executive officer

19

Our strategy First half progress update

Positives

• Operational excellence remains a priority as we drive margin

improvement towards our 8% goal

• Portfolio optimisation continues with the sale of our Polish business

• Ongoing growth in Energy, with skills added through NSA and HOE

acquisitions

• Focused approach delivering strong results in the Middle East

• Strong financial position with net funds of £155m at September 2014

Challenges

• Resolving UK rail contract variations

• Reduced demand in aerospace market.

Acquisition strategy

20

• Organic growth remains our priority, augmented by appropriate

M&A

• Focused on additional skills and/or geographic presence

• Cultural fit is critical

• Primarily expected to be ‘bolt-on’ in terms of scale

• Given the Group’s financial position, more significant opportunities

will also be considered

• Dedicated central team to identify targets and support

execution/implementation.

Disciplined approach

Creating a differentiated offering

21

Clients

Collaboration

Technology/ innovation

External alliances and internal

cooperation

Driving advances in design and

engineering of projects.

Increased client intimacy and focus

Our clients Increasing focus

22

• Thought leadership – a real differentiator eg Future Proofing Cities,

Central planning office, Qatar

• Key account management and CRM tools

• target and prioritise key clients

• a systematic approach to business development (Miller Heiman)

• Selling our Group wide skillbase eg EDF

• Agility – responding to changing markets

• Potential co-investments.

23

Collaboration Value creation through internal cooperation

UK+

Europe

North

America

Energy Asia

Pacific

Middle

East

New

Technical

Professional

Organisation

West Kowloon

Cultural

District

Riyadh Metro

UK

reorganisation

EDF

GDC

24

Collaboration Value creation through external partnerships

Metros Domestic and

international

opportunities

Nuclear

activities

Vinci

Samsung

Chinese

contractors

URENCO

FCC

Assystem

Colombo Port City

Sri Lanka

Window of Canton

Technology/ innovation

25

We undertake around £40m p.a. of innovation and research & development

• This is both our clients’ programmes and investment from Atkins

• Examples include:

• Scenarios planning for the UK water sector

• High speed rail centre for excellence at Heriot Watt University

• Composite materials research.

Our people A critical differentiator

27

• Well established graduate and UK apprenticeship programmes

• Global leadership programme with Saïd Business School

• University partnerships

• Retention

• Viewpoint internal survey

• Confidence in our knowledge (88% positive) and its

contribution to meeting client objectives (86% positive)

remains very high

• 94% care about the success of our organisation.

Summary

28

• Good first half performance

• Delivery of strategy continues

• Outlook for the remainder of 2014/15 is for continued underlying

growth and performance in line with expectations.

WS Atkins plc Half year results for the six months ended 30 September 2014

13 November 2014

Financial appendices

Profit bridge Underlying profit before tax

31

54.8

44.7

46.9

39.0

1.0

11.1

2.2

0.5

4.4

4.0

Sept. 2013reported

Amortisation Profiton disposal

Underlying2013

Increase inunderlying

profit

Underlying2014

Profit ondisposal

Exceptionaltransaction

costs

Amortisation &impairment

Sept. 2014reported

UK revenue by sector Impact of highways services disposal

32

29%

23% 13%

10%

8%

8%

3% 3% 3%

2012/13 H1 2014/15

Roads

Rail (inc. mass transit)

Defence and security

Water and environment

Aerospace and aviation

Other

Buildings

Education

Urban development

36%

16% 11%

8%

7%

6%

5%

3%

9%

Working capital movement

33

Regional lock-up

£m 30 Sep 2014 31 Mar 2014 Inc/(Dec)

Lock-up

UK and Europe 106.1 87.1 19.0

North America 78.3 69.4 8.9

Middle East 66.1 67.3 (1.2)

Other (net) 0.1 (4.2) 4.4

Total 250.7 219.6 31.1

Net funds reconciliation

34

Innovation appendices

36

Key to icons

From the air to the ground How our expertise in aircraft composite materials has

delivered innovative solutions for new sectors

37

GIS Modelling & Monitoring Rapid assessment of flood schemes

38

Fast 80% time saving assessing flood

scheme economics

Screen locations to identify optimum

solution

Visualise impacts using 3D maps

StormCaster, Nationwide, USA Helping communities forecast storms

Produce a climate change-aware

90 year forecast of storms in your

community

A groundbreaking forecasting algorithm

produced through a partnership between

Atkins and Texas A&M university

A publicly available web App that brings

climate science to communities

Central reclamation phase III, Hong Kong Wave-absorbing seawall to reduce reflected waves

40

Improving the wave climate at new piers enhanced the berthing

operation, i.e. reduced chance of having accidents

Enhanced the marine traffic condition within Victoria Harbour by

reducing reflected waves generated from marine traffic

Digital Imaging for Condition Asset

Management (DIFCAM) The use of optional techniques

Reduced cost by rapid data capture

Improved safety less time track-side

Improved quality detailed 3D spatial data

42

Used by clients in all 10 FEMA regions in the United States

Presently the only publicly available software capable of

automating FEMA specified flood maps

Flood Map Desktop, Nationwide, USA Reducing the cost of flood map creation

Disclaimer

43

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.

Investor Relations

Half year results for the six months ended 30 September 2014