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WS Atkins plc

WS Atkins plc. Preliminary results for the year ended 31 March 2007. 26 June 2007. Keith Clarke. Chief Executive. Record Year (pre exceptionals). Revenue. Operating Profit. + 22%. + 20%. £m. £m. Staff Growth. Total Staff. Staff turnover. %.

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WS Atkins plc

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  1. WS Atkins plc Preliminary results for the year ended 31 March 2007 26 June 2007

  2. Keith Clarke Chief Executive

  3. Record Year (pre exceptionals) Revenue Operating Profit + 22% + 20% £m £m

  4. Staff Growth Total Staff Staff turnover % • Improved retention in context of tightening market • Record but planned growth of 1,900

  5. UK c.5% China c.25% USA c.4% Middle East c.20% India c.30% Wage Inflation • Significant variations around the world and by skill level • Anticipated pressures this year • Majority is passed to client in medium term • Anticipate in our budgeting

  6. Lambert Smith Hampton • Sale agreed at £46.5m plus up to £10m • Exceptional year with record year end • Completion of the exit strategy Operating Profit £m

  7. Metronet Enterprise • Notice of extraordinary review for both BCV & SSL • Exceptional loss Equity written down to zero £91.3m Consequential supply chain exceptional £30.0m £121.3m

  8. Robert MacLeod Group Finance Director

  9. Financial highlights Year ended 31 March 2006 Year ended 31 March 2007

  10. Metronet Enterprise £ million • Prudent exceptional supply chain provisions • Heads of Terms agreed to collapse Trans4m – requires banks approval • 620 staff currently engaged on Metronet related work

  11. Segmental analysis Before exceptional items Operating Profit 2006 2007 Equity Investments Design and Engineering Solutions Equity Investments Design and Engineering Solutions Asset Management Asset Management Management and Project Services Management and Project Services Middle East and China Middle East and China Highways and Transportation Rail Highways and Transportation Rail £76.6m £62.9m

  12. Design and Engineering Solutions Before exceptional items Year ended 31 March 2006 Year ended 31 March 2007 • Good year in strong markets • Acquisitions performing well • Headcount growth key – c.200staff in GDC

  13. Design and Engineering Solutions Markets Drivers • Utilities – Increased AMP4 programme • Environment and Planning – Strong UK regeneration programmes • Nuclear – Energy review and decommissioning requirement • Oil&Gas – High oil price • Defence – Through life costing considerations Environment and Planning Utilities Aerospace Others Education Defence Nuclear Oil & Gas Strong Markets

  14. Highways and Transportation Year ended 31 March 2006 Year ended 31 March 2007 • Good year across all part of business • New contracts performing well • 2007/08 significant bid activity

  15. Highways and Transportation Markets Drivers • Highways Services – More Local Authorities adopting integrated services model – Competitive market • Transport PlanningandDesign – Public sector funding under strain – Funding to TIF, London and other cities – Eddington Review Highways Services Design Transport Planning Innovative solutions required

  16. Rail Before exceptional items Year ended 31 March 2006 Year ended 31 March 2007 • Recovery in Network Rail related activities • Offset by loss on contracts in Poland • Significant activity in Rail signalling projects

  17. Rail Markets Drivers • Network Rail – Robust re-signalling programme >£2bn over 5 years • Increasing passenger demand –Capacity constraints require new solutions • Regionalisation • Metronet – Secured work to fall but significant requirement remains Others Contractors Network Rail Metronet Robust renewals programme

  18. Middle East and China Year ended 31 March 2006 Year ended 31 March 2007 • Excellent performance in Middle East • Rail business established in year • China profitable with good opportunities

  19. Middle East and China Markets Drivers Middle East • Building Design – Remains strong with emphasis on sustainability and innovative projects • Rail – Regional expansion • Infrastructure – Future opportunities to expand services China • Strong urban and infrastructure development • Relaxation on licensing is happening Urban Planning and Design & Building Design Urban Planning & Infrastructure Design China Middle East Others Project Supervision and Services Rail Excellent prospects

  20. Management and Project Services Before exceptional items Year ended 31 March 2006 Year ended 31 March 2007 • Faithful+Gould performing well with growth in USA • Management Consultants performance disappointing – due to –Reorganisation –Integration of Mantix

  21. Management and Project Services Markets Drivers F+G UK • Robust market • Strong property and education sectors F+G USA • New focus upon large market • MD now in USA Management Consultants • Continuing Government demand expected • Increasingly competitive marketplace Management Consultants F+G Asia Pacific F+G USA F+G UK Robust markets

  22. Asset Management Year ended 31 March 2006 Year ended 31 March 2007 • Profit reduction due to one-off benefits in 2005/06 • Modern Housing Solutions recovered from poor start • Niche Business

  23. Equity Investments Before exceptional items Year ended 31 March 2006 Year ended 31 March 2007 • Exceptional LSH performance –£7.3m (2006: £3.6m) • Disposal of non-core business to management team for £46.5m • £40.0m cash • £6.5m loan note • Up to £10m further payable depending upon current year performance

  24. Taxation – Effective Tax Rate £ million Year ended 31 March 2006 Year ended 31 March 2007 • Reduced Tax Rate due to: • 3 years R&D benefit • Increased profits from Middle East • Cash tax rate expected to be <15% due to pension payments

  25. Cash flow Dynamics Year ended 31 March 2006 Year ended 31 March 2007 £ million • Lock-up days 27 (31 in 2006) • Working capital improved due to: – Metronet Supply Chain – Middle East performance

  26. Pension Net of Deferred Tax £ million Gross • Consultation regarding Atkins Pension Plan change ongoing • Formal valuation underway (30 June 2006 estimated: £187m) • Buyout deficit c.£520m pre-tax

  27. Keith Clarke Chief Executive

  28. Strategy • Identity + Excellence • Preference for organic growth • Selective bolt-on acquisitions

  29. UK – 12,500 staff Revenue Markets • Nuclear • Defence • Oil&Gas • Environmental Engineering • Rail • Highways • Architecture • Cost consultancy • Aerospace • …. UK Private Sector UK Regulated UK Public Sector Strong underlying demand

  30. UK Market ranking NCE Consultants File 2007 – Market Ranking

  31. Middle East and China Middle East – staff c.1700 China – staff c.900 • Resilient market • Clients taking us abroad • Strong brand • Emerging Market • But market accessibility is key • Sustainable profitability is yet to come

  32. Europe and USA Europe – staff c.670 USA – staff c.650 • Refocused market • A Group Executive member now appointed • Act local and leverage group resources • Cost consultancy and oil & gas • Growth potential

  33. Conclusion • Government efficiency drives • Government spending pressures • International competition • Excellent market position • Very strong skill base • Robust market needs Sustainable growth and continued incremental overall margin improvement

  34. WS Atkins plc Preliminary results for the year ended 31 March 2007 26 June 2007

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