2003 interim results

Interim Results 2003 :Interim Results 2003 Sydney Gillibrand, CBEChairman


Highlights :Highlights Order book strong Acquisition of SPIE Pre-tax profit* £35.7 million in line with expectations Dividend up 5.9 per cent to 3.6p per share Board changes * Before goodwill amortisation and exceptional items


AMEC Operational Structure :AMEC Operational Structure * And executive responsibility for Asia Pacific


Interim Results 2003 :Interim Results 2003 Sydney Gillibrand, CBEChairman


Interim Results 2003 :Interim Results 2003 Stuart SiddallFinance Director


SPIE TransactionsBasis of Accounting :SPIE TransactionsBasis of Accounting SPIE Outstanding 54% acquired 5 March 2003 January and February, accounted for as a joint venture at 46% March to June, accounted for as a subsidiary at 100% Spie Batignolles Agreement reached to dispose of 51% of shares Completion expected in early September 2003 Associate from 5 March 2003 (100%); post disposal (49%) Turnover not recognised Profit, interest and tax recognised (100%/49%) Cash excluded


Financial Summary*Six months ended 30 June 2003 (£ million) :Financial Summary*Six months ended 30 June 2003 (£ million) Total turnover 2,320.6 2,109.9 Pre-tax profit 35.7 41.6 Diluted earnings per share 8.0p 9.7p Effective tax rate 32.4% 31.0% Dividend 3.6p 3.4p Dividend cover 2.2x 2.9x Performance in line with expectations Particularly good first half in 2002 Second half of 2003 expected to be stronger than last year On track to make progress in 2003 Pre-tax exceptional credit of £0.7 million * Before goodwill amortisation and exceptional items 2003 2002


Net DebtAs at 30 June 2003 (£ million) :Net DebtAs at 30 June 2003 (£ million) Net debt 320.4 194.4 Average weekly net debt/(cash) AMEC 170.0 180.0 SPIE acquisition cost * 182.0 n/a SPIE * (22.0) n/a 330.0 180.0 Improvement in AMEC average net debt SPIE acquisition cost as expected SPIE cash reflects exclusion of Spie Batignolles, disposal of headquarters and acquisition of Ipedex * Assumed date of acquisition 1 January 2003 2003 2002


Cash Flow Six months ended 30 June 2003 (£ million) :Opening net debt 1 January (37.3) (44.6) Cash flow from trading activities (85.7) (126.2) Net loss/(profit) retained in joint ventures 0.9 (3.3) Acquisitions/disposals/share issues (169.3) 20.9 Interest, tax and dividends (27.2) (34.2) Currency and other adjustments (1.8) (7.0) Closing net debt 30 June (320.4) (194.4) Cash Flow Six months ended 30 June 2003 (£ million) Usual first half outflow, payments on account reduced Good cash collections around half year end Acquisitions are mainly SPIE and Ipedex, less net cash acquired Cumulative cash flow for 7 years to 2002 in line with retained profit* 2003 2002 * Cash flow excludes corporate transactions, retained profit before expensing of goodwill


Total Operating Profit/(Loss)*By Business six months ended 30 June 2003 (£ million) :Client Support Services 37.0 3.0 38.7 4.2 Capital Projects 19.2 1.8 20.1 1.7 Investments 5.1 8.9 5.0 8.6 61.3 2.6 63.8 3.0 Corporate costs ** (13.0) (11.2) 48.3 2.0 52.6 2.5 Total Operating Profit/(Loss)*By Business six months ended 30 June 2003 (£ million) Margin % 2002 2003 Margin % Margins difficult to interpret: Spie Batignolles from subsidiary to associate Low levels of activity in industrial Full consolidation of SPIE dilutes overall margin as expected Corporate costs now include SPIE regional costs * Before goodwill amortisation and exceptional items ** No E-commerce costs in 2003; 2002 £1.2 million


Client Support ServicesSix months ended 30 June 2003 (£ million) :Client Support ServicesSix months ended 30 June 2003 (£ million) Consulting and Design Total turnover 153.2 178.9 Total operating profit* 3.5 9.0 Margin* % 2.3 5.0 2003 2002 Result in line with expectations Industrial markets remain weak Markets affected by US defence budget constraints Improved performance expected in second half * Before corporate costs, goodwill amortisation and exceptional items


Client Support ServicesSix months ended 30 June 2003 (£ million) :Client Support ServicesSix months ended 30 June 2003 (£ million) Operation Support Services Total turnover 1,060.4 747.1 Total operating profit* 33.5 29.7 Margin* % 3.2 4.0 2003 2002 Consolidation of 100% of SPIE increases profit and dilutes margin Strong performance from oil, gas and rail activities Margin impacted by weakness in industrial markets and utilities Progress expected in second half * Before corporate costs, goodwill amortisation and exceptional items


Capital ProjectsSix months ended 30 June 2003 (£ million) :Capital ProjectsSix months ended 30 June 2003 (£ million) Construction Management Total turnover 107.1 282.1 Total operating profit* (3.4) 0.5 Margin* % (3.2) 0.2 2003 2002 Difficult US commercial building market Restructuring of the business Targeting break even in second half and 2004 * Before corporate costs, goodwill amortisation and exceptional items


Capital ProjectsSix months ended 30 June 2003 (£ million) :Capital ProjectsSix months ended 30 June 2003 (£ million) Construction Total turnover 986.8 873.0 Total operating profit* 22.6 19.6 Margin* % 2.3 2.2 2003 2002 Organic growth in oil, gas, transport and infrastructure Accounting for Spie Batignolles benefits margin Will reduce in second half Disposal marginally dilutive Usual improvement expected in second half * Before corporate costs, goodwill amortisation and exceptional items


InvestmentsSix months ended 30 June 2003 (£ million) :InvestmentsSix months ended 30 June 2003 (£ million) Property Development and Regeneration Total turnover 39.6 43.2 Total operating profit* 0.5 3.3 Challenging UK property development market Result includes Wind Energy development costs of £1.5 million Stronger second half performance expected as usual 2003 2002 * Before corporate costs, goodwill amortisation and exceptional items


InvestmentsSix months ended 30 June 2003 (£ million) :InvestmentsSix months ended 30 June 2003 (£ million) Public Private Partnership Total turnover 17.8 15.1 Total operating profit* 4.6 1.7 Improved contribution from concession companies Lower bid costs Highly selective in pursuing projects 2003 2002 * Before corporate costs, goodwill amortisation and exceptional items


Net Interest PayableSix months ended 30 June 2003 (£ million) :Net Interest PayableSix months ended 30 June 2003 (£ million) Group interest 8.1 6.0 Share of joint ventures and associates: - PPP/Property Development 4.4 3.9 - SPIE interest 0.1 1.1 12.6 11.0 2003 2002 Group interest reflects acquisition of SPIE Increased fixed rate borrowing adds to interest cost Interest cover* remains good at 5.2 times * Excluding PPP concessions and before goodwill amortisation and exceptional items


Fair Value AccountingFRS 7 :Fair Value AccountingFRS 7 SPIE acquisition adjustments – £5 million Some employee benefit issues and tax Spie Batignolles disposal adjustments – £20 million Disposal maximises price and minimises warranties given Tax indemnities provided Warranties given on several old claims


Pension Schemes FRS 17 :Pension Schemes FRS 17 Adoption of FRS 17 deferred Three main UK schemes in surplus Over £100 million as at 31 December 2002 Focus on scheme assumptions* Key assumptions around median levels * For details of pension scheme assumptions, see supplementary slides


US and UK Private Placement of DebtLong-Term Funding :US and UK Private Placement of DebtLong-Term Funding Completed 17 July 2003 US$189 million raised Replaces existing bank facilities Significant extension of debt maturity Favourable interest rates secured Short-term increase to interest charge of £2.5 million per annum


Interim Results 2003 :Interim Results 2003 Sir Peter Mason, KBEChief Executive


Introduction :Introduction First half performance in line with expectations Oil and gas, transport and infrastructure markets strong Industrial markets remain weak Steady performance in French regional services Order book strong


AMEC - Oil and GasOil and Gas Markets Remain Strong :AMEC - Oil and GasOil and Gas Markets Remain Strong Contracts expected to be worth in excess of £500 million announced since 31 December Seven year UK support services contract with Shell Bruce platform for Rhum gas field with BP * Total turnover 6 months ended 30 June 2003 including pro forma 100% of SPIE and excluding Spie Batignolles 25% of Turnover* Sectors Upstream Downstream Pipelines Well positioned in new areas of development Acquisition of Ipedex further strengthens position Pipeline contracts in Sakhalin and the Caspian Enfield FPSO contract (Western Australia)


AMEC – TransportRail Continues to Drive Growth :AMEC – TransportRail Continues to Drive Growth Rail UK high output track renewal, communications, power upgrade and West Coast mainline renewal projects Maintenance spending in the UK remains high Light railway opportunities in Europe 15% of Turnover* Sectors Rail Highways Airports * Total turnover 6 months ended 30 June 2003 including pro forma 100% of SPIE and excluding Spie Batignolles Highways A1(M) and M60 contracts Incheon Bridge, South Korea Airports Framework with BAA significantly expanded Activity levels on Terminal 5 increasing


AMEC - InfrastructureUK Government Spending Remains Strong :AMEC - InfrastructureUK Government Spending Remains Strong UK expenditure on defence, hospitals and other public infrastructure continues to grow Recent contracts include Management of Scottish estates Government office for the North East Submarine berthing facility, Clyde 15% Turnover* Sectors Defence Detention Public and Private Buildings Urban Renewal * Total turnover 6 months ended 30 June 2003 including pro forma 100% of SPIE and excluding Spie Batignolles


AMEC - Infrastructure :AMEC - Infrastructure Public Private Partnerships Net bidding costs reduced, profits from operational concessions increased AMEC remains committed but selective Property Development and Regeneration UK commercial markets challenging Diversity expected to maintain satisfactory returns on investment British Waterways English Cities Fund For further information on AMEC’s PPP activities,see supplemental slides


AMEC - InfrastructureWind Energy :AMEC - InfrastructureWind Energy Leader in UK wind energy Five onshore and one offshore site operational 11 onshore and one offshore site under development Some 200MW of onshore projects a year expected from 2004 Established position in offshore wind Opportunities in project investment, construction and operations and maintenance services Second round of offshore licences could provide opportunities with an overall capital value in excess of £1 billion For further information on AMEC’s wind energyprojects, see supplemental slides


AMEC - IndustrialTiming of Recovery Remains Uncertain :AMEC - IndustrialTiming of Recovery Remains Uncertain Market decline in US activity has slowed, but remains 21 per cent down year-on-year** Little change in Europe AMEC activity levels remain at lower levels experienced in second half of 2002 Signs of recovery in the US Mining and forest industry Timing of recovery remains uncertain 10% Turnover* Sectors Chemicals, Electronics and Telecom, Food and General Manufacturing, Forest Industry, Mining and Metals, Pharmaceutical, Power Generation and Transmission ** US private construction expendituresJune 2003 Source: Datastream * Total turnover 6 months ended 30 June 2003 including pro forma 100% of SPIE and excluding Spie Batignolles


AMEC – Regional ServicesSteady First Half Performance :AMEC – Regional ServicesSteady First Half Performance Order intake and volume in Europe essentially flat Activity levels in Environmental down on first half of 2002 Lower industrial spending and diversion of US defence budgets to Iraq Marked improvement expected in second half Increasing geographical coverage provides important platform for growth 35% Turnover* Sectors Continental Europe Communications, Electrical, HVAC, Mechanical and Industrial North America Environmental Consulting * Total turnover 6 months ended 30 June 2003 including pro forma 100% of SPIE and excluding Spie Batignolles


Order Book*As at 30 June 2003 :Order Book*As at 30 June 2003 * Excludes Spie Batignolles and Regional Services Order book up 10 per cent on 31 December 2002 to £3.6 billion For further information on recent major contractannouncements, see supplementary slides


OutlookLong-Term Prospects in Majority of AMEC’s Markets Remain Good :OutlookLong-Term Prospects in Majority of AMEC’s Markets Remain Good Sound progress expected in full year 2003 Benefit from acquisition of SPIE Oil and gas, transport and infrastructure markets strong Long-term outlook encouraging Regional services robust Timing of recovery in industrial markets remains uncertain Return to organic growth expected in 2004


Interim Results 2003 :Interim Results 2003


Interim Results 2003Supplementary Data Other Matters :Interim Results 2003Supplementary Data Other Matters


Spie BatignollesAMEC’s Future Involvement :Spie BatignollesAMEC’s Future Involvement Three board members, participation in major decisions Will work together in projects of common interest where construction partner required AMEC will retain interest until 31 December 2008 unless: Spie Batignolles exercises call option under a prescribed valuation basis Disposal of Spie Batignolles (100%) On 1 January 2009 or later, AMEC can dispose of 49% but Spie Batignolles has pre-exemption rights


Balance Sheet AnalysisExcluding SPIE (£ million) :Balance Sheet AnalysisExcluding SPIE (£ million) * Based on previous six months’ turnover excluding joint ventures Payments on account (135.3) (165.8) (135.6) Trade creditors due within one year (604.1) (639.5) (677.1) (739.4) (805.3) (812.7) Trade debtors due within one year 783.8 724.7 800.5 Net operating assets/(liabilities) 44.4 (80.6) (12.2) Months of turnover in debtors* 3.2 2.8 2.9 Months of turnover in trade creditors* 2.5 2.7 2.4 Ratio of debtors to creditors 1.3 1.0 1.2 2002 31 Dec 30 Jun 2003 30 Jun


Balance Sheet AnalysisIncluding SPIE for 2003 (£ million) :Balance Sheet AnalysisIncluding SPIE for 2003 (£ million) * Based on previous six months’ turnover excluding joint ventures Payments on account (228.3) (165.8) (135.6) Trade creditors due within one year (1,433.4) (639.5) (677.1) (1,661.7) (805.3) (812.7) Trade debtors due within one year 1,723.0 724.7 800.5 Net operating assets/(liabilities) 61.3 (80.6) (12.2) Months of turnover in debtors* 4.9 2.8 2.9 Months of turnover in trade creditors* 4.1 2.7 2.4 Ratio of debtors to creditors 1.2 1.0 1.2 2002 31 Dec 30 Jun 2003 30 Jun


Pension SchemesFRS 17 :Pension SchemesFRS 17 AMEC Average* Range* % % % Assumed rates of return Equities 7.5 7.8 5.9-11.0 Bonds 5.5 5.1 4.0-6.0 Property 6.5 6.8 6.0-8.0 Cash 4.5 4.0 2.0-5.8 Assumed rates of increase Discount 5.5 5.6 5.0-6.5 Inflation 2.3 2.4 2.0-3-0 Salary increases 3.3 3.9 1.3-5.6 Pension increases 2.3 2.6 2.0-5.0 * Source: Company Reporting, based on an analysis of 273 of the UK’s largest companies


Interim Results 2003Supplementary Data Recent Major Contract Announcements :Interim Results 2003Supplementary Data Recent Major Contract Announcements


Recent Major Contract Announcements :Recent Major Contract Announcements Oil and Gas 01 Aug Sakhalin Pipeline SEIC £28m * 15 Jul Australian Offshore Oil & Gas Woodside Energy £3m ** 10 Jul North Sea Services Shell £237m 27 May SECCO SECCO £53m 21 May Rhum project BP £35m 10 Feb Fawley ExxonMobil £5m 04 Feb Kizomba B ExxonMobil £6m 03 Feb Sakhalin II Shell JV £144m 27 Jan Gulf of Mexico Hook-ups BP £5m 13 Jan Support Services KNOC £3m £0.5 billion * Amended value** Includes option for additional services taking contract value to £36 million AMEC share


Recent Major Contract Announcements :Recent Major Contract Announcements Transport 02 Apr Southern Power Upgrade Network Rail in year 1 £23m 10 Mar M60 Upgrade Highways Agency £51m 25 Feb DLR Extension DLR £140m 14 Feb A1(M) Highways Agency £61m 29 Jan 10 year Framework Agreement BAA up to £800m 23 Jan Communications Network Rail £20m 17 Jan High output track renewal Network Rail £100m up to £1.2 billion AMEC share


Recent Major Contract Announcements :Industrial 07 Jul Carbon Fibre Plant China Worldbest group £15m 03 Feb Telecom support services Crown Castle £20m 28 Jan Grangemouth ops support BP £4m Infrastructure 28 Apr GONE project Hanro Group £15m 16 Apr New PFI prisons Interserve/UKDS c.£25m 08 Apr New submarine berthing facility MoD c.£100m 01 Apr Scottish PRIME MoD £230m 03 Mar Astronomy and Space Centre Merseytravel £4m AMEC share Recent Major Contract Announcements


Interim Results 2003Supplementary DataPPP Projects :Interim Results 2003Supplementary DataPPP Projects


Investments PPP Portfolio Financially Sound and Profitable :Investments PPP Portfolio Financially Sound and Profitable Share of non recourse debt in projects £311 million Operational £192 million Under construction £119 million Five projects operational Operating profit of £6 million (2002: £4 million) Support limited to equity commitments of £40 million Contingent equity arising from adverse events AMEC share £10 million Joint and several obligationif partners fail to provide equity commitments £27 million


Investments - Public Private PartnershipsSix months ended 30 June 2003 (£ million) :Investments - Public Private PartnershipsSix months ended 30 June 2003 (£ million) 2003 2002 Operating profit from concessions 5.5 3.8 Overheads/net bid costs (0.9) (2.1) Total operating profit 4.6 1.7 Net interest payable (3.8) (2.7) Pre-tax profit/(loss) 0.8 (1.0)


Support for Joint VenturesInvestment Commitments (£ million) :Total investment to date of £29.1 million Commitments phased over next five years Investment in regeneration dependent upon market conditions Support for Joint VenturesInvestment Commitments (£ million) Public Private Partnerships As at 31 December 2002 24.2 Additions 19.7 Invested during 2003 (4.3) 39.6 Regeneration Partnerships As at 31 December 2002 28.2 Invested during 2003 - 28.2 Total investment commitments as at 30 June 2003 67.8


PPP Projects Secured to Date :Date signed PPP Projects Secured to Date Transport A1(M) Peterborough to Alconbury 1996 43 operational A419/417 1996 28 operational A13 Thames Gateway 2000 57 in construction A1(M) Darrington to Dishforth 2003 50 in construction DLR Extension 2003 141 in construction Hospitals Cumberland Infirmary 1997 60 operational UCLH 2000 115 in construction Accommodation Inland Revenue Newcastle Estate 1998 232 operational Water Treatment Ayrshire Wastewater Treatment 2000 30 operational International Cross Israel Highway 1999 50 in construction Status Construction Value (£ million)


AMEC PPP ProjectsA419/417 Swindon to Gloucester :AMEC PPP ProjectsA419/417 Swindon to Gloucester Project Value: £122m AMEC Equity: £4.8m (25%) £4.8m invested to date £3.7m repaid Funding Structure: Capital bond 51% EIB loan 34%, Equity 15% Client: UK Highways Agency Consortium: RMS Gloucester Ltd (with Alfred McAlpine/ Halliburton /Dragados) Date: Signed 1996 (30 year concession) Status: Operational Improved and extended highway linking the M4 at Swindon and the M5 near Gloucester


AMEC PPP ProjectsA1(M) Peterborough to Alconbury :AMEC PPP ProjectsA1(M) Peterborough to Alconbury Project Value: £202m AMEC Equity: £7.8m (25%) £7.8m invested to date £1.1m repaid Funding Structure: Capital bond 51% EIB loan 34%, Equity 15% Client: UK Highways Agency Consortium: RMS Peterborough Ltd (with Alfred McAlpine/ Halliburton /Dragados) Date: Signed 1996 (30 year concession) Status: Operational 22 kilometre section of the A1 highway, upgraded to motorway standard


AMEC PPP ProjectsCumberland Infirmary :AMEC PPP ProjectsCumberland Infirmary Project Value: £84m AMEC Equity: £4.0m (50%) £4.0m invested to date £1.1m repaid Funding Structure: Capital bond 90%, Equity 10% Client: Carlisle NHS Trust Consortium: Health Management (Carlisle) plc (with Interservefm) Date: Signed 1997 (45 year concession) Status: Operational New 444 bed infirmary, including non-clinical support services


AMEC PPP ProjectsInland Revenue Newcastle Estate :AMEC PPP ProjectsInland Revenue Newcastle Estate Project Value: £250m AMEC Equity: £15.5m (50%) £11.0m repaid £0.5m invested to date £4.0m yet to be invested Funding Structure: Syndicated bank debt 90%, Equity 10% Client: UK Inland Revenue Consortium: Newcastle Estate Partnership Ltd (with Interservefm) Date: Signed 1998 (30 year concession) Status: Operational Office accommodation project for the Inland Revenue, on four sites in Tyne and Wear


AMEC PPP ProjectsA13 Thames Gateway :AMEC PPP ProjectsA13 Thames Gateway Project Value: £210m AMEC Equity: £5.9m (25%) £1.0m invested to date £4.9m yet to be invested Funding Structure: Capital bond 51% EIB loan 39%, Equity 10% Client: Transport for London Consortium: RMS A13 plc (with Alfred McAlpine/Halliburton/Dragados) Date: Signed 2000 (30 year concession) Status: Under construction 20 kilometre highway stretching from the City of London to the M25 orbital motorway


AMEC PPP ProjectsUniversity College London Hospital :AMEC PPP ProjectsUniversity College London Hospital Project Value: £282m AMEC Equity: £11.8m (33%) £5.9m invested to date £5.9m yet to be invested Funding Structure: Bank debt 90%, Equity 10% Client: UCLH NHS Trust Consortium: Health Management (UCLH) plc (with Balfour Beatty/Interservefm) Date: Signed 2000 (38 year concession) Status: Under construction New 669 bed hospital, including non-clinical support services


AMEC PPP ProjectsDocklands Light Railway City Airport Extension :AMEC PPP ProjectsDocklands Light Railway City Airport Extension Project Value: £175m AMEC Equity: £7.2m (50%) £7.2m yet to be invested Funding Structure: Syndicated bank debt 90%, Equity 10% Client: Transport for London Consortium: City Airport Rail Enterprises plc (with Royal Bank of Scotland) Date: Signed 2003 (30 year concession) Status: Under construction 4.4 kilometre extension of the Docklands Light Rail network to London’s City Airport


AMEC PPP ProjectsAyrshire Water Treatment Works :AMEC PPP ProjectsAyrshire Water Treatment Works Project Value: £79m AMEC Equity: £1.9m (25%) £1.9m invested to date Funding Structure: Bank debt 90%, Equity 10% Client: Scottish Water Consortium: Ayr Environmental Services (with Northumbrian Water/ Degremont) Date: Signed 2000 (30 year concession) Status: Operational Sewage and sludge treatment works


AMEC PPP ProjectsA1(M) Darrington to Dishforth :AMEC PPP ProjectsA1(M) Darrington to Dishforth Project Value: £236m AMEC Equity: £4.7m (25%) £4.7m yet to be invested Funding Structure: Capital bond 47%, EIB loan 45%, Equity 8% Client: UK Highways Agency Consortium: RMS Darrington Ltd (with Alfred McAlpine/ Halliburton/Dragados) Date: Signed 2003 (33 year concession) Status: Under construction 52 km section of the A1 in Yorkshire, upgraded to motorway standard


AMEC PPP ProjectsCross Israel Highway :AMEC PPP ProjectsCross Israel Highway Project Value: £926m AMEC Equity: £9.2m (11%) £9.2m yet to be invested Funding Structure: Capital market/private placing 20%, Syndicated bank debt 70%, Equity 10% Client: Cross Israel Highways (State of Israel) Consortium: Derech Eretz Highways (with Aecon/Africa Israel/Housing & Construction Holdings) Date: Signed 1999 (30 year concession) Status: Under construction 53 mile section of the Cross Israel Highway between Hadera and Gedera


Interim Results 2003Supplementary Data Wind Energy Projects :Interim Results 2003Supplementary Data Wind Energy Projects


Wind Energy ProjectsSix Operational Sites :Wind Energy ProjectsSix Operational Sites Further details are available at www.amec.com/wind


Wind Energy ProjectsTwelve Project Development Sites :Wind Energy ProjectsTwelve Project Development Sites Further details are available at www.amec.com/wind


Interim Results 2003 :Interim Results 2003