|
TIDMAMEC
RNS Number : 6365J
AMEC PLC
09 August 2012
AMEC plc 2012 half-year results
Strong performance continues
Highlights
-- Revenue GBP2,026 million, up 37 per cent
o Underlying revenue up 28 per cent: up 15 per cent excluding GBP200 million of incremental procurement
o Positions group for full year double-digit underlying growth, as expected
-- EBITA(1) GBP152 million, up 25 per cent
-- Margin(2) 7.5 per cent, down 70 basis points largely as a result of increased procurement
-- Diluted EPS from continuing operations(4) 36.1 pence, up 25 per cent
-- Operating cash flow(5) GBP142 million, up GBP67 million
-- Order intake and forward visibility remain good
o Order book strong at GBP3.7 billion (June 2011: GBP3.4 billion; December 2011: GBP3.7 billion)
-- Completed two acquisitions for a total consideration of GBP156 million
-- Purchased GBP158 million of shares under the GBP400 million share buyback programme
-- Interim dividend per share up 15 per cent, to 11.7 pence
Chief Executive Samir Brikho said:
"AMEC has had an excellent start to the year, with revenue growth boosted by phasing of project execution and procurement in our oil & gas and mining businesses in particular. This flowed into EPS, which was up 25 per cent at 36.1 pence, and operating cash flow - where we also achieved a good performance.
"We have completed two acquisitions year-to-date, expanding our engineering capability in the nuclear sector and further strengthening our geographic footprint in Australia. The pipeline of further acquisition opportunities remains good.
"The order book has been maintained at record levels. We see continued demand for our services, and this has not been significantly impacted by the on-going economic uncertainty. Second half revenues are anticipated to be maintained at broadly the same level as the first half, leaving us on track to deliver double-digit underlying revenue growth for the full-year. We expect to continue to deliver good growth in 2013."
Results presentation and live webcast: AMEC will host a presentation on the interim results for analysts and investors at 9.00am today. A live webcast of the event and presentation slides will be available on amec.com.
Interview: with Samir Brikho, Chief Executive, Ian McHoul, Chief Financial Officer and Neil Bruce, Chief Operating Officer is available at www.merchantcantos.net/amec/2012/interim-results
Next events:
-- AMEC is hosting a capital market event focused on the oil & gas market on 30 October 2012
-- Interim Management Statement on 14 November 2012.
Analyst consensus estimates are collated and published on AMEC's website on a periodic basis amec.com/investors/key_facts.
Enquiries to:
AMEC plc: + 44 (0)20 7539 5800
Samir Brikho, Chief Executive
Ian McHoul, Chief Financial Officer
Sue Scholes, Director of Communications
Nicola-Jane Brooks, Head of Investor Relations
Media:
Brunswick Group LLP - Mike Harrison and
David Litterick + 44 (0)20 7404 5959
PAGE 1
Financial highlights
Group
Six months ending 30 June 2012 2011 Change (%)
------------------------------- --------- ------ ------ -----------
Revenue (GBPm) 2,026 1,484 +37
EBITA(1) (GBPm) 152 122 +25
Adjusted profit before tax(3) (GBPm) 157 126 +24
Profit before tax (GBPm) 126 101 +25
=============================== ========= ====== ====== ===========
Operating cashflow(5) (GBPm) 142 75 +89
Adjusted diluted earnings per
share(4) pence 36.1 28.8 +25
Diluted earnings per share
from continuing operations pence 30.0 24.0 +25
Dividend per share pence 11.7 10.2 +15
------------------------------- --------- ------ ------ -----------
Notes:
1. EBITA for continuing operations before intangible amortisation and exceptional items but including joint venture EBITA
2. EBITA as defined above as a percentage of revenue
3. EBITA, as defined above, plus net financing income (including joint ventures) of GBP5 million (2011: GBP4 million)
4. Diluted earnings per share from continuing operations before intangible amortisation and exceptional items
5. Cash generated from operations before exceptional items and discontinued operations and legacy settlements but including dividends received from joint ventures
Basis of presentation
The following commentary is based on the results for continuing operations before intangible amortisation and exceptional items but including joint venture EBITA.
The results are presented to the nearest million. Percentage movements and calculated numbers, such as EPS and margin rates, are based on the underlying numbers to 1 decimal place precision.
Segmental analysis
Segmental analysis is provided for the group's core activities in the Natural Resources, Power & Process and Environment & Infrastructure divisions, as well as fornon-core Investments and other activities.
Amounts and percentage movements relating to continuing segmental earnings before net financing income, tax and intangible amortisation (EBITA) are stated before corporate costs of GBP18 million (2011: GBP17 million) and pre-tax exceptional costs of GBP10 million (2011: GBP4 million).
The average numbers of employees stated in this review include agency staff.
Discontinued operations
In accordance with IFRS 5*, the post-tax results of discontinued operations are disclosed separately in the consolidated income statement.
*International Financial Reporting Standard 5: 'Non-current assets held for sale and discontinued operations'.
Any forward looking statements made in this document represent management's best judgement as to what may occur in the future. However, the group's actual results for the current and future fiscal periods and corporate developments will depend on a number of economic, competitive and other factors, some of which will be outside the control of the group. Such factors could cause the group's actual results for future periods to differ materially from those expressed in any forward looking statements made in this document.
PAGE 2
Group
Six months ending 2012 Underlying Currency Net acquisitions 2011
30 June business exchange
---------------------- --------- ------- ----------- ---------- ----------------- -------
Revenue (GBPm) 2,026 417 9 116 1,484
Y-on-Y change (%) +37 +28 +1 +8
EBITA (GBPm) 152 24 nil 6 122
Y-on-Y change (%) +25 +21 nil +4
EBITA margin (%) 7.5 8.2
Y-on-Y change (bps) (70)
====================== ========= ======= =========== ========== ================= =======
Operating cash flow (GBPm) 142 75
Y-on-Y change (%) +89
Order book (GBPbn) 3.7 3.4
Y-on-Y change (%) +9
Average number of
employees 27,733 24,032
Y-on-Y change (%) +15
---------------------- --------- ------- ----------- ---------- ----------------- -------
Revenue for the first six months of 2012 increased by 37 per cent to GBP2,026 million (30 June 2011: GBP1,484 million). The underlying revenue (excluding the impact of currency and net acquisitions) increased by 28 per cent, driven by a strong performance in the oil & gas and mining sectors and assisted by project phasing and the incremental impact of procurement activities on certain Natural Resources contracts. Excluding this incremental procurement, underlying revenue increased by 15 per cent.
EBITA increased 25 per cent to GBP152 million (30 June 2011: GBP122 million) with underlying EBITA up 21 per cent, despite lower than anticipated profits from key performance indicator targets (KPIs) on Kearl initial development due to schedule delays. EBITA margin declined by 70 basis points to 7.5 per cent (30 June 2011: 8.2 per cent), impacted, as expected, by the increase in procurement activities and a shift in work mix in the Natural Resources division, and offset in part by margin improvements in the other two divisions. Excluding the impact of the incremental procurement activity, the margin was broadly in line with H1 2011.
Adjusted profit before tax of GBP157 million in H1 2012 was ahead of the previous year (30 June 2011: GBP126 million) driven by volume growth and acquisitions. There was joint venture tax of GBP2 million (30 June 2011: GBP3 million), amortisation of GBP19 million (30 June 2011: GBP18 million) and exceptional losses of GBP10 million (30 June 2011: GBP4 million) resulting in profit before tax of GBP126 million (30 June 2011: GBP101 million). The tax charge for H1 2012 was GBP27 million (30 June 2011: GBP22 million) giving a total profit from continuing operations for H1 2012 of GBP99 million (30 June 2011: GBP79 million).
Adjusted diluted earnings per sharefrom continuing operations were 36.1 pence (30 June 2011: 28.8 pence).
Operating cash flow for the period was GBP142 million, up GBP67 million from the comparable period last year, an increase of 89 per cent.
PAGE 3
Dividend
A 15 per cent increase in the interim dividend to 11.7 pence per share (30 June 2011: 10.2 pence) demonstrates the board's continuing confidence in the group's future performance and is in line with AMEC's progressive dividend policy.
Share buyback
As at 30 June, 14,820,000 shares had been purchased at a cost of GBP158 million under the GBP400 million share buyback programme announced in February. The average cost was GBP10.68 per share. As at 8 August 2012, a further GBP33 million of shares had been purchased under an irrevocable, non-discretionary arrangement (see note 8), bringing the total purchased to GBP191 million.
Acquisitions
In the first six months of the year, the group invested GBP156 million in two acquisitions . The larger was Serco's nuclear technical services business (TS), a 600-person team based in the UK, acquired in June for GBP139 million. As expected, the Office of Fair Trading is currently carrying out its review of the transaction and has invited comments by 10 August 2012. The second was Unidel, a 260-person energy, resources and infrastructure engineering and consultancy business based in Australia (May 2012). Acquisitions made in 2011, including MACTEC, which was purchased in June 2011, have now been fully integrated into AMEC's activities.
The acquisition pipeline in 2012 continues to be good.
Average number of employees
The average number of employees in the first half was 27,733, up 15 per cent compared with the same period in 2011 reflecting increased activity levels, particularly in UK North Sea and the Americas, as well as the impact of acquisitions.
Outlook
The demand for AMEC's services continues to be strong, despite on-going economic uncertainty.
Although second half underlying revenue growth is expected to be significantly lower than H1 2012 due to phasing of project execution in Natural Resources, the group remains on track to deliver double-digit underlying revenue growth for the full year. The group expects to continue to deliver good growth in 2013.
Consistent with previous years, second half margin is expected to increase, although it will be lower than in H2 last year due to the shift in business mix and increased procurement activities as previously identified.
AMEC's balance sheet remains strong and operating cash flow in the full year is expected to be good.
PAGE 4
Segmental review
Natural Resources
Natural Resources provides engineering, project management and asset support services, particularly in upstream oil and gas, unconventional oil and in mining. It has particular expertise in large and complex projects in growth regions and in extending the life of assets.
Approximately three-quarters of revenues are generated by asset development (capex) activities, with the remainder in asset support (opex). Oil and gas activities are concentrated mainly in the upstream sector (90 per cent of revenues), with the balance being in midstream and downstream.
H1 revenue can be analysed by sector as shown below:
Natural Resources 2012 2011
Six months ending 30
June
-------------------------- ----- ----- -----
Oil & Gas market
20 Oil & Gas (%) 48 52
20 Unconventional Oil
& Gas (%) 30 24
Minerals & Metals market (%) 22 24
-------------------------- ----- ----- -----
Natural Resources 2012 Underlying Currency Net acquisitions 2011
Six months ending business exchange
30 June
-------------------- ---------- ------- ----------- ---------- ----------------- -------
Revenue (GBPm) 1,200 402 1 7 790
Y-on-Y change (%) +52 +51 nil +1
EBITA (GBPm) 92 8 nil nil 84
Y-on-Y change (%) +10 +10 nil nil
EBITA margin (%) 7.6 10.6
Y-on-Y change (bps) (300)
-------------------- ---------- ------- ----------- ---------- ----------------- -------
Order book (GBPbn) 2.2 2.1
Y-on-Y change (%) +6
==================== ========== ======= =========== ========== ================= =======
Average number of
employees (nos) 13,411 11,657
Y-on-Y change (%) +15
-------------------- ---------- ------- ----------- ---------- ----------------- -------
Revenue in the Natural Resources division improved by 52 per cent in the first half to GBP1,200 million (30 June 2011: GBP790 million). A strong underlying performance across all three sectors was supported by the timing of contract awards and phasing of project execution, and was further boosted by the incremental effect of increased procurement activities (approximately GBP200 million) on key projects. Excluding this increase in procurement, underlying growth was 26 per cent.
EBITA (GBP92 million) was up by 10 per cent, reflecting this increase in volume. Margins declined to 7.6 per cent, down 300 basis points from H1 2011. This is largely the result of the increased procurement activities and a shift in work mix to the more mature markets of the UK North Sea and Gulf of Mexico, as previously flagged. In addition, profits from KPIs on Kearl initial development in Alberta, Canada were lower than anticipated due to schedule delays.
PAGE 5
Contract wins in H1 2012 reflect the continued customer spending in energy and commodity markets. They included:
-- BP: front end engineering and design (FEED) for the second phase of the substantial Mad Dog field, Gulf of Mexico, US
-- BP: GBP10 million contract to modify and extend its Kinneil Terminal, UK
-- SABIC UK Petrochemicals Limited: extensions to two existing asset support contracts worth GBP70 million, UK
-- Abu Dhabi Marine Operating Company (ADMA OPCO): project management consultancy (PMC) services for the 'execute phase' of the Nasr Phase 1 and Umm Lulu Phase 1 field development projects offshore Abu Dhabi, UAE
-- Abu Dhabi Gas Liquefaction Company (ADGAS): PMC services contract for the FEED phase of the flaring and emissions reduction project at their LNG facilities on the island of Das, UAE
-- ENI and Chevron: two asset support contracts for AMEC Clough JV - from repeat customers in Australia.
Other on-going projects include engineering and project management for the main platform design for BP Clair Ridge, the detailed engineering and procurement of ConocoPhillips' existing Judy platform and the hook-up and commissioning of the new Jasmine facilities in the UK North Sea, the design and delivery of components of the Marine Well Containment Company's expanded containment system in the US Gulf of Mexico , a long-term project management contract for KOC in Kuwait, and the EPC contract for Fortescue Metals Group's Cloudbreak project in Australia, as well as the on-going oil sands work for Imperial Oil, Syncrude, Teck, Suncor and Connacher, among others.
The order book at 30 June 2012 was up 6 per cent at GBP2.2 billion (30 June 2011: GBP2.1 billion).
The incremental impact of procurement in H2 is expected to be about half that seen in H1. Excluding this effect, revenue in the second half is expected to be similar to H1, with the relative weighting of growth compared with 2011 significantly impacted by the phasing of project execution. Overall, 2012 is expected to deliver double-digit underlying revenue growth and this is expected to continue in 2013, even excluding procurement.
Consistent with previous years, second half margins are expected to increase, although they will remain impacted by the shift in the business mix towards more mature regions and low-margin procurement activities.
PAGE 6
Power & Process
Power & Process is principally based in the UK and Americas and provides engineering, project management and asset support services in the clean energy market. It has a leading position in the nuclear sector, particularly in the UK, where its services are well-balanced across the asset lifecycle.
Approximately halfof the division's revenues are generated by capex services with the remainder in asset support (opex).
H1 revenue can be analysed by sector as shown below:
Power & Process 2012 2011
Six months ending
30 June
------------------------------- --------- ----- -------
Clean Energy market
20 Nuclear (%) 28 31
20 Renewables / Bioprocess (%) 35 18
20 Conventional Power (%) 21 34
20 Transmission & Distribution (%) 16 17
----------------------------------- ----- ----- -------
Power & Process 2012 Underlying Currency Net acquisitions 2011
Six months ending business exchange
30 June
-------------------- --------- ------ ----------- ---------- ----------------- ------
Revenue (GBPm) 454 17 5 nil 432
Y-on-Y change (%) +5 +4 +1
EBITA (GBPm) 39 4 nil 35
Y-on-Y change (%) +11 +11 nil
EBITA margin (%) 8.5 8.1
Y-on-Y change (bps) +40
-------------------- --------- ------ ----------- ---------- ----------------- ------
Order book (GBPbn) 0.9 0.8
Y-on-Y change (%) +15
==================== ========= ====== =========== ========== ================= ======
Average number of
employees (nos) 7,370 6,946
Y-on-Y change (bps) +6
-------------------- --------- ------ ----------- ---------- ----------------- ------
Revenue for the period increased by 5 per cent, to GBP454 million (30 June 2011: GBP432 million), reflecting a strong performance in the renewable/bioprocess sector in the Americas in particular and continued activity in the UK nuclear sector.
EBITA was up 11 per cent, to GBP39 million (30 June 2011: GBP35 million). The overall EBITA margin improved by 40 basis points to 8.5 per cent.
PAGE 7
Serco's nuclear technical services business was acquired on 29 June 2012.
Contract awards in H1 2012 include:
-- Sellafield Ltd (two contracts): the first is a three-year framework agreement to provide specialist environmental consultancy support on the Sellafield site. The second is a 15-year design support framework contract to provide Sellafield with the full range of engineering services for the development and refurbishment of new and existing facilities and for decommissioning. The latter was awarded to AMEC's AXIOM joint venture (JV).
-- National Grid: five-year extension to the Electricity Alliance West contract, worth about GBP650 million. AMEC has approximately 48 per cent share of the JV, UK.
In addition, in July 2012, AMEC was awarded a three-year contract to provide waste treatment services to the Bohunice nuclear power plant in Slovakia.
In the North American clean energy market, the Sapphire Energy biofuel project in the US continues to advance, and in Canada, good progress is being made on the 99 MW Erieau wind project and the 10 MW Brockville PV solar project. Work is also continuing on a variety of other clean energy projects.
The order book at 30 June was up on the previous year at GBP0.9 billion (30 June 2011: GBP0.8 billion). The 'Tier One' Sellafield decommissioning contract, as an equity accounted joint venture, is not included in these figures.
Progress continues to be made on the resolution of the 'older contracts' which, as previously referenced, do not meet the revised criteria of low-risk services with high value-add.
Progress is expected to continue during the second half. The TS acquisition is expected to be earnings enhancing from 2013.
PAGE 8
Environment & Infrastructure
Environment & Infrastructure is a leading international environmental and engineering consulting organisation. It works across all AMEC's markets and provides a complementary offering to many customers common to the Natural Resources or Power & Process divisions.
The division provides services from approximately 230 offices, mainly in North America, but with an increasing presence in the growth markets of Europe, South America and Australasia.
H1 revenues can be analysed by market and sector as follows:
Environment & Infrastructure 2012 2011
Six months ending 30
June
--------------------------------- ----- ----- -----
Oil & Gas market (%) 14 16
Minerals & Metals market (%) 16 11
Clean Energy market (%) 2 2
Environment & Infrastructure
market
a Government services (%) 23 24
a Industrial / Commercial (%) 15 18
Transportation /
a Infrastructure (%) 17 15
a Water (%) 13 14
---- --------------------------- ----- ----- -----
Environment & Infrastructure 2012 Underlying Currency Net acquisitions 2011
Six months ending business exchange
30 June
------------------------------ --------- ------ ----------- ---------- ----------------- ------
Revenue (GBPm) 397 (4) 3 109 289
Y-on-Y change (%) +38 (1) +1 +38
EBITA (GBPm) 36 6 nil 6 24
Y-on-Y change (%) +50 +27 nil +23
EBITA margin (%) 9.1 8.3
Y-on-Y change (bps) +80
------------------------------ --------- ------ ----------- ---------- ----------------- ------
Order book (GBPbn) 0.6 0.5
Y-on-Y change (%) +12
============================== ========= ====== =========== ========== ================= ======
Average number of
employees (nos) 6,776 5,213
Y-on-Y change (bps) +30
------------------------------ --------- ------ ----------- ---------- ----------------- ------
Revenue increased by 38 per cent to GBP397 million in the first half (30 June 2011: GBP289 million). Performance was strongest in the oil & gas, minerals & metals and transportation & infrastructure sectors, boosted by the full six-month impact of MACTEC. Unidel, acquired in May 2012, is expected to contribute in the second half.
EBITA increased 50 per cent to GBP36 million in the six months to 30 June 2012 (30 June 2011: GBP24 million). Overall EBITA margin increased 80 basis points to 9.1 per cent (2011: 8.3 per cent). The margin uplift is largely the result of overhead efficiency resulting from the MACTEC acquisition.
PAGE 9
The order book improved in the first half of the year to GBP0.6 billion (30 June 2011: GBP0.5 billion). Some of the recent on-going contracts include:
-- Government Procurement Services: three-year framework agreement to provide environmental and sustainability advice, support and delivery services across the UK public sector
-- North London Waste Authority: framework contract to help deliver state-of-the-art new waste services for North London, UK.
The expansion of the business has made seasonal effects less pronounced, though the Unidel acquisition will contribute to the second half. Margins are expected to be stable year-on-year.
Investment and other activities
This principally comprises the Incheon Bridge PPP project in Korea, now in operational phase, the group's insurance captive, and AMEC's residual UK Wind development activities. Revenue was maintained at GBP3 million (30 June 2011: GBP3 million) with EBITA of GBP3 million in the first half (30 June 2011: a loss of GBP4 million).
Financial review
Geographic analysis
The group's largest market was Canada with 30 per cent of revenues (30 June 2011: UK 31 per cent).
Administrative expenses
Administrative expenses of GBP114 million are 9 per cent higher than last year (30 June 2011: GBP105 million), reflecting recent acquisitions.
Net financing income
The net financing income for the first half of GBP7 million is in line with last year and includes bank interest of GBP2 million (2011: GBP3 million), net interest on pensions assets of GBP5 million (2011: GBP3 million) and other items of GBPnil (2011: GBP1 million).
The average interest rate received for the first six months of the year was approximately 0.7 per cent (2011: 0.8 per cent).
Taxation
Continuing operations
The group's effective tax rate for the first six months of 2012 for the continuing businesses (including tax attributable to joint venture interests) before exceptional items and excluding intangible amortisation was 24.0 per cent (30 June 2011: 24.1 per cent). The full year tax rate is expected to remain around the 24 per cent level.
Financial position and net cash
The group remains in a strong financial position, with net cash as at 30 June 2012 of GBP290 million (30 June 2011: GBP455 million). On 18 July, the Group entered into a five-year multi-currency revolving credit facility of GBP377 million, to be used as required for general business purposes.
PAGE 10
Going concern
The directors are satisfied that the group has adequate resources to operate for the foreseeable future. As at 30 June 2012, the group held net cash of GBP290 million.
Intangible amortisation and goodwill impairment
Intangible amortisation relates to capitalised software and intangible assets acquired as part of the group's expansion programme. The first half charge of GBP19 million is GBP1 million higher than in 2011 (GBP18 million) reflecting acquisition activity and a GBP2 million goodwill impairment in 2011.
Exceptional items
Total pre-tax exceptional losses of GBP1 million (2011: GBP5 million) include:
-- a loss on business disposals and closures of GBP8 million arising from adjustments to existing provisions made in respect of prior year disposals and closures
-- other exceptional gains of GBP7 million which include the transaction costs of acquisitions made in the period and certain deferred compensation costs on prior year acquisitions, along with the costs of funding a joint venture which was part of a recent acquisition. These costs have been offset by the recognition, within discontinued operations,of an insurance receivable following the Supreme Court Judgement on mesothelioma liability, a provision against which was established a number of years ago.
Legacy issues
There have been no significant contingent liabilities identified in the first half of 2012.
Cash generated from operations in the first half of 2012 was GBP130 million (30 June 2011: GBP54 million). After adjusting for exceptional items and discontinued operations and legacy settlements but including dividends received from joint ventures, operating cash flow was GBP142 million (30 June 2011: GBP75 million). The year-on-year increase in operating cash flow reflects the higher EBITA and reduced working capital outflows.
Pensions
The IAS 19 surplus of the principal UK pension schemes at 30 June 2012 was GBP35 million (31 December 2011: GBP32 million). The schemes have operated on a career average salary basis since 1 January 2008. During 2012 it was announced that the principal UK pension scheme will be closed to new entrants from 1 October 2012, but will remain open to future accrual for existing members.
The net charge to the income statement in 2012 from pensions, including both the current service accrual and net financing income, is expected to be higher than last year (31 December 2011: GBP12 million) as a result of the reductions in bond yields experienced towards the end of 2011.
PAGE 11
Provisions
Provisions held at 30 June 2011 were GBP178 million (31 December 2011: GBP169 million). During 2012, GBP10 million of the brought forward provisions were utilised, and as part of the ongoing review of the potential liabilities, an additional GBP22 million of provisions were created.
Provisions are analysed as follows:
As at 30 June 2012 GBP million
------------------------------- ------------
Litigation provisions 51
Indemnities granted to buyers
and retained obligations on
disposed businesses 69
Insurance and other 58
=============================== ============
Total 178
------------------------------- ------------
Business risks and opportunities
AMEC operates in some 40 countries globally, serving a broad range of markets and customers. As such, the group is subject to certain general and industry-specific risks. Where practicable, the group seeks to mitigate exposure to all forms of risk through effective risk management and risk transfer practices.
AMEC operates predominately in the UK and North America and is therefore particularly affected by political and economic conditions in those markets.
Changes in general economic conditions may influence customers' decisions on capital investment and/or asset maintenance, which could lead to volatility in the development of AMEC's order intake. These may also lead to change in the customer base, competition and in the way customers procure the services we provide.
AMEC seeks to maintain a balanced geographic presence, and, through acquisition and organic growth, will continue to increase its exposure to other attractive regions of the world.
The risks associated with economic conditions resulting in a downturn and affecting the demand for AMEC's services has been addressed, as far as practicable, by seeking to maintain a balanced business portfolio in terms of geographies, markets, clients and service offering / business model.
In light of current global economic uncertainties, steps have been taken to assess and monitor any potential impact on AMEC's business opportunities and address potential increased supply chain and, more broadly counterparty risk.
Other risks
Other than the specific risks detailed above, the board considers that the nature of the principal risks and uncertainties which may have a material effect on the group's performance in the second half of the year is unchanged from those identified on pages 22 and 23 of the 2011 annual report and accounts. These are:
PAGE 12
changes in commodity prices, expansion of global footprint, mergers and acquisitions, project delivery, pensions, health, safety and security, legacy risk, information technology, staff recruitment and retention and ethical breach.
Notes to Editors:
AMEC (LSE: AMEC) is a focused supplier of consultancy, engineering and project management services to its customers in the world's oil and gas, minerals and metals, clean energy, environment and infrastructure markets. With annual revenues of some GBP3.3 billion, AMEC designs, delivers and maintains strategic and complex assets and employs over 29,000 people in around 40 countries worldwide. See amec.com.
PAGE 13
CONDENSED CONSOLIDATED INCOME STATEMENT
Six months ended 30 June
2012
Before Amortisation,
amortisation, impairment
impairment and
and exceptional
exceptional items
items (note 4) Total
Note GBP million GBP million GBP million
Continuing operations
Revenue 3 2,026 - 2,026
Cost of sales (1,772) - (1,772)
-------------- -------------- ------------
Gross profit 254 - 254
Administrative expenses (114) (29) (143)
Profit on business disposals - - -
and closures
-------------- -------------- ------------
Profit/(loss) before net financing
income 140 (29) 111
Financial income 9 - 9
Financial expense (2) - (2)
-------------- -------------- ------------
Net financing income 7 - 7
Share of post-tax results of
joint ventures 8 - 8
-------------- ------------
Profit/(loss) before income tax 3 155 (29) 126
Income tax 5 (36) 9 (27)
-------------- -------------- ------------
Profit/(loss) for the period
from continuing
operations 119 (20) 99
Profit for the period from
discontinued operations 6 - 7 7
--------------
Profit/(loss) for the period 119 (13) 106
============== ============== ============
Attributable to:
Equity holders of the parent 106
Non-controlling interests -
------------
106
============
Basic earnings per share: 7
Continuing operations 36.7p 30.6p
Discontinued operations - 2.1p
-------------- ------------
36.7p 32.7p
============== ============
Diluted earnings per share: 7
Continuing operations 36.1p 30.0p
Discontinued operations - 2.1p
-------------- ------------
36.1p 32.1p
============== ============
PAGE 14
CONDENSED CONSOLIDATED INCOME STATEMENT
Six months ended 30 June
2011
Before Amortisation,
amortisation impairment
impairment and
and exceptional
exceptional items
items (note 4) Total
Note GBP million GBP million GBP million
Continuing operations
Revenue 3 1,484 - 1,484
Cost of sales (1,270) - (1,270)
------------- -------------- ------------
Gross profit 214 - 214
Administrative expenses (105) (25) (130)
Profit on business disposals and
closures - 3 3
------------- -------------- ------------
Profit/(loss) before net financing
income 109 (22) 87
Financial income 12 - 12
Financial expense (5) - (5)
------------- -------------- ------------
Net financing income 7 - 7
Share of post-tax results of joint
ventures 7 - 7
Profit/(loss) before income tax 3 123 (22) 101
Income tax 5 (28) 6 (22)
------------- -------------- ------------
Profit/(loss) for the period from
continuing
operations 95 (16) 79
(Loss)/profit for the period from
discontinued operations 6 (1) 1 -
Profit/(loss) for the period ` 94 (15) 79
============= ============== ============
Attributable to:
Equity holders of the parent 79
Non-controlling interests -
------------
79
============
Basic earnings/ (loss) per share: 7
Continuing operations 29.4p 24.5p
Discontinued operations (0.4)p (0.2)p
------------- ------------
29.0p 24.3p
============= ============
Diluted earnings/ (loss) per share: 7
Continuing operations 28.8p 24.0p
Discontinued operations (0.4)p (0.2)p
------------- ------------
28.4p 23.8p
============= ============
PAGE 15
CONDENSED CONSOLIDATED INCOME STATEMENT
Year ended 31 December 2011
Before Amortisation,
amortisation, impairment
and
impairment exceptional
and
exceptional items
items (note 4) Total
Note GBP million GBP million GBP million
Continuing operations
Revenue 3 3,261 - 3,261
Cost of sales (2,779) - (2,779)
-------------- -------------- ------------
Gross profit 482 - 482
Administrative expenses (209) (47) (256)
Profit on business disposals
and closures - 2 2
-------------- -------------- ------------
Profit/(loss) before net financing
income 273 (45) 228
Financial income 18 - 18
Financial expense (2) - (2)
-------------- -------------- ------------
Net financing income 16 - 16
Share of post-tax results
of joint ventures 15 - 15
-------------- ------------
Profit/(loss) before income
tax 3 304 (45) 259
Income tax (69) 17 (52)
-------------- -------------- ------------
Profit/(loss) for the year
from continuing
operations 235 (28) 207
Profit for the year from
discontinued operations 6 - 25 25
--------------
Profit/(loss) for the year 235 (3) 232
============== ============== ============
Attributable to:
Equity holders of the parent 232
Non-controlling interests -
------------
232
============
Basic earnings per share: 7
Continuing operations 71.9p 63.3p
Discontinued operations - 7.5p
-------------- ------------
71.9p 70.8p
============== ============
Diluted earnings per share: 7
Continuing operations 70.5p 61.9p
Discontinued operations - 7.4p
-------------- ------------
70.5p 69.3p
============== ============
PAGE 16
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
GBP million GBP million GBP million
Profit for the period 106 79 232
Actuarial losses on defined
benefit pension
schemes - - (71)
Tax on actuarial losses - - 23
Exchange movements on translation
of
foreign subsidiaries (9) (3) -
Net gain on hedges of net investment
in foreign subsidiaries 1 2 4
Tax on net gain on hedges of
net investment
in foreign subsidiaries (1) - -
Cash flow hedges:
Effective portion of changes
in fair value 2 1 -
Tax on effective portion of
changes in fair value
of cash flow hedges (1) - -
Other comprehensive income (8) - (44)
------------ ------------ ------------
Total comprehensive income 98 79 188
Attributable to:
Equity holders of the parent 98 80 188
Non-controlling interests - (1) -
------------ ------------ ------------
Total comprehensive income 98 79 188
============ ============ ============
PAGE 17
CONDENSED CONSOLIDATED BALANCE SHEET
30 June 2012 30 June 31 December
2011 2011
Note GBP million GBP million GBP million
ASSETS
Non-current assets
Property, plant and equipment 38 38 35
Intangible assets 9 978 866 848
Interests in joint ventures 44 46 41
Retirement benefit assets 35 66 32
Other receivables 10 36 22 23
Deferred tax assets 66 37 72
------------- ------------ ------------
Total non-current assets 1,197 1,075 1,051
Current assets
Inventories 4 2 4
Trade and other receivables 1,007 834 844
Derivative financial instruments 1 4 4
Current tax receivable 3 8 31
Bank deposits (more than
three months) 18 49 28
Cash and cash equivalents 452 406 493
------------- ------------ ------------
Total current assets 1,485 1,303 1,404
------------- ------------ ------------
Total assets 2,682 2,378 2,455
------------- ------------ ------------
LIABILITIES
Current liabilities
Bank loans and overdrafts (180) - -
Trade and other payables (989) (795) (758)
Derivative financial instruments (11) (22) (15)
Current tax payable (60) (33) (55)
Total current liabilities (1,240) (850) (828)
------------- ------------ ------------
Non-current liabilities
Trade and other payables 10 (1) (13) -
Derivative financial instruments - (9) (3)
Retirement benefit liabilities (80) (58) (81)
Provisions 11 (178) (185) (169)
------------- ------------ ------------
Total non-current liabilities (259) (265) (253)
------------- ------------ ------------
Total liabilities (1,499) (1,115) (1,081)
------------- ------------ ------------
Net assets 1,183 1,263 1,374
============= ============ ============
EQUITY
Share capital 163 169 169
Share premium account 101 101 101
Hedging and translation reserves 123 128 131
Capital redemption reserve 23 17 17
Retained earnings 772 846 955
------------- ------------ ------------
Total equity attributable to equity
holders
of the parent 1,182 1,261 1,373
Non-controlling interests 1 2 1
------------- ------------ ------------
Total equity 1,183 1,263 1,374
============= ============ ============
PAGE 18
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Capital Non-
Share Share Hedging Transl'n redemption Retained controlling Total
capital premium reserve reserve reserve earnings Total interests equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
million million million million million million million million million
As at 1 Jan
2012 169 101 (4) 135 17 955 1,373 1 1,374
Profit for
the period - - - - - 106 106 - 106
Exchange
movements
on translation
of
foreign
subsidiaries - - - (9) - - (9) - (9)
Net gain on
hedges of
net investment
in
foreign
subsidiaries - - - 1 - - 1 - 1
Tax on net
gain on
hedges of net
investment
in foreign
subsidiaries - - - (1) - - (1) - (1)
Effective
portion
of
changes in
fair value
of cash flow
hedges - - 2 - - - 2 - 2
Tax on
effective
portion
of changes
in fair value
of cash flow
hedges - - (1) - - - (1) - (1)
Other
comprehensive
income for
the period - - 1 (9) - - (8) - (8)
Total
comprehensive
income for
the period - - 1 (9) - 106 98 - 98
Dividends - - - - - (98) (98) - (98)
Equity settled
share-
based payments - - - - - 6 6 - 6
Acquisition
of shares
by trustees
of the
Performance
Share
Plan - - - - - (6) (6) - (6)
Acquisition
of treasury
shares - - - - - (25) (25) - (25)
Utilisation
of treasury
shares - - - - - 8 8 - 8
Acquisition
of shares
under the
buyback
programme (6) - - - 6 (133) (133) - (133)
Forward share
purchase
agreement at
30 June - - - - - (41) (41) - (41)
As at 30 Jun
2012 163 101 (3) 126 23 772 1,182 1 1,183
======== ========= ========= ========= =========== ========= ========= ============ =========
PAGE 19
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (continued)
Capital Non-
Share Share Hedging Transl'n redemption Retained controlling Total
capital premium reserve reserve reserve earnings Total interests equity
GBP GBP GBP GBP GBP GBP GBP GBP GBP
million million million million million million million million million
As at 1 Jan
2011 169 101 (4) 131 17 858 1,272 3 1,275
Profit for
the period - - - - - 79 79 - 79
Exchange
movements
on translation
of
foreign
subsidiaries - - - (2) - - (2) (1) (3)
Net gain on
hedges of
net investment
in
foreign
subsidiaries - - - 2 - - 2 - 2
Effective
portion
of
changes in
fair value
of cash flow
hedges - - 1 - - - 1 - 1
Other
comprehensive
income for
the period - - 1 - - - 1 (1) -
Total
comprehensive
income for
the period - - 1 - - 79 80 (1) 79
Dividends - - - - - (86) (86) - (86)
Equity settled
share-
based payments - - - - - 5 5 - 5
Acquisition
of shares
by trustees
of the
Performance
Share
Plan - - - - - (9) (9) - (9)
Acquisition
of treasury
shares - - - - - (12) (12) - (12)
Utilisation
of treasury
shares - - - - - 11 11 - 11
As at 30 Jun
2011 169 101 (3) 131 17 846 1,261 2 1,263
======== ========= ========= ========= =========== ========= ========= ============ =========
PAGE 20
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
GBP million GBP million GBP million
Cash flow from operating activities
Profit before income tax from continuing
operations 126 101 259
Profit/(loss) before income tax
from discontinued operations 9 (2) (2)
Profit before income tax 135 99 257
Financial income (9) (12) (18)
Financial expense 2 5 2
Share of post-tax results of joint
ventures (8) (7) (15)
Intangible amortisation and goodwill
impairment 19 18 39
Impairment of joint venture investment 3 - -
Depreciation 5 5 10
Loss on disposal of businesses 8 1 2
Difference between contributions
to retirement benefit
schemes and current service cost - - (7)
Equity settled share-based payments 6 5 11
------------ ------------ ------------
161 114 281
Increase in inventories - (1) (3)
Increase in trade and other receivables (156) (52) (62)
Increase/(decrease) in trade and
other payables and
provisions 125 (7) (7)
Cash generated from operations 130 54 209
Tax received/(paid) 1 (24) (36)
------------ ------------ ------------
Net cash flow from operating activities 131 30 173
------------ ------------ ------------
Cash flow from investing activities
Acquisition of businesses (net of
cash acquired) (153) (254) (254)
Funding of joint ventures (7) (8) (12)
Purchase of property, plant and
equipment (7) (7) (12)
Purchase of intangible assets (8) (4) (11)
Movement in short-term bank deposits 10 147 168
Disposal of businesses (net of cash
disposed of) (4) (3) (9)
Disposal of property, plant and
equipment - - 1
Interest received 3 5 6
Dividends received from joint ventures 6 4 17
Amounts paid on maturity of net
investment hedges (2) (8) (20)
------------ ------------ ------------
Net cash flow from investing activities (162) (128) (126)
------------ ------------ ------------
Net cash flow before financing activities (31) (98) 47
------------ ------------ ------------
Cash flow from financing activities
Interest paid (2) - -
Dividends paid (34) (25) (86)
Acquisition of shares for cancellation (129) - -
Acquisition of treasury shares (net) (17) (1) (1)
Acquisition of shares by trustees
of the
Performance Share Plan (6) (9) (11)
------------ ------------ ------------
Net cash flow from financing activities (188) (35) (98)
------------ ------------ ------------
Decrease in cash and cash equivalents (219) (133) (51)
Cash and cash equivalents as at
the beginning of the period 493 544 544
Exchange losses on cash and cash
equivalents (2) (5) -
Cash and cash equivalents as at
the end of the period 272 406 493
============ ============ ============
PAGE 21
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (continued)
30 June 30 June 31 December
2012 2011 2011
GBP million GBP million GBP million
Cash and cash equivalents consist
of:
Cash at bank and in hand 351 157 130
Bank deposits (less than three months) 101 249 363
Bank loans and overdrafts* (180) - -
------------ ------------ ------------
Cash and cash equivalents as at
the end of the period 272 406 493
Bank deposits (more than three months) 18 49 28
Net cash as at the end of the period 290 455 521
============ ============ ============
*Bank overdrafts arise from a new global cash pooling arrangement which, from an accounting perspective, must be shown gross.
NOTES TO THE ACCOUNTS
1. CORPORATE INFORMATION
The interim condensed accounts of AMEC plc for the six months ended 30 June 2012 were authorised for issue in accordance with a resolution of the directors on 9 August 2012.
AMEC plc is a public limited company, which is listed on the London Stock Exchange and incorporated and domiciled in the UK. The principal activities of the company and its subsidiaries (the group) are described in note 3.
2. PREPARATION OF INTERIM RESULTS
Basis of preparation
This condensed set of accounts has been prepared in accordance with IAS 34 'Interim Financial Reporting', as adopted by the EU. As required by the Disclosure and Transparency Rules of the Financial Services Authority, the condensed set of accounts has been prepared applying the accounting policies and presentation that were applied in the preparation of the company's published consolidated accounts for the year ended 31 December 2011 except for the group's tax measurement basis (see note 5).
The comparative figures for the year ended 31 December 2011 are not the group's statutory accounts for that financial year but are an extract from those accounts. The statutory accounts for the year ended 31 December 2011 have been reported on by the group's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report, and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
The consolidated accounts for the year ended 31 December 2011 were prepared in accordance with IFRS as adopted by the EU. There are no IFRS or IFRIC interpretations effective for the first time this financial year that have had a material impact on the group. The accounts are presented rounded to the nearest million, however, all calculated numbers, for example earnings per share, are calculated on the underlying numbers to one decimal place precision.
The preparation of condensed accounts requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amount of assets and liabilities, income and expense. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
Some of these policies require a high level of judgement, and AMEC believes that the most critical accounting policies and significant areas of judgement and estimation arise from the accounting for defined benefit pension schemes under IAS 19 'Employee benefits', for long-term contracts under IAS 11 'Construction contracts' and for provisions under IAS 37 'Provisions, contingent liabilities and contingent assets'.
Defined benefit pension schemes are accounted for in accordance with the advice of independent qualified actuaries but significant judgements are required in relation to the assumptions for future salary and pension increases, inflation, the discount rate applied to the liabilities, investment returns and member longevity that underpin their valuations. For AMEC, these assumptions are important given the relative size of the schemes that remain open.
A significant amount of the group's activities are undertaken via long-term contracts. These contracts are accounted for in accordance with IAS 11 which requires estimates to be made for contract costs and revenues.
PAGE 22
NOTES TO THE ACCOUNTS (continued)
2. PREPARATION OF INTERIM RESULTS (continued)
Basis of preparation (continued)
Management base their judgements of contract costs and revenues on the latest available information, which includes detailed contract valuations. In many cases the results reflect the expected outcome of long-term contractual obligations which span more than one reporting period. Contract costs and revenues are affected by a variety of uncertainties that depend on the outcome of future events and often need to be revised as events unfold and uncertainties are resolved. The estimates of contract costs and revenues are updated regularly and significant changes are highlighted through established internal review procedures. In particular, the internal reviews focus on the timing and recognition of incentive payments and the age and recoverability of any unagreed income from variations to the contract scope or claims. The impact of the changes in accounting estimates is then reflected in the ongoing results.
When accounting for provisions for litigation and other items the group has taken internal and external advice in considering known legal claims and actions made by or against the group. It carefully assesses the likelihood of success of a claim or action. Appropriate provisions are made for legal claims or actions against the group on the basis of likely outcome, but no provisions are made for those which in the view of management are unlikely to succeed.
The directors are satisfied that the group has adequate resources to operate for the foreseeable future and, therefore, it is appropriate to continue to adopt the going concern basis in preparing the accounts. At 30 June 2012 the group held net cash of GBP290 million and on 18 July 2012 the group entered into a five year GBP377 million multi-currency revolving credit facility.
3. SEGMENTAL ANALYSIS OF CONTINUING OPERATIONS
AMEC has three divisions: Natural Resources, Power & Process and Environment & Infrastructure, that offer high-value consultancy, engineering and project management services to customers in the world's oil and gas, minerals and metals, clean energy, and environment and infrastructure markets. Each of the divisions is considered to be a reportable segment.
AMEC's Chief Executive together with the senior management team constitute the chief operating decision maker and they regularly review the performance of these three divisions, as well as the Investments and other activities segment. The Investments and other activities segment principally comprises the Incheon Bridge PPP project in Korea now in the operational phase, the group's insurance captive and AMEC's residual UK wind development activities. Details of the services offered by each division and the end markets in which they operate are given in the segmental review on pages 5 to 10.
Revenue Profit/(loss)
Six Six Six Six
months months Year months months Year
ended ended ended ended ended ended
30 June 30 June 31 December 30 June 30 June 31 December
2012 2011 2011 2012 2011 2011
GBP GBP GBP million GBP GBP GBP million
million million million million
Class of
business:
Natural Resources 1,200 790 1,742 92 84 192
Power & Process 454 432 849 39 35 72
Environment &
Infrastructure 397 289 722 36 24 66
Investments and
other activities 3 3 7 3 (4) 3
---------- --------- ------------ ---------- ----------- --------------
2,054 1,514 3,320 170 139 333
Internal revenue (28) (30) (59)
---------- --------- ------------
External revenue 2,026 1,484 3,261
========== ========= ============
Corporate costs(1) (18) (17) (34)
---------- ----------- --------------
EBITA(2) 152 122 299
Net financing
income(3) 5 4 12
Adjusted profit
before tax 157 126 311
Tax on results
of joint
ventures(4) (2) (3) (7)
---------- ----------- --------------
155 123 304
Intangible
amortisation
and goodwill
impairment (19) (18) (39)
Exceptional items (10) (4) (6)
Profit before
income tax 126 101 259
========== =========== ==============
PAGE 23
NOTES TO THE ACCOUNTS (continued)
3. SEGMENTAL ANALYSIS OF CONTINUING OPERATIONS (continued)
Revenue is analysed by geographical
origin as follows:
Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
GBP million GBP million GBP million
United Kingdom 530 466 976
Canada 618 446 929
United States 550 326 844
Rest of the World 328 246 512
------------ ------------ ------------
2,026 1,484 3,261
============ ============ ============
(1) Corporate costs comprise the costs of operating central corporate functions and certain regional overheads.
(2) EBITA is earnings from continuing operations before net financing income, tax, intangible amortisation and goodwill impairment and pre-tax exceptional items of GBP140 million (six months ended 30 June 2011: GBP109 million; year ended 31 December 2011: GBP273 million), but including joint venture EBIT of GBP12 million (six months ended 30 June 2011: GBP13 million: year ended 31 December 2011 : GBP26 million).
(3) Net financing income includes AMEC's share of net interest payable of joint ventures.
(4) The share of post-tax results of joint ventures is further analysed as follows:
Six Six
months months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
GBP million GBP million GBP million
EBIT 12 13 26
Net financing
income (2) (3) (4)
Tax (2) (3) (7)
8 7 15
============ ============ ============
4. AMORTISATION, IMPAIRMENT AND EXCEPTIONAL ITEMS
Six months Six months
ended ended Year ended
30 June 30 June 31 December
2012 2011 2011
GBP million GBP million GBP million
Continuing operations:
------------ ------------ ------------
Administrative expenses - exceptional
items (10) (7) (8)
Administrative expenses - intangible
amortisation and
goodwill impairment (19) (18) (39)
------------ ------------ ------------
(29) (25) (47)
Profit on business disposals and closures - 3 2
------------ ------------ ------------
(29) (22) (45)
------------ ------------ ------------
Taxation credit on exceptional items
of continuing operations 3 2 6
Taxation credit on intangible amortisation
and goodwill impairment 6 4 11
------------ ------------ ------------
9 6 17
------------ ------------ ------------
Post-tax exceptional amortisation, impairment
and exceptional
items of continuing operations (20) (16) (28)
Exceptional items of discontinued operations
(post tax) 7 1 25
------------ ------------ ------------
Post-tax amortisation, impairment and
exceptional items (13) (15) (3)
============ ============ ============
PAGE 24
NOTES TO THE ACCOUNTS (continued)
4. AMORTISATION, IMPAIRMENT AND EXCEPTIONAL ITEMS (continued)
Post-tax exceptional items are further analysed as follows:
Six months ended 30 June 2012
Profit Loss on
in
respect business Other
of
Loss on business disposals exceptional
disposals closures and closures items Total
GBP million GBP million GBP million GBP million GBP million
Continuing operations - - - (10) (10)
Discontinued operations (8) - (8) 17 9
------------ ------------ ------------- ------------ -------------------
(Loss)/profit before
tax (8) - (8) 7 (1)
Tax 2 - 2 (1) 1
------------ ------------ ------------- ------------ -------------------
(Loss)/profit after
tax (6) - (6) 6 -
============ ============ ============= ============ ===================
Adjustments to provisions held in respect of businesses sold in prior years and foreign exchange movements on provisions established on the disposal of SPIE resulted in the pre-tax exceptional loss on disposals and closures of GBP8 million.
Other exceptional gains of GBP7 million include IFRS3 acquisition, transaction and deferred compensation costs along with the costs of funding a joint venture which was part of a recent acquisition. These costs have been offset by the recognition of an insurance receivable following the Supreme Court Judgement on mesothelioma liability, a provision against which was established a number of years ago. Transaction costs of GBP2 million were incurred in the period.
Six months ended 30 June 2011
Profit Profit on
in
respect business Other
of
Profit business disposals exceptional
on
disposals closures and closures items Total
GBP million GBP million GBP million GBP million GBP million
Continuing operations - 3 3 (7) (4)
Discontinued operations (1) - (1) - (1)
------------ ------------ ------------- ------------ -----------------
(Loss)/profit before
tax (1) 3 2 (7) (5)
Tax 2 1 3 1 4
------------ ------------ ------------- ------------ -----------------
Profit/(loss) after
tax 1 4 5 (6) (1)
============ ============ ============= ============ =================
Adjustments to provisions held in respect of businesses sold or closed in prior years and foreign exchange movements on provisions established on the disposal of SPIE resulted in the pre-tax exceptional gain on disposals and closures of GBP2 million.
Other exceptional losses of GBP7 million include IFRS 3 acquisition, transaction and deferred compensation costs along with the costs of exiting the group's activities in Libya. Transaction costs of GBP2 million were incurred in the period.
Year ended 31 December
2011
Profit Profit/(loss)
in on
respect business Other
of
Profit/(loss) business disposals exceptional
on disposals closures and closures items Total
GBP million GBP million GBP million GBP million GBP million
Continuing operations - 2 2 (8) (6)
Discontinued operations (2) - (2) - (2)
-------------- ------------ -------------- ------------ ----------------
(Loss)/profit before
tax (2) 2 - (8) (8)
Tax 27 1 28 5 33
-------------- ------------ -------------- ------------ ----------------
Profit/(loss) after
tax 25 3 28 (3) 25
============== ============ ============== ============ ================
Adjustments to provisions held in respect of businesses sold in prior years, including the release of a tax provision relating to the disposal of AMEC's Built Environment businesses in 2007, resulted in a post-tax profit on disposals and closures of GBP28 million.
PAGE 25
NOTES TO THE ACCOUNTS (continued)
4. AMORTISATION, IMPAIRMENT AND EXCEPTIONAL ITEMS (continued)
Other exceptional losses of GBP8 million include IFRS 3 acquisition, transaction and deferred compensation costs along with the costs of exiting the group's activities in Libya and restructuring costs in the Environment & Infrastructure segment following the acquisition of MACTEC. Transaction costs of GBP3 million were incurred in the year.
5. INCOME TAX
Income tax on the profit before exceptional items and intangible amortisation but including joint venture profit before tax for the six months ended 30 June 2012 is based on an effective rate of 24.0 per cent (six months ended 30 June 2011: 24.1 per cent), which has been calculated by reference to the projected charge for the full year.
On 21 March 2012, in his Budget Speech, the UK Chancellor of the Exchequer announced a reduction in the rate of Corporation Tax from 26 per cent to 24 per cent from 1 April 2012, with further reductions of 1 per cent per annum to 22 per cent by 1 April 2014. As at 30 June 2012, the reduction in the rate to 24 per cent on 1 April 2012 has been substantively enacted. However the remaining reductions in the rate have not yet been substantively enacted and therefore the proposed changes are not reflected in the figures reported.
The decrease in the rate from 24 per cent to 22 per cent would reduce the balance sheet deferred tax asset by approximately GBP2 million and would have no impact on unrecognised deferred tax assets. During the period to 2014, AMEC estimate that the effect of the proposed changes to income and equity would be a charge of GBP2 million to the income statement.
6. PROFIT FOR THE PERIOD FROM DISCONTINUED OPERATIONS
Discontinued operations represent the residual assets and retained obligations in respect of businesses sold in prior years.
In accordance with IFRS 5, the post-tax results of discontinued operations are disclosed separately in the condensed consolidated income statement.
The results of the discontinued operations are as follows:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
GBP million GBP million GBP million
Cost of sales and net operating - (1) -
expenses
------------ ------------ ------------
- (1) -
Loss on disposal (8) (1) (2)
Attributable tax on loss on disposal 2 2 3
Other exceptional items 17 - -
Attributable tax on other exceptional (4) - -
items
Adjustment in respect of prior years
- release of tax provision on disposal
of business - - 24
Profit for the period from discontinued
operations 7 - 25
============ ============ ============
PAGE 26
NOTES TO THE ACCOUNTS (continued)
7. EARNINGS PER SHARE
Basic and diluted earnings per share are shown on the face of the income statement. The calculation of the average number of shares in issue has been made having deducted the shares held by the trustees of the Performance Share Plan and Transformation Incentive Plan, those held by the qualifying employee share ownership trust and those held in treasury by the company.
Six months ended Six months ended Year ended 31 December
30 June 2012 30 June 2011 2011
Weighted Weighted Weighted
average average average
shares Earnings shares Earnings shares Earnings
Earnings number per Earnings number per Earnings number per
share share share
GBP million pence GBP million pence GBP million pence
million million million
Basic earnings
from
continuing
operations 99 324 30.6 79 327 24.5 207 327 63.3
Share options - 2 (0.2) - 2 (0.2) - 3 (0.6)
Employee share
and
incentive schemes - 4 (0.4) - 5 (0.3) - 4 (0.8)
Diluted earnings
from
continuing
operations 99 330 30.0 79 334 24.0 207 334 61.9
Six months ended Six months ended Year ended 31 December
30 June 2012 30 June 2011 2011
Weighted Weighted Weighted
average average average
shares Earnings shares Earnings shares Earnings
Earnings number per Earnings number per Earnings number per
share share share
GBP million pence GBP million pence GBP million pence
million million million
Basic earnings
from discontinued
operations 7 324 2.1 - 327 (0.2) 25 327 7.5
Share options - 2 - - 2 - - 3 -
Employee share
and
incentive schemes - 4 - - 5 - - 4 (0.1)
Diluted earnings
from
discontinued
operations 7 330 2.1 - 334 (0.2) 25 334 7.4
========= ========= ========= ========= ========= ========= ========= ========= =========
Basic and diluted earnings from continuing operations is calculated as set out below:
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2012 2011 2011
GBP million GBP million GBP million
Profit for the period from continuing
operations 99 79 207
Profit attributable to non-controlling - - -
interests
------------ ------------ ------------
Basic and diluted earnings from
continuing operations 99 79 207
============ ============ ============
PAGE 27
NOTES TO THE ACCOUNTS (continued)
7. EARNINGS PER SHARE (continued)
In order to appreciate the effects on the reported performance of intangible amortisation, goodwill impairment and exceptional items, additional calculations of earnings per share are presented.
Six months ended Six months ended
30 June 2012 30 June 2011
Weighted Weighted
average average
shares Earnings shares Earnings
Earnings number per Earnings number per
share share
GBP million pence GBP million pence
million million
Basic earnings from continuing
operations 99 324 30.6 79 327 24.5
Exceptional items (post-tax) 7 - 2.1 2 - 0.7
Amortisation and impairment
(post-tax) 13 - 4.0 14 - 4.2
Basic earnings from continuing
operations
before amortisation, impairment
and exceptional items 119 324 36.7 95 327 29.4
Share options - 2 (0.2) - 2 (0.2)
Employee share and incentive
schemes - 4 (0.4) - 5 (0.4)
Diluted earnings from continuing
operations
before amortisation, impairment
and exceptional items 119 330 36.1 95 334 28.8
========= ========= ========= ========= ========= =========
Year ended 31 December
2011
Weighted
average
shares Earnings
Earnings number per
share
GBP million pence
million
Basic earnings from continuing
operations 207 327 63.3
Exceptional items (post-tax) - - 0.2
Amortisation and impairment
(post-tax) 28 - 8.4
Basic earnings from continuing
operations
before amortisation, impairment
and exceptional items 235 327 71.9
Share options - 3 (0.6)
Employee share and incentive
schemes - 4 (0.8)
Diluted earnings from continuing
operations
before amortisation, impairment
and exceptional items 235 334 70.5
========= ========= =========
PAGE 28
NOTES TO THE ACCOUNTS (continued)
7. EARNINGS PER SHARE (continued)
Six months ended Six months ended
30 June 2012 30 June 2011
Weighted Weighted
average average
shares Earnings shares Earnings
Earnings number per Earnings number per
share share
GBP million pence GBP million pence
million million
Basic earnings from discontinued
operations 7 324 2.1 - 327 (0.2)
Exceptional items (post-tax) (7) - (2.1) (1) - (0.2)
Basic earnings from discontinued
operations
before amortisation, impairment
and exceptional items - 324 - (1) 327 (0.4)
Share options - 2 - - 2 -
Employee share and incentive
schemes - 4 - - 5 -
Diluted earnings from discontinuing
operations
before amortisation, impairment
and exceptional items - 330 - (1) 334 (0.4)
========= ========= ========= ========= ========= =========
Year ended 31 December
2011
Weighted
average
shares Earnings
Earnings number per
share
GBP million pence
million
Basic earnings from discontinued
operations 25 327 7.5
Exceptional items (post-tax) (25) - (7.5)
Basic earnings from discontinued
operations
before amortisation, impairment - 327 -
and exceptional items
Share options - 3 -
Employee share and incentive - 4 -
schemes
Diluted earnings from discontinuing
operations
before amortisation, impairment - 334 -
and exceptional items
========= ========= =========
8. DIVIDENDS AND SHARE BUYBACK PROGRAMME
After the balance sheet date the directors declared a dividend of 11.7 pence per share payable on 2 January 2013 to equity holders on the register at the close of business on 30 November 2012. This dividend has not been provided for and there are no income tax consequences for the company.
Dividends of GBP98 million were charged to reserves during the six months ended 30 June 2012 being the 2011 interim dividend of 10.2 pence per share and the 2011 final dividend of 20.3 pence per share. Dividends totalling GBP34 million were paid during the six months ended 30 June 2012.
During the period, 14.8 million ordinary shares were purchased at an average price of GBP10.68 and a total cost of GBP158 million. Of the shares purchased, 12.6 million shares have subsequently been cancelled.
At 30 June 2012 the company was party to an irrevocable closed season buyback agreement for the purchase of its own ordinary shares for a maximum total cost of GBP41 million. The purchase of these shares is dependent upon the company's share price not reaching a pre-determined level during the remainder of the contract period. The remaining outstanding share purchase mandate liability of GBP41 million has been presented as a current liability in accordance with IAS 32.23. The company was not party to any such contract at 30 June 2011 or 31 December 2011.
PAGE 29
NOTES TO THE ACCOUNTS (continued)
9. INTANGIBLE ASSETS
Goodwill Software Other Total
GBP million GBP million GBP million GBP million
Cost:
As at 1 January 2012 764 46 164 974
Exchange and other movements (6) - - (6)
Acquisition of businesses 137 2 11 150
Additions - 5 - 5
Disposals - (1) (1) (2)
As at 30 June 2012 895 52 174 1,121
------------ ------------ ------------ ------------
Amortisation:
As at 1 January 2012 39 19 68 126
Provided during the period - 3 16 19
Disposals - (1) (1) (2)
As at 30 June 2012 39 21 83 143
------------ ------------ ------------ ------------
Net book value:
As at 30 June 2012 856 31 91 978
============ ============ ============ ============
Cost:
As at 1 January 2011 597 27 105 729
Exchange and other movements 6 - 1 7
Acquisition of businesses 163 5 84 252
Additions - 4 - 4
Disposal of businesses - - (3) (3)
As at 30 June 2011 766 36 187 989
------------ ------------ ------------ ------------
Amortisation:
As at 1 January 2011 40 15 53 108
Provided during the period* 2 1 15 18
Disposal of businesses - - (3) (3)
As at 30 June 2011 42 16 65 123
Net book value:
As at 30 June 2011 724 20 122 866
============ ============ ============ ============
* Amounts provided during the six months ended 30 June 2011 include GBP2 million of goodwill allocated to a small business divested during the period.
Due to the proximity of Serco's Technical Services business acquisition (Energy, Safety and Risk Consultants (UK) Limited) to the balance sheet date, the total value of intangible assets acquired has been provisionally recorded in goodwill. See note 12 for more details.
10. OTHER NON-CURRENT ASSETS AND LIABILITIES
Other non-current receivables of GBP36 million (30 June 2011: GBP22 million; 31 December 2011: GBP23 million) represent indemnities received on the acquisition of MACTEC and certain insurance receivables both of which are matched by liabilities included within provisions.
Trade and other payables of GBP1 million (30 June 2011: GBP13 million; 31 December 2011: GBPnil) represents the amount of deferred consideration on acquisitions payable in more than one year.
PAGE 30
NOTES TO THE ACCOUNTS (continued)
11. PROVISIONS
The nature and measurement bases of the group's provisions are unchanged from those presented in the 2011 annual report and accounts.
Onerous
Indemnities property
granted contracts
and
Litigation retained and
settlement obligations provisions
and future on disposed to fund
joint
legal costs businesses Insurance ventures Total
GBP million GBP million GBP million GBP million GBP million
As at 1 January 2012 54 66 37 12 169
Exchange movements - (1) - - (1)
Utilised (2) (4) (2) (2) (10)
Charged/(credited)
to the income
statement:
Additional provisions 1 8 2 11 22
Unused amounts reversed (2) - - - (2)
------------ ------------ ------------ ------------ ------------
As at 30 June 2012 51 69 37 21 178
============ ============ ============ ============ ============
As at 1 January 2011 50 66 44 27 187
Exchange movements - 2 - - 2
Arising on business
combinations 22 - - - 22
Utilised (5) (3) (3) (9) (20)
Charged/(credited)
to the income
statement:
Additional provisions 2 12 - - 14
Unused amounts reversed (11) (8) - (1) (20)
As at 30 June 2011 58 69 41 17 185
============ ============ ============ ============ ============
12. ACQUISITIONS
The following purchases have been accounted for as acquisitions. Neither of the businesses acquired made a material contribution to consolidated revenue and profit either in the period from their acquisition to 30 June 2012, nor would they have done in the six months ended 30 June 2012 if they had been acquired in January 2012.
Intangible assets recognised at fair value on the acquisition of these businesses included brands, trade names, customer relationships and non-compete agreements. The initial accounting for these acquisitions has been determined provisionally.
Unidel
On 30 May 2012, the group acquired all of the shares in Unidel Group Pty Limited (Unidel).
Unidel is a 260-person company working in Australia's rapidly expanding energy, resources and infrastructure sectors which provides a range of environmental and infrastructure services similar to those of AMEC. Their experience includes projects involving gas field exploration, development, production and transmission, water pipelines and coal seam methane.
The acquisition is fully aligned with AMEC's Vision 2015 strategy and builds AMEC's presence in Australia to some 1,500 employees. It also expands the group's capabilities in one of the key growth regions and allows the group to better serve customers in the oil & gas, minerals & metals and clean energy markets.
The provisional amounts recognised in respect of identifiable assets and liabilities relating to the acquisition of Unidel were as follows:
PAGE 31
NOTES TO THE ACCOUNTS (continued)
12. ACQUISITIONS (continued)
Unidel (continued)
Recognised
value
GBP million
Intangible assets 12
Trade and other receivables 8
Cash and cash equivalents 1
Trade and other payables (5)
Deferred tax liability (3)
Net identifiable assets and liabilities 13
Goodwill on acquisition 4
------------
17
------------
Consideration
Cash - paid on completion 16
- deferred consideration 1
------------
17
Goodwill has arisen on the acquisition of Unidel primarily due to its skilled workforce positioned within the strong Australian market which did not meet the criteria for recognition as intangible assets as at the date of acquisition.
Energy, Safety and Risk Consultants
On 29 June 2012, the group acquired all of the shares in Energy, Safety and Risk Consultants (UK) Limited (ESRC). ESRC was Serco Group plc's nuclear technical services business. It is based at a number of sites in the UK and has around 600 people providing consultancy and project solutions for customers including the Ministry of Defence, EDF, Magnox and the Nuclear Decommissioning Authority. The acquisition is fully aligned with AMEC's Vision 2015 growth strategy and further builds AMEC's footprint and capabilities in the clean energy market. The team of highly skilled professionals will complement AMEC's existing expertise in nuclear support activities and enable AMEC to better service its customers.
Due to the proximity of the acquisition to the balance sheet date, it has not been possible to complete the purchase price accounting and the excess of the consideration paid over the net assets acquired has been allocated to goodwill. The provisional accounting will be updated during the second half of the year.
The provisional amounts recognised in respect of identifiable assets and liabilities relating to the ESRC acquisition were as follows:
Recognised
value
GBP million
Property, plant and equipment 1
Cash and cash equivalents 1
Trade and other receivables 13
Trade and other payables (5)
Deferred tax liability (3)
Net identifiable assets and liabilities 7
Goodwill on acquisition 132
------------
139
------------
Consideration
Cash - paid on completion 137
- deferred consideration 2
139
============
Other acquisitions
A further GBP2 million was paid in the period in respect of businesses acquired in 2011 and prior years.
PAGE 32
NOTES TO THE ACCOUNTS (continued)
13. CONTINGENT LIABILITIES
The 2011 accounts reported one contingent liability with AMEC Group Limited ('AGL') awaiting a retrial in respect of an incident involving a fatality to a subcontractor at the Leftbank Apartments project in Manchester in April 2004 where AMEC was principal contractor. During March 2012, AMEC was found guilty by majority of a breach of the Health and Safety at Work Act, sentencing took place during June 2012 and AGL was fined GBP300,000.
There have been no significant contingent liabilities identified during the six months ended 30 June 2012.
14. RELATED PARTY TRANSACTIONS
During the six months ended 30 June 2012 there were a number of transactions with joint venture entities.
The transactions and related balances outstanding with joint ventures are as follows:
Value of transactions Outstanding balance
Six months Six months
ended ended 30 June 30 June
30 June 30 June 2012 2011
2012 2011
GBP million GBP million GBP million GBP million
Services rendered 14 23 10 7
Services received - 2 - 3
Provision of finance 2 7 17 13
Management contracts - 2 - 2
There have been no significant changes in the nature of related party transactions from those described in the last annual report.
PAGE 33
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE HALF-YEARLY FINANCIAL REPORT
We confirm that to the best of our knowledge:
-- The condensed set of accounts has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the EU.
-- The interim management report includes a fair review of the information required by:
-- DTR 4.2.7R of the "Disclosures and Transparency Rules", being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
-- DTR 4.2.8R of the "Disclosure and Transparency Rules", being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
Samir Brikho
Chief Executive
Ian McHoul
Chief Financial Officer
9 August 2012
PAGE 34
INDEPENDENT REVIEW REPORT BY ERNST & YOUNG LLP TO AMEC plc
Introduction
We have been engaged by the company to review the condensed set of accounts in the half-yearly financial report for the six months ended 30 June 2012 which comprises the condensed consolidated Income Statement, condensed consolidated Statement of Comprehensive Income, condensed consolidated Balance Sheet, condensed consolidated Statement of Changes in Equity, condensed consolidated Cash Flow Statement and the related notes 1 to 14. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of accounts.
This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (United Kingdom and Ireland) 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual accounts of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of accounts included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the company a conclusion on the condensed set of accounts in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (United Kingdom and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (United Kingdom and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of accounts in the half-yearly financial report for the six months ended 30 June 2012 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Ernst & Young LLP
London
9 August 2012
PAGE 35
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR EAPPPESLAEFF
| 
