AMEC plc Preliminary results 2006

1
AMEC plcPreliminary results 2006
2
Important notice
Certain statements in this presentation are
forward looking statements. By their nature,
forward looking statements involve a number of
risks, uncertainties or assumptions that could
cause actual results or events to differ
materially from those expressed or implied by the
forward looking statements. These risks,
uncertainties or assumptions could adversely
affect the outcome and financial effects of the
plans and events described herein. Forward
looking statements contained in this presentation
regarding past trends or activities should not be
taken as representation that such trends or
activities will continue in the future. You
should not place undue reliance on forward
looking statements, which apply only as of the
date of this presentation. This presentation
does not constitute or form part of any offer or
invitation to sell, or any solicitation of any
offer to purchase any shares in the Company, nor
shall it or any part of it or the fact of its
distribution form the basis of, or be relied on
in connection with, any contract or commitment or
investment decisions relating thereto, nor does
it constitute a recommendation regarding the
shares of the Company. Past performance cannot
be relied upon as a guide to future performance.
3
AMEC plcPreliminary results 2006

• Jock Green-ArmytageChairman

4
AMEC plcPreliminary results 2006

• Samir BrikhoChief Executive

5
2006 preliminary results Highlights
million
2005
2006

• Revenue 3,229.2 2,843.8 14
• Pre-tax profit 64.7 73.9 -12
• Diluted earnings per share 14.5p 17.5p -17
• Dividends per share 12.2p 11.5p 6
• Average net cash/(debt) 190.0 (420.0) nm
• Order book
• Natural Resources/Power and Process 2.49bn 2.05bn
  21

Before exceptional items and intangible
amortisation 1 August 31 December 2006 As
reported before structural changes
6
My first 74 days

• First impressions
• Significant strengths
• Underperformance presents major opportunity
• Take control of the business
• New vision and strategy defined
• Core businesses identified
• Divestment of non-core businesses announced
• STEP Change programme launched

7
On day 163

• Non-core divestments process Well under way
• STEP Change recurring bottom-line
• impact of about 40 million from 2008
  Committed to deliver
• 2007 plans revisited Incentives tied to targets
• Legacy issues No unanticipated developments

8
Agenda

• Financial performance Stuart Siddall, Finance
  Director
• 2006 results
• Restructuring Making it happen
• Non-core divestments
• STEP Change
• Outlook
• 2007 year of implementation
• Core business end markets
• Investment priorities

9
Financial performance

• Stuart SiddallFinance Director

10
Financial performance Agenda

• 2006 accounts - basis of preparation
• Group overview 2006
• Segmental results 2006
• Non-core businesses to be discontinued in 2007
• Proforma for continuing businesses 2006

11
Basis of preparation Todays results presentation

• Presentation based on continuing operations
• Discontinued operations comprise
• AMEC SPIE Sold
• Pipelines construction Sale process ongoing
• Exceptional charges are excluded throughout

Unless otherwise stated
12
Group overview Financial summary
million
2005
2006

• Revenue 3,229.2 2,843.8 14
• Pre-tax profit 64.7 73.9 -12
• Taxation (14.9) (15.7) -5
• Tax rate (incl JV tax) 28.6 26.0 2.6pts
• Diluted earnings per share 14.5p 17.5p -17
• Dividends per share 12.2p 11.5p 6
• Average net cash/(debt) 190.0 (420.0) nm
• Net cash/(debt) at 31 December 354.9 (245.5) nm
  

Before intangible amortisation 1 August 31
December 2006 As reported before structural
changes nm Not meaningful
13
Taxation

• 2006 effective tax rate 28.6 (2005 26.0)
• Tax losses in the US not recognised in deferred
  tax circa (US75m)
• Tax rate going forward likely to remain under 30
• Return to profit in UK Building and Civil
  Engineering
• Utilisation of US tax losses

Before intangible amortisation
14
Group overview Abridged cash flow
million
Net debt as at 1 January 2006 (385) Proceeds
from disposal of AMEC SPIE 667 Other
acquisitions/disposals (net) (17) Tax, dividends
and interest (37) Trading cash flow 159 Total
net cash as at 31 December 2006 387 Adjust for
pipelines construction business now
discontinued (32) Net cash on the balance sheet
as at 31 December 2006 355
Excluding AMEC SPIE Gross proceeds less costs
15
Group overview Profit conversion
million
Cumulative adjusted cash flow 306.5m
350
300
250
179.4m
200
90m future litigation costs
150
100
Cumulative retained profit
50
0
1 Jan 1996 31 Dec 2006
Profit excludes goodwill write off and
amortisation of intangibles but includes
dividends charged in the year Adjusted cash
flow excludes acquisitions, disposals and share
transactions, advanced cash, cash retained in
SPIE prior to March 2003, non-cash pensions
movements and proceeds from securitisation of
debtors
16
Group overview Average net cash/(debt)
million
2006
2005
Average weekly net cash/(debt) 190 (420)

• Average net cash in line with forecast following
  sale of AMEC SPIE
• Average net cash for 2007 expected to be around
  250m

As reported before structural changes 1
August 31 December 2006 Excluding
buybacks/disposals/acquisitions
17
Group overview Share buybacks

• Up to 100m buyback programme
• Announced 13 December 2006
• Purchases must be accretive
• Acquired shares to be held in treasury
• Programme commenced 10 January 2007
• 350,000 shares acquired
• No transactions permitted during close period
• Programme expected to resume during 2007

18
Group overview Balance sheet analysis
Days in stock, WIP and receivables
2005
2006
2004

• Group 82 118 117
• - UK Building
• and Civil Engineering 58 79 84
• - Core businesses 84 96 100
• Reduction in UK Building and Civil Engineering
  reflects actions taken, improved
  controls and resolution of old disputes
• Core businesses reduced to about 77 days
  following receipts in early 2007

19
Exceptional items No material changes
million
2006
North American legacy (87) UK
Construction (75) Natural Resources (8) Tax 24 AM
EC SPIE divestment (post tax) 311 165
Up 5m on prior expectations

• All problem contracts completed
• WIP/receivables written off on contracts subject
  to major litigation
• Oil and Gas fabrication all major contracts
  settled and substantially paid

As disclosed in AMECs announcement of 24
November 2005 Projects subject to major
disputes as per note 28 of the 2005 annual report
20
Legacy issues Update

• General
• Clear ownership of legacy issues
• All the cases are reviewed regularly and
  rigorously
• A prudent view has been taken in respect of all
  legacy issues
• Courthouses
• San Francisco Jail
• World Trade Centre
• Florida Development
• Jormag

Provisions as expected in December 2006
21
Natural Resources Results - excluding Bonga
2005
2006
million

• Revenue 818.0 626.5 31
• Profit 55.0 47.0 17
• Margin 6.7 7.5 -0.8pts
• Average employees 6,750 5,750 17
• Net assets 72.6 86.2 -16
• Order book 1.03bn 0.98bn 5
• Overall strong performance in revenues and profit
  
• Results driven by activities in the Americas
  and UK asset support
• Order book maintained despite strong growth in
  sales

Including Bonga
22
Natural Resources Performance

• Oil and Gas Services
• Reduced incentive payments on Russian project
  affected margins
• Performance in 2005 reflected favourable project
  completions
• Canadian Oil Sands
• Continued strong performance in engineering
  services and infrastructure
• Mining
• North American activity remained at peak levels
• New projects secured in South America

Natural Resources Revenues 2006
13
15
72
Oil and Gas Services
Oil sands (engineering and infrastructure)
Mining
Excluding Bonga
Target margin 2008 7-8
23
Power and Process Results
2005
2006
million

• Revenue 817.4 602.9 36
• Profit 30.4 36.7 -17
• Margin 3.7 6.1 -2.4pts
• Average employees 5,600 4,450 26
• Net (liabilities)/assets (19.9) 41.3 nm
• Order book 1.46bn 1.07bn 36
• Strong revenue growth in industrial markets
• Lower margin reflects industrial contracts
  secured during 2004/5 together with low profit
  take on new contracts
• Order book strong

24
Power and Process Performance

• AMEC Fluor joint venture
• 7.0m profit in 2006 (2005 13.6m)
• Industrial
• Revenues up strongly
• Lower margin on 2004/5 order book and low profit
  take on early stages of industrial projects
• 8 gross margin threshold on new contracts
• Nuclear
• Canada performing ahead of expectations
• Good performance in UK nuclear services
• UK nuclear capital projects deferred

Power and Process Revenues 2006
24
49
27
UK industrial
NA industrial
Nuclear
Excluding Iraq
Target margin 2008 5-7
25
Earth and Environmental Results
2005
2006
million

• Revenue 281.7 270.9 4
• Profit 15.2 14.1 8
• Margin 5.4 5.2 0.2pts
• Average employees 2,800 2,500 12
• Net assets 4.3 16.3 -74
• Exchange rates temper reported results
• Predominantly North American activity
• North American energy and mining sectors strong
• Another year of good performance

Target margin 2008 6-8
26
Construction Results
Built Environment
2005
2006
million

• Revenue 1,150.8 1,063.7 8
• (Loss)/Profit (27.8) 1.0 nm
• Margin (2.4) 0.1 -2.5pts
• Average employees 6,100 6,750 -10
• Net liabilities (283.4) (114.4) -148
• Order book 1.18bn 1.48bn -20
• Overall 2006 Construction losses 35m (1st half
  23m)
• Good performance in Building and Facilities
  Services
• Net liabilities reflect provisions for legal fees
  and settlements of 90m mainly N America

nm not meaningful
27
Construction
Built Environment

• UK Building and Civil Engineering
• Senior team strengthened
• Contract selection tightened up
• Increase in 2006 revenues reflect 2004/5 order
  book
• Order book down 23 on 30 June 2006
• Controls reinforced
• Second half losses significantly less than first
  half

Construction Revenues 2006
26
74
Building and Facilities Services
Building and Civil Engineering
Small profit expected in 2007
28
Investments Results
Built Environment
2005
2006
million

• Revenue 82.5 56.2 nm
• Profit 21.3 16.6 28
• Average employees 185 145 28
• Net assets 112.4 105.8 6
• PPP asset sale once again a significant
  contributor
• Property Developments - IAS 18 impact
• 4m cost of Wind Energy

nm not meaningful
29
PPP portfolio valuation

• NPV (disc. rate )
• Base case 132.1m (9.1)
• Net book value 69.8m
• Valuation highly dependent upon discount rates
  used, secondary market rates favourable
• EU adoption of IFRIC solution to concession
  accounting delayed
• AMEC continues to account for its PPP interests
  in line with UK GAAP

Built Environment
Dec 2006
Value ( million)
UK Portfolio
Total Portfolio
Discount rate
Excluding consortium tax relief see
supplementary slides for valuation basis
discount rates are only varied for the UK
portfolio Including consortium tax
relief International Financial Reporting
Interpretations Committee
30
Non-core businesses
Built Environment businesses subject to
divestment will be reclassified as discontinued
activities during 2007

• Building and Facilities Services
• Building and Civil Engineering
• PPP
• AMEC Property Developments
• Built Environment businesses being retained by
  AMEC as core
• Wind Energy
• Incheon Bridge PPP project

31
Proforma results 2006 Excluding non-core
businesses
million

• Pretax profit as reported 2006 61.1
• Intangible amortisation 3.6
• Joint venture tax Built Environment 5.0
• 69.7
• Built Environment to be sold Loss in 2006
  11.6
• Proforma pre tax profit Core 81.3
• Proforma diluted EPS 16.9p

Includes all PPP projects
32
Outlook

• Samir Brikho
• Chief Executive

33
AMECs vision

• Leading supplier of high value consultancy,
  engineering and project management services to
  defined market segments within the worlds energy
  and industrial process industries
• Services focused on designing, managing the
  delivery of, and maintaining strategic and
  complex assets

capital expenditure
operating expenditure
Consult
Engineer
Procure
Construct
Operate
Maintain
project management
Yellow shading denotes AMEC capability
34
Realising our potential
Investment and organic growthin core businesses

• Creating a fitter, more focused business

OperationalExcellence
STEP Change
Exit from non-core businesses

• Target to raise 2008 operating margin to 6

AMEC today

• Targeting 8 in 2010

35
Performance improvement Update
Margin ()
10
9
2010 target 8
2-3
8
7
2008 target 6
6
1.7-2.5
Operational Excellence
5
4
Step Change
1.9
3
Exit fromnon-coreactivities
2
2.4
1
0
AMEC 2006
Target 2010
Target 2008
Profit for core operations before net financing
costs, exceptional items, intangible amortisation
and joint venture tax, but including joint
venture profit before tax, as a percentage of
revenues. Excluding Oil and Gas lump-sum
fabrication, now closed
36
Business divestments Update

• January 2007
• Beauty parade for advisers
• February 2007
• UBS and Rothschild appointed advisors to the
  major transactions
• Teaser despatched to interested parties
• Sale of railway business announced
• This month
• Information memoranda expected to be issued

37
STEP Change Progress
14 Mar 07

• million 14 Mar 07 13 Dec 06
• Total targeted savings 112 106 Progress
• - of which gross overhead
• costs represent c.80 c.80 Maintained
• Net benefits 2007 20 costs net costs Progress
  20 savings

STEP Change being implemented 40m recurring net
benefit from 2008
Annualised savings against 2006 baseline
38
40m STEP Change net benefits 2008
Core

• million 14 Mar 07 Non-core Total
• Identified savings c.60 c.20 c.80
• Incremental benefit 2008 35 5 40

60 of savings falling to the bottom line
After loss reduction
Annualised savings against 2006 baseline
39
STEP Change Examples of actions taken

• Align benefits programmes with peers
• UK consultation process commenced
• Reduce support staff numbers in core businesses
• Support staff reduced by over 100 to-date
• Consolidate offices with operations
• Carter Lane HQ
• Corporate office in Washington
• Cheshire HQ
• Cut travel and entertainment costs
• Restructure global IT

40
STEP Change Update (continued)
Support staff reduction

• Core Non-core Total
• 2007
• - to-date 114 116 230
• By 31 December 358 130 488
• 2008 Cumulative
• By 31 December 441 130 571

Support staff reduction represents 52 of net
benefits 2008
Against 2006 baseline
41
Outlook 2007

• Step Change
• Costs balanced by benefits
• Costs largely incurred in H1, with related
  benefits in H2
• Core businesses
• Strong performance will be tempered by 7 million
  reduction in profit from AMEC Fluor JV
• Full year benefit from AMEC SPIE proceeds
• Built Environment will be discontinued
• Overall progress expected as UK Building and
  Civil Engineering returns to profit

42
End markets core businesses
43
Oil and gas services end markets
10

• Major oil and gas companies plan 50-60 growth in
  investment 2006-2010 compared with 2001-2005

We took important investment decisions in 2006.
Upstream, we have launched major investments in
unconventionals and deep water.
Jeroen van der Veer, Chief Executive, Shell
February 2007
Source IEA World Energy outlook Guide to
long-term average annual growth in AMEC end
markets
44
Oil Sands end markets
10

• By 2014 the oil sands may produce more oil than
  any OPEC country outside of Saudi Arabia

The Kearl leases hold sufficient bitumen to
support a 300,000 bpd mine. We plan to develop
the Kearl project in phases with the initial
phase sized at 100,000 bpd, and two subsequent
phases to follow. Imperial Oil,
February 2007
Source EIA RJ Research estimates and
analysis Guide to long-term average annual growth
in AMEC end markets
45
Minerals and metals mining end markets
3-5

• Continued economic growth in countries including
  China and India expected to maintain global
  demand for minerals

Consumer demand buoyant as De Beers invests US2
billion to bring new production onstream De
Beers 2006 results announcement, February 2007
Guide to long-term average annual growth in AMEC
end markets
46
UK industrial end markets
10

• Spending in high pressure gas and high voltage
  electricity transmission expected to grow
  significantly

We project that our transmission regulatory
asset base will grow by over 40 over the 5 years
to 2011 National Grid,
December 2006
Guide to long-term average annual growth in AMEC
end markets
47
North American industrial end markets
10

• Spending in power and industrial markets expected
  to remain high

Southern Company plans to invest more than 11
billion over the next three years in transmission
and distribution, environmental, and new
generation projects Southern Company, February
2007
Guide to long-term average annual growth in AMEC
end markets
48
Nuclear end markets
10

• Major opportunity in UK decommissioning
• Sellafield
• Dounreay
• Longer-term opportunity in UK new build

"The DTI has agreed to fund a programme of 2.472
billion for 2007/8 which represents a small
increase on programme spending in the current
year and is significantly higher than the 05/06
budget. NDA, February 2007
Guide to long-term average annual growth in AMEC
end markets
49
Earth and Environmental end markets
5-10

• Increasing environmental legislation
• Escalating volume of brownfield developments
• Exploration of increasingly environmentally
  sensitive regions by natural resources companies
• Continued strength in US DoD spending

This industry will remain a strong one for
years to come. We anticipate a strong and
consistent long-term growth and
profitability EFCG, December 2006
US Engineering and Consulting
Industry Environmental Financial Consulting
Group, New York Guide to long-term average
annual growth in AMEC end markets
50
Investment priorities
51
Delivering
Performance and value

• Results in line with December 2006 update
• Good profit to cash conversion
• No unanticipated developments with legacy issues
• Non-core divestments process well under way
• STEP Change benefit of about 40 million from
  2008
• Investment in prospect after divestments
• Core business end markets strong

52
AMEC plcPreliminary results 2006

• Questions

53
Preliminary results 2006

• Supplementary dataFinancials

54
Proforma results Excluding non-core businesses
2005
2006
Revenue Profit Revenue Profit
Continuing businesses 2,006.9 105.7 1,577.3 102.5
Internal turnover (24.1) - (20.5) - Corporate
costs - (20.2) - (19.9) 1,982.8 85.5 1,556.8 82.
6 Net financing costs - (4.2) - (16.9) Pre-tax 1,
982.8 81.3 1,556.8 65.7 Tax - (24.4) - (19.7) 1
,982.8 56.9 1,556.8 46.0 Diluted
EPS 16.9p 13.8p
Built Environment businesses to be sold,
including all PPP concessions Oil and Gas
lump-sum fabrication Before joint venture
tax and intangible amortisation, but including
joint venture profit before tax Reflects no
benefit from proceeds of Built Environment
businesses Pro forma based on 30
55
Proforma results Excluding non-core businesses
Six months ended 30 June 2006
2006
Revenue Profit
Continuing businesses 951.3 42.8 Internal
turnover (19.9) - Corporate costs
- (10.4) 931.4 32.4 Net financing
costs - (8.1) Pre-tax 931.4 24.3 Tax - (7.3)
931.4 17.0 Diluted EPS 5.0p
Built Environment businesses to be sold,
including all PPP concessions Oil and Gas
lump-sum fabrication Before joint venture
tax and intangible amortisation, but including
joint venture profit before tax Reflects no
benefit from proceeds of Built Environment
businesses Pro forma based on 30
56
Organic growth Analysis of revenues
Order book
2006
2005
Change
Revenues ( million)

• Natural Resources 818.0 626.5 31 1.03bn
• Power and Process 754.0 490.5 54 1.46bn
• Earth and Environmental 281.7 270.9 4
• Core businesses 1,853.7 1,387.9 34
• Construction 1,150.8 1,063.7 8 1.18bn
• Investments 82.5 56.2 nm
• Built Environment 1,233.3 1,119.9 10

• Energy and Process growth tempered by currency
  impact
• Base line for future projections

Excluding Bonga Excluding AMEC/Fluor JV
activities in Iraq and including adjusted figures
for the nuclear engineering services business
NNC, acquired in July 2005
57
STEP Change Update (continued)
Analysis of 40 million net benefits 2008
Other 37
Personnel 52
Property 11
Core businesses
58
Proforma profit including discontinued
operations
2006
2005
Continuing operations
Total group
Discontinued operations
Rail JV tax
Continuing operations
Discontinued operations
Total group
Rail JV tax
million

• Pre-tax profit 64.7 23.9 - 88.6 73.9 44.6 2.4 120
  .9
• Income tax (14.9) (13.7) - (28.6) (15.7) (18.6) (2
  .4) (36.7)
• Post-tax profit 49.8 10.2 - 60.0 58.2 26.0 - 84.2
  
• Intangible amortisation (3.6) (2.6) - (6.2) (4.5
  ) (1.5) - (6.0)
• Post tax profit 46.2 7.6 - 53.8 53.7 24.5 - 78.
  2
• Exceptional items (146.1) 311.5 - 165.4 (72.1) (2.
  4) - (74.5)
• (Loss)/profit
• for the period (99.9) 319.1 - 219.2 (18.4) 22.1 -
  3.7

Before intangible amortisation
59
Segmental summary Analysis of profit
Change
Profit ( million)

• Natural Resources 55.0 47.0 17
• Power and Process 30.4 36.7 -17
• Earth and Environmental 15.2 14.1 8
• Energy and Process 100.6 97.8 3
• Construction (27.8) 1.0 nm
• Investments 21.3 16.6 28
• Built Environment (6.5) 17.6 nm
• Profit before corporate costs 94.1 115.4 -18
• Corporate costs (20.2) (19.9) 1.5
• Profit before net financing costs 73.9 95.5 -23
• Net financing costs (4.2) (16.9) -75
• Joint venture tax (5.0) (4.7) 6
• 64.7 73.9 -12

Before joint venture tax and intangible
amortisation, but including joint venture profit
before tax Including AMEC/Fluor JV activities
in Iraq
60
Natural Resources
Energy and Process
2006
2005
million
Re-stated
Re-stated
Excl. Bonga
Excl. Bonga
Total
Total

• Revenue 920.9 (102.9) 818.0 870.6 (244.1) 626.5
• Profit 55.0 - 55.0 47.0 - 47.0
• Margin 6.0 6.7 5.4 7.5

61
Power and Process
Energy and Process
2006
2005
million
Excl. AMEC/Fluor JV
Excl. AMEC/Fluor JV
Re-stated
Re-stated
Total
Total

• Revenue 817.4 (63.4) 754.0 602.9 (163.0) 439.9
• Profit 30.4 (7.0) 23.4 36.7 (13.6) 23.1
• Margin 3.7 3.1 6.1 5.2

62
Power and Process analysis of results
Energy and Process
2006
million
Excl. Pipeline construction
H1 Re-stated
H1 As reported
2006 Full year
H2

• Revenue 474.7 (101.1) 373.6 443.8 817.4
• Profit 15.6 0.7 16.3 14.1 30.4
• Margin 3.3 4.4 3.2 3.7

63
Results from joint ventures
million
Profit before net financing costs 36.9 40.0 Inter
est (22.1) (24.3) Profit before
tax 14.8 15.7 Taxation (5.0) (4.7) Share of
post tax results 9.8 11.0
64
Information on business units held for disposal
Sale of specialist businesses under way Decision
to sell Built Environment businesses as
expediently as possible
65
Preliminary results 2006

• Supplementary dataProject Equity Investments -
  PPP

66
Basis of valuation of PPP portfolio

• Cash flows extracted from concession models
• Cash flows post tax concession pre-tax AMEC plc
• Discount rate - availability based projects 8
  (2005 9.5) - volume risk based projects 9
  (2005 10.5)
• Risk premium range 2 ramp up 4 construction
  phase
• Discount rate of 15.5 for overseas projects in
  the construction phase
• Tax rate 30
• Tax - benefit of UK consortium relief discounted
  at 9 included within valuation (but not
  reflected in aggregate cash flows)

67
AMEC PPP portfolio aggregate cash flows
Shareholder cash flows (2007 2040)
million
120
100
80
60
40
20
0
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
-20
Excluding consortium relief
68
Investments - PPP
PPP portfolio financially sound and profitable

• Share of non recourse bank debt in projects 625
  million
• Operational 448 million
• Under construction 177 million
• Nine projects operational
• Profit after interest of 6.1 million (2005 3.3
  million)
• Support limited to equity commitments of 29.3
  million (including preferred bids)
• Contingent equity arising from adverse events
• AMEC share 34 million

As at 31 December 2006
69
AMEC PPP projects Operational
Equity and subordinated debt invested less
subordinated debt repaid to-date
70
AMEC PPP projects Operational
Equity and subordinated debt invested less
subordinated debt repaid to-date
71
AMEC PPP projects Delivery
AMEC PPP portfolio total
Equity and subordinated debt invested less
subordinated debt repaid to-date