AMEC plc Interim Results 2004

1
AMEC plc Interim Results 2004
Any forward looking statements made in this
presentation represent managements best
judgement as to what may occur in the future.
However, the groups actual results for the
current and future fiscal periods and corporate
developments will depend on a number of economic,
competitive and other factors including some of
which will be outside the control of the group.
Such factors could cause the groups actual
results for future periods to differ materially
from those expressed in any forward looking
statements made in this presentation.
2
AMEC plc Interim Results 2004

• Jock Green-ArmytageChairman

3
Project Manager and Partner of Choice

• Pre-tax profit up 5, in line with expectations
• Interim dividend up 6
• Important strategic steps forward
• Migration from construction activity
• Further acquisitions in Europe
• Sound base for future growth
• Opportunities in energy and government sectors

AMEC is increasingly a differentiated services
business
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AMEC plc Interim Results 2004

• Stuart SiddallFinance Director

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Financial SummarySix months ended 30 June (
million)
2003
2004

• Total turnover 2,239.0 2,320.6
• Pre-tax profit 37.5 35.7 5
• Effective tax rate 32.8 32.4
• Diluted earnings per share 8.2p 8.0p 3
• Proposed dividend per share 3.8p 3.6p 6
• Dividend cover 2.2x 2.2x

• Increased Services and planned reduction in
  Capital Project activities
• Performance in line with expectations

Before goodwill amortisation and exceptional
items
6
Exceptional Items million
2004
2003

• Business closures/disposals cost/(credit) 19.6 (0
  .7)

• Mainly arises from exiting US Construction
  Management
• Hong Kong ME engineering business disposed of in
  July 2004
• Loss booked in first half
• Small profit expected from second half disposals
• Aggregate goodwill of 13.0 million written off
  on closures/disposals
• No effect on net assets

Before associated goodwill
7
Total Operating Profit/(Loss)By business six
months ended 30 June ( million)
Margin
2003
2004
Margin
Client Support Services 42.8 3.2 37.0 3.0 Capital
Projects 14.1 1.6 19.2 1.8 Investments 5.1 8.6 5.1
8.9 62.0 2.8 61.3 2.6 Corporate costs
(12.1) (13.0) 49.9 48.3

• Improved Services performance in Continental
  Europe and UK offsets weakness in North America
• Reduced activities in Capital Projects reflects
  strategic re-positioning
• Steady performance from Investments

Before goodwill amortisation and exceptional
items
8
Client Support ServicesSix months ended 30 June
( million)
2004
2003

• Total turnover 1,322.1 1,213.6
• Total operating profit 42.8 37.0
• Margin 3.2 3.0

• Full consolidation of SPIE in 2004
• Good contribution from UK term contracts and
  framework agreements
• Reduced US design contribution arising from
  weakness in some markets

Before corporate costs, goodwill amortisation
and exceptional items
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US Construction Expenditures - Manufacturing
2003
2004
Source Datastream
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Capital ProjectsSix months ended 30 June (
million)
2003
2004
Total turnover 880.6 1,093.9 Total operating
profit 14.1 19.2 Margin 1.6 1.8

• Exit from US Construction Management
• Reduced level of activity in UK roads and North
  America generally
• Prudent approach to profit take on certain oil
  and gas contracts

Before corporate costs, goodwill amortisation
and exceptional items
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InvestmentsSix months ended 30 June ( million)
2003
2004
Total turnover 59.2 57.4 Total operating
profit 5.1 5.1

• UK commercial letting market soft but improved
  from 2003 low
• Wind development costs expensed in period
• Increased PPP bid costs
• Stronger second half performance expected, as
  usual

Before corporate costs, goodwill amortisation
and exceptional items
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Investments (continued)Public Private
Partnerships

• Opportunities in the UK and overseas
• Preferred bidder on Incheon Bridge (South Korea)
• Bidding for Richmond - Vancouver LRT (Canada)
• Currently bidding four UK PFI projects
• Colchester Hospital
• DLR extension
• South Lanarkshire Schools
• Belfast M1 Westlink

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Net DebtAs at 30 June million
2004
2003

• Average weekly net debt 405.0 330.0
• Net debt 388.7 320.4

• Payments on account reduced by nearly 40 million
• Increased capital employed on several oil and gas
  projects not expected to reverse until late 2004
  or early 2005
• Average weekly net debt expected to remain ahead
  of last year
• Reflects 10 million of Iraq working capital
  requirements

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Balance Sheet Analysis( million)
31 Dec 2003
30 Jun 2004
30 Jun 2003
Payments on account (126.5) (164.3) (180.3) Trade
creditors (1,155.3) (1,233.4) (1,163.8) (1,2
81.8) (1,397.7) (1,344.1) Stocks/trade debtors
1,596.4 1,637.5 1,542.9 Net operating
assets 314.6 239.8 198.8 Months of turnover
in stocks/trade debtors 4.4 4.7 4.0 Months
of turnover in trade creditors 3.2 3.5
3.0 Ratio of stocks/trade debtors to trade
creditors 1.4 1.3 1.3
Restated for changes in debtor/creditor offsets
in SPIEs balance sheet Based on previous six
months turnover excluding joint ventures
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Cash FlowSix months ended 30 June ( million)
2004
2003
Opening net debt (218.1) (37.3) Cash flow from
trading activities (139.7) (85.7) Net
(profit)/loss retained in joint
ventures/associates (3.7) 0.9 Acquisitions/dispos
als/share issues 1.0 (169.3) Interest, tax and
dividends (28.1) (27.2) Currency and other
adjustments (0.1) (1.8) Closing net debt
(388.7) (320.4)

• Acquisitions and disposals
• Investment in PPP and Development and
  Regeneration
• Extension of Regional Services network
• Proceeds received from Cayman Hotel and Spie
  Batignolles disposals

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Net Interest PayableSix months ended 30 June (
million)
Group 6.0 8.1 Share in joint ventures and
associates 6.4 4.5 12.4 12.6
2004
2003

• Group
• Interest payable reduced by profit on sale of PPP
  subordinated debt investment
• Reflects six months of SPIE acquisition funding
  (2003 four months)
• Joint ventures and associates
• Increase in operational concessions
• Increasing activity in development and
  regeneration

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Order Book billion
Order book at 30 June 2004 3.3 billion (31 Dec
2003 3.0 billion)
Excludes Regional Services, UK rail maintenance
and US Construction Management
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Outlook for 2004

• Prospects in major markets remain generally
  positive
• Continuing improvement in the quality of the
  business portfolio
• Overall progress expected in 2004
• In line with earlier expectations

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Outlook for 2005

• Growth expected in core businesses
• Prospect of profit from Iraq compensating for UK
  rail maintenance and Spie Batignolles
• Positive outlook maintained
• Expectation of further growth

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AMEC plc Interim Results 2004

• Sir Peter Mason KBEChief Executive

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The Balance of our Business has Changed

• Two thirds of operating profit from Services and
  Investments
• AMEC is an international business
• Resilient track record in European Regional
  Services
• Migration from traditional construction activity
• Disposal of Spie Batignolles
• Exit from US Construction Management
• Turnover reduced by around 1 billion with no
  material impact on profits

AMEC is no longer simply a construction company
22
Leading Position in Energy Services

• Energy represents around 30 of total turnover
• AMEC is geared to growth across the sector

AMEC is increasingly a differentiated services
business
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No Constraints as Demand Rises in Oil and Gas

• Changes in upstream patterns of procurement
• Smaller contract size
• Better margins
• Lower risk
• Important contracts in Korea and Kuwait
• Canadian oil sands booming
• Upstream first half order intake up 25
• Overall oil and gas order book 1.2 billion

There are perhaps 20 times more prospects in oil
and gas than AMEC could undertake
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Strong Position in Nuclear

• Substantial opportunities in Geomelt
• US60 million Geomelt contract with US Department
  of Energy
• Strong position in the UK
• Over 30 years continuous experience at
  Sellafield
• Almost 600 people
• Opportunities in UK industry restructuring
• Competitive tendering of 20 civil nuclear sites
  by 2008
• 1.5 2.0 billion p.a. market
• Proposals being submitted for waste at three
  Magnox stations

Cost of nuclear clean-up in the UK alone
estimated at 50 billion
25
A Leading Developer of Wind Farms in UK

• UK wind energy sector gathering momentum
• Government planning guidance policy document
  PPS22
• Scottish Land Court rules in favour of Edinbane
  development
• Leading position in renewables
• AMEC wind farm portfolio exceeds 2,000MW
• Represents 16 of UK Government renewables target
  for 2010
• AMEC considering scenarios which may lead to
  significant investment over the next five years

Wind Energy investment could produce returns of
20 per annum
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Cautious but Successful in Iraq

• Work running largely to plan
• Expected value of projects being worked on either
  by AMEC or in joint venture is some US450
  million
• Cautious estimate now reflected in expectations
  for 2004

Increased contribution expected in 2005
27
Valued Government Supplier

• Outlook in infrastructure markets strengthened by
  UK Government 2004 Spending Review
• NHS 7.1
• Education 5.7
• Transport 4.5
• Growth in defence
• Increased investment in regeneration
• Good relationships with US federal defence sector
• Earth and Environmental working on projects
  expected to be worth US100 million

Average annual growth in spending
Average real annual growth rate in Department
Expenditure Limits 2004/5 2007/8 Source HM
Treasury 2004 Spending Review, July 2004
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Genuine Competitive Advantage

• Continuing shift to higher value services
• Growing recognition as project manager of choice
• Leveraging expertise in growth sectors
• Energy and defence on both sides of the Atlantic
• Extending geographical reach
• Add on acquisitions
• Growth in regions such as Caspian, Middle East
  and Asia Pacific

Continuing growth expected in the medium and
long term
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AMEC plc Interim Results 2004

• Supplementary Information

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Analysis of Total Turnover by Market SectorSix
months ended 30 June 2004
Industrial 9 (2003 10)
Regional Services 32 (2003 35)
Infrastructure 14 (2003 15)
Transport 18 (2003 15)
Oil and gas 27 (2003 25)
Total turnover six months ended 30 June 2003
includes pro forma 100 of SPIE
31
Investments PPP portfolio financially sound and
profitable

• Share of non recourse debt in projects 465
  million
• Operational 203 million
• Under construction 262 million
• Support limited to equity commitments of 20
  million
• Contingent equity arising from adverse events of
  20 million
• Joint and several obligations of 35 million
• Mainly Cross Israel

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InvestmentsPPP commitments ( million)

• As at 31 December 2003 30.5
• Reduced commitments (2.4)
• Investments (8.2)
• As at 30 June 2004 19.9

• Total investment to date of 38.5 million
• Commitments phased over next five years

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Investments Regeneration commitments ( million)
EnglishCities Fund
BritishWaterways
Total

• As at 31 December 2003 5.0 21.2 26.2
• Investments (0.6) (0.3) (0.9)
• As at 30 June 2004 4.4 20.9 25.3

• Investment in regeneration dependent upon market
  conditions