RNS Number:3641I
AMEC PLC
06 March 2003
6 March 2003
AMEC plc Preliminary Results 2002
PRE-TAX PROFIT* #105.2 MILLION
AMEC plc, the international engineering services company, today announces its
audited results for the year ended 31 December 2002.
Highlights:
* Pre-tax profit* #105.2m
* Average net debt** reduced to #195.0m
* Dividend increased by 5.3% to 10.0p per share
* Expected value of contracts awarded since 1 January 2003 in excess
of #1.5bn
* Acquisition of SPIE S.A. completed
Chief Executive, Sir Peter Mason KBE, said:
"With the purchase of SPIE now complete, AMEC is firmly established as the UK's
premier international engineering services company. AMEC is well positioned in
its major markets and recently announced contracts expected to be worth over
#1.5bn give us increased confidence in a return to organic growth in 2004."
* Before charging goodwill amortisation of #13.1m, exceptional
reorganisation, closure and disposal costs of #24.9m and an exceptional write
off of goodwill of #28.0m. The pre-tax profit after including these items is
#39.2m for the year ended 31 December 2002.
** Weekly average for the year ended 31 December 2002.
Financial highlights*
2002 2001
# million # million
Total turnover 4,331.6 4,467.5
Total operating profit 126.2 130.5
Pre-tax profit 105.2 116.7
Average net debt** (195.0) (210.0)
Diluted earnings per ordinary share 24.3p 26.5p***
Dividends per ordinary share 10.0p 9.5p
* Unless otherwise stated, amounts and percentage movements throughout this
document relating to the profit and loss account are stated before goodwill
amortisation and exceptional items. Amounts and percentage movements relating
to operating profit and margin of the Client Support Services, Capital Projects
and Investments businesses are stated before e-commerce and corporate costs of
#1.9m and #20.4m respectively, goodwill amortisation of #13.1m, exceptional
reorganisation, closure and disposal costs of #24.9m and an exceptional write
off of goodwill of #28.0m.
Unless otherwise stated, all references to 2001 earnings per share and
percentage movement thereon relate to a pro forma calculation, which assumes the
preference shares were converted to ordinary shares on 1 January 2001.
** Weekly average for the year ended 31 December.
*** Assuming preference shares were converted to ordinary shares on 1 January
2001 (pro forma).
The preliminary results, slide presentation and spoken remarks will be available
on AMEC's web site www.amec.com from approximately 7:00 am.
Editors' Notes:
AMEC plc (LSE:AMEC) the international engineering services company, provides
design, project delivery and maintenance support to clients in the oil and gas,
transport, industrial and infrastructure sectors.
With its purchase of the outstanding shares of SPIE S.A. on 5 March 2003, AMEC
achieved its strategic transformation from a regional UK construction company in
1997, into one of the world's largest engineering services companies. AMEC now
enjoys a balance of three major "home markets" - in the UK, continental Europe
and the Americas - and strong, long-term relationships with a wide base of
local, national and international clients.
Together with SPIE, AMEC generates revenues of some #5.5bn and works at the
local, national and international levels, employing 50,000 people throughout the
UK, continental Europe, the Americas and some 40 countries worldwide.
AMEC's principal goal is sustainable earnings growth and the creation of value
for all its stakeholders by fully exploiting its technical expertise, geographic
coverage and strong client base. AMEC will capitalise on opportunities to
expand its client relationships and market share in the oil and gas, transport,
industrial and infrastructure sectors and grow its Regional Services businesses
supporting local clients throughout Europe and the Americas.
AMEC is committed to building a safe and sustainable business based upon the
achievement of a positive balance of economic, environmental and social benefits
and to continuous improvement and regular reporting on its sustainability
performance.
www.amec.com
Enquiries to:
AMEC plc:
Sir Peter Mason KBE, Chief Executive + 44 (0)20 7634 0009
Stuart Siddall, Finance Director + 44 (0)20 7634 0055
Neil Jamieson, Director of Investor Relations + 44 (0)20 7634 0063
David Paterson, Director of Corporate Communications + 44 (0)20 7634 0089
Gavin Anderson: + 44 (0)20 7554 1400
Neil Bennett
Laura Hickman
OVERVIEW
With the completion of the SPIE investment, AMEC has built a world class
international engineering services business founded on a steady base of
recurring revenues from longer-term relationships with FTSE 100 and Fortune 500
clients. AMEC is financially sound, has a balanced portfolio, excellent client
partnerships and is well positioned to benefit from its international presence.
Major markets in oil and gas, transport and infrastructure are strong and offer
significant potential for growth.
2002 was characterised by general softness in the global economy and continued
decline in financial markets. Against the Board's original expectations,
results for the year were disappointing. AMEC faced challenges in certain of
its industrial markets, took action to close or sell a number of non-core or
under performing small businesses and focused on cost reduction. Pre-tax profit
for 2002 was in line with the Board's revised expectations at the time of the
December 2002 trading statement. The average net debt during 2002 has reduced
and the order book has strengthened with several large contracts being awarded
in recent weeks.
OUTLOOK
In December 2002, the Board stated that, whilst it expected AMEC to benefit
significantly from the addition of SPIE in 2003, conditions in certain markets
suggested a pause in organic growth. Industrial markets remain a concern and
the UK property development market is expected to be challenging before levels
of activity on major UK regeneration schemes increase in 2004.
Notwithstanding its cautious stance on prospects in these markets, AMEC is well
positioned to take advantage of potential opportunities in the oil and gas,
transport and infrastructure markets. With a strong balance sheet, AMEC has
flexibility to develop its existing markets both organically and through small
strategic acquisitions.
The Board remains of the view that prospects for 2003 are in line with the
position taken in December 2002.
OPERATIONAL REVIEW
In addition to the normal segmental analysis, which provides the most meaningful
financial assessment of activity, a new review of sales and orders by market has
been introduced to present AMEC's key activities more clearly and provide an
additional perspective on its ongoing performance and growth prospects.
Markets are defined in terms of work performed for clients in the oil and gas,
transport, infrastructure and industrial sectors. AMEC's Regional Services
network generates revenues from electrical, heating ventilation and
air-conditioning, communications, mechanical and industrial and environmental
services for clients across all of AMEC's key market sectors and follows a
distinct local business model.
The market and order review includes SPIE at 100%, in order to provide a
meaningful basis for future comparisons.
Oil and Gas
Oil and Gas, with sales of about #1.0bn, generated 19% of total turnover in
2002. This is a strong part of AMEC's business, with a sound base of long-term
operational service contracts and a steady order book. Offshore activities and
Pipelines continue to lead growth in this market sector and encouraging
prospects are seen in Downstream, following a recent period of relatively quiet
activity.
AMEC has recently announced important new contracts in the Caspian, North-East
Russia, West Africa, South Korea and the Gulf of Mexico.
AMEC is well positioned with leading oil industry clients as they move to invest
in the development of new deepwater, offshore production areas. BP alone plans
to spend more than US$20bn over the next five years on new profit centres
including West Africa, Azerbaijan, the Gulf of Mexico and Asia Pacific - all
areas where AMEC is well established and already serving BP and other important
clients.
Transport
Transport also generated about #1.0bn, or 19% of total turnover in 2002. AMEC's
work includes services and projects for clients in rail, highways and airports.
Significant growth opportunities are expected as governments, not least in the
UK, are challenged to deliver modern, integrated transport systems.
AMEC's recent contract announcements of the Docklands Light Railway (DLR)
extension, the high output renewal work for Network Rail, the A1(M) motorway and
the BAA partnership agreement, with the potential for #800m of activity over ten
years, all illustrate growth opportunities in this market sector.
Rail is currently the leading growth element in the transport sector. Combining
the AMEC and SPIE European rail businesses in 2002 positioned AMEC with the
expertise necessary to be a European leader. In the UK, rail maintenance
activities are at unprecedented levels and a number of important new capital
projects have been received. Opportunities in continental Europe for high-speed
projects, rail renewals, municipal tramways and other work are considered
equally promising.
AMEC continues to win a leading share of the growing UK market for highways and,
if the Government fulfils its commitment to increase spending in this area
substantially, the outlook is more promising than it has been for many years.
AMEC's consulting and design business specialising in highways and bridges is
also well positioned in the high growth south west states of the US, as is its
consultancy business in western Canada.
Airports continue to be affected by the events of 11 September, 2001, but this
market is also providing AMEC with growth opportunities. In addition to the new
BAA contract, AMEC has recently completed some of the largest airport projects
in the US, including the new International Arrivals Terminal at JFK and the Fort
Lauderdale Terminal One. AMEC is focused on US homeland security services at
airports, since spending is directed to these immediate priorities. AMEC's work
on 100% hold baggage screening at Boston Airport, is one example in this area.
Infrastructure
AMEC's work in the Infrastructure sector includes construction and maintenance
of public and private sector buildings, particularly in defence, detention and
urban renewal. Infrastructure represented about #1.2bn, or 22% of turnover in
2002 and includes much of AMEC's UK work in urban renewal and non-transport PFI
projects. These include the partnership with British Waterways for waterside
redevelopment, hospital projects, for example UCLH, and government facility
programmes such as the Inland Revenue accommodation project at Longbenton.
In September 2002, AMEC was selected in joint venture as preferred bidder for
the seven-year #460m Regional Prime Contract (AMEC share 50%) for management of
the Ministry of Defence estates in Scotland, which includes some 400 facilities.
Further announcements on other significant MOD projects are expected in the
near future.
Growth potential is also seen in the US defence sector, where AMEC is well
established with key clients such as the Pentagon and various branches of the
Armed Forces. As part of its plan to improve Construction Management, the
business has been reorganised to take advantage of growth in the US public
sector.
AMEC continues to be active in PFI/PPP and recently took two projects to
financial close. AMEC is currently bidding a further five contracts.
Industrial
The industrial market sector includes work for a number of private sector
industries and generated some #0.9bn, or 16% of turnover in 2002. In December
2002, AMEC signalled its concern at the impact of a rapid downturn in industrial
spending and indicated delays or cancellations on some 20 industrial projects
worth more than US$500m. Project delays affected both AMEC Americas design and
engineering services and UK industrial activities and impacted its results
during 2002. At present, AMEC remains cautious about the outlook for this
market sector in 2003, and its strategy has been to reduce costs, stay close to
clients and maximise many long-standing relationships.
There have been positive developments, including the growing diamond mining
partnership with De Beers in Canada and the AMEC Americas PharmaChem business,
which has grown from modest activity levels two years ago to approaching US$70m
in new work in 2002. Trends in food and general manufacturing, for clients such
as General Mills and a number of leading US cement manufacturers, have also been
positive. Encouraging signs of growth are being seen in new orders in
telecommunications in the UK for clients such as Airwave mm02, Crown Castle,
Gridcom and Hutchison.
Regional Services
AMEC's multi-market Regional Services businesses generated sales of about #1.3bn
and contributed 24% of turnover in 2002. This segment includes the Earth &
Environmental business in the Americas and SPIE's electrical, heating,
ventilation and air-conditioning, communications, mechanical and industrial
services delivered locally across continental Europe. Regional Services follow
a distinct business model focused on repeat business and ongoing support for
numerous clients at the local level. Historically, it has been a stable
business characterised by a very large volume of small or renewable contracts.
AMEC's objectives in this area are to sell more services to existing customers
and to geographically expand the network. A good example is the recent
selection of AMEC by the US Air Force to provide environmental and engineering
support within a long-term framework agreement. Another is SPIE's
communications services, which benefited from the acquisition of Matra Nortel
Communications in 2002 and has now entered into a distribution agreement with
Siemens.
ORDER BOOK AND MARKET PROSPECTS
The oil and gas market remains strong. The order book at 31 December 2002 was
just over #1bn, equivalent to about one year's sales. The year-end order book
was down slightly on the extremely strong position of the previous year, but has
been boosted recently by contract awards in North-East Russia, South Korea, West
Africa, UK and the Gulf of Mexico. Upstream and Pipelines activities are
driving growth in this sector, which is expected to remain strong for the
foreseeable future.
The transport sector is also strong, with the year-end order book standing at
about #1bn, or around one year's sales. The year-end order book was slightly
ahead of the previous year and has been strengthened subsequently by major
contracts for the DLR extension, A1(M) motorway and various contracts for
Network Rail. Prospects in Rail and Highways are particularly promising.
After taking account of the #400m fall in the Construction Management order book
as a result of the planned downsizing and adjusting the December 2002 order book
for new contracts recently announced in other areas of the Infrastructure
sector, the order book would have been about #600m, similar to the level
reported in 2001. The outlook for defence, health and other public buildings,
continues to be encouraging.
The order book situation in Industrial reflects the sharp downturn in investment
seen in the second half of 2002 and in the fourth quarter in particular. At 31
December 2002, the Industrial order book stood at some #300m, down only slightly
on the previous year. The reduction in the order book would be more apparent
but for the large volume of short-term work carried out for industrial clients.
Of over US$500m of projects announced as deferred or cancelled in December 2002,
around US$250m, mostly power projects, is now seen as cancelled; US$50m is still
deferred; US$150m is underway and US$50m is presently very active. However, in
contrast with this, the position elsewhere is very different, with new contracts
recently announced expected to be worth in excess of #1.5bn. Further contract
announcements are expected shortly.
The order book in Regional Services at any point in time is not a guide to
prospects, with order intake and sales in a given period being more meaningful.
At 30 June 2002, orders and sales in Regional Services were comfortably ahead of
the previous year but slowed in the second half to end the year very much in
line with 2001, at around #1.3bn.
SUSTAINABILITY
In its first annual Sustainability Report, published in association with the
2001 Annual Report and Accounts, AMEC set out its core sustainability principles
and commitments for sustainability measurement and reporting.
In 2002, significant effort was made to gather, analyse and validate relevant
information from across AMEC. In addition to measuring its progress against its
published indicators, AMEC sought to identify opportunities for improvement.
AMEC's Board and senior management took time to listen to company stakeholders
and to communicate the importance of its sustainability principles as
fundamental elements of the AMEC way of doing business. Sustainability issues
were more formally incorporated into AMEC's project tender review and risk
management processes. The Board also established an Ethics and Compliance
Committee and appointed a senior manager with responsibility for business ethics
and compliance throughout AMEC.
AMEC believes that these and other steps taken in 2002, including its delivery
of environmental and related engineering services for clients worldwide, are
assisting AMEC to improve identification and management of risks and to help
meet its stated objective of building a strong, profitable and sustainable
business for the future. Details of AMEC's Sustainability programme and
performance will be published in the 2002 Sustainability Report and will also be
available at www.amec.com.
FINANCIAL REVIEW
Total turnover for the year was #4,331.6m (2001: #4,467.5m). Growth in Client
Support Services during the year was more than offset by the largely anticipated
decline in Capital Projects activity. Operating margin remained unchanged at
2.9%.
Pre-tax profit declined to #105.2m* (2001: #116.7m). Strong performances in the
Oil & Gas, Rail Maintenance and SPIE's Operations Support Services businesses
were offset by the steep decline in industrial capital spending in the second
half of 2002 and costs associated with the ongoing dispute with the US General
Services Administration ("GSA").
Diluted earnings per share were 24.3p* (2001: 26.5p). The recommended final
dividend per share of 6.6p (2001: 6.4p) together with the interim dividend of
3.4p per share results in a total dividend per share of 10.0p (2001: 9.5p).
Dividend cover was 2.4 times (2001: 2.8 times). Dividends have been growing
over the last five years and a healthy level of cover has been maintained to
provide flexibility. Whilst reported cover fell in 2002, the level on a pro
forma basis assuming SPIE had been wholly owned from 1 January 2002 improves to
2.9 times.
Average net debt fell to #195.0m (2001: #210.0m). Year end net debt of #37.3m
(2001: #44.6m) once again benefited, as predicted, from a strong cash inflow in
the second half of the year. AMEC has committed facilities of nearly #700m,
with an average maturity of 35 months.
AMEC's pension schemes are well funded. Continued falls in stock markets
reduced the surplus in the schemes at 31 December 2002 to around #100m. AMEC
expects to introduce the new accounting standard for retirement benefits, FRS
17, in 2005.
SEGMENTAL REVIEW*
Client Support Services
Consulting and Design Services 2002 2001
#m #m
Total turnover 317.8 396.0
Total operating profit 14.7 19.7
Margin 4.6% 5.0%
Sales started to fall away in the first half and this trend accelerated in the
final quarter, associated with the sharp reduction in industrial capital
spending. Total turnover for the year declined by some 20%. Operating profit
margin declined to 4.6% (2001: 5.0%), reflecting the slowdown in activity levels
and under-recovery of overhead costs in the North American operations. Overhead
costs were addressed through reorganisation and a reduction in the number of
processing centres during 2002.
In December 2002 the Board took a cautious view of the outlook in this sector
for 2003, which assumes no improvement in the conditions experienced in the
latter part of 2002.
Operations Support Services 2002 2001
#m #m
Total turnover 1,463.3 1,369.2
Total operating profit 60.9 54.7
Margin 4.2% 4.0%
Operations Support Services achieved 7% growth in turnover with growth in the
first half of the year and a small decline in the second half. Softer
conditions became more apparent in eastern France and some weakness occurred in
the UK Industrial maintenance sector in the second half. In addition, UK
Facilities Management sales reduced as its portfolio of contracts was
rationalised. Sales benefited from the full year inclusion of acquisitions by
SPIE in both Communications and Oil & Gas services. Operating profit benefited
from strong performances in the Spie Trindel, Rail Maintenance and Upstream Oil
& Gas Support Services businesses that more than offset the small loss in Spie
Communications and the reduction in Industrial activity in North America.
Overall operating profit margin was steady.
Capital Projects
Construction Management 2002 2001
#m #m
Total turnover 513.0 625.1
Total operating (loss)/profit (2.3) 1.1
Margin (0.4)% 0.2%
Construction Management continued to pursue strategic refocusing which, as
expected, resulted in further contraction of low margin turnover during the
year. First half performance was boosted by significant work associated with
the Pentagon rebuilding project. Sales in the second half of #230m continued
the underlying trend of contraction and were approximately one third lower than
the same period in 2001. Total turnover for the year declined by 18% to
#513.0m. The results reflected a good performance on the Pentagon project,
offset by additional subcontractor costs of #6m associated with the ongoing
dispute with the GSA. This dispute stems from contracts performed by Morse
Diesel in the mid 1990s and remains unresolved. AMEC is once again able to bid
for all US Government contracts and hopes to reach an amicable contractual
settlement of the outstanding issues in the near future.
Construction 2002 2001
#m #m
Total turnover 1,897.7 2,032.7
Total operating profit 56.1 62.1
Margin 3.0% 3.1%
AMEC has maintained its strategy of being highly selective in its approach to
work undertaken. Turnover declined by 7%, with performance reflecting lower
levels of activity in the North American and UK industrial sectors. Operating
profit margins were similar to 2001.
Investments
Property Development and Regeneration 2002 2001
#m #m
Total turnover 156.7 101.4
Total operating profit 12.9 12.7
Property Development and Regeneration performed well amid difficult commercial
conditions in the UK, reflecting the benefits of a broad mix of business and a
focus on pre-let and pre-sold projects. Tenant demand is lower and some
weakness is expected in this sector in 2003. Partnership arrangements with
English Cities Fund and British Waterways are moving forward and these will
absorb about #10m in cash in 2003. Benefits from these long-term relationships
are expected in 2004.
The Grand Cayman Hotel, with a carrying value of about US$40m, reported a small
operating profit in 2002. It is intended to sell the hotel when the market
improves.
Public Private Partnerships 2002 2001
#m #m
Total turnover 32.6 29.7
Total operating profit 6.2 4.4
The PPP business had a good year. Lower overall bidding costs, the
capitalisation of such costs where AMEC is preferred bidder (#1m at December
2002, 2001: # nil) and bid cost recoveries from London Underground enabled the
business to improve on 2001, as expected.
AMEC's share of net debt in PPP concessions as at 31 December 2002 was #281m, of
which some #200m related to five operational concessions which have generated
operating profits of #8m in 2002. These concessions are highly geared but in
total reported a profit after interest. AMEC's PPP projects are financially
sound. The debt in AMEC's PPP concessions is substantially without recourse.
AMEC's financial support is limited to equity commitments of #24m, contingent
equity of #10m and, in the unlikely event that its partners fail to provide
their share of the equity, a further #27m.
Since the year-end, financial close has been achieved on the A1(M) Darrington -
Dishforth and the DLR extension. AMEC's share of the forecast debt in these two
concessions is #135m and its maximum equity commitment is about #12m. AMEC has
currently ten PPP/PFI concessions, of which five are now operational.
SPIE
Overall turnover increased by 11% in 2002. Growth of 13% in the first half was
tempered by softness in eastern France in the latter part of the year.
AMEC's operating profit for 2002 includes #25.7m (2001: #19.4m) in respect of
its 46% interest in SPIE. The improvement of 32% was attributable to good
results in Operations Support Services. It also includes a significantly
increased contribution on a number of Pipeline contracts where good progress was
made in the year and an increased contribution from Power activities, which
benefited from some reorganisation in 2001. These more than offset a small loss
in Communications and lower profit in Spie Batignolles.
SPIE's cash position remained healthy with net cash of #107.4m (2001: #114.0m)
at the year-end.
Whilst SPIE has good growth opportunities in its international pipelines
business, AMEC remains cautious about the outlook for Spie Batignolles and some
of the Regional activities.
SPIE's reported post-tax profit of Euro55.6m (after exceptional items and goodwill
amortisation) was in line with SPIE's forecast included in the circular to
shareholders dated 17 January 2003. Subject to some minor differences totalling
about #1m after tax, the net attributable profit included in AMEC's results in
respect of SPIE was close to the estimate provided by the Directors of AMEC in
that circular.
The consideration for the remaining 54% SPIE shares not already owned by AMEC
was paid on 5 March 2003 and most of the outstanding share options will be
acquired by the end of March 2003. The net cost of the transaction was
approximately Euro270m.
As previously stated, AMEC will carry out a strategic review of SPIE's
traditional regional construction business in the context of AMEC's focus on
predictable recurring revenues with long-term customers. In 2002 this business
generated total turnover of #500m and operating profit of approximately #1m. If
the business were to be sold, AMEC's net debt would, because of the high level
of advance cash in Spie Batignolles, rise by about #50m. However, SPIE has
recently sold its headquarters buildings in Paris generating proceeds of about
#60m.
EXCEPTIONAL ITEMS AND GOODWILL
Exceptional costs of #24.9m stemming from reorganisation, closures and disposals
were in line with the Board's expectations. Exceptional costs resulting from
the closure or disposal of non-core or under performing assets totalled #12.0m,
all but #2.0m of which was incurred in the first half of the year.
Restructuring of AMEC's regional businesses in the UK and Americas was completed
in 2002, generating exceptional costs of #8.3m.
In SPIE, the activities of Spie Batignolles T.P., the international civil
engineering contractor, were substantially downsized, resulting in exceptional
costs of #4.6m (AMEC's share).
Goodwill amortisation of #13.1m (2001: #11.1m) related primarily to the AGRA
acquisition. Following the sale or final closure of a number of non-core or
under performing former AGRA businesses in North America, an exceptional write
off of #28.0m was made to the carrying value of goodwill relating to these
businesses.
NET INTEREST
Net interest payable of #21.0m (2001: #13.8m) was close to the 2001 charge after
taking account of the credit to interest in 2001 that arose from the sale of PPP
debt and the increase, during 2002, in the percentage of net debt swapped into
fixed interest rates.
TAX
The effective rate of tax increased to 31.0% (2001: 32.1%) and is expected to
remain above the UK corporate tax rate, reflecting higher underlying tax rates
in continental Europe and the implementation of FRS 19 Deferred tax.
CASH FLOW
As predicted, there was a significant cash inflow in the second half. In both
2002 and 2001, this was greatly assisted by good cash collections and the high
level of payments received on account in the month of December. A significant
outflow is once again expected in the first half of 2003, followed by an inflow
in the second half dependent upon the level of payments received on account.
Over the past seven years, AMEC's cumulative cash flow, excluding acquisitions,
disposals and share transactions, is in line with retained profits before
goodwill amortisation.
2002
CONSOLIDATED PROFIT AND LOSS ACCOUNT
Before goodwill Goodwill
amortisation amortisation
and exceptional and exceptional
items items Total
Notes # million # million # million
Turnover: Group and share of joint ventures 2 4,331.6 - 4,331.6
Share of joint ventures' turnover (1,119.0) - (1,119.0)
Group turnover 3,212.6 - 3,212.6
Cost of sales (2,888.2) - (2,888.2)
Gross profit 324.4 - 324.4
Administrative expenses (238.5) (20.0) (258.5)
Group operating profit/(loss) 85.9 (20.0) 65.9
Share of operating profit/(loss) in joint 40.3 (6.0) 34.3
ventures
Total operating profit/(loss) 2 126.2 (26.0) 100.2
Loss on disposal or closure of operations:
Loss on disposal or closure - (40.0) (40.0)
Goodwill previously written off to reserves - - -
- (40.0) (40.0)
Loss on disposal of fixed assets - - -
Profit/(loss) on ordinary
activities before interest 126.2 (66.0) 60.2
Net interest payable:
Group (12.8) - (12.8)
Joint ventures (8.2) - (8.2)
(21.0) - (21.0)
Profit/(loss) on ordinary
activities before taxation 105.2 (66.0) 39.2
Taxation on profit/(loss) on ordinary 3 (32.6) 4.0 (28.6)
activities
Profit/(loss) on ordinary
activities after taxation 72.6 (62.0) 10.6
Equity minority interests 0.2
Profit for the year 10.8
Dividends on equity and non-equity shares 4 (29.5)
Retained loss for the year (18.7)
Earnings per ordinary share: 5
Basic 24.8p 3.7p
Diluted 24.3p 3.6p
Dividends per ordinary share 4 10.0p
2001 (as restated)
CONSOLIDATED PROFIT AND LOSS ACCOUNT (continued)
Before goodwill Goodwill
amortisation amortisation
and exceptional and exceptional
items items Total
Notes # million # million # million
Turnover: Group and share of joint ventures 2 4,467.5 - 4,467.5
Share of joint ventures' turnover (1,005.0) - (1,005.0)
Group turnover 3,462.5 - 3,462.5
Cost of sales (3,102.0) - (3,102.0)
Gross profit 360.5 - 360.5
Administrative expenses (263.0) (10.3) (273.3)
Group operating profit/(loss) 97.5 (10.3) 87.2
Share of operating profit/(loss) in joint 33.0 (0.8) 32.2
ventures
Total operating profit/(loss) 2 130.5 (11.1) 119.4
Loss on disposal or closure of operations:
Loss on disposal or closure - (24.0) (24.0)
Goodwill previously written off to reserves - (0.5) (0.5)
- (24.5) (24.5)
Loss on disposal of fixed assets - (0.4) (0.4)
Profit/(loss) on ordinary
activities before interest 130.5 (36.0) 94.5
Net interest payable:
Group (6.7) - (6.7)
Joint ventures (7.1) - (7.1)
(13.8) - (13.8)
Profit/(loss) on ordinary
activities before taxation 116.7 (36.0) 80.7
Taxation on profit/(loss) on ordinary 3 (37.5) 4.2 (33.3)
activities
Profit/(loss) on ordinary
activities after taxation 79.2 (31.8) 47.4
Equity minority interests -
Profit for the year 47.4
Dividends on equity and non-equity shares 4 (41.7)
Retained profit for the year 5.7
Earnings per ordinary share: 5
Basic 27.5p 13.7p
Diluted 26.7p 13.3p
Pro forma earnings per ordinary share: 5
Diluted 26.5p 15.9p
Dividends per ordinary share 4 9.5p
CONSOLIDATED BALANCE SHEET
2002 2001
(as restated)
# million # million
Fixed assets
Intangible assets 133.3 188.5
Tangible assets 150.5 169.3
283.8 357.8
Investments:
Joint ventures:
Share of gross assets 1,189.9 1,110.8
Share of gross liabilities (1,083.4) (1,015.9)
106.5 94.9
Associates - 3.1
Other 5.4 5.8
111.9 103.8
395.7 461.6
Current assets
Stocks 86.5 117.9
Debtors: amounts falling due within one year 777.1 937.8
Debtors: amounts falling due after one year 127.1 102.1
Cash at bank and in hand 242.7 290.5
1,233.4 1,448.3
Creditors: amounts falling due within one year (1,024.6) (1,248.4)
Net current assets 208.8 199.9
Total assets less current liabilities 604.5 661.5
Creditors: amounts falling due after one year (303.8) (329.4)
Provisions for liabilities and charges (47.1) (44.2)
Net assets 253.6 287.9
Capital and reserves
Called up share capital 149.5 154.9
Reserves 102.3 130.8
Shareholders' funds 251.8 285.7
Equity minority interests 1.8 2.2
Capital employed 253.6 287.9
Shareholders' funds are attributable to:
Equity shareholders' funds 253.6 266.9
Non-equity shareholders' funds - 21.0
253.6 287.9
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
Notes 2002 2001
# million # million
Net cash flow from operating activities 8 73.3 183.7
Dividends from joint ventures 4.5 1.3
Returns on investment and servicing of finance (16.8) (14.3)
Taxation ( 20.1) (23.8)
Capital expenditure (1.7) (34.9)
Acquisitions and disposals 0.8 67.9
Dividends paid to equity shareholders (26.0) (18.8)
Net cash flow before management of liquid resources
and financing 14.0 161.1
Management of liquid resources 25.2 (45.4)
Financing (54.0) (110.2)
(Decrease)/increase in cash (14.8) 5.5
Reconciliation of net cash flow to movement in net funds
(Decrease)/increase in cash (14.8) 5.5
Cash flow from movement in debt 54.9 112.8
Cash flow from movement in liquid resources (25.2) 45.4
Change in funds resulting from cash flows 14.9 163.7
Exchange and other movements (7.6) 3.5
Movement in net funds in the year 7.3 167.2
Net funds as at 1 January (44.6) (211.8)
Net funds as at 31 December (37.3) (44.6)
Analysis of net funds
Cash at bank and in hand 138.3 160.3
Overdrafts (8.0) (8.7)
Debt due within one year (25.7) (34.1)
Debt due after one year (246.3) (292.3)
Liquid financial instruments 104.4 130.2
(37.3) (44.6)
NOTES
1. PREPARATION OF PRELIMINARY RESULTS
The preliminary results have been prepared on the basis of the accounting
policies set out in AMEC's annual report and accounts for the year ended 31
December 2001 except as noted below:
In order to conform with the requirement of UITF Abstract 34 'Pre contract
costs', the net assets (including goodwill) as at 31 December 2001 have been
adjusted by #3.1 million (net of tax). AMEC has, in the past, written off the
costs of bidding on projects as incurred. Upon financial close, to the extent
AMEC was able to recover bidding costs associated with PFI/PPP projects from
concession companies, these were reinstated on its balance sheet. Cash received
in respect of pre preferred bidder costs is treated as deferred income and
recognised over the period of the contract. This change has no material impact
on the profit and loss account for either 2001 or 2002.
In order to conform with the requirements of FRS19 'Deferred tax', the net
assets as at 31 December 2001 have been adjusted to include provisions of #17.7
million. The effect of adopting FRS19 has been to increase the tax charge for
the year ended 31 December 2001 by #2.3 million. The effect on the year ended
31 December 2002 is to increase the tax charge by #6.1m.
The net prior year impact of the above adjustments as at 31 December 2001 is
#20.8 million.
The preliminary results were approved by the board of directors on 6 March 2003
and are audited.
The financial information for the years ended 31 December 2002 and 2001 set out
above does not constitute statutory accounts within the meaning of section 240
of the Companies Act 1985. Statutory accounts for the year ended 31 December
2001 have been delivered to the Registrar of Companies. The accounts for the
year ended 31 December 2002 will be delivered to the Registrar of Companies
following the annual general meeting. The company's auditors, KPMG Audit Plc,
have reported on the 2002 and 2001 accounts under section 235(1) of the Act.
These reports were not qualified within the meaning of section 235(2) of the Act
and did not contain statements made under section 237(2) and section 237(3) of
the Act.
The annual report and accounts for the year ended 31 December 2002 will be
posted to shareholders on 7 April 2003.
Interim and preliminary announcements notified to the London Stock Exchange are
available on the internet at www.amec.com Copies of annual reports and accounts
are also available from: WILink, Hook Rise South, Surbiton, Surrey, KT6 7LD.
2. ANALYSIS OF TOTAL TURNOVER, TOTAL OPERATING PROFIT/(LOSS) (BEFORE GOODWILL
AMORTISATION AND
EXCEPTIONAL ITEMS) AND NET ASSETS
Total turnover Total operating profit/
(loss)
2002 2001 2002 2001
# million # million # million # million
Class of business:
Client Support Services
Consulting and Design Services 317.8 396.0 14.7 19.7
Operations Support Services 1,463.3 1,369.2 60.9 54.7
1,781.1 1,765.2 75.6 74.4
Capital Projects
Construction Management 513.0 625.1 (2.3) 1.1
Construction 1,897.7 2,032.7 56.1 62.1
2,410.7 2,657.8 53.8 63.2
Investments
Property Development and Regeneration 156.7 101.4 12.9 12.7
Public Private Partnerships 32.6 29.7 6.2 4.4
189.3 131.1 19.1 17.1
4,381.1 4,554.1 148.5 154.7
Internal turnover (49.5) (86.6) - -
E-commerce costs - - (1.9) (4.9)
Corporate costs - - (20.4) (19.3)
4,331.6 4,467.5 126.2 130.5
Geographical origin:
United Kingdom 2,107.5 1,927.3 90.8 100.1
Rest of Europe 845.7 831.9 19.2 13.9
Americas 1,069.0 1,305.5 19.6 29.9
Rest of the world 309.4 402.8 18.9 10.8
4,331.6 4,467.5 148.5 154.7
E-commerce costs - - (1.9) (4.9)
Corporate costs - - (20.4) (19.3)
4,331.6 4,467.5 126.2 130.5
Net assets
2002 2001
# million # million
Class of business:
Client Support Services 59.2 73.6
Capital Projects 20.4 (37.3)
Investments 78.8 123.7
158.4 160.0
Goodwill capitalised 133.3 188.5
Net debt (37.3) (44.6)
Unallocated net assets (0.8) (16.0)
253.6 287.9
Geographical origin:
United Kingdom 34.7 21.8
Rest of Europe 75.8 67.5
Americas 75.8 109.0
Rest of the world (27.9) (38.3)
158.4 160.0
Goodwill capitalised 133.3 188.5
Net debt (37.3) (44.6)
Unallocated net assets (0.8) (16.0)
253.6 287.9
3. TAXATION ON PROFIT/(LOSS) ON ORDINARY ACTIVITIES
2002 2001
# million # million
Corporation tax at 30% (2001: 30%) 13.5 17.1
Double taxation relief (0.4) (0.7)
Overseas taxation 2.4 9.9
Joint ventures' taxation 7.0 4.7
22.5 31.0
Deferred tax at 30% (2001: 30.0%) 6.1 2.3
28.6 33.3
The tax attributable to the exceptional items for the year ended 31 December
2002 amounted to a credit of #4.0 million (2001: #4.2 million)
4. DIVIDENDS ON EQUITY AND NON-EQUITY SHARES
2002 2001 2002 2001
pence pence # million # million
per share per share
Equity shares:
Ordinary shares:
Interim paid 2 January 2003 3.4 3.1 10.1 7.1
Final recommended payable 1 July 2003 6.6 6.4 19.4 18.8
10.0 9.5 29.5 25.9
Non equity shares:
Fixed preferential dividend - 6.5 - 7.3
Special preferential dividend - 6.0 - 8.1
FRS4 finance cost - - - 0.4
- 12.5 - 15.8
29.5 41.7
It is proposed that the recommended final dividend will be paid on 1 July 2003
to members on the register at the close of business on 14 May 2003.
5. EARNINGS PER ORDINARY SHARE
In order to appreciate the effects of goodwill amortisation, exceptional items
(net of attributable tax) and the conversion of preference shares on the
reported underlying performance, additional calculations of earnings per
ordinary share have been presented.
Basic earnings per ordinary share, before goodwill amortisation and exceptional
items, have been calculated on earnings of #72.8 million divided by the average
number of ordinary shares in issue during the year of 293.6 million.
Basic earnings per ordinary share, after goodwill amortisation and exceptional
items, have been calculated on earnings of #10.8 million divided by the average
number of ordinary shares in issue during the year of 293.6 million.
Diluted earnings per ordinary share, before goodwill amortisation and
exceptional items, have been calculated on earnings of #72.8 million and after
including the effect of all dilutive potential ordinary shares, which increases
the average number of ordinary shares in issue during the year to 299.8 million.
Diluted earnings per ordinary share, after goodwill amortisation and exceptional
items, have been calculated on earnings of #10.8 million and after including the
effect of all dilutive potential ordinary shares, which increases the average
number of ordinary shares in issue during the year to 299.8 million.
The pro forma earnings per share calculations for the year ended 31 December
2001 assume that the enhanced and mandatory conversion of preference shares to
ordinary shares took place on 1 January 2001.
6. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES
2002 2001
# million # million
Profit for the year 10.8 47.4
Exchange and other movements (16.1) (4.6)
Total gains and losses relating to the year (5.3) 42.8
Prior year adjustment (note 1) (20.8) -
Total gains and losses recognised since last annual report (26.1) 42.8
7. RECONCILIATION OF MOVEMENTS IN CONSOLIDATED SHAREHOLDERS' FUNDS
2002 2001
# million # million
Profit for the year 10.8 47.4
Dividends on equity and non-equity shares (29.5) (41.7)
Retained (loss)/profit for the year (18.7) 5.7
Goodwill written back on disposals - 0.5
Ordinary shares issued 0.9 12.0
Charge in respect of shares issued to the qualifying employee share trust - (9.4)
Exchange and other movements (16.1) (4.6)
Net (reduction)/addition to shareholders' funds (33.9) 4.2
Shareholders' funds as at 1 January (see below) 285.7 281.5
Shareholders' funds as at 31 December 251.8 285.7
Shareholders' funds at 31 December 2001 were #306.5 million and have been
amended to incorporate a prior year adjustment of #20.8 million, which is
referred to in note 1.
8. RECONCILIATION OF GROUP OPERATING PROFIT TO NET CASH FLOW FROM OPERATING
ACTIVITIES
2002 2001
# million # million
Group operating profit 65.9 87.2
Profit on disposal of fixed assets (1.5) -
Goodwill amortisation 10.7 10.3
Depreciation 26.3 33.3
Decrease/(increase) in stocks 33.5 (42.7)
Decrease in debtors 122.1 31.1
(Decrease)/increase in creditors and provisions (198.7) 59.2
Exchange and other movements 15.0 5.3
Net cash flow from operating activities 73.3 183.7
This information is provided by RNS
The company news service from the London Stock Exchange
END
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