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Thursday 09 August, 2012

AMEC PLC

AMEC plc 2012 Half-year Results

RNS Number : 6365J
AMEC PLC
09 August 2012
 



AMEC plc 2012 half-year results

Strong performance continues

 

 

Highlights

·      Revenue £2,026 million, up 37 per cent

o Underlying revenue up 28 per cent: up 15 per cent excluding £200 million of incremental procurement

o Positions group for full year double-digit underlying growth, as expected

·      EBITA1 £152 million, up 25 per cent

·      Margin2 7.5 per cent, down 70 basis points largely as a result of increased procurement

·      Diluted EPS from continuing operations4 36.1 pence, up 25 per cent

·      Operating cash flow5 £142 million, up £67 million

·      Order intake and forward visibility remain good

o Order book strong at £3.7 billion (June 2011: £3.4 billion; December 2011: £3.7 billion)

·      Completed two acquisitions for a total consideration of £156 million

·      Purchased £158 million of shares under the £400 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

(£m)

2,026

1,484

+37






EBITA1

(£m)

152

122

+25






Adjusted profit before tax3

(£m)

157

126

+24






Profit before tax

(£m)

126

101

+25

 

Operating cashflow5

 

(£m)

 

142

 

75

 

+89






Adjusted diluted earnings per share4

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 £5 million (2011: £4 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 £18 million (2011: £17 million) and pre-tax exceptional costs of £10 million (2011: £4 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 30 June


2012

Underlying business

Currency exchange

Net acquisitions

2011

Revenue

(£m)

       2,026

417

9

116

  1,484

     Y-on-Y change

(%)

+37

+28

+1

+8


EBITA

(£m)

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

 

(£m)

 

142




 

75

     Y-on-Y change

(%)

+89





Order book

(£bn)

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 £2,026 million (30 June 2011: £1,484 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 £152 million (30 June 2011: £122 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 £157 million in H1 2012 was ahead of the previous year (30 June 2011: £126 million) driven by volume growth and acquisitions. There was joint venture tax of £2 million (30 June 2011: £3 million), amortisation of £19 million (30 June 2011: £18 million) and exceptional losses of £10 million (30 June 2011: £4 million) resulting in profit before tax of £126 million (30 June 2011: £101 million). The tax charge for H1 2012 was £27 million (30 June 2011: £22 million) giving a total profit from continuing operations for H1 2012 of £99 million (30 June 2011: £79 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 £142 million, up £67 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 £158 million under the £400 million share buyback programme announced in February. The average cost was £10.68 per share. As at 8 August 2012, a further £33 million of shares had been purchased under an irrevocable, non-discretionary arrangement (see note 8), bringing the total purchased to £191 million.

 

 

Acquisitions

In the first six months of the year, the group invested £156 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 £139 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

Six months ending 30 June


2012

2011

Oil & Gas market




Þ    Oil & Gas

(%)

48

52

Þ    Unconventional Oil & Gas

(%)

30

24

Minerals & Metals market

(%)

22

24

 

 

Natural Resources

Six months ending 30 June


2012

Underlying business

Currency exchange

Net acquisitions

2011

Revenue

(£m)

1,200

402

1

7

790

     Y-on-Y change

(%)

+52

+51

nil

+1


EBITA

(£m)

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

 

(£bn)

 

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 £1,200 million (30 June 2011: £790 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 £200 million) on key projects. Excluding this increase in procurement, underlying growth was 26 per cent.

 

EBITA (£92 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: £10 million contract to modify and extend its Kinneil Terminal, UK

·      SABIC UK Petrochemicals Limited: extensions to two existing asset support contracts worth £70 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 £2.2 billion (30 June 2011: £2.1 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

Six months ending 30 June


2012

2011

Clean Energy market




Þ    Nuclear

(%)

28

31

Þ    Renewables / Bioprocess

(%)

35

18

Þ    Conventional Power

(%)

21

34

Þ    Transmission & Distribution

(%)

16

17

 

 

Power & Process

Six months ending 30 June


2012

Underlying business

Currency exchange

Net acquisitions

2011 

Revenue

(£m)

454

17

5

nil

432

     Y-on-Y change

(%)

+5

+4

+1



EBITA

(£m)

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

(£bn)

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 £454 million (30 June 2011: £432 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 £39 million (30 June 2011: £35 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 £650 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 £0.9 billion (30 June 2011: £0.8 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

Six months ending 30 June


2012

2011

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

a

Transportation / Infrastructure

(%)

17

15

a

Water

(%)

13

14

 

Environment & Infrastructure

Six months ending 30 June


2012

Underlying business

Currency exchange

Net acquisitions

2011

 

Revenue

(£m)

397

(4)

3

109

289

 

     Y-on-Y change

(%)

+38

(1)

+1

+38


 

EBITA

(£m)

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

(£bn)

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 £397 million in the first half (30 June 2011: £289 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 £36 million in the six months to 30 June 2012 (30 June 2011: £24 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 £0.6 billion (30 June 2011: £0.5 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 £3 million (30 June 2011: £3 million) with EBITA of £3 million in the first half (30 June 2011: a loss of £4 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 £114 million are 9 per cent higher than last year (30 June 2011: £105 million), reflecting recent acquisitions.

 

Net financing income

The net financing income for the first half of £7 million is in line with last year and includes bank interest of £2 million (2011: £3 million), net interest on pensions assets of £5 million (2011: £3 million) and other items of £nil (2011: £1 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 £290 million (30 June 2011: £455 million). On 18 July, the Group entered into a five-year multi-currency revolving credit facility of £377 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 £290 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 £19 million is £1 million higher than in 2011 (£18 million) reflecting acquisition activity and a £2 million goodwill impairment in 2011.

 

Exceptional items

Total pre-tax exceptional losses of £1 million (2011: £5 million) include:

·      a loss on business disposals and closures of £8 million arising from adjustments to existing provisions made in respect of prior year disposals and closures

·      other exceptional gains of £7 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 £130 million (30 June 2011: £54 million).  After adjusting for exceptional items and discontinued operations and legacy settlements but including dividends received from joint ventures, operating cash flow was £142 million (30 June 2011: £75 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 £35 million (31 December 2011: £32 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: £12 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 £178 million (31 December 2011: £169 million). During 2012, £10 million of the brought forward provisions were utilised, and as part of the ongoing review of the potential liabilities, an additional £22 million of provisions were created.

 

Provisions are analysed as follows:

 

As at 30 June 2012

£ 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 £3.3 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                                                  

 



Before


Amortisation,






amortisation,


impairment






impairment


and






and


exceptional






exceptional


items






items


(note 4)



Total


Note

£ million


£ million



£ 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





Financial expense


(2)




(2)

 








Net financing income





 








Share of post-tax results of joint ventures





 








Profit/(loss) before income tax

3

155 


(29)



126 

 








Income tax

5

(36)




(27)

 








Profit/(loss) for the period from continuing








operations


119 


(20)



99 

 








Profit for the period from








discontinued operations

6




 








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

 



Before


Amortisation,






amortisation


impairment






impairment


and






and


exceptional






exceptional


items






items


(note 4)



Total


Note

£ million


£ million



£ 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





 








Profit/(loss) before net financing income


109 


(22)



87 

 








Financial income


12 




12 

Financial expense


(5)




(5)

 








Net financing income





 








Share of post-tax results of joint ventures





 








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)




 








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

 



Before


Amortisation,






amortisation,


impairment and






impairment and


exceptional






exceptional


items






items


(note 4)



Total


Note

£ million


£ million



£ 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

 








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



£ million


£ million


£ 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




 







Tax on net gain on hedges of net investment







in foreign subsidiaries


(1)



 







Cash flow hedges:







Effective portion of changes in fair value




 







Tax on effective portion of changes in fair value







of cash flow hedges


(1)



 







 







 







 







Attributable to:







  Equity holders of the parent


98 


80 


188 

  Non-controlling interests


 - 


(1)


 







 

PAGE 17



CONDENSED CONSOLIDATED BALANCE SHEET


 

 

 

 

 

 


 

30 June 2012

 

30 June 2011

 

31 December 2011

 

Note

£ million

 

£ million

 

£ 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

 

 

 

Trade and other receivables

 

1,007 

 

834 

 

844 

Derivative financial instruments

 

 

 

Current tax receivable

 

 

 

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 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 

of the parent

 

1,182 

 

1,261 

 

1,373 

 

 

 

 

 

 

 

Non-controlling interests




 







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



£ million


£ million


£ million


£ million


£ million


£ million


£ million


£ million


£ million




















As at 1 Jan 2012


169 


101 


(4)


135 


17 


955 


1,373 



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










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










Tax on effective portion



















of changes in fair value



















of cash flow hedges




(1)





(1)



(1)




















Other comprehensive



















income for the period





(9)




(8) 



(8) 




















Total comprehensive



















income for the period





(9)



106 


98 



98 

Dividends







(98)


(98)



(98)

Equity settled share-



















based payments










Acquisition of shares



















by trustees of the



















Performance Share



















Plan







(6)


(6)



(6)

Acquisition of treasury



















shares







(25)


(25)



(25)

Utilisation of treasury



















shares










Acquisition of shares



















under the buyback



















programme


(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 



1,183 

 

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



£ million


£ million


£ million


£ million


£ million


£ million


£ million


£ million


£ million




















As at 1 Jan 2011


169 


101 


(4)


131 


17 


858 


1,272 



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










Effective portion of



















changes in fair value



















of cash flow hedges





























Other comprehensive



















income for the period









(1)





















Total comprehensive



















income for the period







79 


80 


(1)


79 

Dividends







(86)


(86)



(86)

Equity settled share-



















based payments










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 



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

 

 

 

£ million

 

£ million

 

£ million

Cash flow from operating activities

 

 

 

 

 

 

 

Profit before income tax from continuing operations

 

 

126 

 

101 

 

259 

Profit/(loss) before income tax from discontinued operations

 

 

 

(2)

 

(2)

 

 

 

 

 

 

 

 

Profit before income tax

 

 

135 

 

99 

 

257 

Financial income

 

 

(9)

 

(12)

 

(18)

Financial expense

 

 

 

 

Share of post-tax results of joint ventures

 

 

(8)

 

(7)

 

(15)

Intangible amortisation and goodwill impairment

 

 

19 

 

18 

 

39 

Impairment of joint venture investment

 

 

 

 

Depreciation

 

 

 

 

10 

Loss on disposal of businesses

 

 

 

 

Difference between contributions to retirement benefit

 

 

 

 

 

 

 

schemes and current service cost

 

 

 

 

(7)

Equity settled share-based payments

 

 

 

 

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)

 

 

 

(24)

 

(36)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

6

Dividends received from joint ventures

 

 

 6 

 

 

17

Amounts paid on maturity of net investment hedges

 

 

(2)

 

(8)

 

(20)

 

 

 

 

 

 

 

 

Net cash flow from investing activities

 

 

(162)

 

(128)

 

(126)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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



£ million


£ million


£ 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 £290 million and on 18 July 2012 the group entered into a five year £377 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.

 



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



£ million


£ 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






(4)

















2,054 


1,514 


3,320 


170 


139 


333 

Internal revenue


(28)


(30)


(59)




















External revenue


2,026 


1,484 


3,261




















Corporate costs1








(18)


(17)


(34)

EBITA2








152 


122 


299 

Net financing income3










12 

Adjusted profit before tax








157 


126 


311 

Tax on results of joint













ventures4








(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

 




 


 


£ million


£ million


£ 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 

 

1Corporate 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 £140 million (six months ended 30 June 2011: £109 million; year ended 31 December 2011: £273 million), but including joint venture EBIT of £12 million (six months ended 30 June 2011: £13 million: year ended 31 December 2011 : £26 million).

3Net financing income includes AMEC's share of net interest payable of joint ventures.

4The 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





 


 

 

£ million


£ million


£ million





 


 

 

 

 

 

 

 

EBIT








12 


13 


26 

Net financing income








(2)


(3)


(4)

Tax








(2)


(3)


(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 



£ million


£ million


£ 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






(29)


(22)


(45)

Taxation credit on exceptional items of continuing operations




Taxation credit on intangible amortisation and goodwill impairment




11 





17 

Post-tax exceptional amortisation, impairment and exceptional







items of continuing operations


(20)


(16)


(28)

Exceptional items of discontinued operations (post tax)




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 in


Loss on



 



respect of


business


Other



Loss on


business


disposals


exceptional



disposals


closures


and closures


items


Total

£ million


£ million


£ million


 £ million


£ million













(10)


(10)

(8)



(8)


17 


(8)



(8)



(1)




(1)


(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 £8 million.

 

Other exceptional gains of £7 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 £2 million were incurred in the period.

 

 

Six months ended 30 June 2011

 



Profit in


Profit on



 



respect of


business


Other



Profit on


business


disposals


exceptional



disposals


closures


and closures


items


Total

£ million


£ million


£ million


 £ million


£ million













(7)


(4)

(1)



(1)



(1)

(1)




(7)


(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 £2 million.

 

Other exceptional losses of £7 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 £2 million were incurred in the period.

 

 


 



Profit in


Profit/(loss) on



 



respect of


business


Other



Profit/(loss)


business


disposals


exceptional



on disposals


closures


and closures


items


Total

£ million


£ million


£ million


 £ million


£ million













(8)


(6)

(2)



(2)


-


(2)

(2)



-  


(8)


(8)

27 



28 



33

25 



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 £28 million.

 

 

PAGE 25

 

 

NOTES TO THE ACCOUNTS (continued)

 

4.  AMORTISATION, IMPAIRMENT AND EXCEPTIONAL ITEMS (continued)

 

Other exceptional losses of £8 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 £3 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 £2 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 £2 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



£ million


£ million


£ million





 


 

Cost of sales and net operating expenses



(1)


-




(1)









Loss on disposal


(8)


(1)


(2)

Attributable tax on loss on disposal




Other exceptional items


17 



Attributable tax on other exceptional items


(4)



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 30 June 2012


Six months ended 30 June 2011


Year ended 31 December 2011




Weighted






Weighted






Weighted






average






average






average






shares


Earnings




shares


Earnings




shares


Earnings


Earnings


number


per share


Earnings


number


per share


Earnings


number


per share


£ million


 million


pence


£ million


 million


pence


£ million


 million


pence



















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 30 June 2012


Six months ended 30 June 2011


Year ended 31 December 2011




Weighted






Weighted






Weighted






average






average






average






shares


Earnings




shares


Earnings




shares


Earnings


Earnings


number


per share


Earnings


number


per share


Earnings


number


per share


£ million


 million


pence


£ million


 million


pence


£ million


 million


pence




 


 




 


 




 


 

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



£ million


£ million


£ 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 30 June 2012


Six months ended 30 June 2011





Weighted






Weighted







average






average







shares


Earnings




shares


Earnings



Earnings


number


per share


Earnings


number


per share



£ million


 million


pence


£ million


 million


pence





 


 




 


 

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)




(0.2)

Employee share and incentive schemes


-


4


(0.4)




(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




£ million


 million


pence






 


 

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





(0.6)

Employee share and incentive schemes





(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 30 June 2012


Six months ended 30 June 2011





Weighted






Weighted