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AMEC PLC (AMFW)

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Thursday 13 February, 2014

AMEC PLC

Full Year Results

RNS Number : 9834Z
AMEC PLC
13 February 2014
 



 

AMEC plc 2013 results

 

Highlights

 

·     Diluted EPS from continuing operations1 87.2 pence, up 11 per cent

Revenue £3,974 million, down 3 per cent on 2012

Underlying revenue, excluding incremental procurement, up 2 per cent

EBITA2 £343 million, up 3 per cent

Margin3 8.6 per cent, up 40 basis points

·     Operating cash flow5 £341 million, up 9 per cent

Cash conversion 99 per cent6

·     Record order book £4.1 billion, strong order intake

·     Proposed dividend per share up 15 per cent, to 42.0 pence

·     Firm offer for Foster Wheeler announced today

 

Chief Executive Samir Brikho said:

 

"AMEC continued to make good progress in 2013, with adjusted earnings per share up by 11 per cent and operating cash flow particularly strong.

"As expected, strong performances from our oil & gas businesses in UK North Sea and the Middle East and from US renewables offset weaker markets elsewhere.

 "We continue to expect good underlying revenue growth in 2014, with ongoing strength in the conventional oil & gas and clean energy markets. As a mark of our continued confidence in the outlook and reflecting our strong cash generation, the board is recommending a 15 per cent increase in the dividend for the year.

 "I am delighted we have announced separately this morning the firm offer for Foster Wheeler. The combination with Foster Wheeler is financially and strategically attractive. I believe it is a compelling proposition for our shareholders, customers and employees."

Results presentation and live webcast: AMEC will host a presentation on the results for analysts and investors at 8.30am today. A live webcast of the event and presentation slides will be available on amec.com.

Interviews with Samir Brikho, Chief Executive and Ian McHoul, Chief Financial Officer are available at www.amec.com/full-year-2013

Next events: Annual General Meeting on 3 April 2014 and Interim Management Statement on 24 April 2014

 

Analyst consensus estimates are published on our website at amec.com/investors/consensus_estimates.htm

 

Enquiries to:

AMEC plc:                                                                                                              + 44 (0)20 7429 7500

Samir Brikho, Chief Executive

Ian McHoul, Chief Financial Officer        

Sue Scholes, Director of Communications             

Rupert Green, Interim Head of Investor Relations  

Media: Brunswick Group LLP - Mike Harrison and Dania Saidam                           + 44 (0)20 7404 5959

 

 

 

Page 1



Financial highlights

Continuing operations:


2013

2012

Change (%)

Revenue

(£m)

3,974

4,088          

-3

EBITA2

(£m)

343

334

+3

Adjusted profit before tax4

(£m)

332

327

+2

Profit before tax

(£m)

255

254

in line

Operating cash flow5

(£m)

341

312

+9

Adjusted diluted earnings per share1

pence

87.2

78.6

+11

Diluted earnings per share from continuing operations

pence

62.5

64.0

-2

Dividend per share

pence

42.0

36.5

+15

Order book

(£bn)

4.1

3.6

+13

Notes:

1.     Diluted earnings per share from continuing operations before intangible amortisation and exceptional items

2.     EBITA for continuing operations before intangible amortisation and exceptional items but including joint venture EBITA

3.     EBITA as defined above as a percentage of revenue

4.     EBITA, as defined above, less net financing costs (including joint ventures) of £11 million (2012: £7 million)

5.     Cash generated from operations before exceptional items, discontinued operations and legacy settlements pension payments in excess of amounts recognised in the income statement and certain foreign exchange movements including dividends received from joint ventures

6.     Operating cash flow as defined above divided by EBITA as defined above

 

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.

The comparative figures for 2012 have been restated as a result of:  

1.     the adoption of IAS 19(2011R) 'Employee Benefits'. The impact on the full year 2012 is a reduction in EBITA of £1 million, a reduction in net financing income of £12 million and a reduction in the tax charge of £5 million, resulting in a reduction of £8 million in profit after tax. See note 2 of the accounts for more details

2.     the presentation of the UK conventional power business as a discontinued operation in 2013

 

Segmental analysis

Segmental analysis is provided for the group's activities in three business units (Americas, Europe and Growth Regions), as well as for non-core Investment Services. 2012 figures have been restated on this same basis.

Amounts and percentage movements relating to continuing segmental earnings before net financing income, tax and intangible amortisation (EBITA) are stated before corporate costs of £35 million (2012: £33 million) and pre-tax exceptional costs of £25 million (2012: £24 million).  

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'.

 

Page 2



2013 results overview

 

Continuing operations


2013

Underlying  ex. proc.

Incremental procurement

Currency exchange

Net acquisitions

2012

Revenue

(£m)

3,974

58

(200)

(22)

50

4,088

     Y-on-Y change

(%)

-3

+2

-5

-1

+1


EBITA

(£m)

343

8

nil

(2)

3

334

     Y-on-Y change

(%)

+3

+2

nil

nil

+1


EBITA margin

(%)

8.6





8.2

     Y-on-Y change

(bps)

+40






Operating cash flow

(£m)

341





312

     Y-on-Y change

(%)

+9






Order book

(£bn)

4.1





3.6

     Y-on-Y change

(%)

+13






Average number of employees


28,687





28,405

     Y-on-Y change

(%)

+1






 

 

Revenue for the year was down 3 per cent to £3,974 million (2012: £4,088 million). Underlying revenue, excluding incremental procurement, increased by 2 per cent, driven by growth in oil & gas and renewables.

EBITA increased 3 per cent to £343 million (2012: £334 million) with margins at 8.6 per cent (2012: 8.2 per cent).  

Adjusted profit before tax of £332 million was 2 per cent ahead of the previous year (2012: £327 million). After joint venture tax of £5 million (2012: £5 million), amortisation of £47 million (2012: £44 million) and exceptional costs of £25 million (2012: £24 million), profit before tax was £255 million (2012: £254 million). The tax charge for the year, including tax on amortisation and exceptional items, was £69 million(2012: £47 million) resulting in a total profit for the year from continuing operations of £186 million (2012: £207 million).

Adjusted diluted earnings per share from continuing operations were 87.2 pence (2012: 78.6 pence), an increase of 11 per cent, supported by the lower average number of shares in issue after the completion of the buyback at the beginning of 2013. Diluted earnings per share were 62.5 pence (2012: 64.0 pence) reflecting the impact of the exceptional charges and increased amortisation.

Operating cash flowfor the period was £341 million (2012: £312 million), up £29 million from the previous year, reflecting EBITA growth and the continued focus on working capital management. Cash conversion was strong at 99 per cent (2012: 93 per cent).

 

Page 3

 



 

Dividend

The board is recommending a final dividend of 28.5 pence per share, which, together with the interim dividend of 13.5 pence, results in a total dividend of 42.0 pence per share (2012: 36.5 pence), an increase of 15 per cent.

The board expects to maintain a progressive policy with dividend cover in the range of 2.0 to 2.5 times. The final dividend will be payable on 2 July 2014 to shareholders on the register at the close of business on 30 May 2014.

Share buyback programme

The £400 million share buyback programme announced in February 2012 was completed on 8 February 2013. Within this programme, 4.2 million shares at a total cost of £45 million were purchased in 2013.

Acquisitions and joint ventures

On 15 November 2013 AMEC completed the acquisition of Automated Engineering Services (AES). AES is a 175-person professional design engineering nuclear services firm based in Naperville, Illinois, US, with annual revenues in excess of US$30 million. This acquisition builds on AMEC's nuclear position in the US and is an important addition to the existing strong positions in the nuclear markets in Canada and Europe.  

AMEC announced a recommended firm offer for Foster Wheeler this morning, in a separate announcement.

Outlook

The priority remains to grow the business by continuing to deliver for customers while investing in AMEC's people, and in 2014 completing the acquisition of Foster Wheeler.

For AMEC's existing operations in 2014, underlying revenue growth, excluding incremental procurement, is expected to be good, with ongoing strength in the conventional oil & gas and clean energy markets. However, the mix of business may result in a slight reduction in group margins. As in 2013, profits and particularly cash flow generation will be more second-half weighted.

As stated previously, the forecast average exchange rates for 2014 are less favourable than 2013. Sterling has continued to strengthen relative to North American currencies and this currently translates into an impact in excess of  £10 million of EBITA, year-on-year.

 

The acquisition of Foster Wheeler is expected to be double-digit earnings enhancing in the first 12 months after completion. However, this will not be fully realised in 2014. The combination of Foster Wheeler and AMEC is expected to create sustainable value for shareholders for the long term. ROIC is expected to exceed the cost of capital in the second twelve months' period after completion.

Page 4

 

Segmental review

Average number of employees

The average number of employees was up 1 per cent in 2013, to 28,687. Growth Regions increased by 21 per cent in support of new projects in the Middle East. The split by business unit is shown below.

Average number of employees


2013

2012

     Change (%)

Americas


14,384

14,828

-3

Europe


10,583

10,473

+1

Growth Regions


   3,476

2,874

+21

Centre


244

230

+6

Group


28,687

28,405

+1

 

Americas

Americas generated 56 per cent of group revenue in 2013. The portfolio of activities is well balanced across all four markets as shown below:

Americas


2013

2012

Oil & Gas

 (%)

35

36

Mining

(%)

19

22

Clean Energy

(%)

27

23

Environment & Infrastructure

(%)

19

19

 









Americas                 


2013

Underlying  ex. proc.

Incremental procurement

Currency exchange

Acquisitions

2012

 

Revenue

(£m)

2,247

(56)

(200)

(10)

13

2,500

 

Y-on-Y change

(%)

-10

-2

-8

nil

nil


 

EBITA

(£m)

241

11

nil

(1)

(2)

233

 

Y-on-Y change

(%)

+3

+4

nil

nil

-1


 

EBITA margin

(%)

10.7





9.3

 

Y-on-Y change

(bps)

+140






 

Order book

(£bn)

1.5





1.3

 

Y-on-Y change

(%)

+14






 

 

Revenue in Americas declined 10 per cent to £2.25 billion, with good growth across conventional oil & gas and renewables offset by the decline in oil sands and mining and the £200 million reduction in incremental procurement, as expected, to £120 million. Excluding this incremental procurement, underlying revenue declined by 2 per cent.

EBITA was up 3 per cent, to £241 million (2012: £233 million). The EBITA margin was 10.7 per cent, up 140 basis points from 2012, largely as the result of the reduced procurement activities, the benefits of increased efficiency following the restructure in 2012 and from successful close

Page 5

out on a number of large projects in oil & gas and mining together with increased grants from the US government for research and development activities.  Excluding incremental procurement, margins were 11.3 per cent, 60 basis points higher than 2012.                                                    

Contract wins announced in 2013 included:

Customer

Market

Description

   Country

BP

Multiple

Framework contract to provide environment and related consulting services for all of BP's assets in their upstream, refining and marketing, alternative energy and shipping businesses worldwide

Global

VALE

Mining

Front end loading (FEL) study to develop underground nickel mine at Voisey Bay

Canada

Dominion

Clean Energy

EPC contract to design and construct the Azalea 7.7MW solar array in Georgia

US

Dominion

Clean Energy

EPC contract to design and construct three solar arrays in Indiana totalling 28.6MW

US

Sempra US Gas & Power

Clean Energy

EPC contract to design and construct 250MW solar array in Nevada

US

Other projects currently underway include the site remediation programme for Honeywell, various mining consulting projects and a number of existing copper, gold and potash EPCM projects for Newmont, Thompson Creek, PotashCorp and K+S Potash, as well as on-going oil sands work for Imperial Oil, Syncrude, CNRL, Suncor, Shell and AMR among others, and the provision of environmental services in US shale gas. Oil & gas activity in the Gulf of Mexico continues with the delivery of the Marine Well Containment System scheduled for early 2014.

Order book was up 14 per cent at £1.5 billion (2012: £1.3 billion), reflecting a particularly strong performance in renewables.

Outlook 

In 2014, the underlying revenue trend is expected to improve on the back of the very strong activity in renewables.  However, average margins in this market are lower, and this is expected to be dilutive to overall margins in the Americas.

Page 6

Europe

Europe generated 31 per cent of group revenue in 2013, largely from conventional oil & gas and nuclear.

Europe


2013

2012

Oil & Gas

 (%)

69

62 

Mining

(%)

0

1

Clean Energy

(%)

27

34

Environment & Infrastructure

(%)

4

3

 

Europe


2013

Underlying business

Currency exchange

Net acquisitions

  2012

Revenue

(£m)

1,227

117

1

29

1,080

     Y-on-Y change

(%)

+14

+11

nil

+3


EBITA

(£m)

93

(7)

nil

5

95

     Y-on-Y change

(%)

-2

-7

nil

+5


EBITA margin

(%)

7.6




8.8

     Y-on-Y change

(bps)

-120





Order book

(£bn)

1.7




1.6

     Y-on-Y change

(%)

+10





Note: Incremental procurement has no impact on Europe business

 

Revenue in Europe improved 14 per cent to £1,227 million, with the oil & gas activity in the North Sea the primary driver.

EBITA was down 2 per cent, to £93 million (2012: £95 million) and the EBITA margin was 7.6 per cent, down 120 basis points from 2012. The margin decline arose mostly in the first half and is largely the result of a reduced contribution from the Sellafield joint venture (2013: £12 million; 2012: £15 million) and losses from the Teesside Gas Processing Plant contract.

Activity in the UK conventional power business has been reducing for a number of years. In 2013 it became a discontinued operation. The 2012 results have been restated to reflect this.

Contract awards announced in 2013 reflect continued investment in the UK North Sea and the clean energy market.

Customer

Market

Description

   Country

 

BP

O&G

2-year renewal for maintenance and operations for BP Forties Pipeline System worth £10-15 million each year

UK North Sea

TAQA

O&G

EPC contract for modifications to the Tern oil production platform and new subsea tie-back to the Cladhan field

UK North Sea



Page 7


Nexen

O&G

EPC services for North Sea offshore assets 

UK North Sea

OMV

O&G

Engineering services framework upgrade of green and brownfield on and offshore facilities in JV with Comproiect-92

Romania

Magnox

Clean Energy

Project management resource contract to support decommissioning at 10 sites in joint venture (VELA alliance) with Jacobs Engineering Group

UK

AWE

Clean Energy

Strategic partnership agreement to provide implementation services at Aldermaston

UK

Horizon Nuclear Power

Clean Energy

Framework agreement to provide specialist engineering and technical design services for its proposed nuclear new build programme

UK

Nuclear Energy Company of Slovakia

Clean Energy

Three-year contract for environmental impact assessment services associated with new nuclear power in Slovakia

Slovakia

Wales & West Utilities

Clean Energy

Renewal of five-year contract to replace the gas mains across its territory

UK

UK Environment Agency

E&I

Framework contract to provide environmental impact assessments, site and risk assessments, remediation projects for the National Contaminated Land Consultancy

UK

Zero Waste Scotland

E&I

Specialist consultancy support to the 'resource efficiency Scotland' programme

UK

 

Following on from the successful completion of the engineering and design work, AMEC was awarded hook up and commissioning contracts on the Jasmine, Cygnus and Clair Ridge fields in the UK North Sea by ConocoPhillips, GDF Suez and BP respectively.

Other projects worked on during the year include a five-year call-off contract to provide brownfield engineering for Talisman and the long-term Shell ONEgas asset support contract in the Southern North Sea. BG extended AMEC's contract to provide engineering, procurement, construction, commissioning and project management support for its facilities in the central North Sea.

Beyond oil & gas projects, on-going clean energy projects include reactor services support work for EDF's nuclear power stations in the UK. The NDA awarded a five-year extension to Nuclear Management Partners' (NMP) contract for decommissioning Sellafield.

Page 8

The order book was up 10 per cent at £1.7 billion, reflecting the continued strong position in oil & gas.

In 2014, it is expected revenue growth will continue along with an improvement in margins, as the losses from the Teesside contract do not recur and as further cost efficiencies come through.

 

 

Growth Regions

Growth Regions generated 13 per cent of group revenue in 2013, driven by conventional oil & gas, particularly in the Middle East.

Growth Regions


2013

2012

Oil & Gas

(%) 

70

62

Mining

(%)

12

24

Clean Energy

(%)

3

1

Environment & Infrastructure

(%)

15

13

 

 

Growth Regions


2013

Underlying business

Currency exchange

Net acquisitions

2012

(£m)

536

10

(13)

8

531

     Y-on-Y change

(%)

+1

+2

-2

+1


EBITA

(£m)

33

2

(1)

nil

32

     Y-on-Y change

(%)

+3

+6

-3

nil


EBITA margin

(%)

6.2




6.1

     Y-on-Y change

(bps)

+10





Order book

(£bn)

0.9




0.8

     Y-on-Y change

(%)

+18





Note: Incremental procurement has no impact on Growth Regions business

 

Revenue in Growth Regions improved 1 per cent to £536 million primarily driven by growth in oil & gas especially in the Middle East, offset by the decline in mining in Australia.

EBITA was up 3 per cent, to £33 million (2012: £32 million) and the EBITA margin was 6.2 per cent, up 10 basis points from 2012.

Page 9

 

 

 

 

 

 

Contract awards in 2013 reflect the strength of the oil & gas market in the Middle East and Azerbaijan.

Customer

Market

Description

   Country

ZADCO-Zakum

O&G

Four-year extension to programme management consultancy services contract

Abu Dhabi

KOC

O&G

Five-year extension to provide Project Management Consultancy services for a portfolio of major upstream projects in Kuwait, worth c. £255 million

Kuwait

KNPC

O&G

Five-year Project Engineering and Management Services contract at three refineries, worth £158 million

Kuwait

Abu Dhabi Marine

O&G

Project Management Consultancy services contract for Umm Lulu Phase-2, worth US$124 million

Abu Dhabi

BP

O&G

Project and construction management services within the AMEC Tekfen Azfen consortium for the Shah Deniz 2 offshore platforms

Azerbaijan

Samsung C&T

Mining

Design and engineering services for the iron ore handling and processing facilities on the Roy Hill Project

 

Australia

Other current projects include providing asset support for ConocoPhillips' Bayu Udan gas facilities in East Timor Sea, operational readiness services for Chevron's Wheatstone facility offshore Australia, and onshore turnaround and maintenance support to ENI's onshore gas treatment plant and offshore unmanned wellhead platform, also in Australia. In the Middle East, AMEC continues to provide support to KNPC's new oil refinery at Al Zour.

Order book was 18 per cent higher at £0.9 billion in 2013 (2012: £0.8 billion), benefitting from the strong oil & gas performance in the Middle East.

Outlook

In 2014, growth is expected to come from the Middle East and Azerbaijan, with a more stable position in Australia.

Investment Services activities

This principally comprises the Incheon Bridge PPP project in Korea and the Lancashire Waste PFI project, both now operational, the group's insurance captive, AMEC's residual UK wind development activities and a range of other non-core activities. Revenue was £6 million (2012: £9 million) with EBITA £11 million (2012: £7 million). EBITA was atypically high, reflecting the successful exit from assets in North America.

Page 10

 

Financial review

Geographical analysis

The group's largest country of operation was the UK with 28 per cent of revenue (2012: 26 per cent), driven by strong demand from the North Sea. Canada was the group's largest revenue generating country in 2012.

Administrative expenses

Administrative expenses increased by £7 million to £228 million (2012: £221 million) principally as a result of a full year's impact of acquisitions made in 2012.

Net financing expenses

Net financing expenses of £(2) million were £(1) million higher than last year (2012: £(1) million) and included bank interest of £(2) million (2012: £2 million receivable) and foreign exchange losses of £(1) million (2012: £nil) offset by net interest on pensions assets and liabilities of £1 million (2012: £(3) million).

The 2012 interest charge has been restated as a result of the changes to the pensions accounting standard (IAS 19) which requires the expected return on assets to be in line with the discount rate, irrespective of the asset class. This resulted in a £12 million reduction in interest income.

In addition, AMEC's share of interest payable of equity accounted joint ventures was £9 million (2012: £6 million).

 

Taxation

Continuing operations

The group's effective tax rate in 2013 for the continuing businesses (including tax attributable to joint venture interests), before exceptional items and excluding intangible amortisation, was 21.9 per cent (2012: 22.5 per cent). The reduction principally reflects decreases in statutory tax rates, a reduction in the tax rate applied to the UK pension surplus, changes in the recognition of tax losses and the agreement of historical items with various tax authorities.

The tax rate in 2014 and beyond is expected to be in the low mid-20s.

Deferred tax

At 31 December 2013, the group had net deferred tax assets of £15 million (2012: £33 million) arising from short-term timing differences relating to provisions and property, plant and equipment, offset by liabilities in respect of intangible assets and retirement benefits.

Financial position and net cash

The group remains in a strong financial position, with net cash as at 31 December 2013 of £121 million (2012: £99 million).

Page 11

Cash generated from operations in 2013 was £292 million (2012: £271 million). After adjusting for exceptional items and discontinued operations, legacy settlements, pension payments in excess of amounts recognised in the income statement, certain foreign exchange movements and dividends received from joint ventures, operating cash flow was £341 million (2012: £312 million).

Going concern

The directors are satisfied that the group has adequate resources to operate for the foreseeable future.

 

Intangible amortisation and goodwill impairment

Intangible amortisation relates to capitalised software and intangible assets acquired as part of the group's expansion programme. The 2013 charge of £47 million was £3 million higher than the prior year (2012: £44 million) with the increase due to a full-year impact of acquisitions completed in 2012 and the acceleration of amortisation of the assets from a prior year acquisition.

In line with IAS 36 'Impairment of assets', annual impairment reviews have been performed on the goodwill carried on the balance sheet. There were no impairment charges required in either 2013 or 2012.

Exceptional items

Total pre-tax exceptional losses of £31 million (2012: £18 million) included:

▪    a loss on business disposals and closures of £13 million arising from adjustments to existing provisions made in respect of prior year disposals and closures

▪    other exceptional costs of £18 million which included transaction costs of £4 million and £14 million restructuring costs associated with the management reorganisation into geographical business units.

There was an exceptional tax provision of £16 million (2012: £nil) for potential withholding tax following a group restructuring that resulted in significant amounts of cash being repatriated from foreign subsidiaries.

In aggregate, there was a post-tax exceptional charge of £47 million (2012: £10 million).

Discontinued trading

In accordance with IFRS 5, the post-tax results of discontinued operations are shown separately in the income statement. The UK conventional power business, which met the definition of a discontinued operation during the year, generated a trading loss before tax of £(10) million during the year (2012: £(4) million). There was a tax credit of £2 million (2012: £1 million), resulting in a loss after tax of £(8) million (2012: £(3) million).

Legacy issues

No new significant contingent liabilities were added in 2013. Provisions currently held for future costs of litigation total £37 million (2012: £40 million).

Page 12

Balance sheet highlights

Key movements in the balance sheet are discussed below:

Intangible assets

The net book value of intangible assets as at 31 December 2013 was £907 million (2012: £969 million) comprising goodwill £757 million, software £37 million, customer relationships £104 million and other acquired intangible assets £9 million.

The reduction in goodwill of £34 million was largely the result of movements in foreign exchange rates, offset by goodwill of £12 million on the acquisition of AES. The reduction of £26 million in customer relationships is predominantly due to amortisation. Other acquired intangible assets included the value of brand names and trademarks, non-compete agreements and order backlogs of acquired businesses. 

Distributable reserves

As at 31 December 2013, distributable reserves of AMEC plc stood at £842 million (2012: £620 million).


£million

As at 1 January 2013

620

Dividends paid during 2013

(108)

Dividends received from subsidiaries

159

Distributable reserves generated in the year

163

Other movements

8

As at 31 December 2013

842

 

During 2012, the group holding company, AMEC plc, generated a significant profit from an internal restructuring. This profit becomes distributable as qualifying consideration is passed to AMEC plc to settle the associated loan balance. £176 million was remitted to AMEC plc during 2012, and £163 million during 2013.

Pensions

The IAS 19 surplus of the principal UK pension schemes at the end of 2013 of £102 million increased compared with 2012 (£86 million) reflecting reductions in both the discount rate and higher than expected asset returns, offset by higher price inflation. 

The UK schemes have operated on a career average salary basis since January 2008. During 2012, the UK defined benefit schemes were closed to new entrants but remain open to future accrual for existing members.

There are a number of smaller schemes which are in a deficit position. The combined deficit as at 31 December 2013 was £62 million (2012: £93 million) with the reduction in the year being due to

Page 13

actuarial gains. During 2012, some 30 per cent of the members of the scheme acquired with MACTEC accepted a lump sum settlement of their liabilities.

Contributions of £29 million were paid to the company's defined benefit schemes during the year (2012: £30 million). This included special contributions agreed with the trustees of £5 million (2012: £5 million). 

Provisions

Provisions held at 31 December 2013 were £163 million (31 December 2012: £171 million).  During 2013, £19 million of the brought forward provisions were utilised. As part of the ongoing review of the potential liabilities, £14 million of provisions were released as they were no longer required but additional provisions of £10 million were created in respect of indemnities granted on prior year disposals, which have been charged as an adjustment to the profit on disposal within discontinued operations and additional litigation provisions of £9 million were created in respect of business closures which have been charged as an adjustment to the loss on closure within discontinued operations.

Provisions are analysed as follows:

As at 31 December 2013

£ million

Litigation provisions

37

Indemnities granted to buyers and retained obligations on disposed businesses

71

Insurance, onerous property contracts and provisions to fund joint ventures

55

Total

163

 

 

Page 14



CONSOLIDATED INCOME STATEMENT



2013



Before


Amortisation




 



amortisation and


and exceptional




 



exceptional


items




 



items


(note 3)



Total

 



£ million


£ million



£ million

 

Continuing operations








 









 

Revenue

2

3,974 




3,974 

 









 

Cost of sales


(3,431)




(3,431)

 









 

Gross profit


543 




543 

 









 

Administrative expenses


(228)


(65)



(293)

 









 

Loss on business disposals and closures



(7)



(7)

 









 

Profit/(loss) before net financing expense


315 


(72)



243 

 









 

Financial income


12 




12 

 

Financial expense


(14)




(14)

 









 

Net financing expense


(2)




(2)

 









 

Share of post-tax results of joint ventures


14 




14 

 









 









 

Profit/(loss) before income tax

2

327 


(72)



255

 









 

Income tax

4

(67)


(2)



(69)

 









 

Profit/(loss) for the year from continuing








 

operations


260 


(74)



186 

 









 

Loss for the year from discontinued








 

operations

5

(8)




(8)

 









 

Profit/(loss) for the year


252 


(74)



178

 









 

Attributable to:








 

Equity holders of the parent







179 

 

Non-controlling interests







(1)

 









 








178 

 









 

Basic earnings/(loss) per share:

6







 

Continuing operations


89.0p 





63.8p 

 

Discontinued operations


(2.7)p





(2.7)p

 









 



86.3p 





61.1 p

 









 

Diluted earnings/(loss) per share:

6







 

Continuing operations


87.2p 





62.5 p

 

Discontinued operations


(2.7)p





(2.7)p

 









 



84.5p 





59.8p 

 









 









 

Dividend per share:

7






42.0p 

 

 

Page 15



 



2012



Before






 



amortisation


Amortisation,




 



and exceptional


and exceptional




 



items


items



Total

 



(Restated)


(note 3)



(Restated)

 



£ million


£ million



£ million

 

Continuing operations








 









 

Revenue

2

4,088 




4,088 

 









 

Cost of sales


(3,556)




(3,556)

 









 

Gross profit


532 




532 

 









 

Administrative expenses


(221)


(68)



(289)

 









 

Profit on business disposals and closures





 









 

Profit/(loss) before net financing expense


311 


(68)



243 

 









 

Financial income


10 




10 

 

Financial expense


(11)




(11)

 









 

Net financing expense


(1)




(1)

 









 

Share of post-tax results of joint ventures


12 




12 

 









 









 

Profit/(loss) before income tax

2

322 


(68)



254 

 









 

Income tax

4

(68)


21 



(47)

 









 

Profit/(loss) for the year from continuing








 

operations


254 


(47)



207 

 









 

(Loss)/profit for the year from








 

discontinued operations

5

(3)




 









 

Profit/(loss) for the year


251 


(42)



209 

 









 

Attributable to:








 

Equity holders of the parent







208 

 

Non-controlling interests







 









 








209 

 









 

Basic earnings/(loss) per share:

6







 

Continuing operations


80.1p 





65.2p

 

Discontinued operations


(0.8)p





0.6p

 









 



79.3p 





65.8p

 









 

Diluted earnings/(loss) per share:

6







 

Continuing operations


78.6p 





64.0p

 

Discontinued operations


(0.8)p





0.6p

 









 



77.8p





64.6p

 









 









 

Dividend per share:

7






36.5p

 

 

Page 16



CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

 

 







2012





2013


(Restated)





£ million


£ million








Profit for the year




178 


209 








Other comprehensive income














Items that may be reclassified to profit and loss:














   Exchange movements:







   Exchange movements on translation of foreign subsidiaries




(70)


(34)

  Net (loss)/gain on hedges of net investment in foreign subsidiaries




(1)


  Tax on exchange movements





(1)








    Cash flow hedges:







     Effective portion of changes in fair value





     Tax on effective portion of changes in fair value




(1)


(1)

     Transferred to the income statement














(67)


(32)







Items that will not be reclassified to profit and loss:












Actuarial gains on defined benefit pension schemes



40 


37 

Tax on actuarial gains



(20)


(24)












20 


13 








Other comprehensive income




(47)


(19)








Total comprehensive income




131 


190 








Attributable to:







  Equity holders of the parent




133 


189 

  Non-controlling interests




(2)









Total comprehensive income



131 


190 

 

Page 17



CONSOLIDATED BALANCE SHEET




31 December


31 December


Note


 2013


 2012




£ million


£ million







ASSETS






Non-current assets






Property, plant and equipment



39 


43 

Intangible assets

9


907 


969 

Interests in joint ventures



52 


47 

Derivative financial instruments




Retirement benefit assets



102 


86 

Other receivables

10


24 


27 

Deferred tax assets



35 


42 







Total non-current assets



1,160 


1,214 







Current assets






Inventories




Trade and other receivables



956 


1,014 

Derivative financial instruments




Current tax receivable



10 


10 

Bank deposits (more than three months)



18 


17 

Cash and cash equivalents (excluding bank overdrafts)



232 


258 







Total current assets



1,224 


1,304 







Total assets



2,384 


2,518 







LIABILITIES





Current liabilities





Bank loans and overdrafts



(129)


(176)

Trade and other payables



(801)


(905)

Derivative financial instruments



(1)


(4)

Current tax payable



(73)


(66)







Total current liabilities



(1,004)


(1,151)













Non-current liabilities






Trade and other payables

10


(11)


(11)

Retirement benefit liabilities



(62)


(93)

Deferred tax liabilities



(20)


(9)

Provisions

11


(163)


(171)







Total non-current liabilities



(256)


(284)







Total liabilities



(1,260)


(1,435)







Net assets



1,124 


1,083 













EQUITY






Share capital



152 


154 

Share premium account



101 


101 

Hedging and translation reserves



33 


99 

Capital redemption reserve



34 


32 

Retained earnings



802 


693 







Total equity attributable to equity holders of the parent



1,122 


1,079 







Non-controlling interests










Total equity



1,124


1,083 

 

Page 18



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 2013


154 


101 


(2)


101 


32 


693 


1,079 



1,083 




















Profit for the



















Year







179 


179 


(1)


178 




















Exchange movements



















on translation of



















foreign subsidiaries





(69)




(69)


(1)


(70)

Net loss on hedges of



















net investment in



















foreign subsidiaries





(1)




(1)



(1)

Tax on exchange



















movements










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)

Cash flow hedges



















transferred to the



















income statement










Actuarial gains on



















defined benefit



















pension schemes







40 


40 



40 

Tax on actuarial gains







(20)


(20)



(20)




















Other comprehensive



















income for the year





(69)



20 


(46)


(1)


(47)







































Total comprehensive



















income for the year





(69)



199 


133 


(2)


131 




















Dividend







(108)


(108)



(108)

Equity-settled



















share-based payments







14 


14 



14 

Tax on equity settled



















share-based



















payments







(1)


(1)



(1)

Acquisition of shares



















by trustees of the



















Performance Share



















Plan







(2)


(2)



(2)

Utilisation of treasury



















shares










Acquisition of shares



















under the buyback



















programme


(2)




























As at 31 Dec 2013


152 


101 



32  


34 


802 


1,122 



1,124 







































 

Page 19



CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

 











Capital


Retained




Non-


Total 



Share


Share


Hedging


Transl'n


redemption


earnings


Total


controlling


equity 



capital


premium


reserve


reserve


reserve


(Restated)


(Restated)


interests


(Restated)



£ million


£ million


£ million


£ million


£ million


£ million


£ million


£ million


£ million 







































As at 1 Jan 2012


169 


101 


(4)


135 


17 


955 


1,373 


1 


1,374 




















Profit for the



















year







208 


208 



209 




















Exchange movements



















on translation of



















foreign subsidiaries





(34)




(34)



(34)

Net gain on hedges of



















net investment in



















foreign subsidiaries










Tax on exchange



















movements





(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)

Actuarial gains on



















defined benefit



















pension schemes







37 


37 



37 

Tax on actuarial gains







(24)


(24)



(24)




















Other comprehensive



















income for the year





(34)



13 


(19)



(19)







































Total comprehensive



















income for the year





(34)



221 


189 



190 




















Dividend







(98)


(98)



(98)

Equity-settled



















share-based payments







15 


15 



15 

Acquisition of shares



















by trustees of the



















Performance Share



















Plan







(6)


(6)



(6)

Utilisation of treasury



















shares










Acquisition of  treasury



















shares







(36)


(36)



(36)

Acquisition of shares



















under the buyback



















programme


(15)





15 


(322)


(322)



(322)

Forward share



















purchase agreement



















at 31 December 2012







(45)


(45)



(45)

Arising on



















on business combinations


 


 


 


 


 


 


 


 


 




















As at 31 Dec 2012


154 


101 


(2)


101 


32 


693 


1,079 



1,083 







































Page 20

 

 

 

 

 

 

 

 

 

 

 

 

 

CONSOLIDATED CASH FLOW STATEMENT






2012




2013


(Restated)


Note


£ million


£ million

Cash flow from operating activities






Profit before income tax from continuing operations



255 


254 

(Loss)/profit before income tax from discontinued operations

5


(16)


2 







Profit before income tax



239 


256 

Financial income



(12)


(10)

Financial expense



14 


11 

Share of post-tax results of joint ventures



(14)


(12)

Intangible amortisation



47 


44 

Impairment of joint venture investment




3 

Depreciation



12 


11 

Loss on disposal of businesses




11 

Difference between contributions to retirement benefit






schemes and current service cost




(5)

Profit on disposal of property, plant and equipment



(1)


(2)

Loss on disposal of intangible assets




Equity-settled share-based payments



14 


15 










305 


323 

Decrease in inventories




Decrease/(increase) in trade and other receivables



66 


(154)

(Decrease)/increase in trade and other payables and provisions



(80)


102 







Cash generated from operations



292 


271 

Tax paid



(52)


(29)







Net cash flow from operating activities



240 


242 







Cash flow from investing activities






Acquisition of businesses (net of cash acquired)



(20)


(159)

Funding of joint ventures



(7)


(11)

Purchase of property, plant and equipment



(10)


(19)

Purchase of intangible assets



(13)


(15)

Movements in bank deposits (more than three months)



(1)


11 

Disposal of businesses (net of cash disposed of)



(4)


(6)

Disposal of property, plant and equipment




4 

Interest received




8 

Dividends received from joint ventures




11 

Amounts paid on maturity of net investment hedges



(3)


(7)







Net cash flow from investing activities



(40)


(183)







Net cash flow before financing activities


200


59 







Cash flow from financing activities






(Repayments of)/proceeds from other borrowings



(30)


150 

Interest paid



(11)


(9)

Dividend paid



(108)


(98)

Acquisition of shares for cancellation



(45)


(322)

Cash flows in respect of treasury shares (net)*




(27)

Acquisition of shares by trustees of the Performance Share Plan



(2)


(6)







Net cash flow from financing activities



(189)


(312)







Decrease in cash and cash equivalents



11 


(253)

Cash and cash equivalents as at the beginning of the year



232 


493 

Exchange losses on cash and cash equivalents



(20)


(8)







Cash and cash equivalents as at the end of the year



223 


232 

 

Page 21



CONSOLIDATED CASH FLOW STATEMENT (continued)




2013


2012




£ million


£ million

Cash and cash equivalents consist of:






Cash at bank and in hand



153 


169 

Bank deposits (less than three months)



79 


89 

Bank overdrafts



(9)


(26)







Cash and cash equivalents as at the end of the year



223 


232 

Bank deposits (more than three months)



18 


17 

Bank loans



(120)


(150)







Net cash as at the end of the year



121 


99 

 

*Net of £7 million (2012: £9 million) received from SAYE option holders on exercise of options.

 

 

Page 22



 

 

 

 

NOTES

 

1. CORPORATE INFORMATION, BASIS OF PREPARATION AND ACCOUNTING STANDARDS ADOPTED DURING THE YEAR

 

Corporate information

 

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 2.

 

The results for 2013 were approved by the board of directors on 13 February 2014 and are audited.

 

The annual report and accounts for the year ended 31 December 2013 will be posted to shareholders on 4 March 2014.

 

The annual general meeting (AGM) will take place on 3 April 2014.

 

Subject to approval by shareholders at the forthcoming AGM, the final dividend will be paid on 2 July 2014 to shareholders on the register of members at the close of business on 30 May 2014.

 

Half-year, full-year and all other announcements notified to the London Stock Exchange are available on the internet at amec.com.

 

Basis of preparation

 

In accordance with EU law (IAS Regulation EC 1606/2002), the preliminary results have been prepared in accordance with International Financial Reporting Standards (IFRS) adopted for use in the EU as at 31 December 2013 (adopted IFRS), International Financial Reporting Interpretations Committee (IFRIC) interpretations and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

The financial information set out herein does not constitute the company's statutory accounts for the years ended 31 December 2013 or 2012 but is derived from those accounts.  The financial information has been prepared using accounting policies consistent with those set out in the annual report and accounts for the year ended 31 December 2012, except for the impact of new accounting standards adopted in the year.  Statutory accounts for 2012 have been delivered to the Registrar of Companies, and those for 2013 will be delivered in due course.  The auditors have reported on those accounts; their reports were 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 any statements under Section 498 (2) or (3) of the Companies Act 2006.

 

The preparation of accounts in accordance with generally accepted accounting principles requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.  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 long-term contracts under IAS 11 'Construction contracts', for provisions under IAS 37 'Provisions, contingent liabilities and contingent assets' and for defined benefit pensions schemes under IAS 19 (revised) 'Employee benefits'.

 

Restatement of 2012 results

 

During 2012, AMEC announced a new organisation structure, effective 1 January 2013, designed to more fully support the future needs of its customers.  The group is now managed geographically and the segmental analysis, as presented in note 2, has been restated to reflect the new structure of Americas, Europe and Growth Regions, together with Investment Services.

For a number of years, AMEC has been taking a more selective approach to the bidding of contracts in the former Power and Process (P&P) division in the UK, most notably in the area of conventional power.  During 2013, all revenue generating activities ceased.  The UK conventional power business was considered to be a major line of business and is now reported as a discontinued business and the 2012 comparatives have been restated accordingly.

 

Page 23

 

 

1. CORPORATE INFORMATION, BASIS OF PREPARATION AND ACCOUNTING STANDARDS ADOPTED DURING THE YEAR (continued)

 

Accounting standards adopted in the year

 

IAS 19 'Employee Benefits' was amended in June 2011. The impact on the group has been to replace interest cost and expected return on plan assets with a net interest amount that is calculated by applying the discount rate to the net defined benefit asset/liability.

 

The group's reported results and financial position have been restated as a result of the adoption of revised standard IAS 19 (2011).  The impact on the results for the year ended 31 December 2012 is an increase in cost of sales by £1 million, a reduction in net financing income by £12 million and a reduction in the income tax charge by £5 million, resulting in a lower profit after tax of £8 million.  Within the consolidated statement of other comprehensive income, the impact is an increase of £13 million to the actuarial gains on defined benefit schemes and an increase of £5 million in the tax on actuarial gains resulting in an increased total comprehensive income of £8 million.  There is no impact on either the net retirement benefit liability or related deferred tax balance within the balance sheet. 

 

The impact of IAS 19 (2011) on the results for the year ended 31 December 2013 has been a reduction in profit before tax of £19 million and a reduction in the income tax charge of £4 million, resulting in a lower profit after tax of £15 million.  Within the consolidated statement of other comprehensive income, the impact is an increase of £19 million to the actuarial gains on defined benefit schemes and an increase of £4 million in the tax on actuarial gains resulting in an increased total comprehensive income of £15 million.  There is no impact on either the net retirement benefit liability or related deferred tax balance within the balance sheet. 

 

An amendment to IAS 36, 'Recoverable Amount Disclosures for Non-Financial Assets' was issued in May 2013 to clarify certain disclosure requirements following the issue of IFRS 13 'Fair Value Measurement'.

 

IFRS 10 'Consolidated Financial Statements' builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated accounts of the parent company. The standard provides additional guidance to assist in the determination of control where this is difficult to assess.

 

IFRS 11 'Joint Arrangements' replaces IAS 31 'Interests in Joint Ventures'. IFRS 11 considers the classification of joint arrangements in which two or more parties have joint control. Under IFRS 11, joint arrangements are classified as joint operations or joint ventures, depending on the rights and obligations of the parties to the arrangements.

 

IFRS 12 'Disclosures of Interests in Other Entities' includes the disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.

 

IFRS 13 'Fair Value Measurement', aims to improve consistency and reduce complexity by providing a precise definition of fair value and a single source of fair value measurement and disclosure requirements for use across IFRS.

 

The adoption of IAS 36 (revised), IFRS 10, 11, 12 and 13 had no impact on the group's reported results or financial position.

 

There are no other IFRS, IAS amendments or IFRIC interpretations that are not yet effective that would be expected to have a material impact on the group.

 

 

 

Page 24



 

 

2.  SEGMENTAL ANALYSIS OF CONTINUING OPERATIONS

 

AMEC is a focused supplier of consultancy, engineering and project management services to customers in the world's oil & gas, mining, clean energy and environment & infrastructure markets.  Following a restructure in late 2012, the group's results are now reported on a geographic, rather than divisional basis.  This reflects the new structure, introduced to strengthen customer focus and so maximise potential growth opportunities.  Each of the three geographies 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 geographies, as well as the Investment Services segment. Details of the services offered by each business unit and the end markets in which they operate are given in the segmental review on pages 5 to 10.

 


Revenue


Profit/(loss)





2012




2012



2013


(Restated)


2013


(Restated)



£ million


£ million


£ million


£ million










Americas


2,247 


2,500 


241 


233 

Europe


1,227 


1,080 


93 


95 

Growth Regions


536 


531 


33 


32 

Investment Services




11 













4,016 


4,120 


378 


367 

Internal revenue


(42)


(32)












External revenue


3,974 


4,088 












Corporate costs1






(35)


(33)

EBITA2






343 


334 

Net financing expense3






(11)


(7)

Adjusted profit before tax






332 


327 

Tax on results of joint ventures4






(5)


(5)







327 


322 

Intangible amortisation






(47)


(44)

Exceptional items






(25)


(24)










Profit before income tax






255


254 










 

1Corporate costs comprise the costs of operating central corporate functions and certain regional overheads.

2EBITA is earnings from continuing operations before net financing income, tax, intangible amortisation and pre-tax exceptional items of £315 million (2012: £311 million) but including joint venture EBITA of £28 million (2012: £23 million).

3Net financing expense 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:







2013


2012







£ million


£ million










      EBITA






28 


23 

      Net financing expense






(9)


(6)

      Tax






(5)


(5)
















14 


12 

 

Page 25



3.  AMORTISATION AND EXCEPTIONAL ITEMS

 



2013


2012 



£ million


£ million 






Continuing operations:





      Administrative expenses - exceptional items


(18)


(24)

      Administrative expenses - intangible amortisation


(47)


(44)



(65)


(68)

Loss on business disposals and closures


(7)




(72)


(68)

Taxation charge on restructuring


(16)


Taxation (charge)/credit on exceptional items of continuing operations


(6)


Taxation credit on intangible amortisation


20 


12 



(2)


21 

Post-tax amortisation and exceptional items





of continuing operations


(74)


(47)

Exceptional items of discontinued operations (post-tax)



Post-tax amortisation and exceptional items


(74)


(42)

 

Post-tax exceptional items are further analysed as follows:

Year ended 31 December 2013
























Loss in


Loss on








respect of


business


Other




Loss on


business


disposals


exceptional




disposals


closures


and closures


items


Total


£ million


£ million


£ million


 £ million


£ million











Continuing operations


(7)


(7)


(18)


(25)

Discontinued operations

(6)



(6)



(6)

Loss before tax

(6)


(7)


(13)


(18)


(31)

Tax charge on restructuring




(16)


(16)

Tax on exceptional items




(6)


Loss after tax


(7)


(7)


(40)


Additional indemnity provisions of £10 million and costs in respect of businesses sold in prior years (and classified as discontinued) were offset by the release of a £5 million litigation provision and indemnity provisions no longer required, and give a pre-tax exceptional loss on disposals of £6 million.

 

There were additional litigation provisions of £9 million offset by releases of £2 million in respect of businesses closed in a prior year and classified as continuing.

 

Exceptional costs of £18 million in continuing operations includes £14 million restructuring costs associated with the management reorganisation into geographic business units and transaction costs of £4 million which, in line with IFRS 3 are charged to the income statement.

 

A tax provision of £16 million has been established for potential withholding tax following a group restructuring that resulted in a significant amount of cash being repatriated from foreign subsidiaries.

 

Year ended 31 December 2012
































Profit in


Loss








respect of


on business


Other




Loss on


business


disposals


exceptional




disposals


closures


and closures


items


Total


£ million


£ million


£ million


 £ million


£ million











Continuing operations




(24)


(24)

Discontinued operations

(11)



(11)


17 


Loss before tax

(11)



(11)


(7)


(18)

Tax on exceptional items





Loss after tax

(8)



(8)


(2)


 

 

Page 26

 

3.  AMORTISATION AND EXCEPTIONAL ITEMS (continued)

 

A loss on disposals of £11 million arose from adjustments to provisions held in respect of a business sold in prior years (and classified as discontinued) and foreign exchange movements on provisions established on the disposal of SPIE.

 

Exceptional costs of £24 million in continuing operations included £11 million costs of funding a joint venture which was part of a recent acquisition, costs of £11 million associated with restructuring following the management reorganisation into geographic business units and transaction and deferred compensation costs which, in line with IFRS3, are charged to the income statement.  Transaction costs of £2 million were incurred in the year.

 

The exceptional gain in discontinued operations of £17 million arose from 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.

 

4.  INCOME TAX

 

The group's effective tax rate in 2013 for the continuing businesses (including tax attributable to joint venture interests) but before exceptional items and intangible amortisation was 21.9 per cent (2012: 22.5 per cent).  The forthcoming reductions in the rate of UK corporation tax have all been substantively enacted.

 

5.  (LOSS)/PROFIT FOR THE YEAR FROM DISCONTINUED OPERATIONS

 

Discontinued operations represent the residual assets and retained obligations in respect of businesses sold in prior years, as well as the UK conventional power business which was discontinued in the year (see note 1 for further details).

 

In accordance with IFRS 5, the post-tax results of discontinued operations are disclosed separately in the consolidated income statement.  The results of the discontinued operations are as follows:

 



2013


2012





(Restated)



£ million


£ million

Revenue


15 


70 

Cost of sales and net operating expenses


(25)


(74)

Loss before exceptional items and attributable tax


(10)


(4)

Attributable tax





(8)


(3)

Loss on disposal


(6)


(11)

Tax on disposals



Other exceptional items



17 

Tax on exceptional items



(4)






(Loss)/profit for the year from discontinued operations


(8)







 

Other exceptional items in 2012 related to the recognition of an insurance receivable, following the Supreme Court judgement on mesothelioma liability.

 

 

 

Page 27



 

 

6.  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 those held in treasury by the company.

 







2013






2012






Weighted







Weighted







average

shares


Earnings

per





average shares


Earnings per



Earnings


number


share


Earnings


number


share



£ million


 million


pence


£ million


million


pence














Basic earnings from













continuing operations


187


293


63.8 


206 


315 


65.2 

Share options


-


2


(0.4)




(0.4)

Employee share and incentive schemes


-


4


(0.9)




(0.8)














Diluted earnings from













continuing operations


187


299


62.5


206 


321 


64.0 














 








2013







2012






Weighted







Weighted







average

shares


Earnings

per





average shares


Earnings per



Earnings


number


share


Earnings


number


share



£ million


 million


pence


£ million


million


pence














Basic (loss)/ earnings from













discontinued operations


(8)


293


(2.7)


2


315


0.6

Share options



2



-


2


-

Employee share and incentive schemes



4



-


4


-














Diluted (loss)/earnings from













discontinued operations


(8)


299


(2.7)


2


321


0.6

 

 

Basic and diluted profit from continuing operations is calculated as set out below:

 



2013


2012



£ million


£ million






Profit for the year from continuing operations


186


207 

Loss/(profit) attributable to non-controlling interests


1


(1)






Basic and diluted profit from continuing operations


187


206 

 

In order to appreciate the effects on the reported performance of intangible amortisation and exceptional items, additional calculations of earnings per share are presented. 

 






2013






2012




Weighted






Weighted






average


Earnings




average


Earnings




shares


per




shares


per


Earnings


number


share


Earnings


number


share


£ million


 million


pence


£ million


million


pence













Basic earnings from continuing operations

187


293 


63.8 


206


315


65.2 













Exceptional items (post-tax)

47



16.0 


15


-


4.7 

Amortisation (post-tax)

27



9.2 


32


-


10.2 













Basic earnings from continuing operations before












amortisation and exceptional items

261


293


89.0 


253


315


80.1 













Share options


2


(0.6)


-


2


(0.5)

Employee share and incentive schemes


4


(1.2)


-


4


(1.0)













Diluted earnings from continuing operations before












amortisation and exceptional items

261


299


87.2


253


321


78.6 















 

Page 28

 

 

6.  EARNINGS PER SHARE (continued)

 

 





2013






2012




Weighted






Weighted






average


Earnings




average


Earnings




shares


per




shares


per


Earnings


number


share


Earnings


number


share


£ million


 million


pence


£ million


million


pence













Basic (loss)/earnings from discontinued operations

(8)


293


(2.7)



315


0.6 













Exceptional items (post-tax)




(5)


-


(1.4)













Basic loss from discontinued operations before












amortisation and exceptional items

(8)


293


(2.7)


(3)


315


(0.8)













Share options


2




2


Employee share and incentive schemes


4




4














Diluted loss from discontinued operations before












amortisation and exceptional items

(8)


299


(2.7)


(3)


321


(0.8)













 

 

7.  DIVIDENDS

 

The directors are proposing a final dividend in respect of the financial year ended 31 December 2013 of 28.5 pence per share, which will absorb an estimated £84 million of equity.  Subject to approval, it will be paid on 2 July 2014 to shareholders on the register of members on 30 May 2014.  This dividend has not been provided for and there are no income tax consequences for the company.  This final dividend together with the interim dividend of 13.5 pence (2012: 11.7 pence) per share results in a total dividend for the year of 42.0 pence per share (2012: 36.5 pence).

 




2013




2012


Pence




Pence



Dividends charged to reserves and paid

per share


£ million


per share


£ million

















Interim dividend in respect of 2012 (2012: interim

11.7


36


10.2


34

dividend in respect of 2011)
















Final dividend in respect of 2012 (2012: final dividend

24.8


72


20.3


64

in respect of 2011)

















36.5


108


30.5


98

 

8.  SHARE BUYBACK PROGRAMME

 

During the year, 4.2 million ordinary shares were purchased at an average price of £10.84 and a total cost of £45 million.  All the shares purchased have subsequently been cancelled.  This completed the £400 million share buy back programme announced in February 2012.

 

At 31 December 2012 the company was party to an irrevocable closed season buyback agreement for the purchase of its own ordinary shares for a maximum total cost of £45 million. The purchase of these shares was dependent upon the company's share price not reaching a pre-determined level during the remainder of the contract period.  The remaining outstanding share purchase mandate liability of £45 million was presented as a current liability in accordance with IAS 32.23.  The company was not party to any such contracts as at 31 December 2013.

 

 

Page 29



 

 

9. INTANGIBLE ASSETS

 






Customer






Goodwill


Software


relationships


Other


Total


£ million


£ million


£ million


£ million


£ million











Cost:










As at 1 January 2013

831 


53 


188 


56 


1,128 

Exchange and other movements

(52)


(1)


(4)


(2)


(59)

Acquired through business combinations

13 





19 

Additions


15 




15 

Disposals and retirements


(1)


(4)


(16)


(21)











As at 31 December 2013

792


66


184


40


1,082 











Amortisation:










As at 1 January 2013

40 


21 


58 


40 


159 

Exchange and other movements

(5)


(1)


(3)


(1)


(10)

Provided during the year


10 


29 



47 

Disposals and retirements


(1)


(4)


(16)


(21)











As at 31 December 2013

35


29


80 


31


175











Cost:










As at 1 January 2012

764 


46 


107 


57 


974 

Exchange and other movements

(20)


(3)


(3)


(1)


(27)

Acquired through business combinations

87 



85 



178 

Additions


12 




12 

Disposals and retirements


(3)


(1)


(5)


(9)











As at 31 December 2012                            

831 


53 


188 


56 


1,128 











Amortisation:










As at 1 January 2012

39 


19 


36 


32 


126 

Exchange and other movements


(2)


(1)


(1)


(3)

Provided during the year



24 


14 


44 

Disposals and retirements


(2)


(1)


(5)


(8)











As at 31 December 2012

40 


21 


58 


40 


159 





















Net book value:










As at 31 December 2013

757 


37 


104 



907 











As at 31 December 2012

791 


32 


130 


16 


969 











As at 1 January 2012

725 


27 


71 


25 


848 

 

 

10.  OTHER NON-CURRENT ASSETS AND LIABILITIES

 

Other non-current receivables of £24 million (2012: £27 million) represent indemnities received on the acquisition of MACTEC, and certain insurance receivables, both of which are matched by liabilities included within provisions.

 

Trade and other payables of £11 million (2012: £11 million) represents lease incentives received which are being amortised over the period of the lease and deferred consideration on acquisitions payable in more than one year.

 

 

Page 30



 

 

11.  PROVISIONS

 

The nature and measurement bases of the group's provisions are unchanged from those presented in the 2012 annual report and accounts. 










Onerous










property






Indemnities




contracts






granted and




and




Litigation


retained




provisions




settlement


obligations




to fund 




and future


on disposed




joint




legal costs


businesses


Insurance


ventures


Total


£ million


£ million


£ million


£ million


£ million











As at 1 January 2013

40 


69 


36 


26 


171 

Exchange and other movements

(1)





Utilised

(4)


(3)


(2)


(10)


(19)

Charged/(credited) to the income










statement:










  Additional provisions


10 




25 

  Unused amounts reversed

(7)


(6)


(1)



(14)





















As at 31 December 2013

37 


71 


37 


18 


163











 

12.  ACQUISITIONS AND DISPOSALS

 

ACQUISITIONS IN 2013

 

The following purchase has been accounted for as an acquisition.  The business acquired did not make a material contribution to consolidated revenue and profit in the period from its acquisition to 31 December 2013, nor would it have done in the year ended 31 December 2013 if it had been acquired on 1 January 2013.

 

Intangible assets recognised at fair value on the acquisition of this business included trade names, order backlogs, customer relationships and non-compete agreements. 

 

Automated Engineering Services Corp.

 

On 15 November 2013, the group acquired all of the shares in Automated Engineering Services Corp. (AES) for up to US$ 35 million, with US$29 million paid on completion and up to $6 million deferred for three years dependent of the achievement of certain performance targets.  AES is a 175-person professional design engineering nuclear services firm based in Naperville, Illinois, US.  It provides plant design / modification engineering, engineering analysis, safety, licensing and regulatory services, and engineering programme support to existing nuclear utilities, primarily in the US.

 

The acquisition is fully aligned with AMEC's Vision 2015 strategy and builds on AMEC's nuclear position in the US, allowing AMEC to better serve its clients and providing a strong platform from which to achieve further growth.

 

The amounts recognised in respect of identifiable assets and liabilities relating to the acquisition of AES were as follows:

 







Recognised







value







£ million








Intangible assets






Trade and other receivables






Trade and other payables






(2)

Net identifiable assets and liabilities






10 

Goodwill on acquisition