Interim Results 2000

1
Interim Results 2000

• 31 August 2000

2
Interim Results 2000

• Sydney Gillibrand, CBE
• Chairman, AMEC plc

3
Interim Results 2000

• Stuart Siddall
• Finance Director, AMEC plc

4
Overall Performance

• Total turnover 1,690 1,436 18
• Operating profit
• Continuing operations 30.7 26.9 14
• Acquisitions 4.4 -
• Total operating profit 35.1 26.9 30
• Net interest (2.7) 0.5
• Pre-tax profit 32.4 27.4 18

5
Taxation

• Half year charge 27.8 27.4

• Benefit from tax free Fairclough dividend
• Focus on mitigating impact of higher Canadian tax
  rates
• Expect underlying rate to approximate UK tax rate

6
Earnings Per Share Diluted

• Adjusted 8.2p 6.9p 19
• before discontinued operations,
  goodwillamortisation and exceptional items
• Net 7.1p 5.9p 20
• after discontinued operations, goodwillamortisati
  on and exceptional items

7
Ordinary Dividend Per Share

• Interim 2.8p 2.5p 12
• Cover 2.9x 2.8x

8
Acquisitions

• AGRA (AMEC Inc.) plus two small acquisitions
• AMEC Inc. accretive in first two months
  (excluding goodwill amortisation)
• Cost of acquisitions 232 million (plus AMEC Inc.
  debt of 67 million)
• Goodwill amortisation 1.8 million in first half

9
AGRA Goodwill

• Goodwill per circular 102
• Deferred consideration and other costsassociated
  with AGRAs acquisitions 19
• 121
• Fair value adjustments
• Revaluations 13
• Alignment of accounting policies 12
• Contract related provisions 13 38
• 159

10
Finance Income / (Charges)

• AMEC 0.2 3.5
• Joint ventures (2.9) (2.0)
• (2.7) 1.5

• AMEC Inc. impact circa 4 million
• Increased Fairclough dividend up to 3.4 million
• Further costs as PPP projects become operational

11
Net Debt

• Cash at 31 December 1999 105
• Acquisitions (232)
• Debt assumed (67)
• Preference share buyback (14) (313)
• Working capital and dividends etc (44)
• Net debt at 30 June 2000 (252)
• Fairclough loan note - due first quarter 2001 95
  
• Adjusted net debt (157)

• First half absorption of working capital in line
  with previous years
• Release cash from sale of non-core assets
• Reduce working capital in AMEC Inc.

12
Net AssetsMovement by sector

• Capital Projects (33) (42)
• Services 37 27
• Investments 85 95
• AMEC Inc. (AGRA) 147 -
• Operating capital employed 236 80
• Goodwill 168 -
• (Net debt) / cashincluding Fairclough loan
  note (157) 160
• Unallocated net assets / (liabilities) 6 (12)
• Net assets 253 228

13
Administrative ExpensesBefore goodwill
amortisation

• Continuing 67.0 66.9
• Acquisitions 16.8 -
• Discontinued - 3.0
• 83.8 69.9

• Cost control in continuing businesses
• Planned investment in e-commerce spend and
  further fiscal restructuring costs
• AMEC Inc. overheads at 15 per cent of sales
  represents norm for engineering services

14
Segmental Analysis Operating Profit
million
15
Capital ProjectsTurnover
16
Capital Projects

• Turnover 1,116 1,022
• Operating profit 11.9 7.3
• Margin 1.1 0.7

• Benefit from AMEC Inc.
• Volume excluding AMEC Inc. little changed
• Underlying improvement elsewhere - principally
  Germany

17
ServicesTurnover
18
Services

• Turnover 532 422
• Operating profit 21.4 18.2
• Margin 4.0 4.3

• Benefit from AMEC Inc.
• Reduced activity and margins on rail maintenance
  contracts
• Good performance in utilities and facilities
• Increased activity at Spie Trindel
• Marked improvement in oil and gas services

19
SPIE S.A.(41.6 share)

• Turnover 319 313
• Operating profit 7.9 6.5
• Margin 2.5 2.1

• Excellent underlying growth
• Expect to invest up to 25 million in rights
  issue to accelerate SPIEs investment plans and
  increase our stake by up to 5 per cent
• Option to buy balance of SPIE in 2002

20
Investments

• Turnover 77 39
• Operating profit 4.3 3.6

• Property development generating first class
  returns
• Further positive contribution from operational
  PPP projects
• Continued investment in PPP with ongoing net
  bidding costs of circa 5 million per annum

21
PPP Projects Secured to Date

• Roads A1(M) 176 44A417/419 116 29A13 190 48
• HospitalsCarlisle 60 60UCLH 226 113
• Accommodation Longbenton 160 160
• International Israel highway 540 60
• 1,468 514

22
PPP Dynamics

• Construction benefits from work with better
  quality margins
• Opportunity to expand facilities business
• High barriers to entry
• Committed investment of 55 million
• Quality profits streams from investments
• Real equity returns should exceed our earlier
  expectations
• Ability to release cash from operational assets
• Market will continue to grow

23
Geographical Analysis

• United Kingdom 907 31.8 833 37.3
• Rest of Europe 304 3.1 270 0.1
• America 371 1.7 243 (4.4)
• Rest of the World 108 1.0 90 (3.9)
• 1,690 37.6 1,436 29.1
• Corporate costs (2.5) (2.2)
• 35.1 26.9 30

Before discontinued operations, goodwill
amortisation and exceptional items
24
Order Book

• AMEC (UK and Asia Pacific) 2.3 billion 5
• AMEC (North America)
• - AMEC Inc. C 1.2 billion 9
• - Morse Diesel US 1.4 billion -16
• SPIE (100) Î 1.9 billion 34

Total orders 5 billion
25
Interim Results 2000

• Peter Mason
• Chief Executive, AMEC plc

26
Strategic Plan

• Expansion in services, engineering and technology
• Selective capital projects work
• Providing complete solutions to customers on a
  global basis
• Sectors where AMEC has in-depth knowledge and
  experience

Improved returns throughrecurring income..
greater quality.. less risk
27
Agenda

• AGRA - integration and value
• Excellent results from SPIE
• Capital Projects, Services and Investments
• Outlook

28
Americas - AMEC Inc.Taking advantage of synergies

• Focus on
• Integrating cultures and processes
• Rationalising structures and costs
• Top-line growth
• Developing technology resources

29
Culture and Process

• AGRA Inc. now AMEC Inc.
• Common platform to serve global base of customers
• Sharing knowledge across AMEC
• Sector specific global teams
• Energy
• PharmaChem

30
Structural Issues

• Birwelco joins UK Capital Projects sector
• New top management at Morse Diesel
• Opportunities in broader range of sectors
• Reduced sales in traditional commercial work
• Margin improvement expected over time
• Sale of non-strategic assets
• Potential for new areas of business

31
Top Line Growth

• Strength in engineering services, technology and
  client relationships
• Recurring engineering and service revenues
• Build on evergreen relationships developing
  globally
• AGRA will follow SPIE in delivering top line
  growth

32
Technology

• AMEC Technologies division created
• Project management system and web-enabling
  AMECs internal systems
• E-commerce initiatives
• Technology a leading differentiator of AMEC
• Portfolio of technology businesses
• Geospatial data management
• Operations analysis
• Process simulation
• Computer based training

33
AMEC Inc.

• Blending cultures
• Structural rationalisation
• Top line synergies
• Technology development

34
Early Wins

• 5 million savings on target
• Increasing margins
• Top line opportunities
• Global engineering services for SmithKline
  Beecham
• Project webs for Shell, Philippines
• International web technology projects

35
ENR Top International Design FirmsJuly 2000
Companies ranked according to international
revenue for design services performed in 1999 in
US millions. Includes subsidiaries
36
SPIEAnother excellent performance

• Revenues and profits increased
• First class management
• Strong French economy
• AMEC SPIE Rail Systems
• Contracts of 300 million in UK

37
SPIECommandes au 31 Juillet 2000Comparison des
Realisations 1999 et 2000

• Spie Trindel 4 985 6 166 24
• Spie Enertrans 2 937 3 019 3
• Spie Batignolles 2 615 3 373 29
• Total SPIE 10 537 12 558 19

38
Capital Projects

• Improved margins through project selectivity and
  management of overheads
• Significant oil and gas work, despite mature
  North Sea market
• 235 million ethane recovery project, Arabian
  Gulf Coast

39
Services

• Increased turnover and profit
• Good performances from
• Oil and gas services
• Utilities outsourcing
• Facilities management
• Reduced returns from rail maintenance
• Shell in Philippines, in alliance with Fluor
  Daniel
• UK leader in wind energy

40
Investments

• Excellent returns from property development
• First PPP hospital opened in Carlisle
• Financial close on A13 road project
• Financial close on University College London
  Hospital

41
OutlookMarket prospects underpin positive
outlook for AMEC

• United Kingdom
• PPP work and encouraging UK Government spending
  review
• Relationships with industrial clients
• France
• Strong European market
• New global opportunities, especially pipelines
  and power
• North America
• Greatest market potential in United States
• Advancing recovery in natural resource industries
  in Canada
• Worldwide
• South East Asian markets recovering rail
  opportunities in Hong Kong
• New oil sector spending

42
Summary

• Strategy
• Expanding businesses with recurring revenue
• Improving project margins selective bidding and
  innovative partnering
• SPIE
• Delivering exceptional value
• AMEC Inc.
• Provides wider access to North American market
• Strengthens engineering services and new
  technology

Delivering excellent value to clients and
shareholders
43

• A provider of services and engineering solutions
  to the worlds infrastructure, manufacturing and
  process industries