WS Atkins plc reported its half year results for the six months ended 30 September 2014. Key highlights included revenue increasing 2% excluding currency effects, acquisitions and disposals, underlying profit before tax up 5%, and underlying operating margin increased 90 basis points to 6.4%. Performance was strong in the Middle East and Energy segments. The outlook for the full year remains unchanged.

1. WS Atkins plc
Half year results for the six months ended 30 September 2014
13 November 2014

2. Uwe Krueger
Chief executive officer

3. Good results despite currency headwinds Strong performance in Middle East and Energy
3
•Revenue up 2% excluding effects of currency, acquisitions and disposals
•Underlying profit before tax up 5%
•Underlying operating margin of 6.4%, up 90 basis points year on year
•Mixed UK and improving North American performance
•Strong financial position with net funds of £155.3m
•Interim dividend increased by 4.8% to 11.0p
•Outlook for the full year unchanged.

4. Heath Drewett
Group finance director

5. Financial summary
5
30 Sep 2014
30 Sep 2013
Revenue
£831.4
m
£915.4
m
(9.2)
%
Operating profit
£44.6
m
£49.7
m
(10.3)
%
Operating margin
5.4
%
5.4
%
-
bp
Underlying operating profit
£53.0
m
£50.7
m
4.5
%
Underlying operating margin
6.4
%
5.5
%
90
bp
Underlying profit before tax
£46.9
m
£44.7
m
4.9
%
Underlying diluted EPS
37.7
p
35.9
p
5.0
%
Dividend per share
11.0
p
10.5
p
4.8
%
Work in hand
89.1
%
87.7
%
Average staff numbers
17,569
17,715
(0.8)
%
Net funds
£155.3
m
£136.1
m
30 Sep 2014
31 Mar 2014
Closing staff numbers
17,898
17,489
2.3
%

6. Segmental summary
6
£m
Revenue
Operating profit/(loss)
Operating margin
UK and Europe
428
22.4
5.2
%
North America
171
10.2
6.0
%
Middle East
96
8.9
9.3
%
Asia Pacific
53
3.5
6.6
%
Energy
81
8.1
10.0
%
Total for segments
829
53.1
6.4
%
Joint ventures included above
-
Total before unallocated items
829
53.1
6.4
%
Unallocated central items
2
(8.5)
Total for Group
831
44.6
5.4
%

7. UK and Europe Mixed performance
7
30 Sep 2014
30 Sep 2013
Revenue (£m)
428.3
525.4
(18.5)
%
Operating profit (£m)
22.4
27.7
(19.1)
%
Operating margin
5.2
%
5.3
%
(10)
bp
Work in hand
85
%
87
%
Average staff numbers
9,335
9,924
(5.9)
%
30 Sep 2014
31 Mar 2014
Closing staff numbers
9,414
9,544
(1.4)
%

8. UK Mixed trading
8
•Revenue in continuing businesses down 4% (excluding highways services revenue of £73.7m in prior year) and operating profit down 8.5%, against a strong first half comparator
•Market downturn in aerospace and outstanding contract variations in rail impacting margin performance
•Our highways and design and engineering businesses have performed well, driven by continuing investment in infrastructure by the UK Government
•Next phase of operational excellence announced, including reorganisation of our six businesses.
30 Sep 2014
30 Sep 2013
Revenue (£m)
398.5
488.4
(18.4)
%
Operating profit (£m)
22.7
26.2
(13.4)
%
Operating margin
5.7
%
5.4
%
30
bp
Work in hand
86
%
88
%
Average staff numbers
8,610
9,184
(6.3)
%
30 Sep 2014
31 Mar 2014
Closing staff numbers
8,737
8,810
(0.8)
%

9. North America Improved performance
9
•Revenue reduction reflects currency effects (£15m) and the sale of Peter Brown (£7m)
•Operating profit performance benefited from disposal of loss making Peter Brown business
•Margin improvement in consultancy, particularly good returns in Department of Transportation work
•Focus around five market facing businesses and a streamlined organisational structure expected to deliver further operating margin improvements.
30 Sep 2014
30 Sep 2013
Revenue (£m)
170.5
205.4
(17.0)
%
Operating profit (£m)
10.2
8.4
21.4
%
Operating margin
6.0
%
4.1
%
190
bp
Work in hand
93
%
91
%
Average staff numbers
2,823
3,016
(6.4)
%
30 Sep 2014
31 Mar 2014
Closing staff numbers
2,786
2,836
(1.8)
%

10. North America analysis Progress despite currency headwinds
10
30 Sep 2014
30 Sep 2013
Revenue (£m)
Consultancy
137.5
164.1
Peter Brown
-
6.9
Faithful+Gould
33.0
34.4
North America
170.5
205.4
Operating profit/(loss) (£m)
Consultancy
8.4
9.4
Margin
6.1%
5.7%
Peter Brown
-
(3.3)
Faithful+Gould
1.8
2.3
Margin
5.5%
6.7%
North America
10.2
8.4
Margin (%)
6.0%
4.1%

11. Middle East Strong first half performance
11
•Focus remains on three key markets: UAE, Qatar and Kingdom of Saudi Arabia and three sectors: rail, infrastructure and property
•Significant performance improvement driven by major metro project wins and improving property market in the UAE
•Strong pipeline of future project opportunities.
30 Sep 2014
30 Sep 2013
Revenue (£m)
96.0
82.6
16.2
%
Operating profit (£m)
8.9
4.2
112
%
Operating margin
9.3
%
5.1
%
420
bp
Work in hand
97
%
90
%
Average staff numbers
2,288
1,979
15.6
%
30 Sep 2014
31 Mar 2014
Closing staff numbers
2,428
2,071
17.2
%

12. Asia Pacific Good consultancy performance
12
•Revenue growth includes Confluence acquisition in October 2013
•Margin dilution reflects further investment in diversification in the region and mainland China slowdown
•Positive second half outlook despite mainland China slowdown and risk of project delays in Hong Kong.
30 Sep 2014
30 Sep 2013
Revenue (£m)
53.4
49.2
8.5
%
Operating profit (£m)
3.5
3.4
2.9
%
Operating margin
6.6
%
6.9
%
(30)
bp
Work in hand
92
%
93
%
Average staff numbers
1,542
1,317
17.1
%
30 Sep 2014
31 Mar 2014
Closing staff numbers
1,566
1,498
4.5
%

13. Energy Strong first half performance
13
•Strong profit growth, in part due to impact of bid costs in prior year
•Nuclear Safety Associates acquisition achieved regulatory approval
•Looking ahead, attractive pipeline and international growth underpinned further by recent Houston Offshore Engineering acquisition.
30 Sep 2014
30 Sep 2013
Revenue (£m)
81.3
83.4
(2.5)
%
Operating profit (£m)
8.1
6.4
26.6
%
Operating margin
10.0
%
7.7
%
230
bp
Work in hand
80
%
78
%
Average staff numbers
1,499
1,401
7.0
%
30 Sep 2014
31 Mar 2014
Closing staff numbers
1,616
1,461
10.6
%

14. Cash flow
14
•Working capital performance reflects increasing lock-up in the UK
•Cash flow targets embedded in management incentive schemes
•Net funds at 30 September of £155.3m (Sep 2013: £136.1m).
£m
30 Sep 2014
30 Sep 2013
Operating profit
44.6
49.7
Depreciation/amortisation
11.6
11.4
Impairment of goodwill
2.8
-
Working capital
(35.6)
(33.5)
Pension
(16.0)
(16.0)
Other
6.1
(2.0)
Cash flow from operating activities
13.5
9.6

15. Working capital
15
First half increase driven by lock-up
2014
2012
Operating profit
104.1
Depreciation/amortisation
28.6
Working capital
(27.0)
Pension
(21.0)
Provisions/other
(1.8)
Cash flow from operating activities
82.9
£m
30 Sep 2014
31 Mar 2014
D
Trade receivables
300.6
281.9
Amounts recoverable on contracts
125.3
93.2
Fees invoiced in advance
(175.2)
(155.5)
Lock-up
250.7
219.6
(31.1)
Other receivables/prepayments
46.9
43.0
(3.9)
Trade payables
(70.6)
(63.1)
7.5
Other payables/accruals
(232.7)
(234.5)
(1.8)
Other
(6.3)
Movement in working capital
(35.6)

16. Pension Improved asset performance
16
•£235m IAS 19 deficit net of deferred tax at 30 Sept 2014 (March 2014: £258m)
•Strong asset and liability hedging programme performance offsetting impact of falling interest/discount rates
•Deficit repayment of £32m in current year, thereafter escalating at 2.5% per annum.
317
342
249
206
187
242
217
263
258
235
Mar
2010
Sep
2010
Mar
2011
Sep
2011
Mar
2012
Sep
2012*
Mar
2013*
Sep
2013*
Mar
2014
Sep
2014
IAS19 deficit net of deferred tax
(£m)
* Restated for IAS19 revision

17. Summary
17
•Good first half performance
•Delivery of strategy continues
•Outlook for the remainder of 2014/15 is for continued underlying growth and performance in line with expectations.

18. Uwe Krueger
Chief executive officer

19. 19
Our strategy
First half progress update
Positives
•Operational excellence remains a priority as we drive margin improvement towards our 8% goal
•Portfolio optimisation continues with the sale of our Polish business
•Ongoing growth in Energy, with skills added through NSA and HOE acquisitions
•Focused approach delivering strong results in the Middle East
•Strong financial position with net funds of £155m at September 2014
Challenges
•Resolving UK rail contract variations
•Reduced demand in aerospace market.

20. Acquisition strategy
20
•Organic growth remains our priority, augmented by appropriate M&A
•Focused on additional skills and/or geographic presence
•Cultural fit is critical
•Primarily expected to be ‘bolt-on’ in terms of scale
•Given the Group’s financial position, more significant opportunities will also be considered
•Dedicated central team to identify targets and support execution/implementation.
Disciplined approach

21. Creating a differentiated offering
21
Clients
Collaboration
Technology/ innovation
External alliances and internal cooperation
Driving advances in design and engineering of projects.
Increased client intimacy and focus

22. Our clients Increasing focus
22
•Thought leadership – a real differentiator eg Future Proofing Cities, Central planning office, Qatar
•Key account management and CRM tools
•target and prioritise key clients
•a systematic approach to business development (Miller Heiman)
•Selling our Group wide skillbase eg EDF
•Agility – responding to changing markets
•Potential co-investments.

23. 23
Collaboration
Value creation through internal cooperation
UK+ Europe
North America
Energy
Asia Pacific
Middle East
New Technical Professional Organisation
West Kowloon Cultural District
Riyadh Metro
UK reorganisation
EDF
GDC

24. 24
Collaboration Value creation through external partnerships
Metros
Domestic and international opportunities
Nuclear
activities
Vinci
Samsung
Chinese
contractors
URENCO
FCC
Assystem
Colombo Port City Sri Lanka
Window of Canton

25. Technology/ innovation
25
We undertake around £40m p.a. of innovation and research & development
•This is both our clients’ programmes and investment from Atkins
•Examples include:
•Scenarios planning for the UK water sector
•High speed rail centre for excellence at Heriot Watt University
•Composite materials research.

27. Our people A critical differentiator
27
•Well established graduate and UK apprenticeship programmes
•Global leadership programme with Saïd Business School
•University partnerships
•Retention
•Viewpoint internal survey
•Confidence in our knowledge (88% positive) and its contribution to meeting client objectives (86% positive) remains very high
•94% care about the success of our organisation.

28. Summary
28
•Good first half performance
•Delivery of strategy continues
•Outlook for the remainder of 2014/15 is for continued underlying growth and performance in line with expectations.

29. WS Atkins plc
Half year results for the six months ended 30 September 2014
13 November 2014

30. Financial appendices

31. Profit bridge Underlying profit before tax
31
54.8
44.7
46.9
39.0
1.0
11.1
2.2
0.5
4.4
4.0
Sept. 2013
reported
Amortisation
Profit
on disposal
Underlying
2013
Increase in
underlying
profit
Underlying
2014
Profit on
disposal
Exceptional
transaction
costs
Amortisation &
impairment
Sept. 2014
reported

32. UK revenue by sector Impact of highways services disposal
32
29%
23%
13%
10%
8%
8%
3%
3%
3%
2012/13
H1 2014/15
Roads
Rail (inc. mass transit)
Defence and security
Water and environment
Aerospace and aviation
Other
Buildings
Education
Urban development
36%
16%
11%
8%
7%
6%
5%
3%
9%

33. Working capital movement
33
Regional lock-up
£m
30 Sep 2014
31 Mar 2014
Inc/(Dec)
Lock-up
UK and Europe
106.1
87.1
19.0
North America
78.3
69.4
8.9
Middle East
66.1
67.3
(1.2)
Other (net)
0.1
(4.2)
4.4
Total
250.7
219.6
31.1

34. Net funds reconciliation
34

35. Innovation appendices

36. 36
Key to icons

37. From the air to the ground How our expertise in aircraft composite materials has delivered innovative solutions for new sectors
37

38. GIS Modelling & Monitoring Rapid assessment of flood schemes
38
Fast 80% time saving assessing flood scheme economics
Screen locations to identify optimum solution
Visualise impacts using 3D maps

39. StormCaster, Nationwide, USA Helping communities forecast storms
Produce a climate change-aware 90 year forecast of storms in your community
A groundbreaking forecasting algorithm produced through a partnership between Atkins and Texas A&M university
A publicly available web App that brings climate science to communities

40. Central reclamation phase III, Hong Kong Wave-absorbing seawall to reduce reflected waves
40
Improving the wave climate at new piers enhanced the berthing operation, i.e. reduced chance of having accidents
Enhanced the marine traffic condition within Victoria Harbour by reducing reflected waves generated from marine traffic

41. Digital Imaging for Condition Asset Management (DIFCAM) The use of optional techniques
Reduced cost by rapid data capture
Improved safety less time track-side
Improved quality detailed 3D spatial data

42. 42
Used by clients in all 10 FEMA regions in the United States
Presently the only publicly available software capable of automating FEMA specified flood maps
Flood Map Desktop, Nationwide, USA
Reducing the cost of flood map creation

43. Disclaimer
43
The information in this presentation pack, which does not purport to be comprehensive, has been provided by Atkins and has not been independently verified. While this information has been prepared in good faith, no representation or warranty, express or implied, is or will be made and no responsibility or liability is or will be accepted by Atkins as to or in relation to the accuracy or completeness of this presentation pack or any other written or oral information made available as part of the presentation and any such liability is expressly disclaimed. Further, whilst Atkins may subsequently update the information made available in this presentation, we expressly disclaim any obligation to do so.
The presentation contains indications of likely future developments and other forward-looking statements that are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the Group’s results, strategy and prospects. Forward-looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ materially from those currently expected. No obligation is assumed to update any forward-looking statements, whether as a result of new information, future events or otherwise.