2010 preliminary results

AMEC plc 2010 results

Strong results reflect operational strength and continued growth

2010 highlights

Strong operating performance

·; Revenue £2,950.6 million, up 16 per cent on 2009

·; EBITA1 £271.8 million, up 30 per cent

·; EBITA margin2 9.2 per cent, 100 basis points higher

·; Diluted EPS from continuing operations4 62.5 pence, up 33 per cent

Order book strong at £3.1 billion

·; Order intake over 25 per cent above 2009

Cash flow conversion 83 per cent

·; Operating cash flow £227 million5

Continued financial strength

·; Net cash as at 31 December 2010 £740 million

Dividends per share up 50 per cent, to 26.5 pence

·; Over last five years dividends have more than doubled

·; Progressive dividend policy to be maintained, with cover of 2 to 2.5 times

Chief Executive Samir Brikho said:

"AMEC made excellent progress in 2010, delivering a record 9.2 per cent EBITA margin and achieving good organic growth in each of our three divisions.

"The need for increased industry investment across our core markets supports our future growth, regardless of the pace of economic recovery. We are well positioned to take advantage of the growing demand for natural resources, power and water, and remain very confident about achieving our targeted earnings per share of greater than 100 pence in 2015.

"The pipeline of potential acquisitions has strengthened. In 2011 we expect continued growth resulting from our customer focus; with margins maintained at around the 9 per cent mark."

Results presentation and live webcast: AMEC will host a presentation on the preliminary results for analysts and investors at 9.00am today. A live webcast of the event and presentation slides will be available on amec.com.

Interview: with Samir Brikho, Chief Executive, Ian McHoul, Chief Financial Officer and Neil Bruce, Chief Operating Officer is available at http://amec.tamarinduk.com

Next event: Annual General Meeting and Interim Management Statement on 5 May 2011. An analyst / investor seminar is planned for Thursday 19 May 2011

Analyst consensus: estimates are collated and published on AMEC's website on a periodic basis amec.com/investors

Enquiries to:

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Financial highlights

Notes:

1. EBITA for continuing operations before intangible amortisation and exceptional items but including joint venture profit before tax

2. EBITA as defined above as a percentage of revenue

3. EBITA, as defined above, plus net financing income of £7.9 million (2009: £7.3 million)

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

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

n/a: not applicable

Basis of presentation

The following analysis is based on the results for continuing operations before intangible amortisation, goodwill impairment and pre-tax exceptional items but including joint venture profit before tax.

Segmental analysis

Segmental analysis is provided for the group's core activities in the Natural Resources, Power & Process and Earth & Environmental divisions, as well as for non-core Investments and other activities.

Amounts and percentage movements relating to continuing segmental earnings before net financing income, tax and intangible amortisation (EBITA) are stated before corporate costs of £35.9 million (2009: £38.1 million) and pre-tax exceptional income of £10.7 million (2009: £8.9 million).

The average numbers of employees for the years ended 31 December 2010 and 31 December 2009 stated in this review include agency staff. Figures for Earth & Environmental employees in 2009 have been restated to bring the definition of full time equivalents in line with the other divisions.

Discontinued operations

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

The cash flows of discontinued businesses are fully consolidated within AMEC up to the date of sale.

Any forward looking statements made in this document represent management's best judgement as to what may occur in the future. However, the group's actual results for the current and future fiscal periods and corporate developments will depend on a number of economic, competitive and other factors, some of which will be outside the control of the group. Such factors could cause the group's actual results for future periods to differ materially from those expressed in any forward looking statements made in this document.

* International Financial Reporting Standard 5 'Non-current assets held for sale and discontinued operations'.

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2010 results overview

Revenue for the year increased by 16 per cent to £2,950.6 million (2009: £2,539.1 million). Underlying revenue increased by 8 per cent, with improvements in all three divisions.

EBITA increased 30 per cent to £271.8 million (2009: £208.3 million), and margins improved by 100 basis points to 9.2 per cent (2009: 8.2 per cent). The underlying EBITA increased by 18 per cent.

Adjusted profit before tax of £279.7 million in 2010 was ahead of the previous year (£215.6 million) and reflected volume growth and the EBITA margin improvements. A reconciliation of the movement from adjusted profit before tax to profit before tax of £258.2 million (2009: £203.5 million) is shown in note 2 on page 25. The tax charge for the year was £21.6 million (2009: £46.8 million), the post-tax loss from discontinued operations was £6.7 million (2009: profit of £15.9 million), resulting in a total profit for the year of £229.9 million (2009: £172.6 million).

Adjusted diluted earnings per share from continuing operations were 62.5 pence (2009: 46.9 pence), an increase of 33 per cent.

Operating cash flow for the period was £227.0 million, down £39.0 million from last year, reflecting the working capital outflow resulting from the growth in the year and the exceptional performance in 2009, and subsequent working capital reversal. Cash flow conversion was 83 per cent (2009: 128 per cent), which compares with a normalised target of 90 per cent.

Dividend

The Board is recommending a final dividend of 19.2 pence per share (2009: 11.6 pence), which together with the interim dividend of 7.3 pence per share (2009: 6.1 pence) results in a total dividend of 26.5 pence per share (2009: 17.7 pence), an increase of 50 per cent. Since 2005, the annual dividend has more than doubled (2005: 11.5 pence).

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Going forward, the Board expects to maintain a progressive policy with dividend cover in the range of 2.0 to 2.5 times. This reflects the improving quality of earnings and cash flow, the de-risked business model, and the Board's confidence in the company's prospects. The interim dividend is expected to revert to being one-third of the annual total in 2011.

The final dividend will be payable on 1 July 2011 to shareholders on the register at the close of business on 27 May 2011.

Implementing Vision 2015

The group remains focused on its target of earnings per share of greater than 100 pence in 2015, delivered through growth at sustainable margins. It will be achieved by a continuing focus on customer service while building and maintaining long-term relationships.

Growth is expected to come through enhancing capabilities and expanding AMEC's footprint in specific sectors and geographies. AMEC is targeting building market share in sectors where it has an existing strong position, such as nuclear, oil and gas and environmental consulting; as well as in areas where it has not previously been focused, such as underground mining, subsea engineering, water and renewables. In terms of geographic regions, AMEC is looking to expand in Australasia, Latin America and the Middle East, as well as in its established markets, particularly UK and North America.

Good progress was made in 2010, as can be seen in more detail in the segmental review. The company's position in the water sector benefited from the acquisition of Entec Holdings Limited (Entec) in the UK. AMEC's position in Australia has been bolstered by three specialist oil and gas acquisitions: Currie & Brown (Australia), BurmanGriffiths and S2V Consulting, with S2V Consulting also bringing subsea engineering capability. This position was further strengthened in February 2011, with the acquisition of Australian-based Zektingroup, while the acquisition of Aberdeen-based qedi enhanced AMEC's project delivery capability. Earth & Environmental continued to build its position in an unconsolidated market, with the acquisition of US-based BCI Engineers and Scientists Inc. announced in February 2011.

In nuclear, AMEC won the 'Tier One' role to support EDF's architect engineer operation for its UK nuclear new build programme, which, alongside the 'Tier One' position at Sellafield, confirms a market-leading position in the UK nuclear market. In mining, AMEC won the Oyu Tolgoi underground mining contract in Mongolia, which secured an entree into this segment, building on AMEC's surface mining reputation.

AMEC further strengthened its position with key customers in 2010. The strategic relationship with BP has been strengthened by recent awards, including: the five-year master services agreement in Azerbaijan; work on the next, 'define', phase of the Clair Ridge project; and AMEC's appointment as one of two strategic partners to provide Engineering and Project Management Services for BP's onshore facilities developments around the world. AMEC's position in the Government services sector was bolstered when the AMEC-led joint venture was among those selected for a five-year, US$4

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billion framework contract for design and construction work to support the US Defence Policy Review initiative in the Pacific region.

AMEC does not own significant plant, equipment or proprietary technology; its success is driven by its employees and the way in which they deliver to customers. Recruitment, development and retention of people are critical to achieving growth and the Vision 2015 target. In 2010, the average number of employees increased to 21,907 (2009: 20,762), partially as a result of the three acquisitions in the Australian oil and gas sector, and Entec in the UK. Revenue per employee increased 10 per cent, consistent with a greater proportion of higher margin, less labour intensive, consulting and front-end work, and improved operational efficiency.

* Includes group central employees

The benefits of AMEC's extensive efforts to reduce cost, integrate activity, enhance efficiency and improve margins through the successful implementation of the Operational Excellence programme continue to be seen in 2010. The resulting 'One AMEC' approach has enabled AMEC to perform more efficiently and mitigate the impact of pricing pressures, thereby creating a more sustainable business. This has been further supported by the appointments of Neil Bruce as Chief Operating Officer and of the business unit leaders to the Group Management Team. The majority of AMEC's engineers and project managers have skills which are transferable across market sectors and the tools and processes are now in place to enable them to do so.

Outlook

The priority in 2011 will be to deliver growth while maintaining margins at around 9 per cent. This will be achieved by continuing to deliver to customers and invest in employees.

Although the pace of economic recovery is uncertain, 2011 is expected to be another year of gradual recovery. There is a long-term requirement for industry investment in AMEC's core markets and this is expected to drive an increase in demand for AMEC services.

AMEC's balance sheet remains exceptionally strong with operating cash flow set to continue to grow. Management remains focused on the delivery of Vision 2015, which includes maximising shareholder returns via further selective value-enhancing acquisitions. If over the course of the next twelve months major transactions are not forthcoming and the balance sheet remains strong, consideration will be given to using the existing buyback authority or considering other one-off returns of capital.

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Segmental review

Natural Resources

Natural Resources provides total life of asset services ranging from consulting, engineering and design through to asset support and decommissioning. Approximately 74 per cent of 2010 revenues were generated by asset development (capex) services, with the remainder in asset support (opex) (2009: capex 65 per cent; opex 35 per cent).

The revenue can be analysed by sector as shown below:

Activities are concentrated mainly in the upstream sector (92 per cent of 2010 revenues), with the balance being in midstream and downstream.

Overall revenue in the Natural Resources division improved 17 per cent to £1,520.5 million through a mix of organic growth, acquisitions and positive currency movements. The division saw good performance, particularly in Canadian oil sands, as work progressed on the initial development of Imperial Oil's Kearl project. Minerals & Metals also performed well on the back of improving commodities markets and North Sea activity picked up in the latter part of the year.

Improvements in EBITA (£174.7 million, up 13 per cent) were driven by revenue growth, the favourable impact of currency movements and acquisitions. The EBITA margin of 11.5 per cent was down 40 basis points, affected by the first year's trading from GRD Minproc, as well as continuing customer pricing pressures. As anticipated, GRD is now trading profitably.

Capex activities increased to 74 per cent of total divisional revenues, and opex activities represented 26 per cent (2009: capex 65 per cent; opex 35 per cent). Margins in capex and opex declined to 12.9 per cent and 7.3 per cent respectively (2009: capex 13.3 per cent; opex 8.8 per cent).

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During 2010, Natural Resources acquired three companies, all in Australia:

▪ Currie & Brown (Australia) Pty Ltd, a 200-person cost and commercial management consultancy business, focused on the oil and gas, mining, building, transport, utilities and infrastructure sectors;

▪ BurmanGriffiths, a 10-person cost estimating, cost management and planning consultancy, headquartered in Brisbane. These first two companies are now trading as Aquenta Consulting Pty Ltd; and

▪ S2V Consulting, a 100-person subsea, pipelines, technical consultancy, headquartered in Perth.

In addition, AMEC has announced two acquisitions in 2011: on 7 February AMEC agreed to acquire Zektingroup, a 200-person specialist engineering consultancy for the oil and gas and resources industries, headquartered in Melbourne; and, on 21 February, AMEC acquired qedi, a 350-person project delivery company focused on delivering completion and commissioning services for major projects in the oil and gas industry, headquartered in Aberdeen.

Contract wins in 2010 reflect increased customer spending in core energy and commodities markets, resurgence in UK North Sea activity and AMEC's work on strategic customer relationships.

North Sea:

▪ Apache: design and implementation of brownfield modifications to Forties Alpha platform

▪ ConocoPhillips: detailed engineering, procurement, hook-up and commissioning Judy platform and Jasmine facilities

▪ Bluewater: engineering and maintenance for two floating production storage and offloading vessels (FPSOs)

▪ Maersk FPSOs: FEED for modifications to the Curlew floating production storage and offloading vessel

▪ Shell: three-year contract extension for Shell ONEgas joint venture contract.

In addition, in January 2011, AMEC was awarded £140 million three-year services contract for all BG Group's North Sea upstream assets.

Mining:

▪ Crazy Horse Resources: Taysan Copper Gold project, Philippines

▪ Northgate Minerals Corporation: EPCM for Young-Davidson Gold Project, Canada

▪ Terrane Metals Corp: EPCM services for Mt. Milligan copper-gold project (JV with Fluor), Canada

▪ PanAust Limited: detailed engineering and procurement services for Ban Houayxai gold and silver project, Laos.

Other contracts:

▪ Chevron: Front end engineering and design (FEED) for Mafumeira Sul project, offshore Angola

▪ South Hook LNG Terminal Co: Three-year (engineering, design) services contract, South Wales, UK

▪ Providence Resources Plc: conceptual study for Ulysses salt cavern gas storage, offshore eastern Ireland.

The division continues to strengthen its relationship with existing customers (ExxonMobil, Shell, BP, Chevron, ConocoPhillips, BG, PotashCorp) as well as build new ones, such as with Bluewater and

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Maersk FPSOs. National Oil Companies represented approximately 7 per cent of the division's revenues in 2010.

Natural Resources order book at 31 December 2010 was up 6 per cent at £1.8 billion, with North Sea brownfield and mining activity driving the increase. Capex activity represents 42 per cent of the order book (2009: 55 per cent), with opex up at 58 per cent (2009: 45 per cent).

AMEC's oil sands activity in 2011 is expected to be below 2010 record levels, due to the phasing of work on Imperial Oil's Kearl project. This short term decline is expected to be offset by an increase in mining and North Sea activity.

Although AMEC has ceased operations in Libya and safely evacuated all expatriate staff, the impact on the group will be insignificant.

Power & Process

Power & Process provides a balanced portfolio of services including consulting, EPC (Engineering, Procurement and Construction) and asset support services across the life cycle of projects and investments, particularly in the areas of clean energy and carbon efficiency. In 2010, 40 per cent of revenues were generated by capex services with the rest in opex (2009: capex 34 per cent; opex 66 per cent). Key customers include public and private companies and utilities, principally located in UK, Europe and the Americas.

The revenue can be analysed by sector as shown below:

Over the last four years the business mix has been migrated towards higher value services and projects which provide an attractive mix of risk and return.

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The Power & Process division achieved a strong set of results in 2010, reflecting these extensive measures taken to refocus the business model and core services.

Revenue was up 12 per cent, to £884.4 million in 2010 (2009: £788.1 million) driven by a strong performance in the UK nuclear sector as well as the ramping up of a power project in the UK.

EBITA increased 36 per cent, to £75.3 million (2009: £55.4 million), benefiting from improvements in operational efficiency. The major Sellafield joint venture contract contributed £16 million in 2010 (2009: £15 million). The overall EBITA margin improved by 150 bps, to 8.5 per cent.

Contract awards in 2010 highlight AMEC's leading position in the UK nuclear sector, an increase in North American renewable activity, and in the UK an increase in activity around carbon capture and storage (CCS) and gas storage projects.

Nuclear:

▪ EDF Energy: major 11-year contract to support the Architect Engineering operation for the proposed delivery of four new EPR (European Pressurised Water Reactor) nuclear reactors at Hinkley Point and Sizewell, UK

▪ Sellafield Limited: two-year contract for the early phase (project definition, design and cost) programme of the Highly Active Effluent Facility project, UK

▪ CEZ: five-year contract for the management of radioactive waste at their nuclear power plant in Dukovany, Czech Republic.

Renewables and Bioprocess:

▪ Kruger Energy: engineering, procurement, construction contract for the Chatham Wind Power project, in Ontario, Canada

▪ EnergySource LLC: engineering services for a 49-megawatt, $350 million geothermal power generating facility at Salton Sea, California, US

▪ National Grid: FEED for carbon capture and storage (CCS) project at Longannet power station in Fife, Scotland, UK

▪ INEOS New Planet BioEnergy: delivery of the first commercial-scale advanced bio-energy facility using the INEOS bio technology, Florida, US

▪ EDF Energy: extension of Hill Top Farm gas storage facility, to include the design, installation and commissioning of the filtration and compression facilities, after-cooling, de-hydration, metering and utility equipment, UK.

The order book at 31 December was £1.05 billion (31 December 2009: £1.17 billion), down on the previous year, due to adjustments made relating to National Grid in the US, where the scope of future work on the infrastructure replacement programme has been reduced. This was offset in part by increased activity in the Renewables and Nuclear sectors. Capex activity represents 57 per cent of the order book (2009: 39 per cent), with opex at 43 per cent (2009: 61 per cent). The 'Tier One' Sellafield decommissioning contract, as an equity accounted joint venture, is not included in these figures.

Good progress continues to be made on the resolution of the 'older contracts' which, as previously referenced, do not meet the revised criteria of low-risk services with high value add.

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In 2011 continued growth is expected to result from ongoing customer focus and the growing market for AMEC's consultancy, engineering and project management services in the clean energy arena.

Earth & Environmental

Earth & Environmental is a leading international environmental and engineering consulting organisation with full service capabilities covering a wide range of disciplines, including environmental engineering and science, geotechnical engineering, water resources and engineering, engineering and surveying, and programme management.

The revenues can be analysed by sector: Government services (29 per cent of 2010 revenues), Industrial/Commercial (16 per cent), Transportation/Infrastructure (15 per cent), Water (13 per cent), Mining (9 per cent), Oil & Gas (9 per cent), Unconventional Oil & Gas (7 per cent), Nuclear (1 per cent]), Renewables/Bioprocess (1 per cent).

The division offers services to a broad range of public and private sector clients, and increasingly works with customers common to Natural Resources or Power & Process, providing a complementary offering. As the majority of the division's activities fall outside the scope of engineering and project management services provided by the other divisions, AMEC is able to provide a broader range of services across the asset life cycle than many competitor companies. This "halo" effect can lead to AMEC becoming involved in major projects at the time of the environmental impact assessment, before they even get off the ground.

Unlike AMEC's other divisions, Earth & Environmental conducts a large number of small contracts. It provides services from a branch network of around 170 offices, mainly in North America, but with an increasing presence in the growth markets of Europe and South America.

Revenue increased by 26 per cent to £592.6 million in 2010 (2009: £470.8 million), benefiting from organic growth, the Entec acquisition and positive currency movement. Government services had a strong year in 2010, as did unconventional oil and gas and mining, underpinning the organic growth. The water sector benefited from a strengthened position in the UK and revenue from water services increased by 46 per cent in the year.

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EBITA increased 50 per cent in 2010 to £54.7 million (2009: £36.5 million), driven by a strong performance in Western Canada and the acquisition in the UK. Overall EBITA margin increased 140bps to 9.2 per cent (2009: 7.8 per cent).

On 29 March 2010, the division acquired UK-based Entec Holdings plc, a 700-person environmental consultancy with a focus on water. In addition, on 2 February 2011, AMEC acquired BCI Engineers and Scientists Inc, a 200-person Florida-based consulting firm concentrated on the water and mining sectors, further consolidating its position in the fragmented North America market.

Contracts in 2010 reflect the strength of the water and federal sectors in particular:

Water:

▪ Northumbrian Water Ltd: renewal of 10-year framework agreement to provide multidisciplinary engineering, contract supervision services and associated environmental support, UK

▪ Southwestern Illinois Flood Prevention District Council: managing the redesign and repair of 64 miles of levees in three counties along the Mississippi River, Illinois, US

▪ Town of Miami: engineering services contract to design the replacement of the town's wastewater collection systems, Arizona, US

▪ Natural Resources Conservation Service (NRCS), an arm of the US Department of Agriculture: Light Detection and Ranging (LiDAR) projects involving the collection of elevation data in various watersheds across six states, US.

Federal:

▪ US Government: among those selected for the major energy sustainability agreement or blanket purchase agreements (BPAs) totalling US$500 million in services on a broad spectrum of energy conservation projects

▪ US Air Force: installation of a one-acre solar photovoltaic field, a new condenser water system, energy-efficient lighting and lighting-control system at Tyndall Air Force Base in Florida, US.

The division has also worked through a large number of smaller contracts during the year.

The peak level of activity in AMEC's federal business is expected to reduce in 2011. This is expected to be offset by increased activity in the mining, oil and gas and water sectors.

Investments and other activities

This principally comprises the Incheon Bridge PPP project in Korea, now in the operational phase, the Lancashire Waste PPP project (under construction) and the run-down of AMEC's non-core North American construction activities. Revenue in this division declined by 46 per cent to £7.4 million (2009: £13.7 million) as the construction projects in both Korea and North America were substantially completed in 2009. EBITA increased to £3.0 million (2009: £0.2 million) as a result of settlements on non-core activities.

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Board changes

On 11 November 2010, Jock Green-Armytage, AMEC's chairman, announced his intention to retire at the AGM on 5 May 2011. The search for his successor is well underway.

Peter Byrom retired from the board at the end of his appointment term as non-executive director on 9 February 2011.

Neil Carson and Colin Day joined the board as non-executive directors on 31 August and 14 October 2010 respectively.

Group Management Team changes

Eleanor Evans has been appointed as General Counsel and Company Secretary and will join AMEC on 15 March 2011. She is currently Chief Legal Officer and Company Secretary at Cobham PLC. Keith Bradford, Group HR Director, is leaving AMEC for family reasons and will be replaced from 1 May 2011 by William Serle, currently AMEC's HR Operations Director.

Financial review

Geographical analysis

Some 71 per cent of 2010 revenues (2009: 69 per cent) were generated outside the UK, with the group's largest overseas market being Canada, driven by Oil Sands and Minerals & Mining.

Administrative expenses

Administrative expenses increased by £14.5 million to £200.3 million (2009: £185.8 million) largely as a result of currency movements and acquisitions.

Net financing income

In 2010, the average interest rate received was approximately 0.9 per cent compared to one per cent in 2009. The net financing income for the year increased by £0.6 million to £7.9 million (2009: £7.3 million).

Changes to reporting allocations

From 2011 the allocation of certain items will be changed:

▪ The UK Asset Support business will be transferred from Power & Process to Natural Resources.

▪ The net interest on pension assets and liabilities, and the net interest within equity accounted JVs will be transferred from EBITA to net financing income.

These are reallocations only and there will be no overall impact to profit before tax or earnings. See note 14 for further details.

Taxation

Continuing operations

The group's effective tax rate in 2010 for the continuing businesses (including tax attributable to joint venture interests) before exceptional items and excluding intangible amortisation was 25.9 per cent

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(2009: 27.0 per cent). The reduction principally reflects decreases in statutory tax rates, the agreement of historical items with various tax authorities and more active management.

The tax rate in 2011 is expected to reduce further due to decreases in statutory tax rates and from further management and planning.

A tax credit of £36.2 million (2009: credit of £1.5 million) relates to total exceptional income of £10.7 million (2009: £8.9 million) and to the release of a provision of £35.9 million resulting from the disposal of the UK Wind Developments business in 2008.

Deferred tax

At 31 December 2010, the group had deferred tax assets of £59.3 million (2009: net assets of £70.0 million) arising primarily from short-term timing differences relating to provisions, property, plant and equipment and tax losses, offset by liabilities in respect of intangible assets.

Financial position and net cash

The group remains in an exceptionally strong financial position, with net cash as at 31 December 2010 of £740.1 million (2009: £742.7 million).

Cash generated from operations in 2010 was £171.8 million (2009: £242.3 million). After adjusting for exceptional items and discontinued operations, legacy settlements, pension payments in excess of amounts recognised in the income statement and dividends received from joint ventures, operating cash flow was £227 million (2009: £266 million).

Intangible amortisation and impairment of goodwill

Intangible amortisation relates to capitalised software and intangible assets acquired as part of the group's expansion programme. The 2010 charge of £25.0 million is £9.3 million higher than 2009 with the increase due to the acquisitions in the year and a full year impact of acquisitions made during 2009.

In line with IAS 36 'Impairment of assets', annual impairment reviews have been performed on the goodwill carried on the balance sheet. There was no impairment charge in 2010 (2009: £1.3 million).

Exceptional items

Divestments

One small business was divested during the first half of 2010. In addition, there were various adjustments to existing provisions in respect of prior year disposals resulting in an aggregate post-tax exceptional gain of £49.4 million (2009: £15.5 million).

Legacy issues

No new significant contingent liabilities were added in 2010.

Provisions currently held for future costs of litigation total £50.3 million (2009: £53.8 million).

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Balance sheet highlights

Key movements in the balance sheet are discussed below:

Property, plant and equipment

The reduction in the net book value of fixed assets as at 31 December 2010 to £31.9 million (2009: £44.1 million) reflects inter alia additions of £6.4 million, acquisitions of £2.6 million, depreciation provided during the year of £12.8 million and disposals of £10.6 million.

Intangible assets

The net book value of intangible assets as at 31 December 2010 was £621.3 million (2009: £507.4 million) comprising goodwill £557.1 million, software £11.9 million and other intangibles £52.3 million.

The increase in goodwill relates to the acquisitions in the year including Entec and Aquenta (formerly Currie & Brown Australia Pty Limited), which generated goodwill of £59.1 million. Other intangible assets include the value of customer relationships, brand names/trademarks, non-compete agreements and order backlogs of acquired businesses. Other intangible assets of £29.6 million arose on acquisitions during the year, including £26.5 million in respect of Entec. This was offset by amortisation of £22.4 million. There were additions of £7.3 million to software offset by amortisation of £2.6 million.

Working capital

Days' sales in inventory/WIP and receivables are as follows:

The increase in days' sales in inventory wip and receivables reflects the increase in activity during the second half of the year compared to the same period in 2009.

Derivative financial instruments

As at 31 December 2010, there were derivative financial instruments with a net liability of £36.6 million (2009: net liability £29.7 million) on the balance sheet. This net liability represents the fair value of foreign exchange contracts used to hedge the cash flows of foreign currency contracts and cross currency instruments used to hedge the net investment in overseas subsidiaries.

Distributable reserves

As at 31 December 2010, distributable reserves of AMEC plc stood at £696.0 million (2009: £729.9 million), a reduction of £33.9 million during the year.

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A dividend of £19.3 million received from a subsidiary company in a prior period is not considered to be distributable.

Pensions

The IAS 19 surplus of the principal UK pension schemes at the end of 2010 of £63.0 million was higher than in 2009 (£26.8 million) reflecting principally gains in the asset values during the year.

For the main UK pension plans, revised mortality assumptions, which incorporate an allowance for additional longevity improvements in future, were adopted for IAS 19 purposes in 2008. The revised assumptions were chosen with regard to the latest available tables, adjusted where appropriate to reflect the experience of the schemes' membership. The tables adopted are part of the PA00 series of tables, taking into account each member's year of birth adjusted by an age rating of +1 year, and allowing for 'medium cohort' with an underpin of one per cent per annum improvements in longevity. For a male/female aged 65 in 2010, these tables show a life expectancy of 21.4/23.7 years. For a male/female aged 45 in 2010, the tables show a life expectancy from age 65 of 23.3/25.5 years.

In association with the Trustees of the Schemes, AMEC will continue to monitor scheme mortality experience and will revise assumptions as appropriate.

Contributions of £22.2 million were paid to the company's defined benefit schemes during the year (2009: £17.8 million). This included special contributions agreed with the Trustees of £5.1 million (2009: £5.1 million).

Provisions

Provisions held at 31 December 2010 were £187.1 million (31 December 2009: £202.0 million). During 2010, £17.0 million of the brought forward provisions were utilised. As part of the ongoing review of the potential liabilities, £14.4 million of provisions were released as they were no longer required but an additional £13.1 million of provisions were created. Provisions are analysed as follows:

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CONSOLIDATED INCOME STATEMENT

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CONSOLIDATED INCOME STATEMENT

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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

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CONSOLIDATED BALANCE SHEET

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY