16th May 2007 07:01
AMEC PLC16 May 2007 AMEC plc 16 May 2007 AGM STATEMENTTrading strong; STEP Change and non-core divestments progressing well • Trading in core businesses strong - offset by strength of Sterling • STEP Change ahead of schedule and on track to deliver margin targets • The board remains confident that progress in 2007 will be in line with its expectations at the time of the preliminary results in March • Average net cash in 2007 expected to be around £300 million - up £50 million on previous expectations • Built Environment disposal process progressing well; trading as expected • Sale of three specialist businesses realises £25 million andexceptional gain of about £10 million Chief executive, Samir Brikho, said:"I am delighted to report that delivery of our portfolio restructuring andmargin targets remains on track. Our continuing businesses are trading stronglyand upon completion of the programme of non-core divestments, AMEC will be wellpositioned to take advantage of investment opportunities." AMEC, the international project management and services company, is holding itsannual general meeting at 10.30am today in London, UK. At the meeting, chiefexecutive Samir Brikho will update shareholders on the strategic restructuringof the group and will confirm that overall trading remains in line with theboard's earlier expectations. Highlights of his address to shareholders are setout below. AMEC will make a further trading statement before entering the closed periodahead of the company's interim results for the six months ending 30 June 2007,which will be announced on Thursday 6 September 2007. A telephone conference call for analysts and investors will be held at 8.30amtoday. STRATEGIC RESTRUCTURING STEP ChangeThe STEP Change programme is ahead of schedule with 75% of actions completed.Completion of all action steps has been brought forward to 31 October 2007. In March 2007, AMEC announced that one-off STEP Change costs would exceedsavings in the first half of 2007. However, savings are now expected at least toequal one-off costs in the full year, with recurring net benefits of £35 millionin the continuing businesses expected from 2008 onwards. The board remains confident that margin targets in the continuing Energy andProcess businesses of 6% in 2008 and 8% in 2010 will be achieved. Divestment of non-core businessesIn December 2006, AMEC announced that its non-core businesses will be divestedas quickly as possible during 2007 consistent with optimising value. Thisprogramme of divestments is progressing well. Information Memoranda for the four principal non-core businesses in Building andCivil Engineering; Building and Facilities Services; Property Developments andPPP were despatched in March 2007, as promised. First round bids have now beenreceived for each of these businesses, both individually and as packages. Thefirst round has been encouraging and the process has now proceeded, on schedule,to the second stage. The following specialist activities have been sold: •AMEC SPIE Rail - announced in February 2007 •Buchan Concrete Solutions - announced in April 2007 •Dynamic Structures - announced in April 2007 Aggregate proceeds from these disposals total £25 million, resulting in anexceptional gain of about £10 million. Disposal of a pipelines construction business is expected before the half year. Basis of reporting and discontinued activities 2007Non-core businesses in Built Environment, together with pipeline constructionactivities, will be treated as discontinued operations in the 2007 accounts. Areturn to profitability in Built Environment continues to be expected during2007. Pipeline construction has reported a small loss in the early months due todelays on a major project. Legacy issuesAMEC continues to proceed with its strategy of settlement where reasonable to doso. Progress is being made and the board is confident that positive developmentswill be achieved over the next few months. Share buyback programmeTo date, 2.85 million shares have been bought in the market to be held intreasury for a total cost of nearly £15 million. The board intends that further buybacks should be made during the course of2007. CURRENT TRADING Natural ResourcesEnd markets in each of the Oil and Gas Services, Oil Sands and Mining and Metalsbusinesses remain strong. In Oil and Gas Services, the North Sea and Americas operations have had a goodstart to the year, performing in line with expectations, whilst frontier regionsare ahead of plan for the year to date. The Oil Sands market remains buoyant, with all areas of this business seeinggood growth. The Mining and Metals business remains strong in North America and, as expected,levels of activity are increasing in South America following recent contractawards in the region. The Natural Resources order book stands at £1.0 billion, in line with theposition at December 2006. Power and ProcessEnd markets in the Industrial businesses on both sides of the Atlantic remainstrong. Year to date performance in the Industrial businesses has exceeded expectations.As previously disclosed, the business now has a gross margin target of 8% on newcontracts. The Nuclear business continues to grow, being driven by the refurbishmentproject at Bruce Power in Canada. The business continues to invest in UK marketopportunities, but the pace of contract awards remains uncertain. The Power and Process order book stands at £1.4 billion, in line with theposition for the continuing businesses at December 2006. Earth and EnvironmentalEnd markets remain generally good and the business has made a strong start tothe year. ConstructionUK markets are generally good in Building and Facilities Services and UKBuilding and Civil Engineering businesses. The Building and Facilities Services business has had a good start to the year. Execution of major projects in UK Building and Civil Engineering has been inline with expectations. The business is focused on improving the quality of work and decreasing risk,and remains on track to deliver a small profit in 2007. InvestmentsThe Property Developments business has made a satisfactory start to the year. Operational PPP concessions are performing as expected, with construction ofcurrent projects progressing as scheduled. Financial close is expected during2007 on the PPP contract to deliver six new secondary schools for EastDunbartonshire Council. Average net cashAverage net cash for 2007 (excluding proceeds from sale of the Built Environmentactivities) is expected to be approximately £300 million, £50 million above theboard's earlier expectations at the time of the preliminary results in March2007. OUTLOOKAMEC's end markets remain strong and each of the core Energy and Processbusinesses expects to make good progress in 2007. Performance is expected to betempered by strength of Sterling. The board remains confident that AMEC will deliver performance in 2007 in linewith its expectations at the time of the preliminary results in March. Enquiries to:AMEC plc: + 44 (0)20 7634 0000 Analysts and investors:Samir Brikho, Chief ExecutiveStuart Siddall, Finance DirectorNeil Jamieson, Director of Investor Relations Media:Charles Reynolds, Head of Media Relations This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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