Full-year results 2012

AMEC plc 2012 results

Good performance continues in 2012

Highlights

Revenue £4,158 million, up 28 per cent on 2011

- Underlying6 revenue up 21 per cent; excluding £320 million of incremental procurement, up 12 per cent

EBITA1 £331 million, up 11 per cent

Margin2 8.0 per cent (2011: 9.2 per cent)

- Excluding impact of incremental procurement, 8.6 per cent

Diluted EPS from continuing operations4 80.4 pence, up 14 per cent

Operating cash flow5 £309 million, up 16 per cent

Order intake strong and forward visibility good

- Order book £3.6 billion (31 December 2011: £3.7 billion)

Invested £159 million in acquisitions in 2012; pipeline remains good

Completed £400 million share buyback on 8 February 2013

Dividend per share up 20 per cent, to 36.5 pence

Chief Executive Samir Brikho said:

"AMEC continued to make good progress in 2012, with earnings per share4 up by 14 per cent and strong operating cash flow. Oil & gas revenue was up strongly, especially in the UK North Sea and in Gulf of Mexico, with good contract wins too in the Middle East.

"Acquisitions strengthened our service offering in nuclear and broadened our footprint in Brazil and Australia. The pipeline of future opportunities remains good. Our £400 million share buyback was completed on 8 February 2013.

"We continue to expect good revenue growth in the conventional oil & gas market in 2013, offsetting softening in the oil sands and mining markets. We remain on track to achieve our targeted EPS of greater than 100 pence ahead of 2015. As a mark of our continued confidence in the outlook and reflecting our strong cash generation, the board is recommending a 20 per cent increase in the dividend for the year."

Results presentation and live webcast: AMEC will host a presentation on the results for analysts and investors at 8.45 am 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 :http://sites.merchantcantos.com/companies/a/amec/full-year-results-2012/

Next event: Interim Management Statement and Annual General Meeting, both on 4 April 2013.

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

Enquiries to:

AMEC plc: + 44 (0)20 7429 7500

Samir Brikho, Chief Executive

Ian McHoul, Chief Financial Officer

Sue Scholes, Director of Communications

Nicola-Jane Brooks, Head of Investor Relations

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

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Financial highlights

Notes:

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

2. EBITA as defined above as a percentage of revenue

3. EBITA, as defined above, plus net financing income (including joint ventures) of £5 million (2011: £12 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, the difference between pension payments and amounts recognised in the income statement and certain foreign exchange movements but including dividends received from joint ventures

6. References in this document to 'underlying' refer to growth adjusted for the impact of currency movements and acquisitions. 'Underlying excluding incremental procurement' and 'underlying ex. proc.' is also adjusted to remove the impact of incremental procurement.

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.

Segmental analysis

Segmental analysis is provided for the group's activities in the Natural Resources, Power & Process and Environment & Infrastructure divisions, as well as fornon-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 £33 million (2011: £34 million) and pre-tax exceptional costs of £24 million (2011: £6 million).

From 1 January 2013, reporting will reflect the new geographic structure of Americas, Europe and Growth Regions together with Investment Services. For information, and following the usual divisional commentary, 2012 results are also shown in this new format. Prior year comparatives for 2010 and 2011 can be found on page 17 of this document.

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.

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

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.

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2012 results overview

Revenue for the year increased 28 per cent to £4,158 million (2011: £3,261 million). Underlying revenue, excluding incremental procurement, increased by 12 per cent, driven by a strong performance within the Natural Resources division.

EBITA increased 11 per cent to £331 million (2011: £299 million) with margins at 8.0 per cent (2011: 9.2 per cent).

Adjusted profit before tax of £336 million was 8 per cent ahead of the previous year (2011: £311 million) driven by volume growth and acquisitions. After joint venture tax of £5 million (2011: £7 million), amortisation of £44 million (2011: £39 million) and exceptional losses of £24 million (2011: £6 million), profit before tax was £263 million (2011: £259 million). The tax charge for the year, including tax on amortisation and exceptional items, was £51 million (2011: £52 million) resulting in a total profit for the year from continuing operations of £212 million (2011: £207 million).

Adjusted diluted earnings per share from continuing operations were 80.4 pence (2011: 70.5 pence), an increase of 14 per cent. Diluted earnings per share were 67.3 pence (2011: 69.3 pence) reflecting the impact of the exceptional charges, increased amortisation and a lower contribution from discontinued operations.

Operating cash flowfor the period was £309 million (2011: £267 million), up £42 million from last year, reflecting EBITA growth and the continued focus on cash management. Cash conversion was strong at 93 per cent (2011: 89 per cent).

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Dividend

The board is recommending a final dividend of 24.8 pence per share, which, together with the interim dividend of 11.7 pence, results in a total dividend of 36.5 pence per share (2011: 30.5 pence), an increase of 20 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 1 July 2013 to shareholders on the register at the close of business on 31 May 2013.

Share buyback programme

As at 31 December 2012, 33 million shares at a cost of £358 million had been purchased under the £400 million share buyback programme announced in February 2012. The group completed the buyback programme on 8 February 2013 and in total 37.4 million shares were purchased at a total cost of £403 million. The average cost was £10.70 per share.

Acquisitions and joint ventures

·; The group invested £159 million in three acquisitions in 2012 and integration is progressing well. The largest was Serco's 600-person nuclear business, Energy Safety and Risk Consultants (ESRC), based in the UK, which was acquired in June 2012 with the acquisition cleared by the Office of Fair Trading in January 2013. The second was Unidel, a 260-person energy, resources and infrastructure engineering and consultancy business in Australia; and the group also acquired a 50 per cent stake in Kromav Engenharia Ltd, a 200-person privately owned Brazilian offshore oil and gas and marine engineering company.

·; In October, AMEC formed a joint venture with Samsung Heavy Industries and Samsung Engineering to carry out the design engineering for fixed and floating offshore platforms, FPSOs and subsea pipelines for Samsung's future offshore oil and gas projects. In June the group signed a collaboration agreement with Aibel, one of the largest service companies in Norway, to jointly deliver projects for the oil and gas industry in the Norwegian Continental Shelf.

Average number of employees

The average number of employees was up 10 per cent in 2012, to 28,405. This reflects increased activity levels, particularly in the UK North Sea and the Americas, as well as the impact of acquisitions.

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Organisation restructure

AMEC announced a new geographic organisation structure in October 2012. Simon Naylor, John Pearson and Hisham Mahmoud were promoted to the new roles of Group Presidents of Americas, Europe and Growth Regions respectively and the COO role was removed. This simplified structure is designed to enable greater collaboration with faster, more efficient decision-making. The goal is to maximise growth opportunities in each of AMEC's four markets (oil & gas, mining, clean energy and environment & infrastructure) across the three geographies. Each geography has significant potential, though the greatest opportunity will come with the creation of sustainable, localised positions in Growth Regions.

Segmental analysis is provided for the group's divisions as they existed in 2012: Natural Resources, Power & Process and Environment & Infrastructure, as well as for non-core Investments and other activities.

From 1 January 2013, as required by accounting rules, the group will report its results under the new geographic structure, consistent with the way in which the business is managed. In order to provide context to the outlook and underlying trends in the business, AMEC's 2012 results are also presented under this new geographic structure. See pages 13 to 17 for further detail.

Outlook

The priority remains to grow the business, across all four markets and all three geographies, by continuing to deliver for customers while investing in AMEC's people.

In 2013, AMEC expects low-to-mid single digit revenue growth for the group on an underlying basis, excluding procurement. A strong conventional oil & gas performance across the board and more modest growth in the clean energy and environment & infrastructure markets in the Americas are expected to offset reduced oil sands revenue and softening demand in the mining market, and in Australia more generally. The full-year impact of acquisitions made in 2012 will further boost revenue growth. Procurement activity in 2013 is expected to be £200 million lower than in 2012.

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Group margins are expected to improve gradually at the headline level in 2013, taking into account the reduced procurement. Cost efficiencies from the reorganisation are expected to come through during the year and offset a dilutive mix effect from lower oil sands activity.

The group remains on track to achieve earnings per share of greater than 100 pence ahead of 2015.

Overall a further year of good progress is expected. Further details on outlook by geography can be found on pages 14, 16 and 17.

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Segmental review - by division

Natural Resources

The Natural Resources division included the following AMEC activities: engineering, project management and asset support services, particularly in upstream oil and gas, unconventional oil and mining. It had particular expertise in large and complex projects in remote regions and in extending the life of assets.

Approximately 68 per cent of 2012 revenue was generated by asset development (capex) activities, with the remainder in asset support (opex) (2011: capex 74 per cent; opex 26 per cent).

The revenue can be analysed by market and sectors as shown below:

Oil & gas activities were concentrated mainly in the upstream segment (90 per cent of 2012 revenues), with the balance in midstream and downstream.

Revenue in the Natural Resources division improved 39 per cent to £2,416 million with good growth in both oil & gas and mining. A strong performance in conventional oil & gas in the UK North Sea and the Gulf of Mexico and in mining throughout the Americas was further boosted by incremental procurement (£320 million) on three key projects. Excluding incremental procurement, underlying growth was 20 per cent.

EBITA (£192 million) was in line with 2011, and the EBITA margin was 8.0 per cent, down 300 basis points. Incremental procurement contributed to this decline as did the shift in work mix to the more mature regions of the UK North Sea and Gulf of Mexico, as previously flagged. In addition, and as discussed in August, there were delays to the Kearl initial development in the oil sands, which resulted in first half profits being lower than anticipated. As a result, the group chose to adopt a more cautious approach to profit-recognition in the second half. Finally, market

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softening in Australia had an impact on margin that was accentuated by comparison with 2011, which saw successful claim settlements in the GRD Minproc business and a number of positive project close-outs.

Contract wins in 2012reflected continued customer spending in core energy and commodity markets. They included:

Oil & Gas

Mining

Other on-going projects included designing and delivering components of the Marine Well Containment Company's expanded containment system; detailed engineering and procurement

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for ConocoPhillips' existing Judy platform and the hook-up and commissioning of the new Jasmine facilities in the North Sea; a long-term project management contract for KOC in Kuwait; and on-going oil sands work for Imperial Oil, Syncrude, Teck, Suncor and Connacher among others. 

Order intake improved with oil & gas activity driving the increase. The order book at 31 December 2012 was up 4 per cent at £2.3 billion.

Power & Process

The Power & Process division included the following AMEC activities: engineering, project management and asset support services in the clean energy market. It was principally based in the UK and Americas. It had a leading position in the nuclear sector, particularly in the UK, where its services were well-balanced across the asset lifecycle.

Approximately half of the division's revenues were generated by capex services with the remainder in asset support (opex).

The revenue can be analysed by market and sectors as shown below:

Revenue increased 15 per cent, to £973 million in 2012 (2011: £849 million). This reflected the continued refocusing of the business, with a strong performance in the renewable/bioprocess sector in the Americas in particular and a six month impact of the ESRC acquisition. This was

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offset by a decline in conventional power, driven by the phasing down of the West Burton combined-cycle gas turbine power station project.

EBITA was up 8 per cent, to £78 million (2011: £72 million), which reflected revenue growth and the ESRC acquisition, with the Sellafield decommissioning joint venture contributing £15 million (2011: £20 million).

The overall EBITA margin was down 50 basis points to 8.0 per cent. The margin decline was largely the result of a reduced contribution from the Sellafield joint venture, where results, though in line with original expectations, were below 2011.

Contract awards in 2012 reflected the focus on the clean energy market, particularly nuclear, where AMEC has benefited from an increase in safety engineering, environmental services and waste management work.

In the North American clean energy market, good progress was made on the Sapphire Energy biofuel project in the US, and in Canada, the 99 MW Erieau wind project continued to advance. Work also continued on a number of other clean energy projects.

The order book at 31 December 2012 was £0.8 billion (2011: £1.0 billion). The decline reflected a reduction in conventional power and transmission & distribution activity, consistent with the shift to cleaner energy sectors. The tier one Sellafield decommissioning contract, as it is an equity accounted joint venture, was not included in these figures.

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

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Environment & Infrastructure

The Environment & Infrastructure division included AMEC's international environmental and engineering consulting activities. It worked across all AMEC's markets and provided a complementary offering to many customers common to the Natural Resources or Power & Process divisions.

The division provided services from approximately 210 offices, mainly in North America, but with an increasing presence in Europe, South America, the Middle East and Australasia.

Revenues can be analysed by market and sector as follows:

Revenue increased by 14 per cent to £820 million in 2012 (2011: £722 million), driven by acquisitions; MACTEC in the US in June 2011 and Unidel in Australia in May 2012. Underlying revenue was down, reflecting a good performance in the oil & gas, mining and clean energy markets but slower performance in other sectors, particularly government services. As can be seen from the tables above, some 32 per cent of revenues in this division came from markets common to Natural Resources and Power & Process (2011: 27 per cent).

EBITA increased 31 per cent in 2012 to £87 million (2011: £66 million). The sector mix improved towards the higher margin energy markets, there were overhead synergies and pension benefits resulting from the integration of MACTEC, and increased Canadian government incentives were

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received for research and development. Overall EBITA margin increased to 10.6 per cent (2011: 9.2 per cent).

The order book was up nine per cent at £0.5 billion, benefiting from contract awards during the year. The average contract size in Environment & Infrastructure was much lower than the other divisions at approximately $100,000. Some recent contract awards included:

Investment and other activities

This principally comprised the Incheon Bridge PPP project in Korea, now in operational phase, the group's insurance captive, and AMEC's residual UK wind development activities. Revenue was £9 million (2011: £7 million) with EBITA £7 million (2011: £3 million).

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Segmental review - by geography

AMEC announced a new geographic organisation structure in October 2012. The simplified structure has a greater focus on collaboration and fostering sustainable growth. The objective is to maximise growth opportunities in each of the four markets, providing consistent services across each of the geographies. From 1 January 2013 and in accordance with accounting rules, reporting will be changed to reflect the management of the business.

A detailed review of 2012 performance by geography is provided below.

Average number of employees

The average number of employees was up 10 per cent in 2012, to 28,405 and the split by geography is shown below.

Americas

Americas generated 60 per cent of group revenue in 2012. The portfolio of activities is well balanced across all four markets as shown below:

A detailed overview of the Americas business is provided in the 2012 full-year results presentation (14 February 2013), available on www.amec.com.

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Revenue in Americas improved 38 per cent to £2.5 billion, with good growth across all markets, boosted by incremental procurement. Excluding this incremental procurement (£320 million), underlying growth was 14 per cent.

EBITA was up 16 per cent, to £233 million (2011: £200 million). The EBITA margin was 9.3 per cent, down 180 basis points from 2011, largely as the result of the increased procurement activities on three Americas' projects. It was also impacted by a decline in profits from the Kearl project, as discussed on page 7. Excluding incremental procurement, margins were similar to last year at 10.7 per cent.

Contract wins in 2012reflect continued customer spending in core energy and commodity markets. They included: BP Mad Dog in the Gulf of Mexico and the Brockville solar plant in Canada among others, as highlighted on pages 8 and 10.

Order book was down 15 per cent at £1.3 billion (2011: £1.5 billion), reflecting softer conditions in some markets and a reduction in incremental procurement.

Americas outlook

Looking ahead to 2013, and on an underlying basis excluding procurement, revenue growth is expected to be in the low-to-mid single digit range, with growth in conventional oil & gas, clean energy and environment & infrastructure offset by a significant reduction in oil sands. Mining, whilst still robust, is expected to be relatively stable, excluding incremental procurement. Overall, procurement in Americas is expected to be £200 million lower than in 2012.

Headline margins are expected to improve in 2013 as procurement reduces. The negative impact from the shift in business mix away from oil sands will be offset in part by cost efficiencies from the organisational restructure.

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Europe

Europe generated 27 per cent of group revenue in 2012, largely from conventional oil and gas and nuclear.

A detailed overview of the Europe business is provided in the 2012 full-year results presentation (14 February 2013), available on www.amec.com.

Note: Incremental procurement has no impact on Europe business

Revenue in Europe improved 12 per cent to £1,150 million through a mix of organic growth and acquisition. The oil and gas market was the primary driver, boosted by a six-month impact of the ESRC acquisition in clean energy.

EBITA was up 10 per cent, to £91 million (2011: £83 million) and the EBITA margin was 7.9 per cent, down 20 basis points from 2011. The margin decline is largely the result of a reduced contribution from the Sellafield joint venture as discussed on page 10, offset by a stronger oil & gas mix.

Contract wins in 2012reflect continued customer investment in the UK North Sea and the clean energy market, where AMEC has benefited from an increase in nuclear safety engineering, environmental services and waste management work (see pages 8, 10 and 12 for 2012 contract awards).

The order book was stable at £1.6 billion, reflecting the decline in conventional power and transmission & distribution in the UK, offset by a strong position in oil & gas.

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Europe outlook

Underlying revenue growth in 2013 is expected in the low-to-mid single digit range, driven by oil & gas in the North Sea, while in clean energy, growth in the nuclear sector is expected to offset a reduction in conventional power.

Margins are expected to improve in 2013, as result of the shift in business mix and efficiencies from the integration of operations.

Growth Regions

Growth Regions generated 13 per cent of group revenue in 2012, driven by conventional oil and gas and mining.

A detailed overview of the Growth Regions business is provided in the 2012 full-year results presentation (14 February 2013), available on www.amec.com.

Note: Incremental procurement has no impact on Growth Regions business

Revenue in Growth Regions improved 20 per cent to £531 million primarily driven by organic growth in the oil & gas and mining markets and boosted by the Unidel acquisition.

EBITA was down 30 per cent, to £32 million (2011: £46 million) and the EBITA margin was 6.1 per cent, down 420 basis points from 2011. The margin decline is largely the result of general market softening in Australia in 2012, which was only partly offset by contract wins in the Middle East, and which was accentuated by a particularly strong year in 2011, on the back of successful claim settlements arising in the GRD Minproc business and a number of positive project close-outs.

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Contract wins in 2012reflect customer investment in the oil & gas and mining markets (see pages 9 and 12 for 2012 contract awards).

Order book was £0.8 billion in 2012 (2011: £0.6 billion), benefitting from a strong oil & gas performance in the Middle East including the award of the KNPC PMC contract.

Growth Regions outlook

Looking ahead, overall revenue in 2013 is expected to be stable, with good performance in most regions, but significant weakness in Australia where demand has softened.

Margins are expected to improve gradually as a result of efficiencies from the integration of operations and as the business matures.

Restatement of historic results

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Financial review

Geographical analysis

The group's largest country of operation was Canada with 30 per cent of revenue (2011: 28 per cent), driven by growth across all markets and increased procurement activity. The UK was the group's largest revenue generating country in 2011.

Administrative expenses

Administrative expenses increased by £16 million to £225 million (2011: £209 million) principally as a result of acquisitions and higher share based payment charges.

Net financing income

Net financing income of £11 million was £5 million lower than last year (2011: £16 million) and included bank interest of £2 million (2011: £4 million) and net interest on pensions assets and liabilities of £9 million (2011: £9 million). 2011 also included foreign exchange gains and other items totaling £3 million.

The average interest rate received was approximately 0.6 per cent compared with 0.8 per cent in 2011.

In addition, AMEC's share of interest payable of equity accounted joint ventures was £6 million (2011: £4 million).

Taxation

Continuing operations

The group's effective tax rate in 2012 for the continuing businesses (including tax attributable to joint venture interests) before exceptional items and excluding intangible amortisation was 23.0 per cent (2011: 24.1 per cent). The reduction principally reflects decreases in statutory tax rates, the benefit of previously unrecognised tax losses, and the agreement of historical items with various tax authorities.

The tax rate in 2013 and beyond is expected to be in the mid-20s.

Deferred tax

At 31 December 2012, the group had net deferred tax assets of £33 million (2011: £72 million) arising from short-term timing differences relating to provisions, property, plant and equipment, and tax losses, 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 2012 of £99 million (2011: £521 million).

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Cash generated from operations in 2012 was £271 million (2011: £209 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 £309 million (2011: £267 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 2012 charge of £44 million is £5 million higher than the prior year (2011: £39 million) with the increase due to the acquisitions in the year and the full-year impact of acquisitions in 2011. 2011 also included a £2 million goodwill impairment charge.

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 2012 (2011: £2 million).

Exceptional items

Total pre-tax exceptional losses of £18 million (2011: £8 million) include:

▪ a loss on business disposals and closures of £11 million arising from adjustments to existing provisions made in respect of prior year disposals and closures

▪ other exceptional costs of £7 million which include the transaction costs of acquisitions made in the period and certain deferred compensation costs on prior year acquisitions, along with the costs of funding a joint venture which was part of a recent acquisition and restructuring costs associated with the management reorganisation into geographical business units. These costs have been offset by the recognition, within discontinued operations,of an insurance receivable following the Supreme Court judgement on mesothelioma liability, a provision against which was established a number of years ago.

In aggregate, there was a post-tax exceptional charge of £10 million (2011: gain of £25 million).

Legacy issues

No new significant contingent liabilities were added in 2012. Provisions currently held for future costs of litigation total £40 million (2011: £54 million).

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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 2012 was £969 million (2011: £848 million) comprising goodwill £791 million, software £32 million, customer relationships £130 million and other acquired intangible assets £16 million.

The increase in goodwill of £66 million primarily related to the acquisitions in the year of Unidel and ESRC. Other acquired intangible assets included the value of brand names and trademarks, non-compete agreements and order backlogs of acquired businesses.

Derivative financial instruments

As at 31 December 2012, there were derivative financial instruments with a net liability of £3 million (2011: £14 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 2012, distributable reserves of AMEC plc stood at £620 million (2011: £820 million).

During the year, 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.

Pensions

The IAS 19 surplus of the principal UK pension schemes at the end of 2012 of £86 million increased compared with 2011 (£32 million) reflecting reductions in both the discount rate and price inflation, along with higher than expected asset returns.

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 will remain open to future accrual for existing members.

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There are a number of smaller schemes which are in a deficit position. The combined deficit as at 31 December 2012 was £93 million (2011: £81 million) with the increase in the year being due to actuarial losses. 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 £30 million were paid to the company's defined benefit schemes during the year (2011: £28 million). This included special contributions agreed with the trustees of £5 million (2011: £5 million).

Provisions

Provisions held at 31 December 2012 were £171 million (31 December 2011: £169 million). During 2012, £22 million of the brought forward provisions were utilised. As part of the ongoing review of the potential liabilities, £5 million of provisions were released as they were no longer required but additional provisions 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 the expected cost of funding a joint venture. This includes £11 million in respect of a joint venture that was part of a recent acquisition, which has been charged as an exceptional item.

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