6th Sep 2007 07:02
AMEC PLC06 September 2007 AMEC plc Interim Results 2007 • Pre-tax profit* up 127% to £48 million (H1 2006: £21 million) • Record performance in all three core divisions • Overall expectations for 2007 pre-tax profit* increased by £5 million • Interim dividend increased 10% to 4.6p per share • Divestment of non-core businesses effectively complete; expected FY 2007 net post-tax gain not less than £210 million • Expected net cash post divestments c.£600 million as at 31 December 2007** • STEP Change programme completed ahead of schedule; 2008 benefit up from £35 million to at least £40 million AMEC Chief Executive, Samir Brikho, said: "These are strong results and demonstrate that we are delivering sustainableimprovements in performance. We have completed the STEP Change programme aheadof schedule and 2008 benefits of at least £40 million are greater than ouroriginal commitment. The divestment programme is effectively complete, we aremaking good progress with legacy issues and our balance sheet is strong. "All of our end markets are buoyant and I am confident we will deliver ourmargin targets of six per cent in 2008 and eight per cent in 2010. "AMEC is now well prepared for the next phase of its development and has anexciting future as a focused supplier of high value consultancy, engineering andproject management services to clients in the energy, power and process industrysectors." * Profit for continuing operations before intangible amortisation of £1.2million (2006: £2.8 million) and pre-tax exceptional profits of £19.9 million(2006: charges of £43.1 million). ** Assuming divestments complete as expected and before further share buybacks. Page 1 Financial highlights: Six months ended 30 June 2007 2006 £ million £ million changeContinuing operations: Revenue 1,152.9 1,009.3 +14% Profit before intangible amortisation, exceptional items* and income tax 48.2 21.2 +127% Profit /(loss) before income tax 66.9 (24.7) nm Profit from discontinued operations beforeexceptional items 5.0 11.3 nm Profit/(loss) from discontinued operations 1.4 (14.4) nm Diluted earnings per share from continuingoperations before intangible amortisationand exceptional items 10.2p 4.5p +127% Diluted earnings per share 15.1p (12.6)p nm Interim dividend per share 4.6p 4.2p +10% nm not meaningful * Intangible amortisation of £1.2 million (2006: £2.8 million); pre-taxexceptional profits of £19.9 million (2006: charges of £43.1 million). Any forward looking statements made in this document represent management's bestjudgement as to what may occur in the future. However, the group's actualresults for the current and future fiscal periods and corporate developmentswill depend on a number of economic, competitive and other factors, some ofwhich will be outside the control of the group. Such factors could cause thegroup's actual results for future periods to differ materially from thoseexpressed in any forward looking statements made in this document. An interview with Samir Brikho, AMEC Chief Executive, is available in video,audio and text formats on AMEC's web site www.amec.com A live webcast of the interim results presentation and presentation slides willbe available on www.amec.com at 08.30am today, 6 September 2007. Enquiries to:AMEC plc: + 44 (0)20 7539 5800 Samir Brikho, Chief ExecutiveStuart Siddall, Finance DirectorSue Scholes, Director of CommunicationsNeil Jamieson, Director of Investor Relations Media:Frank Stokes, Media Relations Manager Page 2 INTERIM RESULTS 2007 Basis of reporting and discontinued activities 2007 The non-core Built Environment businesses are now treated as discontinuedoperations. The comparative segmental results for the six months ended 30 June2006 and the year ended 31 December 2006 have been restated to reflect thischange and some minor business restructuring. These restatements are consistentwith the announcement made on 25 June 2007. Financial highlights Revenue for the six months ended 30 June 2007 increased by 14 per cent to £1,153million (2006: £1,009 million), reflecting strong growth in the NaturalResources and Power and Process businesses. Pre-tax profit before intangible amortisation and exceptional items fromcontinuing operations of £48.2 million was 127 per cent ahead of last year(2006: £21.2 million) and well above the board's December 2006 expectations.Excluding £10.2 million of one-off costs relating to the STEP Change programme,pre-tax profit was 175 per cent higher at £58.4 million. Performance was strongin all three core divisions of the business. Results also benefited from a £14.1million improvement in net financing income, which arose from the divestment ofAMEC SPIE in July 2006 and from on-going good cash management. There were pre-tax exceptional profits of £19.9 million (2006: charges of £43.1million) and intangible amortisation of £1.2 million (2006: £2.8 million),resulting in pre-tax profit from continuing operations of £66.9 million (2006:loss of £24.7 million). Diluted earnings per share from continuing operations were 10.2 pence (2006: 4.5pence). Post-tax profit before exceptional items from discontinued operations was £5.0million. There were post-tax exceptional credits of £3.3 million and thepost-tax loss on disposal of pipeline construction activities was £6.9 million,giving a total post-tax profit for the period of £1.4 million. The interim dividend is increased by 10 per cent to 4.6 pence per share (2006:4.2 pence). Outlook 2007 End markets for each of AMEC's businesses remain strong. The board's overallexpectations for pre-tax profit* in 2007 are increased by £5 million, mainlyreflecting the strength of trading and the group's improved cash position. * Profit before intangible amortisation, exceptional items and income tax Page 3 Dividend policy The board has reviewed the group's dividend policy and intends to rebuildearnings per share dividend cover from its 2006 level to a target level of overtwo times. Capital Structure and share buybacks Average weekly net cash for the seven months ended 31 July 2007 was £350million. Net cash as at 30 June 2007, including cash classified as held for saleon the balance sheet, was £455.5 million (31 December 2006: £387.1 million). In December 2006, AMEC announced its intention to return up to £100 million to shareholders by way of a share buyback programme. To date 2.85 million shares have been bought in the market to be held in treasury, at a total cost of £15 million. The board confirms its expectation that the buyback programme will recommence, with the balance of up to £85 million being returned to shareholders in 2007 and beyond. Upon completion of the divestment programme of non-core businesses, and subjectto all consents being received, net cash at 31 December 2007 is expected to bec.£600 million. Taking account of the commitment to further share buybacks of upto £85 million, and advance cash and other factors of £100 million, cashavailable to the group is expected to be c.£400 million. With a current internaldebt ceiling of c.£200 million, resources available for investment in thebusiness should be in excess of £600 million. During the first eight months of 2007, AMEC has successfully delivered the STEPChange programme and effectively completed the divestment of non-corebusinesses. With this restructuring phase complete, AMEC is now well preparedfor the next phase of its development and sees major opportunities to groworganically and by strategic acquisition. SEGMENTAL REVIEW Amounts and percentage movements relating to segmental activities are stated forcontinuing operations. Amounts relating to segmental earnings before interest, tax and amortisation("EBITA") are stated before corporate costs of £21.3 million (2006: £10.3million) and pre-tax exceptional profits of £19.9 million (2006: charges of£43.1 million), but including joint venture profit before tax of £0.9 million(2006:£1.3 million). Page 4 The average number of employees is stated for the six months ended 30 June 2007and the year ended 31 December 2006. Amounts relating to segmental net assets / (liabilities) are stated beforeintangible assets and net cash, but including interests in joint ventures andassociates. Net assets / (liabilities) and order book are stated as at 30 June 2007 and 31December 2006. Commentary for each of AMEC's principal segments of activity is set out below. Natural Resources Natural Resources comprises AMEC's activities in Oil and Gas Services (c.70 percent of annualised revenues), Oil Sands (engineering and infrastructure, c.15per cent of annualised revenues) and Metals and Minerals Mining (c.15 per centof annualised revenues). Services include asset development and asset supportincluding consultancy and engineering design, project management, commissioningand operational support. "Capex" activities (those activities related to clients' capital expenditure)and "opex" activities (relating to clients' operating expenditure) each accountfor approximately half of annualised revenues. Profit is weighted towards capex,which accounts for some two thirds of annualised EBITA. £ million 2007 2006 change Revenue 498.4 385.6* +29%EBITA 37.2 26.7* +39%EBITA margin 7.5% 6.9%* +0.6pts---------------------------------------------------------------------Average employees 7,950 6,750 +18%Net assets 57.5 71.3 -19%Order book £1.14bn £1.03bn +11% * Excluding lump-sum fabrication, now ceased (2006 revenue: £66.5 million) Revenue for the period, excluding lump-sum fabrication which has now ceased,increased by 29 per cent to £498.4 million, driven by strength in each of theprincipal areas of activity. EBITA increased by 39 per cent to £37.2 million (2006: £26.7 million), withEBITA margin excluding lump-sum fabrication increasing to 7.5 per cent (2006:6.9 per cent). Page 5 Net assets declined by 19 per cent to £57.5 million, mainly reflectingsettlement of the last outstanding lump sum contracts delivered by the business. The Natural Resources order book has increased by 11 per cent since theyear-end, to £1.14 billion. AMEC has continued to win business both from existing clients and from newclients around the world. Major awards during the year to date include afive-year consultancy and engineering services contract with Kuwait NationalPetroleum Company covering upgrades, refurbishment and modifications on Kuwait'sthree existing refineries; a 15-month extension to an AMEC joint venture'soperations and maintenance contract with ConocoPhillips Australia for theBayu-Undan Offshore Development located in the Timor Sea; a contract awarded byPotashCorp to design and manage expansion of its Cory Potash Mine inSaskatchewan, Canada; and a contract with Fairfield Energy Limited to provide arange of consultancy services that are integral to its acquisition of Dunlinassets in the UK North Sea. Fairfield has also entered into exclusivenegotiations with AMEC for the provision of 'duty holder' services in relationto the assets. Further details on these and other contract awards may be foundat www.amec.com/media Acquisitions The Natural Resources business is targeting growth through acquisition inservices related to its core oil and gas services activities and to in-situ oilsands. It is also seeking acquisition opportunities which would provide capacityand geographical expansion in oil and gas and in minerals and metals mining. Consistent with this strategy, in July 2007, Natural Resources increased its presence in the Caspian frontier region through the acquisition of a 60 per centinterest in Kazakh oilfield services company Batys Kazakhstan Kuat Service Limited, for c.£5 million. In August 2007, AMEC and Malaysian company MMC created a joint company todeliver project management and engineering services to oil and gas customers inthe expanding Malaysian and Asian markets. The new company will serve as AMEC'sFar Eastern engineering hub and will work in conjunction with its engineeringcentres of excellence in Europe and the Americas. AMEC sees further opportunities for acquired growth during 2007 and beyond. Outlook End markets in Natural Resources remain strong. Major opportunities are beingpursued in frontier regions and further successes are anticipated during 2007. Page 6 AMEC expects Natural Resources performance in 2008 to be at the upper end of thetarget EBITA margin range of between seven and eight per cent. Power and Process Power and Process includes AMEC's activities in UK and Americas industrial andpower markets, in nuclear and in wind energy. The business designs, delivers,enhances and maintains infrastructure for a broad range of clients in the publicand private sectors. Annualised revenues are split between each of the three principal areas ofactivity in Power and Process as follows: UK Industrial c.45 per cent, AmericasIndustrial c.33 per cent and Nuclear c.22 per cent. £ million 2007 2006 changeRevenue 492.3 366.0 +35%EBITA 18.6 10.1 +84%EBITA margin 3.8% 2.8% +1.0pts--------------------------------------------------------------------------Average employees 6,150 4,925 +25%Net liabilities (39.1) (55.2) +29%Order book £1.27bn £1.44bn -12% Revenue for the period increased by 35 per cent to £492.3 million (2006: £366.0 million), with strong growth in the UK and Americas Industrial businesses. EBITA for the period increased by 84 per cent to £18.6 million (2006: £10.1million), reflecting particularly strong performance in the UK and AmericasIndustrial businesses. Overall EBITA margin, before one-off STEP Change costs of£2.4 million, increased strongly to 4.3 per cent (2006: 2.8 per cent),reflecting improved management focus and a stronger pricing environment. Net liabilities declined by 29 per cent to £39.1 million (31 December 2006:£55.2 million), largely as a result of an exceptional provision releasefollowing the resolution of a major legacy dispute. The business has been more selective in new work taken on and a minimum grossmargin of eight per cent now applies to all new contracts. This increased focuson margin resulted in a 12 per cent decline in the order book during the firsthalf of 2007, as the backlog associated with historic lower margin contracts hasdeclined. Major awards in the year to date include a contract for conceptual anddetailed engineering design, environmental and project management services onStage 1 of National Grid's 91 kilometre gas pipeline from Easington to Hatton,UK; a five-year contract with British Energy for engineering and project Page 7 management services on three of its nuclear power plants in the UK and acontract with Southern Company to install new clean-air systems on two865-megawatt coal-fired boilers in Georgia, US. Further details on these andother contract awards may be found at www.amec.com/media Acquisitions The UK nuclear market offers significant growth opportunities in the Tier 1decommissioning market and in defence. Consistent with the focus on margin inthe Industrial businesses, AMEC is in the final stages of acquiring a low costengineering business in Latin America, with completion expected later in 2007. Wind Energy AMEC is involved with the development of wind energy projects in the UK, whereit has an onshore portfolio of around 1,100MW. In addition, engineering andconstruction services are provided to clients in the US and Canada. AMEC intendsto leverage its product offering in wind energy across North America and the UK. Results include the net costs of progressing AMEC's UK portfolio of winddevelopments, which over the four years ending December 2007 are expected tohave reached £17 million. Despite having received formal planning approval inMay 2007, the 23 megawatt Edinbane project is now being challenged in theScottish Courts. Management Tim Watson, President of the Power and Process division, left the company inJuly 2007 for personal reasons and to take up a position with a major Canadianmining company. Samir Brikho, Chief Executive, has assumed control of thedivision pending the appointment of his successor. Outlook End markets in Power and Process remain strong. The industrial businesses in UKand Americas are expected to deliver strong top-line growth and improved marginperformance in 2007. In 2008, the focus of the business will be on margin improvement, even at theexpense of revenue growth. AMEC continues to target an EBITA margin for Power and Process of between fiveand seven per cent in 2008. Page 8 Earth and Environmental AMEC's Earth and Environmental business provides specialist environmental,geotechnical, programme management and consultancy services to a broad range ofclients in the public and private sectors, primarily in North America. Thebusiness has strong positions in certain end market sectors, notably naturalresources (c.20 per cent of annualised revenues), US Federal (c.40 per cent ofannualised revenues) and other private and public sector markets (c.40 per centof annualised revenues). Earth and Environmental operates from a regionalnetwork and is characterised by a large number of small value contracts. £ million 2007 2006 change Revenue 140.1 151.6 -8%EBITA 8.9 6.7 +33%EBITA margin 6.4% 4.4% +2.0pts-----------------------------------------------------------------------Average employees 3,175 3,100 +2%Net assets 36.5 19.0 +92% Revenue for the period increased by 4 per cent at constant rates of exchange,with EBITA up by 46 per cent on the same basis. Performance was particularlystrong in the natural resources sector in Western Canada and Federal in the US,but was tempered by reduced activity in Iraq. EBITA margin increased by almost50 per cent to 6.4 per cent (2006: 4.4 per cent), with further improvementexpected in the second half. Net assets at the period end of £36.5 million (30 June 2006: £29.6 million)reflected the normal seasonal pattern for the business. Acquisitions The Earth and Environmental industry is large and fragmented, presentingopportunities for small bolt-on acquisitions. The business is targeting growththrough acquisition in services related to its core activities, together withcapacity and geographical expansion. During the first eight months of 2007, two small environmental consultancies were acquired. Outlook End markets for environmental services remain strong and AMEC expects the Earthand Environmental business to deliver another strong performance in 2007 despiteweakness of the dollar. Page 9 AMEC continues to target an EBITA margin for the Earth and Environmentalbusiness of between six and eight per cent in 2008. Investments and other activities Investments and other activities includes ongoing PPP activities in Korea andsupport services in the UK, together with activities in Rail (now sold), HongKong and certain US construction markets where operations were completed duringthe first half of 2007. Net liabilities include provisions for indemnitiesgranted on the disposal of AMEC SPIE and most of the litigation and settlementprovisions relating to legacy issues. £ million 2007 2006 change Revenue 31.2 59.5 -48%EBITA 0.3 (2.2) nmEBITA margin 1.0% (3.7)% nm-----------------------------------------------------------------------Average employees 350 475 -26%Net liabilities (117.3) (109.4) -7% nm: not meaningful Revenue for the period halved, as expected, to £31.2 million (2006: £59.5million), with profit of £0.3 million (2006: loss £2.2 million) reflecting thesale of activities in Rail and reduced levels of activity in Hong Kong and theUS. Profits at the full year will be significantly below those achieved in 2006(2006: £12.8 million) as the range of activities is reduced. STEP CHANGE SUCCESSFULLY COMPLETED In October 2006, AMEC launched "STEP Change", a programme of change in thestructure and culture of the company. The programme was completed ahead ofschedule on 5 September 2007 and exceeded all original expectations. Comparedwith the 2006 baseline, benefits of at least £40 million for the continuingbusinesses are now expected in 2008, up from an initial commitment in March 2007of £35 million. First half results include one-off STEP Change costs of £10 million. For thefull year, total costs of the programme are expected to be £16 million,resulting in net savings of £7 million in 2007. Page 10 OPERATIONAL EXCELLENCE Following the successful completion of STEP Change, AMEC is proceeding with"Operational Excellence", a two year programme designed to radicallyimprove operating performance. Operational Excellence will be a major contributor to AMEC delivering its target margin of 8 per cent by 2010. The programme is packaged into 12 elements identified as those most important toachieving high performance across the group. AMEC intends to improve the qualityof the business portfolio and service delivery to customers; and to simplify andoptimise internal controls and processes. • Cash management • Commercial management • Customer acquisition and relationship management • Employee development • Financial control • Health and safety • Information Technology • Project management and engineering • Strategic marketing • Supply chain management • Sustainability • Time based management Further details about Operational Excellence will be communicated at the end of2007. DIVESTMENT OF NON-CORE BUSINESSES The divestment of non-core activities is now effectively complete. Aggregatecash proceeds from the divestment programme before costs and tax are expected tobe c.£340 million. Built Environment On 12 July 2007, AMEC and Land Securities Trillium agreed terms for divestment of the management team and nine underlying PPP assets of the Project Investmentsbusiness for £163.5 million. Major consents are required from public authoritiesand co-shareholders and lenders in the PFI projects. Completion is expected by 31 October 2007. On 27 July 2007, the divestment of the Property Developments and UK Building andCivil Engineering businesses to Morgan Sindall plc was completed for a premiumof £55 million to the aggregate net assets as at 30 April 2007. Page 11 On 3 August 2007, AMEC and SPIE S.A. agreed terms for divestment of the Buildingand Facilities Services business for £117 million. Completion is expected in September 2007. The divestment of non-core Built Environment businesses will be accounted for inthe second half of 2007. The aggregate post-tax net exceptional gain is expectedto be not less than £210 million. If one major PPP concession is retained due tocomplex pre-emption rights, the net gain is expected to be not less than £150million. AMEC has ongoing responsibility for latent defects on all completed projects andis currently dealing with final accounts/ongoing issues of any significancerelating to six completed UK construction contracts. Of these, two contractshave been settled and the board remains confident that the remaining issues canbe dealt with within the provisions previously made. Peripheral activities Five peripheral non-core businesses were divested during the first half of 2007: Continuing activities •AMEC SPIE Rail •Dynamic Structures Discontinued activities •AMEC SPIE Capag •Buchan Concrete Solutions •Midwest Pipelines These divestments generated an aggregate first half post-tax gain of £9.7million. Further details of the exceptional profits are set out in note 3. SETTLEMENT OF LITGATION AND OTHER LEGACY ISSUES AMEC is making substantial progress with its strategy of settlement of disputeswhere reasonable to do so. In its 2006 accounts, AMEC noted six major contingent liabilities. •On 25 June 2007, AMEC announced that settlement had been reached on the Jordan Magnesia Company Ltd. (Jordan), and Thelwall Viaduct (UK) disputes. Settlement was well within the provisions previously made •Positive progress has been made on the San Francisco Jail (US) and Florida development (US) •A further hearing of the Courthouses (US) dispute is expected in the fourth quarter of 2007 •As expected, the World Trade Center (US) will remain a long-term contingent liability. Page 12 Provisions currently held for future costs of litigation total £75 million (31December 2006: £90 million). The board has reviewed the overall level of provisions associated with theabove. Confidence in the overall level of provisioning has increased, with theboard deciding to make a net pre-tax release of exceptional provisions of £8million (£3.3 million continuing; £4.7 million discontinued). Further details ofthe exceptional profits are set out in note 3. CORPORATE COSTS As a result of one-off costs of £6.6 million associated with the STEP Changeprogramme, and increased charges of £2.7 million in respect of share-basedpayments, corporate costs increased from £10.3 million in the first half of 2006to £21.3 million in the first half of 2007. BOARD CHANGES James Dallas stood down as a non-executive director of AMEC plc at theconclusion of the Annual General Meeting on Wednesday 16 May 2007. Mr Dallas hadbeen a director since 28 October 1999. With the group's divestment programme effectively complete, John Early retired from the board and his executive duties on 31 July 2007. Mr Early had been an executive director of AMEC since March 1986 and was latterly responsible for the Built Environment businesses. Page 13 CONSOLIDATED INCOME STATEMENT Six months ended 30 June 2007 Exceptional Exceptional items arising profit/costs from of exiting Before litigation and businesses exceptional separation and markets items costs (note 3) (note 3) Total Note £ million £ million £ million £ million Continuing operations Revenue 2 1,152.9 - - 1,152.9 Cost of sales (1,010.4) 10.3 0.5 (999.6) ----------- ----------- --------- -------- Gross profit 142.5 10.3 0.5 153.3 Administrative expenses (100.9) - - (100.9) (Loss)/profit on business disposalsand closures - (4.0) 13.1 9.1 ----------- ----------- --------- -------- Profit before netfinancing income 41.6 6.3 13.6 61.5 Financial income 11.1 - - 11.1Financial expense (6.4) - - (6.4) Net financing income 4.7 - - 4.7 Share of post-taxresults of joint ventures andassociates 0.7 - - 0.7 ----------- ----------- --------- -------- Profit before incometax 2 47.0 6.3 13.6 66.9 Income tax 4 (13.8) (3.0) (0.2) (17.0) ----------- ----------- --------- -------- Profit for the periodfrom continuing operations 33.2 3.3 13.4 49.9 Profit/(loss) for theperiod from discontinued operations 5 5.0 3.3 (6.9) 1.4 ----------- ----------- --------- -------- Profit for the period 38.2 6.6 6.5 51.3 =========== =========== ========= ======== Attributable to:Equity holders of the 51.3company -Minority interests -------- 51.3 ======== Basic earnings per share: 6Continuing operations 15.2pDiscontinued operations 0.4p -------- 15.6p ======== Diluted earnings per share: 6Continuing operations 14.7pDiscontinued operations 0.4p -------- 15.1p ======== Page 14 CONSOLIDATED INCOME STATEMENT Six months ended 30 June 2006 Exceptional Exceptional items arising profit/costs from of exiting Before litigation and businesses exceptional separation and markets items costs (note 3) (note 3) Total Note £ million £ million £ million £ million Continuing operations Revenue 2 1,009.3 - - 1,009.3 Cost of sales (890.1) (5.0) (13.0) (908.1) ----------- ----------- --------- -------- Gross profit/(loss) 119.2 (5.0) (13.0) 101.2 Administrative expenses (92.3) - - (92.3) Loss on business disposals and closures - (15.0) (10.1) (25.1) ----------- ----------- --------- -------- Profit/(loss) before net financing costs 26.9 (20.0) (23.1) (16.2) Financial income 5.3 - - 5.3 Financial expense (14.7) - - (14.7) Net financing costs (9.4) - - (9.4) Share of post-tax results of joint ventures and associates 0.9 - - 0.9 ----------- ----------- --------- -------- Profit/(loss) beforeincome tax 2 18.4 (20.0) (23.1) (24.7) Income tax 4 (6.1) - 3.9 (2.2) ----------- ----------- --------- -------- Profit/(loss) for the period fromcontinuing operations 12.3 (20.0) (19.2) (26.9) Profit/(loss) for the period fromdiscontinued operations 5 11.3 (10.5) (15.2) (14.4) ----------- ----------- --------- -------- Profit/(loss) for the period 23.6 (30.5) (34.4) (41.3) ============ =========== ========= ========Attributable to:Equity holders of the (41.1)companyMinority interests (0.2) -------- (41.3) ======== Basic loss per share: 6Continuing operations (8.2)pDiscontinued operations (4.4)p -------- (12.6)p ======== Diluted loss per share: 6Continuing operations (8.2)pDiscontinued operations (4.4)p -------- (12.6)p ======== Page 15 CONSOLIDATED INCOME STATEMENT Year ended 31 December 2006 Exceptional Exceptional items arising profit/costs from of exiting Before litigation and businesses exceptional separation and markets items costs (note 3) (note 3) Total Note £ million £ million £ million £ million Continuing operations Revenue 2 2,121.6 - - 2,121.6 Cost of sales (1,867.0) (17.6) (4.3) (1,888.9) ----------- ---------- --------- ---------- Gross profit/(loss) 254.6 (17.6) (4.3) 232.7 Administrative expenses (171.7) - - (171.7) Loss on business disposals and closures - (39.1) (41.8) (80.9) ----------- ---------- --------- ----------Profit/(loss) beforenet financing costs 82.9 (56.7) (46.1) (19.9) Financial income 9.3 - - 9.3Financial expense (16.3) - - (16.3) Net financing costs (7.0) - - (7.0) Share of post-tax results of jointventures and associates (0.1) - - (0.1) ----------- ---------- --------- ----------Profit/(loss) beforeincome tax 2 75.8 (56.7) (46.1) (27.0) Income tax 4 (22.5) 4.9 2.4 (15.2) ----------- ---------- --------- ----------Profit/(loss) for the period fromcontinuing operations 53.3 (51.8) (43.7) (42.2) Profit/(loss) for the period fromdiscontinuedoperations 5 0.5 (16.4) 277.3 261.4 ----------- ---------- --------- ---------- Profit/(loss) for the period 53.8 (68.2) 233.6 219.2 =========== ========== ========= ========== Attributable to:Equity holders of the company 218.1Minority interests 1.1 ---------- 219.2 ========== Basic (loss)/earningsper share: 6Continuing operations (13.3)pDiscontinued operations 80.2p ---------- 66.9p ========== Diluted (loss)/earningsper share: 6Continuing operations (13.3)pDiscontinued operations 80.2p ---------- 66.9p ========== Page 16 CONSOLIDATED STATEMENT OF RECOGNISED INCOME AND EXPENSE Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 Note £ million £ million £ million Exchange differenceson translation offoreign subsidiaries 12.2 (14.8) (37.4) Actuarial gains on defined benefit pensionschemes - - 2.9 Group share of actuarialgains on defined benefitpension scheme within associate (net of tax) - - 1.8 Net (loss)/gain on hedgesof net investment in foreign subsidiaries (2.6) 4.2 16.4 Cash flow hedges:Effective portion of changes in fair value 1.8 5.7 12.5Transferred to the income statement (1.2) - -Group share of changes in fair value of cash flowhedges within joint venture entities (net of tax) 9.8 6.0 5.0 Tax in respect of items recognised directly inequity (0.2) (2.0) (6.5) --------- --------- --------- Net income/(expense) recognised directly in equity 19.8 (0.9) (5.3) Profit/(loss) for the period 51.3 (41.3) 219.2 --------- --------- ---------Total recognised income and expense for the period 71.1 (42.2) 213.9 ========= ========== ========= Attributable to:Equity holders of the company 8 71.1 (43.3) 211.3Minority interests - 1.1 2.6 --------- --------- ---------Total recognised income and expense for theperiod 71.1 (42.2) 213.9 ========= ========== ========= Page 17 CONSOLIDATED BALANCE SHEET Note 30 June 2007 30 June 2006 31 December 2006 £ million £ million £ million ASSETSNon-current assetsProperty, plant and equipment 60.3 90.0 73.3Intangible assets 203.1 215.5 197.6Interests in joint ventures and associates 15.7 87.2 85.2Other investments 0.8 1.4 0.9Retirement benefit assets 110.6 82.0 105.6Deferred tax assets 9.9 66.7 16.4 ---------- --------- ---------Total non-current assets 400.4 542.8 479.0 ---------- --------- --------- Current assetsInventories 9.2 66.1 47.7Trade and other receivables 569.1 942.9 806.3Current tax receivable - 3.4 -Derivative financial instruments 7.3 1.3 9.0Cash and cash equivalents 452.4 256.0 375.4Assets classified as held for sale 466.9 1,335.7 107.1 ---------- --------- ---------Total current assets 1,504.9 2,605.4 1,345.5 ---------- --------- ---------Total assets 1,905.3 3,148.2 1,824.5 ---------- --------- ---------LIABILITIESCurrent liabilitiesBank loans and overdrafts (8.1) (32.3) (13.6)Trade and other payables (616.2) (970.3) (1,021.4)Derivative financial instruments (1.9) (7.3) (1.9)Current tax payable (23.2) - (19.3)Liabilities classifiedas held for sale (533.2) (1,037.9) (69.5) ---------- --------- ---------Total current liabilities (1,182.6) (2,047.8) (1,125.7) ---------- --------- --------- Non-current liabilitiesBank loans - (688.1) (6.9)Trade and other payables - (32.0) -Retirement benefit liabilities (13.9) (9.9) (13.0)Deferred tax liabilities (10.8) (85.3) (10.3)Provisions (158.5) (27.8) (173.8) ---------- --------- --------- Total non-current liabilities (183.2) (843.1) (204.0) ---------- --------- ---------Total liabilities (1,365.8) (2,890.9) (1,329.7) ---------- --------- ---------Net assets 2 539.5 257.3 494.8 ========== ========= ========= EQUITYShare capital 168.4 166.7 166.8Share premium account 98.0 90.1 90.7Hedging and translationreserves 6.2 (8.9) (20.5)Capital redemption reserve 17.2 17.2 17.2Retained earnings 254.5 (10.1) 238.9Amounts recognised in equity relating to assetsand liabilitiesheld for sale (5.6) 0.9 0.9 ---------- --------- ---------Total equity attributableto equity holders of the parent 538.7 255.9 494.0 Minority interests 0.8 1.4 0.8 ---------- --------- ---------Total equity 539.5 257.3 494.8 ========== ========= ========= Page 18 CONSOLIDATED CASH FLOW STATEMENT Six Six months months Year ended ended ended 30 June 30 June December 31 2007 2006 2006 Note £ million £ million £ millionCash flow from operatingactivitiesProfit/(loss) before income tax from continuing operations 66.9 (24.7) (27.0)Profit/(loss) before incometax from discontinuedoperations 5 8.7 (15.5) 241.3 --------- --------- -------- Profit/(loss) before income tax 75.6 (40.2) 214.3Financial income (14.9) (12.8) (18.5)Financial expense 8.7 25.8 28.3Share of post-tax results of joint ventures and associates (4.4) (4.9) (11.7)Intangible amortisation 1.2 4.7 6.2Depreciation 11.1 21.4 35.1Profit on disposal ofsubsidiaries (12.1) - (301.8)Profit on disposal of property,plant and equipment (1.0) (1.6) (1.6)Impairment of non current assets 1.8 - 7.1Equity settled share-based payments 5.4 0.1 (2.3) --------- --------- -------- 71.4 (7.5) (44.9) Decrease/(increase) in inventories 4.7 (6.1) 12.7(Increase)/decrease in trade and other receivables (27.4) 51.1 112.3Increase/(decrease) in trade andother payables and provisions 7.1 (154.9) 21.6 --------- --------- --------Cash generated/(absorbed) from 55.8 (117.4) 101.7operationsInterest paid (4.1) (25.1) (36.8)Tax (paid)/received (6.1) (2.6) 9.5 --------- --------- --------Net cash flow from operating activities 45.6 (145.1) 74.4 --------- --------- --------Cash flow from investing activitiesAcquisition of subsidiaries, net of cash acquired - (14.9) (15.0)Acquisition of joint ventures and associates (6.1) (16.0) (23.5)Purchase of property, plant and equipment (7.6) (24.3) (38.2)Purchase of intangible assets (0.1) (2.2) (0.6)Disposal of subsidiaries (net of cash disposed of) 23.6 - 627.4Disposal of joint ventures and associates 20.9 5.3 27.2Disposal of property, plant and equipment 2.2 21.0 26.5Interest received 9.3 11.8 19.0Dividends received from joint ventures and associates 1.9 1.8 3.2 --------- --------- --------Net cash flow from investing activities 44.1 (17.5) 626.0 --------- --------- --------Net cash flow before financingactivities 89.7 (162.6) 700.4 --------- --------- --------Cash flow from financing activitiesProceeds from new loans - 160.9 -Repayment of loans (4.4) - (549.9)Dividends paid (13.9) (13.0) (37.5)Proceeds from shares issued 8.9 0.9 1.6Acquisition of treasury shares (14.7) - -Disposal of shares by trusteesof the Performance Share Plan 2002 - - 2.2 --------- --------- --------Net cash flow from financing activities (24.1) 148.8 (583.6) --------- --------- --------Increase/(decrease) in cash and cash equivalents 65.6 (13.8) 116.8Cash and cash equivalents as at the beginning of the period 406.4 332.7 332.7Exchange losses on cash and cash equivalents (1.6) (3.8) (12.8)Cash of former subsidiary equityaccounted from the beginning of the period - (9.3) (30.3) --------- --------- --------Cash and cash equivalents as at the end of the period 470.4 305.8 406.4 ========= ========= ======== Page 19 Cash and cash equivalents consist of:Cash at bank and in hand 431.2 232.0 336.2Short-term investments 21.2 24.0 39.2 --------- --------- -------- 452.4 256.0 375.4Overdrafts (8.1) (19.2) (1.2) --------- --------- -------- 444.3 236.8 374.2Cash and cash equivalents 9(including overdrafts) classified as held for sale 26.1 69.0 32.2 --------- --------- --------Cash and cash equivalents 470.4 305.8 406.4 ========= ========= ========= NOTES 1. PREPARATION OF INTERIM RESULTS This interim financial information has been prepared applying the accountingpolicies and presentation that were applied in the preparation of the company'spublished consolidated accounts for the year ended 31 December 2006. The non-core Built Environment businesses are treated as discontinued operationsin 2007. The segmental results for the six months ended 30 June 2006 and theyear ended 31 December 2006 have been restated to reflect this change inaccounting treatment and some minor business restructuring. These restatedresults were included in the trading update issued on 25 June 2007. Otherdiscontinued activities include pipeline construction and AMEC SPIE. The comparative figures for the year ended 31 December 2006 are not thestatutory accounts for that financial year. Those accounts have been reported onby the auditors and delivered to the registrar of companies. The report of theauditors was unqualified and did not contain statements under section 237(2) or(3) of the Companies Act 1985. During 2006 IFRIC 12 on service concession arrangements was issued. Thisinterpretation is effective with effect from 1 January 2008, but this has yet tobe adopted for use in the EU. In view of this, the directors consider that itremains appropriate to apply the approach set out in Appendix Note F of the UKFinancial Reporting Standard 5 "Reporting the substance of transactions" indetermining the accounting model to be applied to AMEC's PPP activities. Thisinvolves applying a "risks and rewards" test to determine whether a non-currentasset or finance debtor model should be followed. The directors do not expectthis accounting policy to be significantly different to that under IFRIC 12. Page 20 2. ANALYSIS OF REVENUE, PROFIT BEFORE EXCEPTIONAL ITEMS AND INCOME TAX AND NETASSETS OF CONTINUING OPERATIONS Revenue Profit Six Six Six Six months months Year months months Year ended ended ended ended ended ended 30 June 30 June 31 December 30 June 30 June 31 December 2007 2006 2006 2007 2006 2006 £ million £ million £ million £ million £ million £ million Class of business: Natural Resources 498.4 452.1 920.9 37.2 26.7 59.1 Power and Process 492.3 366.0 797.8 18.6 10.1 18.5 Earth & Environmental 140.1 151.6 304.4 8.9 6.7 17.7 Investments & other activities 31.2 59.5 122.6 0.3 (2.2) 12.8 -------- ------- -------- -------- -------- --------- 1,162.0 1,029.2 2,145.7 65.0 41.3 108.1 Internal revenue (9.1) (19.9) (24.1) - - - Corporate costs - - - (21.3) (10.3) (21.4) -------- ------- -------- -------- -------- -------- 1,152.9 1,009.3 2,121.6 43.7 31.0 86.7 Intangible - - - (1.2) (2.8) (3.6)amortisation Net financing income/(costs) - - - 4.7 (9.4) (7.0) Share of tax of joint ventures and associates - - - (0.2) (0.4) (0.3) -------- ------- -------- -------- -------- -------- 1,152.9 1,009.3 2,121.6 47.0 18.4 75.8 -------- ------- -------- -------- -------- -------- Geographical origin: United Kingdom 508.1 377.6 844.5 25.1 6.3 30.0 Rest of Europe 46.1 27.3 55.4 4.2 3.8 5.2 Americas 537.4 455.9 1,018.6 34.1 24.2 58.6 Rest of the World 61.3 148.5 203.1 1.6 7.0 14.3 -------- ------- -------- -------- -------- ------- 1,152.9 1,009.3 2,121.6 65.0 41.3 108.1 Corporate costs - - - (21.3) (10.3) (21.4) -------- ------- -------- -------- -------- ------- 1,152.9 1,009.3 2,121.6 43.7 31.0 86.7 Intangible - - - (1.2) (2.8) (3.6)amortisation Net financing income/(costs) - - - 4.7 (9.4) (7.0) Share of tax of joint ventures and associates - - - (0.2) (0.4) (0.3) -------- ------- -------- -------- -------- -------- 1,152.9 1,009.3 2,121.6 47.0 18.4 75.8 ======== ======= ======== ======== ======== ======== Page 21 2. ANALYSIS OF REVENUE, PROFIT BEFORE EXCEPTIONAL ITEMS AND INCOME TAX AND NETASSETS OF CONTINUING OPERATIONS (continued) Net assets 30 June 30 June 31 December 2007 2006 2006 £ million £ million £ millionClass of business: Natural Resources 57.5 125.9 71.3 Power and Process (39.1) (1.9) (55.2)Earth and Environmental 36.5 29.6 19.0 Investments and other activities (117.3) 0.1 (109.4)Discontinued operations - 49.2 (60.0) --------- --------- ----------- (62.4) 202.9 (134.3) Intangible assets 203.1 215.5 197.6 Nat cash/(debt) 444.3 (464.4) 354.9 Unallocated net assets 20.8 5.5 39.0 Assets and liabilities classified as held for sale (66.3) 297.8 37.6 --------- --------- ----------- 539.5 257.3 494.8 ========= ========= =========== Geographical origin: United Kingdom (24.1) 7.2 (57.0)Rest of Europe (62.9) (17.6) (58.8)Americas 0.1 60.8 (6.6)Rest of the World 24.5 103.3 48.1 Discontinued operations - 49.2 (60.0) ---------- --------- ----------- (62.4) 202.9 (134.3) Intangible assets 203.1 215.5 197.6 Net cash/(debt) 444.3 (464.4) 354.9 Unallocated net assets 20.8 5.5 39.0 Assets and liabilities classified as held for sale (66.3) 297.8 37.6 ---------- --------- ----------- 539.5 257.3 494.8 ========== ========= =========== 3. EXCEPTIONAL ITEMS Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £ million £ million £ million Natural Resources - - (7.8)Power and Process 10.9 (13.0) (17.6)Investments and other activities 9.0 (30.1) (77.4) -------- --------- -----------Exceptional items of continuing 19.9 (43.1) (102.8)operationsTaxation on exceptional items of (3.2) 3.9 7.3continuing operationsExceptional items of discontinued (3.6) (25.7) 260.9operations (post tax) -------- --------- -----------Post-tax exceptional items 13.1 (64.9) 165.4 ======== ========= =========== Exceptional charges were made in 2005 and 2006. These charges included costsrelating to AMEC's exit from certain markets. Following settlement of certaindisputes, provisions have now been released to the extent no longer required. Five peripheral businesses were sold in the period resulting in furtherexceptional gains. Page 22 3. EXCEPTIONAL ITEMS (continued) Exceptional items for the six months ended 30 June 2007 are further analysed asfollows: Gain/ Other (loss) on exceptional disposals items Total £ million £ million £ million Continuing operations 16.6 3.3 19.9 Discontinued operations (4.5) 4.7 0.2 -------- --------- ----------Profit before tax 12.1 8.0 20.1 Tax (2.4) (4.6) (7.0) -------- --------- ----------Profit after tax 9.7 3.4 13.1 ======== ========= ========== 4. INCOME TAX Income tax on the profit before exceptional items and intangible amortisationfor the six months ended 30 June 2007 is based on an effective rate of 29.0 percent, which has been calculated by reference to the projected charge for thefull year. 5. PROFIT/(LOSS) FOR THE PERIOD FROM DISCONTINUED OPERATIONS The non-core Built Environment businesses are treated as discontinued operationsin 2007. Other discontinued activities include pipeline construction and AMECSPIE. The results of discontinued operations were as follows: Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £ million £ million £ million Revenue 571.7 1,639.2 2,431.6 Cost of sales and net operating expenses (563.2) (1,616.7) (2,422.4) -------- --------- ---------- 8.5 22.5 9.2 Intangible amortisation - (1.9) (2.6) -------- --------- ---------- Profit before income tax 8.5 20.6 6.6 Attributable tax (3.5) (9.3) (6.1) -------- --------- ----------Profit after income tax 5.0 11.3 0.5 Exceptional items 4.7 (36.1) (67.1)Attributable tax on exceptional items (1.4) 10.4 16.5 (Loss)/profit on disposal (4.5) - 301.8 Attributable tax on (loss)/profit on disposal (2.4) - 9.7 -------- --------- ----------Profit/(loss) for the period from 1.4 (14.4) 261.4 discontinued operations ======== ========= ========== Page 23 The total profit/(loss) for the period from discontinued operations is analysedas follows: 30 June 30 June 31 December 2007 2006 2006 £ million £ million £ million Profit before exceptional items and tax 8.5 20.6 6.6 Pre-tax exceptional items 4.7 (36.1) (67.1)Pre-tax exceptional (loss)/profit on disposal (4.5) - 301.8 -------- --------- ----------Pre-tax profit/(loss) 8.7 (15.5) 241.3 Tax (7.3) 1.1 20.1 -------- --------- ---------- Profit/(loss) for the period from discontinued operations 1.4 (14.4) 261.4 ======== ========= ========== 6. EARNINGS PER SHARE Total basic earnings/(loss) per share is shown on the face of the incomestatement. The calculation of the average number of shares in issue has beenmade having deducted the shares held by the trustees of the Performance SharePlan 2002, those held by the qualifying employee share ownership trust, andthose held in treasury by the company. In order to appreciate the effects of thecontinuing and discontinued operations and exceptional items on the reportedperformance, additional calculations of earnings per share are presented. Six months ended 30 June 2007 Weighted average Earnings shares per Earnings number share £ million million pence Basic earnings from continuing operations 49.9 328.8 15.2 Share options - 4.0 (0.2) Employee share and incentive schemes - 5.9 (0.3) -------- --------- ----------Diluted earnings from continuing operations 49.9 338.7 14.7 ======== ========= ========== Basic earnings from discontinued 1.4 328.8 0.4 operations Share options - 4.0 - Employee share and incentive schemes - 5.9 - -------- --------- ---------- Diluted earnings from discontinued operations 1.4 338.7 0.4 ======== ========= ========== Basic earnings from continuing operations 49.9 328.8 15.2 Exceptional items (16.7) - (5.1) Intangible amortisation 1.2 - 0.4 -------- --------- ----------Basic earnings before exceptional items andintangible amortisation 34.4 328.8 10.5 Share options - 4.0 (0.1) Employee share and incentive schemes - 5.9 (0.2) -------- --------- ----------Diluted earnings before exceptional itemsand intangible amortisation 34.4 338.7 10.2 ======== ========= ========== Six months ended 30 June 2006 Weighted average Earnings shares per Earnings number share £ million million pence Basic and diluted loss from continuing operations (26.7) 325.4 (8.2) ======== ========= ========Basic and diluted loss from discontinued operations (14.4) 325.4 (4.4) ======== ========= ======== The basic and diluted loss of £26.7 million is the loss for the period forcontinuing operations of £26.9 million less the loss attributable to minorityinterest of £0.2 million. Page 24 6. EARNINGS PER SHARE (continued) Loss per share from continuing operations for the six months ended 30 June 2006was calculated on a loss of £26.7 million, as a result there are no dilutiveordinary shares. Basic loss from continuing operations (26.7) 325.4 (8.2) Exceptional items 39.2 - 12.0 Intangible amortisation 2.8 - 0.9 -------- --------- ----------Basic earnings before exceptional itemsand intangible amortisation 15.3 325.4 4.7 Share options - 4.8 (0.1) Employee share and incentive schemes - 6.8 (0.1) -------- --------- ----------Diluted earnings before exceptional itemsand intangible amortisation 15.3 337.0 4.5 ======== ========= ======== Year ended 31 December 2006 Weighted average Earnings shares per Earnings number share £ million million pence Basic and diluted loss from continuing (43.3) 325.9 (13.3)operations ======== ======== ======Basic and diluted earnings from discontinued operations 261.4 325.9 80.2 ======== ======== ====== The basic and diluted loss of £43.3 million is the loss for the year forcontinuing operations of £42.2 million less the profit attributable to minorityinterest of £1.1 million. Loss per share from continuing operations for the year ended 31 December 2006was calculated on a loss of £43.3 million, as a result, there are no dilutiveordinary shares. 7. DIVIDENDS After the balance sheet date the directors declared a dividend of 4.6 pence pershare payable on 2 January 2008 to equity holders on the register at the closeof business on 23 November 2007. This dividend has not been provided for andthere are no income tax consequences for the company. 8. RECONCILIATION OF MOVEMENTS IN TOTAL EQUITY Six months Six months Year ended ended ended 30 June 30 June 31 December 2007 2006 2006 £ million £ million £ million Total recognised income and expenseattributable to equityholders of the parent 71.1 (43.3) 211.3Dividends (26.4) (24.4) (38.3)Shares issued 8.9 0.9 1.6Equity settled share based payments 5.4 0.1 (2.3)Disposal of shares by trustees of thePerformance Share Plan 2002 - - 2.2Acquisition of treasury shares (14.7) - -Cumulative gains and losses transferredfrom the hedging and translation reserveson disposal of subsidiaries 0.4 - (3.1) -------- --------- --------Net increase/(decrease) in total equity 44.7 (66.7) 171.4Total equity as at the beginning of the 494.0 322.6 322.6period -------- --------- --------Total equity as at end of the periodattributable to the equity holders of theparent 538.7 255.9 494.0 ======== ========= ======== Page 25 9. ANALYSIS OF NET CASH/DEBT 30 June 30 June 31 December 2007 2006 2006 £ million £ million £ million Cash at bank and in hand 431.2 232.0 336.2Short-term investments 21.2 24.0 39.2 ---------- --------- -----------Cash and cash equivalents disclosed on the balance sheet 452.4 256.0 375.4Overdrafts (8.1) (19.2) (1.2) ---------- --------- ----------- 444.3 236.8 374.2Cash and cash equivalents (includingoverdrafts) classified as held for sale 26.1 69.0 32.2 ---------- --------- -----------Total cash and cash equivalents 470.4 305.8 406.4 Current debt - (13.1) (12.4) Non-current debt - (688.1) (6.9) Debt classified as held for sale (14.9) (32.6) - ---------- --------- -----------Net cash/(debt) as at the end of the 455.5 (428.0) 387.1period ========== ========= =========== Net cash/(debt) is analysed between the amount disclosed in the balance sheetand amounts classified as held for sale as follows: 30 June 30 June 31 December 2007 2006 2006 £ million £ million £ million Net cash/(debt) disclosed on the balance sheet 444.3 (464.4) 354.9Net cash classified as held for sale 11.2 36.4 32.2 ---------- --------- -----------Total net cash/(debt) as at the end of the period 455.5 (428.0) 387.1 ========== ========= =========== Page 26 INDEPENDENT REVIEW REPORT BY KPMG AUDIT Plc TO AMEC plc Introduction We have been instructed by the company to review the financial information forthe six months ended 30 June 2007 which comprises the Consolidated IncomeStatement, Consolidated Statement of Recognised Income and Expense, ConsolidatedBalance Sheet, Consolidated Cash Flow Statement and the related notes. We haveread the other information contained in the interim report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe financial information. This report is made solely to the company in accordance with the terms of ourengagement to assist the company in meeting the requirements of the ListingRules of the Financial Services Authority. Our review has been undertaken sothat we might state to the company those matters we are required to state to itin this report and for no other purpose. To the fullest extent permitted by law,we do not accept or assume responsibility to anyone other than the company forour review work, for this report, or for the conclusions we have reached. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority which require that the accountingpolicies and presentation applied to the interim figures should be consistentwith those applied in preparing the preceding annual accounts except where anychanges, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for the use in the UK. A review consistsprincipally of making enquiries of group management and applying analyticalprocedures to the financial information and underlying financial data and, basedthereon, assessing whether the accounting policies and presentation have beenconsistently applied unless otherwise disclosed. A review excludes auditprocedures such as tests of controls and verification of assets, liabilities andtransactions. It is substantially less in scope than an audit performed inaccordance with International Statements of Auditing (UK and Ireland) andtherefore provides a lower level of assurance than an audit. Accordingly, we donot express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. KPMG Audit PlcChartered accountantsManchester6 September 2007 Page 27 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
AMFW.L