12th Jan 2006 07:01
AMEC PLC12 January 2006 AMEC plc 12 January 2006 PRE-CLOSE TRADING UPDATE Highlights- 2005 overall trading before exceptional items in line with the Board's expectations- Overall outlook* for progress in 2006 unchanged- Order book** £2.9 billion (31 December 2004: £2.4 billion)- AMEC SPIE sale expected in first half 2006- Review of future development of continuing businesses progressing Overview Overall trading during 2005 before exceptional items was in line with theBoard's expectations. This reflected strong demand in Oil and Gas, volume growthand margin improvement in Engineering and Technical Services and a goodperformance from PPP activities. This was offset by poor performance in some UKconstruction markets, particularly roads. Engineering and Technical Services ("ETS") The ETS business had a good year, with increased activity in Iraq and on majorUK framework contracts, together with margin improvement in the EuropeanMultitechnical Services business (AMEC SPIE). The environmental business had another record year, with increased federalspending in the US and Iraq, and strong performance in Western Canada. There was some upturn in AMEC's US industrial activities, which received aroundUS$100 million more orders in the second half of 2005 than during the sameperiod in the previous year. AMEC Nuclear achieved its first major win since the acquisition of nuclearservices business NNC Holdings Ltd, with a contract worth up to Cdn$510 million(£245 million) to provide project management and other services for the restartof two nuclear reactors at the Bruce A power station in Ontario, Canada. Oil and Gas The upstream services businesses reported good growth in 2005. A number of majorcontract wins underpin the outlook for this business, including the recent awardby BG Group to provide support services to all its UK upstream assets and tomanage the development of its Maria brownfield gas project in the North Sea. In Canada, the oil sands business performed particularly well. During 2005 thisbusiness received a major engineering design contract for the next oil sandsmine to be managed by Shell Canada and has good long-term prospects. The downstream business benefited from a number of important contracts during2005 for gas import and storage facilities in the UK, together with upgrading ofthe UK distribution network. Project Solutions PPP activities performed ahead of expectations. During the second half of theyear the Docklands Light Railway extension to London City Airport was opened andfinancial close reached on the Incheon Bridge project in South Korea. AMEC wasalso short listed for Fife Hospital and the Building Schools for the Futureproject in Knowsley, Merseyside. In the Wind Energy business the Isle of Lewis project received local authoritysupport at the end of June 2005, but this and other proposed developments remainsubject to planning consents. Further investment in this business resulted in asmall loss in 2005, similar to that in 2004. Overall performance in UK Construction was weak. As previously announced, stepshave been taken to exit unattractive market segments and to restructure thebusiness, costs for which were provided during 2005. Orders In Engineering and Technical Services, the intake of new orders continues togrow, whilst the order book in Oil and Gas and Project Solutions stands at £2.9billion, up from £2.4 billion as at 31 December 2004. Net debt As expected, average net debt in 2005 was about £420 million, with net debt atthe year end around £275 million. Sale of AMEC SPIE and restructuring proposals On 24 November 2005, AMEC announced the proposed sale of its ContinentalEuropean business. Advisers to the sale have been appointed and the sale processis now underway. AMEC has received an encouraging number of expressions ofinterest and anticipates completion during the second quarter of 2006. Meanwhile, AMEC continues to develop its plans for restructuring of theremaining businesses, including a possible separation to create two businessesfocused on energy and process industries and UK infrastructure respectively. Anupdate on these plans will be given at or before the company's preliminaryresults, which will be announced on Wednesday, 15 March 2006. Outlook The Board confirms that the overall outlook* for progress in 2006 remains inline with its earlier expectations. A telephone conference call for analysts and investors will be held at 09:00amtoday when Stuart Siddall, Finance Director will answer questions on the tradingupdate. * For the AMEC group as currently structured. ** Order book for Oil and Gas and Project Solutions Enquiries to:AMEC plc + 44 (0)20 7634 0000 Analysts/Investors:Stuart Siddall, Finance DirectorNeil Jamieson, Director of Investor RelationsMedia:Juliet Sychrava, Director of Corporate CommunicationsCharles Reynolds, Head of Media Relations Internet users will be able to view this announcement, together with otherinformation about AMEC plc, at the company's web site www.amec.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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