WET News

14 Leaders 2015 AECOM expands water business with URS takeover Amec Foster Wheeler expects growth in water AECOM DEsign BuilD Wentworth industrial Park Tankersley Barnsley s75 3Dl T: 01226 224466 www.aecom.com AMEC FOsTEr WhEElEr 4th Floor, Old Change house 128 Queen Victoria street london, EC4V 4BJ T: 020 7429 7500 www.amecfw.com the LeADeRS 2015 The past year for AECOM has been eventful. The group spent $4bn (£2.4bn) to buy the URS Corporation, creating a fully integrated infrastruc- ture business serving clients across a broad range of markets. The enlarged entity's interests span water, transportation, facilities, environmental, energy, and government. The acquisition created a combined entity with sales of around $19bn (£12.6bn) a year, and is expected to realise $250M (£165M) in annual cost-saving synergies, nearly all of which AECOM says will be achieved by the end of fiscal year 2016. Michael Burke, AECOM's chief executive, says the deal has created an industry leader with "unsurpassed capacity to deliver integrated solutions across AECOM's existing markets. We will have the ability to design and deliver major civil infrastructure projects in sectors such as transportation and water". Amec Foster Wheeler designs, delivers and maintains strategic and complex infrastructure assets across a range of markets including water, power, nuclear, and mining. On the water side the group offers a wide variety of services such as stormwater and flooding; water quality, municipal wastewater, and water policy and planning. Last year, Amec completed its £2bn acquisition of Swiss rival Foster Wheeler, creating a group that has a workforce of more than 40,000 staff across 50 countries, with envi- ronment and infrastructure activities accounting for around 9% of the business. Key benefits of the merger include: • Annual cost synergies, estimated by AMEC to be at least £46M • Retaining AMEC's low-risk and cash generative business model. Foster Wheeler has a similar business model, with predominantly cost-plus contracting and an asset-light AECOM's water remit ranges from flood alleviation and water quality to wastewa- ter treatment and asset management. URS's water engineering activities include flood defences, dams, water supply and water treatment plants, and pumping stations Burke says AECOM is now focused on integrating the two businesses "and executing on our strategy to become the premier, fully integrated infrastructure firm". AECOM's AMP6 workload engineering and project management business • Combining two highly skilled workforces with industry-leading engineering and project management expertise • Adding a robust and profitable power equipment business with a solid backlog of orders Chief executive Samir Brikho says: "I am pleased to report that we have delivered 2014 results in line with expectations. Looking ahead, I believe our low-risk, includes providing design services to support the delivery of Wessex Water's capital delivery programme. The initial five-year contract, which has the potential to be extended by a further five years to cover all or part of AMP7, sees AECOM working closely with Wessex Water's in-house engineering arm to deliver design services for projects across the South-west on schemes such as the construction of new assets. The figures below relate to AECOM Design Build. multimarket model combined with the additional benefits from our integration and cost savings programmes, is a strong platform from which to create long-term value for shareholders." The group expects growth this year to be driven by the expansion of environmental and infrastructure service needs. Lower energy costs are driving new project activity in the industrial sector, while the increasing demand for water will drive growth in wastewater and water treatment facilities. ThE nuMBErs 2011 2012 2013 % ChAngE Sales £M 3,261 4,088 3,974 -3 Gross profit £M 482 532 543 2 Operating profit £M 228 243 243 0 Pre-tax profit £M 259 254 255 0 Staff 21,422 23,379 23,572 1 Net assets £M 1,373 1,079 1,122 4 ThE rATiOs 2011 2012 2013 % ChAngE Return on capital % 18.9 23.5 22.7 -3 Gross margin % 14.8 13 13.7 5 Operating margin % 7 5.9 6.1 3 Net margin % 7.9 6.2 6.4 3 Sales/employee £K 152.2 174.9 168.6 -4 ThE nuMBErs 10/11 11/12 12/13 % ChAngE Sales £M 33.6 35.8 61 71 Gross profit £M 9.2 10.6 10.8 2 Operating profit £M -0.9 0.6 0.5 -12 Pre-tax profit £M -0.4 0.9 0.5 -37 Staff 131 147 159 8 Net assets £M 11.1 8.9 6.9 -22 ThE rATiOs 10/11 11/12 12/13 % ChAngE Return on capital % -3.8 9.7 7.9 -19 Gross margin % 27.5 29.7 17.8 -40 Operating margin % -2.8 1.7 0.9 -48 Net margin % -1.3 2.4 0.9 -63 Sales/employee £K 256.1 243.5 383.8 58

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