Half year results for the six months ended 30 September 2012

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Middle East

Key performance indicators
Key performance indicators Six months to 30 Sept 2012 Six months to 30 Sept 2011 Increase / (Decrease)
       
Revenue £79.8m £78.2m 2.0%
Operating profit £5.1m £7.8m (34.6)%
Operating margin 6.4% 10.0% (3.6)pp
Work in hand 89% 91% (2)pp
Staff numbers at 30 September 2,047 1,770 15.6%
Average staff numbers 2,004 1,640 22.2%

 

Performance

Our Middle East business has had a difficult first half. Revenue was up 2%, although margins were down as we experienced delays in capital projects and programmes coming to market, coupled with protracted negotiations on variations to major contracts in the region.  Notwithstanding this, we continue to see a good pipeline of strategic opportunities in a number of countries.

Major infrastructure projects within the region include the design of the King Abdulaziz International Airport in Jeddah in the Kingdom of Saudi Arabia (KSA), where we are the lead designer and programme manager for this complex new 30 million passenger per annum airport terminal and associated buildings and infrastructure. In the UAE we continue the concept and preliminary design for the 1,300km Etihad railway network to link the principal industrial and residential centres in the UAE, while recently we have been appointed to design the infrastructure for a new £1.3 billion, 42 km² residential community in Abu Dhabi. In Qatar we are supporting the country’s 2030 vision, including preparations for the 2022 FIFA World Cup, via a number of high profile and significant infrastructure planning and design projects.

We continue to diversify our skills and expertise in key markets. As a result we have seen growth in the defence, security and communications sector, including a new project to support the Qatar National Broadband Network (Q.NBN) with the rollout of broadband services throughout the state. We are also focused particularly on multidisciplinary design and engineering of infrastructure programmes in our key regional markets for which, although there are strong opportunities, the working capital requirements are more onerous.

Staff numbers have steadily increased over the last six months to over 2,000, which represents an increase of 15.6% on this time last year and 3.8% on March 2012. We expect headcount to remain broadly at this level for the remainder of the financial year.

Outlook

We remain well placed to build on our strong reputation in the region and capitalise on some excellent opportunities as they arise, most notably in Qatar and the KSA. There remains a degree of caution in some parts of the region, where we are seeing procurement delays and a more piecemeal return to investment. As a result, we continue to drive operational excellence through our Middle East business to ensure both resilience and agility in the way we secure and deliver strategic infrastructure programmes going forward.

Our order book at 30 September 2012 represented 89% of forecast revenue for the year (2011: 91%), and the overall outlook for our Middle East business remains in line with our expectations.