WS Atkins plc Annual Report 2009 Annual Report 2009 Report Annual plc Atkins WS
[email protected] www.atkinsglobal.com Plan Design Enable Introduction Governance 01 Financial Highlights 46 Board of Directors 02 Group at a Glance 48 Directors’ Report 04 Business Segments 52 Corporate Governance Report 06 Chairman’s Statement 58 Remuneration Report 08 Chief Executive’s Statement 65 Independent Auditors’ Report Reviews Financial Statements 14 Human Resources Review 68 Consolidated Income Statement 18 Business Review 69 Consolidated and Parent Company 18 Overview of the business Statements of Recognised Income and performance in the year and Expense 20 Segmental performance 70 Consolidated and Parent Company 20 Design and Engineering Solutions Balance Sheets 22 Highways and Transportation 71 Consolidated and Parent Company 24 Rail Cash Flow Statements 26 Middle East, China and Europe 72 Notes to the Financial Statements 30 Management and Project Services 118 Five-Year Summary 32 Asset Management 34 Financial performance Investor Information 37 Principal risks and uncertainties 122 Company Information 38 Corporate Responsibility Review 122 Financial Calendar 122 Shareholder Services
This Annual Report is printed on Revive Pure White Uncoated, a 100% recycled paper made from post-consumer collected Environmental impact waste and manufactured to the certified environmental At Atkins we are genuinely concerned management system ISO 14001. It is TCF (Totally Chlorine about our environmental performance. Free), totally recyclable and has biodegradable NAPM recycled certification. As such, we would encourage you to access shareholder information online at The Atkins logo, ’Carbon Critical Design‘ and the strapline www.atkinsglobal.com/investors or on your ‘Plan Design Enable’ are trademarks of Atkins Limited, mobile phone at www.atkinsglobal.mobi a WS Atkins plc company.
© WS Atkins plc except where stated otherwise. Introduction Reviews Governance Financial Statements Investor Information 01 % Introduction 8 9%
+ +
100.2 26.0
9 9
0 0 91.9 24.0
8 8
0 0 74.1 20.0
7 7
0 0 WS Atkins plc Annual Report 2009 68.4 16.0
6 6
0 0 56.5 12.0 5 5 0 0 Normalised profit before taxation £m Dividend pence % 4 .3pp + 0
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18,017 6.9
9 9
0 0 6.6 17,278
8 8
0 0 6.1 15,868
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0 0 14,907 6.0
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0 0 13,892 5.3 5 5 0 0 Operating margin % Headcount is to be the world’s best world’s the be to is 3% 1 23%
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82.3 1,487.2
9 9
0 0 66.7 1,313.6
8 8
0 0
56.5 1,179.8
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0 0 50.1 1,052.5
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0 0
42.5 955.0 Revenue excludes the Group’s share of revenue from Joint Ventures. Operating margin and normalised profit before taxation are before exceptional more be to considered disposals.is losses profits from or This any and items underlyingtrading. representativeof Normalised diluted earnings per share (EPS) is based on normalised profit after tax and allows for the dilutive effect of share options. including year-end, the at basis equivalent full-time a on shown is Headcount agency staff. 2006/07 and 2007/08 figures arefor continuing operations only. Dividend relating to the year, comprising the interim dividend paid in the year year the in dividend paid interim the comprising year, the to Dividendrelating and the proposed final dividend. 5 5 0 0
Notes 1. 2. 3. 4. 5. 6. Financial Highlights Revenue £m Normalised diluted EPS pence Our vision > infrastructure consultancy. 02 Introduction Group at a Glance
Plan, design, enable is what we do. >
Plan World’s
The challenges facing our clients are multidimensional, We will target chosen geographies, and develop often because of the increasingly complex modern deep local expertise. environment. From cost and risk planning, feasibility studies and logistics to impact assessments and stakeholder engagement activity, we plan every aspect of our clients’ projects. Best
We will seek to consistently anticipate and address Design our clients’ needs. Atkins designs intellectual capital such as management systems and business processes. We also design physical structures such as office towers, schools, bridges and highways. Whatever we design, we apply the same Infrastructure passion and creativity combined with rigorous quality standards. Buildings, transport, utilities, government and industry and their social and environmental context.
Enable
Our clients choose Atkins because they need assurance that their projects are procured safely and Consultancy predictably. They entrust us with the management of projects, people and issues – ensuring that Our primary business model will be selling expertise. deadlines are met, costs are controlled and success is delivered.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 03 Introduction 1 Asia Pacific 1 ,employees 2 0 0 WS Atkins plc Annual Report 2009 Total headcount Total 18,000 2 Middle East Middle 3 ,employees 3 0 0 Other Europe Other employees 900 Approximate full-time equivalent staff March at 31 2009 including agency. Source: New Civil Engineer Consultants File 2009. Notes 1. 2. engineering consultancy in the UK Revenue 2009 £1, 4 8 7m Largest 1 1employees , 9 5 0 United Kingdom United employees North America 650 04 Introduction Business Segments
We report our activities in a number of business segments, reflecting how we manage the business according to different markets and geographies. >
Design and Highways and Engineering Solutions Transportation
We deliver engineering and Our principal activities are technically integrated design transport planning, advising to a wide range of largely UK government and highway clients in the public, regulated authorities on transport policy and private sectors. Our areas and investment appraisals; the of operation include water, design of road improvements; environment, nuclear, power, applying intelligent transport aerospace, defence, oil and systems to enhance network gas and infrastructure design. performance and delivering integrated road network management and highway maintenance services.
This chart illustrates the relative size of the segments by revenue
Design and Engineering Solutions Highways and Transportation Rail Middle East, China and Europe Management and Project Services £418m £292m Asset Management Revenue Revenue
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 05
Introduction Asset Management independent provide We management asset property servicesnumber a to private of public to and clients sector including organisations sector law government, central health education, order, and defence. and £48m Revenue WS Atkins plc Annual Report 2009 £230m Revenue Management and and Management Services Project provides Faithful+Gould management cost and project of range wide a to services clients across the public and UK, the in sectors private USA and Asia Pacific. Our Consultants Management design strategy, offers business management programme and for technology-enabled change. business
£303m Revenue Middle East,Middle Europe and China In the Middle East, we design, of range full a provide project and engineering for services management buildings, transportation and other infrastructure from our the in centres eight Gulf and provide we China In India. urban planning, engineering, services architectural design, designand rail the mainland to Our Kong. Hong and market European business comprises operations Denmark, in Portugal Poland, Ireland, Sweden. and
Revenue £196m We provide specialist design design specialist provide We of range a across services engineering disciplines, civils, signalling, including electrification and specialist services strategic in planning, integration systems and safety principally heavy for rolling rail, stock and metro markets. Rail 06 Introduction Chairman’s Statement
The Group had another successful year. We have a strong balance sheet and will continue to invest in developing the business. >
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 07
Introduction WS Atkins plc Annual Report 2009 I am delighted to welcome Heath Drewett Drewett Heath welcome to delighted am I the Board. to and Heath Joanne Curin Junejoined 2009 the Board and on 15 will assume the role Group finance of joined Joanne 2009. June 19 on director director non-executive a as Board the the take will and 2009 February 10 on the of Audit Committeechair on 30 June 2009. Lord will Boyce assume the role senior of independent director, also on 30 June. Dividend The Board recommending is a final total the making 17.25p, of dividend 24.0p), (2008: 26.0p year the for dividend the approved, 8%. If of increase an September 25 on paid be will dividend the on shareholders ordinary to 2009 August 2009. register on 14 Outlook startWe the newyearin a financial good representing hand in work with position (2008: revenue budgeted our of 54% varies climate macro-economic The 55%). significantly across our diverserange of stable relatively are majority The markets. UK our in remain uncertainties some but confidence and business design building East. Middle the in return fully to yet has well prepared to however, are, We positive both fluctuations, to respond andour negative, all markets. in The Group well is placed navigate to through the challenging overall balance strong a have We environment. sheet invest to and in will continue business. the developing Ed Wallis Chairman June 2009 16
will retire from the Board on 30 June. June. 30 on Board the from retire will invaluable an made each have They them wish I and Group the to contribution every success their endeavours. in future People After a number years of sustained of numbers staff Group’s the growth, 18,600 approximately of peak a reached Novemberin 2008. In response the to latter the in conditions market worsening and UK our in principally year, the of part residential and commercial East Middle we businesses, property-facing announced the redundancy some of staff. Approximately1,200 600 staff year-end, the by business the left had taking our year-end staffnumbers to remainder the with 18,000, approximately leaving the in subsequent months few end. an to come periods notice their as lightly, decisions such make not do We our to responsibilities our take we as people very but they were seriously, costs our reduce to order in necessary economic changed the to response in however, time, same the At environment. recruit fill to to continuing we are our of areas other in vacancies specialist continue which nuclear, as such business, and demand in growth experience to trainees. graduate in take to employees our all thank to like would I their for Group the throughout these during efforts and commitment turbulent economic times. Board of directors as served has who MacLeod, Robert 2004, June since director finance Group a as served has who Morley, James and 2001, January since director non-executive to intention their announced both have will Robert 2009. June in Board the leave and director finance Group as down step June and Jamesleave the Board on 19
In the UK, Highways our Rail, and and Management and Transportation performed all segments Services Project performances good were There well. Middle the in business our for result The year, last of ahead significantly was East 82%. up £17.3m, of profit operating with business the year the of half first the In the in confidence but strongly grew the by impacted significantly was region global economic slowdown and a liquidity crisis the in region 2008. autumn in liquidityThe strong remains Group’s performance cash good very a by helped funds net with year the ended we and had another successful year, with revenue revenue with year, successful another had earnings diluted normalised and 13% up per 23%. up by as share have, We further make to continued planned, margin operating increasing in progress continued This 6.9%. to 6.6% from the including Group, the of development was margins, operating in improvement economic challenging a against achieved the in secondbackdrop the of half year. within businesses our of majority the from the Design and Engineering Solutions design building our in than other segment impacted adversely was which business results The market. its of slowdown the by segment Management Asset small our of reflecting disappointing, very were PFI long-term legacy one with problems contract. management facilities cancelled were projects of number A necessitating quarter, third the during fourth the in business the of re-sizing a in businesses Our year. the of quarter delivered both have Europe and China increased profits. of £234.2m. Results Group the that report to pleased am I 08 Introduction Chief Executive’s Statement Our strategy
Plan, design, enable is what we do. Our vision is to be the world’s best infrastructure consultancy. >
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 09
Introduction WS Atkins plc Annual Report 2009 – although be may this a consequence striving will not We excellence. for broadest or biggest the be necessarily our success.of of area expansive the in lie skills Our ‘infrastructure’ – the wiring society of utilities and transport buildings, covering – as well as water), and power (including governments local and national for work and other industrial clients. The social combined framework, environmental and skills, planning policy social our with we that essential is it – important also is context the in projects our of all view will they which in communities the of be undertaken. will we that means ‘Consultancy’ operate a business based on selling advice advice selling on based business a operate developer, a not are We expertise. and generalist or company construction the have however, do, We outsourcer. skills commercial and status financial increasinglyare demanding. strategy Group will achieveWe our vision through a excellence. multi-skill multi-local, of strategy the is activity our of much to key The the of nature local and national relationships we build with our clients. continue clients our of majority vast The because level local a at Atkins to come to technical deep demonstrated have we decentralised Our performance. local empowering organisation, resources leverages also management, strategy Our Group. the across from we where efforts our focusing involves to successfully engage in a wide wide a in engage successfully to variety contract of forms as clients ableare develop to these deep local call We clients. our with relationships this part our strategy of multi-local.
as the best infrastructure consultancy in in consultancy infrastructure best the as the of because geographies chosen our projects and service will We we deliver. everywhere, offices with global, be not will reach multi-national our although be extensive. to close be will we that means ‘Best’ continue to be needed. We do, however, however, do, We needed. be to continue global The cautiously. term near the view demand impacted has position economic Nevertheless, markets. many in levels push to determined are governments through stimulus packages and are climate with these of many aligning well plays This goals. minimisation change provided Group the of strengths the to to brought be can projects related the also is It manner. timely a in market possible short-term that demand some for our servicesof will rise as governments additional for need the with terms to come strategic capital of planning projects. consulting professional decentralised Our organisation with its very wide range of excellent an provides skills technical deep to Group the across respond to base to ability Our fluctuations. market and add enhance to grow, to continue both of confidence us gives skills these global the negotiating successfully meet to continuing and issues economic the prime objective EPS of growth. Vision Our vision be to is best the world’s consultancy. infrastructure develop will we that means ‘World’s’ targeted certain in expertise local deep recognised be to aim We geographies. needs, their anticipating clients, our and relationships long-term developing help to aim We business. repeat winning know don’t clients our questions answer to them help will We ask. to need they will values Our questions. their define work our out carry we way the espouse – with integrity and respect, always
We believeWe our objective can be best the develop to continuing by achieved predominantly of model business current Design Plan – consulting professional generally part ‘enable’ the with – Enable management as such activities to limited signalling and maintenance road of more become programmes Ascapital complex and our clients, both in the the regarding optimistic remain We services. our for demands medium-term the all and populations urban Growing low-carbon a with connected issues appropriate require will economy infrastructure.Quality, local understanding and breadth will skills therefore of by growthby normalised in diluted earnings our that confident are We share. per design professional of that activity, core environment, built the serving consultant perform to continue to us enable will of spite in company successful a as unprecedented economic turmoil. us gives expertise technical our where of majority The advantage. competitive a our business our clients’ relates to capital expenditure programmes as opposed to expenditure. operating day-to-day their increasing face sector, private and public pressure on expenditure, the Group’s demand. in remain will capabilities Effective use assets current of and efficient procurement with low-carbon plays that platform a provide drivers capital Where strengths. Group’s the to in are we demanded are programmes and cost design and plan to position a carbon savings. Where more effective use design can we needed is assets current of and extension life efficient enable and in example for – alternatives imaginative running shoulder hard and metering ramp the extending and networks road the on reactors. nuclear existing of life Objective and business position business and Objective create to is objective primary Our long-term shareholder value measured 10 Introduction Chief Executive’s Statement Our strategy Continued
The implications of a multi-local None of this strategy works unless we Low-carbon economy strategy are: constantly strive for excellence. Economies The transition to a low-carbon economy rely upon the capital projects on which poses extraordinary challenges and • we will have several home markets, we work, and customer trust in our opportunities. Our Carbon Critical Design where the business is a market leader delivery is paramount. This trust depends programme is producing new ideas and and is material to us on us maintaining world-class skills, and ways of working. We are endeavouring • we will only offer services where we constantly pushing the boundaries of to embed low-carbon design in all of our have a high degree of technical what is technically achievable. work in a marketplace that is still immature. competence in each of these markets • we will be seen as deeply local Our scope is clear. We will continue This encompasses all of our areas of by customers to evolve world-class skills in operation as people around the world • home businesses will be autonomous, infrastructure-related disciplines. wrestle with how to approach the issue but we will leverage capability from one We will focus these skills in selected of climate change. region to another – collaborating and home geographies where our full sharing knowledge across the Group capability can be brought to bear. We are making good progress on our • we will not be global, offering identical journey to have some 5,000 Atkins people commoditised services. Our advantage is clear. Our breadth and engaging with clients on carbon issues depth of skills give us the ability to deliver within the next year. We are investing In addition to developing local skills, simple solutions to complex questions. in carbon tools and running training our local management teams are able The reputation we build will attract courses to raise awareness of the issues to draw upon the Group’s wide range employees and customers worldwide. among our staff. We regularly contribute of skills and resources. One of Atkins’ key to external conferences and debates on differentiators is the extensive range of Skills the subject. skills that we have in the organisation. Our Atkins has a huge range of technical skills ability to mobilise multidisciplinary teams evidenced by the vast array of services We continue to work with governments and deep expertise from around the that the Group can offer. The devolved to offer advice about the delivery of Group for local projects is a demonstrated strategy is to have deep understanding of a low-carbon economy. In this financial capability that we have continued to the skills demanded and offered (Identity) year we have also invested to build successfully develop. Our clients recognise and to deliver these to a degree of a range of carbon calculators across most that, by harnessing this breadth of skills, quality to remain competitive (Excellence). areas of our business to support us in the we can answer their questions better. At business unit level this strategy is delivery of low-carbon design and planning. This part of our strategy we call multi-skill. articulated as Identity+Excellence. This remains an iterative journey but one The implications of a multi-skill Our drive for improvement and growth that is of fundamental importance. We strategy are: has been organic supplemented by will not lose sight of this even in difficult targeted bolt-on acquisitions. Stringent market conditions. We will continue to • our competitive advantage will come acquisition criteria are applied to ascertain invest in raising awareness, developing from our breadth and depth of skills the appropriateness of the skill-set and tools and actively engaging with our • our breadth will allow us to address the cultural fit and to assess whether clients to help them meet their carbon world’s most complex projects, small companies will usefully accelerate the agendas over the next decade. or large, and give us flexibility to react multi-skill, multi-local strategy. Given the to new market opportunities sound financial position of the Group, • we will continue to invest in ensuring acquisitions can be readily financed and collaboration between skill groups and we can direct significant investment into business units areas in which we see value. We have • we will not be satisfied with skills that continued to make good progress on are less than world-class just for the acquiring new skills and extending sake of breadth. our capabilities in recent years. The acquisitions of, for example, Nedtech and M.G. Bennett reflect our desire for skill acquisitions – enhancing our capability in specific areas and embedding new expertise alongside the existing Atkins offering.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 11
Introduction WS Atkins plc Annual Report 2009 to add niche skills and prepare for the the for prepare and skills niche add to economic upturn. and on focus will we Pacific Asia In in activity.in continue will we East Middle the In our available in marketspush hard – Hong in market transit the principally urban and design building and Kong continue will We China. in planning growth significant before years two In the UK we have niche positions in in positions niche have we UK the In to propose We markets. numerous management, in invest to continue the organise and base skill the deepen as will, We way. suitable a in business controlled undertake demonstrated, and businesses of exit or reduction downturns for appropriately structure of advantage take to invest to up, opens market the as opportunities least at be could it that recognising is achieved. develop to continue will we Europe In our local businesses. In the USA, Faithful+Gould and our oil and gas businesses provide the additions Skill focus. growth organic possible.remain continue will areas geographic Other to beto reviewed. • • • • We have strong technical skills in in skills technical strong have We a number robust of markets where quality selection. for determinant significant a is • • • the of many in view medium-term a Board the by noted also was businesses position adequately may Group the that so opportunities of advantage take to itself arise. they as • • developments. market global of light in The tenets main the of strategy were re-affirmed andtop-down the multi-skill, unchanged. remains strategy multi-local empowered and decentralised The the to fundamental is model business conditions, current In Group. the of success certain in priority have responses tactical markets but the need maintain to The Board met the in quarter final of themes strategic 2008/09consider to
at the forefront of activity – determining determining – activity of forefront the at services what delivery, optimise to how which in and offer to skills and operate. to markets geographical is importantis now is strategy the of implementation is appropriate the business units the remain core scenarios credible of range wider a to deal to placed well is Group the but – with this communication the of strategy the consultancy business model model business consultancy the strategy the of economic uncertainty lead could The majority of our business is in the UK the in is business our of majority The our for market core the remains which outside businesses existing Our activities. opportunities attractive present UK the of potential huge The growth. further for we where areas includes UK the outside Middle the as such established well are East, which despite liquidity recent issues, promise. medium-term significant has • • • • Last year we noted that we were mindful mindful were we that noted we year Last theof indirect consequences a of commercial the in downturn prolonged Macro-economic market. property conditions worsened 2008 during late Middle and UK our affect to started and We businesses. design building East swift took and position the recognised action reduce headcount to and match costsThe the available to market. Group monitor to market will continue appropriate take and developments action. a diverse have We base skill and provides which footprint geographic Many times. uncertain in resilience markets remain resource-constrained. as necessary hire to continue to and whereshrink maintain levels required to performance.of the on focused review strategy 2008 The building strategy, Group the of evolution on the work previous of years. The review confirmed: • • The Group is agile and flexible enough enough flexible and agile is Group The
to deliverto complex projects various in parts theof world. The Group top-down strategic aims aims strategic top-down Group The and sectors market encompass and operate to which in geographies units business the which in ways establish superior delivering in assisted be may multiple Increasingly performance. together brought be can units business We set our own challenging targets for for targets challenging own our set We performance our and safety and health betterremains than the industry average HSE the by compiled as performance to keen are We Survey. Force Labour our expanding by improve, to continue to and programme, leadership safety reduce the number handling manual of accidents 23% for which account All our operations of now are by covered businesses our of three and 18001 OHSAS Gold awards: RoSPA received also have Strategy process establishing by developed is strategy Our the evaluating and priorities Group’s the the within businesses the of strengths five-year bottom-up unit Business Group. the of context the in set are plans on a fatality occurred that on the Diego tree a during DG21 Venture Joint Garcia equity an has Atkins operation. felling and Venture Joint the in 24.5% of stake including support, provided have we advice on further how to the improve health and safety arrangements. construction. in accidents serious of alsoWe actively encourage the reporting positive a as near-misses and incidents of prevention. accident towards step Highwaysfor and Transportation, and and Solutions; Engineering and Design (which Management Asset for Distinction running). year 22nd the for awarded was aims. strategic Group top-down Health and safety report we that regret deepest with is It 12 Introduction Chief Executive’s Statement Our strategy Continued
During 2009/10 the Group will continue Looking forward The Middle East comprises several to evaluate the services and countries that Our UK activity is underpinned by the markets and although the Dubai property will provide the best long-term returns for provision of specialist, not commodity, market was effectively frozen from late the Group and, where appropriate, will services to several long-standing calendar 2008, many other geographic follow specific sector opportunities into clients in the private and public sectors. markets and sectors continue to be active. new and related markets. Acquisitions With approximately 50% of our UK The challenges arose from a liquidity and organic investment will be considered revenue coming directly from UK issue in the region which led to a number which deepen the Group’s skill base and government (central or local), the Group of confidence issues. Confidence will strengthen our market position in line with is highly dependent on continued return, and the region as a whole will our strategy. Acquisitions can accelerate government expenditure. continue to be an attractive area that growth in our home geographies and can support a significant Atkins business, elsewhere. Attractive geographies The current economic turmoil and increased increasingly in essential infrastructure continue to be those with good cultural government debt will undoubtedly put as well as buildings, built on experience fit and market scope i.e. a material market pressure on the government’s finances, and relationships established in the with good growth prospects and potential particularly from 2010/11 onwards. decades that we have been present in for Atkins to grow market share. the Middle East. The Group is, however, well positioned The Board remains alive to the challenges despite potential spending cuts because The US workload, driven by a variety of and opportunities that arise from of a number of factors: clients, is steady and we anticipate that unprecedented world economic conditions. fiscal stimulus will help to increase activity The Group is well placed to weather the • There will always be a demand for levels in infrastructure-related areas. downturn and take advantage of high-value technical skills – where opportunities that may present themselves. quality is the major determinant – and Europe and China are longer term It has the resources to emerge strongly these will be in greater demand as the prospects for the Group – but as markets recover. complexity of the questions and infrastructure needs will drive medium challenges facing our clients increase. term demand. Business unit strategy • The drive to satisfy the UK’s Carbon The decentralised consultancy model Reduction Commitment will further Our deep local presence and drive for demands that elements of the strategy increase the need for technical solutions the type of value-for-money engineering be established at business unit level. Each to achieve the government’s targets. that cannot be achieved at the commodity business actively considers its competitive • Decarbonising the economy, together end of the spectrum place us well to and resource-based advantage together with an increasing need for capacity, deliver in all of these markets in the with ways in which we may apply our reliability and predictability should short term and beyond. business models better and improve particularly enhance demand for our services. skills in, for example, our nuclear, We are confident that with our culture, transmission and distribution, skills and business model we are, as Each business determines a medium utilities and rail markets. evidenced by this year’s continued to long-term view of its prospects and • The government can increase efficiency improvement in financial performance, positioning within its markets in the by spending more time on the planning well positioned to weather the context of Group objectives. This year, and designing of projects. Putting more turbulent global economic climate while actions have been focused on the thought into less construction is an area and emerge stronger. near term to ensure navigation through where the Group is particularly strong. rapidly changing markets, strategic action plans have continued to be developed to Keith Clarke ensure medium-term objectives remain in Chief Executive sight. Our management depth and ability 16 June 2009 are key to ensuring that we maintain a forward looking view within the business.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
and performance the in year Overview the of business Segmental performance Design and Engineering Solutions Highways andTransportation Rail Middle and Europe East, China Services Project and Management Asset Management Asset performanceFinancial Principal risks and uncertainties
Human Resources Review Business Review 18 20 20 22 24 26 30 32
34 37 ResponsibilityCorporate Review
18 Reviews 14
38 Reviews 14 Reviews Human Resources Review Our people
Atkins’ success depends on attracting and retaining the most talented professionals in their respective fields and providing an environment in which they are able to apply their skills on a variety of complex projects. >
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
15
2008
26.1% 14.2% 10.9% 15.0% 15.0%
Reviews
2009 8.9% 17.9% 14.7% 10.0% 10.2%
WS Atkins plc Annual Report 2009 USA Europe Middle East China UK year in succession we were awarded the the awarded were we succession in year index stability the monitor also We East Middle (2008:81.9%), 87.2% UK (2008:76.9% 75.3% 83.3%), China 87.4% Europe (2008: 71.2%), and USA 81.5% (2008: 91.7%) Top 20 Top Best Big Companies to Work For The Sunday Times, 2009 To p 10Employers Graduate 0 The Times, 2008 in joining trainees 300graduate had We reduced have we although and, year the ahead, year the for 150 to target our our on those to committed remain we fourth the For programme. graduate the in Recruiter Graduate Popular Most Engineering Civil and Construction Graduate National Target the at category feedback on based is award This Awards. campus online an through gathered survey 90,000 of undergraduates over January in ending period four-month a UK). the in kind its of largest (the 2009 Retention Staff turnover improved markedly staff overall with year the throughout 11.4%. to 15.4% from reducing turnover region by was as follows:Turnover the number(i.e. staff of with more than financial the of end the at service year’s a headcount the of percentage a as year for year) financial the of beginning the at major each for and whole a as Group the measure this in performance Our business. staff experienced of retention the of large most with well very compares with businesses services professional as Group the for 84.3% of index an for indices The (2008:82.2%). whole a follows: as were regions individual the (2008: 88.7%). monitor continued to feedbackWe from staff who left Atkins in the year. year. the in Atkins left who staff from over 80% wouldEncouragingly, work to place a as Atkins recommend and would consider working with again us someat point their in career.
Mar
Feb Jan Dec Nov 2008/09 average Oct with strong growth in most parts of the the partsof most in growth strong with the in action by followed organisation, to resources our adjust to half second environment. economic changed the reflect In the months eight from April to including headcount, 2008 November peak a to 8% by increased staff, agency 2008 November From 18,600. over of 2009 March to there wasthen reductiona circa 600of staff reducing (3.2%) allowance Once 18,017. to headcount design building East Middle and UK the in businesses and Faithful+Gould. in continues and been has effort Every have colleagues of number significant a restructuring, of result a as business the left othersmany been have redeployed business the partsof other to successfully in growth see to continue we where recruiting are We staff. skilled for demand Group, the across roles specialist fill to power gas, and oil nuclear, in notably aerospace. and Headcount Headcount growth the in firsthalf years recent of trend the continued the then notice under staff for made is circa to reduces headcount underlying These reductions were mainly 17,400. whilst and, staff redeploy to made be to Sept
Aug
Jul Adjusted for under notice at year-end Jun May Period end Apr 17,500 17,000 16,500 19,000 18,500 16,000 18,000 We measure our performance in various various in performance our measure We depth and breadth the by partly ways, are able to attract and retain the most most the retain and attract to able are respective their in professionals talented in environment an provide and fields skills their apply to able are they which clients‘ our addressing in experience and an being that means This needs. varied in prerequisite a is choice of employer environment competitive a remains what our of proud are We staff. best the for record meeting in this challenge but recognise focus. it requires a continual theof and skills capabilities our people of but also tracking a number by metrics of our management to which integral are retention, include These business. the of the and engagement employee also We workforce. our of composition the of views careful account take our of external and internal via expressed staff surveys, with the latter resulting in a number awards. of Overview we that extent the to succeeds Atkins Monthly headcount 16 Reviews Human Resources Review Our people Continued
Employee engagement the 10 principal criteria is now well above We have improved our graduate During the year, we continued to invest the benchmark for the organisations development programme, responding in and develop two-way internal which use this survey. Our performance to the results of a review undertaken one communications channels to enable us improved for each of the 10 factors and year ago. The review highlighted many to share information to inspire, motivate for 29 of the 30 detailed questions. examples of exemplary practice, but also and engage Atkins staff around the world some areas where we needed to do and to receive their feedback. In particular, We were delighted to maintain our better, particularly in ensuring the we hosted a conference for 500 live position in the UK’s Sunday Times Top 20 consistency of our delivery against the delegates and 9,000 online delegates to Best Big Companies award with an ‘promise’ that we make to new graduate explain our vision to be the world’s best improved ranking of 10th. This was trainees. This is particularly important infrastructure consultancy and to reinforce particularly pleasing since 2,500 of our given both the size of our graduate trainee our strategy of Identity+Excellence. We UK staff were invited to take part in this population, which now exceeds 1,000 have also launched a new intranet news anonymous survey, which is important in staff, and their importance to our future. centre which has enabled us to deliver allowing us to compare our performance better quality information to staff in against other leading employers in our We have reviewed the training a more timely, appealing and accessible sector and more widely. arrangements for all graduate trainees multi-media format. Penetration statistics in conjunction with our staff and the show that significantly more people are Investment in people major professional institutions, and have receiving information about Atkins than The skills and capabilities of our people taken action to strengthen these where in previous years. Staff therefore have are key to our success. A high priority is necessary. We have set up internal forums a greater understanding of our vision, placed on learning and development with to bring together both graduate trainees strategy, performance, values in action an annual investment in training of over and those responsible for their development and Group achievements than in previous £20m during the year. More than 8,000 to ensure that good practice is shared and years, which contributes to our objectives delegates attended Group programmes high standards are maintained. We have of motivating and retaining staff. (an increase of 10% on the year before). also received accreditation for an Atkins Further Learning Programme by the Joint Most significantly, we measure employee Our portfolio of programmes was Board of Moderators to aid the progress engagement across the Group via our enhanced to ensure that they addressed of graduates with bachelor degrees to annual Viewpoint survey, an online survey the key issues of Carbon Critical Design chartered status. open to all staff in the Group. This was and diversity. New and updated completed by 77% of staff and showed programmes were introduced including, During the year we also created 11 technical an improvement in the employee for example, a course on the leadership networks to encourage excellence and engagement index for the third consecutive of virtual and remote teams in recognition professional development in the areas of: year. An employee engagement index of the fact that many projects now tall buildings; geotechnical engineering; of 75 represents excellent performance. span geographic as well as internal carbon critical buildings; commercial due Furthermore, our performance in each of organisational boundaries. diligence; masterplanning; strategic and policy planning; structural engineering; tunnelling; bridge engineering; internal Employee engagement index project management; and geospatial 75 and integrated digital solutions. Each network is chaired by one of Atkins’ 74 most experienced professionals in each 73 of the disciplines. 72 71 70 69
68 67 66 2003 2004 2005 2006 2007 2008 2009
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
17
Reviews WS Atkins plc Annual Report 2009 s Where Women Want to Work Work to Want Women Where s Top 50 Top Place The Times, 2008 Winner National Graduate Recruitment Awards, Construction and Civil Engineering Sector Magazine, 2009Target Atkins has hosted a number of supplier supplier of number a hosted has Atkins encourage to ODA the with jointly events more SMEs do to business with and us currentlyis working withthe London to LOCOG and Agency Development self-assessment a of benefits the maximise tool – ‘Diversity Works London’. for Scope, with links closer forged have We people’s disabled for working charity a first our recruited have and equality, leadership their through trainee graduate also on have taken our We programme. an Support, Total through recruits first specialises which agency employment or disabilities with people placing in requiring rehabilitation. employs East Middle the in business Our staff over 40 of different nationalities work to continue we UK the in and for Centre Resource UK the with closely to Engineering and Science in Women agenda government’s the to contribute engineering in participation increasing for and science professions. in shift a seeing are we Encouragingly progress of evidence clear and attitudes with increasing numbers women of represented most at levels the of organisation but a realise we have journey complete. to
with colleagues in the ODA, the London London the ODA, the in colleagues with and Olympic the of Committee Organising other and (LOCOG) Games Paralympic reflect we that ensure to partners delivery Games the of objectives diversity the the in and undertake we work the in Olympics supply This included chain. has ODA by run week diversity a for support which to we invited a and LOCOG their share to team sailing Paralympics team; project our with experiences money raise to engagement community Stoke a to children London 250 send to the and sportscamp; Mandeville education diversity a of development programme be to rolled out across Atkins a theatreusing company. (ODA) where we have worked closely closely worked have we where (ODA) to provide a voluntary lower-cost option option lower-cost voluntary a provide to increased significantly to alternative an as contributions. memberemployer and previously with together actions These announced increases employer to reduced significantly have contributions defined our with associated risks the benefit liabilities. Diversity company local a as operates Atkins its of diversity the reflect to needs which which and regions several in community We world. the partsof most from recruits geographical cross which teams assemble for compete and boundaries cultural and skilled staff highly in competitive markets, making are we that ensure to need we so our of talents varied the of most the diversity held we year the During people. and Board the for sessions training Executive. Group areas several in progress made have We initiativesthrough internal and through with and clients with collaboration our national organisations. collaboration our is note particular Of Authority Delivery Olympic the with Finally, we have commenced consultation consultation commenced have we Finally, Atkins the 400in staff approximately with Scheme Pension Railways the of section
We have made additional progress with with progress additional made have We defined Group’s the of restructuring the benefit pension arrangements with award to recognise individual contribution contribution individual recognise to award and performance. a further reduction the in number of Atkins the in benefits accruing members closure the and UK the in plan pension plan McCarthy the of accrual future to Ireland. in We reviewed the operation of our bonus bonus our of operation the reviewed We and arrangements, incentive which we believe operate to well and continue practice. best current against effectively, covers now scheme bonus executive Our addition, In 800 people. than more will staff our of 30% approximately benefitfrom a discretionary bonus Reward remuneration our monitor to continue We people reward we that ensure to practices competitively each the in of markets and the During operate. we which in regions wage in decline significant a saw we year, January in decision a took and inflation the defer to decision the of context the In directors executive our review, pay annual their of 10% waived have chairman and 2009. April 1 from payments salary monthly In addition, response in local to market pay reductionconditions, a 10% been has implemented staff for the in Middle East significant of account taking Ireland, and pay deflationin thesemarkets. engagement with universities has continued Liaison Directors our programme, continued has universities with engagement currently Atkins develop. and grow to in universities 16 with relationships has the in the USA, UK, two 10 China, in two Singapore in and one Dubai. in salary Group-wide annual the defer to 2009. October to April from review considered take to us allow should This against levels pay regarding decisions outlook predictable and stable more a than would otherwise been have the case. In addition, through our University University our through addition, In 18 Reviews Business Review Overview of the business and performance in the year
Atkins provides professional design and engineering consultancy services. We are the largest engineering consultancy in the UK. > Our business Key performance indicators operations increased by 19% to £103.1m Our core business is helping our clients The Group uses a range of performance while the Group’s underlying operating to plan, design and enable capital measures to monitor and manage the margins grew to 6.9%. Translated at programmes that resolve challenges business. Those that are particularly constant exchange rates, revenue grew in the built and natural environment. important in monitoring our progress in by 9% and operating profit by 16%. We are able to plan all aspects of our generating shareholder value are considered clients’ projects, conducting feasibility key performance indicators (KPIs). Our Operating cash flow in the year was studies and impact analyses covering KPIs measure past performance and also £125.5m, representing 122% of operating technical, logistical, legal, environmental provide information and context to profit, and net funds at 31 March 2009 and financial considerations. We design anticipate the future and, in conjunction were £234.2m. systems, infrastructures, processes, with our detailed knowledge and buildings and civil structures. We enable experience of the segments in which we Normalised diluted EPS grew by 15.6p our clients’ complex programmes by operate, allow us to act early and manage per share to 82.3p, an increase of 23%, optimising procurement methods and the business into the future. Revenue, reflecting the benefit of a reduced tax managing supply chains on their behalf operating profit and margin, earnings charge, following the acquisition of tax to reduce timescales, cost and risk. per share (EPS) and operating cash flow losses from Metronet, in addition to a 9% indicate the volume of work we have improvement in normalised profit before We report our activities in six business done, its profitability and the efficiency taxation. Excluding the benefit of acquired segments as this reflects how we with which we have turned operating tax losses, normalised diluted earnings manage the business via different profits into cash; work in hand measures per share would have been 75.3p, an markets and geographies. our secured workload as a percentage of increase of 12.9%. the budgeted revenue for the next year; staff numbers and staff turnover are At 31 March 2009 we had secured 54% measures of capacity and show us how of budgeted revenue for 2009/10, effective we have been in recruiting and compared with 55% last year. retaining our key resource. Staff numbers increased by 739 (4%) KPIs for 2009 are shown in the during the year but will reduce in the first table opposite, along with prior quarter of 2009/10 as approximately 600 year comparatives. people under notice at the year-end leave the business. Review of the year In the year ended 31 March 2009 Segmental analysis of revenue, operating the Group’s revenue from continuing profit, work in hand and staff numbers operations grew by 13% to £1,487.2m. follows, while staff turnover is discussed Operating profit from continuing further in the Human Resources Review.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 19 Reviews WS Atkins plc Annual Report 2009 +4% +6% +13% +13% +19% +19% +23% +23% -1.0pp -4.0pp +55% +55% change +0.3pp
55% 2008 6.6% 66.7p 66.7p 17,278 17,278 15.4% 16,981 16,981 £86.7m £80.9m £1,313.6m
54% 2009 6.9% 82.3p 11.4% 17,988 18,017 £103.1m £125.5m £1,487.2m
1 3 2 4 6 4/5 Note
Revenue excludes the Group’s share of revenue from Joint Ventures. Normalised diluted EPS is based on normalised profit after tax and allowsfor the dilutivethe scheduledfor is that effect March 31 of at share as committed work and options.contracted of value the is hand in Work following expressed year, as a percentageof budgeted revenue for the year. Staff numbers are shown on a full-time equivalent basis, including agency staff. Staff numbers March at 31 2009 included approximately 600 staff under notice of redundancy. average of percentage expressed a as year, voluntary the staffof in number resignations the is turnover Staff staff numbers.
Financial metrics Financial Notes 1. 2. 3. 4. 5. 6. Key performanceKey indicators operationsContinuing Operating cash flow EPS diluted Normalised Revenue Operating profit People Operating margin Work in hand Staff numbers March at 31 Average staff numbers the for year Staff turnover 20 Reviews Business Review Segmental performance
Design and Engineering Solutions
Key performance indicators 2009 2008 change Financial metrics Revenue £418.3m £373.6m +12.0% Operating profit £31.6m £30.2m +4.6% Operating margin 7.6% 8.1% -0.5pp Share of post-tax JV profit £0.1m – Work in hand 43% 39% +4pp People Staff numbers at 31 March 5,167 5,024 +2.8% Average staff numbers 5,133 4,722 +8.7% 31.6 5,133 418.3 30.2 4,722 27.0 373.6 3,980 320.8 22.6 20.6 3,332 3,384 269.5 228.7
05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Revenue £m Operating profit £m Average staff numbers
Revenue by client type
Public Sector: Local Government Water Buildings Public Sector: National Government Nuclear Communications Private Sector Defence Aerospace Regulated Environment Education Oil and Gas Other Urban Development
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 21
Reviews WS Atkins plc Annual Report 2009 will be provided nuclear the by UK’s new-build programme. In the longer term, there are substantial opportunities our for business support to the UK government’s drive achieve to its reduced carbon emissions as outlined the in 2009 carbon budget. Our oil and gas business the in USA is also strong and growing on the back design of commissions BP for and Hess. Outside our core markets Europe of and the USA, we offercontinue to design services regions to such as West Africa, Egypt and Malaysia. 230 staff, transferred C&W to May in 2009. Outlook Overall, the outlook the for Design and Engineering Solutions segment is stable. advantagetake the of opportunities that We are alsoWe supporting BP and other oil companies with theglobal deployment a of Fleet Management System which manages the assessment integrity of data oil for and gas assets. Our communications business, which provides consultancy services support in of current and next generationcommunications infrastructure alongside a range technical of solutions a broad to range clients, of performed following Cable & well. However, Wireless’ (C&W) acquisition Thus of 2008, in C&W decided in-source to the contract to look after its fibre optic network, using the existing Thus expertise. As a consequence approximately staff, out 70 a total of of at 43% handWork in is ahead last of year, (2008: 39%), and over 80% the of segment’s revenue comes from the publicly funded and regulated sectors. Increased competition a tougher in environment market is putting pressure upon prices but the range ourof service offering positions us well for the year ahead. Our UK building design business has been significantlyimpacted reducedby workload, and whilst our direct exposure the to commercial property sector is limited, slowdown has increased that in market competition our in other markets. In addition, it is unclear when the current the in hiatus LSC building programme will come an end. to are carefullyWe monitoring the business to assess whether further any action is required. The nuclear business is well positioned to
last year, has performedlast year, very well and has confirmed our status as a transnational supplier Airbus, to leading a number to newof opportunities. The demand, from both public and private sector clients, the for services our of defence business remains solid. Our work on the Future Rapid Effect System programme for the UK Ministry Defence of is now focused on the Specialist families, Vehicle where we providecontinue to independent consultancy and commercial services. This is opening up further opportunities us. for continued successfully have to We invest in expanding the services we offer the in nuclear sector through training and selective recruitment build a cadre to multidiscipline of nuclearexperience anticipation in increased of decommissioning and new-build activity. are assistingWe the UK Department of with Change studiesEnergy and Climate for thefor nuclear new-build programme and supportcontinue to British Energy through a technical services agreement providing innovative solutions across their portfolio of nuclear power stations the in UK that runs with an option extend to beyond 2012, to this date. Thethis date. acquisition October in 2008 Bennett, M.G. of a 30-strong mechanical and we are also involved various in wave, 300 staff, has performed well and our workload remains strong. In we are Europe, working on new developments such as the Solan fieldWest of Shetland andcontinue we helpto manage the integrity existing of assets companiesfor such as BP and Talisman. and structural engineering design consultancy, with nuclear lifting capability further enhances our offering this in expandingsector. The skills our of energy businesses are increasingly being sought after the in renewables are conducting We sector. structural design work on the Galloper and Thanet offshore wind developments farm tide and current projects. The increasing need alternativefor power generation methods to be connected the to grid offers opportunities ourfor electricity transmission and distribution business develop to outside our core technical support and design contracts Networkswith Central and National Grid. The oil and gas business, which employs
a whole had a good year with growth Operating profit (12%). revenuein £44.7m of (4.6%) with the reduction increased£1.4m by marginin primarily attributable the to poor performance our of UK building design business and consequent reorganisation costs approximatelyof £5m, including property rationalisation costs. Our water and environment business 1,850 of staff continues perform to well. During the secured we have commissionsyear, with Northumbrian and a position Water on the AMP5 Water. framework Severn for Trent Bidding the for forthcoming regulatory programme will continue over the coming year and final determinationsin the AMP5 price review England and in Wales, which governs future expenditure, are due in November with implementation price of limits expected Environmental April in 2010. concerns keep flood mitigation coastaland protection where the to fore, we are undertaking a number studies of under framework contracts with the water companies and the Environment Agency. Our planning and contaminated land capabilities, including environmental impact assessment and remediation work, continue beto demand in both the in public and private sectors. Our 1,400-strong multidisciplinary building design and engineering business, which primarily works on a portfolio public of sector projects the in UK, had a mixed year. Successes on a number major of projects, including work the for on ODA the London Olympic Park, were partially offset a by disappointing year our in UK building design business which was adversely impacted by delays the in college modernisation programme the for Learning and Skills (LSC).Council As a result, headcount thisin part the of business has been reduced by approximately March 2008 200 since 31 to 800. During the year we commenced work following our appointment LOCOG for as the official engineering design services provider Games. thefor London 2012 Our aerospace business, which now employs over 300 staff, performed well to continuing support Airbus on a number certification of and design packages the for A330, A350 XWB, A380 and A400M aircraft. Nedtech, acquired Design and Engineering Solutions as 22 Reviews Business Review Segmental performance Continued
Highways and Transportation
Key performance indicators 2009 2008 change Financial metrics Revenue £292.4m £274.6m +6.5% Operating profit £20.2m £16.8m +20.2% Operating margin 6.9% 6.1% +0.8pp Share of post-tax JV (loss)/profit £(0.4)m £0.7m -157.1% Work in hand 62% 78% -16pp People Staff numbers at 31 March 3,075 2,813 +9.3% Average staff numbers 3,016 3,054 -1.2% 20.2 3,067 292.4 3,054 3,016 274.6 2,834 2,742 16.8 250.5 215.4 206.8 13.2 11.0 9.4
05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Revenue £m Operating profit £m Average staff numbers
Revenue by client type Revenue by market
Public Sector: Local Government Highway Services Public Sector: National Government Design Private Sector Intelligent Transport Systems Planning
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
23
Reviews WS Atkins plc Annual Report 2009 clients, in part through the UK government’s benefitingincreasedfrom spendingby government’s UK the through part in clients, Preparation package. stimulus financial commencement, the for underway is Agency Highways and authority local of awarded be to scheduled contracts MAC commencement this year for later 2010. in Outlook strong a in year financial new startthe We March 2009,position. 31 at hand in Work on Plus Connect for work excludes which yet not had close financial as M25 the represented year-end, the by reached been 2009/10 for revenue budgeted of 62% (2008: 78%). Including the work associated our work with in the M25, us gives This 70%. at good very is hand 2009/10. for outlook the in confidence the of majority the term, longer the In on is segment this by undertaken work government national and local for projects The client. end the are they where or anticipate we as sound remains outlook services and projects on spending that congestion manage capacity, increase that the of operation safe the maintain or will – offering technical strong a have remain stable. in September 2009, of the 30-year M25 M25 30-year the of 2009, September in contract maintenance and operating which will be carried out the by Connect Plus Services operations and maintenance 32.5% a have we which in Venture, Joint interest. This contractwill offset the loss MAC workloadin from the Area 11 50% our through performed contract, which stake the in Optima JointVenture, terminates the at end June of 2009. Work number a bidding on underway also is road network areas which – all in we
Highways Agency, we are supporting supporting are we Agency, Highways managed three of implementation the journey improve to schemes motorway shoulder hard through reliability time the managing are we and running We programme. delivery technology Corridor support to continue the A14 as scheme management traffic to it designed starts,having construction resilience and reliability end-to-end offer location-specific targeting by benefits The problems. congestion and accident market this in services our for demand becontinues to strong with a significant bidding pipeline. delivers which business, design Our R&D and services consultancy technical and sustainability challenges. For the the For challenges. sustainability and highway of design aspectsof all as well as infrastructure and transport technology, M74 the on work Design well. performed is year, last secured Scotland, in project now is project the and well progressing year the During complete. two-thirds over the for design the on commenced work Advance an under project widening M25 financial pending Agreement Activities By contract. DBFO M25 the on close Our intelligent transport systems business business systems transport intelligent Our for market the as grow to continues develops solutions technology-based responsein traffic to management section first the for design the March, 31 been had widened be to M25 the of of one-third over representing completed, Connect for commission design overall the Plus. Construction now has commenced followingclose 2009. financial 20 May on servicesOur highway business, which segment’s this of 60% around represents and maintaining in engaged is revenue, of behalf on networks highway improving authorities. local and Agency Highways the The business performed ahead of expectations the in second half-year
Our transport planning business, which which business, planning transport Our consultancy of range wide a provides services, advice including on strategic, business forecasting, management, policy, for appraisals investment and case good a had investment, infrastructure leading a established have We year. position transport in governance reviews Local the to response in regions city for technical our for Demand Act. Transport planning transport strategic on advice transport the and diligence due policy, remained masterplanning aspectsof Public realmstrong throughout the year. traffic with combined enhancements for improvements and management source good a be to continue pedestrians exemplified is This cities. major in work of of re-design the for proposals our by and crossings pedestrian Circus Oxford onsurrounding area, behalf The of Crown the on study Our others. and Estate business case high-speed for rail media significant receive to continued attention throughout the year and we securedhave further work this area. in strong demand for our higher-margin higher-margin our for demand strong benefits the and activities consultancy our continued driveof greater for average in reduction The efficiencies. transfer the of result the is numbers staff with associated staff of TUPE, under out, Council County Northamptonshire the the and 2008 March 31 on contract on staff of later, months two in, transfer contract. 6 Area Agency Highways the Our Highways and Transportation the continuing year, good a had segment margins. improving and growth of trend £3.4m by increased profit Operating increased as margins 6.9% to (20.2%) the to due principally (2008:6.1%) 24 Reviews Business Review Segmental performance Continued
Rail
Key performance indicators 2009 2008 change Financial metrics Revenue £196.1m £208.2m -5.8% Operating profit £17.0m £11.9m +42.9% Operating margin 8.7% 5.7% +3.0pp Work in hand 61% 65% -4pp People Staff numbers at 31 March 1,624 1,669 -2.7% Average staff numbers 1,635 1,703 -4.0% 17.0 215.1 1,703 1,643 208.2 1,648 1,635 1,587 196.1 164.8 11.9 154.6 7.1 5.2 1.7 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Revenue £m Operating profit £m Average staff numbers
Revenue by client type Revenue by activity
Regulated Signalling Public Sector: Local Government Design Private Sector Communications Consultancy and other
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 25
Reviews WS Atkins plc Annual Report 2009 Outlook The outlook 2009/10 for our Rail for of segment positive remains with 61% by secured revenue 2009/10 budgeted rail UK The (2008:65%). 2009 March 31 strong demonstrate to continues market for demand increasing with investment, for need the meet to solutions innovative a capacity-enhanced, reliable railway. spending increased term longer the Over on enhancements, and continued works, signalling major on spending expectedis following the acceptance the of 2009 February in Rail Network by Office rail spending of Rail Regulation’s of level The 2014. to 2009 for budget rail area London the in investment network London for Transport by also placed well are We opportunity. provides breadth the with clients our support to and depth our multidisciplinaryof expertise.
The other part of our business, which which business, our of part other The and design rail-related on focuses consultancy services, also has performed Furtherwell. work secured on the London transport plan includes the design, 2012 installation and commissioning of communications assets Farringdon, at stations. Blackfriars and Thameslink City railway new awarded been also have We including clients for projects enhancement Keynes Milton Railways, Chiltern London Ports’ Dubai and Partnership market, consultancy rail The Gateway. stock rolling the include clients our where and companies operating train owners, partly been has institutions, financial impacted the by economic current successes notable nevertheless malaise; their in Hitachi supporting include Intercity the for bid successful Express Programme. opportunity significant a remains Crossrail design the to appointment our following date to and year the in earlier framework been Arup, with partnership in have, we Court Roadawarded the Tottenham packages. design tunnel bored and station
During the year we were awarded a awarded were we year the During re-signalling the for contract significant includes Newportwhich in upgrade and testing installing, designing, the on units signalling commissioning Large re-signalling contracts for Network for contracts re-signalling Large of half nearly for account to continue Rail delivery to commitment Our revenue. our Network by recognition public us earned to them enabling in part our for Rail Nuneaton and Rugby the complete Coast West high-profile the of section Main Line upgrade Re-signalling on time. anis important component Network of enhancement and renewalsRail’s continued anticipate we and commitment spending over the next years. few year and delivered an operating profit profit operating an delivered and year substantial and anticipated an £17.0m, of by driven year prior the on improvement the impact the of change the in contractual London for work our on arrangements in activity increased and Underground As business. design margin higher our reduction further a was there expected, decrease revenue andin a small staff in reduction predicted the with line in numbers activityin relation in Metronet. to 35-mile stretch track between of Bristol Line, London North the On Cardiff. and 2012 London the of part forms which been also have we plan, transport appointed this re-signalling take to project commissioning. to design detailed from These two projects combined have approximatelyrevenue of £100m. The Rail segment performed well this 26 Reviews Business Review Segmental performance Continued
Middle East, China and Europe
Key performance indicators 2009 2008 change Financial metrics Revenue £303.2m £191.6m +58.2% Operating profit £22.2m £11.4m +94.7% Operating margin 7.3% 5.9% +1.4pp Work in hand 53% 50% +3pp People Staff numbers at 31 March 4,565 4,076 +12.0% Average staff numbers 4,498 3,660 +22.9% 22.2 303.2 4,498 3,660 2,887 191.6 11.4 2,142 148.9 4.7 7.5 4.3 1,827 105.8 82.5 05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Revenue £m Operating profit £m Average staff numbers
The Middle East, China and Europe segment recorded significant growth in all three regions. On a constant currency basis, revenue increased by 36% and operating profit by 57%. The remaining increase in revenue and operating profit was as a result of foreign exchange translation due to the weakness of sterling with an average exchange rate for the US dollar, the principal currency in which our overseas activities are denominated, in 2008/09 of $1.74:£1 (2007/08: $2.01:£1).
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 27 Reviews Revenue by geography Dubai Abu Dhabi Bahrain Oman Qatar Sharjah India Kuwait Revenue by market Commercial Buildings Residential Buildings Rail Mixed-use Buildings Urban Development Roads Other WS Atkins plc Annual Report 2009
+2pp change +0.8pp + 82.1% +14.3% +33.2% +65.8%
51% 2,119 2,119 2008 8.5% 2,470 2,470 £9.5m £112.2m
53% 2009 9.3% 2,823 2,824 £17.3m £186.0m away from building design and towards towards and design building from away impact the mitigated has infrastructure theof downturn property. in have We resources key protect to able been also such areas, other in them redeploying by have which Oman, and Dhabi Abu as been less affected the by downturn. presence market and capability strong Our large-scale of providers leading as infrastructure, heavy civil engineering, and planning transportation utilities, with us provide to continue engineering, good opportunities. Project wins this in work restoration ongoing include area complex Oman, in Gonu cyclone following in design bridge and roadways elevated ferry and taxi water ‘Abra’ the Dhabi, Abu sanitation on work and Dubai in stations and transportation masterplans Kuwait. in Outlook quarter, third the in slowdown the Despite was work new quality good of £45m secured the in fourth quarter and work budgeted of 53% represents hand in The 51%). (2008: 2009/10 for revenue Qatar, Dhabi, Abu as such countries, oil-rich to continuing are Arabia, Saudi and Kuwait particularly pace, slower a at albeit invest, their enhancing in infrastructure, and there business. our for opportunities good are have Bahrain and Dubai in markets The less activity and the confidence of timing wage high very The uncertain. is returning inflation experiencedin the early partof the year now has reversed and accordingly across cut pay 10% a instigated have we we term, Longer 2009. June in region the activity of resurgence a of optimistic are in thein region.
Operating margin With the cancellation of projects, we also also we projects, of cancellation the With experienced a significant slowdownin payments a number by our clients. of are we and priority a remains flow Cash manage to clients our with working of number a slowdown, the Despite year the during completed were projects theincluding 360m-tall Al Mas Tower exchange diamond first region’s the housing and the 306m-high Address Hotel, new best the of winner latest Dubai’s involvement major Our award. hotel continued Metro Dubai the delivering been has Dubai in market building The crisis, liquidity the by affected particularly business the diversifying of policy our but Financial metrics Financial Operating profit Work in hand by numbers staff our reduced we result, a and year-end the by left 200 which of 500 May. and April 300during remaining the including cuts, staff these of cost The space, office of rationalisation associated was approximately £3m. a satisfactory the outcome for business. busy remaining team 250-person a with throughout the year. However, the region did not escape the the escape not did region the However, conditions trading and crisis liquidity global worsened the in second the of half year, which particularly impacted the property were projects of number a where sector As notice. short at deferred or cancelled Our Middle East business delivered further further delivered business East Middle Our operating and revenue in growth significant Thefirst half of £17.3m. to profit up 82% in growth strong continued saw year the the across economies booming were what numbers staff our time that During region. a peak to over 3,100. 650 of grew by Middle East performanceKey indicators People Revenue Staff numbers March at 31 Average staff numbers 28 Reviews Business Review Segmental performance Continued
China Key performance indicators 2009 2008 change Financial metrics Revenue £46.1m £29.8m +54.7% Operating profit £2.7m £0.3m +800.0% Operating margin 5.9% 1.0% +4.9pp Work in hand 71% 47% +24pp People Staff numbers at 31 March 933 861 +8.4% Average staff numbers 890 859 +3.6% Revenue by market We continue to make progress in China Our business in mainland China recorded and the region as a whole performed a much improved result, following the Rail ahead of expectations recording a closure of underperforming activities and Buildings significant improvement in operating focusing on the core areas of architecture Urban Development profit over the prior year. and urban design. We employ just over Water 400 staff in mainland China which is Industry Other Demand for the services of our broadly in line with last year and positions 300-strong Hong Kong infrastructure us well for growth as the market matures. business contributed to better than expected performance from that business. Outlook The Hong Kong railway market is buoyant The business enters the new financial year following the merger of the two major with 71% of budgeted 2009/10 revenue railway corporations in December 2007 secured (2008: 47%). Our Hong Kong and we are working on five major rail office is particularly busy with work on assignments for MTR Corporation. MTR projects and our business on the Mainland is positioned to benefit from emerging opportunities.
Revenue by geography
Hong Kong Mainland China Other Asia Pacific
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 29 Reviews Revenue by geography Denmark Ireland Sweden Poland Portugal Revenue by market Rail Roads Energy Oil and Gas Industry Environment Other WS Atkins plc Annual Report 2009
-5pp
-0.1pp +8.5% +15.1% change +37.5% +37.5% +43.3%
745 745 682 47% 2008 3.2% £1.6m £49.6m
785 808 808 42% 2009 3.1% £2.2m £71.1m is mixed with work in hand for the region region the for hand in work with mixed is budgeted of 42% representing whole a as 2009/10revenue for (2008: The 47%). outlook Denmark in good is with the rail challenges key two the but strong market successfully be will ahead year the for Ireland, in recession the through managing 10%, by pay reduced have we where Sweden in business our stabilising and a profitableat level. Sweden, which employs 130 staff, had had staff, 130 employs which Sweden, are we but year disappointing another taken have we actions the that optimistic performs business the that ensure will the of rest The ahead. year the in better portfolio, Poland in and Portugal, performed line with in expectations. Outlook The outlook the portfolio for Europe
Average staff numbers Work in hand People There have, however, been mixed results results mixed been however, have, There business, Danish Our portfolio. the across (2008:280 staff 335 employs now which market, rail the in staff)principally performcontinues to Successeswell. to appointment include year the during the of capacity the upgrade to project the connection in network lines main Danish to project Belt Femern coming the with The Germany. to link rail fixed a provide adversely has Ireland in recession severe have we but business Irish our impacted staff with costs reduce to action taken numbers 155 to reducing from 190 a further improvement over the prior year. the before business the left (18 May). in 17 further a and year-end As a whole, the Europe portfolio performed performed portfolio Europe the whole, a As delivering expectations, with line in Europe performanceKey indicators Financial metrics Financial Operating margin Staff numbers March at 31 Revenue Operating profit 30 Reviews Business Review Segmental performance Continued
Management and Project Services
Key performance indicators 2009 2008 change Financial metrics Revenue £229.6m £213.2m +7.7% Operating profit £18.9m £13.6m +39.0% Operating margin 8.2% 6.4% +1.8pp Share of post-tax JV profits £0.2m – – Work in hand 44% 48% -4pp People Staff numbers at 31 March 2,294 2,461 -6.8% Average staff numbers 2,405 2,394 +0.5% 18.9 229.6 2,405 2,394 213.2 2,203 2,049 193.6 1,962 13.9 13.6 171.9 12.8 152.2 9.2
05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Revenue £m Operating profit £m Average staff numbers
Revenue by client type Revenue by market
Private Sector Energy Pharmaceutical Public Sector: National Government Defence Residential Buildings Public Sector: Local Government Industry Government Buildings Regulated Education Commercial Buildings Financial Services Water Transportation Other
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 31 Reviews WS Atkins plc Annual Report 2009
The results for the year in our Management Management our in year the for results The expected, as were, business Consultants quarter fourth the in and improved much framework two to appointed were we business and strategic provide to contracts and project and consultancy change the to services management programme UK Department and Pensions. Work for but stable remains market overall The has sector private the in slowdown the sector public our in competition increased strategy, on focus we where markets for management programme and design change. business technology-enabled Outlook is whole a as segment the for outlook The 2009 March 31 at hand in work with good representing 44% budgeted of revenue 2009/10for (2008: 48%). which business diverse a is Faithful+Gould markets. of range wide a to services delivers mature, relatively is market UK the While for opportunities provide will USA the and energy into further develop to us infrastructure particularly government, Pacific Asia in and defence, and continued from arise will opportunities investmentinward across the region. business Consultants Management Our large a of share small a has currently refocused its with and, market addressable pursuing actively is strategy, and services a to add to opportunities of number a framework existing by underpinned pipeline contracts with established clients.
We remain focused on our other key key other our on focused remain We to continue we USA the In markets. through markets energy the develop for new-build nuclear in instructions management programme and Exelon Faithful+Gould, with operations in the the in operations with Faithful+Gould, project provides Pacific, Asia and USA UK, consultancy cost and management market of range broad a across services sectors. The the result for year line was in with expectations with shortfall a slight in the UK business, which accounts over for improvements by offset revenue, of 60% our Northin America and Asia Pacific to taken was action Early businesses. for compensate to business our right-size mainly sector, private the in softness some development property commercial in 10% than less for accounts which revenue. of PacifiCorp. for lines transmission power of to reappointed been have we UK the In for Schools Building government’s the secured have and programme Future the major a with contract framework new a Pacific In Asia group. services financial UK for commission a awarded been have we have and China in Johnson & Johnson panel solar new a on engaged been also manufacturing Singapore. in plant The Management and Project Services Services Project and Management The improved an delivered segment operating with year, this performance 8.2%. to points percentage 1.8 up margin which business, Faithful+Gould The the of 70% approximately represents tough despite year, good a had segment, the and areas, market some in trading business Consultants Management continued its recovery. 32 Reviews Business Review Segmental performance Continued
Asset Management
Key performance indicators 2009 2008 change Financial metrics Revenue £47.6m £52.4m -9.2% Operating (loss)/profit £(6.8)m £2.8m -342.9% Operating margin (14.3)% 5.3% -19.6pp Share of post-tax JV profits £0.3m £0.2m +50% Profit on disposal of JV £2.5m – – Work in hand 99% 99% – People Staff numbers at 31 March 671 669 0.3% Average staff numbers 682 674 +1.2% 4.5 960 61.8 58.9 889 2.8 52.4 2.0 50.9 47.6 682 674 669 -6.8 -4.5
05 06 07 08 09 05 06 07 08 09 05 06 07 08 09 Revenue £m Operating (loss)/profit £m Average staff numbers
Revenue by client type Revenue by market
Private Sector Financial Services Public Sector: Local Government Education Public Sector: National Government Defence Health
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 33 Reviews WS Atkins plc Annual Report 2009
Outlook is segment Management Asset Our number small relatively a by dominated Performance in the managing agent agent managing the in Performance and expectations of ahead was business recently has business This year. prior the secured a new five-yearcontract with £2.5m of profit a realised also segment The Modern in interest our of disposal the on Housing Solutions (Prime) Limited the at beginning the of year. one of our 10 long-term legacy PFI legacy long-term one our 10 of as act we where contracts maintenance of remainder The contractor. managing with line in performing are contracts the also business the and expectations gain non-recurring a from benefited of £1.7m. been and client services financial major a services of scope the expand to invited clients. sector public two to provided hand in work and contracts long-term of March 2009 represented 31 at 99% budgetedof 2009/10 revenue for (2008: 99%). The result for the Asset Management Management Asset the for result The been having segment materially was poor, contract onerous increased by impacted totalling costs, remediation and provisions with associated £12m, approximately 34 Reviews Business Review Financial performance
Net finance cost Earnings per share (EPS) IAS 19 valuation and accounting Net finance cost for the year was £3.1m Basic EPS was 86.1p (2008: 98.9p). treatment (2008: income of £4.3m) with the Normalised diluted EPS, which is The Group assesses pension scheme increase attributable to a £5.2m increase considered to be a more representative funding with reference to actuarial in the net finance cost on post-employment measure of underlying trading and relates valuations but for reporting purposes benefit liabilities and a significant reduction to continuing operations, was 82.3p uses IAS 19. Under IAS 19, the Group in the interest receivable on short-term (2008: 66.7p), an increase of 23.4%. recognised a much-increased post-tax deposits as global interest rates have Excluding the benefit of acquired tax retirement benefit liability of £215.4m at reduced during the year. The net finance losses, normalised diluted earnings per 31 March 2009 (2008: £153.9m) reflecting cost will increase further in 2009/10 as share would have been 75.2p, an increase the adverse impact of the investment the impact of changing assumptions for of 12.7%. markets on fund assets. The actuarial loss discount rates and lower asset values recognised through equity amounted on the IAS 19 pension deficit interest Pensions to £88.5m (2008: Gain of £6.4m which take effect. Interest receivable on our net Funding became a loss of £1.0m after taking into funds will also be impacted by the low The latest actuarial valuation of the account the impact of the change in UK interest rates. defined benefit Atkins Pension Plan tax rates). (the Plan) carried out as at 1 April 2007 Taxation indicated that the Plan had an actuarial The assumptions used in the IAS 19 The Group’s income tax expense for deficit of approximately £215m. Accelerated valuation are detailed in note 29 to the the year, on continuing operations, was contributions of £44.5m were made Financial Statements. £18.5m (2008: £23.3m). This included during the year and the Group has agreed a one-off £7.0m benefit from the to contribute a further £32m per year for Cash purchase of prior year consortium relief the next five years. The next actuarial Net funds at 31 March 2009 were £234.2m credits from the Metronet companies, valuation will take place as at 1 April 2010 (2008: £168.4m) made up as follows: giving a normalised effective tax rate of and is likely to be completed in late 2010 18.5% (2008: 25.7%). Excluding that or early 2011. 2009 2008 one-off benefit, the Group’s normalised £m £m effective tax rate would have been Charges Cash and cash equivalents 209.7 154.5 25.4%, slightly higher than anticipated The Group accounts for pension costs Loan notes receivable 12.9 5.6 due to the impact of the lower share price under IAS 19, Employee benefits. The on the tax deductions available from the total charge to the income statement in Financial assets at fair value Group’s share incentive plans. Looking respect of defined benefit schemes reduced through profit or loss 28.7 29.7 forward, the Group’s effective tax rate to £14.8m (2008: £17.8m), comprising Borrowings due within is expected to continue to benefit from total service cost of £8.9m (2008: £16.7m) one year (2.8) (4.2) R&D tax credits and the proportion of and net finance cost of £5.9m (2008: Borrowings due after profits earned in jurisdictions with lower £1.1m). The charge relating to defined one year (0.6) (3.2) tax rates than the UK. contribution schemes increased to £28.2m Finance leases (13.7) (14.0) (2008: £19.0m), reflecting the closure Net funds 234.2 168.4 of the defined benefit schemes to future accrual and the transfer of staff to the defined contribution scheme.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
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Reviews WS Atkins plc Annual Report 2009 to letters of credit issued in respect of of respect in issued credit of letters to the by undertaken projects individual Asat businesses. operating Group’s in note 25 to the Financial Statements; Statements; Financial the to 25 note in relates mainly facility the of utilisation £75.0m had Group the 2009 March 31 undrawn committed borrowing facility available (2008: £58.8m). changes significant no been have There during policies treasury Group’s the to the year. in note 2 to the Financial Statements. Statements. Financial the to 2 note in activities ongoing its funds Group The its from generated cash through bank necessary, where and, operations The leases. finance and borrowings described are facilities banking Group’s The Group’s financial instruments, other other instruments, financial Group’s The borrowings, comprise derivatives, than various and resources liquid and cash trade and receivables trade as such items, its from directly arise which payables, these of purpose main The operations. the finance to is instruments financial enters also Group The activities. Group’s principally transactions, derivative into in contracts, currency foreign forward risk exchange foreign manage to order transactions commercial material on the than other currencies in undertaken does Group The currency. functional local instruments. financial in trade not Group’s the from arising risks main The instruments financial risk market are interest risk, exchange foreign (including and risk credit risk), price and risk rate liquidity risk, along with the risks arising fromof the the financing Group’s activities the in Public Private Partnership (PFI) Initiative Finance Private (PPP)and and to exposures Group’s The sectors. risks, these of each of management risk and sensitivities with together detail in described are concentrations, Net funds £234.2m
of £11.5m (2008: £34.9m) with the last last the with (2008:£34.9m) £11.5m of purchase occurring July in 2008. objectives and policies Treasury manages function treasury Group’s The and monitors external and funding investment requirements and financial corporate Group’s the of support in risks objectives. The Board reviews and treasuryfor activities. (2008: £23.4m) had and the Company £108.8m of funds shareholders’ 2009 March 31 by and 2007 November had bought 4.3m its of own the shares in including consideration, total a for market £46.4m. of duty, stamp and commission treasury. within held are shares These bought Company the year the During shares (2008: 3.2m) a total at cost 1.1m agrees policies and authority levels in 2009/10. 2009/10. in including year, the in expenditure capital Net software computer of purchase the £27.6m to amounted licences, than less was This (2008:£25.7m). originally anticipated as we reduced discretionary this time items in of economic uncertainty. (2008: £34.0m) £12.3m of amount An was paid out respect in the of share buyback programme. Capital structure had Group the 2009, March 31 Asat £43.5m of deficit shareholders’ a (2008: £126.9m). paid fully 104.5m had Company The 2009 March 31 at issue in shares ordinary commenced Company The 104.5m). (2008: in programme buyback share a Net tax paid amounted to £12.8m Net tax paid £12.8m amounted to payments includes which (2008:£14.7m) Metronet to (2008:£11.8m) £0.4m of consortiumfor The cash flows relief. consortium year’s this with associated incurred be will £7m of benefit relief
5.7 5.7 £m (7.3) (5.5)
80.9
(29.1) 117.1 2008
9.5 9.2 £m 10.9 2009 (40.6) 125.5 136.5
Movement in working working in Movement capital Additionaloutflow relating pensions to Movement in provisions The movement in provisions includes the the includes provisions in movement The provisions contract onerous additional Management Asset the in recognised Group’s the in increase net a and segment we where provision, property vacant EBITDA optimiseas we continued to the cash position on our contracts. Proactive in resulted management capital working £10.9m of inflow capital working net a lengthening a despite achieved was which debtorof days the in Middle East the in for accruals The year. the of quarter last increased payments bonus and redundancy in outflow an in result will and year this 2009/10. of half first the light in view conservative more a took letting for environment current the of will which of both space, office surplus coming the in outflow cash a in result years. financial strong remained flow cash Operating and can be summarised as follows: Cash generated from continuing continuing from generated Cash operations was £125.5m (2008:£80.9m), £125.5m was operations profit, operating of 122% representing Other non-cash items 36 Reviews Business Review Financial performance Continued
Critical accounting policies Contract accounting The Group’s principal accounting policies Profit is recognised on contracts on are described in note 1 to the Financial a percentage completion basis, provided Statements. The Financial Statements the outcome of the project can be for the year ended 31 March 2009 have reasonably foreseen. Full provision is made been prepared under IFRS as adopted for estimated losses. Where contracts by the EU. span more than two accounting periods profit is not generally recognised until The preparation of Financial Statements the project is 50% complete. in conformity with generally accepted accounting principles requires the use of The projected outcome of any given estimates and assumptions that affect the contract is necessarily based on estimates reported amounts of assets and liabilities of revenues and costs to completion. at the date of the Financial Statements Whilst the assumptions made are based and the reported amounts of revenues on professional judgements, subsequent and expenses during the reporting period. events may mean that estimates calculated Although these estimates are based on prove inaccurate, with a consequent effect management’s best knowledge of the on the reporting of results. amount, event or actions, actual results ultimately may differ from those Defined benefit pension schemes estimates. Material estimates applied Accounting for pensions involves across the Group’s businesses and Joint judgement about uncertain events in Ventures are reviewed to a common the future such as inflation, salary levels standard and adjusted where appropriate at retirement, longevity rates, rates of to ensure that consistent treatment of return on plan assets and discount rates. similar and related issues that require Assumptions in respect of pensions and judgement is achieved upon consolidation. post-retirement benefits are set after Any revisions to estimates are consultation with independent qualified recognised prospectively. actuaries. Management believes the assumptions are appropriate. However, The accounting policies and areas that a change in the assumptions used would require the most significant estimates and impact the Group’s results and net assets. judgements to be used in the preparation Any differences between the assumptions of the Financial Statements are in relation and the actual outcome will affect to contract accounting and defined results in future years. An estimate of benefit pension schemes. the sensitivity is disclosed in note 29 to the Financial Statements.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 37
Reviews WS Atkins plc Annual Report 2009 Recruitment and retention of of retention and Recruitment sufficient high-calibre staff resource key its are staff Group’s The and the recruitment and retention top of quality people our crucial future are to constrain would so do to Failure success. prevent and business the of growth the potential. its achieving from Group the Whilst the recession current reduced has areas, some in pressure recruitment the Also, risk. a still is staff key retain to failure our partsof some in needed skills the the and supply short in still are business large a with compete to has Group secure to organisations other of number a expends Group The staff. best the and effort management of deal great the of summary a area, this in resource Human the in shown being approach Review. Resources environment and safety Health, with concerned is business Group’s The entails this and environment built the environmental and safety health, significant risks. policy Should the Group’s or practice is there inadequate, prove area this in a consequent employees, risk to clients, contractors parties. and third The Group takes health, safety and environment staff all that ensures and seriously issues that and trained appropriately are procedures continuously reviewed are and leadership a take to look We improved. role on health and safety matters our in sector representation and we have on a number committees. of our of Many attaining Group the on insist clients and health in standards appropriate safety regularly are and environment. We independently audited external by consultantsagainstthese industry standards. risk Reputation complex delivering for reputation Our projects relies on the perception our of clients and how portrayed this is the in major a that risk a is There arena. public project poor design, poor from failure our impact could delivery or management mitigate We work. future win to ability cost robust have we ensuring by risk this linked systems management project and quality our internal to processes. These are external by audited independently regularly consultants against industry standards.
is core to our business. Inadequate project project Inadequate business. our to core is financial to lead could skills management Group The damage. reputational and loss mitigates these risks encouraging by processes internal to adherence and training ongoing by augmented selective recruitment. contracting the to Changes market from resulting environment developments conducted is business which in ways The of nature The time. over change inevitably especially is environment contracting the important The Atkins. companies for like increasingly clients where one remains trend consultants; to risk transfer to seek risks. share to seek also will contractors There a possibility is that, securing in new are that risks accepts Group the work, evaluated, or understood insufficiently actively We loss. financial ensuing with internal of range a via risk this mitigate contract enable that procedures review scrutiny appropriate to subject be to terms reduced. be to risks manageable and influenza Pandemic a affect could pandemic influenza An who staff our of number significant either work for report to unable maybe or unwell personally are they because because they need care to for this heightened is risk The dependents. flu swine current the to due year pandemic. This risk closely is monitored and advice from the taken is governments in countries the in authorities medical and which we operate as well as from our own private medical advisors. and travel the limit to place in are plans Contingency and offices our within infection of spread to enable continuity of work commitments through home and working. remote managed by working in a diverse diverse a in working by managed is workload the where business the of business the partsof other to reducing can risk The strong. is workload the where restructuring selective by managed be also downsizing. and Project management projects own our and clients’ Managing parts our business. of This risk is the and markets, and sectors of portfolio parts those from staff of redeployment
Economic environment Economic world a of result a as GDP in decrease A an have could slowdown economic both for workload on impact adverse The clients. sector public and private monitoring by risk this mitigates Group economic indicators and sentiment the in as well as operate, we which in markets sheet, balance strong a maintaining by sectors of portfolio diverse a in working flexibility building by and markets and Competition Group the companies, all with common In our of all in others from competition faces which in markets the of Some markets. clients limited serve works Group the Matching staffing levels to workload (staffing) resources balances Group The to fully mitigate all risks that the Group Group the that risks all mitigate fully to risk, market to addition In encounters. are which risk, liquidity and risk credit and policies Treasury under covered for risks key principal the above, objectives the been Group have assessed as follows: futureinto plans. and barriers entry to In high. are other design architectural as such markets, numerous are there environment, and are entry to barriers and competitors continues Group the that ensure To lower. win work,to develop we work to hard at clients our with relationships long-term success this of measure A levels. multiple our measures which hand, in work our is secured workload Our over the next year. 54%,representing is hand in work overall that revenue 2009/10 of months six over alreadyis contractually committed. of level the control to workload to an in risk, a is There time. insufficient non-productive is there that downturn, economic some in resources current match to work In order to achieve our business objectives objectives business our achieve to order In the to effectively respond must Group the established has Group The risks. associated involving procedures, management risk of monitoring and identification the various at risks operational and strategic regularly Board The management. of levels risk and identified risks material reviews annual our in embedded is management planning strategic and budgeting possible not however, is, It processes.
Principal risks and uncertainties and risks Principal Business Review 38 Reviews Corporate Responsibility Review
Atkins is committed to acting responsibly towards all our stakeholders and to taking a leadership position within our sector. >
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 39
Reviews – We We – – We were were We – – This project determined determined project This – WS Atkins plc Annual Report 2009 – Our carbon Orientcarbon Rail DepotOur Way – critical philosophy helped has to us the from award prestigious a achieve Quality Environmental Engineering Civil Scheme Awards and Assessment (CEEQUAL) transport a key for project in 2012 London the to linked London East Games. Olympic Flagship Taleem Campusdesign Our – LEED first the create to aims Taleem for whilst East Middle the in school certified responding the challenges to location of Design Critical Carbon climate. and lighting, façade, the include features use. energy and materials landscaping, Atkins Remote Technology– (ArT) Management Asset our by Developed business, a web-based this is energy collects only not that system management remote allows also but data energy systems. cooling and heating of control average an produces technology The installed is and 34% of saving energy The UK. the in locations client 350 at system also is being piloted our in operations. own Plan Action Change Climate for measures saving carbon implemented them enabling Police Metropolitan the the in 4% by emissions carbon reduce to firstyearof a three-year programme. Renewables Efficiencyand Energy for Schools energy performance and potential for primary 170 for projects efficiency energy and secondary schools throughout the UK. Planning Urban Dezhou international an at prize top the awarded in planning urban for competition design Our China. of Republic People’s Dezhou, sustainable included concept pioneering urban unique a principles, planning city’s the incorporated and design, energyinitiatives. renewable
Five hundred senior managers received received managers senior hundred Five staff year, the during training awareness activities our about information received awareness an and conference Group a at managers to circulated was DVD throughout the help Group them to teams. their engage The chief executive keynote delivered 16 bodies industry to subject the on speeches Leaders Business Building the as such Council, Industry Construction Forum, Environment Engineers, Civil of Institution Industries Hong Commission, Kong Middle the and Commerce of Chamber Digest. Economic East to year the during £1m invested also We to calculators carbon of suite a develop of engineering and design the in assist low-carbon projects. calculators are Two developed first, The use. daily in already available freely is Faithful+Gould, by (via www.fgould.com/carbon-calculator) green the boosting at aimed is and industry. construction the of credentials It enables the relative cost benefits and and techniques carbon low of risks allow and assessed be to technology tool second The designs. budget-plausible and, kind its of first the be to believed is Remediation the suggests, name its as Options (ROCC) Carbon Calculator (available www.atkinsrocc.com) at is emissions the assessing towards geared land of range a with associated work. remediation more with engage to continued has Atkins clients on Carbon Design, Critical resulting to coming projects exemplar more in months:fruition during the last 12 Green Asphalt collaborated – We with to Council County Northamptonshire 100% first the install and develop The course. surface asphalt cold recycled production include benefits sustainable than more by reduced emissions carbon 90% compared with a hot-mix asphalt, complete and content recycled 100% reuse aggregate of feedstock. Production fuel consumption was also reduced 99%. by
Carbon Critical Design Our efforts continued during the year to focus on embedding ourservices all into carbon a opportunities and challenges the bring. will economy critical A highlight of the year was the design, design, the was year the of highlight A completion and occupation Atkins’ of experts technical our of one addition, In the to secondment bono pro on been has to (CIC) Council Industry Construction UK Sustainable for Strategy the develop help Construction as a joint industry and government initiative. taking a leadership position within our our within position leadership a taking publish information about We sector. website our on performance our including stakeholders, Atkins all sectors private and public governments, and communities across the world. We into sustainability incorporate to continue awareness raise to operations, own our to and clients and employees our among of delivery the in role leadership a take geographies the in economy low-carbon a whichin we operate. a achieved which office Bristol new BREEAM Sustainable rating. excellent chilled a include building the of features beam cooling system, a ground source and harvesting rainwater pump, heat During ware. sanitary usage low-water were recycling of levels high construction achieved and the project involved materials of sourcing local responsible labour. and Our beliefs responsibly acting to committed is Atkins to and stakeholders our all towards Sustainability Sustainability a serious is issue for (www.atkinsglobal.com/cr) and and issues major the summarise here. year the during developments 40 Reviews Corporate Responsibility Review Continued
Safety leadership We continued to improve safety leadership We also continue to develop the skills Atkins remains strongly committed to within Atkins. Our Board directors at required to create, implement and key improvements in health and safety the year-end have undertaken the maintain effective management systems, beyond those required by law. During the Construction Skills Certification Scheme by investing in the development of our year our chief executive became chair of (CSCS) test. During the year, senior quality, safety and environment (QSE) the Construction Industry Council (CIC), management have attended the Atkins managers with the introduction of lean following his position as chair of the Director Safety Tour training course and thinking practices. Self-assessment against Health and Safety Committee, and we the Safety Leadership programme in the the criteria of the European Foundation continued to work with industry through Rail business was expanded to include for Quality Management (EFQM) Business national forums such as the Strategic our supply chain. We also undertook Excellence Model has also been piloted Health and Safety Forum, CIC Health and a safety, health and environment survey by our Middle East business. The Group Safety Committee, Consultants Health in the UK for the first time, to which over continues to maintain a comprehensive and Safety Forum and BuildSafe UAE. 6,500 staff responded. This has helped programme of assurance for its us to identify Atkins’ strengths and management systems, pursuing a consistent The Rail business had a serious near-miss weaknesses, providing valuable input to approach to systems certification globally. when four employees could have been hit our 2009 improvement plan. by a train. These employees now feature Our people in a powerful short film which has been Our work We continue to work to be an employer produced to explain the severity of the We take pride in the quality of products of choice and to provide an environment incident. This film has been adopted as and services that we provide to our in which our people can flourish and a training tool by other rail organisations clients. All our businesses are certified succeed. We engaged more colleagues such as Network Rail and was recognised to ISO 9001:2000 and are expected to in information about our vision, mission in the HSBC Rail Business Awards for satisfy the requirements of the revised and strategy through new internal Safety and Security Excellence. standard for quality management systems, communication channels and our ISO 9001:2008, during 2009, following Viewpoint survey showed an increase The Highways and Transportation business Atkins China’s lead in achieving approval. in employee engagement for the third has set an industry standard for designing consecutive year. We invested £20m in out risks in projects by using an approach There has been significant focus through training and increased our ranking to that is based on the simple concept of a key business forum to rationalise the 10th position in the Sunday Times Best Big traffic lights: Red, Amber and Green content of management systems and Companies to Work For. We made good (RAG). Originally used on the design for to harmonise practice to review client progress on diversity through initiatives Heathrow Terminal 5, the RAG approach feedback management, supply chain and through our collaboration with clients was developed for use in projects for the management and management system and national organisations. Highways Agency, and has since been controls. Our Asset Management segment adopted as the industry standard by has continued to develop its Quantum For more detailed information see the companies such as Arup, Halcrow and process for engaging and reviewing Human Resources Review. Mott MacDonald. supplier performance. The tool now measures performance against 10 metrics including environmental responsibility, health and safety management and operational excellence. All of the businesses have been able to identify improvement opportunities and introduce efficiencies where possible, such as by sharing how they manage the capture of client feedback, and this work continues.
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Reviews WS Atkins plc Annual Report 2009 Engaging with education engaged actively be to continue We from initiatives educational of range a in primary schools universities. through to In Derby the Rail business ran a poster poster a ran business Rail the Derby In children school primary asking competition on thoughts their depict to area the in change and itsclimate impact on the environment with the posters winning being office. displayed the in Atkins Our the inspiring graduates are next Engineering The engineers. of generation Bristol, in based (EA) group, Awareness local in initiatives runs and organises schools designed are that develop to what of understanding youngsters’ enter to some inspire and do engineers the profession. The EA group involved is that activities and events of number a in engineering explore and promote to aim simultaneously while people young with National the of 3 Stage Key to in linking ActivitiesCurriculum. include visits to activities engineering-related for schools students experience work onsite talks, or events and schemes in participation or Challenge. Start Flying the as such Through our University Liaison Directors (ULD) our engagement programme, with and grow to continued has universities being of objective the with develop of partner industrial an as regarded developed further have ULDs Our choice. universitiestheir relationships with 16 relationships developing are and UK the in in two USA, the in 10 with overseas two Singapore in China, and one Dubai. in
In the Middle East employees supported supported employees East Middle the In Arab (United UAE Up Clean sixth the create to launched campaign Emirates) public awareness on the dangers waste of left The on beaches or the in water. project, organised the by Emirates Environmental Group and held at whiteboards flooring, workbench, new a centre the partsof and boards notice and by decorated and painted fully were Atkins people. 44 independent locations, has become become has locations, 44independent a symbol environmental of action and involvement cross-sector of benchmark a than more in resulted and region the in up. cleaned being waste of tonnes 110 also office Doha our from Employees cricket and basketball organised schoolchildren. local for tournaments Sheffield the from staff Faithful+Gould the with volunteers as engaged office Archer Project, which helps homeless men supported employees Our women. and the project once a month the in soup kitchen sessions during lunchtime by serving, cleaning and up. washing their gave employees Wales Newport, In by hand helping a communities local revamping the Duffryn Community Link fittings new of range a with Club Cycle limited the utilise fully to fixtures and Shaftesbury The available. space from benefited also Centre Community
for Chongzhou city Chongzhou for help formulate to create and proposals relief emergency for framework planning strategic a reconstruction the in area following the earthquake. the by caused damage Employeesfrom other officesChina in todonated approximately £10,000 earthquake the of victims the support matched were donations employee and theby Group. Following the earthquake in the Sichuan Sichuan the in earthquake the Following Beijing in employees China, of province advice consultancy bono pro provided During the year, we received the Caring Caring the received we year, the During recognising Kong, Hong in award Company community local the in involvement our socially a being to commitment our and citizen. corporate responsible of house managers is now helping to to helping now is managers house of co-ordinate and promote these activities of examples few A offices. our through world the around place took that activities on available is information Fuller follow. our website (www.atkinsglobal.com/cr). We aim to support our people in their their in people our support to aim We own communities around the world donations, charitable local through volunteering activitiesfundraising, and network The events. social sportsand Making a difference a Making charity our refined we year the During policy give emphasis a greater to on support to employees own our engaging their local communities. to make a difference where it counts. counts. it where difference a make to Our communities Our to contributing about passionate are We and operate we which in communities the together join to people our engaging 42 Reviews Corporate Responsibility Review Continued
Our performance Atkins sets its own challenging targets Our activities regarding health and safety This section reports on Atkins’ corporate as these benchmarks are based on a throughout the last year have included responsibility performance during the year. reduction on previous year of 5% the promotion of risk assessment as part for office and 15% for engineering and of the European Week of Safety, the Health and safety construction. For staff the AIR for integration of safety leadership into our It is with deepest regret that we report engineering decreased from 178 to 147, senior management development that a fatality occurred on the Diego Garcia but there was an increase in AIR for office programme and the improvement of Joint Venture DG21 during a tree-felling from 38 to 89 and, of greatest concern, health and safety information on the operation. Atkins has an equity stake of the AIR for construction increased from Group’s intranet. 24.5% in the Joint Venture and we have 1,042 to 1,833. provided support, including advice on Three of our businesses also received how to further improve the health and Nevertheless, our performance remains RoSPA awards: Gold for both Highways safety arrangements. better than the industry performance as and Transportation, and Design and compiled by the HSE Labour Force Survey, Engineering Solutions; and Distinction for Atkins reports accidents and incidents and we are keen to continue to improve Asset Management (which was awarded for staff, contractors, Joint Ventures and by expanding our Safety Leadership for the 22nd year running). in situations where we are Principal Programme, and to reduce the number Contractor. The Accident Incident Rate of manual handling accidents, which Environment (AIR) is used to measure our accident account for 23% of serious accidents in We are now able to report on our energy performance for staff and contractors. construction. We also actively encourage consumption for approximately 95% of Last year performance was within the the reporting of incidents and near-misses, our operations worldwide. The remaining Atkins AIR benchmark with the exception of which 1,172 were reported compared parts of the organisation in Poland, the of staff in the construction category. to 756 in 2008. We view this as a positive USA and offices in India will start collating The benchmarks were 146 for office, step towards accident prevention. data during 2009. We are not able to 319 for engineering and 1,445 for compare non-UK data as this is the first construction activities. All our operations are now covered by year this information has been collated. OHSAS 18001. The businesses are also on target to achieve the revised specification There was significant effort during 2008 OHSAS 18001:2007 by the deadline to extend the scope of our reporting to of July 2009. include worldwide operations and to obtain more accurate data for UK operations. More accurate data has contributed to a significant reduction in energy consumption. In the UK we consumed 27.0m kWh in the year to Fig. 1 31 December 2008 compared to 34.2m kWh in 2007. In the UK the energy Accident incident rate (AIR) Office Engineering Construction data is now verifiable to 72% for gas and to 77% for electricity. Data is verifiable to Benchmark 146 319 1,445 100% for energy consumption in Sweden, Staff Denmark, Ireland, Portugal, China and the 08/09 89 147 1,833 Middle East and India. 07/08 38 178 1,042 06/07 12 65 995 05/06 104 151 556 04/05 59 235 2,763 Contractors 08/09 132 0 619 07/08 0 0 708 06/07 382 441 1,221 05/06 0 124 293 04/05 0 124 317
(AIR = number of accidents per 100,000 staff or contractors)
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 43
4 15 Reviews Atkins emissions from 2 F E D C B A WS Atkins plc Annual Report 2009 21-150 86+ 01-120 66-185 51-165
1 1 <100 1 226+ G 1
1 Company car fleet emissions average in the UK our business travel is made using the latest latest the using made is travel business our air and road for figures DEFRA published in travel rail for figures DEFRA the travel, emissions rail Intercity US the and UK, the absence the in travel, rail non-UK for figure information. country-specific valid of have we fleet car company UK our For emission average the reduce to continued 154g/km to down now is figure The rating. year. last 158g/km to compared Our waste management facilities have improved significantly throughout our 100% Sweden In operations. worldwide either is generate we that waste the of no – energy into converted or recycled system recycling A landfill. to goes waste beenhas trialled successfully with more the in recycled being waste of 60% than a Hongnew office. Kong Additionally, across implemented been has system properties managed centrally the of some the of 35% than more with UK the in offices. these through recycled being waste Portugal now is ISO by covered 14001 environmental this achieved having during standard systems management the year. All of our operations are now now are operations our of All year. the the by covered standard. The calculation CO for Fig. 3 g/km
1.20 1.01 1.01 emissions emissions 0.89 2 per employee 2 China UK Middle East and India Europe associated withbusiness were travel tonnes. 23,350 road, by km 74m travelled we UK the In in rail by km 21.3m and air by km 36.7m travel business total in 2008/09,resulting to compared km 2.4m by decreasing significant a been has There year. last travel km air in reduction 4.1m of However there compared last to year. has been an increase of 0.9m km in road road in km 0.9m of increase an been has are We travel. rail in km 0.7m and travel as non-UKdata compare to able not this is the first year this information has has information this year first the is this been collated. We are now able to report on business business on report to able now are We 90%of approximately for emissions travel remaining The worldwide. operations our Poland, including organisation the partsof start will India in offices and Ireland travel business Our 2009. in data collating for travel rail and air road, covers data travel air and road Sweden, and UK the thefor Middle East and India region and the Denmark, for travel air and China USA and Portugal. On this basis, our CO worldwide estimated Fig. 2 Tonnes of CO from energy consumption
2 from energy consumption. Fig. 2 2 Worldwide, we emitted 15,071 tonnes of of tonnes 15,071 emitted we Worldwide, CO shows the proportion of emissions from from emissions of proportion the shows each region. The calculation CO for Remote energy metering was installed at at installed was metering energy Remote five pilot locationsin the UK during the as results immediate were There year. and gas both in reductions significant identified were consumption electricity The locations. those at implemented and out rolled being now is metering remote Display UK. the in properties more to Energy Certificates alsohave been these and offices UK some for introduced locations more for generated be will awareness raise help to 2009 during emissions from our energy consumption consumption energy our from emissions DEFRA published latest the using made is forfigures electricity in the forUK and gas the in UK and Ireland and the five- published latest the from average year each for figures Protocol Gas Greenhouse country other than the UK electricity. for on energy performance. 44 Reviews Corporate Responsibility Review Continued
Leadership and behaviour are key CR-related Group policies include elements in our environmental quality, health and safety, environment, management approach. Four of the UK sustainability, community, business businesses have now undertaken the conduct, data protection, dignity and Institute of Environmental Management equality at work, employee disclosure and Assessment (IEMA) environmental (whistle-blowing) and the appropriate use senior executive course with the intentions of information technology. These are in 2009 for the remaining UK business to published on the corporate intranet and complete the course and to review its are provided externally on request. They suitability for all businesses worldwide. are reviewed regularly and updated to reflect changes to legislation, emerging Our supply chain management team has good practice and business needs. been working with a number of Group suppliers in the UK to encourage them to adopt sustainable practices in their own businesses. The Atkins Environmental Strategy has been developed and will be communicated to all our Group suppliers during the coming year.
Regulatory activity In the UK last year the HSE made three visits to Atkins sites with no enforcement action. We have not been prosecuted for any breaches of health and safety or environment regulations.
Governance The Board sets Group policies on corporate responsibility (CR). Our chief executive is the Board member responsible for corporate responsibility and for the Group’s performance, supported by Group-wide frameworks. A common management structure governs quality, health and safety and environment (QSE). The Group director for QSE, who reports to the chief executive, is responsible for Group QSE at a corporate level. Each Atkins business also has dedicated QSE representatives to manage issues at a local level, reporting quarterly.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial statements Investor information
Remuneration Report Remuneration Board Directors of Directors’ Report Governance ReportCorporate
Independent Auditors’ Report Auditors’ Independent
65 48 52 58 Governance 46 Governance 46 Governance Board of Directors
Ed Wallis Keith Clarke Robert MacLeod Chairman Chief Executive Group Finance Director Ed Wallis (69) was appointed a director Keith Clarke (57) was appointed a director Robert MacLeod (45) was appointed in September 2004, taking up the post in October 2003. He is a chartered Group finance director in June 2004. of chairman in January 2005. He is a architect. He joined the Group from A chartered accountant, he joined the chartered engineer. He was the founding Skanska AB where he was executive vice Group as Group financial controller in chief executive of Powergen where he president responsible for its activities in March 2003 having previously worked also held the position of chairman before the UK, Poland, Czech Republic, India and in a variety of senior financial roles at retiring in 2003. Prior to this he gained China. He has over 30 years’ experience Enterprise Oil plc. He is currently a more than 30 years of experience working in construction and engineering, having non-executive director of Aggreko plc. for the Central Electricity Generating previously worked for the City of New A graduate of Cambridge University, he Board. He has a wide range of other York, Olympia and York, Trafalgar House trained at KPMG. Robert will leave the board-level experience including the and Kvaerner. He is chairman of the Board and the Company on 19 June 2009. chairmanship of Lucas Varity and London Construction Industry Council, having Underground. He was invited to become previously chaired its Health and Safety Heath Drewett a companion of the British Institute of Committee. He is also an advisory board Group Finance Director (elect) Management in 1994 and in 1997 member of the Built Environment Heath Drewett (43) was appointed an became a fellow of the Royal Academy Innovation Centre at Imperial College, executive director with effect from of Engineering. In 1996 he was awarded London, a member of the Supporters 15 June 2009, and will take over as honorary doctorates by both Brunel at Large Group for Open House and Group finance director on 19 June 2009. University and Aston University. He patron of the Environmental Industries A graduate in mathematics from became chairman of the Natural Commission. He is a member of the Peterhouse, Cambridge, he started his Environment Research Council in 2006. Nomination Committee. career at PricewaterhouseCoopers where He is chairman of the Nomination he qualified as a chartered accountant. Committee and a member of the Alun Griffiths He has held a variety of senior finance and Remuneration Committee. Executive Director corporate development roles at British Alun Griffiths (54) was appointed Airways plc and The Morgan Crucible a director in March 2007. He has a Company plc. He has spent the past background in management consultancy seven years in BA’s finance team, most and has led a wide range of projects in recently holding the position of head of the areas of restructuring, organisational business performance. development and privatisation in the UK and internationally. He is an economics graduate and a fellow of the Chartered Institute of Personnel and Development. He was appointed Group HR director in February 2003. Alun chairs the Industry Board of the UK Resource Centre for Women in Science, Engineering and Technology (UKRC), an organisation charged with progressing the government’s strategy for increasing the participation of women in science and engineering.
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Governance Governance WS Atkins plc Annual Report 2009 and is a non-executive director of Dyson of director and a non-executive is Spirax-Sarco and plc Bodycote plc, Group Engineering plc. Raj also is of chairman fellow a is Raj Ltd. Private Pumps HHV Williams Peter Sir Non-executive Director (64) appointed was Williams Peter Sir Dr Rajagopal Raj Non-executive Director a appointed was (55) Rajagopal Raj non-executive director June in 2008. He held several positions BOC at Edwards executive, chief appointed being before 2006. November until held he position a the of director executive an was He 2006 November until plc Group BOC and Engineering of Institution the of Royal the of (IET), fellow a Technology of fellow a Engineering, of Academy the Institution Mechanical of Engineers, of Institute Chartered the of fellow a Institute the of fellow a and Management Directors.of He also is an Audit Commissioner and a member the of Business for Centre the of Board Advisory He University. Cambridge of Research 2004. May in director non-executive a University Cambridge from graduated He and physics in PhD and MA an with at career academic an pursued initially Imperial at subsequently and Cambridge with period a After London. College, Oxford joined he Limited Instruments VG its became He 1982. in plc Instruments and was chairmanchief executive 1985 in 1999. in retirement his until 1991 from Physical National the of chairman is He director non-executive a and Laboratory fifth as elected was Peter Sir plc. GKN of chancellor the of University Leicester of on the of chairman is He 2005. October 21 member a and Committee Remuneration theof Audit and Nomination Committees. was awarded an honorary doctor of of doctor honorary an awarded was science degree University Cranfield by in Mensforth Eric IEE IET’s the and 2004 International Gold Medal outstanding for contribution to manufacturing technology a is He 2003. in management and Remuneration the of member and Nomination Committees.
Joanne Curin Non-executive Director was appointed a (51) Joanne Curin non-executive director February in 2009. has and accountant chartered a is She a broad range of international experience experience international of range broad a gained during her career as a senior scale large for executive finance organisations the in property and paper, and pulp gas, and oil construction, has She sectors. logistics and shipping and Zealand New UK, the in worked finance held recently more and Australia Lease Lend both for roles director currently is P&O. She and Corporation Fiona Clutterbuck Non-executive Director was appointed Fiona Clutterbuck (51) a director Intelligent of Engineering Holdings, which developed has and is a compositecommercialising material engineering heavy in use for technology structures. She a member is the of Audit will Joanne Committees. Nomination and succeed James Morley the of as chair Audit Committee on 30 June 2009. a non-executive director in March 2007. 2007. March in director non-executive a a within partner managing a is She Pearl controls and owns that business substantial has Fiona group. insurance experience areas corporate all of in the on focus particular a including finance, during gained sector, institutions financial years Hill Samuel at and HSBC and15 latterly seven years ABN at AMRO. of range wide a on advised has Fiona including countries, many in transactions company public takeovers, and mergers public and fundraisings, and acquisitions and private sales company and flotations. the (Hons)from LLB an has Fiona University London of and qualified as a barrister She a member is 1980. in of the Audit, Nomination and and Nomination Audit, the of Committees. Remuneration
Admiral the Lord Boyce Admiral Non-executive Director Lord (66) Boyce was appointed a He 2004. May in director non-executive Royal the in career distinguished a had (MoD) Defence of Ministry the and Navy Sea First becoming his in culminated that Navy, Royal the of head professional Lord, Staff, Defence of Chief then and 1998; in Forces, Armed the of head professional to elevated was He 2003. to 2001 from appointed was and 2003 in peerage the Cinque the of Admiral and Warden Lord in Castle Dover of Constable Portsand of director non-executive a is He 2004. the of member a is He plc. VTGroup Remuneration and Nomination Committees and he will succeed James Morley as senior independent director on 30 June 2009. non-executive director in 2001. He 2001. in director non-executive a non-executiveis director The of Innovation Group plc, Costain Group PLC, Clarkson and Speedy PLC Hire Plc. He was previously chief operating officerof previously also and Limited Group Primary Holdings Insurance Cox at director finance plc, Arjo Wiggins Appleton plc, Guardian plc. Europe Avis and plc Exchange Royal director, independent senior is He and Committee Audit the of chairman a member the of Remuneration and will James Committees. Nomination from theretire Board on 30 June 2009. James Morley Non-executive Director (60), Morley chartered a James was appointedaccountant, a 48 Governance Directors’ Report
The directors present their annual report The directors recommend a final dividend Lord Boyce and Keith Clarke will retire by on the affairs of the Company and the of 17.25 pence per ordinary share in rotation at the AGM and, being eligible, Group, together with the Financial respect of the year ended 31 March 2009, will offer themselves for re-election. Statements and the Independent to be paid on 25 September 2009 to James Morley, having served on the Board Auditor’s Report, for the year ended ordinary shareholders on the register since January 2001, will retire from the 31 March 2009. These will be laid before on 14 August 2009. This is subject to Board on 30 June 2009. Lord Boyce shareholders at the Annual General shareholder approval at the AGM. If and Keith Clarke will be subject to Meeting (AGM) to be held at 1630 hours approved, this will mean a total dividend retirement by rotation at future AGMs on Wednesday 9 September 2009. Details of 26.0 pence per ordinary share will have in accordance with the Company’s Articles of the business to be considered at the been paid for the year to 31 March 2009 of Association. AGM, together with an explanation of all (2008: 24.0p) when added to the interim the resolutions, are set out in the separate dividend of 8.75 pence per ordinary share The Board considers that the performance Notice of Meeting. paid on 30 January 2009. Further details of those directors proposed for re-election regarding dividend payments can be continues to be effective and that they Principal activities and business review found in Investor Information (page 122). demonstrate a strong commitment to WS Atkins plc is the ultimate holding their role. In addition, the Board considers company of a group of companies. Directors that the performance of the directors Detailed information on the Group’s The names and biographical details of proposed for re-appointment will be principal activities, its performance those persons serving as directors of the effective and that they demonstrate the during the past year and its prospects for Company as at the date of this report necessary commitment. future development are reported in the are set out in this report (pages 46 to 47). Chairman’s Statement (pages 6 to 7), Raj Rajagopal and Joanne Curin were Directors and officers of the Company the Chief Executive’s Statement (pages appointed to the Board during the year and its subsidiaries benefit from directors’ 8 to 12), the Human Resources Review to 31 March 2009. Heath Drewett was and officers’ liability insurance cover in (pages 14 to 17), the Business Review appointed as a director with effect from respect of legal actions brought against (pages 18 to 37) and the Corporate 15 June 2009 and will replace Robert them. In addition, directors of the Responsibility Review (pages 38 to 44). MacLeod as Group finance director when Company are indemnified in accordance The statements and reviews are he leaves the Company on 19 June 2009. with Article 143 of the Company’s Articles incorporated into this report by reference, of Association to the maximum extent together with the list of the principal Under the Company’s Articles of permitted by law. Prior to the adoption subsidiary undertakings and the countries Association all directors must retire at the of new Articles of Association by in which they operate (note 40 to the first AGM following their appointment by shareholders on 3 September 2008, all Financial Statements on page 116). the Board and may offer themselves for directors in appointment on that date re-appointment. Additionally, one-third had separate deeds of indemnity. These Acquisitions and disposals made by the of directors must retire at each AGM and indemnities, which still remain in force, are Group during the year are described in they may offer themselves for re-election. available for inspection by shareholders notes 9 and 15 to the Financial Statements at the Company’s registered office during (pages 90 to 94). Raj Rajagopal, following his appointment normal business hours and will be by the Board as a director on available for inspection at the AGM. Results and dividends 24 June 2008, was re-appointed by The Group profit after tax for the year of shareholders at the 2008 AGM. Joanne Neither the insurance nor the indemnities £84.2m (2008: £100.0m) is shown in the Curin, who was appointed as a director on provide cover where the relevant Consolidated Income Statement (page 68). 10 February 2009, and Heath Drewett will director or officer has acted fraudulently both retire at the AGM and, being eligible, or dishonestly. offer themselves for re-appointment. The Board of directors may exercise all the powers of the Company, subject to the provisions of relevant legislation, the Company’s Memorandum and Articles of Association and any directions given by a special resolution of the shareholders.
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Governance Governance WS Atkins plc Annual Report 2009 0.5 pence per share, listed on the London London the on listed share, per pence 0.5 4,341,000 these, Of Exchange. Stock (the treasury in held are shares ordinary in held be may Shares shares). treasury Further form. uncertificated or certificated and authorised Company’s the of details changes including capital, share issued can be 31 note in found during the year, 108). (page Statements Financial the to did not have any amounts owing to trade trade to owing amounts any have not did March 2009.creditors as 31 at Share capital and share purchases the report, this of date the Asat of consists capital share Company’s ordinary paid fully and issued 104,451,799 of value nominal a with each shares Employees are routinely informed of of informed routinely are Employees results financial and significantbusiness voice email, of use the via issues and intranet Company’s the conference, in-house publications. obtain to out carried is survey annual An feedback from employees. This survey alongside used is and confidential is union and employees with consultation representatives where appropriate. Group’s the in involvement Employee encouraged be to continues performance UK, the In ownership. share through to opportunity the given are employees become shareholders through the Incentive Share Plan. Company’s employees UK of 10% Approximately participate the Incentive in Share Plan. Suppliers policyThe Group’s agree to is terms and conditions its for business transactions abide to endeavour to and suppliers with to subject conditions, and terms these by the supplier performing its obligations. is arrangement supplier one No business the to essential be to considered theof Group. company, holding a as Company, The
The authority will not be used to make make to used be not will authority The normal the within donations political details Further expression. that of meaning containedare the in Notice Meeting. of Charitabledonations made Group the year, the During £187,757 of donations charitable (2008: £191,527). The beneficiaries beneficiaries The (2008:£191,527). charities local were donations these of serving the communities which in the in working charities or operates Group activities. Group’s the to relevant areas itsThe continue to Group intends current the in charities local on focus year. financial governance Corporate remuneration and preparesThe a separate Company (pages Report Governance Corporate Remuneration Directors’ and 57) to 52 64). to 58 (pages Report Corporateresponsibility corporate Group’s the of summary A for provided is activities responsibility shareholders the in Corporate 44). to 38 (pages Review Responsibility further provides Group the addition, In information on corporate responsibility, information detailed includes which respectin health of the and safety, people community, the environment, www.atkinsglobal.com/cr. Employees and fair the to committed is Group The employees, its all of treatment equitable religion, age, race, sex, of irrespective end, this To orientation. sexual or disability policies been have implemented ensure to then and recruitment at practised is this continues throughout an individual’s employment with The the Group. Group encourages recruitment, career training, basis the on promotion and development to regard without ability, and aptitude of retaining to committed also is It disability. employees necessary as retraining and course the during disabled become who theirof employment. and suppliers, on the Company’s website website Company’s the on suppliers, and
Articles of Association Articles of substantial undergone has law Company the when 2007 January since change Companies the of implementation phased The commenced. Act) 2006 (the 2006 Act Company the of Association of Articles was it time this At 2008. in revised were the to changes further that envisaged made be would Association of Articles expenditure and donations Political policyIt the is Group’s make not to political donations incur and not to or UK the in either expenditure, political the Group madeoverseas. no Accordingly, political donations and incurred no such no has and year the during expenditure donations such any making of intention Directors’ interests in the Company and and Company the in interests Directors’ Directors’ the in described are Group the 63). (page 5 table in Report Remuneration the of result a as AGM 2009 the at the of implementation phased continuing of implementation the and Act 2006 Directive. Rights Shareholders’ EU the surrounds still uncertainty some However, has it and latter the of implementation the prudent the that decided been therefore changes further delay to is approach until 2010. or incurring expenditure such the in previously provisions the However, future. and 1985 Act Companies the in contained to relating Act 2006 the in enacted now this by covered expenditure and donations disclosure wide. are an So prevent as to the Act 2006 the of breach inadvertent authority sought historically has Board to subsidiaries its and Company the for such incur and donations such make expenditure an aggregate up to limit of subsidiaries its and Company the for the of provisions the to subject £90,000, 2006 Act. The Board considers it prudent once again seekto authority such the at AGM. forthcoming Company’s Specific powers are detailed in the the in detailed are powers Specific Association, of Articles Company’s back buy and issue to power the including shares, along with the rules the for appointment and removal directors. of 50 Governance Directors’ Report Continued
At the AGM held in 2008, the Company The rights and obligations attaching payments, including information regarding was granted authority by shareholders to the Company’s ordinary shares are the shares held by the EBTs can be found to purchase up to 10,051,000 ordinary contained in the Company’s Articles in note 32 to the Financial Statements shares, representing approximately 10% of Association, a copy of which is (page 109). The Company is not aware of the Company’s ordinary share capital available on the Company’s website of any agreements between shareholders as at 25 June 2008. No ordinary shares www.atkinsglobal.com or can be that might result in the restriction of were purchased pursuant to this authority obtained on request from the company transfer or voting rights in relation to during the year. This authority will expire secretary. The Articles of Association the shares held by such shareholders. at the forthcoming AGM and, in can only be changed by a special accordance with current best practice, resolution passed in a general meeting Changes of control the Company will seek to renew it. of shareholders. All of the Company’s employee share schemes contain provisions relating to The Board, mindful of the benefit of Each ordinary share (other than treasury a change of control of the Company maintaining an efficient balance sheet, shares, which have no voting rights) following a takeover bid. Under these announced a share buyback programme carries the right to one vote on a poll provisions, a change of control of the on 27 November 2007 intended to return at a general meeting of the Company. Company would normally be a vesting up to £100m to shareholders. This There are no restrictions on transfer event, facilitating the exercise or transfer followed a review of the strength of the or limitations on the holding of the of awards, subject to any relevant Group’s balance sheet following the Company’s ordinary shares and no performance conditions being satisfied. disposal of Lambert Smith Hampton and requirements for prior approval of any The Company is not a party to any other resolution of the uncertainty surrounding transfers. Under the Company’s Articles of significant agreements that take effect, the Group’s investment in Metronet. Association, the directors have the power alter or terminate upon a change of to suspend voting rights and the right to control following a takeover bid other The buyback of ordinary shares receive dividends in respect of shares in than its bank facility agreement, which in the Company commenced on circumstances where the holder of those provides that on a change of control the 29 November 2007 and, as at the date shares fails to comply with a notice issued Company is unable to draw down any of this report, 4,341,000 ordinary shares under Section 793 of the 2006 Act. further amounts under the facility. of 0.5 pence had been repurchased for an Further, it is not party to any agreement aggregate consideration of £45,999,418 Shares acquired through Atkins’ employee with the directors or employees providing (excluding fees and stamp duty), share schemes rank equally with all other for compensation for loss of office representing approximately 4.2% of the ordinary shares in issue and have no or employment (whether through Company’s issued share capital. All of special rights. The trustees of the resignation, purported redundancy or these shares are held in treasury. In the Company’s Employee Benefit Trusts (EBTs) otherwise) that occurs as a result of event that the Company purchases further have waived their rights to dividends on a takeover bid. ordinary shares in the Company, up to a shares held by the EBTs and do not further 6,104,179 ordinary shares could be exercise their right to vote in respect of Substantial shareholders held in treasury. No purchases have been such shares. Shares held in trust on behalf As at the date of this report, the Company made since July 2008. of participants in the Atkins Share had been notified of the following Incentive Plan are voted by the Trustee, holdings of 3% or more of the total Capita IRG Trustees Limited, as directed voting rights attaching to its issued by the participants. Details of share-based share capital:
Number of Percentage of Name of holder voting rights1 total voting rights1 Legal & General Group plc 3,910,332 3.90% Lloyds TSB Group plc 3,154,015 3.04% Newton Investments Management Limited 3,928,108 3.92% Norges Bank 3,024,392 3.02% Schroders plc 10,143,360 9.99%
1. Number and percentage of voting rights per last notification received by the Company.
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Governance Governance WS Atkins plc Annual Report 2009 Cautionarystatement 2006, and Acts 1985 Companies the Under required, reportis directors’ company’s a review fair a contain to matters, other among business Group’s the of directors the by comprehensive and balanced a through performance and development the of analysis position the and Group the of business the of with consistent year-end, the at Group the of the size and complexity of the business. The Directors’ Report set out above, including Chief the Statement, Chairman’s the Resources Human the Statement, Executive’s Corporate the and Review Business the Review, by it into incorporated Review Responsibility Report), Directors’ has the (together, reference been prepared only for the shareholders of the and purpose sole its and whole a as Company their exercise to shareholders assist to is use Directors’ the particular, In rights. governance otherwise or audited been not Reporthas its and Company The verified. independently responsible not are employees and directors other any to or use or purpose other any for person in relation the to Directors’ Report. indications Report contains Directors’ The other and developments future likely of subject are that forward-lookingstatements riskto factors associated with, among other things, the economic and business business and economic the things, other in time to time from occurring circumstances segments business sectors and countries, the in which the Group operates. These factors These operates. Group the which in discussed those to, limited not are but include, Uncertainties and Risks Principal under could factors other and These 37). (page strategy results, Group’s affectthe adversely statements Forward-looking prospects. and involve risks, uncertainties and assumptions. assumptions. and uncertainties risks, involve They relate events to and/or depend on cause could which future the in circumstances materially differ to outcomes and results actual obligation No anticipated. currently those from forward-looking any update to assumed is statements, whether as a result of new information, future events or otherwise.
of the Company and the Group and theof Company and other irregularities. the for responsible are directors The the of integrity and maintenance information financial and corporate website. Company’s the on included the governing UK the in Legislation financial of dissemination and preparation legislation from differ may statements otherin jurisdictions. information audit of Disclosure date the at as that, confirm directors The this report was approved,as so each far director there aware is no is relevant audit Company’s the which of information she or he that and unaware are auditors to ought she or he steps the all taken has make to order in director a as taken have himself or herself relevant any of aware that establish to and information audit of aware are auditors Company’s the that information. concern Going The directors a reasonable have expectation and the the that Company adequateGroup have resources to the for existence operational in continue continue therefore and future foreseeable in basis concern going the adopt to preparing the Statements. Financial Auditors auditors, Company’s The have PricewaterhouseCoopers LLP, continue to willingness their expressed their for resolutions and office in the authorise to and re-appointment remuneration their determine to directors will be proposed the at forthcoming AGM. its on signed and Board the by Approved behalf by Webster Richard SecretaryCompany June 2009 16 hence for taking reasonable steps for for steps reasonable taking for hence fraud of detection and prevention the
prepare the Financial Statements on the the on Statements Financial the prepare going concern basis, unless it is inappropriate presume to the that in continue will Company the and Group be should there case which in business, qualifications or assumptions supporting as necessary. state that the Financial Statements Statements Financial the that state the by adopted as IFRS with comply European Union are reasonableare and prudent make judgements and estimates that that estimates and judgements make select suitable accounting policies and and policies accounting suitable select then apply them consistently The directors are responsible for keeping keeping for responsible are directors The disclose that records accounting proper with reasonable accuracy time any the at financial Company position and theof the Group and enable that them ensure to the and Statements Financial the that Remuneration Report comply with regards as and, law company applicable 4 Article Statements, Financial Group the theof IAS Regulation. They also are assets the safeguarding for responsible in preparingin the Statements. Financial The directors confirm that they have have they that confirm directors The complied with the above requirements • • • • • • • • Company law requires the directors to to directors the requires law Company prepare financial statementsfor each prepared have directors The year. financial Financial Company and Group the Statements with accordance in applicable Reporting Financial International and law the by (IFRS) adopted as Standards European Union. The Statements Financial and true a give to law by required are In preparing those Statements, Financial the directors required are to: in accordance with accordance in applicable law and regulations. viewfair the of state affairs of the of profit the of and Group the and Company or loss the of period. that Group for Statement of directors’ responsibilities preparing for responsible are directors The Remuneration the Report, Annual the Statements Financial the and Report 52 Governance Corporate Governance Report
The directors of the Company remain A. Directors During the year the Board’s discussions committed to ensuring appropriate have included: corporate governance procedures are A.1 The Board embedded throughout the Group. The Board of directors is responsible for • the Group’s strategic plan They base these procedures on the leading the Group by setting its broad • potential acquisitions requirements of the Combined Code strategic aims. To deliver these strategic • our health, safety and corporate on Corporate Governance adopted by aims, the Board reviews the performance responsibility performance the Financial Reporting Council (FRC) of management, seeks to ensure that the • approval of the Group budget and in June 2006 (the Code), available on necessary resources are available and that ongoing review of the Group’s the FRC’s website www.frc.org.uk, plus appropriate controls, values and standards financial performance current and emerging best practice. are in place. In pursuance of the Group’s • the Group’s financial results This report sets out our commitment to strategy, the Board has delegated the and dividends corporate governance, how the principles normal operational management of the • our corporate governance framework of the Code have been applied and the Group to our chief executive, Keith Clarke, • shareholder matters extent of our compliance with the Code. but has agreed a formal schedule of • our employees, succession planning and matters reserved solely for its decision. the Group’s pension plan arrangements This schedule includes strategy, the • the share buyback programme, approval of Financial Statements and announced in November 2007. shareholder circulars, treasury policy, major capital investments, risk The Board has a schedule of regular management strategy and significant meetings and holds further meetings acquisitions and disposals. when required. In addition, directors meet as members of committees. Table 1 sets out the name of each Board member, their attendance at meetings and those Board Table 1 committees of which they were a member Audit Remuneration Nomination during the year ended 31 March 2009. Director Board Committee Committee Committee The biographical details for these directors, and Heath Drewett who was appointed Chairman since this date, are contained in a separate Ed Wallis 13/13 – 6/6 2/2 section of the Annual Report (pages 46 and 47). The chairman and non-executive Executive directors directors also meet without the executive Keith Clarke 13/13 – – 2/2 directors present at least annually. Alun Griffiths 13/13 – – – Each Board committee has terms of Robert MacLeod 13/13 – – – reference which are reviewed annually by the Board and revised as deemed Independent non-executive directors necessary and appropriate. Copies are Admiral the Lord Boyce 13/13 – 6/6 2/2 available on the Group’s website Fiona Clutterbuck 13/13 4/4 – 2/2 www.atkinsglobal.com or on request Joanne Curin 3/3 1/1 – –3 from the company secretary. Following James Morley 12/131 4/4 6/6 2/2 formal consideration the Board may, Raj Rajagopal 10/10 – 1/1 –3 on occasion, delegate authority to a Sir Peter Williams 12/132 4/4 6/6 2/2 standing committee consisting of any two directors to facilitate final sign-off Attendance is expressed as number of meetings attended/number eligible to attend. for an agreed course of action within pre-defined parameters. 1. One meeting was called to discuss a specific matter where Mr Morley had a potential conflict of interest and so he absented himself from the meeting with the agreement of the Board. 2. One meeting was called at short notice and coincided with a prior engagement. 3. The appointment of Joanne Curin and Raj Rajagopal to the Nomination Committee took effect after all meetings in the year ended 31 March 2009 had taken place.
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Governance Governance WS Atkins plc Annual Report 2009 reviewing the structure, and size composition the of Board candidates nominating and identifying appointmentfor the Board to and succession orderly ensuring Board the to recommendations making of service continuing the regarding re-electionor their and directors otherwise the Board. to A.4 Appointments to the Board currently Committee Nomination The chairman), (committee Wallis Ed comprises Clutterbuck, Fiona Boyce, Lord Clarke, Keith Rajagopal Raj Morley, James Curin, Joanne Committee’s The Williams. Peter Sir and responsibilities include: • • • are reference of terms Committee’s The Company’s the on review for available company the from request on or website directors’ non-executive The secretary. for available are appointment of terms registered Company’s the at inspection and hours business normal during office Annual General theat Company’s Meeting (AGM). Committee the year, the During of appointments the recommended Raj Rajagopal as and Joanne Curin non-executive directors with effect from 24 June 2008 and 10 February 2009 2009 February 10 and 2008 June 24 respectively. Details Raj to relating disclosed were appointment Rajagopal’s in the Company’s 2008 thein Annual Report. Company’s her to prior advised was Curin Joanne commitment time the of appointment to her enable to necessary considered Committee The responsibilities. her fulfil of appointment the recommended also director executive an as Drewett Heath shortly 2009, June 15 from effect with Group of role the assuming him to prior MacLeod Robert from director finance June 2009. on 19
A.3 Board balance and independence has directors non-executive the of Each be to Board the by determined been have to and management of independent that relationship other or business no interferecould materially with the exercise of independence The judgement. their of considered is directors non-executive the the on based is and annually least at Code. the in suggested criteria James is director independent senior The as him succeed will Boyce Lord Morley. he when director independent senior 2009. June 30 on Board the from retires senior the of responsibilities The leading include director independent the non-executive directors’ annual annual directors’ non-executive the chairman’s the of consideration performance. He also is available to it feel they event the in shareholders inappropriate communicate via to the the chiefchairman, executive or the director. Group finance Directors’ conflicts of interest the 2008At shareholder AGM approval was given amend to the Company’s include to Association of Articles directors’ with dealing for provisions conflictsinterestsof in with accordance the new regime introduced the by of advance In 2006. Act Companies the regime new the of commencement appropriate, where and, considered Board interest of conflicts potential authorised directors When directors. existing all for are they Board the to appointed are notifyrequired to the secretary company and interest of conflicts potential any of these then are considered and authorised Aspotential appropriate. as Board the by are directors arise, interest of conflicts notifyrequired to the secretary company be can they that so interests these of Board the by authorised and considered as In appropriate. addition, the Company to process annual an place in put has review conflictauthorisations.
The respective roles of the Board and and Board the of roles respective The further discussed are Executive Group directors present. 54 (pages control internal to relation in 56).to The chief executive chosen has to the for responsibilities his discharge business the of management operational his Executive, Group the through currently members Its team. executive our of directors managing the comprise finance Group the businesses, principal the and director HR Group the director, team The director. communications Group Those year. the during regularly meets are who Executive Group the of members not directors invited are the of Company year each meetings Board four attend to directors non-executive the meet to and executive the without informally The chief executive is responsible for the the for responsible is executive chief The management day-to-day and leadership formulating includes This Group. the of strategy Group’s the recommending and Boardfor approval addition in to executing the approved strategy. The chairman’s main responsibility is is responsibility main chairman’s The the of management and leadership the chairman, Our governance. its and Board per days two spends usually Wallis, Ed Group. the of business the on week His other significantcommitments are 46). (page The biography his in disclosed commitments these that considers Board his discharge to ability his hinder not do responsibilities effectively. the Company to A.2Chairman and chief executive of roles the that policy Group’s the is It separate, are executive chief and chairman clearly responsibilities and roles their with recorded. and divided defined, 54 Governance Corporate Governance Report Continued
The Board believes that Joanne Curin All directors have access to the advice B. Remuneration and Heath Drewett will be considerable and services of the company secretary assets to the Company, bringing their and are entitled to receive independent Details on the directors’ remuneration experience to bear as we continue to professional advice, at the Company’s and the work of the Remuneration develop the business. External search expense, as required. Committee, as required by the Code consultancies were used to assist in and the Directors’ Remuneration Report making both appointments. A.6 Performance evaluation Regulations 2002, can be found in the The Board, as part of its commitment Directors’ Remuneration Report A.5 Information and professional to ensuring its effectiveness, carried out (pages 58 to 64). development an evaluation of its performance and The company secretary, under the processes during the year. Each director C. Accountability and audit chairman’s direction, is responsible for completed a confidential survey regarding C.1 Financial reporting ensuring that information flows within the performance of the Board as a whole, All shareholder communications are and between the Board, its committees, which was followed by a private meeting designed to present a balanced and the non-executive directors and senior with the chairman to discuss both the understandable view of the Group’s management function effectively. The Board’s performance and that of the position and prospects. Statements company secretary is also responsible director. The recommendations arising regarding directors’ responsibilities and for advising the Board on all from this process have been considered the status of the business as a going governance matters. by the Board and appropriate actions concern are given in the Directors’ Report were identified and have been (pages 48 and 51). On joining the Board, directors take part implemented. During the year, the Audit in a formal induction process. This Committee and Remuneration Committee C.2 Internal control includes the provision of past Board also completed formal assessments of The Board is responsible for reviewing materials to provide background their performance and processes in the and approving the Group’s system of information on the Group, information form of surveys completed by members internal controls and its adequacy and on Board processes and governance, site and key stakeholders. effectiveness. This established system visits and meetings with key employees. of internal controls includes financial, The induction is tailored to each new The chairman’s performance was reviewed operational and compliance controls and director’s specific needs. Raj Rajagopal by the non-executive directors, led by risk management. It is the task of and Joanne Curin received a detailed the senior independent director. management to implement the agreed induction programme which included policies on risk and control. meetings with each member of the Group A.7 Re-election Executive. Heath Drewett will also be In accordance with the Company’s Articles Our system of internal financial and provided with a comprehensive induction of Association, one-third of the Board is operational controls is designed to meet to the Group. required to retire by rotation each year. the Group’s particular needs and aims to In addition, any director appointed since facilitate effective and efficient operations, A continuing professional development the last AGM will stand for re-appointment to safeguard the Group’s assets, ensure framework is in place to assist the at the AGM. These requirements ensure proper accounting records are maintained chairman, executive directors and that each Board member is re-elected at and ensure that the financial information non-executive directors in discharging regular intervals. used within the business and for their responsibilities effectively following publication is reliable. Our risk appointment to the Board. All management process identifies the key non-executive directors meet regularly risks facing each business and reports with members of the Group Executive. to the Board on how those risks are Key employees are also invited to being managed. attend Board dinners during the year and this, together with the presentations and site visits, helps ensure the non- executive directors remain informed of business developments.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 55
Governance Governance WS Atkins plc Annual Report 2009 Business conduct policy The Board responsible is the for Group’s Group The policy. conduct business believes integrity that a fundamental is successfulprerequisite for business and internally both relationships, externally. Reputation, trust and that elements essential are confidence the for enhance and protect to seek we have we whom with those all of benefit Thea relationship. Group seeks to customers’ its meet and understand continuous for striving whilst needs, there Group the Across improvement. proceduresare place seek that in to doing so By approach. this underpin the meet Group to aims the needs stakeholders. all of controls business Individual Individual businesses and central annual an complete functions corporate self-certification Responsible statement. review the confirm personally managers theirof systems and control internal of policies. Group with compliance their The statement also requires the control significant any of reporting areas that so emerged have that issues and identified be may concern Group of addressed and experience The shared. by reviewed are process the of results to reported and Committee Audit the the Board. reporting speciality Functional the facing risks the assesses Board The business on an ongoing basis and has areas key other of number a identified subject are that regular reporting to to the Board as such health and safety, tax resources, human environment, and treasury. • • •
their businesses with the support of determines Board The managers. senior within operates executive chief the how a framework delegated of authorities to seek which powers reserved and certain that ensure transactions, or type, size their of terms in significant undertakenare only after Board review. Control environment clearly has structure operational Our documented and communicated and authority of delegation of principles Group’s The duties. of segregation financial include systems management and corporate procedures, and policies manuals, assurance quality business health and safety procedures and environmental management procedures. review to subject are procedures These enhance to improvements that ensure to cancontrols be made. Financial reporting plan strategic a approves Board The individual of performance financial The regularly reported is segments business budgets. annual to compared and and annual budgets for the Group. Group. the for budgets annual and a on shareholders our to report We half-yearly basis. Forecasts the for by reviewed and updated are Group the Board regularly. control contract and Project Procedures seek risks that ensure to are identified throughout the project project the throughout identified are completion. to bidding from lifecycle place in are procedures review Regular the to reported are issues that ensure to risk commercial A appropriately. Board and audit framework place that in is out carried be to review peer requires opportunities and bids significant all for investment significant where or taken. be to have decisions • • • •
By its statements and actions the Board Board the actions and statements its By integrity, of culture a emphasises fairnesscompetence, and responsibility. strategic on mainly focuses Board The performance management senior issues, chief Our performance. financial and as Executive, Group the and executive concentrate team, executive senior his operational performance, operational on of formulation the and decision-making The Board. the to proposals strategic manage directors managing Group’s Group organisation and culture • The Board has a process for identifying, identifying, for process a has Board The the and managing evaluating risks we has and continual is process That face. review under year the for place in been internal of system our of features Key as are follows:control only be designed to manage rather than than rather manage to designed be only business achieve to failure of risk eliminate reasonable, provide can and objectives against assurance absolute, not but material misstatement and loss. the this and of including date up to in subsidiaries covers process This report. 50% of interest an has Group the which do we which in Ventures Joint more. or treated, not are control overall have not Group. the of part as purposes, these for For these systems Joint Ventures, of agreed as applied are control internal venture. the to parties the between The Audit Committee formally reviews the of effectiveness and operation the an on controls internal of system Group’s covered review latest The basis. annual and 2009 March 31 to year financial the the of approval the to period the included Statements Financial and Report Directors’ theby Board. Such a system of internal control can can control internal of system a Such 56 Governance Corporate Governance Report Continued
• Risk management review C.3 Audit Committee and auditors The Committee meets the independent The Board assesses risk management During the year the Audit Committee external auditors and head of internal throughout the Group, aided by the comprised James Morley (Committee audit privately at each scheduled meeting. Group Risk Committee and detailed chairman), Fiona Clutterbuck, Joanne The independent external auditors reviews of internal controls and risk Curin and Sir Peter Williams. Joanne and head of internal audit also have management. The Group risk Curin, a chartered accountant, will unrestricted access to the Committee management framework requires succeed James Morley as Committee and its chairman. businesses to record formally all chairman when he retires on significant risks facing their business and 30 June 2009. All members of the The Committee monitors the cost- detail the steps being taken to avoid or Committee are considered by the Board effectiveness of audit and non-audit work mitigate those risks. A summary of the to be independent and to have recent performed by the independent auditors key risks facing the Group is placed on and relevant financial experience. The and also considers the potential impact, a risk register which is reviewed regularly Committee’s terms of reference are if any, of this work on independence. by the Audit Committee and the Board. available for review on the Group’s Approval is required prior to the auditors website. The Committee’s activities commencing any material non-audit work The Group maintains insurance policies have included: in accordance with the Group policy. The to provide protection from losses arising policy identifies certain non-audit work through claims from clients. The • an assessment of the effectiveness that may be awarded with the approval adequacy of the Group’s insurance of the Company’s system of internal of the executive directors whereas other cover, including arrangements within the control, risk management process work requires specific approval of the captive insurance company, is reviewed and the Group’s employee disclosure Committee. Certain work is prohibited. by the Board annually. arrangements The Committee also regulates the • a detailed review of the internal appointment of former employees of the • Internal audit audit plan external audit firm to positions in the The internal audit function undertakes • regular examination of the reports Group. The Committee regularly reviews a programme to address internal control arising from the work undertaken by all fees for non-audit work paid to the and risk management processes with the internal audit function independent external auditors. Details particular reference to the Turnbull • a review of the continued independence of these fees can be found in note 5 to guidance. Its conclusions are of the external auditors including their the Financial Statements (page 87). communicated to the relevant level audit and non-audit work, together with of management and the function has the adoption of an updated policy with The independent external auditors also a direct reporting responsibility to the respect to the engagement of the operate procedures designed to safeguard Audit Committee. external auditor for non-audit work their objectivity and independence. These • a review of the independent external include the periodic rotation of audit auditors’ audit plan and their findings partner, use of independent concurring in relation to the annual report and partners, use of a technical review panel half-year report (where appropriate) and annual • a review of the Company’s draft independence confirmations by all staff. annual report, half-year results and The independent external auditors report associated announcements focusing to the Committee on matters including on key judgemental areas and independence and non-audit work on accounting policies an annual basis. • an appraisal of its own effectiveness and that of the internal and independent external auditors.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 57 Governance Governance WS Atkins plc Annual Report 2009
D.2 Constructive use of the AGM the of use Constructive D.2 attend to invited are shareholders our All which at AGM, all the Company’s directors present. are seek We to participation shareholder encourage lodged be to votes proxy enabling by portal, share our via online www.myatkinsshares.com. with thewith Combined Code Statement of compliance compliance of Statement 2009 March 31 ended year the Throughout provisions the with complied Company the complied also It Code. the of 1 Section of Corporate on Code Combined the with Financial the by adopted Governance Reporting June in 2008, Council although until so do to obliged not is Company the 2010. 31 March theyear financial ending on signed and Board the by Approved its behalf by Webster Richard SecretaryCompany June 2009 16
The also chairman writes our to reinforce to annually investors institutional ongoing open, to commitment our director independent senior The dialogue. and other non-executive directors, along themselves make chairman, the with meetingsavailable for with major particularly chairman the shareholders, governance. discuss to available being The non-executive directors kept are shareholders of views the of informed providing directors executive the with updates on investor meetings. The to briefings provides broker Group’s with shareholders as key. Relations Relations key. as shareholders with mainly managed are shareholders with finance Group and executive chief the by regularly held are Meetings director. institutional with year the throughout analysts. and managers fund investors, website information contains The Group’s annual the including activities current on resultsand half-year presentations. with up take to shareholders enables This these individuals issue any they feel unable Group or executive chief the with raise to finance director. and opinions shareholder on Board the from feedback independent compiles investor meetings. D. Relations with shareholders Relations with D. institutional with Dialogue D.1 shareholders The Board regards communication 58 Governance Remuneration Report
This report has been prepared in to provide appropriate incentives to To ensure that we offer the best available accordance with the Directors’ enhance performance and align the incentive to enhance shareholder value, Remuneration Report Regulations 2002 interests of the executive directors with the Committee continued to assess the (the Regulations). As required by the those of shareholders. It also reviews the following constituent elements of the Regulations, a resolution to approve the salaries and benefits of members of the remuneration of the executive directors report will be proposed at the Company’s Group Executive, the company secretary and review the same for members of the AGM at which the Financial Statements and other senior managers reporting Group Executive and senior managers: will be presented for approval. directly to the chief executive. The terms of reference of the Committee are A. salary and other benefits This report has been divided into separate available for review on the Company’s B. performance bonus payments sections for unaudited and audited website or on request from the C. long-term share incentives information. The Regulations require the company secretary. D. all-employee share plan independent auditors to report to our E. retirement benefits. shareholders on the ‘audited information’ The Committee appointed, and continued section of this report and to state to use, Hewitt New Bridge Street (HNBS) In determining remuneration, whether, in their opinion, that part of to provide advice on structuring executive consideration is given to reward levels the report has been properly prepared in remuneration packages and benchmarking. throughout the organisation as well as accordance with the Companies Act 1985 HNBS does not provide any other services in the external employment market. (as amended by the Regulations). to the Group. However, Hewitt Associates, The Committee aims to reward all of which HNBS is a specialist division, employees fairly based on their role, Unaudited information provided standalone benchmarking their performance and salary levels in the services to the Company’s Indian wider market. The remuneration policy Remuneration committee subsidiary during the year. The Committee described below will be kept under Our Remuneration Committee at the is satisfied that this does not compromise review, but the current intention is that year-end comprised Sir Peter Williams, HNBS’s independence. In determining the policy should continue to apply in Lord Boyce, James Morley, Raj Rajagopal remuneration, the Committee also future financial years. and Ed Wallis. Fiona Clutterbuck joined consults the chief executive, Keith Clarke, the committee on 15 June 2009. Sir Peter the Group HR director, Alun Griffiths, and, A. Salary and other benefits Williams, Lord Boyce, Fiona Clutterbuck, where required, the company secretary, The Committee reviews the salaries of James Morley and Raj Rajagopal are Richard Webster, about its proposals. No the executive directors, members of the independent non-executive directors. director or senior manager participates in Group Executive and senior managers Ed Wallis, our chairman, was considered discussions about their own remuneration. annually to ensure they remain independent on his appointment as a appropriate and competitive. A wide director. The Committee is chaired by Remuneration policy range of data is utilised, together with Sir Peter Williams. Details of attendance The objectives of the Group’s assistance from HNBS as appropriate. at Committee meetings can be found in remuneration policy are to attract, retain Table 1 of the Corporate Governance and incentivise management with the Keith Clarke, Robert MacLeod and Report (page 52). appropriate professional, managerial and Alun Griffiths have salaries of £425,000, technological expertise to realise our £315,000 and £200,000 respectively. The Committee reviews the remuneration business objectives and to align their Mr MacLeod’s salary was increased from policy for the chairman and executive interests with those of our shareholders. £300,000 with effect from 1 October 2008 directors and, more generally, the We continue to strive to link total following a detailed appraisal of market remuneration policy of the Group. It remuneration to performance and thereby data. The Group’s annual pay review, determines the level of remuneration, create a performance culture. A significant which is usually implemented on 1 April incentives and other benefits, proportion of the executive directors’ each year, has been postponed until compensation payments and terms of total remuneration is linked to October 2009. In line with the approach employment of the chairman and each performance through participation taken for all Group employees, the salaries executive director. The Committee seeks in the performance bonus plan and of the executive directors were not long-term share incentives. reviewed in April 2009. However, in light
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Governance Governance WS Atkins plc Annual Report 2009 50% the of subject is award the to return shareholder total Company’s (TSR) performance the relative to Index FTSE250 the of constituents date the on trusts) investment (excluding the if achieved is vesting Full award. of ranks the in upperCompany quartile, rata pro and ranking, median a for 30% performance. intermediate for vesting No vesting occurs a ranking for belowmedian. 50% the of subject is award the to normalised in growth real Group’s earnings per (EPS) share over the in increase An period. performance EPS per more of annum than 10% (RPI) index price retail UK the above period performance three-year the over an full; in vest to shares the enables the above annum per 4% of increase shares the of 30% in result will RPI UK increase an for vest shares no vesting; the above annum per 4% than less of for operates vesting rata Pro RPI. UK growth EPS in between 4% and 10% above the UK RPI. C. Long-term share incentives share C.Long-term (LTIP) Plan Incentive Long-Term Atkins The executive the retain and motivate to seeks directors, members the of Group executives. senior other and Executive executive to awards LTIP, the Under Group the of members and directors Executive made are on the following basis: • • may participants other to made Awards as condition EPS the to solely subject be above. out set to subject shares on declared Dividends delivered and up rolled are awards LTIP the of release on cash in executives to award. underlying
similar terms.similar Bonus non-pensionable awards are non-contractual. and long-term and bonus Company’s The executive provide to seek plans incentive Group the of members and directors increase to opportunity the with Executive remunerationoverall levels the upper to but businesses comparable for quartile performance demanding following only targets being achieved. it with a deferred bonus plan on on plan bonus deferred a with it of the Atkins Deferred theof Bonus Atkins Plan (DBP). with retention, aid to designed is DBP The the being award subject forfeiture to on resignation within three years grant. of There no are further performance been has award the once conditions awards DBP on declared Dividends made. participants to delivered and up rolled are cashin on release align the of to award of those with further interests their Group the of Members shareholders. any of one-third take also must Executive (RBP), Plan bonus they receive via made an award Bonus Retention Atkins the under which but DBP the to similar is which prior In period. vesting flexible a for allows awards RBP for period vesting the years bonuses for but years two at set been has year financial the to relation in earned set been has this 2010 March 31 ending threeat years. The DBP expires early in replace will Committee the and 2010 executive director and concluded that that concluded and director executive light in deferred be should changes any over sharesan under award the terms of the current economic circumstances. circumstances. economic current the of to eligible be will directors Executive for salary their 90%of of bonus a receive ending year the for performance on-target also may Committee The 2010. March 31 increase the 100% bonus pay out up to to salaryof exceptional in circumstances. Executive directors take required are to of form the in bonus any of one-third
Heath Drewett, who was appointed as as appointed was who Drewett, Heath replace will and 2009 June 15 on director director finance Group as MacLeod Mr receive will Group, the leaves he when directors executive for benefits Other and car a or allowance car a include expenses, operating its of payment B. Performance bonus payments Executive directors were eligible receive to bonuses 90% up to of their of salary for individual and financial Group achieving year the of respect in targets performance Committee The 2009. March 31 ended thehas discretion increase to the bonus are bonuses which against targets The financial challenging include paid Group of consideration and objectives performance respect in health of and Committee The retention. staff and safety of review thorough a conducted year financial the during remuneration and Alun Griffiths requested that 10% of 10% that requested Griffiths Alun and ending year financial the for salaries their be waived. This waiver March 2010 31 does not affect the underlying reference salary used calculate related to benefits incentives share long-term bonus, as such and pension entitlement. salaryan annual £250,000. of assurance and entitlementlife to private non-contributory a healthcare scheme. in salary of 100% to up out pay to exceptional circumstances. Following the performance the the of Group, bonus a pay to resolved has Committee Clarke Keith of each to salary of 100% of will Griffiths Alun MacLeod. Robert and receive a bonus 90% of salary. of should any, if changes, what determine to structure and levels the both to made be each of package reward total the of of the current economic circumstances, circumstances, economic current the of MacLeod Robert Clarke, Keith of each 60 Governance Remuneration Report Continued
The Committee believes that EPS growth The executive directors are encouraged External appointments provides a closer ‘line of sight’ between to hold shares in the Company (either The Board recognises the benefit which management performance and reward directly or through the DBP) equivalent we can obtain if our executive directors than can be achieved via TSR alone. to the level of their annual salary, based serve as non-executive directors of other on the value of such shares at the time companies. Subject to review in each case, This year the Committee intends to make of their acquisition (or award), or their the Board’s general policy is that each LTIP awards at around 100% of salary current market value from time to time, executive director may accept one to the executive directors following the whichever is the higher. non-executive directorship with another announcement of the Group’s preliminary FTSE 350 company from which any fees results. As in previous years, the number D. All-employee share plan received may be retained. Robert of shares subject to the awards will be The Company’s Share Incentive Plan, as MacLeod is currently a non-executive based on a share price on 1 April 2009. approved by HM Revenue and Customs, director of Aggreko plc and retains The upper limit in the LTIP is 150% of continues to be offered to all eligible the fees payable, receiving £41,000 in salary. The Committee has considered the UK employees, including the executive respect of their financial year ended impact of the £7.0m tax benefit from the directors. The Plan, which was approved 31 December 2008. purchase of prior year consortium relief by shareholders in 2000, will be presented from the Metronet companies on EPS to shareholders for re-approval at the Directors’ contracts for the year ended 31 March 2009. It has forthcoming AGM. Chairman and non-executive directors concluded that the non-trading nature The Chairman and non-executive directors of this benefit is not a fair reflection of E. Retirement benefits have letters of appointment stating their underlying earnings. Excluding this tax Pension and retirement benefits provided annual fee and that their appointment is benefit, normalised basic EPS for the to the executive directors are comparable initially for a term of three years subject year ended 31 March 2009 was 76.4p. to those provided by other companies. to satisfactory performance and their This lower EPS figure has been used to re-election at forthcoming AGMs. Their calculate the vesting of the awards made Performance graph appointment may be terminated with under the LTIP in 2006 and will also be The Company’s performance, measured six months’ written notice at any time. used as the base for the 2009 awards. by TSR, is compared with the performance Table 1 (page 62) summarises the dates of of the FTSE 250 Index (excluding appointment and most recent re-election A full summary of the performance investment trusts) over the past five years. dates for the chairman and each of the conditions attaching to existing share plan This is considered the most appropriate non-executive directors. awards can be found in note 32 to the index against which to measure Financial Statements (page 109). performance as the Company has been Copies of the letters of appointment will a member of the FTSE 250 for the whole be available for inspection prior to and The LTIP allows for the use of market of the five-year period. This is illustrated during the AGM and are also available for purchase, new issue and treasury shares in Fig. 1 (page 62). inspection at the Company’s registered to satisfy awards. To date all vested LTIP office during normal business hours. awards have been satisfied using shares TSR is defined as the return shareholders purchased in the market. The Committee would receive if they held a notional The remuneration of the chairman is reviews the method by which outstanding number of shares and received dividends determined by the Committee. The awards under the LTIP and other on those shares over a period of time. remuneration of the non-executive discretionary share plans are satisfied Assuming dividends are reinvested into directors is determined by the Board on on a regular basis. the Company’s shares, it measures the the recommendation of the executive percentage growth in the Company’s directors within the limits set out in the share price together with the value of Articles of Association and on the basis any dividends paid. of independent advice and the level of fees paid to non-executive directors of comparator companies. The annual fees are specific to each director reflecting their individual commitments to the Board and various Board committees. The current fee structure is shown in Table 2 (page 62).
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 61
Governance Governance WS Atkins plc Annual Report 2009 to contribute £14,000 to his defined defined his to £14,000 contribute to exchange. salary via pension contribution life receive directors executive All times four to equal cover assurance their salary. Directors’ interests The interests the of directors and their 0.5p of shares ordinary the in families 2009 March 31 at as Company the in each 5 (page shownare 63). Table in and options share directors’ of Details long-term March 2009 incentives as 31 at 64). (page 6 Table in given are and options Directors’share 64). (page 6 Table in not had that option under share each For expired theat end theyear, of financial 2009 March 31 on price mid-market the lowest and highest the and 494.50p was year financial the during prices market mid respectively.were 1,089.00p and 423.25p Approval its on signed and Board the by Approved behalf by Sir Peter Williams Remuneration the of Chairman Committee June 2009 16 (2008: £nil) respect in National of Company the contributions Insurance chosen not he had paid have would incentives long-term 4 Table in disclosed emoluments Directors’ for amounts any include not do 63) (page the options ordinary value of acquire to or to granted Company the in shares held the by directors, which set are out During the year the Company made made Company the year the During (2008:£10,980) £26,000 of payments contribution defined Griffiths’ Mr under £1,792 further a and arrangement
1 October 2008 have been calculated in in calculated been have 2008 October 1 guidance of 8.1 version with accordance actuarial the by issued GN11 note Atkins the of Trustees The profession. Pension Plan (the Plan) revised the transfer in date this from effect with basis value Under legislation. new with compliance he arrangement contribution defined the to equivalent amount annual an receives 10% a of consists This salary. his of 13% ordinary employer contribution and a transitional employer contribution 3% of The payable 30 until September 2010. to payable is contribution transitional 30 September 2007 when the scheme scheme the when 2007 September 30 was closed As accrual. future to that at years 21.5 completed had he date 2007 October 1 Since service. pensionable defined a in participated has he same the on arrangement contribution terms as other UK-based staff. The value accrued his of benefitunder thefinal the of start the at arrangement salary annum per £63,953 was year financial accrued total the of value transfer a with pension accrued His £703,523. of benefit increased £6,036 by per during annum This will sum increase continue to the year. Griffiths’ Mr in increases with line in of value transfer the in increase The salary. at As £182,897. was benefits accrued his accrued his of value the 2009, March 31 benefit was withper annum, £69,989 a benefit accrued total the of value transfer before values Transfer £886,420. of the by affected Plan the of members all accrual. benefit defined their of closure Robert MacLeod and Heath Drewett Drewett Heath and MacLeod Robert until arrangement salary final a of also have a contractual entitlement to to entitlement contractual a have also to equivalent amount annual an receive their towards salaries their of 25% pension benefits. During theyear the £76,875 of payments made Company MacLeod’s Mr (2008:into £68,250) personal pension plan. Alun Griffithsis 54 and was a member
Audited information Audited emoluments Directors’ director, each of remuneration The awards incentive long-term excluding benefits Retirement entitlement contractual a has Clarke Keith 25% to equivalent amount an receive to He payment. pension a as salary his of an as entitlement this receive to elected reported is this and emolument additional 63). (page 4 Table in and pensions, during the year ended ended year the during pensions, and 4 March 2009 laid is out Table 31 in 63). (page In the event of unsatisfactory unsatisfactory of event the In the for period notice the performance, three to reduced is directors executive months. Their service agreements terminate will agreements service The when the director reaches the retirement are and Board the by determined as age months’ 12 giving on terminable otherwise service director’s each of Copies notice. inspection for available be will agreement are and AGM the during and to prior Executive directors executive the of agreements service The 3 Table in summarised are directors 62). (page the where loss mitigate to duty a include payment any and terminated is agreement be lieu noticein of may reduced take to service No mitigation. such of account predetermined for provides agreement amounts compensation of the in event contracts. service of termination early of also inspection available for the at normal during office registered Company’s business hours. The chairman and the non-executive non-executive the and chairman The directors not eligible are pensions, for any or bonus annual incentives, share out-of-pocket than other payments similar expenses connection in with the chairman The duties. their of performance not do directors non-executive the and which at meeting any in participate relating matters of respect in discussions theirto own position place. take 62 Governance Remuneration Report Continued
Fig. 1 TSR 220
200
180
160
140
120 FTSE 250
100 Atkins 80 2004 2005 2006 2007 2008 2009
Table 1 Date of Date of appointment as a last non-executive re-election Name of director director at AGM Lord Boyce1 05/05/04 06/09/06 Fiona Clutterbuck 13/03/07 05/09/07 Joanne Curin1 10/02/09 n/a James Morley2 01/01/01 03/09/08 Raj Rajagopal 24/06/08 03/09/08 Ed Wallis 08/09/04 03/09/08 Sir Peter Williams 05/05/04 05/09/07
1. Joanne Curin will stand for re-appointment and Lord Boyce will stand for re-election at the AGM to be held on 9 September 2009. 2. James Morley will retire from the Board on 30 June 2009.
Table 2 Chairman fee1 £200,000 Basic annual fee £37,000 Committee chair annual fee £6,000 Committee annual fee2 £3,000
1. Mr. Wallis has requested that 10% of his fees for the financial year to 31 March 2010 be waived, reducing the annual fee payable for the year ending 31 March 2010 to £180,000. 2. No fee is paid in respect of membership of the Nomination Committee.
Table 3 Effective Notice Unexpired Contract date of period term of date contract (months) contract Keith Clarke1 12/09/03 01/10/03 12 Rolling contract Heath Drewett2 17/04/09 15/06/09 12 Rolling contract Alun Griffiths 18/04/07 13/03/07 12 Rolling contract Robert MacLeod3 14/07/04 23/06/04 12 to 19/06/09
1. Keith Clarke will stand for re-election at the AGM to be held on 9 September 2009. 2. Heath Drewett will stand for re-appointment at the AGM to be held on 9 September 2009. 3. Robert MacLeod has announced his intention to leave the Company on 19 June 2009.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information – 7 9 5 42 9 42 4 4 36 63 n/a n/a n/a n/a n/a 317 197 1 361 7 9 588 846 944 , , , Total 2008 8 9 3,750 1,893 2,500 2,500 1,000 6
1 0 21,399 10,596 6 1 118,741 At 31/03/08At
Governance Governance – 5 6 7 7 5 29 7 30 46 4 46 40 n/a 212 2 4 970 532 394 846 408 8 , , , 2009 Total 3,750 7 4 4 2,500 2,500 1,000 5,000 1,896 22,374 15,596 2 3 8 1 150,073 At 31/03/09At
7
– – – – – – – – – – – 7 0 8 1 2 60 9 9 3 142 6 202 846 , , , 7 £000 3,750 4 2,500 2,500 1,000 4 5,000 2 WS Atkins plc Annual Report 2009 15,596 8 22,445 3 1 150,286 Non-cash At 16/06/09At emoluments
6
– – – – – – – – – – 106 106 £000 Other payments
5
– – – – – – 12 12 14 14 14 42 £000 Other benefits
4
– – – – – – – – 613 210 120 283 £000 Bonus
2 3 5 29 30 46 46 40 933 396 200 425 200 308 fees fees £000 Salary/
s r
o 1
t 1 c e
r 1 i
1 d
e v i t u c e Changes in directors’ interests of Keith Alun Clarke, Griffiths and Robert MacLeod between31 March 16 Juneand 2009 relate to shares acquiredPlan. Incentive via theAtkins Share Keith Clarke sacrificed of the £425,000 £8,173 in exchangefor additional holiday entitlement under the Group’s flexible leave policy. £14,500 of the £200,000 was contributed voluntarily by Alun Griffiths into his defined contribution pension via salary exchange. Amounts payable in cash. Other benefits include such items as company cars or allowances, fuel and medical insurance. Keith Clarke is entitled to a pension payment equivalent of his to 25% salary. He elected to receive this entitlement as a taxable payment. Keith Alun Clarke, Griffiths and Robert MacLeod are required to a take minimum of one-third of their bonus payment in theform of a right to acquire shares under Awardsthe of DBP. shares to these values will be made following the announcement of the preliminary results pursuant to the rules of the DBP to Keith Clarke Fiona Clutterbuck elected to waive her fee in favour of a charity of her choice until 30 June 2008. and Alun Griffiths. These awards will be disclosed in the directors’ share options and long-term incentives table remuneration in the2010 who report. will leave the Company Robert around the timeMacLeod, the grant is made, will not receive an award and will therefore lose one-third of the total value of his bonus. x Executive directors Keith Clarke
Sir Peter Williams Wallis Ed Total chairman Total and non-executive directors Raj Rajagopal Sir Peter Williams James Morley Wallis Ed Fiona Clutterbuck Joanne Curin Raj Rajagopal Lord Boyce Fiona Clutterbuck Fiona Chairman and non-executive directors Alun Griffiths James Morley Total executive Total directors Chairman and non-executive directors Lord Boyce
Robert MacLeod
Robert MacLeod 1. Table 5 Table 2. 3. 4. 5. 6. 7. 1. Table 4 Table Keith Clarke
Heath Drewett Joanne Curin Alun Griffiths Total E 64 Governance Remuneration Report Continued
Table 6 Mid- First Number Number market date of of shares of shares Market price exercise/ under under price on at date Gain on end of Date Plan Award option at option at exercise of grant exercise performance of lapse name1 date 01/04/08 Granted Exercised Lapsed 31/03/094 (pence) (pence) (£) condition of option Keith Clarke LTIP2 25/06/04 20,000 – 6,000 14,000 – 968.5 586.5 58,110 01/04/08 25/06/14 24/06/05 25,000 – – – 25,000 670.0 01/04/09 24/06/15 11/09/06 47,500 – – – 47,500 837.0 11/09/09 11/09/16 03/08/07 44,0003 – – – 44,000 1035.0 03/08/10 03/08/17 27/06/08 – 38,600 – – 38,600 1048.0 27/06/11 27/06/18 DBP 24/06/05 8,574 – 8,574 – – 1055.324 670.0 90,483 24/06/08 24/06/15 29/06/06 6,401 – – – 6,401 826.0 29/06/09 29/06/16 27/06/08 – 13,482 – – 13,482 1048.0 27/06/11 27/06/18 Total 151,475 52,082 14,574 14,000 174,983 148,593 Alun Griffiths LTIP2 25/06/04 10,000 – – 7,000 3,000 586.5 01/04/08 25/06/14 24/06/05 10,000 – – – 10,000 670.0 01/04/09 24/06/15 11/09/06 14,000 – – – 14,000 837.0 11/09/09 11/09/16 03/08/07 18,0003 – – – 18,000 1035.0 03/08/10 03/08/17 27/06/08 – 18,100 – – 18,100 1048.0 27/06/11 27/06/18 DBP 26/08/02 1,663 – – – 1,663 289.0 26/08/05 26/08/12 24/06/05 3,037 – – – 3,037 670.0 24/06/08 24/06/15 29/06/06 3,099 – – – 3,099 826.0 29/06/09 29/06/16 29/06/07 2,777 – – – 2,777 1022.0 29/06/10 29/06/17 27/06/08 – 5,233 – – 5,233 1048.0 27/06/11 27/06/18 Total 62,576 23,333 – 7,000 78,909 – Robert MacLeod LTIP2 25/06/04 30,000 – 9,000 21,000 – 1053.1981 586.5 94,788 01/04/08 25/06/14 24/06/05 10,000 – – – 10,000 670.0 01/04/09 24/06/15 11/09/06 28,750 – – – 28,750 837.0 11/09/09 11/09/16 03/08/07 30,0003 – – – 30,000 1035.0 03/08/10 03/08/17 27/06/08 – 27,250 – – 27,250 1048.0 27/06/11 27/06/18 DBP 24/06/05 4,287 – 4,287 – – 1055.324 670.0 45,242 24/06/08 24/06/15 29/06/06 4,388 – – – 4,388 826.0 29/06/09 29/06/16 27/06/08 – 9,514 – – 9,514 1048.0 27/06/11 27/06/18 Total 107,425 36,764 13,287 21,000 109,902 140,030 Aggregate gains on share options 2009 288,623 Aggregate gains on share options 2008 528,756
1. Plan names: LTIP – Atkins Long-Term Incentive Plan DBP – Atkins Deferred Bonus Plan 2. Subject to performance criteria described in note 32 to the Financial Statements. 3. Following the exceptional write down in relation to Metronet, the Company’s EPS for the financial year ended 31 March 2007 was (56.8p). The consequence of this was that any LTIP awards made in 2007 would never be capable of vesting. Pursuant to the rules of the plan, the Remuneration Committee considered that it was appropriate to remove profit in respect of discontinued operations and the exceptional loss in respect of Metronet and that the EPS for the financial year ending immediately before the commencement of the performance period for the 2007 awards be deemed to be 57.3p. 4. All awards granted under the terms of the LTIP and the DBP are structured as options, for which the exercise price is nil.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 65
Governance Governance WS Atkins plc Annual Report 2009 any apparent misstatements or material material or misstatements apparent any Financial the with inconsistencies do responsibilities Our Statements. not extend other information. any to We reviewWe whether the Corporate Governance Report reflects the nine the with compliance Company’s (2006) Code Combined the of provisions Listing the by review our for specified Authority, Services Financial the of Rules and we report if it does not are not. We Board’s the whether consider to required statements all cover control on internal on opinion an form or controls, and risks corporate Group’s the of effectiveness the and risk its or procedures governance control procedures. in contained information other read We whether consider and Report Annual the Financial audited the with consistent is it information other The Statements. comprises only the information listed on the contents page under the headings Introduction,Reviews, Governance the of part audited the (excluding Report), Remuneration Directors’ Investor and Summary Five-Year implications the consider We Information. our reportfor if we become of aware
We report to you our opinion as to to as opinion our you to report We give Statements Financial the whether a true view and fair and whether the StatementsFinancial and the part the of Directors’ Remuneration Report be to in prepared properly been have audited 1985 Act Companies the with accordance Financial Group the regards as and, Regulation. IAS the of 4 Article Statements, alsoWe report you whether to our in opinion the information given the in Directors’ Report consistent with is the information The Statements. Financial includes Report Directors’ the in given if information specifiedregarding law by directors’ remuneration and other transactions not is disclosed. that specific information presented in presented information specific that Chief the Statement, Chairman’s the Executive’s the Statement, Human Review Business the Review, Resources Review Responsibility Corporate the and cross-referred is that the from Business Review section the of Directors’ Report. our in if, you to report we addition In kept not has Company the opinion, have we if records, accounting proper not received the all information and or audit, our for require we explanations
Respective responsibilities responsibilities Respective Our responsibility audit the to is Financial Statements and the part the of Directors’ Remuneration Report be to audited in and legal relevant with accordance International and requirements regulatory Ireland). (UKand Auditing on Standards has opinion, the including report, This the for only and for prepared been membersCompany’s as a body in the of 235 Section with accordance other no for and 1985 Act Companies this giving in not, do We purpose. opinion, or accept assume responsibility other any to or purpose other any for shown is report this whom to person which comprise the Consolidated Consolidated the Statement, Income Sheets, Balance Company Parent and Company Parent and Consolidated the Consolidated the Statements, Flow Cash Statements of Company and Parent the and Expense and Income Recognised Statements Financial These notes. related accounting the under prepared been have also have We therein. out set policies Directors’ the in information the audited described is that Report Remuneration as been having audited. of directors and auditors preparing for responsibilities directors’ The the Annual Report, the Directors’ Financial the and Report Remuneration Statements with accordance in applicable Reporting Financial International and law the by (IFRSs)adopted as Standards the in out set are Union European Directors’ of Statement Responsibilities. whoseor into come hands it may save prior our by agreed expressly where writing.consent in We have audited the have Group andWe Parent (the Statements Financial Company ‘Financial Statements’) plc WS of Atkins 2009 March 31 ended year the for
to the members of WS Atkins plc Atkins WS of members the to Independent Auditors’ Report Report Auditors’ Independent 66 Governance Independent Auditors’ Report to the members of WS Atkins plc Continued
Basis of audit opinion Opinion We conducted our audit in accordance In our opinion: with International Standards on Auditing (UK and Ireland) issued by the Auditing • the Group Financial Statements give a Practices Board. An audit includes true and fair view, in accordance with examination, on a test basis, of evidence IFRSs as adopted by the European relevant to the amounts and disclosures in Union, of the state of the Group’s affairs the Financial Statements and the part of as at 31 March 2009 and of its profit the Directors’ Remuneration Report to be and cash flows for the year then ended. audited. It also includes an assessment of the significant estimates and judgements • the Parent Company Financial made by the directors in the preparation Statements give a true and fair view, of the Financial Statements, and of in accordance with IFRSs as adopted whether the accounting policies are by the European Union as applied in appropriate to the Group’s and accordance with the provisions of the Company’s circumstances, consistently Companies Act 1985, of the state applied and adequately disclosed. of the Parent Company’s affairs as at 31 March 2009 and cash flows We planned and performed our audit for the year then ended. so as to obtain all the information and explanations which we considered • the Financial Statements and the part necessary in order to provide us with of the Directors’ Remuneration Report sufficient evidence to give reasonable to be audited have been properly assurance that the Financial Statements prepared in accordance with the and the part of the Directors’ Companies Act 1985 and, as regards the Remuneration Report to be audited are Group Financial Statements, Article 4 free from material misstatement, whether of the IAS Regulation. caused by fraud or other irregularity or error. In forming our opinion we also • the information given in the evaluated the overall adequacy of the Directors’ Report is consistent with presentation of information in the the Financial Statements. Financial Statements and the part of the Directors’ Remuneration Report to be audited. PricewaterhouseCoopers LLP Chartered Accountants and Registered Auditors London 16 June 2009
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
Cash Flow Statements Notes to the Financial Statements Summary Five-Year Consolidated and Parent Company Company Parent and Consolidated Balance Sheets Consolidated and Parent Company Company Parent and Consolidated Consolidated Income Statement Company Consolidated and Parent Statements of Recognised Income and Expense
72 118
71
69 70 Financial Statements 68 Financial Statements 68 Financial Statements Consolidated Income Statement For the year ended 31 March 2009
Group Group 2009 2008 £m £m Notes Total Total Continuing operations Revenue (Group and share of Joint Ventures) 1,532.4 1,399.5
Revenue 3 1,487.2 1,313.6 Cost of sales (941.9) (834.1) Gross profit 545.3 479.5
Administrative expenses (442.2) (392.8) Operating profit 3,5 103.1 86.7
Profit on disposal of Joint Venture 9 2.5 – Share of post-tax profit from Joint Ventures 3,4 0.2 0.9 Profit from operations 105.8 87.6
Finance income 7 6.7 9.8 Finance cost 7 (9.8) (5.5) Net finance (cost)/income 7 (3.1) 4.3
Profit before taxation 102.7 91.9
Income tax expense 8 (18.5) (23.3) Profit for the year from continuing operations 84.2 68.6
Discontinued operations 10 – 31.4
Profit for the year attributable to equity shareholders 33 84.2 100.0
Earnings per share From continuing and discontinued operations (total) Basic earnings per share 12 86.1p 98.9p Diluted earnings per share 12 84.8p 97.2p
From continuing operations Basic earnings per share 12 86.1p 67.9p Diluted earnings per share 12 84.8p 66.7p
Dividends Dividends recognised in the year – paid 11 25.25p 21.50p Dividends relating to the year – proposed 11 26.00p 24.00p
The notes on pages 72 to 117 are an integral part of these Financial Statements.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information – – – – – – 69 £m 68.7 68.7 2008 Company
– – – – – – 9.6 9.6 £m 2009 Financial StatementsFinancial
1.3 1.3 3.3 3.3 6.4 0.2 £m (7.8) (0.8) 2008 101.3 101.3 100.0 100.0 WS Atkins plc Annual Report 2009 Group
– – 7.4 7.4 £m 33.6 12.4 2009 84.2 (76.8) (122.8)
8c 8c 33 33 33 33 29a 29a Notes
of Recognised Income and Expense Expense and Income Recognised of For 2009 March the year ended 31 Consolidated and Parent Company Statements Statements Company Parent and Consolidated Actuarial (loss)/gain on retirement benefitliabilities items equity Venture Joint of Share
The notes on pages 72 to 117 are an integral part these of The Financial Statements. notes on pages 117 to 72 Tax on items charged to equity equity to charged items on Tax flowCash hedges Total recognised income and expense and recognisedincome Total for the year attributableto equity shareholders Net differences on exchange equity to directly (expense)/income Net recognised Profitfor the year 70 Financial Statements Consolidated and Parent Company Balance Sheets As at 31 March 2009
Group Company 2009 2008 2009 2008 Notes £m £m £m £m Assets Non-current assets Goodwill 14 62.3 56.7 – – Other intangible assets 16 9.0 10.9 – – Property, plant and equipment 17 46.6 45.6 – – Investments in subsidiaries 18 – – 148.9 130.8 Investments in Joint Ventures 4 3.9 4.2 – – Deferred income tax assets 19 101.6 69.6 – – Other receivables 20 12.9 5.7 6.0 5.6 236.3 192.7 154.9 136.4
Current assets Inventories 21 0.3 0.3 – – Trade and other receivables 22 353.7 299.7 11.4 8.4 Financial assets at fair value through profit or loss 23 28.7 29.7 – – Cash and cash equivalents 24 209.7 154.5 – 7.1 592.4 484.2 11.4 15.5
Liabilities Current liabilities Borrowings 25 (7.6) (7.8) – – Trade and other payables 26 (478.7) (409.2) (57.5) (25.0) Derivative financial instruments 27 (1.2) (0.9) – – Current income tax liabilities (31.2) (26.8) – – Provisions for other liabilities and charges 28 (9.9) (4.3) – – (528.6) (449.0) (57.5) (25.0) Net current assets/(liabilities) 63.8 35.2 (46.1) (9.5)
Non-current liabilities Borrowings 25 (9.5) (13.6) – – Provisions for other liabilities and charges 28 (17.8) (13.5) – – Post-employment benefit liabilities 29 (311.5) (219.3) – – Other non-current liabilities 30 (4.8) (4.9) – – (343.6) (251.3) – –
Net (liabilities)/assets (43.5) (23.4) 108.8 126.9
Capital and reserves Ordinary shares 31 0.5 0.5 0.5 0.5 Share premium account 33 62.4 62.4 62.4 62.4 Merger reserve 33 8.9 8.9 8.9 8.9 Retained (loss)/earnings 33 (115.3) (95.2) 37.0 55.1 Equity shareholders’ (deficit)/funds (43.5) (23.4) 108.8 126.9
Keith Clarke Robert MacLeod Director Director
Approved by the Board on 16 June 2009.
The notes on pages 72 to 117 are an integral part of these Financial Statements.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information – – – – – – – – – – – – – – – – – – – – – – 71 7.1 7.1 7.0 0.2 £m 55.7 55.7 10.9 10.9 55.9 55.9 50.6 2008 (21.8) (55.8) (54.5) (34.0) Company
– – – – – – – – – – – – – – – – – – – – – – – 7.1 0.4 £m (7.1) 10.4 (9.6) (9.6) 29.1 29.1 28.7 2009 (12.3) (24.7) (26.6) Financial StatementsFinancial
– – – – – – – 1.0 1.0 9.7 9.7 0.7 0.7 2.5 2.5 0.3 £m (7.8) (3.3) (0.9) (0.2) (4.4) (0.6) (0.3) (6.4) 19.9 19.9 72.9 72.9 80.9 2008 (17.6) (17.3) (14.7) (27.2) (18.9) (21.8) (32.6) (78.3) (34.0) 187.7 187.7 154.5 154.5 WS Atkins plc Annual Report 2009 Group
– – – – – – – – 6.3 1.1 1.1 1.0 1.0 1.3
0.2 2.5 £m (3.5) (6.9) (4.5) (0.8) (2.2) 17.0 17.0 (4.3) 2009 38.2 116.8 (10.5) (12.8) (12.3) (18.2) (24.7) (45.8) (32.8) 125.5 209.7 154.5
9 11 15 15 10 10 10 24 34 Notes
Investments Joint in Ventures Investments subsidiary in companies
Consolidated and Parent Company Cash Flow Statements Cash Flow Company Parent and Consolidated For 2009 March the year ended 31 Interest received Interest – Consideration Acquisitions subsidiaries of Net cash generated from operating activities operating from generated cash Net
Cash flows from investing activities Ventures Joint from received Distributions Income tax paid Interest paid Cash flows from operating activities operations from generated Cash – Cash acquired Cash – Discontinued operations payments consideration Deferred Net loans Joint to Ventures Dividend income received income Dividend Purchases of property, plant and equipment and plant property, of Purchases equipment and plant property, of disposals from Proceeds Proceeds from disposals of investments in subsidiaries in investments of disposals from Proceeds Proceeds from disposals of investments in Joint Ventures Joint in investments of disposals from Proceeds Purchases intangible of assets Financial assets Discontinued operations Net cash (used in)/generated from investing activities investing from in)/generated (used cash Net
Cash flows from financing activities Repayment short-term of loans Repayment long-term of loans Finance lease principal payments
Net increase/(decrease) in cash, cash equivalentsand bank overdrafts Discontinued operations Loans from Group companies Share buybacks
Net cash used in financing activities financing in used cash Net Exchange movements Cash, cash equivalents and bank overdrafts at beginning of year of beginning at overdrafts bank and equivalents cash Cash, Equity dividends paid shareholders to
Cash, cash equivalents and bank overdrafts at end of year are an integral part these of The Financial Statements. notes on pages 117 to 72 72 Financial Statements Notes to the Financial Statements For the year ended 31 March 2009
1. Accounting policies WS Atkins plc is a public limited company registered and domiciled in the UK. Its registered office is Woodcote Grove, Ashley Road, Epsom, Surrey, KT18 5BW, England.
Basis of preparation The Consolidated Financial Statements of WS Atkins plc have been prepared in accordance with EU-adopted International Financial Reporting Standards (IFRSs), IFRIC interpretations and the Companies Acts 1985 and 2006 applicable to companies reporting under IFRS. The Consolidated Financial Statements have been prepared under the historical cost convention, as modified by the valuation of pensions, share-based payments and financial assets and financial liabilities (including derivative instruments).
The preparation of Financial Statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the Financial Statements and the reported amounts of revenues and expenses during the reporting period. Although these estimates are based on management’s best knowledge of the amount, event or actions, actual results ultimately may differ from those estimates. Material estimates applied across the Group’s businesses and Joint Ventures are reviewed to a common standard and adjusted where appropriate to ensure that consistent treatment of similar and related issues that require judgement is achieved upon consolidation. Any revisions to estimates are recognised prospectively.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Consolidated Financial Statements, are disclosed under ‘Critical Accounting Policies’ on page 36 of the Business Review.
Basis of consolidation The accounting policies have been consistently applied to all the periods presented including the application of new IFRS standards and interpretations.
The Consolidated Income Statement and Balance Sheet include the accounts of the Company, its subsidiary undertakings and its share of Joint Ventures. The results of the subsidiary undertakings acquired during the year are included in the income statement from the date of acquisition. The results of subsidiary undertakings disposed of during the year are included in the income statement up to the date of disposal.
Subsidiaries are entities that are directly or indirectly controlled by the Group. Control exists where the Group has the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are currently exercisable or convertible are taken into account.
The purchase method of accounting is used to account for the acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement. Goodwill is reviewed on finalisation of fair values and any adjustments required to the accounting are recorded within 12 months of the acquisition date.
Where subsidiaries adopt accounting policies that are different from the Group, their reported results are restated to comply with the Group’s accounting policies. All intra-group transactions and balances are eliminated on consolidation. Where subsidiaries do not adopt accounting periods that are co-terminous with the Group’s, results and net assets are based upon accounts drawn up to the Group’s accounting reference date based on unaudited accounts.
Inter-company transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated but considered an impairment indicator of the asset transferred.
The accounts of the Employee Benefit Trusts (EBTs) are incorporated into the results of the Group as, although they are administered by independent Trustees and their assets are held separately from those of the Group, in practice the Group’s advice on how the assets are used for the benefit of employees is normally accepted. The Group bears the major risks and rewards of the assets held by the EBTs until the shares vest unconditionally with the employees. Shares in WS Atkins plc held by the EBTs are shown as a reduction in retained loss/earnings. Other assets and liabilities held by the EBTs are consolidated with the assets of the Group.
Foreign currency transactions and translation Functional and presentation currency Items included in the Financial Statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (‘the functional currency’). The Consolidated Financial Statements are presented in pounds sterling (‘£’), which is the Company’s and Group’s functional and presentation currency.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 73
Financial StatementsFinancial WS Atkins plc Annual Report 2009 Dividend income is recognised when the right to receive payment is established. is payment receive to right the when recognised is income Dividend Interest income is recognised on a time-apportionment basis using the effective interest method. When a receivable is impaired, the Group Group the impaired, is receivable a When method. interest effective the using basis time-apportionment a on recognised is income Interest interest effective original the at discounted flow cash future estimated the being amount, recoverable its to amount carrying the reduces the using recognised is loans impaired on income Interest income. interest as discount the unwinding continues and instrument, the of rate original effective interest rate. Revenue recognition on outsourcing contracts is determined by reference to the proportion of the annual service delivered to date. Where Where date. to delivered service annual the of proportion the to reference by determined is contracts outsourcing on recognition Revenue the costs obligations of in relation the to non-renewal or termination a contract of are higher in the final periodof thecontract a proportion revenueof is deferred each period meet to these anticipated costs. provision Full is made losses for onto outsourcing loss the contracts of if theamount forecast the assessing In receivable. income forecast the exceed period contract the throughout contract the fulfilling of costs provide on an outsourcing contract, share the account is of taken the of forecast Group’s results from Joint any which Ventures the contract is servicing. Profit is recognised on a percentagecompletion basis when the outcomecontractof a or project can Where be reasonablyforeseen. completion. on Provision is taken is profit foreseen, reasonably be cannot contract a of outcome the Where losses. estimated for full in made contracts span two or more accounting periods, profit is not generally recognised until thecontract is 50%complete. Inter-segment transfers and transactions are entered into under the normal commercial terms and conditions that would also be available available be also would that conditions and terms commercial normal the under into entered are transactions and transfers Inter-segment Revenue recognition and contract accounting and overheads of proportion appropriate an plus contracts on incurred costs the comprises progress in work contract of value The trade in disclosed separately is balance the and progress in work of value the from deducted are account on invoiced Fees profit. attributable and other receivables as amounts recoverable on contracts, unless such fees exceed the value the of work progress in on contract any when advance. in invoiced fees as payables other and trade in disclosed separately is excess the Segment reporting Segment that returns and risks to subject are that services or products providing in engaged operations and assets of group a is segment business A economic particular a within services providing in engaged is segment geographical A segments. business other of those from different are environment that is subject risks to and returns that are different from those segments of operating in other economic environments. segments The offerings. service and markets key its reflecting purposes, management for segments operating six into organised is Group The are Design and Engineering Solutions; Highways and Transportation; Rail; Middle East, and Europe; China Management and Project Services; and Asset Management. These segments form the basis reporting for primary the Group’s segment information as it is the main determinant risks theof Group’s and returns. The basis reporting for the secondary segment information is the geographical sectors the of United Kingdom, other European countries, Middle East, North America and Asia Pacific. Theserevenue representto mostthe Group’s significantrelates geographicalrevenue All resource. of utilisation or revenue on based segments to allocated are costs central of majority The sectors. from services. third-party from services and goods purchase to obliged is and expenditure customer manages Group the contracts, services certain Under excluded are customers to recharged and contractors by charged amounts The cost. at customer the to on them recharge and contractors are transactions these to relating cash and payables Receivables, agent. an as acting is Group the where sales of cost and revenue from sheet. balance Group the in included Group companies Group Assets and liabilities overseas of subsidiaries are translated at the closingand assets rates exchange of net at results the balance sheetopening of Trading date. of retranslation the from resulting Differences exchange. of rates average at translated are subsidiaries overseas results the for period at closing rates are taken the to statement recognised of income and expense. Revenue Group’s the with accordance in calculated period the during performed work of value the comprises contracts long-term from Revenue policy contract for accounting set out Revenue below. from other contract activities represents fee income receivable in respect services of period. the during provided of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity equity in deferred when except statement, income the in recognised are currencies foreign in denominated liabilities and assets monetary of hedges. investment net qualifying and hedges flow cash qualifying as unrelatedto third parties. Transactions and balances transactions. the of dates the at prevailing rates exchange the using currency functional the into translated are transactions currency Foreign Foreign exchange gains and losses resulting from the settlement such of transactions and from the translation at year-end exchange rates 74 Financial Statements Notes to the Financial Statements Continued
Pre-contract costs The Group accounts for all pre-contract costs in accordance with IAS 11, Construction contracts. Costs incurred before it becomes probable that a contract will be obtained are charged to expenses. Directly attributable costs incurred after that point are recognised in the balance sheet and charged to the income statement over the duration of the contract or, in the case of PPP/PFI concessions, over the same period as the Group’s interest in any Special Purpose Company (SPC) charges the equivalent capitalised amounts to the income statement.
Bid recovery fees are deferred and credited to the income statement over the duration of the contract or, in the case of PPP/PFI concessions, over the same period as the Group’s interest in any SPC charges the equivalent capitalised amounts to the income statement. Where the Group’s interest in any SPC reduces, the deferred bid recovery fees are credited to the income statement in proportion to the reduction of the Group’s interest.
Exceptional items Where certain expense or revenue items recorded in a period are material by their size or incidence, the Group reflects such items as exceptional items and these are shown separately in the income statement.
Exceptional items are also summarised by class in the segmental analyses, excluding those that relate to interest and tax.
Retirement benefit schemes The Group operates defined contribution and defined benefit pension schemes which require payments to be made into separately administered funds. For defined benefit schemes, regular valuations are prepared by independent professionally qualified actuaries to determine the level of contributions required to fund the benefits set out in the scheme rules.
The Group accounts for pensions in accordance with IAS 19, Employee benefits. The cost of the defined contribution schemes is charged to operating profit as incurred. The cost of the defined benefit schemes is charged as follows:
• the current service cost incurred during the period to provide retirement benefits to employees is charged to operating profit
• gains or losses arising from settlements or curtailments not covered by actuarial assumptions are included in operating profit
• a charge representing the expected increase in scheme liabilities is included in net finance costs. This is based on the present value of scheme liabilities at the beginning of the period
• a credit representing the expected return on scheme assets is included within net finance costs. This is based on the market value of the assets of the schemes at the start of the period allowing for expected cash flows during the period.
For defined benefit schemes, all actuarial gains and losses (asset experience, liability experience and changes in assumptions) are recognised immediately in the statement of recognised income and expense, together with differences arising from changes in assumptions. The difference between the market value of scheme assets and the present value of scheme liabilities is recognised as a retirement benefit asset or liability on the consolidated balance sheet. To the extent that it is recoverable, any related deferred tax asset or liability is included in the relevant category of receivable/payable.
The Group has elected to recognise actuarial gains and losses in full as they arise through retained loss/earnings.
Share-based payments In accordance with IFRS 2, Share-based payments, the cost of share-based payments awarded after 7 November 2002 is charged to the income statement over the performance and vesting periods of the instruments. The cost is based on the fair value of the awards made at the date of grant adjusted for the number of awards expected to vest. In accordance with the transitional provisions within IFRS 2, no charge is made in respect of instruments awarded before 7 November 2002. The credits associated with the amounts charged to the income statement are included in retained earnings/loss until the awards are exercised. Where awards are settled by new issue shares any proceeds received in respect of share options are credited to share capital and share premium. Where awards are settled in shares held by the EBTs any proceeds are credited to retained earnings/loss.
Share awards are granted by the Parent Company to employees of its subsidiaries. The Company charges to cost of investment in subsidiaries an amount equivalent to the equity-settled element of the annual IFRS 2 charge, with an equivalent credit to reserves in accordance with IFRIC 11, Group and treasury share transactions.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
75
Financial StatementsFinancial WS Atkins plc Annual Report 2009
, the Group accounts for Joint Ventures under the equity method of accounting. accounting. of method equity the under Ventures Joint for accounts Group the ,
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries and Joint Ventures. Ventures. Joint and subsidiaries overseas of earnings unremitted the on recognised is tax deferred No Deferred income tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the the which against available be will profit taxable future that probable is it that extent the to recognised are assets tax income Deferred utilised. be can differences temporary or the deferred income tax liability is settled. is liability tax income deferred the or Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and and assets of bases tax the between arising differences temporary on method, liability the using full, in provided is tax income Deferred it if for accounted not is tax income deferred the However, statements. financial consolidated the in amounts carrying their and liabilities arises from initial recognition an of asset or liability in a transaction other than a business combination that at the time the of transaction enacted been have that laws) (and rates tax using determined is tax income Deferred loss. or profit taxable nor accounting affectsneither net of value added tax rebates and discounts. Revenue from contracting activities represents the value of work carried out during the the during out carried work of value the represents activities contracting from Revenue discounts. and rebates tax added value of net is equity in directly recognised events or transactions on arising tax Income equity. in directly recognised is that event or transaction a equity. to directly credited or charged realised is asset tax income deferred related the when apply expectedto are and date sheet balance the by enacted substantially or The financial asset represents an interest-bearing, long-term receivable. The cost of the financial asset at any one time is equal to the to equal is time one any at asset financial the of cost The receivable. long-term interest-bearing, an represents asset financial The date. to received amounts less asset financial the to charged interest accumulated plus delivery service of value accumulated business of course normal the in provided services and goods for received consideration the of value fair the at recognised is Revenue stage the to reference by recognised are costs and revenue reliably, measured be can contract construction a of outcome the Where an as recognised is loss expectedresultant the revenue, contract total exceed will costs contract total the that probable is it When Income tax of result a as arises taxation the where except period the for statement income the in recognised are tax income deferred and Current all of the Group’s PPP/PFI concession assets have been classed as financial assets. financial as classed been have PPP/PFIassets concession Group’s the of all income the to taken is value fair in movement any receivable loan a as classed is it Where value. fair at measured is asset financial The reserves. to taken is value fair in movement any sale for available as classed is it Where statement. effective the and outstanding principal the to reference by basis time a on accrued is income Interest invoiced. not amounts including year interest applicable, rate which is the that exactly rate discounts estimated future cash receipts through the expected the of life financial asset that asset’s to net carrying value amount. of outcome the Where incurred. costs contract the by measured as date sheet balance the activityat contract the of completion of costs contract that probable is it that extent the to recognised is revenue contract reliably, estimated be cannot contract construction a recovered. be will incurred immediately. expense PPP/PFIconcessions intangible or assets financial as Ventures Joint the of accounts the in classified are PPP/PFIcompanies by Assetsconcession constructed assets, depending on whether the grantor or user has the primary responsibility pay to the operator the for concession services. date, To Where Joint Ventures do not adopt accounting periods that are co-terminous with the Group’s, results and net assets are based upon upon based are assets net and results Group’s, the with co-terminous are that periods accounting adopt not do Ventures Joint Where unaudited accounts drawn accounting reference the up to date. Group’s The results, assets and liabilities Joint of are stated Ventures in accordance with Group accounting policies. Where Joint adopt Ventures accounting policies that are different from the their Group, reported results are restated comply to with accounting policies. the Group’s In accordance Interests with IAS in Joint Ventures 31, the Within control. joint acquires Group the which on date the from included is tax after profit Venture’s Joint a of share Group’s The the reflect to adjusted subsequently and asset) non-current a as (classified cost at recorded is investment the sheet balance consolidated share the of movementsGroup’s net assets in the Joint Venture’s post-acquisition. Joint Ventures
76 Financial Statements Notes to the Financial Statements Continued
Intangible assets Goodwill Goodwill is stated at cost less impairment. Prior to 1 April 2004, goodwill was amortised over its estimated useful economic life. Amortisation ceased on 1 April 2004 and the carrying value of existing goodwill was frozen at that date and subject to annual impairment review.
On acquisition of a business, fair values are attributed to the assets, liabilities and contingent liabilities of the acquired business at the date of acquisition. Goodwill arises when the fair value of the consideration given for a business exceeds the fair value of the net assets. In accordance with IFRS 3, Business combinations, goodwill arising on acquisitions is capitalised and is subject to impairment review both annually and when there are indications that the carrying value may not be recoverable.
Goodwill that arose prior to 1 April 1997 was written off to retained earnings/loss. Profit or loss on disposal of the underlying businesses to which this goodwill related will not include goodwill previously recorded as a deduction from equity.
Acquired customer relationships Acquired customer relationships consist of intangible assets arising on the consolidation of recently acquired business, principally future order books, that do not appear within the balance sheet of the acquired entity itself, and which are separable from goodwill in accordance with IFRS 3, Business combinations and IAS 38, Intangible assets. Customer relationships are amortised on a straight-line basis over their useful economic lives of between one and three years.
Corporate information systems In accordance with IAS 38, Intangible assets, the Group’s corporate information systems are treated as an intangible asset. Costs included are those directly attributable to the design, construction and testing of new systems (including major enhancements and internally generated costs) from the point of inception to the point of satisfactory completion where the probable future economic benefits arising from the investment could be assessed with reasonable certainty at the time the costs are incurred. Maintenance and minor modifications are expensed in the income statement as incurred. The corporate information systems are amortised on a straight-line basis over their estimated useful economic life of six years.
Software licences Acquired computer software licences are capitalised on the basis of the costs incurred to acquire and bring into use the specific software. These costs are amortised on a straight-line basis over their useful lives of between two and five years.
Property, plant and equipment Property, plant and equipment is carried at cost less accumulated depreciation and impairment. Cost comprises purchase price after discounts and rebates plus all directly attributable costs of bringing the asset to working condition for its intended use.
Property, plant and equipment is depreciated on a straight-line basis calculated at annual rates to write off the cost less residual value of each asset over the term of its estimated useful economic life as follows:
Freehold buildings 10 to 50 years Short leasehold over the life of the lease Plant and machinery 3 to 10 years Special purpose industrial motor vehicles 3 to 12 years Other motor vehicles 3 to 4 years Information technology 2½ to 5 years
No depreciation is provided in respect of freehold land.
The directors annually review the estimated useful economic lives and residual values of property, plant and equipment.
Impairment Assets that have an indefinite useful life are not subject to amortisation and are reviewed for impairment annually and when there are indications that the carrying value may not be recoverable. Assets that are subject to amortisation are reviewed for impairment wherever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of the fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 77
Financial StatementsFinancial Financial instruments: WS Atkins plc Annual Report 2009 , the gain or loss on re-measurement is recognised in the income statement together with the corresponding corresponding the with together statement income the in recognised is re-measurement on loss or gain the , Where a derivative is designated as a fair value hedge and is assessed as being effective in accordance with IAS 39, IAS 39, with accordance in effective being as assessed is and hedge value fair a as designated is derivative a Where Derivative financial instruments are and and into hedge entered accounting is contract a date the on value fair at measured and for accounted initially are instruments financial Derivative value. fair at re-measured subsequently to knownto amounts cash of and which are subject an insignificant to riskof changes in value. recognition and measurement Where a derivative is designated as a cash flow hedge and is assessed as being effective in accordance with IAS 39, the gain or loss on loss or gain the 39, IAS with accordance in effective being as assessed is and hedge flow cash a as designated is derivative a Where underlying the when statement income the to transferred are equity in accumulated Amounts equity. in recognised is re-measurement initial the in included are liability, or asset non-financial a of creation the in results transaction the if or, occurs hedged being transaction changes in the fair value of the hedged item that are attributable to the hedged risk. hedged the to attributable are that item hedged the of value fair the in changes Trade receivables receivables Trade is there when established is receivables trade of impairment for provision A amount. invoice original at recognised are receivables Trade objective evidence that the Group will not be able collect to all amounts due according the to original terms the of receivables. Significant financial difficultiesprobability of the debtor, that the debtorenterwill bankruptcy orfinancial reorganisation,and default ordelinquency Financial assets at fair value through profit or loss on quoted price at mid-market valued are which of deposit certificates and notes rate floating securities, interest fixed include These Inventories Inventories are stated at cost less impairment. is calculated Cost on a first-in, first-out basis. Financial assets Financial The Group classifies its financial assets into the following two categories: fair value at through profit or lossand loans andreceivables. The Group assesses at each balance sheet date whether there is objective evidence that financial a assetaccounting or groupthe of financial in assets below described is is receivables trade for testing Impairment statement. income the to charged is impairment Any impaired. policy paragraph relating trade to receivables. Investments in subsidiaries impairments. less cost at stated are subsidiaries in Investments Loans and receivables market. an active in quoted not are that payments determinable or fixed assets with financial non-derivative are receivables and Loans interest effective the using cost amortised at measured are which disposals, of respect in receivable notes loan include receivables Other method less provision any impairment. for This valuation approximates their to value. fair Cash and cash equivalents andCash cash equivalents comprise cash in hand, demand deposits and short-term highly liquid investments that are readily convertible accordance in effective being as assessed is and operation foreign a in investment net the of hedge a as designated is derivative the Where income the to transferred are equity in accumulated Amounts equity. in recognised is re-measurement on loss or gain the IAS 39, with operation foreign a in investment net a of hedge the where applied is treatment Similar operation. foreign the of disposal on statement Changes in the value fair derivative of financial instruments that do not qualifyfor hedge accounting are recognised in theincome statement as they arise. a recognised stock exchange. Debt securities issued at a significant discount to the maturity value are valued at cost plus amortised discount discount amortised plus cost at valued are value maturity the to discount significant a at issued securities Debt exchange. stock recognised a arrangements. contractual under restricted are withdrawals where deposits cash restricted are included Also security. the of life the over statement. income the in recognised are value fair in Changes they case which in date sheet balance the after months 12 than greater is maturity the where except assets current within included are They equivalents, cash and cash and receivables other and trade of consist receivables and loans Group’s The assets. non-current as included are for provision less amount invoice original at recognised are receivables Trade sheet. balance the within separately shown are which impairment, which, due their to short-term approximates nature, their to value. fair impaired. is receivable trade the that indicators considered are payments in cost the of asset or liability. is a non-derivative financial instrumentsuch foreign as a currency loan. 78 Financial Statements Notes to the Financial Statements Continued
Lease obligations Finance leases Lease arrangements that transfer substantially all the risks and rewards of ownership to the lessee are treated as finance leases. Assets held under finance leases are capitalised within property, plant and equipment and depreciated over the shorter of the lease term and the useful life of the asset. A liability is recognised for the present value of the minimum lease payments within current and/or non-current liabilities as appropriate. Rental payments are apportioned between capital and interest expense to achieve a constant rate of interest charge on the outstanding obligation.
Where the Group acts as a lessor in a finance lease, receivables under finance leases represent outstanding amounts due under these agreements less finance charges allocated to future periods. Finance lease interest is recognised over the primary period of the lease so as to produce a constant rate of return on the net cash investment.
Operating leases Where the Group acts as lessee in an operating lease arrangement, the lease payments are charged as an expense to the income statement on a straight-line basis over the lease term. Lease incentives received are also recognised on a straight-line basis over the lease term.
Where the Group acts as lessor in an operating lease arrangement, rental income from operating leases is accounted for on a straight-line basis over the period of the lease. Lease incentives provided are also recognised over the lease term on a straight-line basis.
Trade payables Trade payables are recognised at original invoice amount.
Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
Provisions for other liabilities and charges Onerous contract provisions are recognised for losses on contracts where the forecast costs of fulfilling the contract throughout the contract period exceed the forecast income receivable. In assessing the amount of the loss to provide on any contract, account is taken of the Group’s share of the forecast results from any Joint Ventures which the contract is servicing. The provision is calculated based on discounted cash flows to the end of the contract.
Vacant property provisions are recognised when the Group has committed to a course of action that will result in the property becoming vacant. The provision is calculated based on discounted cash flows to the end of the lease.
Dividend distribution Dividend distribution to the Company’s shareholders is recognised as a liability in the Group’s Financial Statements in the period in which the dividends are approved by the Company’s shareholders. Interim dividends are recognised when paid.
Application of new IFRS standards and interpretations (a) Standards, amendments and interpretations effective in current financial year but not relevant There are no standards, amendments and interpretations effective in the current year but not relevant to the Group’s activities.
(b) Standards that are not yet effective and have not been early adopted by the Group • IFRS 2 (Amendment), Share-based payments (effective for accounting periods beginning on or after 1 January 2009) deals with vesting conditions and cancellations. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. All cancellations, whether by the Group or by other parties, will receive the same accounting treatment.
• IFRS 3 (revised), Business combinations (effective for annual periods beginning on or after 1 July 2009), will impact the calculation of consideration and goodwill for future acquisitions, as transaction costs will be expensed and some contingent payments will be re-measured at fair value through the income statement.
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Financial StatementsFinancial
WS Atkins plc Annual Report 2009
(effective annual for periods beginning on or after 1 January 2009) clarifies the accounting (effective annual for periods beginning on or after 1 July 2008) clarifies that where goods or (effective accounting for periods beginning on or after 1 January 2009) replaces IAS and aligns segment 14 (effective 1 January 2009). The amendment the to standard is still subject endorsement to It the by requires EU.
is not expected significant any have to impact on the resultsof the Group. Amendment IAS to Financial Instruments: 32, Presentation and IAS 1 Presentation Financial of Statements (effective annual for periods beginning on or after 1 January 2009) addresses the liability versus equity classificationcertainof puttable financialinstruments and instruments, or components which thereof, impose upon an entity an obligation deliver to a pro-rata share net of assets on liquidation. Amendment IAS to 38,Assets Intangible advertisingfor expenditure. Amendment IAS to Financial 39, Instruments: Recognition and Measurement (effective annual for periodsone-sided beginningthe in on or after 1 Julyvalue time of inclusion the and debt rate fixed a of component hedgeable a as inflation designating 2008)prohibits hedges. as options designating when risk hedged from effective be will and 2008 May in published was project improvements (IASB)’s Board annual Standards Accounting International The intangible associates, in investments including topics on standards of number a to amendments minor makes project The 2009. January 1 assets, borrowing costs and impairment assets. of those borrowing costs will be removed. The group will apply IAS 23 (Amended) from 1 April 2009, subject to endorsement by the EU EU the by endorsement to subject 2009, April 1 from (Amended) IAS 23 apply will group The removed. be will costs borrowing those but is currently not applicable the to Group as thereor Company are no qualifying assets. IAS (revised), 27 Consolidated and separate Financial Statements (effective annual for periods beginning on or after 1 January 2009), IFRIC Hedges 16, a net investment of in a foreign operation (effective annual for periods beginningits on ornot after 1 Octoberand 2008)accounting hedge apply clarifies may entity an which to exposure the creates entity parent a of currency functional the only that presentation currency. It also concludes that the hedging instruments be may held entity any by or entities within the Group and that services are sold together with a customer loyalty incentive (for example, loyalty points or free products), the arrangement is a multiple- element arrangement and the consideration receivable from the customer is allocated between the components the of arrangement using values.fair Customer loyalty programmes loyalty Customer IFRIC 13, The new standard underwhich uses segment a ‘management approach’, information is presented on the same basis as that used for the on impact significant a have to expected not is it but 2009 April 1 from IFRS8 apply will Group The purposes. reporting internal Group’s accounts. expected 2009),not January is 1 after or IASon 1 (revised),beginning periods Presentationannual Financial of Statements(effectivefor significant any have to impact on the results of the Group although a have it presentationalmay impact. IAScosts Borrowing 23, an entity capitalise to borrowing costs directly attributable the to acquisition, construction expensing or productionimmediately of a qualifying of option The asset asset. (onethat that of cost the of part as sale) or use for ready get to time of period substantial a takes hedging of respect in loss or profit to reserve translation currency foreign the from reclassify to amount the determine to applied is IAS39 items. hedged of respect in applied is IAS 21 while instruments reporting with the requirements of the US standard SFAS 131, Disclosures about segments of an enterprise and related information. information. related and enterprise an of segments about Disclosures 131, SFAS standard US the of requirements the with reporting Operating segments IFRS 8, Operating
• • • • (c) Interpretationsto existing standardsadopted: early thatnot are nothas yet effectiveGroup the and periods and have not beenaccounting early adoptedlater for by the Groupmandatory are that published been have interpretations following The • IFRIC Agreements 15, for construction real of estates (effective annual for periods beginning on or after 1 January 2009). • • • • IFRIC The IAS limit on a defined 14, 19, benefit asset. (d) Interpretations to existing standards that are not yet effective and are not relevant to the Group’s operations The following interpretations existing to standards been have published that are mandatory later for accounting periods but are not relevant operations: thefor Group’s • IFRIC assets of Transfer from 18, customers (effective annual for periods beginning on or after 1 July 2009). • • Distributions non-cash of • IFRIC assets 17, to owners (effective annual for periods beginning on or after 1 July 2009). • 80 Financial Statements Notes to the Financial Statements Continued
(e) Interpretations to existing standards that are not yet effective and the principles have been applied by the Group The following interpretations to existing standards have been published that are mandatory for later accounting periods but the principles have been applied by the Group:
• IFRIC 12, Service concession arrangements, which outlines an approach to account for contractual arrangements arising from entities providing public services.
2. Financial risk management Risk factors The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
Risk management is carried out by a central treasury department (Group Treasury) under policies approved by the Board of directors. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
These policies are further described within the Treasury Policies and Objectives section of the Business Review.
Where individual sensitivities are disclosed below, all other variables are held constant. a) Market risk i) Foreign exchange risk The Group operates in a number of international territories. Each business undertakes a large proportion of its commercial transactions within its local market and in its local functional currency. Foreign exchange risk arises from the small proportion of commercial transactions undertaken in currencies other than the local functional currency, from financial assets and liabilities denominated in currencies other than the local functional currency and on the Group’s net investments in foreign operations.
Group policy is for each business to undertake commercial transactions in its own functional currency whenever possible. When this is not possible, the Group manages its foreign exchange risk from future commercial transactions using appropriate derivative contracts arranged via Group Treasury. Cash flows are reviewed on a monthly basis throughout the duration of future projects and the future cover amended as appropriate.
Trade receivables and payables denominated in currencies other than the local functional currency arise from commercial transactions and are therefore largely hedged as part of the process described above. Remaining financial assets and liabilities denominated in currencies other than the local functional currency include bank accounts, loans and intercompany funding balances. These are unhedged with the exception of balances that are themselves designated as hedging instruments used to hedge the Group’s net investment in foreign operations.
The Group’s primary exposure to foreign exchange rate risk on unhedged financial instruments arises mainly in respect of movements between the US dollar (including dollar-pegged currencies) and sterling and between the euro and sterling. At 31 March 2009, if sterling had strengthened/weakened by 10% against the US dollar then profit after tax would be lower/higher by approximately £0.1m (2008: £0.3m) and equity would be £0.1m lower/higher (2008: £0.3m). If sterling had strengthened/weakened by 10% against the euro then profit after tax would be lower/higher by approximately £0.5m (2008: £0.6m) and equity would be £0.5m lower/higher (2008: £0.6m). ii) Interest rate risk The Group’s exposure to interest rate risk arises from loan notes, cash and cash equivalents and financial assets at fair value through profit or loss which are all interest bearing, offset in part by interest bearing borrowings. The majority of items included in the above are at floating rates of interest or fixed deposits for periods of less than six months; changes in the interest rate result in changes in interest related cash flows. No interest hedging is currently undertaken by the Group or its subsidiaries. If interest rates for the year to 31 March 2009 were 10 basis points higher/lower, then profit after tax for the year would have been approximately £0.2m (2008: £0.1m) higher/lower, principally due to increased interest received on short-term bank deposits. iii) Price risk The Group does not have any equity securities in its balance sheet and is not materially exposed to commodity price risk. Certain longer term project and framework contracts include indexation clauses that are applied to unit rates to offset the effect of inflation on input costs over the duration of the agreement. The Group is exposed to price risk to the extent that inflation differs from the index used and forecast project outcomes that form the basis of revenue recognition include an estimate of this risk where it is present.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
81
£m £m
£m £m
7.4 7.4 0.9 0.9 1.2 3.4
14.0 14.0 52.0 52.0 13.7 20.5 20.5 16.5 64.4 (15.3) Total (19.6)
value Total
value Carrying Carrying –
1.8 1.8
£m £m 1.1 1.1 0.2 (1.8) (0.9) – – £m £m (2.2) (0.5) (0.7) (0.2) Between Between Discount Financial StatementsFinancial Discount 2 and 5 years 2 and 5 years
– – – – – £m £m £m £m 1.8 1.8 2.6 2.6 5.7 1.2 0.2 (2.6) (5.5) Over Over 5 years 5 years WS Atkins plc Annual Report 2009 Between Between
1 and 2 years 1 and 2 years – – – £m £m 0.7 0.7 5.3 4.2 9.7 9.7 £m £m 0.9 0.9 0.8 16.1 16.1 (8.9) (15.2) 1 year Between Within 1 year Between Within 2 and 5 years 2 and 5 years
– – £m £m 2.9 2.9 4.7 4.7 0.7 3.6 Between Between 1 and 2 years 1 and 2 years
£m £m 4.3 4.4 2.9 5.4 52.0 52.0 64.4 1 year 1 year or within or within On demand
On demand
The table below analyses the maturity profile of the Group’s non-derivative financial liabilities. Figures shown are undiscounted. are shown Figures liabilities. financial non-derivative Group’s the of profile maturity the analyses below table The to longto term ensure that to sufficientfunds availableare to meetcommitments the Group’s as fallthey due. For trade and other receivables, an assessment of credit quality of the customer is made where appropriate using a combination of external external of combination a using appropriate where made is customer the of quality credit of assessment an receivables, other and trade For mitigated is risk the poor, or unavailable is information credit where circumstances In factors. other and experience past agencies, rating c) Liquidity risk The Group funds its activities through cash generated from its operations and, where necessary, bank borrowings and finance leases. The banking facilitiesGroup’s include cash facilities and bank guarantees. flow Cash forecasts are preparedcovering various periods from short parties with a minimum rating of A are accepted. Investments carry a minimum credit rating of A-1/P1. Cash and investments are not not are investments and Cash A-1/P1. of rating credit minimum carrya Investments accepted. are A of rating minimum a with parties concentrated with one any counterparty. although limits, credit individual apply to not is policy Group insurance. risk credit through exception, by and, payments advance of use by recovery debt escalating of series a with level, client and project individual at both closely monitored are performance payment and exposure additional circumstances economic current of view In dispersed. and broad is base customer Group’s The necessary. where taken actions management attention has been focused on the recovery debtors. of b) Credit risk The obligations. contractual their on defaulting counterparties of result a as loss financial suffer will Group the that risk the is risk Credit the with receivables, other and trade and equivalents cash and cash loss, or profit through value fair at instruments financial on arises risk does Group The March. 31 at sheet balance Group’s the in disclosed value carrying the of 100% to equivalent risk to exposure maximum not hold collateral any as security. The majority cash the of deposits Group’s are placed with its relationship banks, which carryrated at leastindependently an only institutions, financial and banks with placed investments market money and deposits For rating. credit A-1/P1 Loan notes payables Trade Hire purchase and finance leases 2009 Net 2008 Hire purchase and finance leases Inflow Outflow 2008 Outflow Inflow Loan notes 2009 Derivative financial instruments consist of forward foreign exchange contracts used to hedge future commercial transactions, as disclosed disclosed as transactions, commercial future hedge to used contracts exchange foreign forward of consist instruments financial Derivative follows: as was date sheet balance the at values fair at measured outflows and inflows undiscounted of profile maturity The 27. note in Trade payables Trade Net 82 Financial Statements Notes to the Financial Statements Continued
d) Concentrations of financial instruments The carrying amounts of the Group’s financial assets and liabilities, excluding derivative financial instruments, were denominated in the following currencies.
Financial Financial Financial Financial assets liabilities assets liabilities 2009 2009 2008 2008 £m £m £m £m Sterling 327.3 57.2 239.9 55.6 UAE dirham 67.6 7.8 14.7 0.7 US dollar 37.9 3.0 95.7 6.2 Euro 22.8 4.0 16.6 2.3 HK dollar 15.2 2.5 10.5 2.5 China RMB 14.2 0.5 6.2 0.2 Denmark krone 11.2 3.3 5.1 1.6 Other 38.3 3.2 21.9 4.3 Total 534.5 81.5 410.6 73.4
The financial assets and liabilities of the Company are all denominated in sterling.
Capital risk management The Group manages its capital to ensure that it is able to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders, and to minimise its cost of capital by maintaining an optimal capital structure.
The Group maintains or adjusts its capital structure through the payment of dividends to shareholders, issues of new shares and buyback of existing shares and through its loan facility.
For capital management purposes, the Group monitors the ratio of its net debt plus defined benefit pension deficit net of deferred tax to EBITDA. This policy is unchanged from prior year. Total capital is calculated as ‘equity’ as shown in the consolidated balance sheet plus net debt.
The Group’s banking facilities include a number of financial and non-financial covenants. Compliance with these covenants is monitored and as at 31 March 2009 none of the covenants had been breached.
3. Segmental reporting a) Group business segments Revenue and results Share of Inter- post-tax Total segment Operating Operating profit from revenue revenue Revenue profit margin Joint Ventures 2009 £m £m £m £m % £m Design and Engineering Solutions 435.2 (16.9) 418.3 31.6 7.6 0.1 Highways and Transportation 312.2 (19.8) 292.4 20.2 6.9 (0.4) Rail 210.2 (14.1) 196.1 17.0 8.7 – Middle East, China and Europe 329.9 (26.7) 303.2 22.2 7.3 – Management and Project Services 240.6 (11.0) 229.6 18.9 8.2 0.2 Asset Management 50.5 (2.9) 47.6 (6.8) (14.3) 0.3 Total continuing segments 1,578.6 (91.4) 1,487.2 103.1 6.9 0.2
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
– – – – – – 83 0.7 0.9 0.9 0.9 0.9 9.8 £m 0.2 4.3 4.3 £m 86.7 (5.5) 87.6 91.9 31.4 68.6 (23.3) 2008 100.0 post-tax Share of profit from profit Joint Ventures
– 6.7 £m 0.2 2.5 7.7 % 6.1 (3.1) 8.1 5.7 5.9 84.2 5.3 6.6 6.4 (9.8) 2009 84.2 51.2 (18.5) 103.1 103.1 102.7 105.8 margin Financial StatementsFinancial Operating
2.8 2.8 £m 11.9 11.9 17.0 17.0 11.4 11.4 13.6 13.6 16.8 16.8 86.7 86.7 30.2 30.2 profit 103.7 103.7 WS Atkins plc Annual Report 2009 Operating
£m 52.4 52.4 33.2 191.6 191.6 213.2 213.2 274.6 274.6 373.6 373.6 208.2 1,313.6 1,313.6 1,346.8 Revenue
£m (0.1) (2.3) (14.9) Inter- Inter- (17.2) (17.0) (16.7) (10.3) (78.5) (78.4) revenue segment segment
£m Total Total 33.3 33.3 54.7 390.8 390.8 291.6 291.6 224.9 224.9 223.5 223.5 206.5 revenue 1,392.0 1,392.0 1,425.3 1,425.3
s n o i t a r e p o
d t e s u o c n
i t e n c o n c a
s i n i
Design and Engineering Solutions Engineering and Design Highways and Transportation 2008 Rail Total continuing segments continuing Total Middle East, and Europe China Services Project and Management Asset Management Discontinued operations Total from operationsTotal
Reconciliation of segmental analysis to profit for the year attributable to equity shareholders: equity to attributable year the for profit to analysis segmental of Reconciliation
Operating profit (continuing segments) (continuing profit Operating Profit on disposalVenture of Joint Share post-tax of profit fromVentures Joint F Finance income Profit from operations Net finance (cost)/income Profit before taxation Income tax expense D Profit for theyear from continuing operations
Profit for theyear attributable to equity shareholders 84 Financial Statements Notes to the Financial Statements Continued
Balance sheet Investments Other Total Total in Joint segment segment segment Net assets/ Goodwill Ventures assets assets liabilities (liabilities) 2009 £m £m £m £m £m £m Design and Engineering Solutions 34.5 – 173.7 208.2 (294.6) (86.4) Highways and Transportation 2.4 0.6 90.2 93.2 (176.5) (83.3) Rail 1.4 – 55.1 56.5 (46.3) 10.2 Middle East, China and Europe 5.2 – 267.0 272.2 (179.4) 92.8 Management and Project Services 18.8 2.9 72.0 93.7 (73.8) 19.9 Asset Management – 0.4 23.9 24.3 (49.8) (25.5) Total for continuing segments 62.3 3.9 681.9 748.1 (820.4) (72.3) Unallocated assets/(liabilities) – – 80.6 80.6 (51.8) 28.8 Total for Group 62.3 3.9 762.5 828.7 (872.2) (43.5)
Investments Other Total Total in Joint segment segment segment Net assets/ Goodwill Ventures assets assets liabilities (liabilities) 2008 £m £m £m £m £m £m Design and Engineering Solutions 32.5 (0.1) 137.6 170.0 (195.4) (25.4) Highways and Transportation 2.2 1.0 67.2 70.4 (129.5) (59.1) Rail 1.4 – 76.7 78.1 (87.3) (9.2) Middle East, China and Europe 3.9 – 173.0 176.9 (120.4) 56.5 Management and Project Services 16.7 2.5 67.5 86.7 (67.7) 19.0 Asset Management – 0.8 13.7 14.5 (33.7) (19.2) Total for continuing segments 56.7 4.2 535.7 596.6 (634.0) (37.4) Unallocated assets/(liabilities) – – 80.3 80.3 (66.3) 14.0 Total for Group 56.7 4.2 616.0 676.9 (700.3) (23.4)
Unallocated assets/(liabilities) primarily consist of UK financial assets, UK cash and cash equivalents and payables that cannot be readily allocated to segments.
Other segmental information Share-based Capital Depreciation payments expenditure & amortisation 2009 £m £m £m Design and Engineering Solutions 3.1 11.6 9.9 Highways and Transportation 1.6 7.5 5.7 Rail 1.2 1.8 3.0 Middle East, China and Europe 0.9 10.4 8.0 Management and Project Services 1.8 4.1 6.0 Asset Management 0.3 0.5 0.8 Total for continuing segments 8.9 35.9 33.4
Share-based Capital Depreciation payments expenditure & amortisation 2008 £m £m £m Design and Engineering Solutions 3.1 17.0 9.5 Highways and Transportation 1.8 11.4 5.6 Rail 1.4 4.7 4.3 Middle East, China and Europe 0.1 7.3 3.7 Management and Project Services 1.9 6.9 6.2 Asset Management 0.3 1.1 1.1 Total for continuing segments 8.6 48.4 30.4 Discontinued segments – 0.9 0.5 Total for Group 8.6 49.3 30.9
Capital expenditure includes additions to goodwill, other intangible assets and property, plant and equipment.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
85 £m 1.0 1.0 1.4 5.7 0.9 0.9 0.9 0.5 5.8 0.8 £m 6.8 (0.1) 39.9 49.3 48.4 2008 Total (12.6) 2008 230.6 (223.8)
– – £m 1.1 1.1 1.4 1.4 7.2 7.2 0.9 0.9 6.0 1.2 3.2 £m (1.4) (8.3) 35.9 35.9 2008 23.2 2009 144.7 144.7 Capital expenditure (138.7) Financial StatementsFinancial (note 10) Discontinued Discontinued
– 1.3 1.3 0.9 0.9 0.8 £m £m 4.8 (4.3) (0.4) 21.5 21.5 35.1 35.1 (85.1) 72.3 72.3 85.9 85.9 2008 2008 122.3 122.3 425.7 425.7 676.9 676.9 676.9 676.9 WS Atkins plc Annual Report 2009 Continuing Continuing
– –
5.1 0.5 0.2 0.2 £m £m (5.4) 45.2 38.1 79.4 49.3 2009 Total (44.7) 2009 195.6 828.7 828.7 466.3 Total segmentTotal assets Continuing
£m 55.4 55.4 38.7 38.7 33.2 63.8 2008 128.3 128.3 1,027.4 1,027.4 1,313.6 1,313.6 1,346.8 Revenue
– £m 61.2 70.7 86.3 2009 206.8 1,062.2 1,487.2 1,487.2
e u n e v e Middle East Other European countries External revenue is measured by location of operation. There was no material difference between geographic revenue by location location by revenue geographic between difference material no was There operation. of location by measured is revenue External The Group’s operations are based in five main geographical areas. The United Kingdom is the home country of the Parent Company. Parent the of country home the is Kingdom United The areas. geographical main five in based are operations Group’s The operationof and location by customer. of Kingdom United North America Asia Pacific segments continuing from Total Discontinued segments 4. Ventures Joint a) Share of post-tax profit/(loss) from VenturesJoint b) Group geographical segments geographical b)Group Total for Group for Total c) Company The business Company’s invest is to in its subsidiaries and hence it operates in a single segment. Capital expenditure includes additions to goodwill, other intangible assets and property, plant and equipment. and plant property, and assets intangible other goodwill, to additions includes expenditure Capital
R Operating profit Share post-tax of profit fromVentures Joint Operating expenditure Finance cost Finance income Income tax (expense)/credittax Income Profit/(loss) before taxation 86 Financial Statements Notes to the Financial Statements Continued
b) Investments in Joint Ventures Total 2009 £m Non-current assets Other non-current assets 73.3 73.3
Current assets Cash and cash equivalents 15.9 Other current assets 16.2 32.1
Current liabilities Trade and other payables (12.2) (12.2)
Non-current liabilities Borrowings (86.7) Other non-current liabilities (2.6) (89.3)
Share of net assets 3.9 Investments in Joint Ventures 3.9
Total 2008 £m Non-current assets Other non-current assets 82.5 82.5
Current assets Cash and cash equivalents 7.5 Other current assets 31.5 39.0
Current liabilities Trade and other payables (32.0) (32.0)
Non-current liabilities Borrowings (81.9) Other non-current liabilities (3.4) (85.3)
Share of net assets 4.2 Investments in Joint Ventures 4.2
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
87 0.1 0.1 0.1 0.1 4.1 1.9 1.9 1.0 1.0 0.7 0.9 0.9 3.0 3.0 2.2 0.3 0.4 0.5 0.2 0.8 0.2 £m 6.8 0.2 £m (3.1) (0.8) 17.6 Total Total 22.1 22.1 10.3 10.3 2008 2008 670.3 670.3 Group Group
– – – – – – – – – – – – – – – 0.1 0.1 0.1 0.1 0.5 0.5 6.6 0.4 0.4 0.4 0.4 £m £m 2008 2008 Financial StatementsFinancial Discontinued Discontinued Discontinued Discontinued
– 0.1 0.1 0.1 0.1 4.1 4.1 1.5 1.5 2.9 2.9 0.7 0.7 0.9 0.9 6.7 6.7 2.2 0.6 0.3 0.5 0.5 0.2 0.8 0.2 £m 0.2 £m (3.1) 17.1 17.1 (0.8) 21.7 21.7 10.3 10.3 2008 2008 663.7 663.7 WS Atkins plc Annual Report 2009 Continuing Continuing Continuing Continuing
– £m £m 0.1 0.1 0.1 0.1 2.1 2.1 0.7 1.5 0.9 1.3 0.6 0.6 0.5 0.4 0.2 6.5 0.5 2.5 0.2 (3.1) 15.4 30.7 12.2 18.2 Total Total Total Total 2009 2009 776.7 Continuing Continuing
1
Not previously disclosed.
UK Non-UK 1. 5.costsnature by profit Operating of – analysis
Total auditTotal services
Other services pursuant to such legislation legislation such to pursuant services Other Other services relating taxation to – assets held under finance 17)leases (note Operating profit is arrived at after charging/(crediting) Employee benefitcosts (see note 6) – owned assets Net foreign exchange (gains)/losses – increase in provisions (note 22) Loss/(profit) on sale of property, plant and equipment and plant property, Loss/(profit)of sale on Depreciation and impairment property, of plant and equipment: Services relating corporate to finance transactions Impairment trade of receivables/(reversal impairment) of All other services – customer relationships (note 16) – release provisions of Total non-auditTotal services – plant and machinery Receipts under operating leases: Amortisation intangibles of (included in administrative expenses) – other assets Total – property The statutory audit of the Company’s annual accounts was £0.1m (2008: £0.1m). No other services were provided to the Company by the the by Company the to provided were services other No (2008: £0.1m). £0.1m was accounts annual Company’s the of audit statutory The auditorsGroup’s (2008: nil). The Pension Atkins Plan is audited Tilly Baker by and the audit fee 2009 for was £29,000 (2008: £28,000). This audit fee was borne the by Group. – plant and machinery Payments under operating leases: – property Services provided the by Group’s auditors costs at auditors Group’s the from services following the obtained subsidiaries) overseas its (including Group the year the During Company operating profit was arrived at after charging £0.1m of net foreign exchange gains (2008: £nil) and £9.5m of realised profit profit realised of £9.5m and (2008: £nil) gains exchange foreign net of £0.1m charging after at arrived was profit operating Company on disposal investments of (2008: £57.7m). below: detailed as
Statutory audit Parent of Company’s and consolidated annual accounts The audit accounts of Group of companies pursuant legislation to
88 Financial Statements Notes to the Financial Statements Continued
6. Employee benefit costs Average Year-end 2009 2008 2009 2008 No. No. No. No. Number of full-time equivalent people (including executive directors) employed by the Group By class of business: Design and Engineering Solutions 4,805 4,414 4,846 4,673 Highways and Transportation 2,920 2,930 2,983 2,717 Rail 1,531 1,588 1,499 1,565 Middle East, China and Europe 4,253 3,381 4,283 3,787 Management and Project Services 2,292 2,282 2,169 2,337 Asset Management 658 651 653 645 Corporate 588 523 593 549 Total continuing operations 17,047 15,769 17,026 16,273 Discontinued operations – 223 – – Group Total 17,047 15,992 17,026 16,273
Aggregate employee benefit costs of those people amounted to: Group Total Continuing Continuing Discontinued Total 2009 2008 2008 2008 £m £m £m £m Wages and salaries 648.4 547.1 6.0 553.1 Profit share and performance-related bonus 24.1 21.1 – 21.1 Social security costs 54.2 48.1 0.6 48.7 Retirement benefit costs (see note 29) 37.1 35.7 – 35.7 Other post-employment benefit costs (see note 29) 4.0 3.1 – 3.1 Share-based payments (see note 32) 8.9 8.6 – 8.6 776.7 663.7 6.6 670.3
Wages and salaries for 2009 includes £7.7m of redundancy costs (2008: £2.4m) relating to continuing operations.
Details of remuneration (including retirement benefits) and interests for directors are included in the Remuneration Report, which forms part of these Financial Statements. Details of remuneration for key management are included in note 39.
The Company has no employees (2008: nil).
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information – 89 1.1 1.1 1.9 1.9 1.4 1.4 1.2 1.2 0.4 0.4 8.0 0.8 £m 6.4 £m (1.6) (7.4) (3.7) (3.6) (0.3) (0.8) Total 91.9 18.9 23.7 23.7 92.3 23.3 (10.1)
2008 2008 25.7% 25.4% Group Group
– – – – – – – – £m 0.1 0.1 0.9 0.9 0.6 0.8 £m 1.2 0.5 18.5 (0.3) (0.3) (2.5) 16.8 18.5 2008 2009 102.7 100.2 18.5% 18.0% Financial StatementsFinancial
Discontinued Discontinued
1.1 1.1 1.0 1.0 1.4 1.4 1.2 1.2 5.5 5.5 0.8 £m (7.1) (1.6) (4.3) (9.8) (0.3) (0.8) 2008 WS Atkins plc Annual Report 2009 Continuing Continuing
– £m 3.1 3.1 1.0 1.0 1.2 9.8 6.6 (1.2) (6.7) (2.9) (0.4) (2.2) Total Total 2009 Continuing
a) Analysis of charge in the year 8. Income tax operations expense – continuing 7. Netcost/(income) finance 7.
Current income taxCurrent year – Current
Deferred income tax (see note 19) note (see tax income Deferred Income tax on profit perincome statement Adjust for: taxation– Joint Venture – Adjustment respect in prior of year Adjust for: taxation– Joint Venture Profit before tax per income statement Normalised income tax expense tax income Normalised
Effective income tax rate Normalised profit before income tax income before profit Normalised Normalised effective income tax rate The total income tax expense (continuing and discontinued operations) was £18.5m (2008: £28.3m). See note 10. note See (2008: £28.3m). £18.5m was operations) discontinued and (continuing expense tax income total The – Profit on disposalVenturesof Joint Interest payable on borrowings Hire purchase and finance leases Net financecost on post-employment benefits Unwinding discount of Interest receivable on short-term deposits Finance cost Other financecosts Income from held value at fair financial assets Finance income Other finance income Unwinding discount of Unwinding discount of disclosed within financecost comprises relatingto provisions and £0.7m £0.3m relatingto borrowings. of £0.4mof (2008: £0.3m). Net finance cost/(income) receivable notes loan on discount of unwinding and (2008: £0.5m) £0.1m of income interest net of consisted income finance Company 90 Financial Statements Notes to the Financial Statements Continued
b) Factors affecting income tax expense The income tax expense for the year is lower (2008: lower) than the standard rate of corporation tax in the UK of 28% (2008: 30%). The differences are explained below: Group 2009 2008 % % UK statutory income tax rate 28.0 30.0
Increase/(decrease) resulting from: Expenses not deductible for tax purposes 0.7 1.5 Adjustment in respect of overseas tax rates (4.1) (3.4) Effect of share-based payments 2.6 0.8 Tax on Joint Ventures (0.1) (0.3) R&D tax credit (2.4) (2.9) Consortium relief (6.8) (0.6) Other 0.8 0.3 Disposal of Joint Ventures (0.7) – Effective income tax rate 18.0 25.4
The normalised income tax expense for the year is lower (2008: lower) than the standard rate of corporation tax in the UK of 28% (2008: 30%). The differences are explained below: Group 2009 2008 % % UK statutory income tax rate 28.0 30.0
Increase/(decrease) resulting from: Expenses not deductible for tax purposes 0.7 1.4 Adjustment in respect of overseas tax rates (4.2) (3.4) Effect of share-based payments 2.7 0.8 Tax on Joint Ventures (0.1) – R&D tax credit (2.4) (2.9) Consortium relief (6.9) (0.6) Other 0.7 0.4 Normalised effective income tax rate 18.5 25.7 c) Income tax on items charged to equity Group 2009 2008 Retirement Share- Retirement Share- benefit based benefit based liability payments Total liability payments Total £m £m £m £m £m £m At 1 April 1.1 2.9 4.0 8.5 3.3 11.8 Deferred income tax 34.3 (1.1) 33.2 (7.4) (0.6) (8.0) Current income tax – 0.4 0.4 – 0.2 0.2 At 31 March 35.4 2.2 37.6 1.1 2.9 4.0
9. Profit on disposal of Joint Venture On 1 April 2008 the Group disposed of its holding in Modern Housing Solutions (Prime) Limited generating a profit on disposal of £2.5m.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
– 91
7.6 7.6 7.6 0.3 £m £m (5.0) (0.6) (0.3) Total 11.4 16.1 21.8 21.8 31.4 23.7 23.7 16.4 16.4 14.2 14.2 20.0 20.0 20.0 30.9 33.2
(17.3) (16.2) 2008
(48.2)
– – – – – – £m 8.6 8.6 £m (2.5) (4.8) (0.4) (0.8) 17.2 17.2 11.2 11.2 11.2 11.2 16.1 16.0 16.0 16.9 25.5 24.7 2009 (50.5) (48.0) Company and Group Financial StatementsFinancial Metronet and Trans4m
– 2.8 2.8 0.2 0.2 £m LSH
0.4 0.4
(0.2) 16.0 16.0 20.0 20.0 30.9 30.9 33.2
(0.2) (0.3) 7.50 7.50
20.0 20.0
20.2 (15.8) 2008 21.50 16.50 14.00 24.00 WS Atkins plc Annual Report 2009 pence
8.75 8.75 2009 17.25 16.50 25.25 26.00 pence
e u n e
v e 11. Dividends 11. Metronet Joint Venture, Trans4m Joint Venture and relatedterminated discontinuedwere contracts revenues and costsTrans4m’s and 2007 July 18 on Administration PPP entered Limited SSL Metronet and Limited BCV Metronet 10. Discontinued operations (3110. March 2008) Lambert Smith Hampton (LSH) was of disposed Goodwill £50.8m. at valued consideration total a for LSH of disposal the for exchanged were contracts 2007 June 25 On including £2.6m within LSH’s own balance sheet. The profit on disposal£17.5m, was £20.0m. discontinued becoming to prior period the for Venture Joint Trans4m and Venture Joint Metronet LSH, to relating information Financial on 30 August 2007. on 30 August 2007. is set out The below. income statement and cash flow statement distinguish discontinued operations fromcontinuing operations. Final dividend proposed for the year ended 31 March 2009 (2008) 2009 March 31 ended year the for proposed dividend Final Dividends relating the to year Interim dividend paid for the year ended 31 March 2009 (2008) 2009 March 31 ended year the for paid dividend Interim
Income tax expense Pre-tax profit on disposal Profit after income tax of discontinued operations discontinued of tax income after Profit Net finance income/(cost) Administration and other expenses Income tax expense R Income statement and cash flow information 2008
As March 2009 at 31 the EmployeeTrusts Benefithad agreementsin placeto waive dividends in penceexcess of 0.01 per share on The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability liability a as included been not has and Meeting General Annual the at shareholders by approval to subject is dividend final proposed The in these Financial Statements. by year in paid dividend the reduced arrangements These gift. equivalent an for return in (2008: 2,697,476) shares ordinary 2,339,512 £0.6m (2008: £0.6m). On April 29 2009 one the of EmployeeTrusts Benefit entered a new agreementto waive future all dividendsin (2008: £0.4m).£0.4m by dividend final proposed the reducing entirety their Dividends recognised in the year the in recognised Dividends Interim dividend paid for the year ended 31 March 2009 (2008) 2009 March 31 ended year the for paid dividend Interim
Profit from discontinued operations After-tax profit on disposal Profit before taxation from discontinued operations discontinued from taxation before Profit Final dividend paid for the year ended 31 March 2008 (2007) 2008 March 31 ended year the for paid dividend Final Operating cash flows from discontinued operations discontinued from flows cash Operating Investing cash flows from discontinued operations Total cash Total flows Investing cash flows – cash proceeds on disposal net of cash disposed cash of net disposal on proceeds cash – flows cash Investing operations discontinued from flows cash Financing 92 Financial Statements Notes to the Financial Statements Continued
12. Earnings per share (EPS) Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by the weighted average number of shares in issue during the year excluding shares held by the Employee Benefit Trusts (EBTs), which have not unconditionally vested in the employees, and shares in treasury.
Diluted earnings per share is the basic earnings per share after allowing for the dilutive effect of the conversion into ordinary shares of the number of options outstanding during the year. The options relate to discretionary employee share plans.
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below:
Group 2009 2008 number number (000) (000) Number of shares Weighted average number of shares used in basic and normalised basic EPS 97,790 101,105 Effect of dilutive securities – share options 1,516 1,735 Weighted average number of shares used in diluted and normalised diluted EPS 99,306 102,840
£m £m Earnings – continuing and discontinued operations Profit for the year attributable to equity shareholders 84.2 100.0
Earnings – continuing operations Profit for the year attributable to equity shareholders 84.2 68.6 Profit on disposal of Joint Venture (note 9) (2.5) – Normalised earnings 81.7 68.6
pence pence From continuing and discontinued operations Basic earnings per share 86.1 98.9 Diluted earnings per share 84.8 97.2
From continuing operations Basic earnings per share 86.1 67.9 Diluted earnings per share 84.8 66.7
Normalised basic earnings per share 83.5 67.9 Normalised diluted earnings per share 82.3 66.7
Normalised diluted EPS is considered to be a more representative measure of underlying trading.
13. Parent Company income statement The Company has not presented its own income statement as permitted by Section 230 of the Companies Act 1985. The profit for the year attributable to equity shareholders was £9.6m (2008: £68.7m), which included £nil (2008: £10.9m) dividend income from subsidiary companies.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information p p – 93 u u 6.7 6.2 9.1 9.1 4% 0.5 0.8 £m o
o 63.4 71.0 56.7 56.7 r r (17.5) 2008 2008 G G
8% – 15% 12.5% – 40% 12.5%
– – 6.7 2.5 4% 9.2 2.9 5.2 £m 71.5 25% 63.4 62.3 2009 2009 Financial StatementsFinancial 0% – 18%
WS Atkins plc Annual Report 2009
Impairment assets of atleast annually.
e t a
r
s l n a o s i t o a p x s i a
14. Goodwill
Cost at 1 AprilCost
Additions (note 15) D Difference onexchange Impairment charge the for year Cost at 31 March at 31 Cost Difference on exchange Aggregate impairment at 1 April 1 at impairment Aggregate The recoverable amount of goodwill for each CGU has been based on value in use as represented by the net present value of future future of value present net the by represented as use in value on based been has CGU each for goodwill of amount recoverable The The goodwill allocation by CGU, summarised at segmental level, is disclosed in note 3. note in disclosed is level, segmental at summarised CGU, by allocation goodwill The Goodwill is allocated to the Group’s cash-generating units (CGUs) identified according to their business segment. segment. business their to according identified (CGUs) units cash-generating Group’s the to allocated is Goodwill Goodwill is tested for impairment in accordance with IAS 36, IAS 36, with accordance in impairment for tested is Goodwill The adjustment resulting from finalising provisional goodwill in the prior year is not considered material and has been included within within included been has and material considered not is year prior the in goodwill provisional finalising from resulting adjustment The current year additions. by inflated are they which beyond plans, and budgets approved on based years five for forward projected are flows Cash flows. cash nominal on based rate discount pre-tax Group’s the on based rate discount a using discounted then are They factor. growth GDP-based a each across consistently applied been has which annum per 13.8% was used rate discount pre-tax The capital. of cost average weighted The key assumptions used for each CGU are as follows: as are CGU each for used assumptions key The CGU based on theirCGU similar risk profiles. Aggregate impairment at 31 March 31 at impairment Aggregate Net book March value at 31
5-year growth rate Post 5-year growth rate T As at 31 March 2009, based on these internal valuations, the recoverable value of goodwill required no impairment. no required goodwill of value recoverable the valuations, internal these on based 2009, March 31 Asat 94 Financial Statements Notes to the Financial Statements Continued
15. Business combinations On 6 October 2008 the Group acquired 100% of the share capital of M.G. Bennett & Associates Limited, a UK registered entity, for £3.1m, consisting of cash consideration of £2.6m and deferred consideration of £0.5m.
On 1 December 2008 the Group acquired 100% of the share capital of Trafimark AB, a Swedish registered entity, for £0.8m, consisting of cash consideration of £0.5m, deferred consideration of £0.2m and direct expenses paid of £0.1m.
Total Provisional Total carrying fair value provisional value adjustments fair value Group £m £m £m Property, plant and equipment 0.6 (0.5) 0.1 Trade and other receivables 1.0 (0.1) 0.9 Cash and cash equivalents 1.0 – 1.0 Short-term trade and other payables (0.8) – (0.8) Current income tax liabilities – – – 1.8 (0.6) 1.2 Goodwill on acquisition 2.7 Consideration 3.9
Consideration: Cash paid 3.1 Direct costs relating to the acquisition 0.1 Deferred consideration 0.7 3.9
All acquisitions in the year have been aggregated above as no single acquisition is considered individually material.
Included in the goodwill recognised above are items that cannot be individually separated and reliably measured due to their nature. These include new customers and synergy benefits. The provisional fair value adjustments relate primarily to the alignment to Group accounting policies.
The initial accounting for these acquisitions has been determined provisionally because fair values have not been finalised. Any adjustments to the accounting required following finalisation of the fair values to be assigned to the acquired assets and liabilities will be recorded from the acquisition date within 12 months of the acquisition date.
During the year the Group paid additional consideration of £0.1m to the vendors of Atkins (Trinidad) Limited, £0.1m to the vendors of Novaplan AB and £0.2m to the vendors of the trade and assets of H Day Ltd T/A Derek Rogers & Associates.
As a result of finalising fair values of previous acquisitions and incurring qualifying direct expenses, additional goodwill of £0.2m was recognised for the trade and assets H Day Ltd T/A Derek Rogers & Associates during the year.
Included in the Group’s results for the year is £1.7m of revenue and no profit in relation to the acquisitions above. If the acquisitions had been made at the beginning of the year then the Group’s results would have included revenue of £3.8m, profit before taxation of £0.5m and profit after taxation of £0.4m for the year in relation to the acquisitions. The Group’s total results would have been revenue of £1,489.3m, profit before taxation of £103.2m and profit after taxation of £84.6m.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 95 0.1 0.1 1.2 0.9 5.9 5.9 0.6 0.3 9.0 (4.0) (7.1) £m £m (4.1) (4.1) (9.3) 11.1 11.1 (12.1) 31.1 17.6 27.0 27.0 12.7 21.6 21.6 40.1 40.1 10.9 10.9 10.5 32.5 32.5 14.8 25.4 22.4 (10.3) 117.8 117.8 107.6 Total Total Total Total 135.9 135.9 Group Group 7.4 7.4 0.1 5.1 5.1 1.2 1.2 0.9 0.9 5.0 5.0 0.6 9.2 4.6 0.2 8.6 £m £m (4.1) (4.1) (7.0) (9.5) (3.8) (8.8) 12.1 12.1 17.3 15.1 15.1 10.1 10.1 21.3 21.3 13.9 13.9 14.7 14.7 91.2 10.3 10.3 22.5 22.5 84.3 (11.4) 104.2 Plant, Financial StatementsFinancial licences Software & vehicles machinery
– – – – – – – – – – – – – – – 0.1 0.1 5.1 5.1 4.1 4.1 0.2 0.2 0.8 0.2 0.2 0.2 £m £m (0.7) (0.2) (0.8) 21.6 21.6 13.2 13.2 16.5 16.5 WS Atkins plc Annual Report 2009 rights property property leasehold Short-term Intellectual
– – – – – – – – – – – – – – £m 0.1 0.1 0.1 0.1 0.1 0.1 2.9 0.2 (0.5) £m 10.1 10.1 10.1 10.1 10.1 10.1 (0.1) 15.5 15.5 15.7 15.7 12.5 12.5 15.3 15.3 15.3 15.3 15.4 15.4 land & systems Freehold buildings Corporate information
– – – – – – – – 1.9 1.9 1.9 1.9 1.9 1.9 0.1 0.1 1.3 1.3 1.8 1.8 0.5 0.5 0.5 0.5 0.6 0.8 £m Acquired customer relationships
17. Property, and plant equipment 17. Cost at 31 March 2008 at 31 Cost 16. Other16. intangible assets Additions Disposals Cost at 1 AprilCost 2007
Cost at 1 AprilCost 2007
Disposals Additions Additions Difference on exchange March 2009 at 31 Cost Acquisition subsidiary of undertakings Amortisation charge the for year Amortisation at 1 April 2007 Disposal subsidiary of undertaking Disposals Amortisation March 2008 at 31 Disposals Difference on exchange Amortisation charge the for year Acquisition subsidiary of undertakings (note 15) Additions Cost at 31 March 2008 at 31 Cost Disposals Disposals Difference on exchange Difference on exchange Cost at 31 March 2009 at 31 Cost Amortisation March 2009 at 31 Included within corporate information systems is £0.1m (2008: £nil) of internally generated intangible assets. intangible generated internally of (2008: £nil) £0.1m is systems information corporate within Included Net book value March at 31 2009 Net book March 2008 value at 31 96 Financial Statements Notes to the Financial Statements Continued
Freehold Short-term Plant, land & leasehold machinery Group buildings property & vehicles Total £m £m £m £m Depreciation at 1 April 2007 7.2 6.1 48.1 61.4 Depreciation charge for the year 0.1 2.1 17.6 19.8 Disposals – (0.1) (2.8) (2.9) Disposal of subsidiary undertaking – (0.6) (6.1) (6.7) Difference on exchange – – 0.6 0.6 Depreciation at 31 March 2008 7.3 7.5 57.4 72.2
Depreciation charge for the year 0.1 3.7 16.9 20.7 Disposals – (0.5) (8.0) (8.5) Difference on exchange (0.1) 0.9 4.1 4.9 Depreciation at 31 March 2009 7.3 11.6 70.4 89.3
Net book value at 31 March 2009 2.8 10.0 33.8 46.6 Net book value at 31 March 2008 2.8 9.0 33.8 45.6
The market value of freehold land and buildings is estimated at £9.0m (2008: £10.3m).
Included in plant, machinery and vehicles above are equipment and vehicles held under finance leases and hire purchase contracts as follows:
2009 2008 £m £m Cost 24.3 23.3 Accumulated depreciation (11.1) (9.9) Net book value 13.2 13.4
Additions to property, plant and equipment funded by finance leases were £4.2m (2008: £6.3m).
Included in the above are equipment and vehicles leased to customers under operating leases as follows:
2009 2008 £m £m Cost 3.7 3.2 Accumulated depreciation (2.4) (2.1) Net book value 1.3 1.1
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
)
)
5 1 9 9 p . – . . . 97 u 8 1 3 2 0.8 £m 5.1 5.1 4.1 4.1 0.5 0.5 0.4 0.4 £m £m 1 o 2 3 2 (0.2) (0.2) (0.2) ( 22.7 22.7 69.6 69.6 69.6 69.4 59.2 69.8 r 2008 Total 1
1 2008 121.0 121.0 131.6 131.6 149.7 (
130.8 130.8 148.9
Group G Company
– 1.1 0.9 £m
0.4 2.5 2.8 (0.1) £m (0.1) (0.1) 98.9 13.8 83.0 2009 2009 101.7 101.6 101.6 101.6 101.6 Financial StatementsFinancial
WS Atkins plc Annual Report 2009
s s s s s l l n n a a a o o e s s i i s t t o o i i r p p d d
e
s s v i d i d
19. Deferred income tax tax income Deferred 19. tax current against assets tax current offset to right enforceable legally a is there when offset are liabilities and assets tax income Deferred liabilities and when the deferred income taxes relate the to same fiscal authority. Theoffset amounts follows:are as
18. Investments in subsidiaries in Investments 18.
Deferred tax assets:tax Deferred months 12 than more after recovered be to assets tax Deferred –
A Cost at 1 AprilCost 2007 Deferred tax liabilities: tax Deferred months 12 than more after recovered be to liabilities tax Deferred – – Deferred tax assets to be recovered within 12 months 12 within recovered be to assets tax Deferred – a) Deferred tax assets – Deferred tax liabilities to be recovered within 12 months 12 within recovered be to liabilities tax Deferred – (net) assets tax Deferred D
Deferred income Deferred O liabilities benefit post-employment on asset tax Deferred Share-based payments Share-based Accelerated depreciation Accelerated
Cost at 31 March 2008 at 31 Cost Amortisation intangibles of on acquisitions Othertemporary differences A Total deferredTotal income tax Cost at 31 March 2009 at 31 Cost Impairment at 1 April 2007 D During the year the Company increased its investment in Atkins Investments UK Limited (formerly Atkins Metro Limited) in order to facilitate facilitate to order in Limited) Metro Atkins (formerly Limited UK Investments Atkins in investment its increased Company the year the During The principal Group’s subsidiaries are disclosed in note 40. company. Group another from Limited UK Investments Atkins by Limited (Guernsey) Insurance Atkins WS of purchase the Net book March 2008 value at 31 Net book value March at 31 2009 Impairment March 2008 March at 31 2009 and 31 98 Financial Statements Notes to the Financial Statements Continued
b) Analysis of movements during the year Group 2009 2008 £m £m Deferred tax assets at 1 April 69.6 89.8 Deferred tax charged to the income statement – continuing operations (note 8a) (1.2) (8.0) Deferred tax charged to the income statement – discontinued operations – (3.6) Deferred tax credited/(charged) to equity (note 8c) 33.2 (8.0) Acquisition of subsidiary undertakings – (0.6) Deferred tax assets at 31 March 101.6 69.6
20. Other receivables Group Company 2009 2008 2009 2008 £m £m £m £m Non-current assets: Loan notes receivable 12.9 5.6 6.0 5.6 Deferred consideration on disposals – 0.1 – – 12.9 5.7 6.0 5.6
Loan notes receivable of £6m arose on disposal of LSH. These loan notes have no fixed redemption date.
During the year the Group acquired £7m of interest bearing loan notes in RMPA Holdings Limited which mature in 2039.
All other non-current receivables are due within five years from the balance sheet date.
None of the other receivables are past due or impaired.
21. Inventories Group 2009 2008 £m £m Raw materials and consumables 0.3 0.3
The directors consider that the carrying amount of inventories approximates their fair value.
There were no amounts of inventories written off during the year (2008: £nil).
22. Trade and other receivables Group Company 2009 2008 2009 2008 £m £m £m £m Current assets: Trade receivables 301.9 224.1 – – Less: Provision for impairment of receivables (26.5) (13.0) – – Trade receivables – net 275.4 211.1 – – Amounts recoverable on contracts 33.3 44.7 – – Amounts due from subsidiary undertakings (note 39) – – 11.4 8.4 Amounts due from Joint Ventures (note 39) 7.8 9.7 – – Other receivables 23.0 20.3 – – Prepayments and accrued income 14.2 13.9 – – 353.7 299.7 11.4 8.4
The directors consider that the carrying amount of trade and other receivables approximates their fair value.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information – 99 7.1 7.1 7.1 3.1 0.3 £m £m £m (4.1) (0.5) 29.7 (11.8 ) (13.0) 2008 2008 2008 Group Group Company Company
– – – 3.1 £m £m 2.2 £m (3.4) 28.7 2009 2009 (13.0) 2009 (15.4) (26.5) Financial StatementsFinancial
£m 61.0 61.0 93.5 93.5 2008 154.5 154.5 WS Atkins plc Annual Report 2009 Group Group
£m 78.1 78.1 2009 131.6 209.7
24. Cash and cash equivalents 23. Financial assets at fair value through profit or loss value assets23. Financial fair at
Movements in the Group provision impairment for trade of receivables were as follows: At 31 March 2009 £176.2m (2008: £172.2m) of trade receivables were within normal payment terms and considered to be fully performing. performing. fully be to considered and terms payment normal within were receivables trade of (2008: £172.2m) £176.2m 2009 March 31 At impairment for provision a carried which date, invoice from months six to up aged and date due past (2008: £38.8m)were £92.2m further A for provision a carried and (2008: £13.1m) £33.4m totalled date invoice of months six beyond aged receivables Trade (2008: £1.3m). £nil of impairment (2008: £26.5m of £11.7m). Short-term bank deposits Cash at bankCash and hand in
Marketable securities Marketable
Release provisions of Increase in provisions Provision impairment for at beginning year of
Receivables written off as uncollectable The effective interest rate on cash and cash equivalents was 2.0% (2008: 5.5%). 2.0% was equivalents cash and cash on rate interest effective The Within the Middle East £0.6m (AED 3.2m) is held within an escrow in order account cover the to liability in respect visa of bonds issued locally. Included in the Group’s cash and cash equivalents above are amounts held by the Employee Benefit Trusts of £2.9m (2008: £5.4m). £2.9m of Trusts Benefit Employee the by held amounts are above equivalents cash and cash Group’s the in Included Provision impairment for at end year of Difference on exchange Amounts due from Joint are (2008: shown Ventures net contract-related of £22.6m). provisions £23.1m of The other classes financial of assets 2008. March 31 and 2009 March 31 at both unimpaired were receivables other and trade within shown None the of financial assets that fullyare performing were renegotiated during the year. The creation and release the of provision been have included within revenue in the income statement. 100 Financial Statements Notes to the Financial Statements Continued
25. Borrowings Group 2009 2008 £m £m Current Hire purchase and finance leases 4.8 3.6 Loan notes 2.8 4.2 7.6 7.8
Non-current Hire purchase and finance leases 8.9 10.4 Loan notes 0.6 3.2 9.5 13.6
Loan notes relate to previous years’ Group acquisitions.
The maturity profile of the carrying amount of the non-current borrowings was as follows: Group Hire purchase Hire purchase and finance Loan 2009 and finance Loan 2008 leases notes Total leases notes Total £m £m £m £m £m £m Repayable: – between one and two years 3.3 0.6 3.9 4.7 2.6 7.3 – between two and five years 4.2 – 4.2 4.6 0.6 5.2 – after more than five years 1.4 – 1.4 1.1 – 1.1 8.9 0.6 9.5 10.4 3.2 13.6
The carrying amount of the borrowings are denominated in the following currencies: Group Hire purchase Hire purchase and finance Loan 2009 and finance Loan 2008 leases notes Total leases notes Total £m £m £m £m £m £m Sterling 13.7 3.4 17.1 14.0 7.4 21.4 Total 13.7 3.4 17.1 14.0 7.4 21.4
The minimum lease payments under finance leases fall due as follows: Group 2009 2008 £m £m Not later than one year 5.4 4.4 Later than one year but not more than five years 7.8 10.0 More than five years 1.2 1.8 14.4 16.2 Future finance charges on finance leases (0.7) (2.2) Present value of finance lease payables 13.7 14.0
Finance leases are on a fixed repayment basis, with interest rates fixed at the contract date. The average effective borrowing rate was 6.2% (2008: 6.9%) over a weighted average remaining period of 44 months (2008: 47 months).
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
– – – – 1.1 0.1 0.1 0.9 0.9 £m £m £m
101
25.0 25.0 23.8 58.8 2008 2008 2008 Group Group
Company
– – – – – 1.2 £m 0.1 0.1 £m £m 57.5 57.5 57.4 75.0 2009 2009 2009 Financial StatementsFinancial
– 0.9 0.9 £m 52.0 52.0 34.6 30.8 2008 142.3 148.6 148.6 409.2 WS Atkins plc Annual Report 2009 Group
– 0.8 £m 21.3 33.7 64.4 64.4 2009 178.7 179.8 478.7
Trade payables Trade
The fair value of forward currency contracts at the year end, based on their market value, is detailed below: detailed is value, market their on based end, year the at contracts currency forward of value fair The 27. Derivative financialinstruments Derivative 27. 26. Trade and other payables 26. Trade The Group’s banking facilities include a number of financial and non-financial covenants. Compliance with these covenants is monitored. monitored. is covenants these with Compliance covenants. non-financial and financial of number a include facilities banking Group’s The The Group’s principal borrowing facilities of £100.0m signed on 21 June 2006 are unsecured and include borrowings and letter of credit credit of letter and borrowings include and unsecured are 2006 June 21 on signed £100.0m of facilities borrowing principal Group’s The 2008: £40.2m). March (31 £25.0m was 2009 March 31 at issue in credit of letters total The facilities. interest. of rates floating to subject be will facilities borrowing committed undrawn Group’s the of All As March 2009 at 31 none these of covenants had been breached. Borrowingfacilities The Group has the following undrawn committed borrowing facilities March available expiring at 31 as follows: Deferred consideration on acquisitions on consideration Deferred Social security and other taxation Amounts duesubsidiary to undertakings (note 39) Fees invoiced in advance in invoiced Fees Forward currency hedges currency Forward
Between two and five years
The directors consider that the carrying value trade the of and Group’s other payables approximates their value. fair the next 12 months. The prior year balance for deferred consideration represents £0.8m outstanding in respect of MSL Engineering Limited Limited Engineering MSL of respect in outstanding £0.8m represents consideration deferred for balance year prior The months. next12 the outstanding in respectand £0.1m Nedtech of Engineering BV. The current year balance for deferred consideration represents £0.8m outstanding in respect of Nedtech Engineering BV to be settled in in settled be to BV Engineering Nedtech of respect in outstanding £0.8m represents consideration deferred for balance year current The Other payables been have and payables other and trade within disclosed previously were liabilities benefit post-employment other opening Group’s The Group. the of statement income the on impact no had restatement The restated. Accruals and deferred income The future inflows and outflows associated with these derivative financial instruments is disclosed in note 2. The Group has reviewed reviewed has Group The 2. note in disclosed is instruments financial derivative these with associated outflows and inflows future The to hedgeto foreign currency receipts and payments on current contracts. contract. host the to related closely not are that instruments such any have not does and derivatives embedded for contracts all The carrying value derivative the of Group’s financial instruments approximates theirfair value. The Group did not use derivative any instrument during the year other than forward currency contracts and foreign exchange swaps 102 Financial Statements Notes to the Financial Statements Continued
28. Provisions for other liabilities and charges 2009 2008 Group Group Onerous Vacant Onerous Vacant contracts property Total contracts property Total £m £m £m £m £m £m Current 9.7 0.2 9.9 0.7 3.6 4.3
Between one and two years 0.4 1.1 1.5 1.0 2.6 3.6 Between two and five years 0.7 3.7 4.4 1.8 1.7 3.5 Over five years 5.0 6.9 11.9 5.8 0.6 6.4 Non-current 6.1 11.7 17.8 8.6 4.9 13.5
Total 15.8 11.9 27.7 9.3 8.5 17.8
Group Onerous Vacant contracts property Total £m £m £m Balance at 1 April 2008 9.3 8.5 17.8 Charge to income statement 8.0 6.9 14.9 Provisions utilised (2.1) (3.7) (5.8) Difference on exchange – 0.1 0.1 Unwinding of discount 0.6 0.1 0.7 Balance at 31 March 2009 15.8 11.9 27.7
The onerous contracts and vacant property provisions are discounted. No provision has been released or utilised for any purpose other than that for which it was established.
The onerous contracts provision relates to PFI school and hospital facilities management contracts in the Asset Management segment. The PFI provisions held are expected to be utilised over the next 21 years.
The vacant property provision is expected to be utilised over the next 11 years.
29. Post-employment benefit liabilities The Group’s post-employment benefit liabilities are analysed below. The Group’s opening other post-employment benefit liabilities were previously disclosed within trade and other payables and have been restated. The restatement has no impact on the income statement of the Group. Group 2009 2008 £m £m Retirement benefit liabilities 298.4 213.1 Other post-employment benefit liabilities 13.1 6.2 311.5 219.3 a) Retirement benefit liabilities The Group operates both defined benefit and defined contribution pension schemes. The two main defined benefit schemes are the Atkins Pension Plan and the Railways Pension Scheme, both of which are funded final salary schemes. The assets of both schemes are held in separate trustee administered funds. Other pension schemes include the Atkins McCarthy Pension Plan in the Republic of Ireland, which is a final salary funded defined benefit scheme, and a range of defined contribution schemes or equivalent.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
– – No. 103 931 F+G 849 2008
2008
1,780 1,780 5.10% 7.30% 2.50% 3.60% 6.50% 3.60% 3.60% 3.60% 5.00%
24.1 years 24.1 24.6 years24.6 26.5 years26.5 22.2 years
– – No. 973 848 2009 2009 1,821 6.60% 3.00% 3.00% 3.00% 3.00% 5.00% 6.30% 4.50% 2.50% Financial StatementsFinancial 26.6 years 24.7 years 22.3 years 24.2 years
– – No. Plan 2008 7,868 7,868 3,907 3,907 WS Atkins plc Annual Report 2009 11,775 11,775 Defined contribution schemes contribution Defined
Atkins Pension – – No. 2009 8,700 4,784 13,484
– No. 433 433 192 192 325 325 950 2008 Scheme
– Railways Pension No. 946 227 397 322 2009
No. 495 495 Plan 2008 1,622 1,622 6,557 6,557 2,430 11,104 Defined benefit schemes benefit Defined
Atkins Pension No. 100 2009 1,810 6,549 2,585 11,044
n n e
e
m m n n o o e e W M W Fixed Fixed Limited Price Indexation Limited Price Indexation 2.5% to M
At 31 March 2009 the defined benefit section of the Atkins McCarthy pension scheme was closed to future accrual of benefits for members for benefits of accrual future to closed was scheme pension McCarthy Atkins the of section benefit defined the 2009 March 31 At Retirement Personal the to transferred have members These pension. salary final a to right contractual or statutory a enjoy not do who contribution a defined to transferred were Plan Pension Atkins the of members benefit defined all 2007) September (30 year previous the In service the although pension; salary final a to right contractual or statutory a enjoy not did they clear was it where service future for section Limited Atkins by employed whilst remains salary final to link the members, these for ceased sections benefit defined the under accrual defined the of membership offered now are who entrants, new to closed are schemes pension all of sections benefit defined The Membership principal the of Group’s pension schemes is as follows: Savings Accounts – Ireland (PRSA – Irish Life) scheme with effect from 1 April 2009. April 1 from effect with scheme Life) (PRSAIrish – Ireland – Accounts Savings plan the of section contribution defined a to transferred members 1,622 2007, October 1 On sooner). if retiring or out opting (unless from effect with plan the of section contribution defined the to transferred members 421 additional an consultation, further following and, 1 October 2008. section. contribution
Members Pensioners Deferred pensioners pensioners Deferred Restricted members
The main assumptions used for the IAS 19 valuation of the retirement benefit liabilities for the Atkins Pension Plan and the Railways Pension Pension Railways the and Plan Pension Atkins the for liabilities benefit retirement the of valuation IAS 19 the for used assumptions main The below: table the in listed are Scheme Restricted members consists of staff who are no longer accruing final salary benefits but retain their entitlement to pensions linked to linked pensions to entitlement their retain but benefits salary final accruing longer no are staffwho of consists members Restricted where included also are staff These accrual. future to scheme the of closure the to prior accumulated service of years on based salary final schemes. contribution defined within appropriate Longevity at age current for 65 pensioners Expected social of rate security increases Expected return of rate on plan assets Discount rate Rate increase of deferred for pensioners
Rate increase of in salaries Rate increase of pensions of in payment Price inflation Longevity at age future for pensioners 65 (current age 45) tables, standard ‘2000 series’ the were Plan Pension Atkins the for liabilities benefit retirement the calculate to used tables actuarial The Pension Railways The application. use of year on based annum, per improvement 1% of minimum a and improvements cohort medium with mortalitytables. same the on based be to basis approximate an on adjusted been have results Scheme 104 Financial Statements Notes to the Financial Statements Continued
The components of the pension cost are as follows: Atkins Railways Pension Pension Plan Scheme Other Total 2009 £m £m £m £m Cost of sales Current service cost 4.6 3.7 0.6 8.9 Total service cost 4.6 3.7 0.6 8.9 Finance cost/(income) Finance cost 52.8 12.5 0.3 65.6 Expected return on plan assets (45.9) (13.5) (0.3) (59.7) Net finance cost/(income) 6.9 (1.0) – 5.9 Total charge to income statement for defined benefit schemes 11.5 2.7 0.6 14.8 Charge for defined contribution schemes – – 28.2 28.2 Total charge to income statement 11.5 2.7 28.8 43.0 Statement of recognised income and expense Loss on pension scheme assets (136.2) (56.4) (1.6) (194.2) Changes in assumptions 47.7 22.2 1.5 71.4 Actuarial loss (88.5) (34.2) (0.1) (122.8) Deferred tax credited to equity 24.7 9.6 – 34.3 Actuarial loss (net of deferred tax) (63.8) (24.6) (0.1) (88.5)
Atkins Railways Pension Pension Plan Scheme Other Total 2008 £m £m £m £m Cost of sales Current service cost 12.2 4.0 0.5 16.7 Total service cost 12.2 4.0 0.5 16.7 Finance cost/(income) Finance cost 46.1 10.2 0.2 56.5 Expected return on plan assets (42.6) (12.4) (0.4) (55.4) Net finance cost/(income) 3.5 (2.2) (0.2) 1.1 Total charge to income statement for defined benefit schemes 15.7 1.8 0.3 17.8 Charge for defined contribution schemes – – 19.0 19.0 Total charge to income statement 15.7 1.8 19.3 36.8 Statement of recognised income and expense Loss on pension scheme assets (68.4) (18.3) (1.4) (88.1) Changes in assumptions 92.7 2.6 (0.8) 94.5 Actuarial gain/(loss) 24.3 (15.7) (2.2) 6.4 Deferred tax (charged)/credited to equity (11.9) 4.1 0.4 (7.4) Actuarial gain/(loss) (net of deferred tax) 12.4 (11.6) (1.8) (1.0)
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
– –
1.0 £m £m 8.9 2.3 105 £m £m £m 12.1 12.1 12.1 97.0 14.9 16.6 65.6 Total Total (71.4) Total Total Total Total (24.9) 165.7 134.2 121.2 705.0 (213.1) 808.8 (298.4)
1,021.9 Scheme 1,003.4 (1,021.9) Scheme (1,003.4)
Railways Pension Railways – – – Railways Pension % % 9.0 7.1 7.1 7.0 7.0 4.6 1.0 £m 0.6 0.3 0.2 4.2 (7.1) £m £m 81.0 10.0 (2.5) 10.0 10.0 (7.0) 80.0 (1.5) (0.7) (2.8) Other 100.0 100.0 Other Other Financial StatementsFinancial
– – 1.7 1.7 3.7 £m £m 5.8 £m £m £m Plan Plan (6.2) 25.5 25.5 12.5 40.6 (29.0) 351.2 351.2 261.8 261.8 (63.0) 165.7 (22.2) 121.2 121.2 579.6 638.5 194.7 WS Atkins plc Annual Report 2009 272.4 260.8 184.2 (194.7) (184.2) Pension Scheme Railways Scheme Scheme Pension Pension Railways Railways Atkins Pension Atkins
Atkins Pension – – – % % 7.0 1.0 4.0 £m 0.4 4.6 £m £m Plan 41.0 47.0 55.0 45.0 52.8 Plan Plan 100.0 (47.7) 579.6 638.5 100.0 (18.0) Atkins Atkins (820.1) 820.1 820.1 812.2 (181.6) (812.2) (232.6) Atkins Atkins Pension Pension Pension Pension Pension
% % 7.15 7.45 7.90 6.50 5.00 8.40 3.50 6.40 Expected Expected asset return asset return
benefit obligation. The expected return on plan assets is based on market expectations at the beginning of the year for returns over the entire life of the the of life entire the over returns for year the of beginning the at expectations market on based is assets plan on expectedreturn The
2009 Defined benefit obligation obligation benefit Defined 2008
Retirement benefitliabilities Fair value plan of Fair assets
The major categories of plan assets as a percentage of total plan assets are as follows: as are assets plan total of percentage a as assets plan of categories major The Other includes the McCarthy Atkins defined benefit pension scheme andunfunded an pension obligation in relation former to a director, £0.5mfor (2008: £0.5m). Retirement benefitliabilities Fair value plan of Fair assets Defined benefit obligation obligation benefit Defined 2009 Equities Bonds Property Other/cash
2009 Equities
Bonds
Movements in the present value the of defined benefit obligation are as follows: The plan assets do not include own the of any financial Group’s instruments or property occupiedby the Group. Other/cash Property Benefit payments Difference on exchange
Defined benefit obligation at end of year year of end at obligation benefit Defined Change of assumptions of Change Employee contributions 2009 Interest cost Defined benefit obligation at beginning of year year of beginning at obligation benefit Defined Service cost 106 Financial Statements Notes to the Financial Statements Continued
Atkins Railways Pension Pension Plan Scheme Other Total 2008 £m £m £m £m Defined benefit obligation at beginning of year 867.3 185.3 5.6 1,058.2 Service cost 12.2 4.0 0.5 16.7 Interest cost 46.1 10.2 0.2 56.5 Change of assumptions (92.7) (2.6) 0.8 (94.5) Employee contributions 3.9 1.8 0.2 5.9 Benefit payments (16.7) (4.0) (0.9) (21.6) Difference on exchange – – 0.7 0.7 Defined benefit obligation at end of year 820.1 194.7 7.1 1,021.9
Movements in the fair value of plan assets are as follows: Atkins Railways Pension Pension Plan Scheme Other Total 2009 £m £m £m £m Fair value of plan assets at beginning of year 638.5 165.7 4.6 808.8 Expected return on plan assets 45.9 13.5 0.3 59.7 Employer contributions 49.0 2.9 0.6 52.5 Employee contributions 0.4 1.7 0.2 2.3 Benefits paid (18.0) (6.2) (0.7) (24.9) Actuarial loss (136.2) (56.4) (1.6) (194.2) Difference on exchange – – 0.8 0.8 Fair value of plan assets at end of year 579.6 121.2 4.2 705.0
Atkins Railways Pension Pension Plan Scheme Other Total 2008 £m £m £m £m Fair value of plan assets at beginning of year 632.3 170.8 5.0 808.1 Expected return on plan assets 42.6 12.4 0.4 55.4 Employer contributions 44.8 3.0 0.7 48.5 Employee contributions 3.9 1.8 0.2 5.9 Benefits paid (16.7) (4.0) (0.9) (21.6) Actuarial loss (68.4) (18.3) (1.4) (88.1) Difference on exchange – – 0.6 0.6 Fair value of plan assets at end of year 638.5 165.7 4.6 808.8
Movements in the retirement benefit liabilities are as follows: Atkins Railways Pension Pension Plan Scheme Other Total 2009 £m £m £m £m Retirement benefit liabilities at beginning of year (181.6) (29.0) (2.5) (213.1) Service cost (4.6) (3.7) (0.6) (8.9) Net finance (cost)/income (6.9) 1.0 – (5.9) Contributions 49.0 2.9 0.6 52.5 Actuarial loss (88.5) (34.2) (0.1) (122.8) Difference on exchange – – (0.2) (0.2) Retirement benefit liabilities at end of year (232.6) (63.0) (2.8) (298.4)
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
6.4 £m 6.4 6.4 £m £m 107 (1.1) £m £m (0.1) (32.7) 55.4 55.4 59.7 48.5 Total Total Total Total Total Total (29.1) (16.7) (22.7) (88.1) (22.7) Total Total Total Total (213.1) (250.1) (145.5) (134.5) (122.8) (194.2)
0.7 0.7 0.2 £m 0.4 £m £m 0.3 £m £m (0.1) (2.7) (1.0) (1.4) (2.5) (2.2) (2.2) (0.5) (0.5) (0.1) (0.6) (1.6) (1.3) (2.7) (2.8) Other Other Other Other Other Financial StatementsFinancial
– 3.0 3.0 2.2 £m £m £m £m £m (5.9) (0.5) (4.0) (0.5) 12.4 12.4 15.2 15.2 13.5 (15.7) (15.7) (14.5) (18.3) (29.0) (34.7) (42.9) (56.4) (34.2) WS Atkins plc Annual Report 2009 Pension Pension Pension Scheme Scheme Scheme Railways Railways Railways Scheme Scheme Pension Pension Railways Railways
– £m £m £m £m £m Plan Plan Plan 42.6 42.6 (3.5) 45.9 44.8 Plan Plan 24.3 24.3 24.3 24.3 (12.2) (19.5) (25.8) (43.8) (19.5) (68.4) Atkins Atkins Atkins Atkins Atkins Atkins (90.3) (88.5) (235.0) (181.6) Atkins Atkins (136.2) (108.0) Pension Pension Pension Pension Pension Pension Pension
2008
Retirement benefit liabilities at beginning of year year of beginning at liabilities benefit Retirement Net finance (cost)/income Service cost Cumulative net actuarial gains/(losses) recognised in equity are as follows: follows: as are equity gains/(losses)in actuarial recognised net Cumulative Retirement benefitliabilities at endof year Difference on exchange Contributions Actuarial gain/(loss)
2009 Net actuarial loss recognised in the year year the in recognised loss actuarial Net end year of At At beginningAt year of 2008
Net actuarial gain/(loss) recognised in the year year the gain/(loss) in actuarial Net recognised At beginningAt year of The return on plan assets is as follows: At end year of At
2009 Experience loss on plan assets Actuarial loss on plan assets Expected return on plan assets 2008
Expected return on plan assets Experience loss on plan assets Actuarial loss on plan assets 108 Financial Statements Notes to the Financial Statements Continued
History of experience gains and losses: 2009 2008 2007 2006 2005 Total Total Total Total Total Experience gain/(loss) on scheme assets £(194.2)m £(88.1)m £3.4m £88.4m £16.1m Percentage of scheme assets (27.5)% (10.9)% 0.4% 12.2% 2.8%
Experience gain/(loss) on scheme liabilities £9.1m £20.7m £(0.5)m £15.8m £(11.5)m Percentage of defined benefit obligation (0.9)% (2.0)% 0.0% (1.5)% 1.4%
Defined benefit obligation £(1,003.4)m £(1,021.9)m £(1,058.2)m £(1,021.9)m £(843.9)m Fair value of plan assets £705.0m £808.8m £808.1m £722.0m £569.7m Retirement benefit liability £(298.4)m £(213.1)m £(250.1)m £(299.9)m £(274.2)m
The Group expects employer contributions to be paid during the financial year to 31 March 2010 to be circa £39.5m, of which £32.0m is in relation to the funding of the actuarial deficit, and employee contributions paid to be circa £2.3m. Expected benefit payments made directly by the Group to pensioners in the financial year to 31 March 2010 are £nil.
The approximate effect on the liabilities from changes in the main assumptions used to value the liabilities are as follows:
Effect on plan liabilities Change in assumption Atkins Pension Plan Railways Pension Scheme Discount rate increase/decrease 0.5% decrease/increase 10.0% decrease/increase 9.0% Inflation increase/decrease 0.5% increase/decrease 8.0% increase/decrease 9.0% Real rate of increase in salaries increase/decrease 0.5% increase/decrease 2.0% increase/decrease 3.0% Longevity increase 1 year increase 3.0% increase 2.0%
The effect of the change in inflation on liabilities assumes a corresponding increase in salary increases and inflation-related pension increases. b) Other post-employment benefit liabilities The Group operates unfunded gratuity schemes within certain of its non-UK businesses. Members of the schemes are entitled to receive a cash gratuity on leaving the business which is dependent on their length of employment and final salary. Valuation of the gratuity obligation is carried out in line with the principles of IAS 19, Post-employment benefits. Group 2009 2008 £m £m Other post-employment obligation at beginning of year 6.2 3.3 Service cost 4.0 3.1 Interest cost 0.7 0.3 Benefit payments (1.0) (0.4) Difference on exchange 3.2 (0.1) Other post-employment obligation at end of year 13.1 6.2
The main assumptions used for the IAS 19 valuation of other post-employment benefits are listed in the table below:
2009 2008 Discount rate 9% 9% Salary inflation 7% 9% Average remaining service period 2 years 3 years
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
p
u
1.6 2.9 4.9 4.9 0.5 0.5 0.4 0.8 £m £m 109
o
r 2008 2008
G
£m 1.1 0.9 2.8 4.8 2009 Group and Company Financial StatementsFinancial No. Shares 104,451,799 104,451,799 104,451,799 150,000,000
0.5 0.5 0.8 £m 2009 WS Atkins plc Annual Report 2009
No. Shares 104,451,799 104,451,799 150,000,000 150,000,000
is ranked in the upper quartile, 30% vesting will be achieved with a median ranking with pro rata vesting for intermediate performance. performance. intermediate for vesting rata pro with ranking median a with achieved be will vesting 30% quartile, upper the in ranked is 32. Share-based payments Long-Term Incentive Plans Atkins Long-Term Incentive Plan (LTIP) September 2006 onwards A share plan senior for executives employees and key used awards employees to make to that are settled in equity in limited circumstances, or, in cash. There are different performance targets different for categories management. of Awards made executive to the of directors constituents and senior the to relative (TSR) performance return shareholder total Company’s the to subject award the of 50% have employees FTSE Index 250 (excluding investment trusts) on the date the of award. vesting Full this of portion the of award willtake place if the Company No vesting will occur for a ranking below median. below ranking a for occur will vesting No The remaining 50% the of award made executive to directors and senior employees is subject real growth the to Company’s in normalised be to increase the required target growth the awards subsequent and 2006 the For period. performance the (EPS) over share per earnings increase the if vesting; full allow to period performance (RPI)three-year Index the Price in Retail UK the above annum per 10% than more 31. Ordinary shares 31. Subject to vesting, participants are entitled to receive the benefit of dividends declared following award, without interest. without award, following declared dividends of benefit the receive to entitled are participants vesting, to Subject Awards made to other participants are subject solely to the EPS condition. As a general rule awards made to participants who leave leave who participants to made awards rule general Asa condition. EPS the to solely subject are participants other to made Awards employment prior vesting to will lapse. In the event a participant leaves as a result a qualifying of reason they receive a pro-rated entitlement. is less than 4% per annum above the UK RPI then there will be no vesting. A sliding scale operates between above 4% and 10% the UK RPI. 30. Other non-current liabilities At the 2008 Annual General Meeting (AGM), shareholder authority was obtained for the Company to purchase up to a maximum of 10.1m 10.1m of maximum a to up purchase to Company the for obtained was authority (AGM), shareholder Meeting General Annual 2008 the At itsof own ordinary shares (representing approximately the of issued 10% share capital June the on of 25 2008) Company a period for equity. shareholders’ from deduction a represent and shares treasury as held are but cancelled been not have report, this of date the at as As at the date this of report there ordinarywere 4,341,000 held as treasury shares 0.5p of each (nominalduty shares.stamp value 1,123,000 £21,705) and fees excluding £11.3m of cost a at (2008: 2009 3,218,000) March 31 ended year the during purchased were shares ending on the earlier of the next annual general meeting or 3 December 2009, provided that certain conditions (relating to the purchase purchase the to (relating conditions certain that provided 2009, December 3 or meeting general nextannual the of earlier the on ending approve a resolution updating and renewing this authority. Shares also in the may Company be purchased Employee Atkins’ by Trusts. Benefit capital share called-up the of (2008: 3.1%) total the of 4.2% approximately represent which shares, treasury 4,341,000 The (2008:£34.7m). price) are met. The Notice Meeting of the be for to hours AGM held at 1630 on Wednesday 9 September 2009 proposes that shareholders
At 1 AprilAt Authorised each 0.5p of shares ordinary March 31 and April 1 at Authorised Issued, allottedand fully paid ordinary shares of 0.5p each March 31 At
Deferred PFI/PPP bid costs recovered, deferred consideration and development fees: development and consideration deferred PFI/PPP Deferred recovered, costs bid Maturing between one and two years Maturing between two and five years Maturing after more than five years 110 Financial Statements Notes to the Financial Statements Continued
Atkins Long-Term Incentive Plan (LTIP) September 2003 to August 2006 A share plan for senior executives and key employees used to make awards to employees that are settled in equity or, in limited circumstances, in cash. The performance condition is TSR with an EPS growth underpin measured over three financial years starting with the financial year beginning immediately after the award is granted. Full vesting of any award will take place for a top 20% ranking against a group of up to 16 comparator companies, 30% vesting for a median ranking and no award if TSR falls below the median. The EPS underpin is the UK RPI plus 2% per annum. As a general rule awards made to participants who leave employment prior to vesting will lapse. In the event that a participant leaves as a result of a qualifying reason they received a pro-rated entitlement. All awards have now vested.
Atkins Long-Term Incentive Plan (LTIP) pre-September 2003 A share plan for senior executives and key employees used to make awards to employees that are settled in equity. Awards have an EPS performance condition. EPS is required to be more than 12% per annum above the UK RPI in the relevant three-year performance period to enable all of the ordinary shares to be acquired, but if the EPS growth is less than 5% per annum above the UK RPI then none of the ordinary shares can be acquired. A sliding scale in relation to the number of ordinary shares that can be acquired operates for growth in EPS between 5% and 12% above the UK RPI. Participants are entitled to receive the benefit of dividends declared, without interest, on the shares subject to the award between vesting and exercise. As a general rule awards made to participants who leave employment prior to vesting will lapse. In the event that a participant leaves as a result of a qualifying reason they receive a pro-rated entitlement. All awards have now vested.
WS Atkins Employees’ Stock Option Plan (ESOP) A share plan used to make awards to key employees in the US that is settled in equity or in cash and which permits options to be granted at an exercise price no lower than the market price of a share at the time of grant. Options vest after three years and must be exercised within 10 years of the date of grant. All awards have now vested.
Atkins Restricted Stock Unit Plan (RSU) A share plan used to make awards to key employees following the acquisition of Hanscomb. There is no performance condition but awards are restricted for three years from the date of award. As a general rule awards made to participants who leave employment prior to vesting will lapse. In the event that a participant leaves as a result of a qualifying reason they will receive their award in full.
Deferred Bonus Plans Atkins Deferred Bonus Plan (DBP) A share plan for senior executives and key employees that is settled in equity or, in limited circumstances, in cash. There is no performance condition but awards are restricted for at least three years from the date of award. As a general rule awards made to participants who leave employment prior to vesting will lapse. In the event that a participant leaves as a result of a qualifying reason they will receive their award in full. In the case of awards to executive directors, the value of the shares over which an award may be granted under the plan shall be taken to form part of the annual bonus payable to that participant. Awards may also be granted under the plan to employees below the level of executive directors that do not form part of their annual bonus (for instance, on recruitment of the employee).
Atkins Retention Bonus Plan (RBP) A share plan for senior executives and key employees that is settled in equity or, in limited circumstances, in cash. Awards cannot be made to executive directors. There is no performance condition but awards are restricted for a set period, fixed by the Remuneration Committee at grant, from the date of the award. As a general rule awards made to participants who leave employment prior to vesting will lapse. In the event that a participant leaves as a result of a qualifying reason they will receive their award in full. In the case of awards to senior executives, the value of the shares over which an award may be granted under the plan shall be taken to form part of the annual bonus payable to that participant. Awards may also be granted under the plan to employees below the level of senior executives that do not form part of their annual bonus (for instance, on recruitment on the employee).
The Group’s share-based payments charge for the year of £8.9m (2008: £8.6m) has been included in administrative expenses in the income statement.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
s – – – – p – – – – – – – – – – – d u r 8.1 0.7 0.7 111
0.5 8.6 £m
o 400 a r 2009 2,297 2008 w G 57,240 57,240 128,339 2 A average exercise/ Weighted exercisable at 31 Marchat 31
transfer price
s –
d DBP/RBP 1.0 8.7 8.9 0.2 r £m 400 a 2009 (467) 2,297 2009 w 68,429 501,158 (54,145) (63,007) A 468,132 468,132 926,750 406,043 798,902 378,304 Financial StatementsFinancial 1,021,037 (213,509) (250,633) 1,076,554 1,076,554 Number 1,522,195 1,000,276 at 31 Marchat 31
outstanding
– – – – – – – – –
e d g e life t a 0.16p 0.61p 0.78p r h e g WS Atkins plc Annual Report 2009 i v average e exercise/ a
1 Weighted Weighted 2.19 years 2.19 7.32 years 7.32 7.88 years 7.88 5.93 years 5.93 2.67 years2.67 8.31 years8.31 6.87 years 0.88 years W remaining
contractual transfer price
LTIPs
term 3 years 441,319 774,029 774,029 10 years 10 Number (155,712) (299,152) (170,943) (359,336) (145,700)
(763,948) 2,701,298 2,241,284 2,021,855 Maximum 3 to 10 years 10 3 to 3 to 10 years 10 3 to 3 to 10 years 10 3 to 2 to 10 years 10 2 to 3 to 10 years 10 3 to 3 to 10 years 10 3 to
3 years 3 years 3 years 3 years 3 years 3 years Scheme maturity 2 to 3 years2 to 3 to 4 years 3 to
0.0p 0.0p 0.0p 0.0p 0.0p 0.0p 0.0p price 832.5p 832.5p Exercise
date
Award 30/11/2001 09/01/2009 27/06/2008 24/06/2005 08/06/2001 29/06/2006 26/08/2002 29/06/2007 to 28/11/2008to 17/09/2003 to 11/09/2006 to 11/09/2006 to to 27/06/2008to to 29/06/2007to
Including ESOP and LTIP, RSU awards. Including DBP and RBP awards.
Lapsed Forfeited
Awards outstanding March 2009 at 31 Exercised/transferred Granted Awards outstanding at 1 April 2008 Forfeited Awards outstanding at 1 April 2007
As March 2009 at 31 the following awards were outstanding:
Exercised/transferred Lapsed Granted 2. 1. The weighted average share price at the date exercise of was 934.86p (2008: 1081.78p).
transactions payment share-based cash-settled for liability of balance Closing The effect of the share-based payment transactions on the Group’s result and financial position is as follows: as is position financial and result Group’s the on transactions payment share-based the of effect The
A summary awards of outstanding March 2009 as at 31 is as follows: Total expense recognised for cash-settled share-based payment transactions payment share-based cash-settled for recognised expense Total
Total expense recognised for equity-settled share-based payment transactions payment share-based equity-settled for recognised expense Total
LTIP (September 2006 EPS onwards) LTIP (September 2003 to Augustto 2006) Scheme LTIPs LTIP (September 2006 TSR/EPS onwards) LTIP (pre-September 2003) ESOP RSU
DBPs DBP
On 28 November 2008 the Group issued awards over 10,500 shares to employees under the LTIP and 69,791 shares to employees under under employees to shares 69,791 and LTIP the under employees to shares 10,500 over awards issued Group the 2008 November 28 On On 27 June 2008 the Group issued awards over 423,450 shares to employees under the LTIP, 28,229 shares to employees under the DBP the under employees to shares 28,229 LTIP, the under employees to shares 423,450 over awards issued Group the 2008 June 27 On and 700,882 shares employees to under the RBP. the RBP. RBP 112 Financial Statements Notes to the Financial Statements Continued
On 1 January 2009 the Group issued awards over 7,369 shares to employees under the LTIP.
At 31 March 2009 the Group’s Employee Benefit Trusts held 2,339,512 shares (2008: 2,697,476 shares) at a nominal value of £0.0m (2008: £0.0m) and market value of £11.6m (2008: £28.4m).
For the purposes of valuing LTIP awards with market performance conditions, the Monte Carlo model has been used to arrive at the share-based payments charge. The assumptions used in the model are as follows:
LTIP LTIP 2009 2008 Exercise price £nil £nil Risk-free interest rate n/a n/a Discount in respect of dividend yield 0% 0% Volatility of share price 24.5% and 35.8% 22.6% Share price at grant date – 03/08/2007 1,035.0p 1,035.0p – 27/06/2008 1,048.0p – – 27/11/2008 611.0p – Expected term 3 years from grant date 3 years from grant date
Volatility was determined based on the movement in the share price over a period prior to the grant date equal in length to the period over which the TSR condition applies, which equates to a three-year share price history (2008: a three-year share price history). The fair value of share plans involving market performance conditions takes into account market information.
In accordance with the rules of the plan, the Monte Carlo model simulates TSR for the Company and a comparator group. In 2009 and 2008 the comparator group consisted of the FTSE 250 excluding investment trusts. The model takes into account historic dividends and share price volatilities for the Company and the comparator group to produce a predicted distribution of relative share performance.
Awards that do not contain market performance conditions are valued at market value at date of award and discounted in the event that the award does not benefit from dividends during the vesting period.
The weighted average fair value of awards granted during the year was 993.70p (2008: 1009.88p).
33. Statement of changes in equity Equity Retained shareholders’ Share Share Merger (loss)/ (deficit)/ capital premium reserve earnings funds £m £m £m £m £m Group Balance at 1 April 2007 0.5 62.4 8.9 (147.9) (76.1) Profit for the year – – – 100.0 100.0 Dividends – – – (21.8) (21.8) Actuarial loss on retirement benefit liabilities (net of deferred tax) – – – (1.0) (1.0) Share-based movements – – – 7.7 7.7 Share buyback – – – (34.9) (34.9) Share of Joint Venture equity items – – – 0.2 0.2 Cash flow hedges – – – (0.8) (0.8) Net differences on exchange – – – 3.3 3.3 Balance at 31 March 2008 0.5 62.4 8.9 (95.2) (23.4)
Profit for the year – – – 84.2 84.2 Dividends – – – (24.7) (24.7) Actuarial loss on retirement benefit liabilities (net of deferred tax) – – – (88.5) (88.5) Share-based movements – – – 8.0 8.0 Share buyback – – – (11.5) (11.5) Net differences on exchange – – – 12.4 12.4 Balance at 31 March 2009 0.5 62.4 8.9 (115.3) (43.5)
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
y t i
£m 8.1 113 9.6 8.5 u 68.7 (21.8) q (11.5) (34.9) 108.8 (24.7) 126.9 funds 106.8 E
(deficit)/ shareholders’
8.5 £m 8.1 8.1 9.6 55.1 55.1 37.0 35.0 35.0 68.7 (21.8) (11.5) (34.9) (24.7) (loss)/ earnings Financial StatementsFinancial Retained
– – – – – – – – – £m 8.9 8.9 8.9 8.9 8.9 WS Atkins plc Annual Report 2009 Merger reserve
– – – – – – – – – £m 62.4 62.4 62.4 62.4 62.4 Share Share premium
– – – – – – – – – 0.5 0.5 0.5 0.5 0.5 £m Share capital
. This adjustment had no effect on the Group.
Company Balance at 1 April 2007 Profit13)for the year (note Balance at 31 March 2008Balance at 31 Share buyback Share-based movements Share-based Dividends Profit13)for the year (note Share-based movements Share-based Dividends Merger reserve Merger The balance on the merger reserve represents the value fair the of consideration given excess in the of nominal value the of ordinary shares issued in an acquisition made shares by where the Group took relief under the of Companies Section Act from the requirement 1985 131 The opening Company reserves balances been have restated the account take into effect to theof IFRS implementation 2, IFRIC of 11, Share premium Share The balance on the share premium represents account the amounts received in excess the of nominal value the of ordinary shares in issue. £10.4m and £26.3m totalled goodwill negative and positive which of £15.9m, to amounting 1997 April 1 to prior arose that Goodwill respectively, has been written off retained to (loss)/earnings. Share capital Share The balance the of share capital account represents the aggregate nominal value all of ordinary shares in issue. establishto a share premium account. (loss)/earningsRetained are EBTs the by held shares plc Atkins WS Group. the of losses and profits accumulated the (loss)/earnings is retained in held balance The deducted from retained (loss)/earnings. Group and treasury share transactions Share buyback March 2009Balance at 31 114 Financial Statements Notes to the Financial Statements Continued
34. Cash generated from continuing operations Group Company 2009 2008 2009 2008 £m £m £m £m Profit for the year 84.2 68.6 9.6 68.7 Adjustments for: Income tax (note 8) 18.5 23.3 – – Finance income (note 7) (6.7) (9.8) (0.8) (0.8) Finance cost (note 7) 9.8 5.5 0.3 – Share of post-tax profit from Joint Ventures (note 4) (0.2) (0.9) – – Depreciation charges 20.7 19.3 – – Profit on disposal of Joint Venture (2.5) – – – Amortisation charges 12.7 11.1 – – Release of deferred income (0.1) (3.0) – – Share-based payment charge (note 32) 8.9 8.6 – – Result on disposal of property, plant and equipment 0.7 0.1 – – Dividends received – – – (10.9) Profit on disposal of subsidiaries – – – (57.7) Movement in provisions (note 28) 9.2 (5.5) – – Movement in inventories (note 21) – 0.1 – – Movement in trade and other receivables (note 22) (34.1) (37.2) (3.0) 0.1 Movement in payables (note 26) 45.0 29.8 22.6 56.3 Movement in post-employment benefits (note 29) (40.6) (29.1) – – Cash generated from continuing operations 125.5 80.9 28.7 55.7
35. Analysis of net funds At 31 March Cash Other non- Exchange At 31 March 2008 flow cash changes movement 2009 £m £m £m £m £m Cash and cash equivalents 154.5 38.2 – 17.0 209.7 Loan notes receivable 5.6 6.9 0.4 – 12.9 Financial assets at fair value through profit or loss 29.7 (1.0) – – 28.7 Borrowings due within one year (4.2) 4.3 (2.9) – (2.8) Borrowings due after one year (3.2) – 2.6 – (0.6) Finance leases (14.0) 4.5 (4.2) – (13.7) Net funds 168.4 52.9 (4.1) 17.0 234.2
36. Contingent liabilities The Group has given indemnities in respect of overseas office overdrafts, performance bonds, advance payment bonds, Letters of Credit and import duty guarantees issued on its behalf. The amount outstanding at 31 March 2009 was £61.5m (2008: £73.1m) including £25.0m in respect of Metronet (2008: £25.0m). The indemnities, which arose in the ordinary course of business, are not expected to result in any material financial loss.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information p – u 5.9 0.4 0.1 4.1 1.5 1.0 115 0.3 £m £m £m £m 8.2 o 10.3 10.3 43.6 r 2008 2008 2008 2008
G Group Group Group Vehicles, Vehicles, Vehicles, Vehicles, plant and plant and equipment equipment
– £m £m 1.1 1.1 1.3 1.3 2.4 2.4 £m £m 4.8 2.2 26.4 59.3 20.0 20.0 66.5 2009 2009 145.8 145.8 Property Property Financial StatementsFinancial
3.1 3.1 7.8 7.8 0.5 0.2 0.2 2.4 £m £m 10.5 18.5 2009 2009 WS Atkins plc Annual Report 2009 Vehicles, Vehicles, Vehicles, Vehicles, plant and plant and equipment equipment
1.7 1.7 £m £m 0.1 0.1 1.3 0.3 27.4 27.4 13.3 170.7 170.7 130.0
Property Property
Within one year Later than one year but less than five years After five years After five years Later than one year but less than five years Within one year
a) Group sales and purchases of goods and services to/from Joint Ventures Details principal the of Company’s subsidiaries are shown in note 40 and principal Joint in note 41. Ventures Transactions with the retirement benefit schemes are shown 29. in note Details of the directors’ shareholdings, share options and remuneration are given in the Remuneration Report, which forms part of these these of part forms which Report, Remuneration the in given are remuneration and options share shareholdings, directors’ the of Details Financial Statements. 39. Related party Related 39. transactions 38. Capitaland othercommitments financial
37. Operating lease arrangements 37. Purchases goods of and services from Joint Ventures and Private Finance Initiative (PFI) contracts £20m of (2008: £6.8m). Sales goods of and services Joint to Ventures The Group is committed to make payments for equity and debt into Special Purpose Companies under Public Private Partnership (PPP) Partnership Private Public under Companies Purpose Special into debt and equity for payments make to committed is Group The
Capital expenditure contracted for but not incurred – property, plant and equipment and plant property, – incurred not but for contracted expenditure Capital
Future aggregate minimum lease payments payments lease minimum aggregate Future under non-cancellable operating leases expiring: The had no Company operating lease commitments March 2009 as at 31 (2008: £nil).
Amounts receivable under non-cancellable operating leases expiring: The had no Company operating lease receivables March 2009 as at 31 (2008: £nil). 116 Financial Statements Notes to the Financial Statements Continued
b) Group year-end balances arising from sales/purchases of goods and services to/from Joint Ventures and loans provided to Joint Ventures Group 2009 2008 £m £m Receivables from Joint Ventures 7.8 9.7
Receivables from Joint Ventures are shown net of contract-related provisions of £23.1m (2008: £22.6m) which were previously held within amounts recoverable on contracts.
Payables to Joint Ventures – – c) Company sales/purchases of goods and services to/from subsidiaries The Company did not sell any goods or services to subsidiaries during the year (2008: £nil). The Company did not purchase any goods or services from its subsidiaries during the year (2008: £nil). d) Company year-end balances with subsidiaries Company 2009 2008 £m £m Receivables from subsidiaries 11.4 8.4
Payables to subsidiaries 57.4 23.8
Provision of goods and services to and purchases of goods and services from related parties were made at the rates charged to external customers. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No provision has been made for doubtful debts in respect of amounts owed by related parties and £nil charged to income and expense (2008: £nil).
Receivables from subsidiaries are shown net of impairment of £111.5m (2008: £121.0m). e) Key management compensation Key management comprises the executive and non-executive directors, and certain senior managers who are members of the Group Executive.
Group 2009 2008 £m £m Salaries and other short-term employment benefits 5.1 4.9 Post-employment benefits 0.2 0.3 Share-based payments 1.3 1.0 6.6 6.2
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information
117
External Insurance auditors cost estimators Property services KPMG Audit PLC Holding company Holding Investment company Nature of business Consulting engineers Consulting Consulting engineersConsulting Consulting engineersConsulting Consulting engineersConsulting
Quantity surveyors and programme and Project management consultants Financial StatementsFinancial audited
financial statements Date of last 31 Mar 200831 WS Atkins plc Annual Report 2009
2
Class and percentage 14.0% 100% ordinary 100% ordinary 100% 100% ordinary 100% ordinary 100% ordinary 100% ordinary 100% ordinary 100% 100% ordinary 100% ordinary 100% ordinary 100% of shares held shares held Proportionof
USA China Gibraltar Guernsey Country of registration/ incorporation England and Wales England and Wales England and Wales England and Wales England and Wales England and Wales and England
1
Holding company for companies involved in in involved companies for company Holding Nature of business the design, financing and construction of the the of construction and financing design, the MoD garrison facility at Colchester.
1 1
1
1 1
1
1
from any of these Joint Ventures. Owned by a subsidiary undertaking other than WS Atkins plc. Proportion of shares held is in respect of ordinary share capital. There are no special rights or constraints on the shares. There are no restrictions on distributions Owned by a subsidiary undertaking other than WS Atkins plc. Atkins China Limited China Atkins FacilitiesAtkins Management Limited Atkins Investments Limited Investments Atkins 1. 2. A full list of subsidiary companies will be filed at Companies House with the Company’s Annual Return. Annual Company’s the with House Companies at filed be will companies subsidiary of list full A All the above operate in the country registration, of except WS for & Partners Atkins Overseas, which operates the in Middle East. The following represents the principal Joint in which Ventures the Group participated during the year: whole of all classes of issued share capital. share issued of classes all of whole Ventures Joint 41. 1. the holds Group The held. rights voting of percentage the to equivalent is Group the by held capital share issued the of percentage The
40. Subsidiary undertakings The following companies were the principal subsidiary undertakings March 2009: as at 31
RMPA Holdings Limited Holdings RMPA Atkins Limited Atkins WS Atkins Insurance (Guernsey) Limited (Guernsey) Insurance Atkins WS
WS & Partners Atkins Overseas
WS Atkins International Limited International Atkins WS Atkins Investments UK Limited UK Investments Atkins Faithful+GouldInc Name
stated. otherwise unless Kingdom United the in operate Ventures Joint All Faithful+Gould Limited Faithful+Gould 118 Financial Statements Five-Year Summary
Consolidated income statements for years ended 31 March
2009 2008 2007 2006 2005 £m £m £m £m £m Revenue (Group and share of Joint Ventures) 1,532.4 1,399.5 1,240.3 1,411.0 1,157.3
Revenue 1,487.2 1,313.6 1,179.8 1,052.5 955.0
Cost of sales (941.9) (834.1) (781.1) (637.3) (579.3) Gross profit 545.3 479.5 398.7 415.2 375.7
Administrative expenses (442.2) (392.8) (335.0) (352.3) (332.7) Operating profit 103.1 86.7 63.7 62.9 43.0
Profit on disposal of Joint Ventures 2.5 – – 6.4 3.7 Share of post-tax profit from Joint Ventures 0.2 0.9 2.8 8.8 10.2 Profit from operations 105.8 87.6 66.5 78.1 56.9
Finance income 6.7 9.8 9.0 7.9 6.8 Finance cost (9.8) (5.5) (5.4) (11.2) (10.7) Net finance (cost)/income (3.1) 4.3 3.6 (3.3) (3.9) Profit before taxation 102.7 91.9 70.1 74.8 53.0
Income tax expense (18.5) (23.3) (15.2) (17.9) (14.1) Profit for the year from continuing operations 84.2 68.6 54.9 56.9 38.9
Profit/(loss) for the year from discontinued operations – 31.4 (112.2) – –
Profit/(loss) for the year attributable to equity shareholders 84.2 100.0 (57.3) 56.9 38.9
Basic earnings/(loss) per share – continuing operations 86.1p 67.9p 54.4p 57.0p 39.3p – discontinued operations – 31.0p (111.2)p – – 86.1p 98.9p (56.8)p 57.0p 39.3p
Diluted earnings/(loss) per share – continuing operations 84.8p 66.7p 53.8p 55.9p 38.7p – discontinued operations – 30.5p (110.6)p – – 84.8p 97.2p (56.8)p 55.9p 38.7p
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information – 0.5 8.9 £m 0.2 119 (2.6) (2.8) 11.1 11.1 97.5 41.6 43.7 43.7 10.8 10.8 29.3 29.3 62.4 62.4 (11.1) 22.8 34.2 (21.5) (10.8) (26.5) 2005 (53.4) (53.4) 114.6 114.6 392.6 266.7 236.2 (125.2) (332.7) (274.2) (333.3) (348.9)
– – 0.5 0.5 8.9 £m 0.2 (2.8) (6.5) 70.1 70.1 47.2 47.2 21.6 21.6 20.7 10.0 10.0 35.6 35.6 62.4 62.4 46.2 (11.7) (35.1) (36.1) (36.1) (12.3) (23.9) 2006 177.4 177.4 471.2 471.2 272.9 272.9 103.8 103.8 264.4 (107.9) (401.1) (379.5) (370.6) (299.9) Financial StatementsFinancial
0.1 0.1 9.4 9.4 0.5 0.5 8.9 8.9 0.4 £m (0.1) (3.7) (8.7) 62.3 62.3 49.6 49.6 62.4 62.4 89.8 46.2 64.8 (76.1) (76.1) (14.3) 2007 (26.0) (34.5) (28.3) (23.8) 187.7 187.7 521.7 521.7 184.3 284.0 (147.9) (250.1) (322.7) (418.6) (459.4) WS Atkins plc Annual Report 2009
5.7 5.7 0.5 0.5 8.9 8.9 0.3 £m 4.2 (7.8) (4.9) (4.3) (0.9) 10.9 10.9 29.7 29.7 69.6 69.6 56.7 56.7 45.6 45.6 62.4 62.4 35.2 (13.5) (13.6) (23.4) (23.4) 2008 (26.8) (95.2) 192.7 192.7 299.7 299.7 154.5 154.5 484.2 (251.3) (219.3) (409.2) (449.0)
9.0 3.9 0.5 8.9 0.3 £m (7.6) (1.2) (9.5) (9.9) (4.8) 12.9 28.7 63.8 46.6 62.3 62.3 62.4 (17.8) 2009 (31.2) (43.5) (43.5) 101.6 353.7 209.7 592.4 236.3 (115.3) (311.5) (478.7) (528.6) (343.6)
Consolidated balance sheets as March at 31 Assets Non-current assets Goodwill Other intangible assets Property, plant and equipment Provisions other for liabilities and charges Post-employment benefitliabilities Non-currentliabilities Borrowings Other receivables Other non-current liabilities Net current assets Derivative financialinstruments Cash andCash cash equivalents Liabilities Currentliabilities Borrowings and other payablesTrade Current assets Inventories
Deferred income tax assetstax income Deferred Investments Joint in Ventures
Current income taxCurrent liabilities Provisions other for liabilities and charges Financial assets value at fair through profit or loss Trade and other receivablesTrade Netliabilities Equity shareholders’ deficit Capital and reserves Ordinary shares Retained loss Retained Share premium account Merger reserve 120 Financial Statements Five-Year Summary Continued
Consolidated cash flow statements for the years ended 31 March
2009 2008 2007 2006 2005 £m £m £m £m £m Continuing operations Profit for the year 84.2 68.6 54.9 56.9 38.9 Adjustments for: Income tax 18.5 23.3 15.2 17.9 14.1 Finance income (6.7) (9.8) (9.0) (7.9) (6.8) Finance cost 9.8 5.5 5.4 11.2 10.7 Share of post-tax profits from Joint Ventures (0.2) (0.9) (2.8) (8.8) (10.2) Profit on disposal of Joint Ventures (2.5) – – (6.4) (3.7) Depreciation charges 20.7 19.3 18.8 14.7 19.1 Amortisation charges 12.7 11.1 11.6 9.6 8.7 Release of deferred income (0.1) (3.0) (0.2) (0.8) (0.8) Impairment of goodwill – – – – 7.2 Share-based payment charge 8.9 8.6 5.1 3.0 2.2 Result on disposal of property, plant and equipment 0.7 0.1 (0.1) 0.7 (0.4) Movement in provisions 9.2 (5.5) 8.5 (0.1) 2.8 Working capital movements (29.7) (36.4) (13.5) 21.7 6.3 Cash generated from continuing operations 125.5 80.9 93.9 111.7 88.1
Discontinued operations Profit for the year – 0.3 10.8 – – Cash generated from discontinued operations – 0.3 10.8 – –
Cash generated from operations 125.5 81.2 104.7 111.7 88.1 Interest received 6.3 9.7 8.9 7.6 7.0 Interest paid (2.2) (3.3) (2.1) (2.4) (2.4) Income tax (paid)/received (12.8) (14.7) 4.9 (10.9) (18.3) Net cash from operating activities 116.8 72.9 116.4 106.0 74.4
Cash flows from investing activities (32.8) (27.2) (78.0) (41.2) (20.9)
Cash flows from financing activities (45.8) (78.3) (25.9) (2.9) (25.6)
Net increase in cash, cash equivalents and bank overdrafts 38.2 (32.6) 12.5 61.9 27.9 Cash, cash equivalents and bank overdrafts at beginning of year 154.5 187.7 177.4 114.6 86.2
Effect of exchange rate changes 17.0 (0.6) (2.2) 0.9 0.5 Cash, cash equivalents and bank overdrafts at end of year 209.7 154.5 187.7 177.4 114.6
Financial assets 28.7 29.7 49.6 40.8 31.2 Loan notes receivable 12.9 5.6 – – – Borrowings due within one year (2.8) (4.2) (0.4) (2.7) – Borrowings due after one year (0.6) (3.2) (23.1) (20.6) (10.5) Finance leases (13.7) (14.0) (14.7) (18.3) (13.6) Net funds 234.2 168.4 199.1 176.6 121.7
WS Atkins plc Annual Report 2009
Introduction Reviews Governance Financial Statements Investor Information Investor Information Investor 122 Investor Information Investor Information
WS Atkins plc Investor relations website Giving your shares to charity Many commonly asked shareholders’ If you only have a small number of shares Registered in England. questions are addressed in the investor whose value makes it uneconomic to sell Company no. 1885586 relations section of our website them, you may wish to consider donating www.atkinsglobal.com/investors them to charity through ShareGift, an independent share donation scheme. The Company Secretary and E-communications relevant share transfer form can be obtained Registered Office Shareholders can choose to receive all from the registrar. ShareGift is administered Richard Webster Company communications electronically. by the Orr Mackintosh Foundation, WS Atkins plc To register please visit our share portal at registered charity number 1052686. Woodcote Grove www.myatkinsshares.com Further information may be obtained Ashley Road on +44 (0)20 7930 3737 or from Epsom Dividend reinvestment plan (DRIP) www.ShareGift.org Surrey KT18 5BW The Company offers a dividend reinvestment plan to shareholders as a cost-efficient Identity theft way of increasing their shareholding in the Identity theft is on the increase. Criminals Financial Calendar Company. Should you wish to participate may steal your personal information, putting in the DRIP please contact the registrar your Atkins shareholding at risk. Ex-dividend date 12 August 2009 on the telephone number given above to Record date 14 August 2009 request a mandate form and an explanatory Tips for protecting your Atkins shares: Annual General booklet. Your completed mandate form Meeting 9 September 2009 must be received by the registrar no later • Ensure all your certificates are kept in a Final dividend than 26 August 2009 if you wish your final safe place or hold your shares electronically payment date 25 September 2009 dividend for the year to be reinvested to buy in CREST via a nominee. additional shares. • Keep all correspondence from the registrar Shareholder Services Amalgamation of accounts that shows your shareholder reference Shareholders who receive duplicate sets number in a safe place, or destroy your Registrar of Company mailings owing to multiple correspondence by shredding it. Enquiries and notifications concerning accounts in their name should write dividends, share certificates, transfers and to the registrar to have their accounts • If you change address inform the registrar address changes should be sent to the amalgamated. in writing or via our share portal registrar, whose address is: www.myatkinsshares.com Unsolicited mail Capita Registrars The Company is obliged by law to make • Know when dividends are paid and Northern House its share register available to other consider having your dividend paid directly Woodsome Park organisations who may then use it for into your bank account. This will reduce Fenay Bridge a mailing list. If you wish to limit receipt of the risk of the cheque being intercepted Huddersfield unsolicited mail you may do so by registering or lost in the post. If you change your bank West Yorkshire with the Mailing Preference Service (MPS). account, inform the registrar of the details HD8 0GA Registration can be made in writing to: The of your new account. You can do this Mailing Preference Service (MPS), Freepost by post or online using our share portal Telephone: 0871 664 0300 (UK callers, 29 LON20771, London W1E 0ZT or online www.myatkinsshares.com. Respond to any calls cost 10p per minute including VAT at www.mpsonline.org.uk or via telephone letters the registrar send you about this. plus any additional network charges) on 0845 7034599. or +44 20 8639 3399 (non-UK callers).
Other shareholder enquiries should be addressed to the company secretary at the registered office.
WS Atkins plc Annual Report 2009 Introduction Reviews Governance Financial Statements Investor Information 123 Investor Information WS Atkins plc Annual Report 2009 Inform our registrar. The FSA also maintains on its website a list are who firms overseas unauthorised of investors UK targeted, have or targeting, and approach any from such organisations this that so FSA the to reported be should list can be date up and to other any kept appropriate action can be considered. If you deal with an unauthorised firm, you wouldnot be eligible receive to payment Compensation Services Financial the under by contacted be can FSA The Scheme. completing an online form at http://www. fsa.gov.uk/pages/doing/regulated/law/ alerts/overseas.shtml Check thatCheck they are properly authorised by can You involved. getting before FSA the www.fsa.gov.uk/register/ at check Make sure youMake get the correct name the of person and organisation. Details share-dealing any of facilities that the endorses Company will be included in mailings.Company similar or this on information detailed More website FSA the on found be activitycan www.moneymadeclear.fsa.gov.uk/ • • • If you receive any unsolicited investment investment unsolicited any receive you If advice: •
a victim identity of theft. If you are buying or selling shares only deal of country your in registered brokers with residence or the UK. If you receive a letter from the registrar registrar the from letter a receive you If a or address of change a regarding dividend instruction but not have recently you how to change a requested or moved receive your dividends, please contact been have may you as immediately them • Warning to shareholders Over the last year companies many have become aware that their shareholders calls telephone unsolicited received have or correspondence concerning investment matters. These are typically from overseas- based ‘brokers’ who target UK shareholders to out turn often what them sell to offering UK or US in shares high-risk or worthless be and persistent very be can They investments. extremely persuasive and a 2006 survey by (FSA) has Authority Services Financial the reported that the average amount lost by investors is around £20,000. It is not just duped been has that investor novice the been had victims the of many way; this in successfully investing several for years. waryvery be to advised are Shareholders • • of any unsolicited advice, offers to buy buy to offers advice, unsolicited any of free of offers or discount a at shares company reports. 124 Investor Information You can help us to reduce our environmental impact by opting to receive shareholder communications online at www.atkinsglobal.com/investors To help you find the information you’re looking for, the key features of our investor relations website are highlighted below.
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Calendar
WS Atkins plc Annual Report 2009 Introduction Governance 01 Financial Highlights 46 Board of Directors 02 Group at a Glance 48 Directors’ Report 04 Business Segments 52 Corporate Governance Report 06 Chairman’s Statement 58 Remuneration Report 08 Chief Executive’s Statement 65 Independent Auditors’ Report Reviews Financial Statements 14 Human Resources Review 68 Consolidated Income Statement 18 Business Review 69 Consolidated and Parent Company 18 Overview of the business Statements of Recognised Income and performance in the year and Expense 20 Segmental performance 70 Consolidated and Parent Company 20 Design and Engineering Solutions Balance Sheets 22 Highways and Transportation 71 Consolidated and Parent Company 24 Rail Cash Flow Statements 26 Middle East, China and Europe 72 Notes to the Financial Statements 30 Management and Project Services 118 Five-Year Summary 32 Asset Management 34 Financial performance Investor Information 37 Principal risks and uncertainties 122 Company Information 38 Corporate Responsibility Review 122 Financial Calendar 122 Shareholder Services
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