1st Jul 2011 16:30
WS Atkins plc (the "Company" and the "Group") announces that, pursuant to Listing Rule 9.6.1, the following documents have been submitted to the National Storage Mechanism and will shortly be available for inspection at www.hemscott.com/nsm.do.
·; The Company's Annual Report and Accounts (the "Annual Report") for the year ended 31 March 2011;
·; Notice of Annual General Meeting (the "Notice of Meeting") to be held on 8 September 2011;
·; Form of Proxy; and
·; Notice of Availability for Documents on the Company's Website.
The Annual Report and Notice of Meeting are also available electronically on the Company's investor relations website at www.atkinsglobal.com/investors.
Pursuant to Disclosure and Transparency Rule 6.3.5, a description of the principal risks and uncertainties, details of related party transactions and a responsibility statement are set out below in full unedited text. Condensed financial statements were appended to the Company's final results announcement issued on 16 June 2011, which also included an indication of important events that occurred during the year.
Page references below refer to page numbers in the Annual Report. References to notes to the financial statements refer to notes in the Annual Report.
PRINCIPAL RISKS AND UNCERTAINTIES
(Pages 42 to 43 of the Annual Report)
Risk | Mitigation |
Competition The Group faces competition in all of its markets. Some of the markets in which we operate serve a limited number of clients and barriers to entry are high. In other markets, such as architectural design and environment, there are numerous competitors and barriers to entry are lower. | To ensure that the Group continues to win work, we work hard to develop long term relationships with our clients. We have also taken measures to reduce our cost base to ensure that we remain competitive. In addition, our robust processes for monitoring bidding activity seek to ensure that our bids reflect the competitive environment in which we are working and that the contracts deliver appropriate returns.
A measure of this success is our work in hand; this measures our secured workload over the coming year. Our overall work in hand is 55%, representing over six months of 2011/12 budgeted revenue that is already contractually committed.
See pages 18 to 37 of the Annual Report for our segmental performance
|
Changes to the contracting environment The contracting environment in which we operate continues to evolve. Clients increasingly seek to transfer risk to consultants; contractors will also seek to share risks. There is a possibility that, in securing new work, the Group accepts risks that are insufficiently understood or evaluated, with ensuing financial loss. | We actively mitigate this risk via a range of internal review procedures that enable contract terms to be subject to appropriate scrutiny and manageable risks to be reduced. Our service delivery process, which forms an important internal control within our governance framework, is continually enhanced to address these issues.
See page 60 of the Annual Report for more information about our governance framework
|
Integration of acquired businesses Failure to integrate acquired business into Atkins could lead to a loss of shareholder value with expected benefits and synergies not achieved. | We always establish an implementation plan in conjunction with the acquired business, monitor progress against the plan and feed back regularly to the Board on each acquisition.
|
Matching staffing levels to workload The Group balances staff resources against workload to control the level of non-productive time. In an economic downturn there is a risk that there is insufficient work to match current resources.
| This risk is managed by working in a diverse portfolio of sectors and markets, and by the redeployment of staff from those parts of the business where the workload is reducing to other parts of the business where the workload is strong. Productivity is a key internal measure and is constantly monitored across the Group, with selective restructuring and headcount reduction undertaken as necessary. This approach has been successfully implemented during the last year to maintain levels of productivity.
See pages 44 to 47 of the Annual Report for our Human Resources Review
|
Project management and major projects Managing clients' and our own projects is core to our business. Inadequate project management could lead to financial loss and reputational damage.
| The Group mitigates these risks via the internal controls within our governance framework, ongoing training, knowledge-sharing and selective recruitment. |
Pensions The Group's defined benefit pension fund has a material deficit. The Group has previously agreed measures to reduce this deficit; however the deficit is exposed to the risk of changes in interest rates and asset values, as well as inflation and the life expectancy of the members.
| The Group's defined benefit pension funds are closed to new members and future accruals ceased in October 2007 for the majority of members. In addition, a consultation has recently commenced with employees who are members of the Group's main plan to reduce the deficit further with a proposal to remove the link between employees' accrued pension and future increases in salary. The Group actively monitors the fund's position, taking professional actuarial advice, assesses the liabilities and is implementing inflation and interest rate swaps to reduce future volatility.
See page 124 of the Annual Report for note 29 to the Financial Statements
|
Market position and reputation Our reputation for delivering complex projects relies on the perception of our clients and how the Group is portrayed publicly. There is a risk that a major failure from poor design, poor project management or delivery could impact our ability to win future work. | We mitigate this risk by ensuring our governance framework includes robust cost, project management and other internal controls. These are subject to regular independent audit against industry standards.
See page 60 of the Annual Report for more information about our governance framework
|
Health, safety and the environment The Group's business is concerned with the built environment and this entails significant health, safety and environmental risks. Should the Group's policy or practice in this area prove inadequate, there is a consequent risk to employees, clients, contractors and third parties and also a risk of reputational damage to the Group.
| The Group takes these issues very seriously and ensures all staff are adequately trained in health, safety and environmental issues; indeed we lead our sector on health and safety matters. Procedures in this area are central to our governance framework and are continually reviewed and improved. We also undertake regular independent audits against industry standards.
See pages 48 to 56 of the Annual Report for our Corporate Responsibility Review
|
Data security There is a risk that the Group might mishandle client, commercial or staff data. Such an event could have a significant impact on our reputation and expose the Group financially. | Data security is taken very seriously, and we have in place procedures on how to handle client and staff data, including the use of secure networks and encryption. Appropriate building security is in place to protect confidential data, and offsite storage of client data and use of cyber protection of both hardware and software applications have been implemented. In addition, training our staff so that they understand their responsibilities is an important mitigating measure.
See pages 54 of the Annual Report for our Assurance /Corporate Responsibility Review
|
Recruitment and retention of sufficient high-calibre staff The recruitment and retention of the best people is crucial to our future success. Failure to do so will constrain the growth of the business and prevent us from delivering our strategy. | The Group expends a great deal of management effort and resource in this area, and further details of our staff controls are given in the Human Resources Review.
See pages 44 to 47 of the Annual Report for our Human Resources Review
|
Crisis event A crisis event at an Atkins site or one affecting staff could lead to loss of staff or interruption to service delivery. | The Group's business continuity strategy requires business continuity plans (BCPs) for all major offices. Staff awareness and testing of BCPs is a key mitigating measure, and the resilience of our back-up systems for IT infrastructure is regularly tested.
|
Cash management Effective cash management is critically important as our major costs, such as payroll, are often paid prior to fees being settled by clients. | The Group's systems and internal controls seek to ensure that appropriate contractual terms are established at the outset of projects. Once work has commenced, projects are subject to robust financial review coupled with effective processes to manage cash receivables.
The Group also maintains strong relationships with a number of banks to support its day to day cash needs.
|
Carbon impact and sustainability Failure to respond to the imperative to reduce the carbon impact of our operations and those of our clients could lead to a loss of market share and damage to our environment. | The Group has funded the creation of carbon tools to enable the carbon impact of our designs to be appropriately monitored and costed. We have engaged our staff extensively to educate them in the need to embrace carbon critical design.
See pages 51 to 52 of the Annual Report for our Corporate Responsibility Review
|
Global political, economic, legal and regulatory risks The Group trades in a number of countries around the world, potentially exposing it to political, economic, legal and regulatory risks.
Political instability could threaten our operations, an economic slowdown could have an adverse impact on workload for both our private and public sector clients, and the Group could fail to adequately address legal and regulatory risks in unfamiliar jurisdictions. | The Group mitigates these risks by monitoring economic indicators and sentiments in the markets in which we operate, as well as maintaining a strong balance sheet, working in a diverse portfolio of business sectors and markets and building flexibility into future plans. We aim to remain cash-positive on projects and negotiate commercially favourable payment terms on contracts. Our service delivery process seeks to identify legal and regulatory risks during bidding and through the lifecycle of projects.
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RELATED PARTY TRANSACTIONS
(Pages 137 to 138 of the Annual Report)
Details of the directors' shareholdings, share options and remuneration are given in the Remuneration Report on page 72, which forms part of these Financial Statements.
Transactions with the retirement benefit schemes are shown in note 29.
Details of the Company's principal subsidiaries are shown in note 39 and principal Joint ventures in note 40.
a) Group sales and purchases of goods and services to/from Joint ventures
2011 £m | Group 2010 £m | |
Sales of goods and services to joint ventures | 34.2 | 20.6 |
Purchases of goods and services from joint ventures | - | - |
b) Group year end balances arising from sales/purchases of goods and services to/from joint ventures and loans provided to joint ventures
2011 £m | Group 2010 £m | |
Receivables from joint ventures | 8.3 | 3.2 |
Receivables from joint ventures are shown net of contract-related provisions of £nil (2010: nil).
Payables to joint ventures | - | - |
c) Group year end balances arising from loans provided to other related parties
2011 £m | Group 2010 £m | |
Receivables from related parties | 13.3 | 7.9 |
d) Company sales/purchases of goods and services to/from subsidiaries
The Company did not sell any goods or services to subsidiaries during the year (2010: £nil). The Company did not purchase any goods or services from its subsidiaries during the year (2010: £nil).
e) Company year end balances with subsidiaries
2011 £m | Company 2010 £m | |
Receivables from subsidiaries | 89.3 | 11.3 |
Payables to subsidiaries | 69.9 | 42.2 |
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 (2010: £nil).
Receivables from subsidiaries are shown net of impairment of £42.1m (2010: £75.4m).
f) Key management compensation
Key management comprises the executive and non-executive directors, and certain senior managers. Until 30 September 2010 the senior managers comprised members of the Group Executive and from 1 October 2010 comprised members of the Strategy Group. This change reflects the organisational changes that took effect from 1 October 2010.
2011 £m | Group 2010 £m | |
Salaries and other short term employment benefits | 5.1 | 5.9 |
Post-employment benefits | 0.2 | 0.3 |
Share-based payments | 1.6 | 1.6 |
6.9 | 7.8 |
STATEMENT OF DIRECTORS' RESPONSIBILITIES
(Pages 62 to 63 of the Annual Report)
The directors are responsible for preparing the Annual Report, the Remuneration Report and the Financial Statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. The directors have prepared the Group and Company Financial Statements in accordance with applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the Financial Statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Company and the Group for that period.
In preparing the Financial Statements, the directors are required to:
·; select suitable accounting policies and then apply them consistently
·; make judgements and accounting estimates that are reasonable and prudent
·; state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the Financial Statements
·; prepare the Financial Statements on the going concern basis, unless it is inappropriate to presume that the Group and the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and that enable them to ensure that the Financial Statements and the Remuneration Report comply with the Act and, as regards the Group Financial Statements, Article 4 of the International Accounting Standards Regulation. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Each of the directors, whose names and functions are listed in this Annual Report (pages 58 and 59), confirm that, to the best of their knowledge:
·; the Directors' Report contained in the Annual Report includes a fair review of the development and performance of the business and the position of the Group, together with a description of the principal risks and uncertainties that it faces
·; the Group Financial Statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group.
Richard Webster
Company Secretary
Telephone: +44 (0)1372 726140
1 July 2011
CAUTIONARY STATEMENT
This announcement has only been prepared for the shareholders of the Company, as a whole, and its sole purpose and use is to assist shareholders to exercise their governance rights. In particular, this announcement has not been audited or otherwise independently verified. The Company and its directors and employees are not responsible for any other purpose or use, or to any other person, in relation to this press release.
This announcement contains indications of likely future developments and other forward looking statements which were made in good faith based on information available on 15 June 2011, being the date of approval of the Annual Report. They are subject to risk factors associated with, among other things, the economic and business circumstances occurring from time to time in the countries, sectors and business segments in which the Group operates. These and other factors could adversely affect the Group's results, strategy and prospects. Forward looking statements involve risks, uncertainties and assumptions. They relate to events and/or depend on circumstances in the future which could cause actual results and outcomes to differ. No obligation is assumed to update any forward looking statements, whether as a result of new information, future events or otherwise.
Related Shares:
ATK.L