25th Jun 2015 16:51
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 2015; |
- | Notice of Annual General Meeting (the "Notice of Meeting") to be held on 29 July 2015; |
- | 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 12 June 2015, 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 50 to 53 of the Annual Report)
Strategic
Risk (in alphabetical order) | Mitigation | Activities in the year ended 31 March 2015
| Change in year |
Economic outlook Imposition of government austerity measures has an impact on our trading performance as spending on public sector infrastructure is reduced.
Worsening economic conditions lead to reduced levels of private sector infrastructure spend and have an adverse impact on our clients' ability to pay for our services.
| We have increased our sector and geographic diversification to provide resilience at a time when many of our markets still experience uncertainty. We have a clear strategic priority to focus on sectors which have attractive growth prospects with good levels of funding.
We reshaped our business so that nearly 50% of our revenue is now delivered outside the UK. Our medium-term goal is to generate more than 75% of revenue from our non-UK and Energy businesses.
To provide resilience and remain competitive, we utilise our global design centres (GDCs) in India to support market opportunities and projects across the regions in which we operate.
We seek to redeploy our people around the Group to meet demand in growth markets and sectors, frequently moving work to people and people to work to enhance Group agility and staff utilisation.
We perform periodic client credit checks and maintain regular management reviews of credit terms, trade debtors and work in progress. | We are focused on targeting growth in well-funded infrastructure markets.
During the year we increased the utilisation of our Indian GDCs, increasing staff numbers across our two sites (Delhi and Bangalore).
| No material change to risk |
Financial A deterioration of the Group's financial position limits our ability to invest in growth.
Adverse movements in liability assumptions or asset values result in a significant increase in the Group's defined benefit pension obligations, increasing the cash funding required to repay the deficit and reducing our ability to invest in further growth opportunities. | We review the Group's trading and funding position on an ongoing basis.
The Group's treasury function manages and monitors external funding and investment requirements and risks arising from the Group's financial instruments risks, including foreign exchange risk, interest rate risk and price risk, credit risk and liquidity risk.
We have made good progress in implementing our strategy to continue to de-risk our defined benefit pension schemes. We will continue to manage the assets and liabilities of our pension schemes. | In early 2015, we amended and extended our five year revolving credit facility of £200m which now matures in 2020. This is in addition to our 2012 debut issue in the US private placement market, which together broaden the sources of funding available to the Group.
We have continued to monitor and manage our strategy to de-risk our defined benefit pension schemes during 2015. In 2014, we successfully concluded our negotiations on the triennial actuarial funding valuation with the trustee of the Atkins Pension Plan, which resulted in an extension of the associated deficit repayment plan to 31 March 2025.
Further information is contained in the United Kingdom and Europe review (page 27). | Risk decreasing |
Geopolitical Political instability in the regions within which we operate has a negative impact on our ability to deliver contractual services and receive payment, and endangers the safety of our people.
Political transition leads to uncertainty or deadlock delaying government funded programmes. | We have focused on geographies that have more stable trading markets and environments with regional growth resulting from economic diversity, population growth and urbanisation.
We closely monitor our operating geographies and markets to identify geopolitical change that could potentially have an impact on the trading conditions across the Group.
We obtain the latest professional risk and security information provided by external organisations before engaging in contracts in new geographies and we regularly monitor the economic stability and the security of the markets in which we continue to trade. | The operational leadership team and senior management periodically review geopolitical influences that have the potential to affect the economic and safety environment in our operating geographies and markets.
During the year we developed a security standard for our staff when working in low, medium and high risk geographies. Testing of this standard is underway in anticipation of a Group wide roll out during the year ending 31 March2016.
Further information is contained in the Middle East review (page 37), Asia Pacific review (page 40) and North America review (page 34). | No material change to risk |
Market Worsening market conditions, for example a fall in commodity prices or a shift in industry demand, lead to changes in contracts resulting in increased risk transfer from clients as competitors accept more onerous contract terms to win work.
Reductions in the amount of available work increase pricing pressure and reduce our operating margins. | We have robust, integrated online service delivery review processes, which include risk classification, peer reviews and Group authority approvals during the key stages of bidding work, entering into contracts and during delivery of our projects.
We continue to focus our strategy on sectors with strong sustainable growth prospects, good levels of funding and higher technical barriers to entry.
We have a strategic focus on operational excellence and, through a series of initiatives together with the increasing use of our GDCs in India, we aim to deliver a competitive cost base while also supporting and enabling growth across the Group. | We are continuing to drive operational performance across the Group to improve our margins.
We continue to embed our integrated online service delivery process across the Group and this year we implemented successfully the online service delivery process in Asia Pacific and commenced the implementation of the process in North America.
During the year, we carried out a review of our online service delivery process to ensure it continues to provide a robust standard for winning, delivering and reducing contract and commercial risk across the Group.
During the second half of the year we have taken action to reduce our resources in our oil and gas business, redeploying elsewhere within the Group where possible, in response to reduced demand for our services from a number of our clients as they have reacted to the fall in oil prices. | Risk increasing |
Regulatory/Legal Legislation and regulations restrict our ability to operate in certain locations or perform certain activities leading to the need to exit these markets.
Breaches of regulation or legislation result in fines, imprisonment and reputational damage. | We seek external advice about new and/or changing trading restrictions, communicating these changes across our business as necessary.
We operate a Group trading standard and associated country approval list, detailing the approved procedure for trading worldwide. The country approval list details the risk profile for countries around the world across matters including trade restrictions, corruption and travel security, which determine the level of approval required to trade there.
We continue to invest in training and communication in the area of compliance.
We have a whistleblower hotline that is available to all our people, suppliers, subcontractors, clients and third parties. | The Group code of conduct was launched during the year with all our people either receiving or being provided with access to a copy. To ensure that all our people have read and understood the code, an e-learning module has been built and tested ready for launch during the year ending 31 March 2016.
During the year the Group trading standard and the associated country approval list have been reviewed and updated, and these are accessible to all our people via our intranet.
| No material change to risk |
Operational
Risk (in alphabetical order) | Mitigation | Activities in the year ended 31 March 2015
| Change in year |
Crisis event A significant one-off event affecting a key business location, project or our people could interrupt service delivery, threaten life and/or cause reputational damage to our business. | We have a Group crisis management plan in place to enable us to respond quickly to such events. | A review of the Group's crisis management plan was carried out during the year, as was our plan in the Middle East. This included a simulated exercise of a regional crisis event that was escalated to the Group. | No material change to risk |
Health, safety and environmental Shortcomings in our design or works' supervision result in a health, safety or environmental incident involving our people, clients or other third parties leading to injury, loss of life and/or significant damage to our reputation with all stakeholders. | Safety is part of our commitment to quality and reliability. Clear and explicit senior management leadership on health, safety and environmental matters is regularly reinforced via targeted campaigns.
Our Group wide behavioural awareness programme, Safe and Secure by Choice, supports our commitment to creating a leading health and safety culture.
We have implemented our safety standards worldwide.
We mandate accident and near-miss reporting and provide a whistleblower hotline to enable our people suppliers, subcontractors, clients and third parties to raise concerns confidentially.
We invest in training of and communication to our people about the importance of safety and security in the workplace. | Our standard to assess the competency of construction contractors and set the minimum requirements expected on site during the supervision of the services and works continued to be communicated to Group businesses around the world during the year. Further information is contained in the Middle East review (page 37).
During the year we developed a security standard for our people when working in low, medium and high risk geographies. Testing of this standard is underway in anticipation of a Group wide roll out during the year ending 31 March 2016.
We also developed the Atkins operating safely (AOS) system this year. The system includes an online risk assessment and enables employees to be tracked while working on site. It has initially been implemented in the United Kingdom and Europe with a wider roll-out to the rest of the Group planned during 2015/16.
The International Standard for Driving, ISO 39001, has been adopted providing a minimum standard across the Group. The whole Group, apart from Europe, currently uses the travel tracker system through local travel providers. Implementation of the standard in Europe is planned during the financial year ending 31 March 2016.
Part of our code of conduct focuses on the safety behaviours of our employees, highlighting the importance of reporting health and safety incidents. The Safe & Secure by Choice awareness campaign rolled out during the year includes sections on personal safety, able to challenge, driving and near miss reporting. | No material change to risk |
Physical and data security Confidential client business and/or personal data is mishandled, resulting in breach of contract, the inappropriate release of commercially sensitive information or the loss of the personal information of our clients and/or our people.
Our business systems suffer an attack from hackers or viruses.
The safety and security of our people is threatened.
| We use appropriate physical security, secure networks and encryption to protect data.
We train our people and provide guidance on best practice in information assurance.
The Group security officer seeks to ensure best practice and continually raise the profile of security across the business. | During the year, we continued to provide information assurance guidance and training across our business. Information assurance guidance and behaviour based training modules for the Group are also being developed to complement and improve the effectiveness of our controls in this area and these will be made available to all our people.
We have developed a security standard (protecting our people and property) and an information assurance standard. These are scheduled to be rolled out during the financial year ending 31 March 2016.
Recognising the increasing focus on privacy, the protection of personal data and the expectations of our clients, people and other stakeholders in this regard, a Group data protection manager was appointed to develop our approach to data protection further.
Achieved certification to the UK Government's new Cyber Essentials Plus standard. | Risk increasing |
Projects Poor management of projects leads to client dissatisfaction, damage to our reputation for technical excellence and a deterioration in the Group's financial performance. | We continue to implement our online project management system to drive consistently high standards across the Group.
We invest in ongoing project management excellence training programmes for our people.
We continually improve project controls, which include regular financial reviews of project performance. | We continued during the year to invest in increasing the project management capabilities across all sectors (people, processes and systems) in developing a new project management competency framework. | No material change to risk |
Staff recruitment and retention Failure to attract and retain the most talented, motivated professionals in their respective fields makes us unable to deliver on clients' expectations and respond to the most technically challenging and time critical projects, thereby eroding our market share and damaging our financial performance. | Regular business reviews evaluate a number of metrics including headcount, staff turnover, vacancy levels and employee engagement.
We maintain a succession management plan across the Group.
Regular succession planning reviews provide support for internal mobility, development of an effective talent pipeline and career path management.
An annual review of our staff engagement through our Viewpoint survey ensures that the morale and motivation of our people is managed effectively. | During the year we regularly reviewed data relating to headcount, staff turnover, vacancy levels and employee engagement.
Sector succession plans are developed, reviewed and implemented each year to ensure that we retain our best talent.
A talent management pilot has been launched to focus on our high potential people in succession management planning across the Group.
We implemented improvements across the Group during the year to define and support career paths within the Group including technical, project management, business management and business development routes.
We continue to use a variety of channels, including our annual Viewpoint survey, to engage in a two way dialogue with our people. | Risk decreasing |
Technical delivery Design errors or omissions lead to client dissatisfaction, financial losses and damage to our reputation for technical excellence. | Our robust service delivery process, and the associated stage gate review procedures during the bidding, contracting, delivery and completion stage, ensure that the Group has the capability to deliver the technical requirements within our contracts.
We use seven design principles which govern all our technical work and are embedded in our business management system. Technical reviews and checking during delivery of our projects remains a key control.
Our technical assurance guidance is included within our business management system.
We have implemented a programme of continual technical training and development.
'Network chairs' lead our technical centres of excellence across the Group. | We have continued to develop our standard in project manager competence and development and electronic data management across all sectors during the year.
We developed a technical assurance standard during the year establishing the minimum assurance requirement for our technical deliverables to our clients in the Group. We also refreshed the technical assurance guidance in our business management system.
During 2014, we set up a working group of representatives from all our operating businesses and relevant corporate functions to develop and disseminate best practice regarding technical assurance and governance. | No material change to risk |
Related Party Transactions
(Pages 197 to 198 of the Annual Report)
Details of the directors' shareholdings, share options and remuneration are given in the Remuneration Report (page 90), 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 its principal joint ventures in note 40.
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 (2014: £nil).
a) Group sales and purchases of goods and services
Group | ||
2015 £m | 2014 £m | |
Sales of goods and services to joint ventures | 30.7 | 61.9 |
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
Group | |||
2015 | 2014 | ||
Note | £m | £m | |
Receivables from joint ventures | 23 | 6.4 | 7.7 |
Receivables from joint ventures are shown net of contract-related provisions of £nil (2014: £nil).
Payables to joint ventures | - | - |
c) Group year end balances arising from loans provided to other related parties
Group | |||
2015 | 2014 | ||
Note | £m | £m | |
Receivables from related parties | 22 | 19.8 | 19.9 |
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 (2014: £nil). The Company did not purchase any goods or services from its subsidiaries during the year (2014: £nil).
e) Company year end balances with subsidiaries
Company | |||
2015 | 2014 | ||
Note | £m | £m | |
Receivables from subsidiaries | 23 | 169.4 | 164.2 |
Payables to subsidiaries | 27 | 65.9 | 76.2 |
Receivables from subsidiaries are shown net of impairment of £0.5m (2014: £0.5m).
f) Key management compensation
Key management comprises the executive and non-executive directors, and certain senior managers who are members of the senior leadership team (SLT).
Group | ||
Restated1 | ||
2015 | 2014 | |
£m | £m | |
Short term employee benefits | 7.3 | 7.6 |
Post-employment benefits | 0.1 | 0.2 |
Share-based payments | 2.3 | 2.6 |
9.7 | 10.4 |
1 Salaries and other short-term employment benefits restated for the financial year ended 31 March 2014 as the executive directors' cash bonus payments were erroneously excluded.
The deferred share award element of any bonus paid to key management is not included in the salaries and other short term employment benefits number as it is included in the share-based payment charge in subsequent years.
Directors' Statement of Responsibility
(Pages 70 to 71 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. Under that law, the directors have prepared the Group and Company Financial Statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the EU. 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 Group and the Company and of the profit or loss of the Company and 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 EU have been followed, subject to any material departures disclosed and explained in the Financial Statements. |
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 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 Standard 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.
The directors considers that the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for shareholders to assess the Group's performance, business model and strategy.
Each of the directors, whose names and functions are listed in this Annual Report (pages 66 and 67), confirms that, to the best of his/her knowledge:
- | the Group Financial Statements, which have been prepared in accordance with IFRSs as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit of the Group
|
- | the Directors' report contained in the Annual Report (pages 68 to 71) 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. |
As required by the LRs, the Company's independent auditor has considered the directors' statement of compliance in relation to those points of the UK Corporate Governance Code which are specified for its review.
Richard Webster
Company Secretary
Telephone: +44 (0) 20 7121 2000
25 June 2015
CAUTIONARY STATEMENT
This announcement has been prepared for the shareholders of Atkins 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 and no warranty is given as to its accuracy or completeness (other than any such warranty which is mandatorily implied by statute). Atkins and its directors and employees are not responsible for any other purpose or use or to any other person in relation to this announcement and their responsibility to shareholders shall be limited to that which is imposed by statute.
This announcement contains indications of likely future developments and other forward looking statements that 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 materially from those currently expected. No obligation is assumed to update any forward looking statements, whether as a result of new information, future events or otherwise.
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