Final Results

25th Jun 2008 07:00



Wednesday 25 June 2008 for Immediate Release

Results for the year ended 31 March 2008

Design and engineering consultancy group WS Atkins plc (Atkins) today announced preliminary unaudited results for the year ended 31 March 2008.

RESULTS SUMMARY

	Notes	2008	2007	Increase/ (Decrease)
Continuing operations
Revenue		£1,313.6m	£1,179.8m	11%
Operating profit	1	£86.7m	£67.7m	28%
Operating margin	1	6.6%	5.7%	0.9pp
Normalised profit before taxation	2	£91.9m	£74.1m	24%
Profit before taxation		£91.9m	£70.1m	31%
Normalised diluted EPS	3	66.7p	56.5p	18%
Cash flow from operating activities		£80.9m	£93.9m	(14)%
Year end staff numbers	4	17,278	15,869	9%
Total operations
Profit/(loss) for the year		£100.0m	£(57.3)m	-
Diluted earnings/(loss) per share		97.2p	(56.8)p	-
Dividend relating to the year		24.0p	20.0p	20%
Net funds		£168.4m	£199.1m	(15)%

SUMMARY

Another good year's results with normalised diluted earnings per share up 18% to 66.7p.

Operating profit increased by 28% and margins continue to improve as sustained growth in the Middle East and strong demand in other key markets helped increase revenue by 11%.

Staff numbers increased by over 1,400 during the year to almost 17,300.

Strong work in hand at 31 March representing 55% of budgeted revenue for 2008/09 (2007: 58%). Very good order intake post year-end and the Connect Plus consortium named as provisional preferred bidder for the 30-year M25 motorway widening DBFO contract.

Disposal of Lambert Smith Hampton completed for a profit of £20.0m. Discontinued operations also include an £11.2m accounting gain arising from the treatment of Metronet deferred income.

Continuing strong cash flow from operating activities of £80.9m (2007: £93.9m). £34.9m returned to shareholders via the share buyback programme with net funds at 31 March of £168.4m (2007: £199.1m).  

The Board is recommending a final dividend of 16.5p, making the total dividend for the year 24.0p (2007: 20.0p), an increase of 20%.

Notes:

1. Operating profit/margin before exceptional items.

2. Normalised profit before taxation is defined as profit before taxation less exceptional items and any profits or losses from disposals. This is considered to be a more representative measure of underlying trading.

3. Normalised diluted EPS is based on normalised profit after tax and allows for the dilutive effect of share options.

4. Staff numbers are measured on a full-time equivalent basis, including agency staff.

Wednesday 25 June 2008 for Immediate Release

Well positioned to respond to the opportunities of a carbon critical economy

"The Group has had another successful year, with revenue up 11% and normalised diluted earnings per share up by 18%. We have made further good progress, demonstrated by the substantial increase in operating margins before exceptional costs from 5.7% to 6.6%. We believe that improvements in margin will continue.

Once again there was substantial growth in the Middle East and there were good performances from our Design and Engineering Solutions and Highways and Transportation segments in the UK. Faithful+Gould also performed well and margins improved substantially within our Rail segment, as anticipated. The Group's cash generation remains very strong and we ended the year with net funds of £168.4m.

During the year the Board reviewed the strength of the Group's balance sheet and commenced a share buyback programme in November 2007 with the intention of returning up to £100m to shareholders. As at 31 March 2008 3.2m shares had been purchased at a total cost of £34.9m.

We start the new year in a good position with work in hand representing 55% of our budgeted revenue (2007: 58%) and are continuing to increase headcount. While there is of course uncertainty about the future direction of some of the economies in which we operate, we have not seen any sign of reduction in activity. Climate change is becoming a significant issue for many of our clients. We are working actively to raise awareness, develop tools and engage with clients to help them respond to the complex requirements of a carbon critical economy.

Our markets remain strong and as the Group continues to improve its services we are confident that the Group will achieve further good progress in the year ahead. We continue to review further opportunities to add to the depth and range of our technical skills and invest in the sustainable growth of the Group."

Ed Wallis Keith Clarke

Chairman Chief Executive

Enquiries

Atkins
Keith Clarke, Chief Executive	+ 44 (0) 1372 726140
Robert MacLeod, Group Finance Director	+ 44 (0) 1372 726140
Sara Lipscombe, Group Communications Director	+ 44 (0) 1372 726140
Smithfield
Lucinda Kemeny	+44 (0) 20 7360 4900

Notes to editors

1. Atkins

Atkins (www.atkinsglobal.com) plans, designs and enables the delivery of complex infrastructure and buildings for clients in the public and private sectors across the world. Atkins is the largest engineering consultancy in the UK and the world's fifth largest international design firm (sources: New Civil Engineer Consultants File, 2008; Engineering News Record, 2007).

2. Attachments

Attached to this press release are the overview of the year, operating review, the unaudited consolidated income statement, consolidated statement of recognised income and expense, consolidated balance sheet, consolidated cash flow statement and notes to the preliminary unaudited financial information for the year.

3. Analyst Presentation

A presentation for analysts will be held today at JPMorgan Cazenove, 20 Moorgate, London EC2R 6DA at 8.30am. Dial-in details are available from Smithfield for those wishing to join the presentation by conference call. A webcast of the presentation will subsequently be available via the Company's website, www.atkinsglobal.com

4. Cautionary Statement

This press release and preliminary unaudited financial information (press release) have only been prepared for the shareholders of the Company, as a whole, and their sole purpose and use is to assist shareholders to exercise their governance rights. In particular, this press release 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 press release 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. No obligation is assumed to update any forward looking statements, whether as a result of new information, future events or otherwise.

OVERVIEW OF THE YEAR

Results

The Group has had another successful year, with revenue up 11% and normalised diluted earnings per share up by 18%. We have made further good progress, demonstrated by the substantial increase in operating margins before exceptional costs from 5.7% to 6.6%. We believe that improvements in margin will continue.

Once again there was substantial growth in the Middle East and there were good performances from our Design and Engineering Solutions and Highways and Transportation segments in the UK. Faithful+Gould also performed well and margins improved substantially within our Rail segment, as anticipated. The Group's cash performance remains very strong and we ended the year with net funds of £168.4m.

On 18 July 2007 the Metronet infrastructure companies entered PPP Administration and our contracts with Trans4m and Trans4m's contracts with Metronet were subsequently terminated on 30 August 2007. Since then we supported Metronet directly under new contractual terms throughout the period of its administration and currently provide consultancy, design and engineering support under contracts secured with the successor companies recently established by Transport for London.

During the year the Board reviewed the strength of the Group's balance sheet and commenced a share buyback programme in November 2007 with the intention of returning up to £100m to shareholders. As at 31 March 2008 3.2m shares had been purchased at a total cost of £34.9m.

Outlook

We start the new year in a good position with work in hand representing 55% of our budgeted revenue (2007: 58%) and are continuing to increase headcount. While there is of course uncertainty about the future direction of some of the economies in which we operate, we have not seen any sign of reduction in activity. Climate change is becoming a significant issue for many of our clients. We are working actively to raise awareness, develop tools and engage with clients to help them respond to the complex requirements of a carbon critical economy.

Our markets remain strong and as the Group continues to improve its services we are confident that the Group will achieve further good progress in the year ahead. Notwithstanding the share buyback programme, we continue to review further opportunities to add to the depth and range of our technical skills and invest in the sustainable growth of the Group.

Dividend

The Board is recommending a final dividend of 16.5p, making the total dividend for the year 24.0p (2007: 20.0p), an increase of 20%. If approved, the dividend will be paid on 26 September 2008 to ordinary shareholders on the register on 15 August 2008.

OPERATING REVIEW 

Design and Engineering Solutions

Key performance indicators	2008	2007	% change  In year
Financial metrics
Revenue	£373.6m	£320.8m	+16%
Operating profit	£30.2m	£27.0m	+12%
Operating margin	8.1%	8.4%	-0.3pp
Share of post-tax JV losses	-	-	-
Work in hand	39%	40%	-1.0pp
People
Staff numbers at 31 March	5,024	4,405	+14%
Average staff numbers	4,722	3,980	+19%

Note: 

2007 has been restated to exclude the results of European businesses previously included within Design and Engineering Solutions that are now included within the Middle East, China and Europe segment. 

2007 operating profit is before exceptional costs of £1.1m in relation to the Metronet supply chain contracts.

Design and Engineering Solutions had a good year with growth in revenue of £52.8m (16%). Operating profit increased by £3.2m (12%) with a slight reduction in margin attributable to re-organisation (£1.5m) and costs associated with the integration of the Advantage and Nedtech acquisitions (£1.0m). We have successfully added over 600 staff during the year, with a significant proportion of this growth occurring in our office in Bangalore, India where we now have 325 people.

Our 1,600-strong multi-disciplinary design business works on a strong portfolio of public and private sector projects in the UK as well as internationally. Performance in the year has been mixed with successes on projects such as the London Olympic Park, which has employed around 300 staff, being partially offset by a disappointing year in our UK regional businesses. During the year we have refocused the latter to create a national business, which subsequently won appointment to all three regional framework contracts to provide design services for the Learning and Skills Council. Our current international projects include the Centaurus hotel in Islamabad which will be Pakistan's tallest building.

Our aerospace business continues to grow as it benefits from strong relationships with clients such as Airbus and Rolls-Royce. The acquisition in December 2007 of the Dutch consultancy Nedtech Engineering BV has increased the range of services we can provide to our aerospace clients, principally Airbus, where we now satisfy their requirement of being a trans-national supplier. This acquisition added around 50 people with expertise in the areas of airframe and aero engine design and our aerospace business now has over 300 staff.  We have recently been awarded contracts to provide certification analysis for the Airbus A400M military transporter and A330F long-range freighter aircraft.

There is steady demand for the services of our defence business which provides technical and commercial consulting services to the UK Ministry of Defence (MoD) and to defence industry clients such as AWE, BAE Systems, Rolls-Royce, General Dynamics and Thales. The integration of Advantage, acquired in March 2007, has been successful and has added to our capability in this sector.  We continue to provide significant and successful independent assessment and challenge to the multi-billion pound Future Rapid Effect System (FRES) programme.

We have seen a growing demand for our nuclear and power capabilities as a result of increased confidence in the nuclear power generation sector which was boosted by the publication of the UK Government's nuclear power white paper in January 2008. Staff numbers have increased by over 20% to 500 in this business, which is performing ahead of expectations and, after the year-end, we were selected by British Energy to continue as part of their Technical Support Alliance to provide engineering and technical support to their fleet of nuclear power stations in the UK until 2012, with options to extend beyond this date. Our nuclear training academy has proved successful with more than 200 attendees on a range of courses to date. 

Our oil and gas business has continued to grow with high levels of activity in a buoyant sector fuelled by record oil prices.  It now employs approximately 300 people.  Increasing internationalisation of our business has seen recent contract awards such as a dynamic simulation study for Shell in Malaysia and structural integrity management work for both BP Egypt and BP Trinidad.  The business has also increased its workload in the important liquefied natural gas industry with a number of significant projects awarded.

Our water and environment business continues to make very good progress and now employs almost 1,800 staff. Performance in the year was good and was boosted by a full year's revenue from the Southern Water contract, which commenced at the beginning of the financial year. Ongoing programmes of water resources and flood defence work have continued under framework contracts with water companies and the Environment Agency. Wins during the year included a three-year appointment with Northumbrian Water to provide multi-discipline design and water modelling services and our appointment as a preferred supplier for the provision of scoping and feasibility services to Severn Trent Water for their AMP5 programme.

Public and Government concern with global warming, the scarcity of natural resources and increased environmental legislation has led to strong demand for our services.  Carbon emissions, climate change and ecological footprint are critical issues and we have won work in these areas for Southern Water and the Environment Agency amongst others. There is strong demand for our planning and contaminated land capabilities which are being deployed on the ongoing ground remediation and environmental works at the Olympic Park in east London, and for our geotechnical and tunnelling expertise.

Outlook

The outlook for Design and Engineering Solutions is good with current prospects stretching into the medium-term.  Around 80% of our workload comes from publicly funded and regulated sectors where we have a diverse range of key clients.  Consequently we are well positioned for the year ahead with our broad base of complementary technical skills remaining in considerable demand. This is most notably the case in the water sector, where a number of AMP5 bids are progressing, and in nuclear and oil and gas where focus is increasingly directed toward the next generation of supply as well as maximising the efficiency and longevity of existing capacity. Increasing environmental awareness is also strengthening demand for our services, highlighting the need for leadership in Carbon Critical Design.

Highways and Transportation

Key performance indicators	2008	2007	% change  in year
Financial metrics
Revenue	£274.6m	£250.5m	+10%
Operating profit	£16.8m	£13.2m	+27%
Operating margin	6.1%	5.3%	+0.8pp
Share of post-tax JV profits	£0.7m	£0.6m	+17%
Work in hand	78%	77%	+1.0pp
People
Staff numbers at 31 March	2,813	3,095	-9%
Average staff numbers	3,054	3,067	-0%

Our Highways and Transportation segment had a good year. Operating profit increased by £3.6m (27%) as margins grew to 6.1% (2007: 5.3%) due to the strong demand for our higher-margin design activities. Staff numbers reduced by 9% primarily through the transfer of those previously engaged on the Highways Agency Area 10 and Northamptonshire County Council contracts, which both ended during the year, to new service providers.

Our highway services business, which represents around two-thirds of this segment's revenue, is engaged in operating, maintaining and improving highways and motorways on behalf of the Highways Agency and local authorities.  The business performed well, benefiting from the first full-year's revenue from the Cambridgeshire County Council contract won last year. This year also included the final year of the Northamptonshire contract which ended on 28 March 2008. During the year we were awarded the Area 6 MAC contract by the Highways Agency. This five-year contract, with an option to extend to a total of seven years, commenced on 1 June 2008. We are currently bidding for a number of further commissions including MAC contracts for the Highways Agency Areas 4 and 9. 

Our transport design business, which delivers all aspects of design of highway infrastructure and transport technology, performed well. During the year we completed the design of the widening of junctions 6A to 10 of the M1 and were awarded a number of projects for the Highways Agency including the detailed design for widening two lengths of the M27 and extensions to a number of other commissions. This year we also succeeded in securing major design commissions for the A14 in Cambridgeshire and the M74 in Scotland. Our intelligent transport systems group continues to grow as the market for technological solutions including ramp metering and traffic management information develops. In February 2008 we commenced a three-year contract to provide driver information, network management and operational services to Transport Scotland in their interim traffic control centre and we continue to work extensively with Traffic Wales.

Our transport planning business, which provides a full range of strategic, policy, management, forecasting, business case and investment appraisals for infrastructure investment consultancy services, was augmented during the year by the acquisition and successful integration of the Intelligent Space Partnership. The business had a good year and our workload in road pricing through the Transport Innovation Fund, technical advice and research for Central Government on strategic planning and policy, rail planning, and the delivery of local transport plans remained strong throughout the year. We provide high-level transport governance advice for the major metropolitan areas of the UK and, on behalf of the Department for Transport, we developed the guidelines and assessment methodology for highway flood relief funding following the summer floods in 2007.

In May 2008 the Connect Plus consortium, in which we are a member, was announced as the Highways Agency's provisional preferred bidder for the 30-year, M25 motorway widening Design Build Finance and Operate (DBFO) contract.

Final confirmation of the contract would give Atkins responsibility for designing the works to increase the capacity of the M25. This design work should commence before financial close, which is expected to be late 2008 or early 2009, to enable the contract to start on site as soon as possible. As well as being a 10% shareholder in the Connect Plus joint venture company, our involvement will include a 32.5% share in the operation and maintenance joint venture responsible for the management of the entire M25 and a network of feeder roads including the tolling operations at the Dartford Crossing.

Outlook

The recent UK Government Comprehensive Spending Review indicated that transport expenditure would increase by 2.5% per annum up to 2019 with much of that increase in the early years. On that basis we would expect modest growth in the overall market but, in the areas in which we operate, growth should be higher as the Government looks to deliver capacity and efficiency savings.  We expect projects of national importance, such as the M25, M74, A1 and A14 to continue but other projects may slip, particularly where innovative technology solutions in which we have a deep and broad expertise (such as motorway access management) could be deployed.

Our recent success gives us confidence that the outlook for the Highways and Transportation segment is strong, underpinned by our order book at 31 March increasing to 78% of budgeted revenue for 2008/09 (2007: 77%).

Rail

Key performance indicators	2008	2007	% change  in year
Financial metrics
Revenue	£208.2m	£215.1m	-3%
Operating profit	£11.9m	£5.2m	+129%
Operating margin	5.7%	2.4%	+3.3pp
Work in hand	65%	69%	-4.0pp
People
Staff numbers at 31 March	1,669	1,669	-
Average staff numbers	1,703	1,648	+3%

Note: 

2007 has been restated to exclude the results of European businesses previously included within Rail that are now included within the Middle East, China and Europe segment.

2007 operating profit is before exceptional costs of £2.6m in relation to the Metronet supply chain contracts.

The Rail segment performed well this year and delivered an operating profit of £11.9m, an anticipated and substantial improvement on the prior year driven by increased activity in our higher margin design business and the impact of the change in the contractual arrangements on our work for London Underground.  As expected, revenue reduced slightly, partly due to the changes at Metronet and also due to a reduction in volumes of pass-through expenses on our re-signalling contracts.

We continue to derive around half of our revenue from large re-signalling contracts for Network Rail.  During the year approximately 60% of that work consisted of significant projects at Basingstoke and the Rugby/Nuneaton section of the West Coast Main Line upgrade. Our delivery performance has been good which has helped us secure work with Network Rail on a number of additional projects. The re-signalling requirement for Network Rail remains significant with spending anticipated to remain at approximately the same level over the next few years.  Our strong reputation for delivery and our relationship with Network Rail makes us well placed to win a significant share of this market.

The other part of our business focuses on design and consulting services. Performance in the year has been good as we have benefited from an improving market as Network Rail and other Passenger Transport Executives (PTEs) bring more enhancement projects to market. Significant projects during the year include the Glasgow Airport Rail Link, where we are providing design and technical consultancy for the new railway line running from Glasgow Central station to the international airport, and Farringdon Station where we have been appointed by Network Rail Thameslink to provide detailed design for the upgrade of this major interchange between Thameslink, London Underground and Crossrail.

During the year we have secured work on a number of major strategic programmes including Thameslink, Crossrail, the InterCity Express programme, Network Rail enhancement frameworks and major stations including Birmingham New Street. Additionally we had success in the sustainability-driven renaissance of electrification, in particular the Glasgow to Edinburgh line where we have been appointed by Network Rail acting on behalf of Transport Scotland. Our work involves feasibility studies and outline plans for the electrification of approximately 100 miles of main and branch lines in the Glasgow to Edinburgh corridor ahead of works required for the Commonwealth Games in 2014.

As anticipated, there has been a decline in revenue from our work on the London Underground, through Metronet and Trans4m, which reduced by around one-third.  On 18 July 2007 the Metronet infrastructure companies entered PPP Administration and on 30 August 2007 the contracts with Trans4m were terminated.  Since then we have continued to provide station and civils design, civils inspection and assessment capability to Metronet under a series of short-term contracts. Following the transfer on 27 May 2008 of certain of the trade and assets of the Metronet infrastructure companies to new entities established by Transport for London, we have entered into longer-term contracts with the successor companies for the provision of consultancy, design and engineering support. 

Our investment in Metronet and Trans4m is discussed on page 9 under Discontinued Operations.

Outlook

In the short term the outlook for our Rail segment remains good with 65% of 2008/9 budget revenue secured by 31 March 2008. The UK rail market continues to demonstrate steady growth, with increasing demand for innovative solutions to meet the need for a capacity-enhanced, reliable railway.

Over the longer term a significant increase in spending on enhancements, and continued spending on major signalling works is expected. We are well placed to meet these demands with the breadth and depth of our multi-disciplinary expertise.

Middle East, China and Europe

Key performance indicators	2008	2007	% change  in year
Financial metrics
Revenue	£191.6m	£148.9m	+29%
Operating profit	£11.4m	£7.5m	+52%
Operating margin	5.9%	5.0%	+0.9pp
Work in hand	50%	61%	-11.0pp
People
Staff numbers at 31 March	4,076	3,223	+26%
Average staff numbers	3,660	2,887	+27%

Note: 

2007 has been restated to include the results of European businesses, previously included within Design and Engineering Solutions and Rail, that are now included within the Middle East, China and Europe segment

This year we have reorganised the management of our European businesses and now report their results within this expanded segment. Our businesses in Denmark, Ireland, Poland, Portugal and Sweden were previously included within the Rail and Design and Engineering Solutions segments. 

Middle East

	2008	2007	% change  in year
Financial metrics
Revenue	£112.2m	£79.3m	+41%
Operating profit	£9.5m	£7.0m	+36%
Operating margin	8.5%	8.8%	-0.3pp
Work in hand	51%	76%	-25.0pp
People
Staff numbers at 31 March	2,470	1,721	+44%
Average staff numbers	2,119	1,417	+50%

Our Middle East business continues to grow very rapidly with both revenue and staff numbers up by more than 40% on the prior year. The market as a whole remains buoyant driven by the high oil price with particularly strong performances in Abu Dhabi, Bahrain and Dubai.

There has been a significant volume of work on the Dubai Metro project, secured last year, and our work on the Red Line is nearing completion. Work on the Green Line is over 75% complete and during the year we have secured a further project designing the links between the metro and other modes of transport.  Our civil engineering rail business in the Middle East is now actively pursuing other opportunities in this growing market.

In the year we were awarded a number of building design contracts including: the 60-plus-storey Sheth residential tower at Maritime City (Dubai); the 77-storey Tasameem mixed-use tower on Sheikh Zayed Road (Dubai); Etihad Village, a ten tower residential complex on Al Raha Beach in Abu Dhabi; and Mahboula Tower, a hotel and 300 unit residential development in Kuwait.

Our regional portfolio of infrastructure and masterplanning projects was further strengthened with appointments for the Al Sowa Island roads and bridges contract (Abu Dhabi), the Seeb Corporate Park development (Oman), and in Bahrain, the Downtown Al Areen township and Bahrain Marina mixed use developments. 

We continue to invest in the clear trend towards lower carbon design.  We are progressing with the detailed design of a 60-storey tower in the Dubai financial centre planned to achieve 65% energy savings and in April 2008 the three 29m-diameter turbines on the award-winning Bahrain World Trade Center, in Manama, began turning.

There is strong demand for our services and the year has been characterised by the addition of several large projects to our portfolio including those mentioned above. After the year-end we have secured in excess of £50m worth of projects, including the design and supervision of a 125-storey tower block in Dubai.

Staff numbers in the region have exceeded 2,500 since the year-end and we have established a design office in the Philippines to serve the Dubai market.

China

	2008	2007	% change  in year
Financial metrics
Revenue	£29.8m	£28.9m	+3%
Operating profit	£0.3m	£0.2m	+50%
Operating margin	1.0%	0.7%	+0.3pp
Work in hand	47%	28%	+19pp
People
Staff numbers at 31 March	861	881	-2%
Average staff numbers	859	836	+3%

We continue to make progress in China and the region as a whole performed in line with expectations recording a modest improvement over the prior year.

Demand for the services of our Hong Kong infrastructure business contributed to better than expected performance from that business.  The Hong Kong railway market is set for a resurgence following the merger of the two major railway corporations in December 2007 and we were subsequently appointed to undertake detailed design work on the West Island Line.

The rapid pace of urbanisation in mainland China presents opportunities and our urban planning practice continues to penetrate into second and third-tier cities. Our architecture business won its fifth airport terminal design competition and we have seen a surge in five-star hotel activity led by our Songjiang Quarry hotel project

We employ just over 400 staff in mainland China which is broadly in line with last year. This is a sound base which positions us for growth as the market matures.

Europe

	2008	2007	% change  in year
Financial metrics
Revenue	£49.6m	£40.7m	+22%
Operating profit	£1.6m	£0.3m	+433%
Operating margin	3.2%	0.7%	+2.5pp
Work in hand	47%	53%	-6.0pp
People
Staff numbers at 31 March	745	621	+20%
Average staff numbers	682	634	+8%

As a whole, the Europe portfolio performed in line with expectations, delivering a significant improvement over the prior year with all five businesses ending the year trading profitably.

Our key focus during the year has been to strengthen the local management teams and much progress has been made. The two largest businesses, Denmark with 280 staff and Ireland with 180 staff, have performed well. In Denmark our work on the Copenhagen Metro City Circle Line, where we are working on the transportation systems package, is progressing well. Our Swedish business, which employs some 110 staff, was able to record a modest profit in the last quarter having made management changes following a very disappointing start to the year.

Outlook

The outlook for this segment remains very good, especially in the Middle East. Our work in hand at year-end is very good at 50% (2007: 61%) of budgeted revenue for 2008/09. The reduction was anticipated and principally relates to the Dubai Metro project which represented a substantial portion of last year's secured workload. 

The investment boom in the Middle East region is set to continue with the rate of growth tempered only by the availability of appropriate resource. The scale of the projects that we are working on continues to grow significantly and we are increasing our service offering to meet client demands. It is also likely that the drive to lower the carbon footprint of buildings will be pushed further by clients in the Middle East.

The outlook for China and Europe is improving as our investments in the local management teams position these businesses to take advantage of the emerging opportunities.

Management and Project Services 

Key performance indicators	2008	2007	% change  in year
Financial metrics
Revenue	£213.2m	£193.6m	+10%
Operating profit	£13.6m	£12.8m	+6%
Operating margin	6.4%	6.6%	-0.2pp
Work in hand	48%	42%	+6.0pp
People
Staff numbers at 31 March	2,461	2,260	+9%
Average staff numbers	2,394	2,203	+9%

Note: 

2007 operating profit is before exceptional costs of £0.3m in relation to the Metronet supply chain contracts.

The performance of the Management and Project Services segment this year was mixed. The Faithful+Gould business, which represents approximately 70% of the segment, had a good year but the Management Consultants business continued to perform below our expectations.

Faithful+Gould, with principal operations in the UK, USA and Asia, provides project management and cost consultancy services across a broad range of market sectors. All three regions delivered strong performances with both revenue and operating profit ahead of expectations. The UK business accounts for over 60% of revenue and the North America and Asia Pacific businesses grew by 11% and 43% respectively. During the year many of our markets were strong, including petrochemical, driven by high oil prices; public and regulated sectors where there is continuing investment; and financial services where we have a growing reputation. We have a limited exposure to the commercial property sector and, overall, there has been no material slowdown in work.

There remains a strong market for our Management Consultants' services and we continue to provide programme management services to support the ongoing change programme at GCHQ, where we are approaching the mid-point of our five-year contract.  Performance in the business was impacted by a loss of focus following a reorganisation undertaken at the same time as the integration of Mantix which was acquired in June 2006. Management changes were made during the year and profits were further depressed by one-off costs incurred reducing overhead and simplifying the management structure.

Outlook

Outlook for the segment as a whole is good with work in hand at 31 March 2008 representing 48% of budgeted revenue for 2008/09.

Faithful+Gould is a diverse business which covers a wide range of markets. While the UK is relatively mature, in the USA there are further opportunities to deepen our services, especially for the large programmes commissioned by the government, and in the petrochemical and education sectors.

Our Management Consultants business currently has a small share of a large addressable market and there is potential for a recovery from its current position underpinned by existing framework contracts with established clients.

  Asset Management

Key performance indicators	2008	2007	% change  In year
Financial metrics
Revenue	£52.4m	£50.9m	+3%
Operating profit	£2.8m	£2.0m	+40%
Operating margin	5.3%	3.9%	+1.4pp
Share of post-tax JV profits	£0.2m	£2.2m	-91%
Work in hand	99%	99%	-
People
Staff numbers at 31 March	669	680	-2%
Average staff numbers	674	669	+1%

Note:

2007 has been restated to include the continuing elements of the former Equity Investments segment.

Asset Management had a good year with results broadly in line with our expectations.

There is strong demand for our Managing Agent service offering support to both private and public sector clients with large property portfolios. Our contract with Barclays Bank has been extended to 2012 and in March 2008 we were awarded a contract that will enable the Home Office to improve the management and sustainability of its property estate.

Outlook

Our Asset Management business remains a small but profitable part of the Group. Work in hand at 31 March 2008 represented 99% of budgeted revenue for 2008/09.

Discontinued Operations

Lambert Smith Hampton

The disposal of Lambert Smith Hampton (LSH) to the management team was completed on 20 July 2007. Cash received during the year was £45.5m with a further £6.5m deferred in the form of loan notes.

The disposal resulted in a gain of £20m.  In the period to disposal, LSH recorded revenue of £16.0m and a profit after tax of £0.2m.

Metronet Enterprise

The Metronet infrastructure companies entered PPP Administration on 18 July 2007 and Trans4m's contracts were terminated on 30 August 2007.

An exceptional accounting gain of £17.2m has arisen on the accelerated release of deferred income following Metronet entering administration. This relates to the unamortised balance of amounts received by the Group in April 2003 in respect of bid cost recoveries and project development fees. The amount received was previously being released to the income statement over the 30-year life of the contract in accordance with the Group's policy in relation to bid recovery fees on PPP/PFI investments. Profit after tax relating to discontinued Metronet activities was £11.2m.

On 27 May 2008, certain trade and assets of the Metronet infrastructure companies were transferred by the PPP Administrator to two new entities established by Transport for London. We retain our 25% shareholding in Trans4m Limited and our 20% shareholding in the residual groups headed by Metronet Rail BCV Holdings Limited and Metronet Rail SSL Holdings Limited although these entities are not currently trading.

Financial Performance

Net finance income

Net finance income for the year was £4.3m (2007: £3.6m) with the increase partly attributable to a £1.3m decrease in the net finance cost on retirement benefit liabilities.

 

Taxation

The Group's income tax expense for the year, on continuing operations, was £23.3m (2007: £15.2m). As expected, the normalised effective tax rate increased to 25.7% from 22.0% in the prior year which benefited from three years' research and development tax credits. The Group's effective tax rate is expected to remain below the UK statutory rate due to the continuing benefit of research and development tax credits and the increasing proportion of profits earned in jurisdictions with lower tax rates than the UK.

Earnings per share (EPS)

EPS was 98.9p (2007: loss per share 56.8p). Normalised diluted EPS, which is considered to be a more representative measure of underlying trading and relates to continuing operations, was 66.7p (2007: 56.5p), an increase of 18%. Further details are given in note 9 to this preliminary unaudited financial information.

  Pensions

Funding

The latest actuarial valuation of the defined benefit Atkins Pension Plan (the Plan) carried out as at 1 April 2007 indicated that the Plan had an actuarial deficit of approximately £215m. Accelerated contributions of £37.5m were made during the year with a further £12.5m on 1 April 2008. A commitment to contribute a further £32m per year for the next six years has been agreed with the Trustees. 

Charges

The Group accounts for pension costs under IAS 19, Employee benefits. As expected, following the transfer of 1,622 members from the defined benefit section to the defined contribution section on 1 October 2007, the total charge to the income statement in respect of defined benefit schemes reduced to £17.8m (2007: £24.9m), comprising total service cost of £16.7m (2007: £22.5m) and net finance cost of £1.1m (2007: £2.4m). The charge relating to defined contribution schemes increased to £23.3m (2007: £16.0m).

IAS 19 valuation and accounting treatment

The Group assesses pension scheme funding with reference to actuarial valuations but for reporting purposes uses IAS 19. Under IAS 19, the Group recognised a post-tax retirement benefit liability of £153.9m at 31 March 2008 (2007: £175.1m). The actuarial gain recognised through equity amounted to £6.4m (2007: £31.3m). However, after taking into account the impact of the change in UK tax rates, there was a post-tax actuarial loss of £1.0m (2007: gain of £21.7m).

The assumptions used in the IAS 19 valuation are detailed in note 11 to this preliminary unaudited financial information. 

Cash

Net funds at 31 March 2008 were £168.4m (2007: £199.1m) made up as follows:

	2008	2007
	£m	£m
Cash and cash equivalents	154.5	187.7
Loan notes receivable	5.6	-
Financial assets at fair value through profit or loss	29.7	49.6
Borrowings due within one year	(4.2)	(0.4)
Borrowings due after one year	(3.2)	(23.1)
Finance leases	(14.0)	(14.7)
Net funds	168.4	199.1

Cash generated from continuing operations was £80.9m (2007: £93.9m). Working capital increased by £4.6m during the year (2007: £7.5m decrease), despite the 11% growth in revenue due in part to the continued growth in the Middle East, which features advance cash receipts on major projects. The reduction in cash generated from operations compared to last year was largely due to increases in funding the defined benefit pension scheme deficit.

Net tax paid amounted to £14.7m (2007: net refund of £4.9m). Payments for consortium relief were made to Metronet during the year, reversing a cash timing difference that had benefited the Group in 2007. The 2007 figure also included back-dated settlement of research and development tax credits.  

Net capital expenditure in the year, including the purchase of computer software licences, amounted to £25.7m (2007: £24.2m).  We expect this spend to increase by approximately £10m in the coming year due to the planned cyclical refresh of IT hardware.

Cash payments relating to acquisitions in the year amounted to £5.7m (2007: £26.2m) net of cash acquired of £0.7m (2007: £3.4m). As mentioned within the segmental performance section above, the Group acquired two businesses during the year: Intelligent Space Partnership Limited and Nedtech Engineering BV. Further details of these are given in note 10 to this preliminary unaudited financial information.

Within financing activities, £17.6m of foreign currency denominated loans were repaid following a review of the Group's hedging of its net investment in foreign subsidiaries. An additional £34.0m outflow was associated with the share buyback programme which commenced during the year. 

Cash flows on discontinued operations amounted to £17.3m outflow (2007: £10.9m). The largest item was £48.0m investments in the Metronet and Trans4m joint ventures, which had been provided for at 31 March 2007, offset in part by £30.9m net cash proceeds received on the disposal of LSH.

Events after the balance sheet date

On 1 April 2008 the disposal of the Group's interest in the Modern Housing Solutions joint venture was completed for a cash receipt of £3.9m and profit on disposal of £2.5m.

  Capital structure

The Company had 104.5m fully paid ordinary shares in issue at 31 March 2008 (2007: 104.5m). The Company commenced a share buyback programme in November 2007 and by 31 March 2008, had bought 3.2m of its own shares in the market for a total consideration, including commission and stamp duty, of £34.9m. These shares are held within treasury.

As at 31 March 2008, the Group had a shareholders' deficit of £23.4m (2007: £76.1m).

Keith Clarke Robert MacLeod

Chief Executive Group Finance Director

25 June 2008

  Consolidated income statement for the year ended 31 March 2008 (unaudited)

		2008	2007
	Notes	£m	£m
Continuing operations
Revenue (Group and share of Joint Ventures)		1,399.5	1,240.3
Revenue	2	1,313.6	1,179.8
Cost of sales		(834.1)	(777.1)
Cost of sales - exceptional	6	-	(4.0)
Gross profit		479.5	398.7
Administrative expenses		(392.8)	(335.0)
Operating profit	2	86.7	63.7
Share of post-tax profit from Joint Ventures	3	0.9	2.8
Profit from operations		87.6	66.5
Finance income	4	9.8	9.0
Finance cost	4	(5.5)	(5.4)
Net finance income	4	4.3	3.6
Profit before taxation		91.9	70.1
Income tax expense	5	(23.3)	(16.4)
Income tax - exceptional	6	-	1.2
Profit for the year from continuing operations		68.6	54.9
Discontinued operations	7	31.4	(112.2)
Profit/(loss) for the year attributable to equity shareholders	12	100.0	(57.3)
Earnings per share
From continuing and discontinued operations (total)
Basic earnings/(loss) per share	9	98.9p	(56.8)p
Diluted earnings/(loss) per share	9	97.2p	(56.8)p
From continuing operations
Basic earnings per share	9	67.9p	54.4p
Diluted earnings per share	9	66.7p	53.8p
Dividends
Dividends recognised in the year - paid	8	21.5p	17.5p
Dividends relating to the year - proposed	8	24.0p	20.0p

Consolidated statement of recognised income and expense for the year ended 31 March 2008 (unaudited)

		2008	2007
	Notes	£m	£m
Actuarial gain on retirement benefit liabilities	11	6.4	31.3
Share of Joint Venture equity items	12	0.2	7.5
Tax on items charged to equity	5	(7.8)	(8.5)
Cash flow hedges	12	(0.8)	(0.1)
Net differences on exchange	12	3.3	(0.1)
Net income recognised directly to equity		1.3	30.1
Profit/(loss) for the year		100.0	(57.3)
Total recognised income and expense for the year attributable to equity shareholders		101.3	(27.2)

The notes on pages 15 to 24 form part of the preliminary unaudited financial information.

  Consolidated balance sheet as at 31 March 2008 (unaudited)

		2008	2007
	Notes	£m	£m
Assets
Non-current assets
Goodwill		56.7	64.8
Other intangible assets		10.9	9.4
Property, plant and equipment		45.6	46.2
Investments in Joint Ventures		4.2	(26.0)
Deferred income tax assets		69.6	89.8
Other receivables		5.7	0.1
		192.7	184.3
Current assets
Inventories		0.3	0.4
Trade and other receivables		299.7	284.0
Financial assets at fair value through profit or loss		29.7	49.6
Cash and cash equivalents		154.5	187.7
		484.2	521.7
Liabilities
Current liabilities
Borrowings		(7.8)	(3.7)
Trade and other payables		(415.4)	(418.6)
Derivative financial instruments		(0.9)	(0.1)
Current income tax liabilities		(26.8)	(28.3)
Provisions for other liabilities and charges		(4.3)	(8.7)
		(455.2)	(459.4)
Net current assets		29.0	62.3
Non-current liabilities
Borrowings		(13.6)	(34.5)
Provisions for other liabilities and charges		(13.5)	(14.3)
Retirement benefit liabilities	11	(213.1)	(250.1)
Other non-current liabilities		(4.9)	(23.8)
		(245.1)	(322.7)
Net liabilities		(23.4)	(76.1)
Capital and reserves
Ordinary shares	12	0.5	0.5
Share premium account	12	62.4	62.4
Merger reserve	12	8.9	8.9
Retained loss	12	(95.2)	(147.9)
Equity shareholders' deficit		(23.4)	(76.1)

The notes on pages 15 to 24 form part of the preliminary unaudited financial information.

  Consolidated cash flow statement for the year ended 31 March 2008 (unaudited)

		2008	2007
	Notes	£m	£m
Cash flows from operating activities
Cash generated from operations	13	80.9	93.9
Interest received		9.7	8.9
Interest paid		(3.3)	(2.1)
Income tax (paid)/received		(14.7)	4.9
Discontinued operations	7	0.3	10.8
Net cash generated from operating activities		72.9	116.4
Cash flows from investing activities
Distributions received from Joint Ventures		2.5	1.7
Investments in Joint Ventures		(0.9)	-
Acquisition of subsidiaries
- Consideration		(6.4)	(29.6)
- Cash acquired		0.7	3.4
Purchases of property, plant and equipment		(18.9)	(16.2)
Proceeds from disposals of property, plant and equipment		1.0	0.6
Financial assets		19.9	(8.8)
Purchases of intangible assets		(7.8)	(8.6)
Discontinued operations	7	(17.3)	(20.5)
Net cash used in investing activities		(27.2)	(78.0)
Cash flows from financing activities
Repayment of short-term loans		(0.2)	(2.7)
Repayment of long-term loans		(17.6)	(1.6)
Finance lease principal payments		(4.4)	(2.8)
Sales of own shares by Employee Benefit Trusts		-	0.1
Share buyback		(34.0)	-
Equity dividends paid to shareholders	8	(21.8)	(17.7)
Discontinued operations	7	(0.3)	(1.2)
Net cash used in financing activities		(78.3)	(25.9)
Net (decrease)/increase in cash, cash equivalents and bank overdrafts		(32.6)	12.5
Cash, cash equivalents and bank overdrafts at beginning of year		187.7	177.4
Exchange movements		(0.6)	(2.2)
Cash, cash equivalents and bank overdrafts at end of year	14	154.5	187.7

The notes on pages 15 to 24 form part of the preliminary unaudited financial information.

  Notes to the preliminary financial information for the year ended 31 March 2008

1. Preparation of preliminary financial information

This preliminary financial information has been extracted from unaudited financial statements which have not yet been filed with the Registrar of Companies and does not constitute summary financial information or statutory financial information as defined in Section 240 and Section 251 of the Companies Act 1985. The preliminary financial information has been prepared in accordance with the Disclosure and Transparency Rules of the UK Financial Services Authority, International Financial Reporting Standards as adopted by the European Union (IFRSs), International Financial Reporting Interpretations Committee (IFRIC) interpretations, and those parts of the Companies Act 1985 applicable to companies reporting under IFRS.

2. Segmental reporting

Revenue and results 

							Share of
		Inter-					Post-tax profit from
	Total revenue	segment revenue	Revenue	Operating profit	Operating margin		Joint Ventures
2008	£m	£m	£m	£m	%		£m
Design and Engineering Solutions	390.8	(17.2)	373.6	30.2	8.1%		-
Highways and Transportation	291.6	(17.0)	274.6	16.8	6.1%		0.7
Rail	224.9	(16.7)	208.2	11.9	5.7%		-
Middle East, China and Europe	206.5	(14.9)	191.6	11.4	5.9%		-
Management and Project Services	223.5	(10.3)	213.2	13.6	6.4%		-
Asset Management	54.7	(2.3)	52.4	2.8	5.3%		0.2
Total continuing segments	1,392.0	(78.4)	1,313.6	86.7	6.6%		0.9
Discontinued operations	33.3	(0.1)	33.2	17.0	51.2%		-
Total from operations	1,425.3	(78.5)	1,346.8	103.7	7.7%		0.9

						Impairment	Share of
		Inter				of investment	post-tax profit from
	Total revenue	segment revenue	Revenue	Operating profit	Operating margin	in Joint Ventures	Joint Ventures
2007 (restated)	£m	£m	£m	£m	%	£m	£m
Design and Engineering Solutions	333.6	(12.8)	320.8	25.9	8.1%	-	-
Highways and Transportation	265.9	(15.4)	250.5	13.2	5.3%	-	0.6
Rail	238.4	(23.3)	215.1	2.6	1.2%	-	-
Middle East, China and Europe	161.6	(12.7)	148.9	7.5	5.0%	-	-
Management and Project Services	201.9	(8.3)	193.6	12.5	6.5%	-	-
Asset Management	53.5	(2.6)	50.9	2.0	3.9%	-	2.2
Total continuing segments	1,254.9	(75.1)	1,179.8	63.7	5.4%	-	2.8
Discontinued operations	83.8	-	83.8	8.9	10.6%	(70.0)	(48.2)
Total from operations	1,338.7	(75.1)	1,263.6	72.6	5.7%	(70.0)	(45.4)

Design and Engineering Solutions and Rail segments have been restated to exclude the results of other European businesses that are now reported within the Middle East, China and Europe segment.

The continuing elements of the former Equity Investments segment are now shown within Asset Management.

Included within operating profit for the year to 31 March 2007 is £4.0m exceptional loss (refer to note 6) relating to Design and Engineering Solutions (£1.1m), Rail (£2.6m) and Management and Project Services (£0.3m).

  3. Joint Ventures

Share of post-tax profit/(loss) from Joint Ventures

		Discontinued
	Continuing	(note 7)	Total
2008	£m	£m	£m
Revenue	85.9	144.7	230.6
Operating expenditure	(85.1)	(138.7)	(223.8)
Operating profit	0.8	6.0	6.8
Finance cost	(4.3)	(8.3)	(12.6)
Finance income	4.8	0.9	5.7
Profit/(loss) before taxation	1.3	(1.4)	(0.1)
Income tax (expense)/credit	(0.4)	1.4	1.0
Share of post-tax profit from Joint Ventures	0.9	-	0.9

		Discontinued
	Continuing	(note 7)	Total
2007	£m	£m	£m
Revenue	60.5	315.8	376.3
Operating expenditure	(58.1)	(377.9)	(436.0)
Operating profit/(loss)	2.4	(62.1)	(59.7)
Finance cost	(4.4)	(19.4)	(23.8)
Finance income	4.7	19.2	23.9
Profit/(loss) before taxation	2.7	(62.3)	(59.6)
Income tax credit	0.1	14.1	14.2
Share of post-tax profit/(loss) from Joint Ventures	2.8	(48.2)	(45.4)

4. Net finance (income)/cost

	Continuing	Discontinued	Total
2008	£m	£m	£m
Interest payable on borrowings	0.8	-	0.8
Hire purchase and finance leases	1.0	0.1	1.1
Unwinding of discount	1.2	-	1.2
Net finance cost on retirement benefit liabilities	1.1	-	1.1
Other finance costs	1.4	0.8	2.2
Finance cost	5.5	0.9	6.4
Interest receivable on short term deposits	(7.1)	(0.3)	(7.4)
Income from held at fair value financial assets	(1.6)	-	(1.6)
Unwinding of discount	(0.3)	-	(0.3)
Other finance income	(0.8)	-	(0.8)
Finance income	(9.8)	(0.3)	(10.1)
Net finance (income)/cost	(4.3)	0.6	(3.7)

	Continuing	Discontinued	Total
2007	£m	£m	£m
Interest payable on borrowings	1.0	0.1	1.1
Hire purchase and finance leases	0.7	0.2	0.9
Unwinding of discount	0.5	-	0.5
Net finance cost on retirement benefit liabilities	2.4	-	2.4
Other finance costs	0.8	1.0	1.8
Finance cost	5.4	1.3	6.7
Interest receivable on short term deposits	(7.5)	(0.9)	(8.4)
Income from held at fair value financial assets	(1.5)	-	(1.5)
Unwinding of discount	-	-	-
Other finance income	-	-	-
Finance income	(9.0)	(0.9)	(9.9)
Net finance (income)/cost	(3.6)	0.4	(3.2)

  5. Income tax expense - continuing operations

a) Analysis of charge in the year

	2008	2007
	£m	£m
Current income tax
- Current year	18.9	15.0
- Adjustment in respect of prior year	(3.6)	(4.5)
Deferred income tax	8.0	4.7
Income tax on profit per income statement	23.3	15.2
Adjust for:
- Joint Venture taxation	0.4	(0.1)
- Tax on exceptional items	-	1.2
Normalised income tax expense	23.7	16.3
Profit before tax per income statement	91.9	70.1
Adjust for:
- Joint Venture taxation	0.4	(0.1)
- Exceptional items	-	4.0
Normalised profit before income tax	92.3	74.0
Effective income tax rate	25.4%	21.7%
Normalised effective income tax rate	25.7%	22.0%

The total income tax expense (continuing and discontinued operations) was £28.3m (2007: 17.7m)

b) Income tax on items charged to equity

			2008			2007
	Retirement benefit liability	Share- based  payments	Total	Retirement benefit liability	Share-based  payments	Total
	£m	£m	£m	£m	£m	£m
At 1 April	8.5	3.3	11.8	18.1	2.2	20.3
Deferred income tax	(7.4)	(0.6)	(8.0)	(9.6)	(0.5)	(10.1)
Current income tax	-	0.2	0.2	-	1.6	1.6
At 31 March	1.1	2.9	4.0	8.5	3.3	11.8

6. Exceptional items - continuing operations

Exceptional items originally disclosed in the financial statements for the year ended 31 March 2007 related to the Metronet Enterprise. As a result of Metronet BCV Limited and Metronet SSL Limited entering PPP Administration, the majority of these charges are now disclosed under discontinued operations (see note 7).

The exceptional charges shown below are in respect of the Group's supply chain work and relate to anticipated future losses under the original contracts.

	2007
	£m
Atkins supply chain exceptional loss included in operating profit	(4.0)
Tax credit on exceptional loss	1.2
Operating entities' post-tax exceptional loss	(2.8)

  7. Discontinued operations

Lambert Smith Hampton (LSH)

On 25 June 2007 contracts were exchanged for the disposal of LSH for a total consideration valued at £50.8m. Goodwill disposed of was £17.5m, including £2.6m within LSH's own balance sheet. The profit on disposal was £20.0m.

LSH's results and profit on disposal are presented as a discontinued operation.

Consideration received or receivable at date of disposal	£m
Initial cash consideration	40.0
Working capital adjustment	5.5
Loan notes	6.5
Discounting of loan notes to present value	(1.2)
Disposal consideration	50.8

Assets and liabilities at date of disposal	£m
Goodwill	2.6
Property, plant and equipment	5.4
Trade and other receivables	18.5
Cash and cash equivalents	14.6
Trade and other payables	(24.2)
Borrowings	(4.0)
Other liabilities	(0.1)
Net assets and liabilities of LSH	12.8

Metronet Joint Venture, Trans4m Joint Venture and related discontinued revenues and costs

Metronet BCV Limited and Metronet SSL Limited entered PPP Administration on 18 July 2007 and Trans4m's contracts were terminated on 30 August 2007. Their results are presented as a discontinued operation and are also disclosed in note 3.

In addition, certain associated revenue and costs, including the accelerated release of deferred income relating to the reimbursement of bid costs received at financial close in April 2003, have been classified as discontinued.

Financial information relating to LSH, Metronet Joint Venture and Trans4m Joint Venture for the period prior to becoming discontinued is set out below. The income statement and cash flow statement distinguish discontinued operations from continuing operations.

2008	LSH	Metronet and Trans4m	Total
Income statement and cash flow information	£m	£m	£m
Revenue	16.0	17.2	33.2
Administration and other expenses	(15.8)	(0.4)	(16.2)
Net finance income/(cost)	0.2	(0.8)	(0.6)
Profit before taxation from discontinued operations	0.4	16.0	16.4
Income tax expense	(0.2)	(4.8)	(5.0)
Profit after income tax of discontinued operations	0.2	11.2	11.4
Pre-tax profit on disposal	20.0	-	20.0
Income tax expense	-	-	-
After-tax profit on disposal	20.0	-	20.0
Profit from discontinued operations	20.2	11.2	31.4
Operating cash flows from discontinued operations	2.8	(2.5)	0.3
Investing cash flows from discontinued operations	(0.2)	(48.0)	(48.2)
Investing cash flows - cash proceeds on disposal net of cash disposed	30.9	-	30.9
Financing cash flows from discontinued operations	(0.3)	-	(0.3)
Total cash flows	33.2	(50.5)	(17.3)

  7. Discontinued operations (continued)

2007	LSH	Metronet and Trans4m	Total
Income statement and cash flow information	£m	£m	£m
Revenue	81.8	2.0	83.8
Administration and other expenses	(74.3)	(0.6)	(74.9)
Net finance income/(cost)	0.6	(1.0)	(0.4)
Impairment of investment in Joint Ventures	-	(70.0)	(70.0)
Share of post-tax loss from Joint Ventures (note 3)	-	(48.2)	(48.2)
Profit/(loss) before taxation	8.1	(117.8)	(109.7)
Income tax expense	(2.4)	(0.1)	(2.5)
Profit/(loss) after income tax of discontinued operations	5.7	(117.9)	(112.2)
Operating cash flows from discontinued operations	10.1	0.7	10.8
Investing cash flows from discontinued operations	(2.5)	(18.0)	(20.5)
Financing cash flows from discontinued operations	(1.2)	-	(1.2)
Total cash flows	6.4	(17.3)	(10.9)

8. Dividends

	2008	2007	2008	2007
	pence	pence	£m	£m
Final dividend paid for the year ended 31 March 2007 (2006)	14.0 p	11.5 p	14.2	11.6
Interim dividend paid for the year ended 31 March 2008 (2007)	7.5 p	6.0 p	7.6	6.1
Dividends recognised in the year	21.5 p	17.5 p	21.8	17.7
Interim dividend proposed for the year ended 31 March 2008 (2007)	7.5 p	6.0 p	7.6	6.1
Final dividend proposed for the year ended 31 March 2008 (2007)	16.5 p	14.0 p	16.1	14.2
Dividends relating to the year	24.0 p	20.0 p	23.7	20.3

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in this preliminary financial information.

  9. 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 held 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:

	2008	2007
	number ('000)	number ('000)
Number of shares
Weighted average number of shares used in basic, diluted (2007 only) and normalised basic EPS	101,105	100,901
Effect of dilutive securities - share options	1,735	1,204
Weighted average number of shares used in diluted (2008 only) and normalised diluted EPS	102,840	102,105
	£m	£m
Earnings - continuing and discontinued operations
Profit/(loss) for the year attributable to equity shareholders	100.0	(57.3)
Earnings - continuing operations
Profit for the year attributable to equity shareholders	68.6	54.9
Exceptional items (note 6)	-	2.8
Normalised earnings	68.6	57.7
	pence	pence
From continuing and discontinued operations
Basic earnings/(loss) per share (post-exceptional)	98.9	(56.8)
Diluted earnings/(loss) per share (post-exceptional)	97.2	(56.8)
From continuing operations
Basic earnings per share (post-exceptional)	67.9	54.4
Diluted earnings per share (post-exceptional)	66.7	53.8
Normalised basic earnings per share (pre-exceptional)	67.9	57.2
Normalised diluted earnings per share (pre-exceptional)	66.7	56.5

In 2007 the effect of share options was anti-dilutive.

Normalised diluted EPS (before exceptional items) is considered to be a more representative measure of underlying trading.

  10. Business combinations

On 5 September 2007 the Group acquired 100% of the share capital of Intelligent Space Partnership Limited, a UK registered entity for £2.3m deferred consideration relating to loan notes.

On 21 December 2007 the Group acquired 100% of the share capital of Nedtech Engineering BV, a Dutch registered entity for a consideration of £6.5m consisting of cash consideration of £4.7m, deferred consideration of £1.6m and direct expenses paid of £0.2m.

	Total carrying value	Provisional fair value adjustments	Total provisional fair value
	£m	£m	£m
Property, plant and equipment	0.3	-	0.3
Trade and other receivables	2.2	(0.6)	1.6
Cash and cash equivalents	0.7	-	0.7
Short term trade and other payables	(0.9)	(0.1)	(1.0)
Current income tax liabilities	(0.3)	-	(0.3)
	2.0	(0.7)	1.3
Goodwill on acquisition			7.5
Consideration			8.8
Consideration:
Cash paid			4.7
Direct costs relating to the acquisition			0.2
Deferred consideration			3.9
			8.8

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 cash consideration of £0.6m to the vendors of Advantage Business Group (acquired on 19 March 2007) and incurred and capitalised direct expenses of £0.4m.

During the year the Group paid additional cash consideration of £0.4m to the vendors of Boreas Consultants Limited (acquired on 14 December 2006) and incurred and capitalised direct expenses of £0.1m.

As a result of finalising fair values of previous acquisitions and incurring qualifying direct expenses, additional goodwill of £0.9m, £0.3m and £0.4m was recognised for Boreas Consultants Limited, Advantage Business Group and Mantix Group Limited respectively during the year.

Included in the Group's results for the year is £1.7m of revenue, £0.3m profit before taxation and £0.2m profit after taxation 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 £4.9m revenue, £1.4m profit before taxation and £0.9m profit after taxation for the year in relation to the acquisitions. The Group's total results would have been £1,316.8m of revenue, £93.0m profit before taxation and £69.3m profit after taxation.

  11. 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.

At 30 September 2007 the defined benefit section of the Atkins Pension Plan was closed to future accrual of benefit for members who do not enjoy a statutory or contractual right to a final salary pension.  These members have transferred to a defined contribution section of the plan with effect from 1 October 2007.

The defined benefit sections of all pension schemes are closed to new entrants, who are now offered membership of the defined contribution section.

The main assumptions used for the IAS 19 valuation of the retirement benefit liabilities for the Atkins Pension Plan and the Railways Pension Scheme are listed in the table below.

	2008	2007
Price inflation	3.60%	3.10%
Rate of increase of pensions in payment:
Limited Price Indexation	3.60%	3.10%
Limited Price Indexation to 2.5%	2.50%	2.50%
Fixed	5.00%	5.00%
Rate of increase in salaries	5.10%	4.60%
Rate of increase for deferred pensioners	3.60%	3.10%
Discount rate	6.50%	5.35%
Expected rate of return on plan assets	7.30%	6.70%
Expected rate of social security increases	3.60%	3.10%
Longevity at age 65 for current pensioners
Men	22.2 years	18.8 years
Women	24.6 years	21.8 years
Longevity at age 65 for future pensioners (current age 45)
Men	24.1 years	21.0 years
Women	26.5 years	24.0 years

The actuarial tables used to calculate the retirement benefit liabilities for the Atkins Pension Plan were the "2000 series" standard tables, with medium cohort improvements and a minimum of 1% improvement pa, based on year of use application. The Railways Pension Scheme results have been adjusted on an approximate basis to be based on the same mortality tables.

The components of the pension cost are as follows:

Cost of sales	2008  £m	2007 £m
Current service cost	16.7	22.5
Total service cost	16.7	22.5
Finance (income)/cost
Finance cost	56.5	51.7
Expected return on plan assets	(55.4)	(49.3)
Net finance cost	1.1	2.4
Total charge to income statement for defined benefit schemes	17.8	24.9
Charge for defined contribution schemes	23.3	16.0
Total charge to income statement	41.1	40.9
Statement of recognised income and expense
(Loss)/gain on pension scheme assets	(88.1)	3.4
Changes in assumptions	94.5	27.9
Actuarial gain	6.4	31.3
Deferred tax charged to equity	(7.4)	(9.6)
Actuarial (loss)/gain (net of deferred tax)	(1.0)	21.7

The expected return on plan assets is based on market expectation at the beginning of the year for returns over the entire life of the benefit obligation. 

  11. Retirement benefit liabilities (continued)

	2008  £m	2007  £m
Defined benefit obligation	(1,021.9)	(1,058.2)
Fair value of plan assets	808.8	808.1
Retirement benefit liabilities	(213.1)	(250.1)
Movements in the retirement benefit liabilities are as follows:
	2007  £m	2007  £m
At beginning of year	(250.1)	(299.9)
Service cost	(16.7)	(22.5)
Net finance cost	(1.1)	(2.4)
Contributions	48.5	43.4
Actuarial gain	6.4	31.3
Difference on exchange	(0.1)	-
At end of year	(213.1)	(250.1)

The approximate effect on scheme 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%
Rate of inflation	increase/decrease 0.5%	increase/decrease 7.0%	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 3.0%

12. Statement of changes in equity

	Share Capital	Share premium account	Merger reserve	Retained (loss)/ earnings	Equity shareholders' deficit
	£m	£m	£m	£m	£m
Balance at 1 April 2006	0.5	62.4	8.9	(107.9)	(36.1)
Loss for the year	-	-	-	(57.3)	(57.3)
Dividends	-	-	-	(17.7)	(17.7)
Actuarial gain on retirement benefit liabilities	-	-	-	21.7	21.7
Share-based movements	-	-	-	5.9	5.9
Employee Benefit Trusts	-	-	-	0.1	0.1
Share of Joint Venture equity items	-	-	-	7.5	7.5
Cash flow hedges	-	-	-	(0.1)	(0.1)
Net differences on exchange	-	-	-	(0.1)	(0.1)
Balance at 31 March 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	-	-	-	(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)

The amounts included above are shown net of taxation

  13. Cash generated from continuing operations

	2008	2007
	£m	£m
Profit for the year	68.6	54.9
Adjustments for:
Income tax	23.3	15.2
Finance income	(9.8)	(9.0)
Finance cost	5.5	5.4
Share of post-tax profit from Joint Ventures	(0.9)	(2.8)
Depreciation charges	19.3	18.8
Amortisation charges	11.1	11.5
Release of deferred income	(3.0)	(0.2)
Share-based payment charge	8.6	5.1
Result on disposal of property, plant and equipment	0.1	(0.1)
Movement in provisions	(5.5)	8.5
Movement in working capital	(4.6)	7.5
Movement in pensions	(31.8)	(20.9)
Cash generated from continuing operations	80.9	93.9

14. Analysis of net funds

	At 31  March  2007  £m	Cash  flow  £m	Other  non-cash  changes  £m	Exchange movement £m	At 31  March  2008  £m
Cash and cash equivalents	187.7	(32.6)	-	(0.6)	154.5
Loan notes receivable	-	-	5.6	-	5.6
Financial assets at fair value through profit or loss	49.6	(19.9)	-	-	29.7
Borrowings due within one year	(0.4)	0.2	(4.0)	-	(4.2)
Borrowings due after one year	(23.1)	17.6	2.6	(0.3)	(3.2)
Finance leases	(14.7)	7.0	(6.3)	-	(14.0)
Net funds	199.1	(27.7)	(2.1)	(0.9)	168.4

15. Events after the balance sheet date 

On 1 April 2008 the Group disposed its holding in Modern Housing Solutions (Prime) Limited, receiving cash of £3.9m and generating a profit on disposal of £2.5m.

General Information

WS Atkins plc is a public limited company incorporated and domiciled in England with company number 1885586. The Company is listed on the London Stock Exchange.

Copies of this preliminary unaudited financial information are available from the registered office: Woodcote Grove, Ashley Road, Epsom, Surrey KT18 5BW, England and may be viewed on the Atkins website www.atkinsglobal.com.

ENDFR ILFIARTISFIT

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Related Shares:

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